S&P 500 1,108.39 -.41%
NASDAQ 1,924.72 -1.11%
Leading Sectors
Airlines +.56%
Telecom +.38%
Insurance +.26%
Lagging Sectors
Disk Drives -2.05%
Networking -2.32%
Semis -3.22%
Other
Crude Oil 40.46 +1.25%
Natural Gas 6.02 -1.97%
Gold 407.40 -.12%
Base Metals 112.48 -.75%
U.S. Dollar 87.38 -.05%
10-Yr. T-note Yield 4.43% -.44%
VIX 15.17 -3.87%
Put/Call 1.20 +62.16%
NYSE Arms 1.52 +49.02%
Market Movers
NVLS -4.3% after beating 2Q estimates and raising 3Q guidance.
MCIA +9.7% after saying Leucadia National is seeking U.S. government approval to buy a controlling stake in the company.
*Semis down across the board on Merrill downgrade of sector.
NCR +10.5% after raising 2Q forecast substantially.
CALM +13.7% after reporting strong 4Q results.
TZOO +5.8% after saying it is entering the cost-per-click search business with the launch of SuperSearch, a tool that allows consumers to search multiple travel Web sites.
MTB +5.5% after beating 2Q estimates and reaffirming 04 forecast.
CENT -18.8% after cutting 3Q and 04 forecast.
ELAB -11.9% after downgrade to Sell at ThinkEquity Partners.
ZBRA -5.6% after Thomas Weisel downgrade to Underperform.
ESI -6.3% after saying President resigned.
Economic Data
None of note.
Recommendations
CRL raised to Buy at UBS, target $55. FON raised to Buy at Legg Mason, target $23. NHP raised to Buy at Legg Mason. EMC raised to Outperform at Thomas Weisel. NNI raised to Overweight at Morgan Stanley, target $25. Merrill Lynch cut its rating on the global chip industry, saying earnings growth at companies such as Intel and Taiwan Semi may slow as customers try to reduce inventories, Bloomberg reported. ATYT, LSI, MCHP, ISIL, NVDA, TXN, PMCS, IDTI, VTSS, TER, AEIS, ESIO, DPMI, ATMI and KLIC cut to Sell at Merrill. LNET rated Outperform at Bear Stearns, target $24. Goldman Sachs reiterated Outperform on MDT, CZN, DIS, GILD, CTSH and GE. Citi SmithBarney said Buy BAC and TCB for near-term trade. Citi said to Buy EOG, target $75. Citi reiterated Buy on JPM, target $50. Citi reiterated Buy on ACLS, target $15. Citi reiterated Buy on ACS, target $70. Citi reiterated Buy on RTLX, target $27.50. Citi reiterated Buy on GE, target $38.
Mid-day News
U.S. stocks are lower mid-day on continuing weakness in the technology sector after a Merrill Lynch downgrade of semiconductor shares. China's coal consumption rose faster than domestic production in the first half this year, China Central Television reported. Anarchists planning to disrupt next month's Republican National Convention in New York say they will seek to fool bomb-sniffing dogs on trains bound for Manhattan's Penn Station with samples of gunpowder or ammonium nitrate-laced tablets, the NY Daily News reported. Applied Materials CEO Splinter told CNBC that confidence continues to grow in the semiconductor industry, Bloomberg reported. Cendant Corp.'s Century 21 Real Estate division is reporting very strong sales in most marketplaces, CEO Kunz told CNBC. Ford Motor plans to spend $750 million at an Atlanta plant to produce new Lincoln sedans, Automotive News reported. Wendy's is set to overtake Burger King as the second-largest U.S. hamburger-restaurant company by sales behind McDonald's, the AP reported. Lea Fastow, the wife of Enron's former CFO, began a one-year prison term today for her role in the accounting fraud that forced the company into bankruptcy, Bloomberg said. Athens and other parts of southern Greece were blacked out this afternoon, closing the subway system and knocking out traffic lights at a time when organizers are seeking to ensure electricity supplies for next month's Olympics, Bloomberg said. Eli Lilly and marketing partner Icos started offering men free Cialis impotence pills, three months after Pfizer began a discount program for its top-selling Viagra, Bloomberg said. Union Pacific and other U.S. railroads have more business than they can handle in a strengthening economy, causing delays that cut Arch Coal's profit and forced Dow Chemical to idle a Michigan plant, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower today as my Chinese ADR and Internet longs are down a little more than my oil service and software shorts. I added a few new shorts this morning, bringing the Portfolio's market exposure to 25% net short. One of my new shorts is CMN and I am using a $26.75 stop-loss on the position. Investor sentiment towards technology stocks continues to be overly pessimistic. Novellus Systems reported better-than-expected earnings and raised guidance, yet the stock is down. As well, Applied Materials' CEO made very positive comments regarding current and future business conditions. However, the semi sector is down substantially as investors only focus on Merrill's downgrade of the sector. Longer-term investors should use any extreme weakness in the coming weeks to add to favorite semi long positions as I believe they will rally substantially in the fourth quarter. It is good to see the Put/Call and Arms readings soaring, however rising oil prices will likely prevent any significant rally from occurring today.
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