Thursday, July 15, 2004

Mid-day Update

S&P 500 1,113.13 +.15%
NASDAQ 1,923.51 +.48%

Leading Sectors
Disk Drives +4.59%
Oil Service +2.44%
Computer Boxmakers +1.73%

Lagging Sectors
Banks -.73%
Fashion -.95%
Wireless -1.18%

Crude Oil 40.92 -.53%
Natural Gas 5.85 -2.12%
Gold 405.50 unch.
Base Metals 111.70 -.22%
U.S. Dollar 87.84 +.30%
10-Yr. T-note Yield 4.49% +.22%
VIX 14.0 +1.74%
Put/Call .79 -15.0%
NYSE Arms 1.37 -1.44%

Market Movers
NOK -13.5% after saying third-quarter earnings per share may fall by as much as half and sales will decline as it cuts prices.
AAPL +9.8% after beating 3Q estimates, raising 4Q guidance and multiple upgrades.
OVTI +11.2% after strong SNDK report.
ERICY -5.9% after better-than-expected 2Q on worries over price war with Nokia.
SNDK +23.8% after beating 2Q estimates substantially and raising 3Q forecast.
PLNR +13.4% after beating 3Q estimates, lowering 4Q guidance and multiple upgrades.
FCS +12.1% after missing 2Q estimates but making positive comments regarding 3Q margins.
PPDI +13.12% after beating 2Q estimates and multiple upgrades.
MCS +15.9% after saying La Quinta agreed to buy almost all its hotel assets for about $395 million.
FCFS +14.6% after beating 2Q estimates, raising 04 guidance and announcing 1.6 million share buyback.
GIVN +10.7% on strong second-quarter report.
CEC +11.3% after beating 2Q estimates, raising 3Q/4Q guidance and multiple upgrades.
CNJ +9.0% after Luxottica increased its bid for the company to $495 million, exceeding the offer by rival Moulin International.
CME -5.0% after CFO quit.
SWIR -6.3% after National Bank cut rating to Underperform.
HET -4.7% after agreeing to purchase Caesars for $5.18 billion.
WDFC -9.1% after missing 3Q estimates.

Economic Data
Producer Price Index for June fell .3% versus estimates for .2% rise and a .8% rise in May.
PPI Ex Food & Energy for June rose .2% versus estimates of a .2% rise and a .3% rise in May.
Initial Jobless Claims for last week were 349K versus estimates of 345K and 309K prior week.
Continuing Claims were 2971K versus estimates of 2883K and 2859K prior.
Business Inventories for May rose .4% versus estimates of a .5% rise and a .7% rise in April.
Empire Manufacturing for July came in at 36.54 versus estimates of 27.80 and 29.93 in June.
Industrial Production for June fell .3% versus estimates of a .1% rise and a .9% gain in July.
Capacity Utilization for June was 77.2% versus estimates of 77.7% and 77.6% in May.
Philly Fed for July came in at 36.1 versus estimates of 25.0 and a reading of 28.9 in June.

PLXS cut to Underweight at JP Morgan. CBH cut to Underweight at Morgan Stanley, target $48. PAYX raised to Outperform at CSFB, target $38. ADP raised to Outperform at CSFB, target $48. CZR cut to Underweight at Prudential, target $18. LYO raised to Buy at Bank of America, target $20. ACV raised to Buy at Bank of America, target $56. CHTT raised to Buy at Bank of America, target $36. Goldman reiterated Outperform on AMD, ETN, CSCO, MAR, ATG, KRB, EQT and AIG. Goldman reiterated Underperform on QLGC and MTG. Citi SmithBarney said to Buy ROH, target $47. Citi reiterated Buy on HET, target $63. Citi reiterated Buy on CSCO, JNPR, FDRY, FFIV, RDWR, AXTR and ETS. Citi reiterated Buy on AAPL, target $37. Citi reiterated Sell on KFT, target $29.50. Citi reiterated Buy on BCII, target $30. Citi reiterated Buy on PNR, target $40. Citi reiterated Sell on RSH, target $28.

Mid-day News
U.S. stocks are modestly higher mid-day on mostly stronger economic reports and falling inflation readings. A U.S. government plan to collect personal information on airline passengers and rank them according to risk-level is being canceled after criticism about privacy and concern about its effectiveness, USA Today reported. Gary Kelly, CFO of Southwest Air told CNBC that revenue and airline traffic have been very strong in July, Bloomberg said. The price of some types of U.S. business insurance, which can include anything from broad decisions to property damage, is beginning to decline after three years of increases, according to two new surveys, the Wall Street Journal reported. Motorola may face a market cool to investment in chip-making today when it announces share prices for the planned IPO of its Freescale Semiconductor unit, the NY Times reported. Boeing plans to use voice over Internet technology for its communications, replacing traditional phones, the Chicago Tribune reported. Marriott said second-quarter profit rose 28% after an increase in business travels enabled the hotel company to charge higher room rates, Bloomberg reported. Harrah's Entertainment agreed to buy Caesars Entertainment for about $9.44 billion in cash, stock and assumed debt, Bloomberg reported. Nokia said third-quarter profit and sales will fall as it cuts prices to regain lost market share, Bloomberg said. U.S. producer prices fell .3% last month, the biggest drop in more than a year, reflecting declines in energy and food prices, Bloomberg reported. Enron won court confirmation of a plan to exit bankruptcy, Bloomberg said. U.S. industrial production unexpectedly fell for the first time since March, led by a slowdown in car production, Bloomberg reported. Iraq's interim Prime Minister Allawi today said he will visit several other Arab nations starting next week to open new relationships and ease tensions in the Middle East, Bloomberg reported. Intel plans to spend $400 million to add a second clean room at its Colorado plant and plans to hire several hundred workers, the Denver Post reported. Manufacturing in the Philadelphia region unexpectedly expanded at a faster pace this month than in June as more companies reported rising orders and higher employment, Bloomberg reported.

BOTTOM LINE: The Portfolio is unchanged again today as my falling retail shorts are being offset by my declining biotech longs. I have not traded and the Portfolio is still market neutral. Overall, the data released today were encouraging as manufacturing readings mostly exceeded expectations and measures of inflation fell. As well, a number of corporate earnings reports were very strong. I am a little disappointed in the market's reaction so far. However, stocks should gain into the close.

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