Mid-day Update

S&P 500 1,100.93 -.07%
NASDAQ 1,876.10 -.60%

Leading Sectors
Tobacco +1.06%
Defense +.85%
Homebuilders +.57%

Lagging Sectors
Disk Drives -1.55%
Biotech -1.74%
Airlines -2.42%

Other
Crude Oil 43.52 -.64%
Natural Gas 5.82 -4.70%
Gold 394.00 +.10%
Base Metals 111.49 -.57%
U.S. Dollar 89.75 -.24%
10-Yr. T-note Yield 4.46% -.40%
VIX 16.06 +4.83%
Put/Call .78 +21.87%
NYSE Arms 1.11 -15.27%

Market Movers
COCO -43.2% after lowering 4Q, 04 and 05 forecasts. Education stocks down across the board on the news.
COX +20.5% after James Cox Kennedy, whose family controls Cox, offered $7.9 billion to take the fourth-largest U.S. cable-tv operator private.
NTMD +27.0% after Deutsche Bank initiated coverage with a Buy rating, citing the "blockbuster potential" for the company's heart drug for African-Americans.
QCOM +3.4% after Bank of America upgrade to Buy.
RIGL +37.4% after saying its first experimental drug, dubbed R112, showed promise in alleviating the symptoms of hay fever in its first large test.
PG +3.2% after beating 4Q estimates and giving positive 05 outlook.
SNPS -16.4% after lowering 3Q forecast.
INVN -13.2% as looming investigations by the Dept. of Justice and SEC may delay GE's $900 million acquisition of the company.

Economic Data
Construction Spending for June fell .3% versus estimates of unch. and up .1% in June.
ISM Manufacturing for July was 62.0 versus estimates of 62.0 and 61.1 in June.
ISM Prices Paid for July was 77.0 versus estimates of 79.0 and 81.0 in June.

Recommendations
NFX raised to Overweight at JP Morgan. ARDI cut to Underweight at JP Morgan. PPP cut to Underweight at JP Morgan. QCOM raised to Buy at Bank of America, target $90. NTMD rated new Buy at Deutsche Bank, target $38. CBG rated Outperform at CSFB, target $26. COCO cut to Underweight at JP Morgan. Goldman Sachs reiterated Outperform on CBL, WMT, FD, NOI, RSE, PG, STA, MMP, FDC, CRE, EBAY, CAL and COH. Goldman reiterated Underperform on DTE and FHCC. Goldman rated JTX Outperform. Goldman upgraded SANM to Outperform. Goldman reiterated Cautious view on REITs. NT raised to Buy at Citi SmithBarney, target $5. Citi reiterated Buy on TXT, target $70. FCX reiterated Buy on FCX, target $50. Citi reiterated Buy on PEG, target $45. Citi reiterated Buy on CI, target $75.

Mid-day News
U.S. stocks are modestly lower mid-day on fears over domestic terrorism. An overseas Web gambling industry has sprung up in recent years that the U.S. wants to curb because betting via the phone or Internet is illegal in the U.S., the Wall Street Journal reported. Absolut vodka has begun sponsoring social-networking text messages on entertainment locations, in a bid to boost its brand, the Wall Street Journal reported. The shares of OAO Yukos Oil, Russia's largest oil exporter, jumped as much as 20% as government officials said the company may get more than the two months allowed by law to pay a $3.4 billion tax bill, Bloomberg said. DirectTV agreed to buy Pegasus Satellite TV's broadcast satellite business for about $938 million, Bloomberg said. Fifth Third Bancorp, the 11th largest U.S. bank, said it agreed to buy First National Bankshares of Florida for $1.58 billion in stock to help it expand into five new markets in Florida, Bloomberg said. Companies in the S&P 500 have reported a 31% rise in profits for the 2nd quarter so far, above the 21% expected increase and the best performance in at least 6 years, Bloomberg reported. The Institute of Supply Management's factory index for last month rose to 62.0, near the 20-year high reading of 63.6 set in January, Bloomberg reported. President Bush said he supports two key recommendations of the commission that studied the Sept. 11 attacks: creating the post of national intelligence director and an office to coordinate all U.S. efforts to combat terrorism, Bloomberg said. According to Tradesports.com, President Bush's chances of re-election have risen 4 percentage points since the Democratic Convention to 53.3%.

BOTTOM LINE: The Portfolio is lower today as most of my longs are declining. I have not traded and the Portfolio is still 125% net long. While the major indices are lower, the mildly negative reaction to the weekend's terror news is a positive for the Bulls. As well, oil is falling despite the news and violence in Iraq over the weekend. I expect U.S. stocks to rise modestly into the close.