Mid-day Update

S&P 500 1,105.09 -.14%
NASDAQ 1,877.83 -.75%

Leading Sectors
Energy +1.11%
Telecom +.81%
Oil Service +.76%

Lagging Sectors
Hospitals -1.11%
Retail -1.38%
Semis -2.47%

Other
Crude Oil 43.80 -.16%
Natural Gas 5.84 +.46%
Gold 394.20 -.05%
Base Metals 110.83 -.59%
U.S. Dollar 89.58 -.18%
10-Yr. T-note Yield 4.42% -.44%
VIX 15.34 -.20%
Put/Call .66 -14.29%
NYSE Arms 1.18 +28.26%

Market Movers
LGND -28.2% after missing 2Q estimates and lowering 04 outlook.
VSH -12.1% after missing 2Q estimates and lowering 3Q guidance.
UTHR +14.1% after substantially beating 2Q estimates.
AMED +13.7% after beating 2Q estimates and boosting 04 guidance.
SEM +14.0% after Legg Mason upgrade to Buy.
MNT +9.4% after beating 1Q estimates.
WPI +11.4% after beating 2Q estimates and raising 3Q guidance.
EDMC +7.0% on Legg Mason upgrade to Buy.
MVSN +7.1% after meeting 2Q estimates and raising 3Q revenue guidance.
PCLN -13.5% after meeting 2Q estimates and lowering 3Q forecast.
NTES -7.0% after disappointing 2Q and ThinkEquity downgrade to Source of Funds.
DVA -7.6% after missing 2Q estimates and lowering 04 outlook.
MICC -12.7% after disappointing 2Q.

Economic Data
Personal Income for June rose .2% versus estimates of a .3% rise and an increase of .6% in May.
Personal Spending for June fell .7% versus estimates of a .1% decline and a 1.0% increase in May.
PCE Deflator(YoY) for June rose 2.5% versus estimates of a 2.6% rise and a 2.5% increase in May.
PCE Core(YoY) for June rose 1.5% versus estimates of a 1.7% increase and a 1.6% rise in May.

Recommendations
Goldman Sachs reiterated Outperform on AMGN, IR, TYC, GILD, BSX, MDT, INTC, AMT, AMX, AGN and PXD. Goldman rated RAI Underperform. Goldman reiterated Underperform on UCL, SGP, PRXL and KZL. Citi SmithBarney said to Buy L, target $11. Citi reiterated Buy on CSCO, target $34. Citi upgraded CIT to Buy, target $44. Citi reiterated Buy on CAT, target $106. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on AMT, target $19. Citi reiterated Buy on GILD, target $75. Citi reiterated Buy on BEAS, target $11.50. Citi reiterated Sell on SPW, target $35. Citi reiterated Buy on FITB, target $65. Citi reiterated Buy on BCII, target $31. LIN raised to Overweight at JP Morgan. MKC cut to Underweight at Prudential, target $31. JTX rated Outperform at CSFB, target $22. EDMC raised to Buy at Legg Mason, target $35. SEM raised to Buy at Legg Mason, target $20.

Mid-day News
U.S. stocks are modestly lower mid-day on declines in technology shares and a weaker-than expected consumer spending report. The top three Bell phone companies are cutting consumer prices to levels that don't cover costs, while rivals who must pay the Bells for network access want regulators to look into what they say may be monopolistic behavior, the Wall Street Journal reported. A credible member of al-Qaeda told U.K. interrogators the group has plans for an attack in September inside the U.S., two months before the presidential election, Newsday reported. Alex, the first named storm of the 04 Atlantic season, became a hurricane early today, as it advanced off the coast of North Carolina, Bloomberg said. California homebuilders may obtain the most new-home permits since 1989 by the end of this year as they try to keep up with the growing population, the LA Times said. Tyco, the world's largest maker of electric connectors and security systems, said fiscal third-quarter profit rose 63% as it cut costs and sold more components. Tyco also raised its 2004 forecast, Bloomberg said. Wachovia said the SEC may recommend enforcement action against the company and some of its current former executives related to stock purchases, Bloomberg reported. The Core PCE, a measure of inflation watched by the Fed, was revised down for May and was unchanged in June, signaling a pause in recent price trends, Bloomberg said. Fidelity Brokerage agreed to pay $2 million to settle allegations that the company falsified or destroyed documents before regulatory inspections, Bloomberg reported. Crude oil futures retreated from a record in New York after a Saudi Arabian official said the country can boost production by 500,000 barrels a day to 10 million barrels a day immediately, and by more if needed, Bloomberg said. Pfizer said it is suing five Internet pharmacies and trying to seize the domain names of more than two dozen others to stop the sale of counterfeit Viagra, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly lower today as weakness in my semi-equipment longs more than offsets my declining retail shorts. I have not traded today and the Portfolio is still 100% net long. I believe the weakness in personal spending for June was temporary and is already rebounding. Historically wet weather and the spike in home-buying during 2Q likely curtailed spending in June. I expect U.S. stocks to rise modestly into the close on stabilizing energy prices and falling interest rates.