Mid-day Update

S&P 500 1,070.76 -.92%
NASDAQ 1,797.44 -1.33%

Leading Sectors
Utilities +1.07%
Homebuilders +.90%
Banks -.22%

Lagging Sectors
Iron/Steel -2.23%
Semis -2.66%
Fashion -2.67%

Other
Crude Oil 44.48 +.16%
Natural Gas 5.65 -1.09%
Gold 402.40 +1.98%
Base Metals 108.60 -1.28%
U.S. Dollar 88.31 -1.48%
10-Yr. T-note Yield 4.23% -3.88%
VIX 18.94 +3.38%
Put/Call 1.51 +93.59%
NYSE Arms 2.84 +.35%

Market Movers
NVT +15.6% on strong demand for its IPO.
NVDA -31.5% after missing 2Q estimates substantially and multiple downgrades.
BSX -5.6% after the FDA said it may broaden a probe of its products.
DOVP +21.85% after saying it may receive as much as $455 million from Merck for the right to experimental drugs for depression and other diseases.
PNRA +5.6% after Piper Jaffray upgrade to Market Perform.
DTSI -24.2% after disappointing 2Q results.
VSTA -25.9% after missing 2Q estimates, lowering 04 outlook and multiple downgrades.
GB -28.6% after missing 2Q forecast, lowering 04 guidance and multiple downgrades.
BCSI -31.9% after lowering 1Q forecast and downgrade by ThinkEquity to Accumulate.

Economic Data
Unemployment for July was 5.5% versus estimates of 5.6% and 5.6% in June.
Change in Non-farm Payrolls for July was 32K versus estimates of 240K and a downwardly revised 78K in June.
Change in Manufacturing Payrolls for July was 10K versus estimates of 10K and an upwardly revised -1K in June.

Recommendations
Goldman Sachs reiterated Outperform on CLX, ADP, WAG, STZ, UNH, DTV, BSX and AMLN. Goldman reiterated Underperform on DAL. Citi SmithBarney rated WYY Buy, target $73. Citi rated STT Buy, target $57. AMX raised to Buy at Deutsche Bank, target $40. BLX raised to Buy at Deutsche Bank, target $18.55. VLO raised to Buy at Deutsche Bank, target $80. PCO raised to Buy at Deutsche Bank, target $40. GB cut to Underweight at Morgan Stanley. RDEN raised to Overweight at JP Morgan. QLTI raised to Strong Buy at Raymond James, target $24. SONSE raised to Strong Buy at Raymond James, target $7.50.

Mid-day News
U.S. stocks are lower mid-day after a much weaker-than-expected jobs report and continuing worries over high energy prices. A study of about 1,800 women in Mexico found the risk of developing breast cancer was more than two times greater in those that had diets with high carbohydrate intake, the AP reported. Talk-show host Oprah Winfrey signed a three-year contract renewal yesterday that will keep her syndicated show on the air through the 2010-2011 tv season, the Chicago Sun-Times said. OPEC raised production to 30.02 million barrels a day in July, its highest in 25 years, according to Middle East Economic Survey estimates. The Moscow Arbitration Court ruled that the government's plan to seize the main oil unit of OAO Yukos Oil is illegal, Interfax reported. Janus Capital intends to start relying more on brokers to sell its mutual fund portfolios, marking a shift in the company's sales strategy, Denver's Rocky Mountain News reported. Bristol-Myers Squibb is closing a manufacturing plant in Syracuse, NY, as it streamlines operations worldwide to save money, Bloomberg reported. Shares of Barclays Plc, Britain's third-largest bank, surged as much as 11% after a report the company may get a bid from Citigroup, Bloomberg reported. Shares of MCI rose as much as 20% in early trading after the company said it will pay a .40 quarterly dividend to distribute cash to shareholders, Bloomberg said. DaimlerChrysler may run out of engines for its diesel-powered Jeep Liberty sport-utility vehicle based on interest the light truck is generating among prospective buyers, Bloomberg said. U.S. Treasury Notes soared after a report showed the economy added fewer jobs than forecast for a second straight month, raising speculation an economic slowdown in more than temporary, Bloomberg said. However, the U.S. unemployment rate fell to 5.5%, better than expectations of 5.6%, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher today as my steel and healthcare shorts are dropping substantially, more than offsetting losses in my biotech and gaming longs. I have not traded today and the Portfolio is still 50% net short. Anti-business political rhetoric and terrorism fears are resulting in a loss of confidence by executives. Thus, corporations are hiring fewer people and spending less. I continue to believe this weakness is temporary and economic growth will accelerate in the 4th quarter. I expect stocks to drift modestly lower into the close as buyers fail to materialize heading into a weekend with oil near record levels. However, with interest rates plunging, the Arms and Put/Call readings at very high levels and the VIX rising, a rally will likely materialize on Monday and follow-through on Tuesday with the Fed rate hike. I expect the Fed to raise rates 25 basis points and to make comments that they will take a "wait and see" approach with respect to further rate hikes. After Tuesday's rate increase, I expect the Fed to remain on hold at least through the October meeting.