Mid-day Update

S&P 500 1,073.48 +.78%
NASDAQ 1,794.88 +1.14%

Leading Sectors
Airlines +3.12%
I-Banks +2.0%
Networking +1.95%

Lagging Sectors
Oil Service +.25%
Tobacco unch.
Energy -.26%

Other
Crude Oil 44.45 -.87%
Natural Gas 5.91 +3.81%
Gold 402.70 -.07%
Base Metals 108.48 +.50%
U.S. Dollar 88.35 -.05%
10-Yr. T-note Yield 4.24% -.46%
VIX 17.72 -6.25%
Put/Call 1.11 +23.33%
NYSE Arms .63 -27.59%

Market Movers
DISH +6.2% after beating 2Q estimates and announcing $1B share buyback.
CEPH -8.1% after it was cleared by U.S. antitrust enforcers to complete its $515M purchase of Cima Labs and updating outlook.
ACF +16.4% after beating 4Q estimates, raising 05 forecast and Piper Jaffray upgrade to Outperform.
TASR +6.6% after winning 4 large orders for its weapons from three police departments and reiterated 3Q outlook.
SNIC +12.5% after announcing it would buy Roxio's consumer-software division to Sonic Solutions.
SOL +16.1% after beating 1Q estimates and reaffirming 2Q/05 view.
ESE +11.8% after beating 3Q estimates substantially and raising 4Q outlook.
FOSL +11.4% after beating 2Q estimates and raising 04 forecast.
PLMO +4.7% after Friedman, Billings rated it Outperform.
NDC -30.0% after missing 4Q estimates substantially and lowering 1Q outlook.
ADRX -16.6% after missing 2Q estimates.
KDE -12.8% after missing 2Q estimates.

Economic Data
Preliminary 2Q Non-farm Productivity rose 2.9% versus estimates of 2.0% and a 3.7% rise in 1Q.
Preliminary 2Q Unit Labor Costs rose 1.9% versus estimates of 2.0% and a .3% rise in 1Q.

Recommendations
STJ raised to Outperform at CSFB, target $76. DOX rated Outperform at Thomas Weisel. CMVT rated Outperform at Thomas Weisel. ET rated Overweight at Morgan Stanley, target $14.50. AMTD rated Overweight at Morgan Stanley, target $14. ISPH rated Overweight at Morgan Stanley, target $18. WCG rate Overweight at Morgan Stanley, target $20. CEPH cut to Underweight at Morgan Stanley. FCX raised to Overweight at Prudential, target $42. Goldman Sachs reiterated Outperform on FDC, AVP, AMGN, BIIB, NFX, FSH, BSX, MDT, GDT, BAX and DNA. Goldman reiterated Underperform on PSS. Goldman reiterated Attractive view of Gold sector, favorites are NEM and PDG. Citi SmithBarney reiterated Buy on URBN, target $35. Citi reiterated Buy on CHS, target $48. Citi reiterated Buy on TJX, target $27. Citi reiterated Buy on PLCE, target $30. Citi reiterated Buy on GPS, target $25. Citi reiterated Buy on BLS, target $32. Citi reiterated Buy on VIAB, target $50.

Mid-day News
U.S. stocks are higher mid-day on a reversal in oil prices and optimism over Greenspan's commentary after the rate announcement. Paul Volcker, the former Fed chairman who heads a panel investigating the corruption in the UN's former oil-for-food program in Iraq, said he will probably need a year to report his findings, the NY Times said. People who held mentally demanding jobs may be at a lower risk for developing Alzheimer's disease, the Wall Street Journal reported. Electric companies have fixed many of the problems that led to the largest blackout in U.S. history on Aug. 14, 2003, although many long-term power problems haven't been tackled, the Washington Post reported. Toy companies are selling their products in clothing stores, supermarkets and even Starbucks to boost sales and fight pressure to cut prices from discount retailers such as Wal-Mart, the NY Post said. U.S. Transportation Security Administration officials issued a directive ordering federal passenger screening for helicopter tours in New York City after officials learned that suspected al-Qaeda terrorist operatives had pictures and other information about the tours, the NY Times reported. Symantec estimates that as much as 30% of all Internet traffic is spam, CEO Thompson told CNBC. Kuwait's Supreme Petroleum Council approved a planned $7 billion development of oil fields in the north of the country, the Kuwait News Agency reported. President Bush named Representative Porter Goss, chairman of the House Intelligence Committee and a former U.S. intelligence officer, to head the CIA, Bloomberg reported. Kmart will scale back its sale of stores to Home Depot by as much as half from the plan announced in June, Bloomberg said. U.S. traffic deaths last year fell for the first time since 1988, as more people used seat belts, states cracked down on drunk driving and automakers built safer autos, Bloomberg reported. Crude oil fell on expectations that Iraq will start pumping oil through pipelines at normal rates after reducing the flow yesterday, Bloomberg said. A Pakistani man known as Kamran Shaikh appeared in U.S. federal court this morning after being spotted videotaping buildings in downtown Charlotte, NC, last month, the Charlotte Observer reported.

Bottom LINE: The Portfolio is up substantially today as my alternative energy and security longs are rising and my Chinese ADR shorts are declining. I added a few new longs this morning, bringing the Portfolio's market exposure to 100% net long. One of my new longs is GS and I am using an $84.50 stop-loss on the position. The tone of the market is much better than yesterday's. I expect U.S. stocks to rise modestly into the close after the rate-hike and Fed commentary.