Mid-day Update

S&P 500 1,104.09 -.08%
NASDAQ 1,852.40 -.45%

Leading Sectors
Oil Service +1.68%
Fashion +.88%
Gaming +.80%

Lagging Sectors
Restaurants -.85%
Semis -1.24%
Disk Drives -1.55%

Other
Crude Oil 43.18 -.67%
Natural Gas 5.12 -3.36%
Gold 409.30 -.17%
Base Metals 108.43 +.49%
U.S. Dollar 89.39 -.03%
10-Yr. T-note Yield 4.22% -.96%
VIX 15.02 +.27%
Put/Call .83 +6.41%
NYSE Arms .92 +16.46%

Market Movers
SBUX -5.9% after saying August same-store-sales rose 8%, less than the 11% average gain in the first 11 months of its fiscal year.
APOL +8.9% after reiterating 1Q guidance and raising 05 outlook.
TASR +6.7% after saying it won four additional orders from police departments valued at more than $1 million.
WFI +33.0% after saying it agreed to be purchased by WesBanco(WSBC) for $102.5 million in cash and stock.
SAM -15.7% after lowering 04 estimates and Prudential downgrade to Neutral Weight.
FRED -11.11% after missing 2Q estimates and giving weak guidance.
KKD -10.8% after missing 2Q estimates and lowering 05 outlook.
AOS -9.42% on Robert W. Baird downgrade to Neutral.

Economic Data
Initial Jobless Claims for last week were 343K versus estimates of 335K and 333K the prior week.
Continuing Claims were 2897K versus estimates of 2885K and 2892K prior.
Help Wanted Index for July was 37 versus estimates of 38 and 38 in June.

Recommendations
Goldman Sachs reiterated Underperform on Newspaper industry. Goldman reiterated Outperform on UST, IR, FS, HOT, GCI and FON. Goldman reiterated Underperform on DJ and CVH. Citi SmithBarney said to Buy PEP on weakness, target $60. Recent Citi CIO survey points to strength at BEAS, VRTS, RSAS, COGN and MSTR. Citi reiterated Buy on TOL, target $62. Citi reiterated Buy on AFC, target $40. BAX cut to Reduce at UBS. EFX and WW cut to Sector Underperform at CIBC. KLAC rated Buy at Deutsche Bank, target $44. CCI rated Buy at Bank of America, target $18. SSI rated Buy at Bank of America, target $51. PSYS raised to Strong Buy at Raymond James, target $30. Mario Gabelli, founder and chief executive officer of Gabelli Assest Management, told CNBC that investors should buy oil stocks. Gabelli also said investors should buy shares of LBTYA.

Mid-day News
U.S. stocks are quietly lower mid-day as investor apprehension over terrorism rises ahead of the Republican Convention. Democratic U.S. Senator Daschle faces a close re-election race, with allegations that, as Senate Minority Leader, he helped block President Bush's judicial nominees and Republican-backed legislation in a state where Bush is popular, the Washington Post reported. General Electric's NBC has sold $20 million to $30 million in tv ads in recent days, due to the popularity of the Olympics, the New York Daily News reported. Fifty of the U.S.'s leading anarchists are expected to be in NYC for next week's Republican Convention, some with histories of violent and disruptive tactics, the New York Daily News reported. Illegal immigrants cost the U.S. government more than $10 billion annually and efforts to legalize them would boost the cost to $29 billion a year, the LA Times reported. Workers at Southern Peru Copper Corp., Peru's biggest copper miner, plan to strike Tuesday, Platts reported. UPS plans to deliver packages using a van with the latest fuel-cell technology starting today, the LA Times said. Nearly 300 anti-Semitic acts have been recorded in France so far this year, 67 of them involving physical or verbal assaults on individual Jews, LCI tv reported. Bonds of Toys "R" Us Inc. are being shunned by investors on speculation a corporate restructuring may leave the securities with a more heavily indebted entity, Bloomberg reported. Crude oil futures declined for a fifth straight session, the longest period in 10 months, as a cease-fire in Najaf eased concern that shipments from Iraq will be disrupted, Bloomberg said. President Bush took a 3 percentage point lead over Senator Kerry in a recent poll by the LA Times for the first time this year, Bloomberg reported. U.S. initial jobless claims rose for the first time in four weeks, boosted by more filings related to Hurricane Charley, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly lower mid-day as my declining technology and restaurant longs are more than offsetting my declining steel shorts. I have not traded today and the Portfolio is 100% net long. Oil, Natural Gas and Gasoline futures are all falling and interest rates are declining again today. I continue to believe inflation worries have peaked for at least the intermediate-term and that U.S. economic growth will accelerate in the fourth quarter. Oil prices should drift lower throughout the remainder of the year as supply catches up to demand and the terror premium erodes. The major U.S. indices appear to be consolidating recent gains before a move higher next week. I expect stocks to remain mixed-to-weaker through tomorrow morning and begin rising later tomorrow on short-covering.