Mid-day Update

S&P 500 1,097.01 -.19%
NASDAQ 1,823.33 -.72%

Leading Sectors
Oil Service +1.40%
Iron/Steel +1.03%
Homebuilders +.85%

Lagging Sectors
Software -1.02%
Internet -1.21%
Semis -1.95%

Other
Crude Oil 41.95 -.78%
Natural Gas 5.10 -2.56%
Gold 412.00 +.49%
Base Metals 108.65 +.42%
U.S. Dollar 88.92 -.87%
10-Yr. T-note Yield 4.10% -1.70%
VIX 15.75 +2.01%
Put/Call .77 -8.33%
NYSE Arms 1.71 -33.98%

Market Movers
IPIX +13.8% after saying it signed an agreement with Soling Company to supply, install, and support Ipix systems in Russia.
UNFI +6.6% after beating 4Q estimates and raising 05 outlook.
POS +7.9% after saying it reached agreement on a five-year, $125 million revolving credit line.
SWIR -10.5% on worries over competition.

Economic Data
Chicago Purchasing Manager for August was 57.3 versus estimates of 60.0 and a reading of 64.7 in July.
Consumer Confidence for August was 98.2 versus estimates of 103.5 and a reading of 105.7 in July.

Recommendations
BLKB rated Overweight at JP Morgan. UPL raised to Overweight at JP Morgan, target $47. KSS raised to Buy at Merrill, target $58. DEX rated Buy at Deutsche Bank, target $24. DEX rated Buy at Merrill, target $25. RIG raised to Buy at Merrill, target $36. NE raised to BUY at Merrill and named Focus 1 stock of the week, target $47. GSF raised to Buy at Merrill, target $33. BLKB rated Outperform at Thomas Weisel. Goldman Sachs rated IDIX Outperform, target $23. Goldman reiterated Outperform on ROH, target $50. Goldman reiterated Outperform on PFE and Underperform on SGP, PNY. Citi SmithBarney rated TXU Buy, target $49.

Mid-day News
U.S. stocks are quietly lower mid-day on declines in technology shares after weaker-than-expected economic data. U.S. Senate and Defense Department computers were invaded by hackers who used them to send spam e-mail, USA Today reported. Senator John McCain speaking at the Republican Convention, described Michael Moore as "a disingenuous filmmaker" and Moore, who was in the convention hall with a press pass, responded with a wave an formed an "L," for loser, with his thumb and forefinger, the New York Times reported. Wal-Mart didn't renew a contract to build a second store in Chicago because of concerns over minimum wage and other standards the city is considering, the Chicago Sun-Times reported. Russian President Putin today said the explosions that brought down two airliners in Russia a week ago were the work of terrorists linked to the al-Qaeda terrorist network, Bloomberg said. Apple Computer will start shipping a new version of the iMac personal computer in the middle of September, missing the back-to-school shopping season, Bloomberg reported. U.S. Treasury notes rose, heading for their biggest monthly gain since September 2003, after indices measuring consumer confidence and Chicago-area manufacturing fell more than forecast this month, Bloomberg reported. Crude oil futures fell for the seventh session in eight as Iraqi exports rose to near-normal rates and Russia said it would increase production this year, Bloomberg reported.

BOTTOM LINE: The Portfolio is lower mid-day on declines in my technology longs and rising steel shorts. I exited a few technology longs as they hit my stop-losses, thus leaving the Portfolio 75% net long. Another disappointing day for the Bulls as technology shares continue to deteriorate on light volume. While today's economic releases were disappointing, they are not near worrisome levels. It is my belief the Bears are looking in the rear-view mirror as the economy should accelerate meaningfully in the fourth quarter. Energy prices are down 15-25% in a very short period of time, inflation fears are subsiding, long-term interest rates have fallen over 80 basis points just since June, the big picture in Iraq is improving, terrorism worries are diminishing the closer we get to the U.S. election, the uncertainty and negative political rhetoric associated with the election will end in the next couple of months and most stocks are at attractive valuations relative to interest rates and growth. I expect stocks to trade mixed into the afternoon as worries over slowing economic growth are offset by falling energy prices and plunging interest rates.