Mid-day Update

S&P 500 1,107.75 +.16%
NASDAQ 1,854.74 +.23%

Leading Sectors
Retail +1.36%
Broadcasting +1.33%
Foods +.73%

Lagging Sectors
Restaurants -.55%
Semis -.59%
Homebuilders -.66%

Other
Crude Oil 45.0 +2.34%
Natural Gas 4.91 -1.01%
Gold 408.80 -.49%
Base Metals 106.95 -1.14%
U.S. Dollar 88.96 +.10%
10-Yr. T-note Yield 4.17% +1.45%
VIX 14.91 unch.
Put/Call 1.02 -1.92%
NYSE Arms .88 -8.33%

Market Movers
TASR +14.2% on short squeeze.
GPS +5.1% on better-than-expected same-store-sales for August.
CHS -6.2% after disappointing August sales and muted guidance.
PLCE +11.8% after strong August sales report.
AEOS +5.8% after strong August sales, boosting 3Q guidance and initiating dividend.
MLI +8.2% after saying it will pay a one-time dividend of $6.50 in cash and $8.50 in 6% bonds for each share.
STGS +5.4% after strong August sales report.
ROST +8.3% after better-than-expected August sales and positive guidance.
VTS -15.3% after saying it will delay reporting fourth-quarter earnings as it reviews whether depreciation of equipment was accounted for properly.
ARO -3.6% after August sales didn't meet optimistic expectations.

Economic Data
Final 2Q Non-farm Productivity rose 2.5% versus estimates of a 2.7% gain and a prior estimate of 2.9%.
Final 2Q Unit Labor Costs rose 1.8% versus estimates of a 2.0% rise and a prior estimate of 1.9%.
Initial Jobless Claims for last week were 362K versus estimates of 340K and 343K the prior week.
Continuing Claims were 2882K versus estimates of 2880K and a downwardly revised 2887K prior.
Factory Orders for July rose 1.3% versus estimates of a 1.1% increase and an upwardly revised 1.2% gain in June.

Recommendations
Goldman Sachs reiterated Underperform on DPH, VTS and GM. Goldman reiterated Outperform on BSX, WMT, BBY, WAG and CAL. Citi SmithBarney reiterated Buy on CSGS, target $18.50. Legg Mason raised MCBI to Buy, target $18. Thomas Weisel reiterated Outperform on AUXL, target $12. AEOS raised to Sector Outperform at CIBC, target $46. MRO raised to Outperform at Morgan Stanley. SLB raised to Outperform at CSFB, target $76. NE raised to Outperform at CSFB, target $53. FST raised to Outperform at CSFB, target $38. AHC raised to Outperform at CSFB, target $93. WYNN raised to Buy at Bank of America, target $48. PAS cut to Underweight at JP Morgan. MOGN raised to Outperform at Bear Stearns.

Mid-day News
U.S. stocks are modestly higher mid-day on a better-than-expected economic report and declining domestic terrorism fears. Online job postings, as measured by the Monster Employment Index, showed a healthy gain in August, reversing the modest month-to-month decline seen in July, Bloomberg reported. Retired Army General Tommy Franks, who was commander in chief of the U.S. Central Command during the invasions of Iraq and Afghanistan, endorsed President Bush for re-election, the Washington Post reported. France implemented its ban on the Islamic headscarf and other "conspicuous" signs of religious belief in state schools for the first time today as classes resumed for the academic year, Agence France-Presse reported. Bank of America CEO said the company will move one of its four main units to Boston, the Boston Globe reported. News Corp.'s Fox News Channel drew a bigger audience than any of the U.S. broadcast networks for the first time ever during Tuesday's coverage of the Republican Convention, the LA Times reported. California's Richmond City Council voted to proceed with plans to sell Point Molate to a casino developer, a move that enraged opponents including ChevronTexaco, the San Francisco Chronicle said. Hurricane Frances struck the southeast Bahamas today and moved closer to Florida as hundreds of thousands of residents along the state's coast prepared to evacuate their homes, Bloomberg said. Terrorists holding more than 300 hostages at a school in southern Russia released some women and children soon after talks to end the crisis resumed, the North Ossetian government said. Crude oil is rising for a second day on reports of a pipeline fire in Iraq and after Russia's largest oil exporter, OAO Yukos Oil, said it may cut output, Bloomberg reported. Nortel said it won't have financial statements for last year and the first half of 2004 ready until the end of October, a month later than planned, Bloomberg said. U.S. factory orders beat economists' expectations, rising in July by the most in four months, reflecting increased demand for commercial aircraft, appliances and business equipment, Bloomberg reported.

BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my healthcare, internet and alternative energy longs are being offset by declines in my retail and RFID-related longs. I have not traded today and the Portfolio is still 125% net long. I expect U.S. stocks to rise modestly into the close in anticipation of pro-business political rhetoric, subsiding terrorism fears and short-covering.