Mid-day Update

S&P 500 1,118.50 +.20%
NASDAQ 1,865.69 +.82%

Leading Sectors
Semis +5.06%
Iron/Steel +3.23%
Networking +2.44%

Lagging Sectors
Drugs -.62%
Fashion -.83%
Retail -1.14%

Other
Crude Oil 44.40 +3.81%
Natural Gas 4.64 +.30%
Gold 400.40 -.25%
Base Metals 106.45 -.33%
U.S. Dollar 88.85 +.09%
10-Yr. T-note Yield 4.17% +.37%
VIX 13.92 -1.0%
Put/Call .98 -6.67%
NYSE Arms .88 -33.33%

Market Movers
TXN +6.8% after raising 3Q earnings forecast and lowering 3Q revenue outlook.
ICPT +6.0% after saying Fidelity National Financial(FNF) agreed to buy it for $408 million.
TZOO +12.85% on continuing short-squeeze.
DIOD +18.9% on positive 3Q guidance.
NUE +5.88% after boosting 3Q guidance substantially, announcing 2-for-1 split, boosting dividend and UBS upgrade to Buy.
CBRL +8.1% after saying it settle a lawsuit with the NAACP and making positive comments on 1Q.
RCII -14.2% after lowering 3Q/04 outlook.
*Steel stocks up across the board on NUE report.
*Semis up across the board on positive comments by NOK, MOT, TXN, NSM.

Economic Data
Import Price Index for August rose 1.7% versus estimates of a .6% increase and a .3% increase in July.
Initial Jobless Claims for last week were 319K versus estimates of 345K and 363K prior.
Continuing Claims were 2898K versus estimates of 2868K and 2878K prior.
Wholesale Inventories for July rose 1.3% versus estimates of a .6% increase and a 1.1% rise in June.

Recommendations
BLL cut to Underperform at CSFB, target $37.50. MRVL raised to Buy at UBS, target $30. TXN reiterated Sell at Merrill Lynch. NUE rated Buy at UBS, target $98. CMVT reiterated Buy at Merrill Lynch. ACDO raised to Outperform at CSFB, target $29. TIN downgraded to Underperform at CSFB, target $63. Goldman reiterated Outperform on DD, target $53. Goldman Reiterated Outperform on PFGC, AET, SANM, GLW and AMGN. Goldman reiterated Attractive view of metals, favorites are N, AA, AL, NEM and PDG. Citi SmithBarney downgraded REITs, sees 10-15% correction. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on JNPR, target $32.50. Citi reiterated Sell on PGN, target $38.50. Citi reiterated Buy on NMG/A, target $68.

Mid-day News
U.S. stocks are mixed mid-day as strength in the technology sector is offsetting weakness related to energy oil prices. Long-term institutional investors such as pension funds, insurance companies and universities are investing twice as much in commodities as hedge funds, the Wall Street Journal reported. Electronic Arts and AOL have entered the video games market for fantasy sports leagues, the Wall Street Journal reported. Independent investment research executives are lobbying the SEC for the use of brokerage commissions to pay for independent research, the Wall Street Journal reported. New Jersey created three areas where technology start-up companies can qualify for tax credits and other assistance to bolster economic growth, the Star-Ledger reported. Ken Jennings, the "Jeopardy!" champion who won about $2.5 million, breaking records for the most money won on the TV quiz show, lost during his 75th appearance, Bloomberg reported. The International Energy Agency, the oil adviser to 26 industrialized nations, said prices might fall below $40/bbl. because consumers are "well supplied" with crude and inventories are rising, Bloomberg reported. Nokia boosted its forecasts for third-quarter earnings and sales as shipments of cellular phones exceeded expectations, Bloomberg reported. U.S. initial jobless claims plunged last week by the most since December 2001, reflecting a decline in the number of filings by Floridians in the aftermath of Hurricane Charley, Bloomberg reported. U.S. interest rates must rise to stay ahead of inflation and keep "unintended consequences" from creeping into an economy that's regaining momentum lost over the past few months, said Jack Guynn, president of the Federal Reserve Bank of Atlanta. National Semiconductor, which makes chips that boost battery life in mobile electronics, said first-quarter profit increased nearly 400% and sales rose, Bloomberg said. Crude oil in NY is rising after the Energy Department reported that U.S. inventories declined more than expected, Bloomberg reported. Hurricane Ivan, packing winds of 160 mph, moved across the Caribbean Sea toward Jamaica on a path that may make it the third hurricane to hit Florida in a month, prompting authorities to tell residents and tourists in the Keys to evacuate the island chain, Bloomberg reported.

BOTTOM LINE: The Portfolio is substantially higher mid-day as my homebuilding, internet, semi-equipment and education longs are rising. I added a few more technology longs this morning, bringing the Portfolio's market exposure to 125% net long. One of my new longs is BRCM and I am using a $26 stop-loss on this position. The market continues to consolidate recent gains in a very orderly fashion with a number of stocks making new highs and a healthy advance/decline line, notwithstanding a move higher in crude prices. It is also a big positive for the psychology of the market that the technology sector, specifically semis, seems to have stabilized. On the negative side, measures of investor anxiety are falling once again. I had hoped these indicators would move higher before the 9/11 anniversary. I expect U.S. stocks to rise modestly into the close on short-covering in the technology sector.