NASDAQ 2,078.78 -.73%
Leading Sectors
Oil Service +.88%
Utilities +.28%
Energy +.15%
Lagging Sectors
Retail -1.47%
Airlines -1.82%
Homebuilders -1.84%
Other
Crude Oil 46.70 -.36%
Natural Gas 7.20 -3.17%
Gold 440.40 +.71%
Base Metals 117.99 -.03%
U.S. Dollar 83.75 -.30%
10-Yr. T-note Yield 4.21% +.64%
VIX 13.36 -.15%
Put/Call .60 +11.11%
NYSE Arms 1.48 +38.32%
Market Movers
RMBS +17.1% after a federal judge issued a ruling defining terms in a patent dispute with Hynix Semiconductor.
GOOG -4.3% after a lock-up on 39.1 million insider shares expired.
CTMI +30.0% after beating 4Q estimates substantially and raising 1Q guidance.
ELOS +5.4% after announcing that its Vela system for non-invasive cellulite treatment has received Medical CE Mark 0344 approval.
GGC +5.7% after CSFB upgrade to Outperform.
IFIN +7.9% after beating 3Q estimates and giving strong 04 outlook.
FNF +9.3% on speculation the company may draw bids of $9 billion from Thomas H. Lee Partners and Texas Pacific.
TSRA +13.1% after agreeing to settle a lawsuit with Samsung.
NILE -12.1% after announcing the intention of insiders to sell.
INSP -9.3% on Raymond James downgrade to Outperform.
XIDE -19.3% after missing 2Q estimates.
ESE -6.8% after beating 4Q estimates and lowering 05 guidance.
Economic Data
Producer Price Index for October rose 1.7% versus estimates of a .6% increase and a .1% gain in September.
PPI Ex Food & Energy for October rose .3% versus estimates of a .1% gain and a .3% rise in September.
Recommendations
-Goldman Sachs reiterated Outperform on CSCO, HD and WMT.
-Citi SmithBarney reiterated Buy on FNM, target $81. Citi reiterated Sell on FRO, target $28. Citi reiterated Buy on MSFT, target $32. Citi reiterated Buy on PRE, target $69. Citi reiterated Buy on HD, target $70. Citi reiterated Buy on GE, target $38.
-JP Morgan raised ARM to Overweight.
-Banc of America rated PLB Sell, target $14. BofA rated ILSE Buy, target $22.
-Prudential rated AAP Overweight, target $44. Pru rated ORLY Overweight, target $48. Pru rated AN Underweight, target $15.
-CSFB raised GGC to Outperform, target $64. CSFB raised NCX to Outperform, target $52.
Mid-day News
U.S. stocks are quietly lower mid-day on profit-taking and a higher inflation reading. Take-Two Interactive Software's ESPN sports games have been able to gain market share against better-known titles from Electronic Arts, including its Madden football franchise, the Wall Street Journal reported. Commerce One is set to sell 39 patents covering aspects of Internet transactions in a bankruptcy court auction next month, the NY Times reported. Side air bags and an automatic brake feature are the two most important car safety features, the NY Times reported, citing recent studies. IBM will help finance a project to use the spare power of personal computers for research on AIDS, cancer and other diseases, the NY Times said. The number of births among U.S. girls ages 10-14 fell 38% from 1994 to 2002 to the lowest level in almost 60 years, the AP reported. U.S. Homeland Security Dept. Secretary Tom Ridge will resign, and Health and Human Services Secretary Tommy Thompson will also step down, Fox News reported. CIT Group plans to expand its international business and improve the U.S. leasing company's brand and name recognition in the U.K. and Europe, the Star-Ledger reported. Janus Capital plans to introduce three funds next year, including the Janus Research Fund in February, to win back customers and attract new ones, Reuters reported. Hedge funds attracted $46.6 billion during the first nine months of this year and more than half the money went to middlemen who don't personally oversee the funds, Bloomberg reported. Home Depot said third-quarter earnings climbed 15%, topping estimates, because of demand for installation services and higher sales during hurricane season, Bloomberg said. Wal-Mart said third-quarter profit rose 13%, helped by a tax credit, Bloomberg reported. International investors increased their holdings of U.S. assets in September by $63.4 billion, the most since June, as foreign demand for corporate bonds and U.S. Treasury securities rose, Bloomberg reported. SBC Communications will begin a residential Internet-based phone service in early 2005 to keep customers from switching to other carriers, Bloomberg said. Prices paid to U.S. producers rose 1.7% last month, the biggest jump in 14 years, as energy prices rose, Bloomberg said. Gasoline futures are falling for a third day in four amid speculation that rising refinery production will keep the U.S. amply supplied with fuel, Bloomberg said.
Bottom Line: The Portfolio is lower mid-day on declines in my internet, retail and Chinese ADR longs. I have not traded today and the Portfolio is still 125% net long. While the tone of the market is mildly negative today, volume is lighter and the advance/decline line isn't that bad. The PPI was likely just an excuse for profit-taking after a large run. Measures of inflation, while rising in the short-run, should begin decelerating again towards year-end on a decline in energy prices. The muted reaction by the bond market echoes this view. I expect U.S. equities to rise into the close on short-covering, bargain-hunting and declining energy prices.
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