NASDAQ 2,121.58 -1.42%
Leading Sectors
Oil Service +.90%
Energy +.55%
Restaurants +.50%
Lagging Sectors
Defense -3.12%
Semis -3.18%
Airlines -5.03%
Other
Crude Oil 43.65 +3.63%
Natural Gas 5.94 +2.59%
Gold 428.50 -.28%
Base Metals 117.17 -6.76%
U.S. Dollar 82.36 +1.30%
10-Yr. T-note Yield 4.24% +.69%
VIX 14.01 -.50%
Put/Call .65 -14.47%
NYSE Arms 1.53 +15.04%
Market Movers
AMZN -5.7% on Citi SmithBarney downgrade to Sell.
KVHI +11.7% on Janco Buy rating.
ROV +14.0% after agreeing to buy lawn-and-garden products manufacturer United Industries for $475 million.
TONS +11% on short-squeeze.
LPNT +5.2% on Bear Stearns upgrade to Outperform.
SONC +6.68% after beating 1Q estimates and reiterating 2Q guidance.
CHIR +4.7% on Deutsche Bank upgrade to Buy.
TCNO +9.94% after agreeing to be acquired by UGS PLM Solutions for $227.7 million.
RDA +9.96% after saying it paid down approximately $200 million in debt in the Fiscal 2005 second quarter.
BCSI +7.9% on Pacific Growth upgrade to Overweight.
RFIL -18.7% on profit-taking after yesterday’s gains.
NGPS -17.57% on profit-taking.
ZOLL -13.22% after cutting 1Q and ’05 estimates.
VLTR -11.36% on profit-taking.
DRIV -8.95% on profit-taking and AMZN downgrade.
Economic Data
Factory Orders for November rose 1.2% versus estimates of 1.0% and an upwardly revised rise of .9% in October.
Recommendations
-Goldman Sachs: Reiterated Outperform on CAL and WAG.
-Citi SmithBarney: Cut AMZN to Sell, target $40.
-CSFB: Added LLY to Focus List. Removed GCI from Focus List.
-UBS: Downgraded DPH to Reduce, target $6. Rated BMCS Reduce.
-Bear Stearns: Cut UNP to Underperform, target $65. Raised LPNT to Outperform, target $43
-Deutsche Bank: Raised CHIR to Buy, target $42.
-CIBC: Downgraded KNTA to Sector Underperform.
-Morgan Stanley: Rated IM, TECD Underweight.
Mid-day News
U.S. stocks are lower mid-day on higher energy prices/interest rates, profit-taking and weakness in technology shares. Morgan Stanley will lease space in lower Manhattan, returning to the area for the first time since 2001, the NY Times reported. Motorola is installing phone headsets into motorcycle helmets and ski apparel, enabling people to ski or drive while talking, the Wall Street Journal reported. Walt Disney, GE’s NBC and News Corp.’s Fox plan to roll racier and more complex television serials in the next few weeks to replace programs that flopped in the fall, the Wall Street Journal reported. The number of US companies increasing dividends rose 7.2% last year, buoyed by cash flows and a change in tax law, the NY Times reported. Job prospects for graduating college seniors are improving as the US economy improves, the Wall Street Journal reported. The US Department of Homeland Security has met a congressional deadline to establish a new fingerprint identification system at the nation’s 50 busiest land ports of entry, the Washington Times said. O’Hare International Airport handled a record 992,471 flights in 2004 as traffic from smaller jets continues to increase, the Chicago Tribune said. New Jersey Acting Governor Codey will propose using $500 million in state funds to invest in stem cell research, the Star-Ledger reported. A shareholder lawsuit accused Krispy Kreme Doughnuts of doubling shipments to wholesalers at the end of quarters to boost its sales, the AP reported. The pharmaceutical industry is starting a program that will help poor New Jersey residents get prescription drugs at discount prices or for free, the Star-Ledger reported. DaimlerChrysler AG and competitors claim steel companies including ThyssenKrupp AG are charging too much for the metal they supply to Germany’s car industry, Capital reported. Priceline.com could be the target of a takeover, an Internet analyst at S&P told CNBC. The Mexican government is distributing a book with safety tips to people planning to cross illegally into the US, the LA Times reported. Krispey Kreme Doughnuts will restate its 2004 earnings amid a federal investigation into its accounting and may default of a $150 million credit line, Bloomberg said. China cut its money supply growth target for 2005 to curb inflation and slow expansion in the world’s fastest-growing major economy, the People’s Bank of China said. The US dollar rose the most since August against the euro after an acceleration in manufacturing growth spurred optimism the US economy will outpace the 12-nation euro region for the fourth straight year, Bloomberg reported. Ford Motor said US vehicle sales rose 1% in December from a year earlier on sales of new cars, while Nissan Motor said sales rose 38%, Bloomberg reported. Crude oil in New York rose on speculation that declining production will make it harder for refiners to meet rising fuel demand, Bloomberg said. Aluminum prices in London plunged the most in more than 17 years and copper fell on speculation that investors are reducing holdings as Chinese demand for metals slows, Bloomberg said. Orders placed with US factories rose in November by the most in four months, paced by improving demand for commercial aircraft and business equipment, Bloomberg said. Sales surged 4.6% in the week after Christmas at US retailers as shoppers bought discounted items and redeemed gift cards, Bloomberg said.
Bottom Line: The Portfolio is lower mid-day on losses in my technology, biotech and security longs. I exited a number of longs this morning, thus leaving the Portfolio 25% net long. The tone of the market is very weak again today as volume is strong and decliners swamp advancers. Rather than just temporary profit-taking, it appears the major indices are in a correction. Investors are worried about a lack of stimuli with slowing global growth. Overcapacity and deflation are still more of a concern than inflation in my opinion. However, Fed comments seem to suggest otherwise, further pressuring shares. Measures of investor anxiety are not yet at levels associated with a trading bottom. My short-term trading indicators are now giving sell signals. I expect US shares to trade mixed into the close.
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