NASDAQ 2,111.23 +.16%
Leading Sectors
HMOs +1.55%
Telecom +.98%
Disk Drives +.87%
Lagging Sectors
Broadcasting -1.19%
Iron/Steel -1.34%
Airlines -5.68%
Other
Crude Oil 43.30 -1.39%
Natural Gas 5.83 -1.22%
Gold 427.30 -.44%
Base Metals 118.72 +1.32%
U.S. Dollar 82.43 -.12%
10-Yr. T-note Yield 4.26% -.64%
VIX 13.35 -4.58%
Put/Call 1.04 +36.84%
NYSE Arms .82 -67.07%
Market Movers
TARR +23.3% after affirming 04 and raising 05 guidance.
EDLG +22.7% after CIT Group agreed to buy it for $19.05/share.
KERX +21.2% after saying its experimental KRX-101 drug for the treatment of kidney damage in diabetics was safe in a study.
TOO +13.0% after raising 4Q guidance.
LCRD +13.2% on optimism over homeland security products.
AFFX +5.9% after pre-announcing 4Q.
JWN +4.2% on strong December same-store-sales.
ANTP -20.1% after saying its backlog of orders fell.
NGPS -10.5% on continued profit-taking.
RGS -9.2% after lowering 2Q and 05 forecasts.
BMHC -11.7% on profit-taking.
ACH -5.7% on worries over falling aluminum prices.
*Airlines down across the board on pricing concerns.
Economic Data
ISM Non-Manufacturing for December rose to 63.1 versus estimates of 61.0 and a reading of 61.3 in November.
Recommendations
-Goldman Sachs: Reiterated Outperform on KO, DO, SVU, CEN and BSX. Reiterated Underperform on LSI and FRX. Said to Buy Jan. 05 $65 calls and Sell Jan. 05 $70 calls on AAPL before next week’s earnings and MacWorld.
-Citi SmithBarney: Downgraded JBX to Sell, target $34. Reiterated Buy on MCD, target $36. Reiterated Buy on PFCB, target $68. Reiterated Buy on SBUX, target $70. Reiterated Buy on SYY, target $42. Reiterated Buy on AINV, target $18. Reiterated Buy on CIT, target $50. Reiterated Buy on F, MGA and BWA. Reiterated Buy on TXT, target $83. Reiterated Buy on INTU, target $54. Reiterated Buy on MCRL, target $13.50. Reiterated Buy on FON, target $27.
-CSFB: Raised CINF to Outperform. Rated AGP Outperform, target $90. Rated NPSP Outperform, target $28. Rated VRTX Outperform, target $16.
-Morgan Stanley: Raised CRM to Overweight, target $21. Rated ASO Overweight, target $26. Rated BEC Overweight, target $77.
-Wells Fargo: Raised AMD to Buy, target $27.
-Lazard Freres: Cut MEDI to Sell, target $21.
-Merrill Lynch: Cut ESPD, DAL, AAI to Sell.
-Banc of America: Raised PG to Buy, target $62. Cut CL to Sell, target $44.
-Raymond James: Raised CCI to Strong Buy, target $19.
Mid-day News
U.S. stocks are mildly higher mid-day on falling interest rates and oil prices. Iraq’s national elections, scheduled for Jan. 30, will be held on time, Prime Minister Allawi said today, according to Agence France-Presse. The Consumer Electronics Show, which holds its media day today and likely will draw 130,000 to the exposition, has attracted a large audience of consumers and executives alike to Las Vegas, the NY Times reported. Morningstar Inc. is the subject of three reviews by regulators after 20 years without scrutiny, the Wall Street Journal reported. United Airlines’ creditors and some banks and unions oppose an agreement the bankrupt airline reached with pilots to terminate employee pension plans in exchange for equity in the carrier, the NY Times reported. The tsunami that struck Asian coastlines last week may cause delays in shipments of coffee, cocoa, sugar and cotton and lead to price increases, the NY Post reported. Pamela Thomas-Graham, the president of CNBC, may resign because of poor ratings, the NY Post reported. IBM and customers including Sony plan to invest $1.9 billion to build a semiconductor plant in Fishkill, NY, Reuters said. Massachusetts companies are optimistic about the economy and may hire more people in 2005, the Boston Globe reported. Sanford Wallace, know as the “Spam King,” agreed to stop sending spyware programs until a federal lawsuit against him is resolved, the AP said. EchoStar Communications will increase monthly subscription rates for satellite television packages by as much as $4 starting next month, the Rocky Mountain News reported. The Bush administration is beginning a campaign to change US laws on frivolous medical-malpractice and class-action lawsuits that raise the cost of healthcare, the Washington Post reported. A three-year rally in global commodity markets is faltering and prices may drop for the next six months or more, Barclays Capital said. Delta Air is cutting domestic air fares by as much as 50% in an effort to win back passengers from low-fare competitors and recover from more than $6 billion in accumulated losses, Bloomberg said. Nordstrom said sales rose 11.7% for the five-week period ending Jan. 1 compared with a year ago, Bloomberg said. Bonds of Halliburton may gain after reaching a $4.7 billion settlement of asbestos-damage claims, allowing two units to emerge from bankruptcy, Bloomberg reported. AIG said it will raise the company’s dividend by two-thirds after profits surged, Bloomberg reported. US services expanded at a stepped-up pace in December, capping a record year for the economy’s largest segment, Bloomberg said. RealNetworks will provide a free radio service to Comcast’s 6.5 million high-speed Internet users to gain customers, Bloomberg reported. Sirius Satellite Radio said it plans to offer a video service in automobiles with Microsoft next year and expects to create several channels with children’s programming, Bloomberg said. GlaxoSmithKline, Novartis and Johnson & Johnson may be potential buyers of Bristol-Myers Squibb’s consumer-products business, which includes the Excedrin and Bufferin headache medicines, Bloomberg reported. Oil prices dropped after a government report showed that US fuel inventories rose last week, signaling that a mild winter is helping ease demand for heating oil, Bloomberg said.
Bottom Line: The Portfolio is slightly higher mid-day as my steel and chemical shorts are declining and my internet longs are rising. I have not traded today and the Portfolio is still 25% net long. The tone of the market is weak again as the advance/decline line remains negative, volume is relatively heavy and small-caps continue to underperform. Measures of investor anxiety are mixed and not at levels normally associated with bottoms. However, an oversold rally could occur at any time. I expect US stocks to rise into the close on short-covering, falling energy prices and declining interest rates.
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