NASDAQ 2,087.77 -.23%
Leading Sectors
Oil Service +2.17%
Iron/Steel +2.06%
Boxmakers +1.92%
Lagging Sectors
Drugs -.91%
Telecom -1.21%
Airlines -2.05%
Other
Crude Oil 48.00 +3.52%
Natural Gas 6.41 +7.69%
Gold 425.00 -.38%
Base Metals 119.34 -.95%
U.S. Dollar 82.44 +.33%
10-Yr. T-note Yield 4.19% -.92%
VIX 12.53 -.24%
Put/Call .75 -17.58%
NYSE Arms 1.23 +48.19%
ISE Sentiment 139.00 -16.27%
Market Movers
AAPL +8.2% after substantially beating 1Q estimates, raising 2Q outlook and multiple upgrades.
TASR +25.1% after the US Defense Department said it supports Taser’s argument its stun guns are generally safe and a study in the Pacing and Clinical Electrophysiology Journal states its guns are unlikely to cause heart problems.
VRST +55.9% after saying it agreed to be purchased by Cadence Design for $285.7 million in cash.
HLIT +20.2% after boosting 4Q sales estimates.
LCBM +26.3% after beating 2Q estimates and raising ’05 guidance.
TKR +9.2% after raising 4Q and 04 estimates.
ABMD -16.4% after lowering 3Q estimates.
KCP -8.08% after cutting 4Q estimates and re-affirming 05 guidance.
Economic Data
Import Price Index for December fell 1.3% versus estimates of a .3% decrease and a downwardly revised .2% fall in November.
Advance Retail Sales for December rose 1.2% versus estimates of a 1.1% increase and a .1% gain in November.
Retail Sales Less Autos for December rose .3% versus estimates of a .4% increase and a .4% gain in November.
Initial Jobless Claims for last week were 367K versus estimates of 340K and 357K the prior week.
Continuing Claims were 2631K versus estimates of 2775K and 2850K prior.
Recommendations
-Goldman Sachs: Reiterated Outperform on STZ, FSH, AMX, BLS, CZN, MCK and SBC. Reiterated Underperform on MKL, FHCC, CVH, T and LVLT.
-Banc of America: Upgraded AAPL to Buy, target $85. Rated CHD Sell, target $28.
-JP Morgan: Reiterated Overweight on RL, target $49. Cut KWD to Underweight. Raised FOSL to Overweight.
UBS: Rated AFR Buy, target $16.50. Rated GR Buy, target $37.
CSFB: Rated DTV Outperform, target $20. Rated FON Outperform, target $28. Rated NXTL Outperform, target $35. Rated T Underperform, target $15.
Prudential: Raised VCI to Overweight, target $42. Raised AAPL to Overweight, target $93.
Legg Mason: Rated IWA Buy, target $22.50.
Merrill Lynch: Raised AXCA to Buy, target $25.
Mid-day News
U.S. stocks are modestly lower mid-day as energy prices rise and worries continue over slowing growth persist. Charles Schwab lowered the asset requirement for avoiding service fees on some accounts, in hopes of attracting more clients, the Wall Street Journal said. Ubisoft Entertainment SA, make of “Tom Clancy’s Splinter Cell” video game, is considering several defenses against a possible takeover by Electronic Arts, the Wall Street Journal reported. US company directors have become nervous that agreements by former directors of WorldCom and Enron to pay $31 million to settle suits over accountability for corporate frauds may increase their own liabilities, the Wall Street Journal reported. GM’s finance unit is altering its borrowing plans in case its credit rating falls below investment grade, the Financial Times reported. Cendant Corp. is speeding up plans to sell its marketing services unit for about $3 billion, the NY Post reported. China’s steel exports more than doubled to a record 14.23 million metric tons in 2004 from a year earlier, the Tex Report said. EBay plans to increase some of the prices it charges on its EBay and EBay Motors Web sites on Feb. 18 as it experiences higher demand, the Wall Street Journal reported. Georgia’s Cobb County school system was ordered to remove stickers place inside science textbooks that say evolution is a “theory, not a fact,” the Atlanta Journal Constitution reported. Wal-Mart Stores will begin an advertising campaign to counter criticism that it pays workers too little, Bloomberg reported. Owens Corning, driven into bankruptcy by personal injury lawsuits, is set to find out what it will cost to settle hundreds of thousands of claims, Bloomberg reported. Bayer AG, Germany’s second-largest drug company, will pare its research and development budget for a third straight year to the lowest since 1997, Bloomberg said. The euro fell against the dollar and yen after European Central Bank President Trichet said inflation pressures in the 12-nation region have diminished, Bloomberg said. Merk’s Mevacor cholesterol drug should require a doctor’s prescription to ensure an effective dose and prevent kidney damage, physicians said before a US government meeting today on the company’s request to sell the medication over the counter, Bloomberg reported. RadioShack Corp. said Leonard Roberts will step aside as CEO in May when President and COO Edmondson takes over, Bloomberg said. US Homeland Security Chief Ridge said the country will begin a pilot program using eye scans to expedite travelers through NY’s John F. Kennedy airport as it looks to limit security checks on low-risk flyers, Bloomberg reported. Newly elected Palestinian Authority President Abbas said he’s serious about implementing the US-backed “road map” to peace with Israel, Bloomberg said. US Treasury notes rose after government reports showed the prices of goods imported to the US fell and first-time jobless claims rose, Bloomberg reported. Nine vendors for a US unit of Netherlands-based Royal Ahold NV, the world’s fourth largest retailer, were charged with helping company executives inflate earnings by more than $800 million, Bloomberg said. Crude oil is rising to a six-week high on forecasts that colder weather will move into the eastern US next week, bolstering demand for heating fuel, Bloomberg said. Sales at US retailers rose 1.2% in December, the most in three months, as incentives boosted auto purchases and lower gasoline prices left shoppers with more to spend on furniture and holiday gifts, Bloomberg reported.
Bottom Line: The Portfolio is higher mid-day on gains in my homebuilding and wireless longs. I have not traded and the Portfolio is still 75% net long. The tone of the market is improved today, notwithstanding small losses in the major indices. The advance/decline line is negative, however much improved from recent sell-offs and a number of sectors are gaining. Small-caps and commodity-related stocks are outperforming. I expect crude prices to top over the next few days and begin heading to around $35/bbl. sometime in the first half of 05 on ample supply, decelerating demand and a stabilizing US dollar. I look for US stocks to trade modestly higher into the close.
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