Thursday, March 03, 2005

Mid-day Report

S&P 500 1,208.48 -.13%
Dow 10,810.57 -.02%
NASDAQ 2,054.59 -.62%
Russell 2000 636.38 -.15%
DJ Wilshire 5000 11,906.11 -.15%
S&P Barra Growth 582.20 -.14%
S&P Barra Value 621.89 -.11%
Morgan Stanley Consumer 586.68 -.29%
Morgan Stanley Cyclical 770.08 -.21%
Morgan Stanley Technology 471.52 -.98%
Transports 3,752.18 -.01%
Utilities 353.53 +.02%
Put/Call .79 -1.25%
NYSE Arms 1.04 +14.29%
Volatility(VIX) 12.96 +3.68%
ISE Sentiment 174.00 +13.73%
US Dollar 83.29 +.25%
CRB 307.64 +.32%

Futures Spot Prices
Crude Oil 54.45 +2.64%
Unleaded Gasoline 152.15 +2.57%
Natural Gas 6.71 -.03%
Heating Oil 150.50 -.17%
Gold 431.00 -.65%
Base Metals 128.46 +1.43%
Copper 147.55 -.10%
10-year US Treasury Yield 4.38% +.23%

Leading Sectors
Oil Service +2.51%
Energy +1.87%
Airlines +1.40%

Lagging Sectors
Computer Hardware -1.07%
Wireless -1.14%
Semis -1.45%

Market Movers
AAPL -5.6% on profit-taking and worries over competition to iTunes.
CVC -4.59% after Bear Stearns downgrade to Underperform and announcing SEC inquiry into share trading.
TASR +7.56% after saying that US District Court for the Eastern District of Michigan dropped a lawsuit alleging harm from their stun gun.
DSTI +16.64% after saying it introduced a foil with solar cells for use on high altitude airships, winged unmanned aerial vehicles and satellites.
ESRX +7.09% after meeting 4Q estimates and raising 1Q outlook.
UCL +10.3% after a Wall Street Journal report that ChevronTexaco is interested in buying the company.
LDG +9.6% after beating 4Q estimates and raising 1Q outlook.
BEBE +8.43% after beating February same-store-sales substantially.
TECH +7.0% after announcing 2.9M share buyback and Robert Baird upgrade to Outperform.
CVS +5.2% after beating February same-store-sales estimate and raising 1Q outlook.
KSS +4.62% after beating February same-store-sales estimates.
ELN -11.0% after a Merrill Lynch analyst cut future sales estimates and said Tysabri may be limited to patients who have failed on other MS treatments as a safety precaution if it returns to market.
NKTR -8.82% after an SG Cowen analyst said it may have trouble getting FDA approval for Exubera.
EAGL -11.2% after missing 4Q estimates and widening 05 guidance.
SPW -5.6% after missing 4Q estimates.
LSCP -8.06% after beating 4Q estimates and lowering 05 outlook.
LRCX -5.7% on worries over DRAM exposure.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
- Final 4Q Non-farm Productivity rose 2.1% versus estimates of a 1.5% increase and prior estimates of a .8% gain.
- Final 4Q Unit Labor Costs rose 1.3% versus estimates of a 1.8% gain and a prior estimate of a 2.3% rise.
- Initial Jobless Claims for last week fell to 310K versus estimates of 310K and 311K the prior week.
-Continuing Claims rose to 2672K versus estimates of 2658K and 2660K prior.
- ISM Non-Manufacturing for February fell to 59.8 versus estimates of 60.0 and a reading of 59.2 in January.

- Goldman Sachs: Reiterated Outperform on TPX, COH, UTX, SYK, COH, NKE, LIZ, PMMAY and INTC. Raised TAP to Outperform.
- Smith Barney: Upgraded CMS to Buy, target $14.25. Reiterated Buy on APD, target $69. Reiterated Buy on CMS, target $14.25. Reiterated Buy on INTC, target $26.50. Reiterated Buy on FCS, target $19. Reiterated Buy on MXIM, target $52. Reiterated Buy on NMG/A, target $92.
- JP Morgan: Rated NAT Underweight.
- Oppenheimer: Raised AA and AL to Sector Outperform.
- Bear Stearns: Downgraded CVC to Underperform.
- Raymond James: Raised THE to Strong Buy, target $42.

Mid-day News
US stocks are modestly lower mid-day on continuing worries over high energy prices. A weakness in the US dollar is more likely to cause economic growth than a financial crisis, the Wall Street Journal reported, citing a Fed study. President Karzai appointed Afghanistan’s first female provincial governor, in a country where the former regime barred women form taking jobs outside their homes, AFP reported. Liberty Media Chairman Malone’s acquisition of $900 million in shares in Rupert Murdoch’s News Corp. may prompt the two companies to set up a separate media entity from the assets of each company, the Wall Street Journal reported. Small oil companies are drilling within the Houston city limits as crude oil prices have remained high, the NY Times reported. US hedge fund managers have spent hundreds of millions of dollars on art works in the past few years, the NY Times reported. Oil prices are unlikely to jump to $80/bbl. any time soon unless a disruption cuts as much as 2 million barrels a day from world supply, the acting secretary general of OPEC said, Al-Qabas reported. GE’s NBC Universal may take over Microsoft’s stake in MSNBC, the NY Post reported. The US Financial Accounting Standards Board softened a proposal that would force companies to make changes in accounting principles retroactively, the Wall Street Journal said. Stock Car racing is joining with hip-hop and rap artists to attract more minority fans to its racetracks, the Wall Street Journal reported. Ibrahim Jafari of the United Iraqi Alliance, a leading Shiite Muslim politician, is seeking Kurdish support to become prime minister of Iraq, the Washington Post reported. Russian, Saudi Arabia and Germany joined the US and France in calling for Syria to remove its military forces from neighboring Lebanon, Reuters reported. US states such as Wisconsin and Arizona may impose more limits on police use of stun guns, which temporarily immobilize suspects by shocking them with electrical charges, USA Today reported. Saudi Prince Alwaleed bin Talal, the world’s fourth-riches man, said he has no plans to sell any of his stake in Hewlett-Packard and liked the computer maker’s prospects, CNBC reported. FedEx said it won tentative approval from the US to add three weekly flights to China, Bloomberg reported. Wal-Mart Stores said February sales at US stores open at least a year rose 4.1%, the most in nine months, as shoppers began spending income tax refunds, Bloomberg said. The number of American filing first-time claims for unemployment insurance fell for the fourth time in five weeks, suggesting improvement in the labor market, Bloomberg reported. The productivity of US workers grew at a 2.1% rate from October through December, faster than previously estimated, and unit labor costs slowed, Bloomberg said. Bank of America agreed to pay $460.5 million to settle claims it helped issue $15.4 billion in WorldCom bonds which it should have know better, Bloomberg said. The US tax code is “overly complicated” and needs to be recast with a focus on broadening the revenue base and lowering rates, Fed Chairman Greenspan told a presidential tax panel. The US dollar traded near the strongest in 10 days against the euro after a report showed services industries in the US expanded at a faster pace and the European Central Bank cut its growth forecast, Bloomberg reported. Crude oil is surging above $55/bbl. in NY, less than a $1 short of a record on strong US economic data, Bloomberg reported.

BOTTOM LINE: The Portfolio higher mid-day on gains in my alternative energy, retail and steel longs. I have not traded today, thus the Portfolio’s market exposure remains 100% net long. The tone of the market is modestly negative as the advance/decline line is slightly lower, sector performance is mixed and volume is decent. Losses are mainly confined to the technology sector. Measures of investor anxiety are mixed. The downward revision to 4Q unit labor costs is a big positive as over two-thirds of inflation is comprised of this measure. Considering oil is trading near highs, the market’s performance is very good today and it appears as though the Bears are dropping the ball once again. I expect US stocks to trade higher from current levels into the close as optimism over US economic growth, short covering and stabilizing long-term interest rates offsets worries over stubbornly high energy prices.

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