Wednesday, October 05, 2005

Stocks Finish Sharply Lower, Led Down by Commodity Stocks on Increasing Signs of Slowing Demand

Indices
S&P 500 1,196.39 -1.49%
DJIA 10,317.36 -1.19%
NASDAQ 2,103.02 -1.70%
Russell 2000 644.98 -2.84%
DJ Wilshire 5000 11,956.32 -1.66%
S&P Barra Growth 572.28 -1.40%
S&P Barra Value 619.97 -1.57%
Morgan Stanley Consumer 580.90 -1.05%
Morgan Stanley Cyclical 705.44 -1.98%
Morgan Stanley Technology 497.23 -1.25%
Transports 3,623.52 -1.96%
Utilities 415.17 -3.30%
Put/Call 1.01 +29.49%
NYSE Arms 2.18 +60.12%
Volatility(VIX) 14.55 +10.23%
ISE Sentiment 155.00 -34.60%
US Dollar 89.98 -.13%
CRB 328.20 -.46%

Futures Spot Prices
Crude Oil 62.43 -.57%
Unleaded Gasoline 189.35 -.75%
Natural Gas 14.17 -.08%
Heating Oil 200.00 -.73%
Gold 468.10 -.26%
Base Metals 131.84 +1.16%
Copper 178.15 -.28%
10-year US Treasury Yield 4.34% -.45%

Leading Sectors
Restaurants +.11%
Banks -.55%
Insurance -.73%

Lagging Sectors
Oil Service -3.84%
Coal -4.79%
Steel -5.29%

Evening Review
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After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on DHR, GE, MMM, TYC, FDC, NFX and UTX.

Afternoon/Evening Headlines
Bloomberg:
- Crude oil fell after a government report showed that US fuel demand dropped as refinery operating rates plunged because of hurricane Rita.
- Gasoline fell for the fifth straight session on indications that demand is ebbing because of high prices at the pump.
- Apple Computer may introduce a version of the best-selling iPod device that also plays videos.

Financial Times:
- Louisiana will ask the US government for $1 billion to help rebuild its tourism industry as it recovers from damage caused by Hurricane Katrina, citing Angele Davis, the state’s depart of culture, recreation and tourism secretary.
BOTTOM LINE: The Portfolio finished unchanged today as gains in my Energy-related shorts and Steel shorts offset losses in my Semiconductor longs and Medical Information Systems longs. I exited a few of my IWM and QQQQ shorts in the afternoon, thus leaving the Portfolio 25% net long. The tone of the market was very negative today as the advance/decline line finished at session lows, almost every sector fell and volume was above average. Measures of investor anxiety were higher into the close. Overall, today’s market action was negative. I completely disagree with those who say today's sell-off was because of inflation fears. In my opinion, the drop is a result of worries that high commodity prices and a hawkish Fed will greatly hurt the economy. I expect these fears will increase over the coming weeks during earnings pre-announcement season. However, this will set the stage for a very strong year-end rally as commodity prices continue to fall, Fed worries subside and the economy remains healthy.

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