Wednesday, May 10, 2006

Stocks Finish Near Session Lows as Fed Hikes Rates for 16th Time

S&P 500 1,322.85 -.17%
DJIA 11,642.65 +.02%
NASDAQ 2,320.74 -.75%
Russell 2000 775.94 -.61%
Wilshire 5000 13,394.86 -.20%
S&P Barra Growth 610.48 -.30%
S&P Barra Value 710.78 -.05%
Morgan Stanley Consumer 616.99 -.22%
Morgan Stanley Cyclical 889.37 +.13%
Morgan Stanley Technology 538.35 -1.22%
Transports 4,991.24 -.15%
Utilities 408.70 +.69%
Put/Call .82 -1.20%
NYSE Arms 1.04 +18.57%
Volatility(VIX) 11.80 -1.58%
ISE Sentiment 151.00 -26.34%
US Dollar 84.47 -.42%
CRB 360.21 +1.49%

Futures Spot Prices
Crude Oil 72.15 +.03%
Unleaded Gasoline 216.60 -.16%
Natural Gas 6.90 unch.
Heating Oil 206.26 -.10%
Gold 709.30 +.54%
Base Metals 244.96 +3.60%
Copper 371.00 +.53%
10-year US Treasury Yield 5.12% +.04%

Leading Sectors
HMOs +1.88%
Homebuilders +.79%
Gold & Silver +.69%

Lagging Sectors
Biotech -1.35%
Wireless -1.72%
Semis -2.49%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Morgan Keegan:
- Upgraded COGT to Outperform.

Afternoon/Evening Headlines
- The US government’s April budget surplus rose to $118.9 billion, the largest for any month since 2001, as the fastest economic growth in more than two years buoyed tax revenue. The US budget deficit in fiscal 2005 narrowed for the first time since the stock market bubble burst and tax receipts began plunging in 2000. It finished 2005 at 2.6% of GDP, around the long-term average. The budget deficit is projected to come in at 2.2% of US GDP this year.
- Morgan Stanley(MS) violated federal law by destroying e-mails, comprising probes into IPOs and analysts’ research, the SEC said.
- Federal Reserve policy makers raised the main US interest rate to 5% and suggested they may not be finished with the nearly two-year run of increases.
- Oil rose above $72/bbl. in NY after the EIA reported US gasoline consumption increased last week. However, gasoline demand has now declined .1% over the past 4 weeks.
- The US Treasury today declined to brand China a manipulator of its currency.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Retail longs and Semi longs. I added to my (IWM) and (QQQQ) shorts in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished lower, sector performance was mostly negative and volume was above average. Measures of investor anxiety were mixed into the close. Overall, today's market performance was bearish. Stocks temporarily rallied after the 10-year yield reversed lower, but could not maintain gains, which is a negative. It is also a negative that the U.S. dollar did not rally on the FOMC policy statement. Finally, a number of market-leading stocks remained weak throughout the day.

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