Stocks Finish Near Session Lows on Rise in Long-term Rates Ahead of Inflation Data

Indices
S&P 500 1,493.00 -1.07%
DJIA 13,295.01 -.97%
NASDAQ 2,549.77 -.87%
Russell 2000 821.72 -1.38%
Wilshire 5000 15,043.88 -1.06%
Russell 1000 Growth 590.02 -.95%
Russell 1000 Value 857.09 -1.15%
Morgan Stanley Consumer 729.34 -.79%
Morgan Stanley Cyclical 1,054.30 -1.09%
Morgan Stanley Technology 603.83 -1.15%
Transports 4,994.82 -1.92%
Utilities 488.16 -1.38%
MSCI Emerging Markets 125.66 -1.06%

Sentiment/Internals
Total Put/Call 1.10 +1.85%
NYSE Arms 1.18 +28.44%
Volatility(VIX) 16.67 +13.32%
ISE Sentiment 107.0 -18.94%

Futures Spot Prices
Crude Oil 65.26 -1.08%
Reformulated Gasoline 213.10 -.94%
Natural Gas 7.71 +1.34%
Heating Oil 191.40 -.78%
Gold 651.20 -1.18%
Base Metals 252.22 -1.88%
Copper 326.80 -2.62%

Economy
10-year US Treasury Yield 5.27% +12 basis points
US Dollar 82.94 +.27%
CRB Index 309.71 -.75%

Leading Sectors
Restaurants -.10%
Computer Services -.54%
Medical Equipment -.56%

Lagging Sectors
Coal -2.02%
Homebuilders -2.24%
Steel -2.38%

Evening Review
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Afternoon Recommendations
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Congress should more than double tax rates for many hedge fund managers and private equity partners who classify their pay as capital gains, former Clinton administration Treasury secretaries Robert Rubin and Lawrence Summers said.
- Yields on benchmark 10-year Treasuries rose to the highest in five years as signs of accelerating global growth raised concern central banks will increase borrowing costs.
- The US dollar posted its longest rally against the euro since October as speculation increased that the Federal Reserve will hold interest rates steady this year.
- Intercontinental Exchange Inc.(ICE), one of two suitors for the Chicago Board of Trade(BOT), said it will submit a revised merger offer for the Chicago company that included a $2.5 billion cash component.
- Nickel fell to the lowest price in more than three months in London on signs that demand for the metal used in stainless steel probably slowed while supply increased.

Nikkei English News:
- Honda Motor(HON) plans to market passenger vehicles with “clean,” fuel-efficient diesel engines in the US and Japan by 2009 and possibly as early as 2008.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Software longs and Semi longs. I added to my (TLT) long and (IWM)/(QQQQ) hedges in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was very negative today as the advance/decline line finished substantially lower, every sector declined and volume was above average. Measures of investor anxiety were slightly above average into the close. Today's overall market action was bearish. Commodity, transport and real estate-related stocks were especially weak today. Many growth stock leaders held up very well despite today's losses in the major averages. As well, there were an unusual number of stocks on my monitor pages higher today considering the losses. Trading was sloppy throughout the day as it appeared large asset allocation programs were at play. The U.S. Dollar index finished near session highs as gold and TIPS finished near session lows. This remains very noteworthy considering the rise in the 10-year yield. The Nikkei futures are indicating about an 85-point drop on the open in Japan.