Stocks Finish at Session Lows on Low Volume as Credit Fears Resurface

Indices
S&P 500 1,432.36 -2.35%
DJIA 13,041.85 -2.10%
NASDAQ 2,500.64 -2.37%
Russell 2000 767.83 -2.74%
Wilshire 5000 14,382.27 -2.34%
Russell 1000 Growth 574.52 -2.16%
Russell 1000 Value 804.13 -2.52%
Morgan Stanley Consumer 701.60 -1.82%
Morgan Stanley Cyclical 991.80 -3.17%
Morgan Stanley Technology 610.63 -2.41%
Transports 4732.98 -2.75%
Utilities 477.01 -1.20%
MSCI Emerging Markets 128.04 -2.13%

Sentiment/Internals
Total Put/Call 1.29 +35.79%
NYSE Arms 3.87 +184.17%
Volatility(VIX) 26.30 +15.8%
ISE Sentiment 92.0 -30.83%

Futures Spot Prices
Crude Oil 71.60 -.51%
Reformulated Gasoline 201.90 -1.04%
Natural Gas 5.67 +5.45%
Heating Oil 199.23 -.87%
Gold 671.80 -.65%
Base Metals 236.56 +1.12%
Copper 329.0 -1.97%

Economy
10-year US Treasury Yield 4.51% -5 basis points
US Dollar 80.84 +.13%
CRB Index 304.44 -.38%

Leading Sectors
HMOs -.39%
Gaming -1.08%
Disk Drives -1.27%

Lagging Sectors
Engineering & Construction -3.6%
Steel -4.45%
Homebuilders -4.79%

Evening Review
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In Play

Afternoon Recommendations
ThinkEquity:
- Upgraded (RNOW) to Buy.

Afternoon/Evening Headlines
Bloomberg:
- Corn fell the most in more than two weeks and soybeans declined as farmers in the South began their harvest, boosting US supplies that the government estimates will be 14% larger than last year.
- Google Inc.(GOOG) said CFO George Reyes will leave and the biggest Internet search engine company will replace him by year-end.
- NY Senator Hillary Rodham Clinton and Connecticut Senator Chris Dodd won their first endorsements from national labor unions, gaining coveted support in their bids for the Democratic presidential nomination.
- IndyMac Bancorp Inc.(IMB), the biggest US independent home lender, is hiring as many as 850 former employees of bankrupt American Home Mortgage Investment Corp. in a push to issue more loans to people with good credit.
- Seagate Technology(STX), the world’s largest make of hard-disk drives, boosted its sales and profit forecasts for the current quarter. The stock rose 5.5% in after-hours trading.
- Semtech(SMTC), a leading producer of high performance analog and mixed-signal semiconductors, reported net sales for the second quarter rose 3.3% yoy. The stock surged 8.5% in after-hours trading.
- PDL Biopharma(PDLI) will divest all its marketed products, stop developing its lead drug candidate and slash a “substantial” number of jobs in a strategic overhaul. The shares tumbled 15% in extended trading.

AP:
- New Jersey was surpassed by Maryland as the nation’s richest state, according to the latest US Census Bureau statistics.

BOTTOM LINE: The Portfolio finished lower today on losses in my Retail longs, Computer longs and Semi longs. I added to my (SII) short, (BHP) short and to my (IWM)/(QQQQ) hedges 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 substantially lower, every sector fell and volume was below average. Measures of investor anxiety were elevated into the close. Today's overall market action was bearish. In my opinion, the news today wasn't that bad, which makes today's losses more meaningful. As well, the 10-year yield is at session lows at 4.51%, and the yen is at session highs vs. the U.S. dollar. Cyclicals were especially weak today, falling 3.1%. Growth outperformed value, which could be pressuring quant funds again. Nikkei futures are indicating a down 387 open in Japan tonight. I expect stocks to make their lows for the week tomorrow.