Retail Surging, Job Market Still Healthy

- Advance Retail Sales for April rose 1.4% versus estimates of a .7% increase and a .4% gain in March.
- Retail Sales Less Autos for April rose 1.1% versus estimates of a .5% gain and a .2% increase in March.
- Initial Jobless Claims for last week rose to 340K versus estimates of 325K and 336K the prior week.
- Continuing Claims rose to 2598K versus estimates of 2610K and 2583K prior.

Bottom Line: US retail sales increased twice as much as forecast in April as consumers spent more on cars, clothes and restaurant meals. A strong housing market, rising incomes and improving job prospects are giving Americans the means to keep spending even as gas prices take more of their paychecks.

Weekly jobless claims are still averaging about 327,000 this year, down from the 343,000 average during 2004. The four-week moving average of initial jobless claims, a less volatile measure, rose to 324,000 from 322,000. The insured unemployment rate, which is closely correlated to the US employment rate, held at a four-year low of 2%. The four-week moving-average of continuing claims fell to 2.59M, the best since the week that ended March 31, 2001.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Thursday Watch

Late-Night Headlines
Bloomberg:
- Shares of Chinese companies including China Unicom may lead a list of additions to Morgan Stanley Capital International's global stock benchmarks when it releases its annual review of the indexes today.
- China said it will impose new taxes and restrictions on real estate transactions to curb speculation that's caused what the government calls a property price bubble.

Wall Street Journal:
- American Express will face a new challenge in a class-action lawsuit Monday, when plaintiffs plan to file an amended complaint over the company's insurance programs.

CNBC:
- Arena Pharmaceuticals will announce the results of an insomnia study toward the end of next month, CEO Jack Lief said.

AP:
- Google Inc. received a license to operate a "representative" office in China.

Shanghai Morning Post:
- China's consumer prices may have risen 1.8% in April from a year earlier versus a 2.7% increase in March.

Business Standard:
- Wal-Mart Stores plans to purchase 30% more form India.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on DIS, DNA, EMC, IBM, MSFT, MUR and NUE.
- Reiterated Underperform on UST and KFT.

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated unch.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
ADI/.30
AEOS/.34
DELL/.37
DRL/.46
KSS/.37
NVDA/.28
PSUN/.23
TGT/.53
URBN/.30
WMT/.56

Splits
CHE 2-for-1
ZQK 2-for-1
HUBG 2-for-1

Economic Releases
8:30 EST
- Advance Retail Sales for April are estimated to rise .8% versus a .3% gain in March.
- Retail Sales Less Autos for April are estimated to rise .5% versus a .1% gain in March.
- Initial Jobless Claims for last week are estimated to fall to 325K versus 333K the prior week.
- Continuing Claims are estimated to rise to 2610K versus 2589K prior.

BOTTOM LINE: Asian indices are mixed as lower energy prices offset continuing declines in Chinese shares. I expect US equities to open modestly higher on lower energy prices and a good retail sales report. The Portfolio is 100% net long heading into tomorrow.

Stocks Close Near Session Highs on Falling Oil Prices and a Stronger US Dollar

Indices
S&P 500 1,171.11 +.42%
DJIA 10,300.25 +.19%
NASDAQ 1,971.55 +.45%
Russell 2000 595.57 +.09%
DJ Wilshire 5000 11,535.83 +.37%
S&P Barra Growth 566.27 +.53%
S&P Barra Value 600.45 +.31%
Morgan Stanley Consumer 581.70 +.50%
Morgan Stanley Cyclical 708.38 +.40%
Morgan Stanley Technology 448.11 +.71%
Transports 3,534.04 +1.01%
Utilities 366.68 +.39%
Put/Call 1.0 +17.65%
NYSE Arms .79 -62.45%
Volatility(VIX) 14.45 -3.09%
ISE Sentiment 152.00 +14.29%
US Dollar 84.89 +.52%
CRB 300.95 -.16%

Futures Spot Prices
Crude Oil 50.33 -3.34%
Unleaded Gasoline 147.30 -2.47%
Natural Gas 6.67 -.36%
Heating Oil 140.41 -3.14%
Gold 428.00 +.02%
Base Metals 123.30 -.91%
Copper 144.00 -.17%
10-year US Treasury Yield 4.19% -.09%

Leading Sectors
Disk Drives +2.42%
Networking +1.30%
Internet +1.11%

Lagging Sectors
Airlines -1.0%
HMOs -1.08%
Broadcasting -1.19%

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
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on MO.
- Reiterated Underperform on RAI.

Afternoon/Evening Headlines
Bloomberg:
- US Defense Secretary Rumsfeld agreed to reverse most of the cuts made to Lockheed Martin’s C-130J transport program.
- A US Senate panel debating a plan to create a $140 billion trust fund to compensate asbestos-exposure victims adopted a provision to pay the sickest people during the trust’s startup period.
- The US government posted the largest April budget surplus in three years as taxpayers filed returns for 2004, when Americans benefited from the fastest economic growth in almost 6 years.
- Kuwait has drawn up formal charges against Saddam Hussein, eight aides and 293 lower-ranking officials for war crimes stemming from Iraq’s 1990 invasion.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Internet, Wireless and Gaming longs and Entertainment shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market improved into the afternoon as the advance/decline finished near its session highs, most sectors rose and volume was average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was modestly positive considering recent fears and the decline in energy prices. The US government reported the largest April budget surplus in three years this afternoon as Americans paid more taxes for 2004 due to the strongest economic growth since the bubble peaked in 1999. This is another positive for the US dollar. I expect stocks to build on today’s gains through week’s end.

Stocks Modestly Higher on Stronger Dollar and Lower Oil

Indices
S&P 500 1,169.49 +.28%
DJIA 10,291.68 +.10%
NASDAQ 1,969.73 +.35%
Russell 2000 595.16 +.02%
DJ Wilshire 5000 11,526.59 +.29%
S&P Barra Growth 565.61 +.40%
S&P Barra Value 600.06 +.25%
Morgan Stanley Consumer 581.74 +.51%
Morgan Stanley Cyclical 706.71 +.16%
Morgan Stanley Technology 447.81 +.64%
Transports 3,526.99 +.81%
Utilities 366.36 +.30%
Put/Call 1.00 +17.65%
NYSE Arms .84 -60.29%
Volatility(VIX) 14.55 -2.41%
ISE Sentiment 136.00 +2.26%
US Dollar 84.95 +.59%
CRB 301.25 -.06%

Futures Spot Prices
Crude Oil 50.80 -2.44%
Unleaded Gasoline 148.10 -1.94%
Natural Gas 6.72 +.39%
Heating Oil 141.10 -2.66%
Gold 428.20 +.07%
Base Metals 123.30 -.91%
Copper 144.20 -.03%
10-year US Treasury Yield 4.19% -.14%

Leading Sectors
Disk Drives +1.53%
Networking +1.06%
I-Banks +1.04%

Lagging Sectors
Oil Tankers -1.16%
HMOs -1.22%
Airlines -1.40%

BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Internet and Wireless longs and Entertainment shorts. I added to some of my current longs today from various sectors, thus leaving the Portfolio 100% net long. One of the longs I added to was AAPL. I am using a stop-loss of $33 on this position. The tone of the market is mixed as the advance/decline line is slightly lower, most sectors are higher and volume is average. Measures of investor anxiety are mostly lower. Today’s overall market action is modestly positive considering terrorism fears, hedge fund blow-up worries and yesterday’s sell-off. I expect US stocks to trade modestly higher into the close on short-covering, bargain hunting and lower energy prices.