S&P 500 1,132.74 -.82%
NASDAQ 1,954.32 -.84%
Leading Sectors
Retail +.48%
Hospitals +.03%
Restaurants +.01%
Lagging Sectors
Airlines -2.66%
Homebuilders -3.0%
Drugs -3.12%
Other
Crude Oil 52.33 +.60%
Natural Gas 7.13 +1.21%
Gold 419.70 -.07%
Base Metals 122.83 -.06%
U.S. Dollar 88.33 -.17%
10-Yr. T-note Yield 4.24% +.42%
VIX 13.89 +4.59%
Put/Call .83 +7.79%
NYSE Arms 1.23 +68.49%
Market Movers
PFE -5.9% after a doctor said in the New England Journal of Medicine that drugmakers must prove that medications such as Pfizer's Celebrex don't carry the same risk of heart problems as Merck's Vioxx.
ATYT +5.3% after beating 4Q estimates and raising 1Q outlook.
DNA -4.6% after beating 3Q estimates and giving disappointing guidance.
COST +4.3% after beating 4Q estimates and giving positive outlook.
HOTT +13.5% after better-than-expected same-store-sales, announcing 1M share buyback and Bank of America upgrade to Buy.
ANF +9.0% after substantially beating same-store-sales estimates.
CHS +6.7% after beating same-store-sales estimates.
JWN +5.7% after beating same-store-sales estimates.
OSTK +4.4% on short-covering.
ARO +5.8% after beating same-store-sales estimate.
BEBE +6.3% after substantially beating same-store-sales estimate and boosting 1Q guidance.
LZB -11.1% after JP Morgan downgrade to Underperform.
MBI -7.5% after missing 3Q estimates and giving negative outlook.
MSTR -6.7% on profit-taking and Jeffries downgrade to Hold.
BRL -4.6% on Bank of America downgrade to Neutral.
MIK -5.4% after missing same-store-sales estimate and lowering 3Q/4Q outlooks.
Economic Data
Initial Jobless Claims for last week were 335K versus estimates of 355K and 372K the prior week.
Continuing Claims were 2864K versus estimated of 2875K and 2865K prior.
Recommendations
Goldman Sachs reiterated Outperform on GCI, DNA, CLX, RIG, DDR, PFE, FD and SAP. Goldman reiterated Underperform on RAI and UIS. Citi SmithBarney said to Buy MCD ahead of Sept. Comp Sales release, target $34. Citi also said to Sell DAL into strength as chap.11 filing is imminent, target $1. Citi reiterated Buy on ETR, target $65. Citi reiterated Buy on VIAM, target $50. Citi reiterated Buy on JNPR, target $32.50. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on EXTR, target $11. Citi reiterated Buy on FDRY, target $15. Citi reiterated Sell on ISIL, target $14. Citi reiterated Buy on DNA, target $87.50. JP Morgan reiterated Overweight on MOT. Bank of America rated C Buy, target $52. HOTT raised to Buy at Bank of America, target $23. XRTX raised to Buy at Bank of America, target $15.75. TRMS cut to Sell at Legg Mason. CBG rated Overweight at JP Morgan, target $32. LZB cut to Underperform at JP Morgan.
Mid-day News
U.S. stocks are lower mid-day on continuing fears over higher energy prices and declines in pharmaceutical stocks. The bacteria that forced the closure of Chiron's U.K. flu vaccine factory is a common one that lives in water, soil and animals, and can colonize medical equipment, the Wall Street Journal reported. The FCC will restart funding for a program that provides U.S. public libraries and schools with high-speed Internet and telephone service, the Wall Street Journal reported. Afghanistan's Oct. 9 election marks the first time in the nation's 5,000 year history that people will choose their president, the Wall Street Journal reported. Shares of AIG may decline further as the word's largest insurer refused to compromise in a dispute with U.S. regulators over transactions the government suspects were fraudulent, the NY Times reported, citing analysts. Students in NYC and across the state scored higher on a standardized math test for the third year in a row, suggesting that increased classroom time on the subject and programs including the use of special math coaches are having a positive effect, the NY Times said. Bill Miller, CEO of Legg Mason Capital Management, wants Barry Diller's IAC/InterActiveCorp to use its more than $1 billion in cash to buy back stock, the NY Post said. Boeing is in talks to sell airliners to Libya after the U.S. lifted almost two decades of economic sanctions, enabling Africa's biggest holder of oil reserves to buy U.S.-made equipment, Bloomberg reported. The number of Americans filing initial claims for unemployment benefits plunged last week to the lowest level in a month, suggesting the labor market is improving as the economy gains momentum, Bloomberg said. Oil-tanker rates from the Middle East and West Africa surged to the highest in three decades, boosting earnings for Frontline and Teekay Shipping, Bloomberg reported. The last employment report Americans will see before November's election may show hurricanes blew away as many as 100,000 jobs last month, Bloomberg said. Parmalat Chairman Bondi sued Bank of America in a U.S. court, seeking more than $10 billion in damages for what he says was the U.S. bank's role in the Italian foodmaker's bankruptcy, Bloomberg reported. Crude oil in NY rose to $53/bbl. a gain of more than $10 since Hurricane Ivan began to shut Gulf of Mexico oil production on Sept. 13, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly lower mid-day as weakness in my Chinese ADR and software longs is more than offsetting the strength in my Internet and alternative energy longs. I exited a few longs this morning as they hit stop-losses, leaving the Portfolio 100% net long. The negative affects of the record-setting hurricanes on the U.S. labor market appear to be dissipating, however tomorrow's jobs report will be negatively affected by the storms. I will be pleasantly surprised if the change in non-farm payrolls exceeds the 150K estimates. Going forward, an accelerating U.S. economy and the rebuilding efforts in Florida should boost employment opportunities. I expect stocks to remain mixed into the close on energy fears and short-covering.
Thursday, October 07, 2004
Thursday Watch
Earnings of Note
Company/Estimate
AMD/.12
AA/.33
AMHC/.27
COST/.58
Splits
None of note.
Economic Data
Initial Jobless Claims estimated at 355K versus 369K last week.
Continuing Claims estimated at 2875K versus 2873K prior.
Consumer Credit for August estimated at $6.0B versus $10.9B in July.
Recommendations
Goldman Sachs reiterated Outperform on RIG, GDT, DEX, AFL, ALL, AMGN, DELL, XOM, MDT, MSFT, PFE, CLX, GDT and UPS.
Late-Night News
Asian indices are quietly mixed as optimism over the late afternoon rally in U.S. shares is being offset by higher oil prices. Ford Motor's Jaguar luxury car unit said it sold 6,220 cars in September, 200 more than a year ago, the Financial Times reported. Taiwan President Chen Shui-bian vowed to maintain peace along the straight separating the island from China for the remainder of his term, which ends in 2008, the Economic Daily News said. The U.S. will pursue a free trade agreement with South Korea and is hoping North Korea rejoins six-nation talks on nuclear disarmament soon, Bloomberg reported. Corning will take a charge of $2.8 billion to $2.9 billion to reflect the reduced value of some assets, Bloomberg reported. Carlyle Group, the world's third-largest buyout firm, plans to increase its investments in China to more than $1 billion as the pace of state asset sales picks up and more private start-ups seek capital, Bloomberg reported. Clorox agreed to swap $2.1 billion in cash, the Soft Scrub and Combat brands and a stake in a joint venture to buy back 61.4 million of its shares from Henkel KgaA, Bloomberg said. Chiron said problems with U.K. regulators won't affect a $100 million plan to double the capacity of the vaccine manufacturing plant in Liverpool, northwest England, the Financial Times reported.
Late-Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.14%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a follow-through from today's strong close. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
AMD/.12
AA/.33
AMHC/.27
COST/.58
Splits
None of note.
Economic Data
Initial Jobless Claims estimated at 355K versus 369K last week.
Continuing Claims estimated at 2875K versus 2873K prior.
Consumer Credit for August estimated at $6.0B versus $10.9B in July.
Recommendations
Goldman Sachs reiterated Outperform on RIG, GDT, DEX, AFL, ALL, AMGN, DELL, XOM, MDT, MSFT, PFE, CLX, GDT and UPS.
Late-Night News
Asian indices are quietly mixed as optimism over the late afternoon rally in U.S. shares is being offset by higher oil prices. Ford Motor's Jaguar luxury car unit said it sold 6,220 cars in September, 200 more than a year ago, the Financial Times reported. Taiwan President Chen Shui-bian vowed to maintain peace along the straight separating the island from China for the remainder of his term, which ends in 2008, the Economic Daily News said. The U.S. will pursue a free trade agreement with South Korea and is hoping North Korea rejoins six-nation talks on nuclear disarmament soon, Bloomberg reported. Corning will take a charge of $2.8 billion to $2.9 billion to reflect the reduced value of some assets, Bloomberg reported. Carlyle Group, the world's third-largest buyout firm, plans to increase its investments in China to more than $1 billion as the pace of state asset sales picks up and more private start-ups seek capital, Bloomberg reported. Clorox agreed to swap $2.1 billion in cash, the Soft Scrub and Combat brands and a stake in a joint venture to buy back 61.4 million of its shares from Henkel KgaA, Bloomberg said. Chiron said problems with U.K. regulators won't affect a $100 million plan to double the capacity of the vaccine manufacturing plant in Liverpool, northwest England, the Financial Times reported.
Late-Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.14%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a follow-through from today's strong close. The Portfolio is 125% net long heading into tomorrow.
Wednesday, October 06, 2004
Wednesday Close
S&P 500 1,142.05 +.67%
NASDAQ 1,971.03 +.79%
Leading Sectors
Iron/Steel +2.12%
Oil Service +2.03%
Airlines +1.89%
Lagging Sectors
Gaming +.01%
Tobacco -.12%
Drugs -.88%
Other
Crude Oil 51.97 +1.72%
Natural Gas 7.03 -1.87%
Gold 419.30 -.12%
Base Metals 122.90 +2.11%
U.S. Dollar 88.40 +.27%
10-Yr. T-note Yield 4.22% +1.12%
VIX 13.28 4.80%
Put/Call .77 4.94%
NYSE Arms .73 -47.10%
After-hours Movers
LTD +5.08% after announcing that its Board has authorized the repurchase of $2 billion of its common stock and a post-repurchase special dividend of $500 million.
PXLW +5.19% on bargain-hunting after lowering 3Q/4Q forecast.
HOTT +7.87% after beating same-store-sale estimate and announcing 1M share buyback.
LAVA -8.88% after lowering 2Q, 3Q and 4Q forecasts.
Recommendations
Goldman Sachs reiterated Outperform on WMT, AMGN, KO, DNA, MDT, FSL, UPS and AYE.
After-hours News
U.S. stocks finished higher today on a late-day surge spurred by short-covering. After the close, AstraZeneca Plc CEO McKillop told the pharmaceutical industry that pressure on drug price and rising costs may reduce profit unless companies can find new ways to do business, the Financial Times reported. Sirius Satellite Radio CEO Clayton told CNBC that he's interested in obtaining the right to broadcast Major League Baseball. Police in Marshfield, Mass. said they arrested a 16-year-old high school student after discovering he planned a Columbine-style assault against the local high school and had tested a homemade bomb in preparation for the attack, Bloomberg reported. Genentech, the world's second-biggest biotechnology company, said third-quarter profit rose 52% as more doctors prescribed the Avastin colon-cancer drug, Bloomberg reported. In a show of confidence, Limited Brands authorized the repurchase of $2 billion of its common stock and will declare a one-time dividend of $500 million, Bloomberg reported. Crude oil in NY jumped to $52.02/bbl., pulling gasoline and heating oil higher, after the Energy Dept. reported that U.S. stockpiles increased less than expected due to the lingering affects of the hurricanes, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today on strength in my base metal, telecom equipment and semiconductor longs. I did not trade in the afternoon, thus the Portfolio is still 125% net long. The underlying strength in the market is considerable. There have been ample opportunities for a pullback, yet stocks continue higher. Volume increased again today and breadth measures were pretty good. Long-term interest rates have risen 25 basis points from their lows as investors begin to anticipate accelerating economic growth. The S&P 500 has clearly broken above its downtrend that had been in place since March and the NASDAQ is very close to breaking out. The S&P 500 will likely test its highs for the year within the week.
NASDAQ 1,971.03 +.79%
Leading Sectors
Iron/Steel +2.12%
Oil Service +2.03%
Airlines +1.89%
Lagging Sectors
Gaming +.01%
Tobacco -.12%
Drugs -.88%
Other
Crude Oil 51.97 +1.72%
Natural Gas 7.03 -1.87%
Gold 419.30 -.12%
Base Metals 122.90 +2.11%
U.S. Dollar 88.40 +.27%
10-Yr. T-note Yield 4.22% +1.12%
VIX 13.28 4.80%
Put/Call .77 4.94%
NYSE Arms .73 -47.10%
After-hours Movers
LTD +5.08% after announcing that its Board has authorized the repurchase of $2 billion of its common stock and a post-repurchase special dividend of $500 million.
PXLW +5.19% on bargain-hunting after lowering 3Q/4Q forecast.
HOTT +7.87% after beating same-store-sale estimate and announcing 1M share buyback.
LAVA -8.88% after lowering 2Q, 3Q and 4Q forecasts.
Recommendations
Goldman Sachs reiterated Outperform on WMT, AMGN, KO, DNA, MDT, FSL, UPS and AYE.
After-hours News
U.S. stocks finished higher today on a late-day surge spurred by short-covering. After the close, AstraZeneca Plc CEO McKillop told the pharmaceutical industry that pressure on drug price and rising costs may reduce profit unless companies can find new ways to do business, the Financial Times reported. Sirius Satellite Radio CEO Clayton told CNBC that he's interested in obtaining the right to broadcast Major League Baseball. Police in Marshfield, Mass. said they arrested a 16-year-old high school student after discovering he planned a Columbine-style assault against the local high school and had tested a homemade bomb in preparation for the attack, Bloomberg reported. Genentech, the world's second-biggest biotechnology company, said third-quarter profit rose 52% as more doctors prescribed the Avastin colon-cancer drug, Bloomberg reported. In a show of confidence, Limited Brands authorized the repurchase of $2 billion of its common stock and will declare a one-time dividend of $500 million, Bloomberg reported. Crude oil in NY jumped to $52.02/bbl., pulling gasoline and heating oil higher, after the Energy Dept. reported that U.S. stockpiles increased less than expected due to the lingering affects of the hurricanes, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today on strength in my base metal, telecom equipment and semiconductor longs. I did not trade in the afternoon, thus the Portfolio is still 125% net long. The underlying strength in the market is considerable. There have been ample opportunities for a pullback, yet stocks continue higher. Volume increased again today and breadth measures were pretty good. Long-term interest rates have risen 25 basis points from their lows as investors begin to anticipate accelerating economic growth. The S&P 500 has clearly broken above its downtrend that had been in place since March and the NASDAQ is very close to breaking out. The S&P 500 will likely test its highs for the year within the week.
***Alert***
There will not be a mid-day update today due to a scheduling conflict. Sorry for the inconvenience. The Wednesday close will appear at its regular time. The Portfolio is up slightly today and I have not traded, leaving it 125% net long.
Wednesday Watch
Earnings of Note
Company/Estimate
DNA/.21
MON/.02
SCHN/.90
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on BBY, YHOO, KMI, GE, VNO and SRE.
Late-Night News
Asian indices are modestly higher on strength in commodity-related shares. China will ease controls on loans, property and investment amid concern that tough measures to cool the economy may lead to a "hard landing," the South China Morning Post reported. Pulte Homes CEO Dugas told CNBC that its new-home order growth in the third quarter, excluding Las Vegas, was 24%, Bloomberg reported. Adelphia Communications may refuse to allow Comcast and Time Warner to submit a joint offer to acquire the company, the Wall Street Journal said. US Airways' 3,200 pilots will vote on an agreement that would allow $1.85 billion in pay and benefit reductions over five years that the company said it needs to help avoid liquidating, Bloomberg reported. Electronic Arts said it will set up a development studio in China to tap the nation's growing online games market and earn more sales from Asia, Bloomberg said.
Late-Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.10%
BOTTOM LINE: I expect U.S. equities to open modestly higher on gains in Asia, positive Fed comments and short-covering. However, the weekly government oil inventories report will likely dictate trading later in the day. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
DNA/.21
MON/.02
SCHN/.90
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on BBY, YHOO, KMI, GE, VNO and SRE.
Late-Night News
Asian indices are modestly higher on strength in commodity-related shares. China will ease controls on loans, property and investment amid concern that tough measures to cool the economy may lead to a "hard landing," the South China Morning Post reported. Pulte Homes CEO Dugas told CNBC that its new-home order growth in the third quarter, excluding Las Vegas, was 24%, Bloomberg reported. Adelphia Communications may refuse to allow Comcast and Time Warner to submit a joint offer to acquire the company, the Wall Street Journal said. US Airways' 3,200 pilots will vote on an agreement that would allow $1.85 billion in pay and benefit reductions over five years that the company said it needs to help avoid liquidating, Bloomberg reported. Electronic Arts said it will set up a development studio in China to tap the nation's growing online games market and earn more sales from Asia, Bloomberg said.
Late-Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.10%
BOTTOM LINE: I expect U.S. equities to open modestly higher on gains in Asia, positive Fed comments and short-covering. However, the weekly government oil inventories report will likely dictate trading later in the day. The Portfolio is 125% net long heading into tomorrow.
Tuesday, October 05, 2004
Tuesday Close
S&P 500 1,134.48 -.06%
NASDAQ 1,955.50 +.16%
Leading Sectors
Energy +1.10%
Hospitals +.94%
Software +.75%
Lagging Sectors
Biotech -1.43%
Homebuilders -2.25%
Airlines -2.90%
Other
Crude Oil 51.10 +.02%
Natural Gas 7.11 -.75%
Gold 420.60 +.19%
Base Metals 120.36 +.28%
U.S. Dollar 88.17 -.24%
10-Yr. T-note Yield 4.17% +.23%
VIX 13.95 +4.03%
Put/Call .81 -2.41%
NYSE Arms 1.38 +97.14%
After-hours Movers
OTEX -17.7% after lowering 1Q estimates.
ZRAN -12.9% after lowering 3Q forecasts.
PRGO +3.9% after announcing that it has received approval from the U.S. FDA to market over-the-counter nicotine polacrilex gum and prescription ibuprofen oral suspension.
Recommendations
Goldman Sachs reiterated Underperform on ATI. Goldman reiterated Outperform on CSCO, PHCC and HEW.
After-hours News
U.S. stocks finished quietly mixed today as rising energy prices dampened optimism over better economic growth. After the close, News Corp. Chairman Murdoch offered to change the company's constitution to appease investors opposed to his plan to move the company to the U.S., the Australian Financial Review reported. Iran's missiles can reach as far as 1,243 miles and the country may continue to increase the range of the weapons, former President Rafsanjani said. Fannie Mae CEO Raines will defend the company's accounting practices at a congressional hearing tomorrow, the Financial Times reported. Yum! Brands, operator of the Taco Bell, Pizza Hut and KFC restaurant chains, said third-quarter earnings rose 13% and it would beat its annual forecast, boosted by higher sales in China, Bloomberg reported. Mutual fund manager Bill Miller disclosed that his Legg Mason Value Trust has acquired almost 6% of Google's common shares, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as my rising steel and internet longs were offset by my falling biotech and retail longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. Considering another major U.S. company, Chiron(CHIR), took a significant hit and oil breached $51/bbl. today, U.S. stocks turned in a pretty good showing. Today's ISM Non-manufacturing report, while lower than expectations, showed another decline in inflationary pricing and an improving employment outlook. This is especially encouraging considering the affects the record-setting hurricanes had on the service industries in the South. I continue to believe the U.S. economy is accelerating from its 3.3% growth in the second quarter to around 4% in the third quarter and 5% in the fourth quarter. This should allow many companies to beat lowered 4Q estimates.
NASDAQ 1,955.50 +.16%
Leading Sectors
Energy +1.10%
Hospitals +.94%
Software +.75%
Lagging Sectors
Biotech -1.43%
Homebuilders -2.25%
Airlines -2.90%
Other
Crude Oil 51.10 +.02%
Natural Gas 7.11 -.75%
Gold 420.60 +.19%
Base Metals 120.36 +.28%
U.S. Dollar 88.17 -.24%
10-Yr. T-note Yield 4.17% +.23%
VIX 13.95 +4.03%
Put/Call .81 -2.41%
NYSE Arms 1.38 +97.14%
After-hours Movers
OTEX -17.7% after lowering 1Q estimates.
ZRAN -12.9% after lowering 3Q forecasts.
PRGO +3.9% after announcing that it has received approval from the U.S. FDA to market over-the-counter nicotine polacrilex gum and prescription ibuprofen oral suspension.
Recommendations
Goldman Sachs reiterated Underperform on ATI. Goldman reiterated Outperform on CSCO, PHCC and HEW.
After-hours News
U.S. stocks finished quietly mixed today as rising energy prices dampened optimism over better economic growth. After the close, News Corp. Chairman Murdoch offered to change the company's constitution to appease investors opposed to his plan to move the company to the U.S., the Australian Financial Review reported. Iran's missiles can reach as far as 1,243 miles and the country may continue to increase the range of the weapons, former President Rafsanjani said. Fannie Mae CEO Raines will defend the company's accounting practices at a congressional hearing tomorrow, the Financial Times reported. Yum! Brands, operator of the Taco Bell, Pizza Hut and KFC restaurant chains, said third-quarter earnings rose 13% and it would beat its annual forecast, boosted by higher sales in China, Bloomberg reported. Mutual fund manager Bill Miller disclosed that his Legg Mason Value Trust has acquired almost 6% of Google's common shares, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as my rising steel and internet longs were offset by my falling biotech and retail longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. Considering another major U.S. company, Chiron(CHIR), took a significant hit and oil breached $51/bbl. today, U.S. stocks turned in a pretty good showing. Today's ISM Non-manufacturing report, while lower than expectations, showed another decline in inflationary pricing and an improving employment outlook. This is especially encouraging considering the affects the record-setting hurricanes had on the service industries in the South. I continue to believe the U.S. economy is accelerating from its 3.3% growth in the second quarter to around 4% in the third quarter and 5% in the fourth quarter. This should allow many companies to beat lowered 4Q estimates.
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