S&P 500 1,113.65 -.73%
NASDAQ 1,920.53 -.24%
Leading Sectors
Restaurants +2.09%
Airlines +2.09%
Semis +1.78%
Lagging Sectors
Homebuilders -2.23%
Commodity -2.76%
Iron/Steel -4.63%
Other
Crude Oil 53.64 +2.15%
Natural Gas 6.94 +4.58%
Gold 417.30 +.65%
Base Metals 113.43 -8.06%
U.S. Dollar 87.87 -.17%
10-Yr. T-note Yield 4.05% -1.04%
VIX 15.42 +2.46%
Put/Call 1.06 +7.07%
NYSE Arms 1.36 -22.29%
After-hours Movers
SNDK -18.97% after missing estimates and lowering 4Q guidance.
NVEC +3.44% after saying it received an initial order from Starkey Laboratories for custom-designed ultra-miniature spintronic sensor integrated circuits.
AAPL +6.69% after substantially beating 4Q estimates and raising 1Q outlook.
NVLS -5.88% after meeting 3Q estimates and lowering 4Q guidance substantially.
Recommendations
Goldman reiterated Outperform on ALL, WMT, KR and KRB.
After-hours News
U.S. stocks finished modestly lower today over worries that high energy prices would slow future economic growth. After the close, a majority of the FCC voted to conditionally approve Cingular Wireless's planned purchase of AT&T Wireless Services, Reuters said. Apple Computer said fourth-quarter profit more than doubled on surging sales of its iPod digital music player, Bloomberg said. The Australian dollar traded close to its lowest in a week after prices of the country's raw material exports such as copper and nickel plunged the most in more than a decade, Bloomberg said. Progressive Corp., the third-largest U.S. auto insurer, said third-quarter profit rose 22%, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my shipping and steel longs. I exited a shipping long in the afternoon and added IGT long. I am using a stop-loss of $31 on this position and the Portfolio is still 100% net long. The tone of the market improved a bit in the afternoon as volume increased and the advance/decline improved somewhat. Most measures of investor anxiety rose again today, which is a positive. As well, Apple Computer's VERY strong report after the close is one positive data point for the U.S. consumer. I expect stocks to rise tomorrow on short-covering after the Presidential debate and release of the weekly oil inventory data.
Wednesday, October 13, 2004
Mid-day Update
S&P 500 1,111.12 -.96%
NASDAQ 1,917.8 -.43%
Leading Sectors
Airlines +1.85%
Restaurants +1.38%
Semis +1.28%
Lagging Sectors
Homebuilders -2.64%
Commodity -3.24%
Iron/Steel -5.44%
Other
Crude Oil 52.68 +.36%
Natural Gas 6.77 +2.02%
Gold 414.10 -.60%
Base Metals 113.43 -8.06%
U.S. Dollar 88.25 +.26%
10-Yr. T-note Yield 4.07% -.61%
VIX 15.44 +2.59%
Put/Call .96 -3.03%
NYSE Arms 1.27 -27.43%
Market Movers
YHOO +3.3% after beating 3Q estimates and raising 4Q guidance.
MCD +3.4% after raising 3Q estimates.
ACN -11.5% after missing 4Q estimates, lowering 1Q/05 outlook and downgrade to Hold at Deutsche Bank.
ASKJ +6.0% on strong YHOO report.
LNCR +15.4% after a U.S. government agency recommend higher-than-expected payments for services to Medicare patients and UBS upgrade to Buy.
HURN +22.2% on strong demand for its IPO.
JUPM +12.4% on strong YHOO report.
ENER +12.4% after positive article in the Wall Street Journal.
ITRI +15.9% after boosting 3Q estimates substantially.
SONC +6.9% after beating 4Q estimates and raising 1Q guidance.
MSTR +4.2% after FBI said it would use its business intelligence platform to support the Bureau's Investigative Data Warehouse.
MMSI -14.0% after lowering 3Q forecast.
POT -4.7% on Scotia Capital downgrade to Sector Underperform.
JNY -7.4% after lowering 3Q, 4Q and 05 guidance.
*Base Metals down across the board on profit-taking and fears that supply will exceed demand in 05.
Economic Data
None of note.
Recommendations
N cut to Underweight at Prudential, target $30. ZQK rated Overweight at Prudential, target $30. EPD raised to Outperform at Raymond James, target $26. CREO raised to Sector Outperform at CIBC. Goldman Sachs reiterated Outperform on MERQ, MSFT, YHOO, PETC, INTC, PFE, CSCO, NFX and ACN. Goldman cut DE to Underperform and reiterated Underperform on AG, CNH, HMT. Citi SmithBarney rated SEPR Sell, target $40. Citi rated ENDP, target $25. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on INTC, target $25.50. Citi reiterated Buy on MER, target $73. Citi reiterated Buy on LRCX, target $33. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on PETC, target $42. Citi reiterated Buy on LLTC, target $44. Goldman reiterated Attractive view of steel sector, favorites are STLD, ISG, NUE and X.
Mid-day News
U.S. stocks are lower mid-day on worries over future economic growth and higher oil prices. A Virginia high school has spent $1.4 million to issue laptop computers to its 2,100 students, one of a growing number of schools trying to make sure all its students have equal access to technology, the Washington Post reported. The IRS has new powers to crack down on questionable tax shelters, transactions meant to help people avoid taxes, in legislation approved by the Senate this week and expected to be signed by President Bush, the Wall Street Journal reported. Iraq's interim Prime Minister Allawi demanded that the insurgent-held city of Fallujah turn over suspected al-Qaeda associate al-Zarqawi or be invaded, Agence France-Presse reported. The median home price in LA country was $407,000 in September, up 21.1% from a year earlier, Bloomberg said. Harvard University's Stem Cell Institute scientists asked the university's ethical review board for approval to clone embryos for use in stem-cell research, the Boston Globe reported. Shaw's Supermarkets plans to start selling groceries over the Internet, and its parent company, Albertson's, will spend $500 million on new global positioning and wireless systems to prepare for the future, Bloomberg reported. NBC attracted its smallest audience in at least five years during the first three weeks of the tv season, Bloomberg said. JP Morgan Chase President Dimon said the second-largest U.S. bank may make acquisitions to boost its consumer and commercial-banking franchises abroad and in the domestic market, Bloomberg reported. Merck said short-term studies show the company's planned successor to Vioxx, Arcoxia, doesn't carry the same risks, Bloomberg said. The U.S. Financial Accounting Standards Board delayed until next June a rule that will force companies to make worker stock options an expense, saying firms need more time to comply with other regulations, Bloomberg said. Shares of Alcoa, U.S. Steel, Phelps Dodge and other metal producers fell amid speculation increases in supply will more than offset demand next year, Bloomberg reported. The New York Yankees' victory over the Boston Red Sox last night attracted the highest tv ratings in the biggest U.S. markets since 1993 for the opening game of the American League Championship Series, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly lower mid-day as declines in my steel and shipping longs are more than offsetting gains in my internet and telecom equipment longs. I have not traded today and the Portfolio is still 100% net long. The declines in base metal stocks are significant. However, it is unclear at this point whether this is just a correction after substantial gains or the beginning of a downtrend. I suspect the former. I have taken profits in most of my base metal long positions over the last few weeks leaving just a few small longs in steel. The overall tone of the market is negative today, however tech is outperforming. I expect U.S. stocks to rise modestly from current levels into the close on short-covering ahead of the Presidential debate and numerous economic reports.
NASDAQ 1,917.8 -.43%
Leading Sectors
Airlines +1.85%
Restaurants +1.38%
Semis +1.28%
Lagging Sectors
Homebuilders -2.64%
Commodity -3.24%
Iron/Steel -5.44%
Other
Crude Oil 52.68 +.36%
Natural Gas 6.77 +2.02%
Gold 414.10 -.60%
Base Metals 113.43 -8.06%
U.S. Dollar 88.25 +.26%
10-Yr. T-note Yield 4.07% -.61%
VIX 15.44 +2.59%
Put/Call .96 -3.03%
NYSE Arms 1.27 -27.43%
Market Movers
YHOO +3.3% after beating 3Q estimates and raising 4Q guidance.
MCD +3.4% after raising 3Q estimates.
ACN -11.5% after missing 4Q estimates, lowering 1Q/05 outlook and downgrade to Hold at Deutsche Bank.
ASKJ +6.0% on strong YHOO report.
LNCR +15.4% after a U.S. government agency recommend higher-than-expected payments for services to Medicare patients and UBS upgrade to Buy.
HURN +22.2% on strong demand for its IPO.
JUPM +12.4% on strong YHOO report.
ENER +12.4% after positive article in the Wall Street Journal.
ITRI +15.9% after boosting 3Q estimates substantially.
SONC +6.9% after beating 4Q estimates and raising 1Q guidance.
MSTR +4.2% after FBI said it would use its business intelligence platform to support the Bureau's Investigative Data Warehouse.
MMSI -14.0% after lowering 3Q forecast.
POT -4.7% on Scotia Capital downgrade to Sector Underperform.
JNY -7.4% after lowering 3Q, 4Q and 05 guidance.
*Base Metals down across the board on profit-taking and fears that supply will exceed demand in 05.
Economic Data
None of note.
Recommendations
N cut to Underweight at Prudential, target $30. ZQK rated Overweight at Prudential, target $30. EPD raised to Outperform at Raymond James, target $26. CREO raised to Sector Outperform at CIBC. Goldman Sachs reiterated Outperform on MERQ, MSFT, YHOO, PETC, INTC, PFE, CSCO, NFX and ACN. Goldman cut DE to Underperform and reiterated Underperform on AG, CNH, HMT. Citi SmithBarney rated SEPR Sell, target $40. Citi rated ENDP, target $25. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on INTC, target $25.50. Citi reiterated Buy on MER, target $73. Citi reiterated Buy on LRCX, target $33. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on PETC, target $42. Citi reiterated Buy on LLTC, target $44. Goldman reiterated Attractive view of steel sector, favorites are STLD, ISG, NUE and X.
Mid-day News
U.S. stocks are lower mid-day on worries over future economic growth and higher oil prices. A Virginia high school has spent $1.4 million to issue laptop computers to its 2,100 students, one of a growing number of schools trying to make sure all its students have equal access to technology, the Washington Post reported. The IRS has new powers to crack down on questionable tax shelters, transactions meant to help people avoid taxes, in legislation approved by the Senate this week and expected to be signed by President Bush, the Wall Street Journal reported. Iraq's interim Prime Minister Allawi demanded that the insurgent-held city of Fallujah turn over suspected al-Qaeda associate al-Zarqawi or be invaded, Agence France-Presse reported. The median home price in LA country was $407,000 in September, up 21.1% from a year earlier, Bloomberg said. Harvard University's Stem Cell Institute scientists asked the university's ethical review board for approval to clone embryos for use in stem-cell research, the Boston Globe reported. Shaw's Supermarkets plans to start selling groceries over the Internet, and its parent company, Albertson's, will spend $500 million on new global positioning and wireless systems to prepare for the future, Bloomberg reported. NBC attracted its smallest audience in at least five years during the first three weeks of the tv season, Bloomberg said. JP Morgan Chase President Dimon said the second-largest U.S. bank may make acquisitions to boost its consumer and commercial-banking franchises abroad and in the domestic market, Bloomberg reported. Merck said short-term studies show the company's planned successor to Vioxx, Arcoxia, doesn't carry the same risks, Bloomberg said. The U.S. Financial Accounting Standards Board delayed until next June a rule that will force companies to make worker stock options an expense, saying firms need more time to comply with other regulations, Bloomberg said. Shares of Alcoa, U.S. Steel, Phelps Dodge and other metal producers fell amid speculation increases in supply will more than offset demand next year, Bloomberg reported. The New York Yankees' victory over the Boston Red Sox last night attracted the highest tv ratings in the biggest U.S. markets since 1993 for the opening game of the American League Championship Series, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly lower mid-day as declines in my steel and shipping longs are more than offsetting gains in my internet and telecom equipment longs. I have not traded today and the Portfolio is still 100% net long. The declines in base metal stocks are significant. However, it is unclear at this point whether this is just a correction after substantial gains or the beginning of a downtrend. I suspect the former. I have taken profits in most of my base metal long positions over the last few weeks leaving just a few small longs in steel. The overall tone of the market is negative today, however tech is outperforming. I expect U.S. stocks to rise modestly from current levels into the close on short-covering ahead of the Presidential debate and numerous economic reports.
Wednesday Watch
Earnings of Note
Company/Estimate
ACN/.28
AAPL/.18
HDI/.75
LRCX/.58
NYT/.32
NVLS/.38
SNDK/.34
QLGC/.36
PGR/1.69
Splits
MIK 2-for-1
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on FSH and GCI.
Late-Night News
Asian indices are mixed as strength in technology shares in the region is offsetting weakness from energy worries. North Korea is believed to have as many as nine nuclear weapons after producing plutonium for the past 20 years, the Chosun Ilbo reported. Coca-Cola began operating a $20 million bottling plant in northeastern China's Jilin province, aiming to take market share from rival PepsiCo, the China Daily reported. AU Optronics and four other flat-panel display makers in Taiwan may have cut their spending plans for next year by $5.9 billion compared with their forecasts given in the first half this year, the Economic Daily News said. Denny's(DNNY) customers are buying more of its higher-priced meals, which benefits operating margins, the Wall St. Journal reported. Afghanistan's successful presidential election is an example for the future of Iraq and shows democracy is able to flourish anywhere in the world, said U.S. Secretary of State Colin Powell. Iraqi insurgents in Fallujah are turning against the foreign guerillas who have been their allies in fighting U.S. troops and the interim government, the Washington Post reported. Lehman Brothers is moving beyond bond trading in a effort to become a top-tier investment bank without a merger, the Wall Street Journal reported. Australian Prime Minister Howard's victory in an election last weekend shows Australians endorse the government's plan to keep troops in Iraq, Foreign Minister Downer wrote in the Wall Street Journal. Microsoft has arranged with enough partners that it is positioned to achieve its goal of making the PC the command console for entertainment in the home, Bill Gates told the Wall Street Journal.
Late-Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.20%.
NASDAQ 100 indicated +.59%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning, led by technology shares. The fact that Iraqi insurgents are turning against foreign fighters in Iraq is a very positive development. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
ACN/.28
AAPL/.18
HDI/.75
LRCX/.58
NYT/.32
NVLS/.38
SNDK/.34
QLGC/.36
PGR/1.69
Splits
MIK 2-for-1
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on FSH and GCI.
Late-Night News
Asian indices are mixed as strength in technology shares in the region is offsetting weakness from energy worries. North Korea is believed to have as many as nine nuclear weapons after producing plutonium for the past 20 years, the Chosun Ilbo reported. Coca-Cola began operating a $20 million bottling plant in northeastern China's Jilin province, aiming to take market share from rival PepsiCo, the China Daily reported. AU Optronics and four other flat-panel display makers in Taiwan may have cut their spending plans for next year by $5.9 billion compared with their forecasts given in the first half this year, the Economic Daily News said. Denny's(DNNY) customers are buying more of its higher-priced meals, which benefits operating margins, the Wall St. Journal reported. Afghanistan's successful presidential election is an example for the future of Iraq and shows democracy is able to flourish anywhere in the world, said U.S. Secretary of State Colin Powell. Iraqi insurgents in Fallujah are turning against the foreign guerillas who have been their allies in fighting U.S. troops and the interim government, the Washington Post reported. Lehman Brothers is moving beyond bond trading in a effort to become a top-tier investment bank without a merger, the Wall Street Journal reported. Australian Prime Minister Howard's victory in an election last weekend shows Australians endorse the government's plan to keep troops in Iraq, Foreign Minister Downer wrote in the Wall Street Journal. Microsoft has arranged with enough partners that it is positioned to achieve its goal of making the PC the command console for entertainment in the home, Bill Gates told the Wall Street Journal.
Late-Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.20%.
NASDAQ 100 indicated +.59%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning, led by technology shares. The fact that Iraqi insurgents are turning against foreign fighters in Iraq is a very positive development. The Portfolio is 100% net long heading into tomorrow.
Tuesday, October 12, 2004
Tuesday Close
S&P 500 1,121.84 -.23%
NASDAQ 1,925.17 -.19%
Leading Sectors
Homebuilders +1.26%
I-Banks +.77%
Utilities +.70%
Lagging Sectors
Semis -1.32%
Oil Service -1.45%
Iron/Steel -1.73%
Other
Crude Oil 52.20 -.59%
Natural Gas 6.61 -.32%
Gold 416.60 unch.
Base Metals 123.37 -1.51%
U.S. Dollar 87.94 +.46%
10-Yr. T-note Yield 4.09% -.80%
VIX 15.05 +2.31%
Put/Call .99 +28.57%
NYSE Arms 1.75 +44.63%
After-hours Movers
INTC +3.40% on bargain-hunting after meeting 3Q estimate and lowering 4Q guidance.
ASKJ +3.46% on positive YHOO earnings report.
STM +5.36% on optimism over INTC report.
NABI +4.81% after saying that StaphVAX received Fast Track Designation from the FDA.
Recommendations
Goldman reiterated Outperform on MER, MDT and YHOO.
After-hours News
U.S. stocks finished slightly lower today after a late-afternoon rebound on optimism over declining energy prices. After the close, Walt Disney's Hong Kong Disneyland will open Oct. 14 next year, the Wall Street Journal reported. The Business Council corrected a survey of CEOs, saying the placement of numbers in the wrong column in a spreadsheet caused their forecast to show the U.S. economy would expand no more than 2% next year. The survey, prepared by the chief economist of Fannie Mae, really showed the U.S. economy may expand 4.5% in 2005, Bloomberg reported. U.S. truckers including JB Hunt Transport Services and railroads such as Union Pacific are hiring more workers and asking customers to spread out shipments because of record demand for cargo hauling, Bloomberg said. Intel said third-quarter profit rose 15%, as record stockpile of computer chips increased expenses, Bloomberg said. Yahoo! said third-quarter profit more than tripled and sales more than doubled on higher advertising revenue and a gain from selling shares of Google, Bloomberg said.
BOTTOM LINE: The Portfolio finished lower today on weakness in my steel, Chinese ADR and Internet longs. I added a few new longs in the afternoon, leaving the Portfolio 100% net long. One of my new longs is PLMO and I am using a $28.95 stop-loss on the position. The tone of the market improved greatly during the afternoon as the advance/decline line rose and volume increased. As well, commodity prices declined, the US dollar gained, interest rates fell and measures of investor anxiety rose today. The market is also responding well to Intel and Yahoo's earnings in after-hours.
NASDAQ 1,925.17 -.19%
Leading Sectors
Homebuilders +1.26%
I-Banks +.77%
Utilities +.70%
Lagging Sectors
Semis -1.32%
Oil Service -1.45%
Iron/Steel -1.73%
Other
Crude Oil 52.20 -.59%
Natural Gas 6.61 -.32%
Gold 416.60 unch.
Base Metals 123.37 -1.51%
U.S. Dollar 87.94 +.46%
10-Yr. T-note Yield 4.09% -.80%
VIX 15.05 +2.31%
Put/Call .99 +28.57%
NYSE Arms 1.75 +44.63%
After-hours Movers
INTC +3.40% on bargain-hunting after meeting 3Q estimate and lowering 4Q guidance.
ASKJ +3.46% on positive YHOO earnings report.
STM +5.36% on optimism over INTC report.
NABI +4.81% after saying that StaphVAX received Fast Track Designation from the FDA.
Recommendations
Goldman reiterated Outperform on MER, MDT and YHOO.
After-hours News
U.S. stocks finished slightly lower today after a late-afternoon rebound on optimism over declining energy prices. After the close, Walt Disney's Hong Kong Disneyland will open Oct. 14 next year, the Wall Street Journal reported. The Business Council corrected a survey of CEOs, saying the placement of numbers in the wrong column in a spreadsheet caused their forecast to show the U.S. economy would expand no more than 2% next year. The survey, prepared by the chief economist of Fannie Mae, really showed the U.S. economy may expand 4.5% in 2005, Bloomberg reported. U.S. truckers including JB Hunt Transport Services and railroads such as Union Pacific are hiring more workers and asking customers to spread out shipments because of record demand for cargo hauling, Bloomberg said. Intel said third-quarter profit rose 15%, as record stockpile of computer chips increased expenses, Bloomberg said. Yahoo! said third-quarter profit more than tripled and sales more than doubled on higher advertising revenue and a gain from selling shares of Google, Bloomberg said.
BOTTOM LINE: The Portfolio finished lower today on weakness in my steel, Chinese ADR and Internet longs. I added a few new longs in the afternoon, leaving the Portfolio 100% net long. One of my new longs is PLMO and I am using a $28.95 stop-loss on the position. The tone of the market improved greatly during the afternoon as the advance/decline line rose and volume increased. As well, commodity prices declined, the US dollar gained, interest rates fell and measures of investor anxiety rose today. The market is also responding well to Intel and Yahoo's earnings in after-hours.
Mid-day Update
S&P 500 1,118.46 -.53%
NASDAQ 1,916.88 -.67%
Leading Sectors
Homebuilders +.26%
Tobacco +.22%
I-Banks +.11%
Lagging Sectors
Papers -1.34%
Iron/Steel -1.52%
Semis -2.07%
Other
Crude Oil 53.43 -.39%
Natural Gas 6.74 -3.62%
Gold 415.80 -1.80%
Base Metals 123.37 -1.51%
U.S. Dollar 88.09 +.63%
10-Yr. T-note Yield 4.08% -1.12%
VIX 15.22 +3.47%
Put/Call .88 +14.29%
NYSE Arms 2.21 +82.64%
Market Movers
STT -5.9% after missing 3Q estimates.
SNDK -3.9% after Citi SmithBarney downgrade to Sell.
TZOO +7.1% on strong 3Q earnings.
INFY +5.3% on strong 2Q earnings and positive 3Q guidance.
CTV -18.0% after reaffirming 3Q and lowering 4Q forecasts.
SFL -8.7% on Citi SmithBarney downgrade to Sell and profit-taking.
FAST -6.7% after slightly missing 3Q estimates.
OSK -5.7% after losing out on a $1.97 billion contract to build support vehicles for the U.K.'s Ministry of Defense.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on UNH, MER, NFP, GCI, AHC, AMT, BBY, XRX and IBM. Goldman reiterated Underperform on EK and DYN. Citi SmithBarney said to Buy DPZ ahead of earnings, target $21. Citi downgraded SNDK to Sell, target $25. Citi reiterated Buy on URBN, target $43. Citi downgraded SFL to Sell, target $16. Citi reiterated Buy on NPSP, target $30. WFMI cut to Undeweight on JP Morgan. ZION rated Buy at Deutsche Bank, target $71. OS rated Buy at Jeffries, target $22. MI rated Buy at Deutsche Bank, target $46. WOR cut to Underweight at Prudential, target $15. PSUN raised to Outperform at Bear Stearns.
Mid-day News
U.S. stocks are modestly lower mid-day on continuing fears over high energy prices and earnings worries. Anheuser-Busch will have a strong position in the Chinese market after its acquisition of Harbin Brewery Group, the No. 4 Chinese beer-maker, the Wall Street Journal reported. General Maritime, the second-largest owner of mid-sized oil tankers, expects freight rates to stay near record highs as scrapping of single-hulled vessels reduces supplies, Bloomberg said. DreamWorks SKG plans to sell shares to the public either this month or in early November, the NY Times said. EBay is working to repair its PayPal service, which has had some disruptions following a monthly software upgrade on Oct. 8, the AP said. California voters are likely to pass a ballot measure that would generate as much as $800 million annually for mental health services by taxing the state's millionaires, the LA Times reported. President Bush indicated he might allow imports from Canada of cheaper prescription drugs that his administration has opposed, the NY Times reported. Chicago-area home foreclosures declined 8% from 2002-2003, the first time the delinquency actions have decreased in a decade, the Chicago Sun-Times reported. The Fed's pace of rate increases will probably be "a lot slower" after an expected rate boost next month, said Paul McCulley, a managing director at PIMCO. Merrill Lynch said third-quarter profit fell 8% as an industry-wide slump in stock trading hurt revenue, Bloomberg reported. Chiron, which on Oct. 5 said it wouldn't sell influenza vaccine in the U.S. this season, said it received a grand jury subpoena from the U.S. Attorney's office. Johnson & Johnson said third-quarter profit rose 13% on higher sales of the anti-psychotic drug Risperdal and Remicade for rheumatoid arthritis, Bloomberg reported. The Afghan election was "overwhelming positive" and brings the country closer to a "vigorous democracy," a senior UN official told the Security Council. "The impressive participation, the enthusiasm and pride of the women and men voting for the first time, the peaceful and orderly environment in which the electoral operation unfolded made it a very special event." Crude oil is declining, after reaching $54.45/bbl. in NY, on speculation that demand doesn't warrant prices at this level, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on weakness in my shipping, base metal and internet longs. I have not traded today and the Portfolio is still 75% net long. The tone of the market is negative today, however measures of investor anxiety are rising again, which is a positive. I continue to believe the major indices are just consolidating recent gains before another meaningful push higher later this month. U.S. economic growth should accelerate in November and investors will begin to anticipate this over the next couple of weeks. The IEA today said, after oil demand increases 3.4% this year, crude demand will fall next year due to slowing world economic growth and China's move to natural gas. Slowing demand and increased production should push crude prices back to the $30-40/bbl. range next year. I expect stocks to trade mixed-to-higher into the close.
NASDAQ 1,916.88 -.67%
Leading Sectors
Homebuilders +.26%
Tobacco +.22%
I-Banks +.11%
Lagging Sectors
Papers -1.34%
Iron/Steel -1.52%
Semis -2.07%
Other
Crude Oil 53.43 -.39%
Natural Gas 6.74 -3.62%
Gold 415.80 -1.80%
Base Metals 123.37 -1.51%
U.S. Dollar 88.09 +.63%
10-Yr. T-note Yield 4.08% -1.12%
VIX 15.22 +3.47%
Put/Call .88 +14.29%
NYSE Arms 2.21 +82.64%
Market Movers
STT -5.9% after missing 3Q estimates.
SNDK -3.9% after Citi SmithBarney downgrade to Sell.
TZOO +7.1% on strong 3Q earnings.
INFY +5.3% on strong 2Q earnings and positive 3Q guidance.
CTV -18.0% after reaffirming 3Q and lowering 4Q forecasts.
SFL -8.7% on Citi SmithBarney downgrade to Sell and profit-taking.
FAST -6.7% after slightly missing 3Q estimates.
OSK -5.7% after losing out on a $1.97 billion contract to build support vehicles for the U.K.'s Ministry of Defense.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on UNH, MER, NFP, GCI, AHC, AMT, BBY, XRX and IBM. Goldman reiterated Underperform on EK and DYN. Citi SmithBarney said to Buy DPZ ahead of earnings, target $21. Citi downgraded SNDK to Sell, target $25. Citi reiterated Buy on URBN, target $43. Citi downgraded SFL to Sell, target $16. Citi reiterated Buy on NPSP, target $30. WFMI cut to Undeweight on JP Morgan. ZION rated Buy at Deutsche Bank, target $71. OS rated Buy at Jeffries, target $22. MI rated Buy at Deutsche Bank, target $46. WOR cut to Underweight at Prudential, target $15. PSUN raised to Outperform at Bear Stearns.
Mid-day News
U.S. stocks are modestly lower mid-day on continuing fears over high energy prices and earnings worries. Anheuser-Busch will have a strong position in the Chinese market after its acquisition of Harbin Brewery Group, the No. 4 Chinese beer-maker, the Wall Street Journal reported. General Maritime, the second-largest owner of mid-sized oil tankers, expects freight rates to stay near record highs as scrapping of single-hulled vessels reduces supplies, Bloomberg said. DreamWorks SKG plans to sell shares to the public either this month or in early November, the NY Times said. EBay is working to repair its PayPal service, which has had some disruptions following a monthly software upgrade on Oct. 8, the AP said. California voters are likely to pass a ballot measure that would generate as much as $800 million annually for mental health services by taxing the state's millionaires, the LA Times reported. President Bush indicated he might allow imports from Canada of cheaper prescription drugs that his administration has opposed, the NY Times reported. Chicago-area home foreclosures declined 8% from 2002-2003, the first time the delinquency actions have decreased in a decade, the Chicago Sun-Times reported. The Fed's pace of rate increases will probably be "a lot slower" after an expected rate boost next month, said Paul McCulley, a managing director at PIMCO. Merrill Lynch said third-quarter profit fell 8% as an industry-wide slump in stock trading hurt revenue, Bloomberg reported. Chiron, which on Oct. 5 said it wouldn't sell influenza vaccine in the U.S. this season, said it received a grand jury subpoena from the U.S. Attorney's office. Johnson & Johnson said third-quarter profit rose 13% on higher sales of the anti-psychotic drug Risperdal and Remicade for rheumatoid arthritis, Bloomberg reported. The Afghan election was "overwhelming positive" and brings the country closer to a "vigorous democracy," a senior UN official told the Security Council. "The impressive participation, the enthusiasm and pride of the women and men voting for the first time, the peaceful and orderly environment in which the electoral operation unfolded made it a very special event." Crude oil is declining, after reaching $54.45/bbl. in NY, on speculation that demand doesn't warrant prices at this level, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on weakness in my shipping, base metal and internet longs. I have not traded today and the Portfolio is still 75% net long. The tone of the market is negative today, however measures of investor anxiety are rising again, which is a positive. I continue to believe the major indices are just consolidating recent gains before another meaningful push higher later this month. U.S. economic growth should accelerate in November and investors will begin to anticipate this over the next couple of weeks. The IEA today said, after oil demand increases 3.4% this year, crude demand will fall next year due to slowing world economic growth and China's move to natural gas. Slowing demand and increased production should push crude prices back to the $30-40/bbl. range next year. I expect stocks to trade mixed-to-higher into the close.
Tuesday Watch
Earnings of Note
Company/Estimate
FAST/.47
GCI/1.18
INTC/.27
JNJ/.76
LLTC/.32
MER/.92
YHOO/.09
TZOO/.08
STT/.65
SONC/.33
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on YHOO and UST. Goldman reiterated Underperform on RAI.
Late-Night News
Asian indices are lower on weakness in chipmakers and electronics companies in the region. Microsoft plans to spend $20 billion over the next 6 years on digital media innovation, the Times of London reported. The Saudi Arabian government banned women from voting or running in its first nationwide elections, the AP reported. Some U.S. companies are already planning investments based on a recent bill Congress approved that would provide $76.5 billion in tax breaks for manufacturers, the Wall Street Journal reported. India may sell up to 10% of profitable state-run companies, the Economic Times reported. China's inflation will start to ease rapidly this quarter as growth in food prices abates, the Shanghai Securities News reported. JP Morgan and Morgan Stanley offered to help rescue Daiei, Japan's third-largest retailer, the Nihon Keizai newspaper reported.
Late-Night Trading
Asian Indices are -1.50% to -.25% on average.
S&P 500 indicated -.13%.
NASDAQ 100 indicated -.28%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on weakness in technology shares and another up-tick in oil prices. U.S. stocks should finish their recent consolidation within the next 2 weeks and head meaningfully higher through year-end. Thus, I am looking to add to favorite longs on any excessive weakness. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
FAST/.47
GCI/1.18
INTC/.27
JNJ/.76
LLTC/.32
MER/.92
YHOO/.09
TZOO/.08
STT/.65
SONC/.33
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on YHOO and UST. Goldman reiterated Underperform on RAI.
Late-Night News
Asian indices are lower on weakness in chipmakers and electronics companies in the region. Microsoft plans to spend $20 billion over the next 6 years on digital media innovation, the Times of London reported. The Saudi Arabian government banned women from voting or running in its first nationwide elections, the AP reported. Some U.S. companies are already planning investments based on a recent bill Congress approved that would provide $76.5 billion in tax breaks for manufacturers, the Wall Street Journal reported. India may sell up to 10% of profitable state-run companies, the Economic Times reported. China's inflation will start to ease rapidly this quarter as growth in food prices abates, the Shanghai Securities News reported. JP Morgan and Morgan Stanley offered to help rescue Daiei, Japan's third-largest retailer, the Nihon Keizai newspaper reported.
Late-Night Trading
Asian Indices are -1.50% to -.25% on average.
S&P 500 indicated -.13%.
NASDAQ 100 indicated -.28%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on weakness in technology shares and another up-tick in oil prices. U.S. stocks should finish their recent consolidation within the next 2 weeks and head meaningfully higher through year-end. Thus, I am looking to add to favorite longs on any excessive weakness. The Portfolio is 75% net long heading into tomorrow.
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