NASDAQ 2,159.18 -.75%
Leading Sectors
Airlines +.82%
Insurance +.23%
Networking -.10%
Lagging Sectors
Iron/Steel -2.42%
Energy -3.30%
Oil Service -3.31%
Other
Crude Oil 41.55 -4.3%
Natural Gas 5.77 -6.16%
Gold 429.20 -2.1%
Base Metals 125.66 +.55%
U.S. Dollar 81.30 +.56%
10-Yr. T-note Yield 4.21% -.19%
VIX 13.97 +5.12%
Put/Call .77 +24.19%
NYSE Arms .99 -17.50%
Market Movers
RSTG +32.9% on optimism for its electric motor technology.
DCAI +17.4% on optimism over its potential growth prospects.
NIHD +5.5% on optimism for growth prospects in Latin and South America.
WAG +4.48% on better-than-expected 1Q earnings report.
WWCA +6.2% on Merrill upgrade to Buy.
BDY -16.4% on Raymond James downgrade to Market Perform.
AGIX -13.8% after a disappointing update on its AGI-1067 clinical program for the treatment of atherosclerosis in patients with coronary artery disease.
MCRS -5.4% on profit-taking.
MACR -9.4% on comments from Piper Jaffray.
*Energy-related stocks down across the board on lower energy prices and profit-taking.
Economic Data
Construction Spending for November fell .4% versus estimates of a .4% rise and a .3% increase in October.
ISM Manufacturing for December rose to 58.6 versus estimates of 58.5 and a reading of 57.8 in November.
ISM Prices Paid for December fell to 72.0 versus estimates of 72.0 and a reading of 74.0 in November.
Recommendations
-Goldman Sachs reiterated Outperform on EMC, WAG and BC. Goldman lowered BE to Underperform.
-Banc of America upgraded SPG to Buy, target $67. Banc of America raised PXLW to Buy, target $15. Banc of America upgraded MMC to Buy, target $39.
-Citi Smith Barney said they would remain sellers of oil-tanker stocks, OSG, FRO, GMR and SFL. Citi says upside not factored in at BEAS, SEBL, ASCL, INFA and SY.
-UBS cut EQY to Reduce, target $21. UBS cut GGP to Reduce, target $34.
-Morgan Stanley raised ZMH to Overweight, target $95. Morgan raised GSF to Overweight, target $45. Morgan raised CAM to Overweight, target $70.
-Raymond James upgraded WSM to Strong Buy, target $47.50.
-Merrill Lynch upgraded WWCA to Buy, target $36.
JP Morgan raised SYK to Overweight.
Mid-day News
U.S. stocks are lower mid-day on profit-taking in small-caps and declines in commodity-related stocks. Conde Nast Publications, the publisher of Vogue, will start an online shopping Web site in March after a trial of the service in September, the Wall Street Journal reported. The FBI said incidents in which laser beams were shone at commercial airplanes weren’t related to terrorist activity, USA Today reported. A US law change means more retirees can switch Individual Retirement Accounts to so-called Roth IRAs, from which they aren’t compelled to withdraw money in their lifetimes, the Wall Street Journal reported. The US trade deficit shows foreigners are investing in the US economy, and doesn’t mean Americans are living beyond their means, Arthur Lafffer, chairman of Laffer Associates, wrote in the Wall Street Journal. Economists at Eaton Corp. won the Wall Street Journal’s semi-annual economic forecasting contest, the paper reported. The “Dogs of the Dow” failed to beat the Dow’s total return in 2004, the Wall Street Journal reported. Wal-Mart Stores estimated that December sales at US stores open at least a year rose about 3%, boosted by a surge of after-Christmas shoppers, Bloomberg said. Shares of Skis Rossignol SA jumped to a four-year high after the world’s largest ski maker said its controlling shareholder is considering combining the company with California surf-equipment maker Quiksilver, Bloomberg reported. Manhattan apartment prices gained 16% in the fourth quarter as the city’s economy accelerated and incomes rose at the fastest pace in six years, Bloomberg reported. President Bush today will name two former presidents, his father George Bush and Bill Clinton, to lead a nationwide fund-raising effort to aid victims of the Asian tsunamis, a White House spokesman said. Morgan Stanley’s Wien predicts the S&P 500 will be little changed in 2005, the US dollar will extend its decline against the yen and euro and Japan’s economy will slip into recession, Bloomberg reported. Advanced Micro Devices this week will unveil a chip to let people download digital television programs from a set-top box to a portable media player, without a PC, Bloomberg reported. Crude oil in NY plunged more than $2/bbl. on the first day of trading in 2005 on warmer weather, Bloomberg reported. The US dollar rose for a second day against the euro as a report showed manufacturing grew in December, suggesting production will boost the economy in 2005, Bloomberg said. Gold in NY fell to the lowest price in two months as the dollar rallied against the euro, eroding the appeal of precious metals as an alternative investment to US stocks and bonds, Bloomberg said. US manufacturing grew at a quicker pace in December as more factories reported a rise in orders and exports increased, a sign the economy strengthened heading into 2005, Bloomberg said.
Bottom Line: The Portfolio is lower mid-day on losses in my small-cap technology long positions. I have not traded today and the Portfolio is still 125% net long. The tone of the market is weak today as volume is heavy and the advance/decline line is poor. However, most of the selling is confined to last year’s big winners. The ISM continues to show significant improvement in manufacturing. The index averaged 60.5 last year, the highest since 1973. The report showed the biggest concern among manufacturers was higher commodity prices, which are currently falling. I expect commodity prices to continue to fall through the first-half on a stabilizing US dollar, decelerating demand from Europe/Asia and increased supply. Profit-taking in small-caps, which have substantially outperformed over the last few years, will likely ebb over the coming days as historically a rising dollar and strong US economy benefits these stocks. I expect US stocks to rise from current levels into the close.