Mid-day Report

Indices
S&P 500 1,196.33 +.36%
Dow 10,733.87 +.65%
NASDAQ 2,054.43 +.09%
Russell 2000 626.60 +.14%
DJ Wilshire 5000 11,771.46 +.31%
S&P Barra Growth 573.45 +.33%
S&P Barra Value 618.57 +.38%
Morgan Stanley Consumer 587.87 +.19%
Morgan Stanley Cyclical 759.71 +.54%
Morgan Stanley Technology 468.42 -.07%
Transports 3,577.88 +.19%
Utilities 352.64 +.22%
Put/Call .90 -3.23%
NYSE Arms 1.00 -37.11%
Volatility(VIX) 11.81 +1.81%
ISE Sentiment 124.00 -4.62%
US Dollar 85.46 -.53%
CRB 284.85 +1.42%

Futures Spot Prices
Crude Oil 46.90 +3.17%
Unleaded Gasoline 128.80 +4.09%
Natural Gas 6.17 +.16%
Heating Oil 131.15 +3.74%
Gold 419.30 +1.21%
Base Metals 122.07 +1.64%
Copper 142.40 +2.67%
10-year US Treasury Yield 4.06% +2.04%

Leading Sectors
Oil Service +2.55%
Energy +2.42%
Commodity +2.17%

Lagging Sectors
Networking -67%
Software -.73%
Airlines -.73%

Market Movers
ATVI -12.3% after saying some executives sold 7.1 million shares late yesterday.
ERICY -9.14% after missing 4Q estimates.
SYNA -16.53% on multiple downgrades.
PBH +10.0% on strong demand for IPO.
HLND +28.44% on strong demand for IPO.
UNTD +18.35% on strong 4Q results.
ERES +18.37% after meeting 4Q estimates and reiterating 1Q guidance.
CTSH +16.4% after beating 4Q estimates and raising 1Q outlook.
AUGT +13.94% after KLA-Tencor(KLAC) offered to buy it for $11.50 a share in cash.
WFMI +6.6% after beating 4Q estimates and reiterating 05 outlook.
NFX +6.03% after beating 4Q estimates.
BYD +8.34% after beating 4Q estimates.
NVT +9.48% after beating 4Q revenue estimates and raising 05 guidance.
PLAY -10.7% on no news.
ILSE -7.96% after missing 4Q estimates and raising 05 outlook.
SHPGY -8.86% after Canada ordered the withdrawal of its best-selling product, Adderall XR, after it was linked to at least 20 deaths.
SEH -9.85% after lowering 1Q estimates and announcing plant closures.
NBIX -5.56% on worries over 4Q report.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
-The Trade Balance for Dec. came in at -$56.4B versus estimates of -$57.0B and -$59.3B in November.
-Initial Jobless Claims for last week fell to 303K versus estimates of 325K and 316K the prior week.
-Continuing Claims rose to 2737K versus estimates of 2700K and 2690K prior.

Recommendations
-Goldman Sachs: Reiterated Outperform on DO, AET, FSH and AGN. Reiterated Underperform on VRTX. Raised PKG to Outperform.
-Citi SmithBarney: Reiterated Sell on TMK, target $55. Reiterated Buy on MPG, target $28.00. Reiterated Sell on CIEN, target $2.40. Reiterated Buy on CAM, target $70. Reiterated Buy on AAP, target $48. Reiterated Buy on SRCL, target $56.
-Banc of America: Upgraded Semiconductor Sector to Neutral. Upgraded ADI to Buy, target $44. Upgraded MXIM to Buy, target $50. Upgraded XLNX to Buy, target $33. Upgraded POWI to Buy, target $23.50.
-JP Morgan: Raised YCC to Overweight, target $38. Raised CATT to Overweight. Raised GKIS to Overweight. Rated BBW Overweight, target $38.
-CIBC: Raised BYD to Outperform, target $52.
-Merrill Lynch: Added HCA to Focus 1 list. Rated STX Buy, target $65.
-Legg Mason: Raised STFC to Buy, target $30.
-Lehman Brothers: Raised VRC to Overweight, target $36.
-CSFB: Raised MKTX to Outperform, target $17.
-Deutsche Bank: Rated TS Buy, target $63.
-Prudential: Cut HPQ to Underweight, target $26. Rated WPI Underweight, target $26. Rated IVX Overweight, target $20. Rated TEVA Overweight, target $33. Rated NVL Underweight, target $17.

Mid-day News
US stocks are higher mid-day on gains in commodity-related stocks and optimism over an improving labor market. Verizon Communications made an informal stock and cash offer for MCI and talks between the two companies have intensified, the Wall Street Journal said. US auto-insurance rates this year are expected to rise 1.5%, their smallest increase since 2001, the Wall Street Journal reported. Nissan Motor is achieving strong sales figures in the US, Japan and Europe, even beating Toyota Motor and Honda Motor by some measures, the Wall Street Journal reported. Toyota Motor introduced its FJ Cruiser, as automakers gear up to sell smaller-sized, yet military-style, versions of the sport-utility vehicle to American consumers, the Wall Street Journal said. Sirius Satellite Radio and Apple Computer have held talks about a possible partnership using the iPod digital music player to carry radio, the NY Daily News said. The median price for a condominium last year surpassed that of a single-family home for the first time since such figures were tracked in the early 1980s, the Wall Street Journal reported. The US Army said it won’t rely so much on National Guard soldiers and reservists in Iraq because they impose strains on the troops, the AP reported. The US Environmental Protection Agency and UPS are expected to announce a test project today to demonstrate a transmission that uses less fuel and emits fewer pollutants, the NY Times reported. Louisiana Energy Services is trying to build a uranium enrichment plant in the dessert town of Hobbs, New Mexico, just west of the Texas border, in what would be the largest commercial nuclear project in the country in more than three decades, the NY Times reported. Russia will ban foreign companies from bidding for large deposits of oil and metals, including the Sakhalin-3 oil field and the Sukhoi Log gold deposit, Interfax reported. Palestinian Authority President Abbas fired his security commanders in the Gaza Strip after mortars were fired today at a Jewish settlement, the AP reported. US state governments’ finances have improved enough for Moody’s Investors Service to change its credit outlook on the group to stable, saying their budgets have rebounded from the recession, Bloomberg said. The US FCC today may begin dismantling rules that force Verizon Communications and other phone companies to pay $37 billion a year in call-connection fees to competitors, Bloomberg reported. The number of Americans filing first-time claims for unemployment insurance unexpectedly fell 13,000 last week to the lowest level in more than four years, Bloomberg reported. The US trade gap narrowed 4.9% in December as the price of foreign oil sank and exports jumped, Bloomberg said. Pfizer and Microsoft filed lawsuits against two Internet pharmacies and sought to seize the domain names of more than a dozen others to stop the sale of counterfeit Viagra, the top-selling male impotence drug, Bloomberg reported. North Korea said it has produced nuclear bombs and is pulling out of negotiations with the US and four other nations to abandon the weapons program, Bloomberg reported. Riggs National agreed to a reduced takeover bid from PNC Financial, Bloomberg said. The benchmark US 10-year T-note fell for the first day this week, pushing its yield back above 4%, after jobless claims unexpectedly fell and exports rose, Bloomberg reported. Oil is rising more than $1/bbl. after the IEA said global demand is increasing faster than expected, Bloomberg reported.

BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my oil service shorts. I exited a few of these shorts as they hit stop-losses and added some new technology shorts, thus leaving the Portfolio 25% net long. One of my new shorts is ADBL and I am using a stop-loss of $27.85 on this position. The tone of the market is mixed, notwithstanding gains in the Dow. The advance/decline line is nearly unchanged, technology stocks are underperforming, a number of sectors are lower and volume is decent. As well, measures of investor anxiety are mostly lower and commodity prices are rising across the board. I continue to expect weakness to resurface over the next few days, however I expect US stocks to trade mixed into the close.

Thursday Watch

Late-Night News
Asian indices are mixed as gains in financial shares are offsetting losses in technology stocks in the region. Israel will increase the number of Palestinian prisoners released if its plan to disengage from the Gaza Strip and parts of the West Bank goes smoothly, the Israeli daily newspaper Haaretz said. Some of Saddam Hussein's top officials will go on trial before an Iraqi tribunal in televised proceedings within weeks, the AP reported. The US and the European Union may find it difficult to reach an agreement on subsidies to Boeing and Airbus SAS, the Wall Street Journal reported. Democratic Senator Joe Biden wrote in the Wall Street Journal that more foreign governments should work with the US to create a stable and united Iraq. Indian Prime Minister Singh has set a six-month target for changing labor and tax laws, developing a foreign direct investment policy and eliminating some subsidies, the Business Standard reported. China's central bank will remove restrictions on foreign banks issuing credit and debit cards in the country by the end of next year to foster more competition and improve management of the business, state news agency Xinhua reported. Huawei Technologies is among Chinese telecommunications equipment makers increasing business in other countries, forcing competitors to lower prices, the Wall Street Journal reported. SEC Chairman Donaldson said he will press for better disclosure on executive pay, the Wall Street Journal said. GlaxoSmithKline Plc expects to finish intermediate clinical trials this year on more than a dozen medicines, the Wall Street Journal reported.

Late Recommendations
-Goldman Sachs: Reiterated Outperform on ACS, TMK, STR and NFX. Reiterated Underperform on DE, AG and CNH.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.20%.

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

Earnings of Note
Company/Estimate
AET/1.80
ADI/.29
ADBL/.03
CZR/.08
CTSH/.19
DELL/.36
MAY/1.28
NBIX/-.35
ODP/.20
PIXR/.77
XMSR/-1.02

Splits
None of note.

Economic Data
-Trade Balance for December is estimated at -$57.0B versus -$60.3B in November.
-Initial Jobless Claims for last week are estimated at 325K versus 316K the prior week.
-Continuing Claims are estimated at 2700K versus 2696K prior.
-Monthly Budget Statement for January is estimated at $10.0B versus -$1.4B in December.

BOTTOM LINE: I expect US equities to open modestly higher on a bounce from today's sell-off. However, shares may weaken later in the afternoon on a resumption of today's worries. Long-term interest rates are falling for three main reasons: 1)Global economic growth is slowing 2)The US dollar is stabilizing 3)Inflation expectations are falling. In my opinion, the decline in rates is a positive. I expect fears of slowing growth will peak during the first half of the year. Low interest rates, weaker commodity prices, continuing employment gains and stimulative US reforms should boost growth in the second half of the year. I continue to expect the Fed to slow the pace of their rate hikes in the near future. The Portfolio is 50% net long heading into tomorrow.

Wednesday Close

Indices
S&P 500 1,191.99 -.86%
Dow 10,664.11 -.56%
NASDAQ 2,052.55 -1.64%
Russell 2000 625.71 -2.04%
DJ Wilshire 5000 11,734.30 -.96%
S&P Barra Growth 571.54 -1.04%
S&P Barra Value 616.24 -.68%
Morgan Stanley Consumer 586.75 -.82%
Morgan Stanley Cyclical 755.66 -1.09%
Morgan Stanley Technology 468.85 -1.26%
Transports 3,571.16 -1.07%
Utilities 351.86 -.38%
Put/Call .93 +19.23%
NYSE Arms 1.59 +41.96%
Volatility(VIX) 12.00 +3.45%
ISE Sentiment 130.00 -15.58%
US Dollar 84.92 -.21%
CRB 280.86 -.21%

Futures Spot Prices
Crude Oil 45.61 +.33%
Unleaded Gasoline 124.20 +.37%
Natural Gas 6.17 +.08%
Heating Oil 126.42 unch.
Gold 415.10 +.14%
Base Metals 120.10 +.37%
Copper 138.30 -.29%
10-year US Treasury Yield 3.97% -.96%

Leading Sectors
Insurance +.60%
Oil Service -.02%
Energy -.09%

Lagging Sectors
Disk Drives -2.58%
Biotech -3.07%
Airlines -3.87%

After-hours Movers
WFMI +5.04% after beating 4Q estimates and reiterating 05 outlook.
ERES +5.43% after meeting 4Q estimates and reiterating 1Q guidance.
BYD +5.4% after beating 4Q estimates.
SRVY +8.51% after meeting 4Q estimates, raising 05 guidance and announcing the acquisition of Zing Wireless for $30M.
TKLC -6.34% after only issuing partial 4Q results.
RARE -4.64% after meeting 4Q estimates and cutting 1Q forecast.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
-Goldman Sachs: Rated SSP Outperform, target $58. Reiterated Underperform on AMAT. Reiterated Outperform on AIG.

After-hours News
US stocks finished lower today, led down by weakness in small-caps and technology stocks over earnings worries. After the close, Michigan Governor Granholm wants the state to sell $2 billion of bonds over 10 years to finance the development of auto, health and security technology, the Detroit Free Press reported. WPP Group’s Young & Rubicam unit lost the advertising account for Sony’s electronics unit, which is worth more than $100 million, the Wall Street Journal reported. The NHL players union rejected the league’s latest contract proposal today and the two sides set a weekend deadline for saving the season, Canadian Press reported. US Steel CEO Surma said he is considering acquisitions in Europe and Russia, especially those that may supply coal or iron ore to the company’s steel plants in Serbia and Slovakia, Bloomberg reported. A US House committee investigating corruption in the UN/Iraq oil-for-food program said it might expand its probe to overall management of the world body and 16 related agencies, Bloomberg said. President Bush will ask Congress to approve $950 million in aid for countries to rebuild after the Asian tsunami that left more than 280,000 dead or missing, Bloomberg reported. Sudden emotional stress can trigger heart failure in people without cardiac disease, probably by fueling an overload of hormones that stun the organ, according to a study in the Feb.10 New England Journal of Medicine. Record, movie and software companies petitioned the US government to haul China into consultations at the WTO over pirated merchandise they say sapped $2.5 billion in sales last year, Bloomberg said. Arab Bank Plc didn’t know payments made by a Saudi charity through the bank’s branches in the West Bank and Gaza Strip were going to the families of suicide bombers, said Arab Bank’s chief banking officer.

BOTTOM LINE: The Portfolio finished lower today on losses in my semiconductor, homebuilding, networking and alternative energy longs. I exited a number of these positions in the afternoon as they reached stop-losses, thus leaving the Portfolio 50% net long. The tone of the market weakened noticeably into the close as the advance/decline line finished at its lows for the day, almost every sector fell and volume was decent. As well, small-caps and technology shares underperformed substantially. On the positive side, oil was unable to rally on today’s inventory data, the yield on the 10-year T-note fell below 4% and measures of investor anxiety rose into the close. I expect more weakness in the near-term on continuing worries over slowing global growth.

Mid-day Report

Indices
S&P 500 1,197.00 -.44%
Dow 10,692.26 -.30%
NASDAQ 2,068.50 -.87%
Russell 2000 632.09 -1.04%
DJ Wilshire 5000 11,789.88 -.50%
S&P Barra Growth 573.87 -.65%
S&P Barra Value 618.80 -.27%
Morgan Stanley Consumer 588.55 -.51%
Morgan Stanley Cyclical 759.05 -.65%
Morgan Stanley Technology 471.92 -.61%
Transports 3,584.41 -.70%
Utilities 353.23 +.01%
Put/Call .81 +3.85%
NYSE Arms .96 -12.50%
Volatility(VIX) 11.81 +1.81%
ISE Sentiment 130.00 -15.58%
US Dollar 85.04 -.07%
CRB 280.49 -.34%

Futures Spot Prices
Crude Oil 45.10 -.77%
Unleaded Gasoline 121.70 +.07%
Natural Gas 6.11 -.88%
Heating Oil 125.10 +.40%
Gold 413.80 -.12%
Base Metals 120.10 +.37%
Copper 138.20 -.43%
10-year US Treasury Yield 3.99% -.58%

Leading Sectors
Oil Service +.85%
Insurance +.68%
Energy +.34%

Lagging Sectors
Semis -1.67%
Biotech -1.97%
Airlines -2.39%

Market Movers
HPQ +5.1% on the ousting of CEO Fiorina after a five-year reign in which the shares dropped 50%.
ISPH -45.0% after saying its experimental treatment for dry eye failed to work in a study and Morgan Stanley downgrade to Equal-Weight.
ISRG +15.11% after substantially beating 4Q estimates.
NILE +14.2% after beating 4Q estimates, lowering 1Q guidance, reiterating 05 outlook and announcing $30M share buy-back.
ATN +12.66% after beating 1Q estimates and saying it will restructure its distribution chain.
USNA +11.19% after beating 4Q estimates and raising 1Q outlook.
VSTA +10.75% after substantially beating 1Q estimates and raising 05 guidance.
TBL +6.71% after beating 4Q estimates and giving positive guidance.
AOC +8.07% after beating 4Q estimates.
INPC +7.86% after beating 4Q estimates.
DRTK -17.2% after missing 4Q estimates.
SYNA -16.4% on continuing worries over sales to Apple Computer.
SNIC -15.45% after beating 3Q estimates and lowering 4Q outlook.
ASFI -12.83% after missing 1Q estimates.
CSC -5.12% after missing 3Q estimates.
NFI -5.91% on continuing weakness from 4Q report.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
Wholesale Inventories for December rose .4% versus estimates of a .9% increase and a 1.2% gain in November.

Recommendations
-Goldman Sachs: Reiterated Outperform on CSCO, AIG, AL and CI. Reiterated Underperform on TRB and LVLT. Raised PKG to Outperform.
-Citi SmithBarney: Said to Buy ACI, target $43. Reiterated Buy on CSCO, target $30. Reiterated Buy on CSC, target $67. Reiterated Buy on SLM, target $61. Reiterated Buy on RSG, target $36. Reiterated Buy on AMAT, target $22. Reiterated Buy on PRU, target $60. Reiterated Buy on PRE, target $71. Reiterated Buy on MPG, target $28.
-Merrill Lynch: Raised EBAY to Buy, target $96. Raised BEN to Buy, target $75.
-CSFB: Reiterated Outperform on CSCO.
-Deutsche Bank: Cut MSTR to Sell, target $60.
-CIBC: Rated GS Outperform, target $126.
-UBS: Raised OTEX to Buy, target $25.
-Morgan Stanley: Raised AMD to Overweight, target $25.
-Bear Stearns: Raised GRP to Outperform, target $28. Downgraded HPQ to Underperform.
-Prudential: Raised GGP to Overweight, target $38.
-Banc of America: Raised RHAT to Buy, target $16.

Mid-day News
US stocks are lower mid-day on worries over slowing earnings growth and hawkish Fed comments. Foreign investment into Russia fell 12% last year, Interfax reported. A newly formed group of more than 20 companies is seeking to protect the Internet telephone service industry from hackers and viruses, the Wall Street Journal said. MCI Inc. investors may be uninterested in Qwest Communications’ tentative $6.3 billion offer for the second largest US long-distance company without a premium to the current share price, the Wall Street Journal reported. Iran may face UN sanctions if it doesn’t halt efforts to build nuclear weapons, the AP reported. Diamond retailers such as South Africa’s De Beers are facing increased competition and marketing and a more educated consumer that is demanding lower prices for the gems, the NY Times reported. Luxury retailers such as Neiman Marcus, Coach and Tiffany may be seeking to acquire other retailers or perhaps sell themselves to take advantage of strong demand, the NY Times reported. Starbucks plans to begin selling hot breakfast items in 100 outlets in Washington, DC, this year and offer customers the chance to burn music CDs in stores, the Wall Street Journal reported. A new estimate by the Bush administration increases the expected cost of the Medicare drug benefit to $720 billion, more than the $400 billion forecast when the law was passed, the NY Times reported. The US last week sent an emissary to see Chinese President Hu Jintao to urge him to put more pressure on North Korea to stop its nuclear weapons program, the NY Times reported. About 68% of American surveyed said benefits for the wealthiest should be cut to help address concerns about the Social Security system, USA Today reported. Citigroup plans to introduce the Chairman card for its wealthy clients beginning next month, giving them free access to airport lounges and enabling them to earn free airline tickets faster, the Wall Street Journal reported. Sempra Energy’s San Diego Gas & Electric utility plans to offer some customers high-speed Internet access through power lines as part of a pilot project, the LA Times reported. White House officials are meeting today on plans that may restrict the growth of Fannie Mae and Freddie Mac, or sever the companies’ ties to the US Treasury, the American Banker reported. Russia plans to sign an agreement with the US to restrict the sale of shoulder-fired anti-aircraft missiles to hot spots of concern to the US, the AP reported. Hewlett-Packard Chairwoman and CEO Fiorina will step down, effective immediately, Bloomberg reported. GM, Ford and DaimlerChrysler are testing a program with Michigan health care and hospital companies where doctors cut costs and errors by submitting prescriptions electronically, Bloomberg reported. Transsexual golfers will be allowed to play in professional competitions such as the women’s British Open following a review by the Ladies’ Golf Union, Bloomberg reported. The European Union said it is going ahead with plans to lift its 15-year-old embargo on arms sales to China, rebuffing a plea by US Secretary of State Condoleezza Rice, Bloomberg said. The US Senate, considering a measure favored by the Bush administration to restrain class-action lawsuits, defeated the first of several Democratic amendments to make it easier for consumers to press damage claims against companies, Bloomberg reported. Long-term interest rates are falling after Fed Bank of Atlanta President Guynn suggested the bank may soon need to remove the word “measured” from its interest-rate policy statement, Bloomberg reported.

BOTTOM LINE: The Portfolio is lower mid-day on losses in my alternative energy, semiconductor and software longs. I have not traded today, thus the Portfolio remains 125% net long. The tone of the market is weaker as decliners are swamping advancers, volume is decent, most sectors are lower and small-caps/tech are underperforming. The continuing decline in long-term interest rates leads me to believe the Fed would be making a huge mistake to increase rates at an accelerated pace. However, I think recent hawkish comments are just attempts to maintain the rally in the US dollar and do not pose a serious risk at this point. In my opinion, with the US dollar stabilizing, global growth slowing and inflation decelerating, there is not sufficient reason to continue to hike rates at their current pace, much less an accelerated rate. Oil’s inability to maintain morning gains is a positive, considering today’s inventory data. Measures of investor anxiety are mixed on today’s declines, which is a negative. I expect US stocks to rise modestly into the close on falling interest rates, weaker energy prices and short-covering.

Wednesday Watch

Late-Night News
Asian indices are mixed as gains in India are being offset by losses in Australia. KPMG Intl., Ernst & Young Intl., PricewaterhouseCoopers LLP and Deloitte & Touche LLP have doubled their audit fees with US clients due to the requirements of Sarbanes-Oxley legislation, the Financial Times said. The outlook for the US economy this quarter improved on signs of faster income growth and more corporate investment in equipment, according to results form a monthly survey by Bloomberg. The economy is projected to expand at a 3.6% annual pace from January through March, according to the median estimate of 74 economists surveyed. Profits at US companies, including ConocoPhillips and US Steel, climbed 18% in the fourth quarter, capping the biggest annual rise in a decade, Bloomberg reported. Earnings increased about 19.5% in all of 2004, based on results from the 384 member companies of the S&P 500 that have reported so far, Bloomberg said. DaimlerChrysler AG is finding that growth at the company's Chrysler unit is being set back by a slump in profit in sales by Mercedes, the Wall Street Journal reported. ING Groep NV is promoting its Internet-only bank, ING Direct, as the best way of expanding in a fragmented European banking market without mergers and acquisitions, the Wall Street Journal reported. Israeli Defense Minister Shaul Mofaz approved an easing of restrictions on Palestinians after a truce was declared by the two parties in a summit held in an Egyptian resort, Haaretz reported.

Late Recommendations
-Goldman Sachs: Reiterated Outperform on GNW and HEW. Reiterated Underperform on NFS, PPS and TCO.

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.10%.

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

Earnings of Note
Company/Estimate
RKY/1.13
AIG/1.11
BYD/.37
CI/1.61
CAM/.53
DO/.13
ERES/.12
TKLC/.16
ZBRA/.44

Splits
None of note.

Economic Data
Wholesale Inventories for December are estimated to rise .9% versus a 1.1% increase in November.

BOTTOM LINE: I expect US equities to open slightly lower in the morning on mild weakness in technology shares. However, stocks may rise later in the day on optimism over declining energy prices, low interest rates, increasing fund flows and short-covering. The Portfolio is 125% net long heading into tomorrow.

Tuesday Close

Indices
S&P 500 1,202.30 +.05%
Dow 10,724.63 +.08%
NASDAQ 2,086.68 +.22%
Russell 2000 638.72 +.33%
DJ Wilshire 5000 11,848.39 +.08%
S&P Barra Growth 577.52 +.07%
S&P Barra Value 620.46 +.02%
Morgan Stanley Consumer 591.59 +.04%
Morgan Stanley Cyclical 763.98 +.05%
Morgan Stanley Technology 474.84 -.21%
Transports 3,609.87 +.21%
Utilities 353.19 +.39%
Put/Call .78 +8.33%
NYSE Arms 1.12 -8.94%
Volatility(VIX) 11.60 -1.11%
ISE Sentiment 154.00 -22.61%
US Dollar 85.15 +.05%
CRB 281.46 +.09%

Futures Spot Prices
Crude Oil 45.45 +.38%
Unleaded Gasoline 121.62 +.33%
Natural Gas 6.18 +3.62%
Heating Oil 124.60 +1.25%
Gold 414.10 -.31%
Base Metals 119.66 -.42%
Copper 139.00 +.11%
10-year US Treasury Yield 4.02% -.77%

Leading Sectors
Semis +2.19%
Homebuilders +1.49%
Networking +1.47%

Lagging Sectors
Hospitals -.76%
Software -1.12%
Airlines -1.28%

After-hours Movers
VSTA +14.9% after substantially beating 1Q estimates and raising 05 guidance.
ISRG +13.7% after substantially beating 4Q estimates.
UTSI +6.5% after meeting 4Q estimates and raising 1Q guidance.
NFI -10.0% on continuing weakness from 4Q report.
SNIC -9.99% after beating 3Q estimates and lowering 4Q outlook.
BOBE -8.33% after cutting 3Q estimates.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
-Goldman Sachs: Reiterated Outperform on K and MSFT.

After-hours News
US stocks finished modestly higher today as long-term interest rates declined again, spurring further gains in homebuilding stocks. Semiconductors also outperformed ahead of Cisco’s report. After the close, Deutsche Telekom, Siemens and IBM have missed a deadline for submission of offer proposals for the Herkules project, Germany’s biggest public-private venture, Financial Times Deutschland said. Huawei Technologies, China’s top phone-equipment maker, posted a 22% gain in full-year profit as orders surged 46%, the Financial Times reported. Cisco Systems said second-quarter profit almost doubled amid demand for devices that help consumers connect home offices to the Internet, Bloomberg said. The scientist who cloned “Dolly” the sheep in 1996 today was granted the second British license to clone human embryos for medical research, Bloomberg reported. Boeing CEO Stonecipher said the second-biggest US defense contractor may use its growing cash reserves to buy “small” military intelligence businesses, increase its dividend or buy back stock, Bloomberg reported. Pfizer said it is considering job cuts as it faces the loss of patent protection on several key drugs, Bloomberg said.

BOTTOM LINE: The Portfolio finished higher today on gains in my homebuilding, semiconductor, networking and software longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The tone of the market remained mildly positive into the close as volume rose and the advance/decline line stayed slightly higher. As well, long-term interest rates finished at their lows for the day. Measures of investor anxiety were mixed. Overall, today’s action appeared to be another healthy consolidation from recent gains. The market’s after-hours reaction to Cisco’s mildly disappointing report looks muted so far, which is a positive.