Wednesday Close

Indices
S&P 500 1,173.79 -1.18%
DJIA 10,403.93 -.99%
NASDAQ 1,974.37 -1.55%
Russell 2000 602.54 -1.71%
DJ Wilshire 5000 11,553.90 -1.21%
S&P Barra Growth 566.94 -1.04%
S&P Barra Value 602.49 -1.31%
Morgan Stanley Consumer 585.52 -.17%
Morgan Stanley Cyclical 729.50 -1.86%
Morgan Stanley Technology 444.88 -1.74%
Transports 3,548.34 -2.68%
Utilities 367.26 -.70%
Put/Call .94 -20.34%
NYSE Arms 1.65 +71.79%
Volatility(VIX) 13.31 +17.79%
ISE Sentiment 175.00 +11.46%
US Dollar 84.40 -.05%
CRB 300.83 -.59%

Futures Spot Prices
Crude Oil 50.34 +.24%
Unleaded Gasoline 148.15 -.19%
Natural Gas 6.98 +.04%
Heating Oil 144.80 +.42%
Gold 430.90 -.02%
Base Metals 125.38 -3.26%
Copper 145.30 -.45%
10-year US Treasury Yield 4.36% +.19%

Leading Sectors
Drugs +1.37%
Hospitals +.22%
Tobacco +.18%

Lagging Sectors
Energy -2.46%
Semis -2.71%
Steel -3.38%

After-hours Movers
AMD +3.2% after missing 1Q estimates and saying it will spin off its memory-chip unit in an IPO that’s worth as much as $600M.
LRCX +3.5% after beating 3Q estimates.
MNT +10.4% after a government panel recommend that US regulators approve Mentor’s silicone breast implants for sale, after the group yesterday voted to reject Inamed’s similar device.
IFIN -3.13% after missing 1Q estimates.
PLAY -4.4% on AAPL report.
SYNA -4.59% on AAPL report.
IMDC -5.05% on MNT news.
MOGN -6.83% after missing 1Q estimates.

Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Rated ARO Outperform, target $41.

Afternoon/Evening Headlines
Bloomberg:
- Verdant Power LLC, a closely held developer of hydroelectric plants, won approval from US energy regulators to install six 16-foot power-generating turbines at the bottom of New York City’s East River.
- Apple Computer said second-quarter earnings soared more than six-fold as the devices propelled sales and helped win new customers for more profitable Macintosh computers.

Handelsblatt:
- DaimlerChrysler AG expects its US commercial-vehicle business to grow sales by 20% over the next 18 months.

Xinhua:
- China called Japan’s decision to grant Japanese companies energy drilling rights in the East China Sea “a provocation.”

BOTTOM LINE: US stocks finished sharply lower today as long-term interest rates bounced and worries over slowing economic growth and earnings shortfalls rose. The Portfolio finished lower on losses in my Financial, Homebuilding and Tech longs. I added a few new shorts from various sectors in the afternoon, thus leaving the Portfolio 25% net long. One of my new shorts is GMR and I am using a $49.50 stop-loss on this position. The tone of the market weakened meaningfully into the afternoon as the advance/decline finished sharply lower, almost every sector fell and volume was modest. Measures of investor anxiety remained mixed into the afternoon. Overall, today’s market action was negative, considering the fall in energy prices, recent losses and the market’s inability to follow-through on yesterday’s advance.

Mid-day Scoreboard

Indices
S&P 500 1,177.11 -.90%
DJIA 10,441.28 -.64%
NASDAQ 1,981.76 -1.17%
Russell 2000 604.91 -1.32%
DJ Wilshire 5000 11,586.50 -.93%
S&P Barra Growth 568.20 -.82%
S&P Barra Value 604.37 -1.0%
Morgan Stanley Consumer 585.65 -.15%
Morgan Stanley Cyclical 731.76 -1.55%
Morgan Stanley Technology 446.57 -1.37%
Transports 3,563.20 -2.28%
Utilities 367.55 -.62%
Put/Call .79 -33.05%
NYSE Arms 1.45 +50.50%
Volatility(VIX) 12.42 +9.91%
ISE Sentiment 183.00 +16.56%
US Dollar 84.45 +.01%
CRB 300.51 -.69%

Futures Spot Prices
Crude Oil 50.25 -3.10%
Unleaded Gasoline 148.20 -3.44%
Natural Gas 7.02 -1.04%
Heating Oil 143.90 -1.79%
Gold 431.10 +.42%
Base Metals 125.38 -3.26%
Copper 145.70 -2.61%
10-year US Treasury Yield 4.39% +.79%

Leading Sectors
Drugs +1.26%
Tobacco +.33%
Hospitals +.26%

Lagging Sectors
Transports -2.14%
Semis -2.15%
Steel -3.33%

BOTTOM LINE: US stocks are lower mid-day on worries over slowing growth and a bounce in long-term interest rates. The Portfolio is slightly lower on losses in my Homebuilding, Tech and Financial longs. I exited a number of Tech and Homebuilding longs this morning, thus leaving the Portfolio’s market exposure 50% net long. The tone of the market is negative as the advance/decline line is weak, almost every sector is lower and volume is modest. Measures of investor anxiety are mixed. Today’s overall market action is negative, considering the decline in commodity prices, the market’s oversold state and its inability to add to yesterday’s gains. Investors appear to be factoring in the possibility of a recession sooner than I had anticipated. With commodity prices breaking down and economic data coming in bellow expectations, Fed comments will become even more important. Any sign that the pace of rate hikes will slow should spur equities. I believe this will occur over the coming weeks. I continue to expect lower energy prices, low interest rates and modestly improving employment prospects to boost economic growth in the second half. I expect US stocks to trade mixed into the close as lower energy prices offset worries over slowing growth.

Today's Headlines

Bloomberg:
- ASML Holding NV, Europe’s largest maker of equipment used to make semiconductors, forecast a drop in orders this quarter from the previous three months.
- Abu Dhabi, holder of the world’s fifth-largest oil reserves, will offer stakes in its five biggest fields to foreign companies such as Exxon Mobil to boost output capacity by 25%.
- The OECD plans to cut its growth estimates for this year and next because of weaker-than-expected economies in Japan and Europe.
- Joseph Perella and Terry Meguid, Morgan Stanley’s top two investment bankers, plan to resign as the exodus of senior managers from the world’s No. 2 securities firm gathers pace.
- Siebel Systems said Michael Lawrie stepped down as CEO, less than a year after raking the reins from Thomas Siebel.
- Merck said it probably earned first-quarter profit of 62 cents a share, more than the company had forecast.
- Crude oil is falling more than $1 a barrel to a seven-week low after an Energy Dept. report showed that US inventories climbed for a ninth consecutive week as OPEC boosted production.

Wall Street Journal:
- California officials expect the state to be able to handle summer electricity demand if temperatures are normal, but a hot season could mean shortages in the south of the state.
- A food workers’ union said it filed claims of unfair labor practices against Wal-Mart Stores to press the retailer to release documents.
- The US Congress is due to start a debate today on the Central American Free Trade Agreement.
- The House Energy and Commerce Committee gave federal regulators primary authority over the location of liquefied natural gas terminals on US coasts.
- The SEC will postpone the deadline for requiring companies to start expensing employee stock options.
- Amazon.com had an injunction imposed against it lifted by a state appellate court in a dispute with Toys “R” Us over exclusivity rights.

Dow Jones:
- Brijot Imaging Systems, a security company that has licensed millimeter-wave technology from Lockheed Martin, plans to deliver camera systems that can spot weapons on people from 45 feet.

NY Times:
- The rising cost of steel is forcing US developers to scale back or drop projects.
- Yahoo! said it will give free Web sites to small businesses.
- US companies reported about a 12% average return on pension investments last year.

Metal Bulletin:
- Copper production at a mine in Chile owned by Anglo American Plc and Falconbridge Ltd. dropped to 65% of capacity because of technical problems.

San Francisco Chronicle:
- A California legislative committee approved a bill that would allow terminally ill patients in the state to hasten their death.

Tehran Times:
- Iran is China’s third-largest supplier of crude oil, after Saudi Arabia and Angola.

Economic Releases

- Advance Retail Sales for March rose .3% versus estimates of a .8% increase and a .5% gain in February.
- Retail Sales for March rose .1% versus estimates of a .5% increase and a .6% gain in February.
- Summary of Weekly Petroleum Data for the Week Ending April 8, 2005.

Morning Buy/Sell Recommendations

Goldman Sachs:
- Reiterated Outperform on MUR and AMLN.

Smith Barney:
- Said to Buy SSCC on weakness, target $23.
- Reiterated Buy on ENN, target $12.25.
- Reiterated Buy on KPA, target $15.25.
- Reiterated Sell on IMCL, target $29.
- Reiterated Buy on BIIB, target $42.
- Reiterated Buy on MXRE, target $28.50.
- Reiterated Buy on FDRY, target $11.
- Reiterated Buy on AMTD, target $13.25.

Morgan Stanley:
- Rated IMCL Overweight, target $52.
- Reiterated Overweight on GSF, target $49.

Lehman Brothers:
- Lowered HDI to Underweight.
- Reiterated Overweight on JOYG, target $50.
- Reiterated Overweight on BUCY, target $44.

CSFB:
- Raised EYET to Outperform, target $40..
- Raised BWA to Outperform, target $55.
- Rated ENZN Underperform, target $10.
- Reiterated Outperform on GCI, target $97.
- Reiterated Outperform on UTX, target $107.

Thomas Weisel:
- Raised BWNG to Outperform.

Raymond James:
- Rated SVM Strong Buy, target $17.50.

UBS:
- Raised APPB to Buy, target $33.
- Raised GOL to Buy, target $36.

Deutsche Bank:
- Rated BLC Buy, target $28.

Links of Interest

Links of Interest
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NYSE Unusual Volume
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