Tuesday Close

Indices
S&P 500 1,151.74 -.89%
DJIA 10,151.13 -.89%
NASDAQ 1,927.44 -1.20%
Russell 2000 587.66 -1.47%
DJ Wilshire 5000 11,349.22 -.90%
S&P Barra Growth 557.33 -.88%
S&P Barra Value 590.06 -.91%
Morgan Stanley Consumer 571.95 -.91%
Morgan Stanley Cyclical 701.80 -1.58%
Morgan Stanley Technology 438.66 -1.15%
Transports 3,404.55 -1.91%
Utilities 365.61 -1.07%
Put/Call .75 -5.06%
NYSE Arms 1.78 +169.42%
Volatility(VIX) 14.91 +1.98%
ISE Sentiment 161.00 +25.78%
US Dollar 83.93 +.13%
CRB 309.78 +.36%

Futures Spot Prices
Crude Oil 54.36 -.38%
Unleaded Gasoline 162.70 -1.45%
Natural Gas 7.15 -.04%
Heating Oil 151.38 -.28%
Gold 438.60 +.64%
Base Metals 124.60 -.42%
Copper 145.70 -1.82%
10-year US Treasury Yield 4.26% +.42%

Leading Sectors
Gaming +2.57%
Broadcasting -.18%
Retail -.29%

Lagging Sectors
Tobacco -3.34%
Computer Hardware -3.64%
Steel -4.53%

Evening Review
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Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on GILD and LVS.

Afternoon/Evening Headlines
Bloomberg:
- Amazon.com reported first-quarter net income fell to $78 million, hurt by new discounts on shipping and increased development costs.

Financial Times:
- The benefits of countries opening their borders to foreign service-providers will exceed any reduction in jobs, citing the OECD.

BOTTOM LINE: US stocks finished lower today on continuing worries over slowing global growth. The Portfolio finished slightly lower on losses in my Internet and Networking longs. I did not trade in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market deteriorated into the afternoon as the advance/decline finished at its daily lows, almost every sector fell and volume was average. Measures of investor anxiety were mixed. Overall, today’s market action was negative, considering strong home sales, a rising US dollar, falling energy prices, good earnings reports and stable interest rates. Choppiness will likely continue until oil breaks below $50/bbl. or the Fed makes less hawkish comments. The fact that the Homebuilders declined today even with home sales substantially exceeding expectations, building costs declining, mortgage rates dropping and weather improving is a negative and illustrates the overly pessimistic environment that still dominates trading.

Mid-day Scoreboard

Indices
S&P 500 1,160.41 -.15%
DJIA 10,225.88 -.17%
NASDAQ 1,942.01 -.45%
Russell 2000 591.81 -.78%
DJ Wilshire 5000 11,433.60 -.17%
S&P Barra Growth 561.79 -.10%
S&P Barra Value 594.41 -.18%
Morgan Stanley Consumer 575.45 -.30%
Morgan Stanley Cyclical 708.29 -.67%
Morgan Stanley Technology 442.31 -.34%
Transports 3,440.77 -.87%
Utilities 368.76 -.21%
Put/Call .68 -13.92%
NYSE Arms .93 +40.02%
Volatility(VIX) 14.59 -.21%
ISE Sentiment 161.00 +25.78%
US Dollar 84.02 +.24%
CRB 309.59 +.29%

Futures Spot Prices
Crude Oil 54.15 -.77%
Unleaded Gasoline 162.00 -1.88%
Natural Gas 7.08 -1.02%
Heating Oil 151.00 -.53%
Gold 438.90 +.71%
Base Metals 124.63 -.42%
Copper 145.70 -1.82%
10-year US Treasury Yield 4.27% +.61%

Leading Sectors
Gaming +3.06%
Homebuilders +.92%
Broadcasting +.52%

Lagging Sectors
Computer Hardware -2.61%
Tobacco -2.89%
Steel -3.84%

BOTTOM LINE: US stocks are modestly lower mid-day, spurred by declines in commodity-related stocks. The Portfolio is slightly lower on losses in my Internet and Networking longs. I added a few new shorts and longs this morning, thus leaving the Portfolio 75% net long. One of my new shorts is PD and I am using a $93 stop-loss on this position. The tone of the market is negative as the advance/decline line is lower, sector performance is mixed and volume is average. Measures of investor anxiety are mostly lower. Today’s overall market action is modestly negative, considering lower energy prices, a rising US dollar and strong home sales. The recent home sales data should quell fears that US growth is slowing too much. As well, I continue to see data that points to lower commodity prices in the future, which bodes well for a decline in inflation readings. I expect US stocks to trade modestly higher into the close on short-covering, lower energy prices and bargain-hunting.

Today's Headlines

Bloomberg:
- Syria held an official ceremony to mark the withdrawal of its remaining soldiers and intelligence agents from Lebanon and the end of 29 years of military presence in the country.
- Germany’s six leading economic institutes cut their forecast for growth this year in half to .7% as consumer spending slows and unemployment reaches levels not seen since WWII.
- Japan’s household spending, buffeted by reduced overtime hours and stagnant wages, fell for a second month in March and the economy lost jobs, suggesting consumers won’t help sustain a recovery from last year’s recession.
- Billionaire Ken Langone, who’s considering a takeover bid for the NYSE, wants to close its trading floor, ending the way the world’s biggest stock market has operated for more than two centuries.
- Shares of Roche Holding AG and partner Genentech jumped after research showed their Herceptin treatment cut the risk of relapse among women newly diagnosed with an aggressive form of breast cancer.
- IBM’s top 50 managers will give up pay increases this year after the company had trouble closing orders last quarter.
- US Treasury notes are falling after a report showed new-home sales surged 12.2% to a record pace, adding to evidence that housing is still contributing meaningfully to economic growth.

Wall Street Journal:
- The NYSE and Archipelago plan to offer a menu of products besides stocks as they seek to widen profit.
- The US Senate may debate a bill to legalize the status of hundreds of illegal immigrant college grads in coming months.
- More US corporations are starting campus recruiting drives from fall to spring, suggesting demand for candidates with a MBA degree is growing.
- The National Academies, the leading US scientific advisory body, plans to issue ethics guidelines on embryonic stem-cell research today, including not paying donors for eggs or other tissues.

NY Times:
- AIG found at least $1 billion more in accounting errors in an internal review than previously disclosed.
- Qwest Communications may increase its bid for MCI to $32 a share if Verizon Communications matches Qwest’s $30 a share offer from last week.
- Wall Street executives, including Merrill Lynch CEO O’Neal, are questioning Goldman Sachs’ role in adviser in the NYSE’s proposed takeover of Archipelago.
- Neiman Marcus has received bids for its credit card unit from American Express, Citigroup and HSBC Holdings.

USA Today:
- US federal lawmakers have accepted $16 million in privately funded trips since 2000, with more than half sponsored by nonprofit organizations that don’t have to say who’s footing the bill.

AP:
- Wal-Mart Stores will move most over-the-counter cold and allergy medicine to the pharmacy in all of its stores by early June.

Detroit News:
- GM may close more North American plants.

Boston Globe:
- Massachusetts lawmakers yesterday agreed on details of a stem-cell research bill, moving the measure closer to becoming a law.

AFP:
- Oil spills worldwide plunged over the past 30 years because of improvements in ship engineering.

Economic Releases

- Consumer Confidence for April fell to 97.7 versus estimates of 98.0 and a reading of 103.0 in March.
- New Home Sales for March soared 12.2% to 1431K versus estimates of 1190K and an upwardly revised 1275K in February.

Links of Interest

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