Initial Jobless Claims Rise Modestly

- Initial Jobless Claims for last week rose to 327K versus estimates of 318K and 321K the prior week.
- Continuing Claims fell to 2603K versus estimates of 2745K and 2740K prior.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits unexpectedly rose last week as delayed filing from the Thanksgiving week inflated the tally, Bloomberg said. The total number of people collecting benefits dropped by the most in almost a year. The four-week moving average of jobless claims fell to 322,500 from 322,750. The unemployment rate among those able to receive benefits, which follows the US unemployment rate, fell to 2.0% from 2.1%. I continue to believe the labor market will remain healthy, but fail to tighten to the extent as to boost unit labor costs, the largest component of inflation, substantially.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Thursday Watch

Late-Night Headlines
Bloomberg:
- Sony Corp. had its debt rating cut one level to A2 by Moody’s Inventors Service.

Chicago Tribune:
- Chicago’s city council today approved an ordinance that will ban smoking in all public places in the city, including restaurants, bars and sports venues, within three years.

Reuters:
- Worldwide DVD movie sales are probably nearing their peak as customer interest in downloads and video-on-demand rises.

Kyodo News:
- Japan’s government will today announce a one-year extension of the deployment of its troops in Iraq.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on KO.
- Reiterated Underperform on TXN.

Smith Barney:
- Upgraded PLAY to Buy, target $36.

Night Trading
Asian Indices are -1.25% to -.25% on average.
S&P 500 indicated -.21%.
NASDAQ 100 indicated -.26%.

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

Earnings of Note
Company/EPS Estimate
CIEN/-.03
COST/.45
FLE/.00
CMOS/-.02
ESL/.56
NSM/.28
TOL/.65

Upcoming Splits
CDIS 2-for-1
TXU 2-for-1

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 318K versus 320K the prior week.
- Continuing Claims are estimated to fall to 2745K versus 2767K prior.

BOTTOM LINE: Asian indices are lower, dragged down by Financial shares in the region. I expect US equities to open lower and to rally modestly into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Close Modestly Lower After Late-day Rally

Indices
S&P 500 1,257.37 -.50%
DJIA 10,810.91 -.42%
NASDAQ 2,252.01 -.39%
Russell 2000 683.01 -.66%
DJ Wilshire 5000 12,581.10 -.50%
S&P Barra Growth 602.42 -.41%
S&P Barra Value 650.57 -.59%
Morgan Stanley Consumer 591.36 -.30%
Morgan Stanley Cyclical 778.57 -.73%
Morgan Stanley Technology 532.00 -.35%
Transports 4,110.25 -.44%
Utilities 401.09 -.74%
Put/Call .78 unch.
NYSE Arms 1.03 +26.08%
Volatility(VIX) 12.18 +5.73%
ISE Sentiment 195.00 +4.28%
US Dollar 91.89 +.49%
CRB 324.66 +.11%

Futures Spot Prices
Crude Oil 59.08 -.22%
Unleaded Gasoline 156.53 -.15%
Natural Gas 13.78 +.58%
Heating Oil 173.40 -.15%
Gold 518.70 +.17%
Base Metals 152.89 +1.18%
Copper 202.80 -.17%
10-year US Treasury Yield 4.51% +.70%

Leading Sectors
Gold & Silver +1.91%
Airlines .43%
Retail +.21%

Lagging Sectors
Semis -1.19%
HMOs -1.55%
Homebuilders -2.33%

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

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on NUE and FRNT.
- Reiterated Underperform on CR.

Afternoon/Evening Headlines
Bloomberg:
- Gold prices in NY rose to a 24-year high, climbing for the seventh time in eight sessions, as international fund managers seek to diversify from currencies, stocks and bonds.
- Gannett, the largest US newspaper company, predicted lackluster growth in advertising revenue next year, in line with other publishers.
- Resolution of the Israeli-Palestinian conflict has dropped to seventh place from second among concerns cited by Arabs in six countries, as domestic economic and social issues gain attention, according to a survey released today by the Arab American Institute.
- The US House of Representatives passed a measure that would spare 15 million households from a $30 billion alternative minimum tax increase next year.
- Guidant, which has an agreement to be acquired by Johnson & Johnson, said it is ready to negotiate with Boston Scientific on an unsolicited proposal to buy Guidant for $25 billion.
- Borrowing by US consumers unexpectedly fell in October as credit card debt and new car loans declined.
- A US air marshal fired at a passenger in a jetway outside American Airlines Flight 924 in Miami, after the passenger said a carry-on bag held a bomb.
- Texas Instruments said profit this quarter will be at the high end of its forecast on higher holiday demand.

Automotive News:
- GM has asked Jerome York, a representative of billionaire investor Kirk Kerkorian, to join the company’s board.

RPP:
- Peru and the US reached an agreement for a free-trade accord after 18 months of negotiations.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Airline longs, Medical longs and Retail longs offset losses in my Semi longs and Internet longs. I did not trade in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished lower, most sectors fell and volume was about average. Measures of investor anxiety were mostly higher into the close. Overall, today's action was disappointing for the bulls. The major averages and breadth are finishing lower despite the fall in oil. Jitters over the housing market, increased terrorism fears and a bounce in long-term rates were the culprits. On the positive side, the bears were unable to gain substantial traction. Moreover, the retail index is actually positive on the day. It appears as though more choppy action is necessary before another push higher. I sense a lack of conviction in the bearish community as their main arguments become harder and harder to make.

Stocks Lower Mid-day as Long-term Rates Bounce and Housing Worries Persist

Indices
S&P 500 1,256.14 -.59%
DJIA 10,794.58 -.57%
NASDAQ 2,248.80 -.53%
Russell 2000 682.41 -.75%
DJ Wilshire 5000 12,574.46 -.55%
S&P Barra Growth 601.90 -.53%
S&P Barra Value 650.31 -.65%
Morgan Stanley Consumer 591.12 -.34%
Morgan Stanley Cyclical 778.71 -.72%
Morgan Stanley Technology 531.82 -.39%
Transports 4,116.81 -.27%
Utilities 402.17 -.46%
Put/Call .81 +3.85%
NYSE Arms .99 +20.46%
Volatility(VIX) 12.08 +4.86%
ISE Sentiment 202.00 +8.02%
US Dollar 91.94 +.55%
CRB 325.20 +.28%

Futures Spot Prices
Crude Oil 59.72 -.32%
Unleaded Gasoline 158.00 -.22%
Natural Gas 13.87 +2.75%
Heating Oil 174.50 -1.52%
Gold 518.10 +.84%
Base Metals 152.89 +1.18%
Copper 203.10 +2.21%
10-year US Treasury Yield 4.51% +.66%

Leading Sectors
Gold & Silver +1.48%
Airlines +.29%
Retail +.01%

Lagging Sectors
Banks -1.21%
HMOs -1.76%
Homebuilders -2.16%

BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Medical longs and Retail longs offset losses in my Computer longs and Internet longs. I covered a Steel short and added IWM and QQQQ shorts this morning, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are lower and volume is about average. Measures of investor anxiety are mostly higher. Overall, today’s market action is negative considering yesterday’s afternoon sell-off and a drop in the price of oil. The EIA reported crude inventories rose 2.72 million barrels vs. estimates of a 1.9 million barrel drawdown. Gasoline supplies rose 2.74 million barrels vs. estimates of a 1.05 million barrel rise. Distillate inventories rose 2.73 million barrels vs. estimates of a 1.75 million barrel rise. Finally, refinery utilization rose 1.31% vs. estimates of a 0.5% increase. These numbers are very bearish for oil considering the time of the year. I expect US stocks to trade mixed into the close as higher long-term rates and worries over the housing sector offset lower oil prices and short-covering.

Today's Headlines

Bloomberg:
- Nokia Oyj plans a rival to the BlackBerry to exploit the “cloud” of lawsuit.
- President Bush said the US has adapted its tactics in the country and Iraqis are making “amazing progress” toward rebuilding their economy.
- A witness today told the Baghdad trial of ousted dictator Saddam Hussein how he endured at least two years of torture.
- The US dollar is rising again on speculation the Fed next week will raise borrowing costs after recent strong economic reports.
- Crude oil in NY retreated as the government reported an unexpected increase in inventories.
- US Treasuries are falling as dealers prepared to bid on $21 billion of five- and 10-year notes.

Wall Street Journal:
- The University of Pittsburgh has initiated an inquiry into possible scientific misconduct by researchers involved in stem-cell technology.
- Time Warner’s AOL unit and Microsoft are discussing a plan under which AOL would switch from Google to Microsoft’s search engine and a joint venture would be set up to sell online advertising across both AOL and Microsoft’s MSN portal.
- New Orleans officials plan to sell rights to be the “official sponsor” of the next Mardi Gras for $2 million to help defray the cost of street cleaning, police and overtime and other expenses.
- BellSouth President Mark Feidler said yesterday that the company will offer an Internet-based television service in a market test with 1,000 consumers in Atlanta next year.
- San Francisco’s commercial real estate market has bounced back after the slowdown from 2001 to 2003 when only five top-quality downtown office buildings were sold.
- PepsiCo is close to overtaking Coca-Cola’s market capitalization for the first time.

NY Times:
- Actor Mel Gibson, whose movie “Passion of the Christ” was labeled anti-Semitic by some, is working on a non-fiction television miniseries about the Holocaust.

Detroit News:
- Ford Motor executives and the company’s board will discuss a plan to close at least 10 assembly and component plants and cut as many as 30,000 hourly jobs in North America in five years.

AP:
- Al-Qaeda’s deputy chief, Ayman al-Zawahiri, called for attacks on oil facilities in the Gulf and said the movement’s leader Osama bin Laden is still alive, citing a videotape posted on the Internet.