ISM Manufacturing Best in 14 Months, Prices Paid Declines

- ISM Manufacturing for June rose to 56.0 versus estimates of 55.0 and a reading of 55.0 in May.

- ISM Prices Paid for June fell to 68.0 versus estimates of 69.1 and a reading of 71.0 in May.

BOTTOM LINE: Manufacturing growth in the US accelerated last month to the highest level in 14 months, boosted by an increase in production and new orders, Bloomberg reported. The Prices Paid component fell to 68 from 71 the prior month. The New Orders component rose to 60.3 from 59.6 prior. The Inventory component of the index fell to 45.3 versus 46.1 the prior month. I continue to believe manufacturing helped to boost US growth to 3%+ last quarter. As well, the prices paid component has likely peaked for the year already.

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote

Dow Jones Hedge Fund Indexes

Monday Watch

Weekend Headlines
Bloomberg:
- Apple’s iPhone debuted to crowds in US cities from New York to San Francisco as shoppers snapped up the handset and praised its slim design.
- Apple’s US debut of the iPhone drew thousands of shoppers over the weekend, emptying most AT&T’s(T) inventory and causing network glitches as the flood of customers began activating the device.
- The Ontario Teachers’ Pension Plan, BCE Inc.’s biggest shareholder, agreed to buy the telephone service provider for $48.5 billion.
- Security at US airports was increased today, ahead of the July 4^th holiday, and the threat to commercial aviation remained high after terrorist incidents in the UK, White House spokesman Tony Snow said.
- A burning car crashed through the main glass doors of Glasgow airport’s passenger terminal at 3:15 pm local time, a police spokeswoman said. The incident occurred a day after police dismantled two car bombs in central London.
- Northern Iraq’s semi-autonomous government will offer 40 oil and gas blocks for exploration, part of plans to increase daily output to 1 million barrels in the next five years.
- President Bush said the US is seeing “hopeful signs” from its troop increase in Iraq, including a drop in sectarian murders and suicide attacks.
- Police arrested five people and searched houses after an attack on Glasgow Intl. Airport and two attempted London car bombings forced Prime Minister Gordon Brown’s new government to step up security in the UK.
- Hard-Landing Risk is Rising for China’s Economy.
- Macquarie Communications Infrastructure Group and partners agreed to buy a US wireless tower operator for $1.4 billion, adding American assets to a UK network bought in April. Macquarie Communications and Macquarie Infrastructure Partners will buy Boca Raton, Florida-based Global Tower Partners, which has 2,500 towers and 4,600 rooftop wireless communications points across the US and Puerto Rico.
- Investors and economists who’ve grown used to European Central Bank President Jean-Claude Trichet’s vow to be on constant lookout for signs of faster inflation are likely to find the term disappearing from his pronouncements.
- Confidence among Japan’s largest manufacturers held near a two-year high and companies said they’re increasing spending, supporting the central bank’s argument for a third interest-rate increase in seven-years.
- Manufacturing activity in China expanded at a slower pace in June, according to a survey of purchasing managers released today.

Wall Street Journal:
- The European Union is following the US’s lead in banning some seafood farmed in China, citing EU spokesman Philip Tod.
- AT&T(T) agreed to acquire Dobson Communications, a wireless carrier, in a deal worth $2.5 billion to $3 billion.

NY Times:
- Biotechnology and pharmaceutical companies are taking advantage of patent expirations to combine old drugs to replenish their pipelines faster and at lower costs.
- President Bush will seek help from Russian leader Vladimir Putin in putting economic pressure on Iran to get the nation to halt its nuclear program.
- General Mills(GIS), Kellogg(K) and Toys “R” Us have increased scrutiny of food ingredients and products they import from China or receive from suppliers.
- US Deal-Making topped $1 Trillion in First Half. Slowdown? What slowdown?

Forbes:
- The world’s richest individual’s halved their allocations to alternative investments in 2006, largely in favor of real estate and equity investments, but the appetite for hedge funds and private equity is poised to return, according to a report by Merrill Lynch and Capgemini.

ABC News:
- Democratic Senator Barack Obama raised more than $30 million for his US presidential campaign in the second quarter. Senator Hillary Clinton’s presidential campaign has said that they expect the NY Democrat to have brought in $27 million in the second quarter.

Barron’s:
- Investor’s Guide to the Presidential Candidates.
- Republican presidential candidate Mitt Romney strikes some voters as just too slick, and his adherence to Mormonism has hurt him in the polls. Democrat Bill Richardson, the garrulous governor of New Mexico, has bloviated himself from near the front of his party's field to the back. Yet Romney would be the best Republican candidate for stocks, bonds and the economy, and Richardson, hands down, would be the best Democrat.

ifixit:
- Technicians explain the iPhone’s construction and identify specific parts.

Crain’s Chicago Business:
- Microsoft Corp.(MSFT) Chairman Bill Gates and Manulife Financial’s John Hancock subsidiary are buying Illinois farmland to cash in on rising demand for corn to make ethanol.

SILICONVALLEY.COM:
- Months after release, demand for Nintendo’s Wii still far outpaces supply.

Economist:
- As the line blurs between hedge funds and banks, a bit of mystique goes missing.

Financial Times:
- McDonald’s Corp.(MCD) plans to convert cooking oil from its restaurants into biodiesel to run its 155 delivery trucks in the UK.

Observer:
- Two UAE-based funds plan to buy one or both of Ford’s(F) Jaguar and Land Rover units.

Times of London:
- Carlyle Group is among buyout firms who have made informal approaches for Virgin Media Inc.(VMED).

Sunday Times:
- GLG Partners LP, a London-based hedge fund manager, is dividing an 11% stake in the firm valued at $400 million among 16 of its best-performing traders.

Telegraph:
- China’s stock market boom is “too hot.”

South China Morning Post:
- Property prices in Beijing will probably fall after next year’s Olympic Games, citing a government-controlled research group. There is now a bubble forming in the city’s property market, quoting a report released by the Beijing Olympics Economic Research Institute. The institute estimates average annual demand of 20 million square-meters in new flats, a figure that is “way below the built up areas.”

Weekend Recommendations
Barron's:
- Made positive comments on (SSW), (SAH) and (UAG).
- Made negative comments on (DFS-W) and (AAPL).

Citigroup:
- Reiterated Buy (BWA), raised target to $99.

Night Trading
Asian indices are unch. to +.50% on average.
S&P 500 indicated +.20%.
NASDAQ 100 indicated +.18%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/Estimate
- (NDN)/.01
- (UAPH)/1.35

Upcoming Splits
- (CXW) 2-for-1

Economic Releases
10:00 am EST
- ISM Manufacturing for June is estimated at 55.0 versus a reading of 55.0 in May.
- The ISM Prices Paid Index for June is estimated to fall to 68.5 from 71.0 in May.

Other Potential Market Movers
- The (SFC) shareholders meeting could also impact trading on Monday.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and energy shares in the region. I expect US stocks to open mixed and to rally into the afternoon finishing modestly higher. The Portfolio is 100% net long heading into the week.

Weekly Outlook

Click here for The Week Ahead by Reuters

Click here for the Bloomberg US Equity Monday Preview

There are some economic reports of note and a few significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. – ISM Manufacturing, ISM Prices Paid

Tues. – Pending Home Sales, Factory Orders, Total Vehicle Sales, weekly retail sales reports

Wed. – All US markets closed

Thur. – weekly MBA mortgage applications report, weekly EIA energy inventory report, Challenger Job Cuts, ADP Employment Change, Initial Jobless Claims, ISM Non-Manufacturing

Fri. – Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. – 99 Cents Only Stores(NDN)

Tues. – None of note

Wed. – All US markets closed

Thur. – Healthways(HWAY), International Rectifier(IRF),

Fri. – Laidlaw Intl.(LI)

Other events that have market-moving potential this week include:

Mon. – None of note

Tue. – None of note

Wed. – All US markets closed, BOE Policy Meeting

Thur. – BOE Policy Meeting, ECB Policy Meeting

Fri. – The Fed’s Yellen speaking

BOTTOM LINE: I expect US stocks to finish the week modestly higher on declining long-term rates, subsiding terrorism fears, diminished sub-prime concerns, lower energy prices, bargain hunting, better-than-expected earnings reports and short-covering. My trading indicators are giving mixed signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,503.35 +.05%

Click here for The Weekly Wrap by Briefing.com.

Weekly Scoreboard*

Indices
S&P 500 1,503.35 +.05%
DJIA 13,408.62 +.36%
NASDAQ 2,603.23 +.55%
Russell 2000 833.70 -.13%
Wilshire 5000 15,163.08 +.03%
Russell 1000 Growth 595.22 -.03%
Russell 1000 Value 858.51 +.07%
Morgan Stanley Consumer 728.96 +.39%
Morgan Stanley Cyclical 1,076.43 -.59%
Morgan Stanley Technology 622.61 -.14%
Transports 5,098.88 -.18%
Utilities 498.17 +2.64%
MSCI Emerging Markets 131.11 -.45%

Sentiment/Internals
NYSE Cumulative A/D Line 74,318 -2.49%
Bloomberg New Highs-Lows Index +144 +136.1%
Bloomberg Crude Oil % Bulls 48.0 +28.0%
CFTC Oil Large Speculative Longs 197,493 -1.63%
Total Put/Call 1.01 -1.94%
NYSE Arms 1.41 +57.47%
Volatility(VIX) 16.23 +3.05%
ISE Sentiment 166.0 +30.71%
AAII % Bulls 39.02 -9.59%
AAII % Bears 35.77 +6.2%

Futures Spot Prices
Crude Oil 70.47 +2.22%
Reformulated Gasoline 223.75 -.16%
Natural Gas 6.78 -5.23%
Heating Oil 203.79 -.19%
Gold 651.50 -.91%
Base Metals 251.09 -.14%
Copper 343.0 +1.84%

Economy
10-year US Treasury Yield 5.03% -10 basis points
4-Wk MA of Jobless Claims 316,000 +.3%
Average 30-year Mortgage Rate 6.67% -2 basis points
Weekly Mortgage Applications 618.60 -3.90%
Weekly Retail Sales +1.70%
Nationwide Gas $2.97/gallon -.02/gallon
US Cooling Demand Next 7 Days 5.0% below normal
ECRI Weekly Leading Economic Index 142.80 unch.
US Dollar Index 81.93 -.50%
CRB Index 315.74 +.32%

Leading Sectors
Disk Drives +2.96%
Utilities +2.64%
Telecom +2.60%
Wireless +2.2%
Internet +2.2%

Lagging Sectors
I-Banks -1.55%
Gold -1.87%
Coal -1.97%
Homebuilders -2.94%
Oil Service -3.55%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change