Indices
S&P 500 1,125.38 -.80%
Dow 10,282.83 -.86%
NASDAQ 2,006.66 -.93%
Russell 2000 582.72 -.85%
Volatility(VIX) 15.08 -.72%
AAII % Bulls 56.97 +.99%
US Dollar 87.99 -.89%
CRB 268.23 -1.48%
Futures Spot Prices
Gold 398.70 -1.04%
Crude Oil 38.39 +2.51%
Natural Gas 6.15 -3.64%
Base Metals 109.94 +.41%
10-year US Treasury Yield 4.46% -4.09%
Average 30-year Mortgage Rate 6.21% -.64%
Leading Sectors
Broadcasting +2.09%
Papers +1.43%
Oil Service +.83%
Lagging Sectors
Retail -3.55%
Semis -4.51%
Disk Drives -5.84%
*% Gain or loss for the week
Friday, July 02, 2004
Mid-day Update
S&P 500 1,127.01 -.17%
NASDAQ 2,007.68 -.39%
Leading Sectors
Homebuilders +2.24%
Utilities +1.01%
Oil Service +.51%
Lagging Sectors
Software -1.12%
Disk Drives -1.25%
Semis -1.87%
Other
Crude Oil 38.40 -.75%
Natural Gas 6.15 -1.0%
Gold 398.70 +.58%
Base Metals 109.94 +.06%
U.S. Dollar 87.97 -.93%
10-Yr. T-note Yield 4.45% -2.32%
VIX 14.98 -1.38%
Put/Call .88 -5.38%
NYSE Arms 2.37 -15.66%
Market Movers
AAPL -4.6% after saying the next version of its iMac computer will be about two months late.
CMX -5.4% after saying the attorney general of Washington sate has demanded information about business practices in the company and its recently acquired AdvancePCS unit.
JUNO +10.8% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
DLI +12.44% after saying it would be acquired by Church & Dewight and Kelso & Co. for $385 million in cash.
*Homebuilders + across the board on interest rate decline.
ESPD -25.4% after lowering 2Q estimates and multiple downgrades.
MAMA -12.3% after Billionaire Mark Cuban sold his stake.
NFLX -9.8% as strong subscriber growth did not meet optimistic expectations.
SY -11.83% after cutting 2Q forecast.
PPP -10.77% after deeming its Hungarian development well "disappointing."
Economic Data
Unemployment Rate for June came in at 5.6% versus estimates of 5.6% and 5.6% in May.
Average Hourly Earnings for June rose .1% versus estimates of a .3% rise and a .3% rise in May.
Change in Non-farm Payrolls for June was 112k versus estimates of 250K and a downwardly revised 235K in May.
Change in Manufacturing Payrolls for June was -11K versus an estimate of 30K and a downwardly revised 24K in May.
Average Weekly Hours for June came in at 33.6 versus an estimate of 33.8 and 33.8 in May.
Factory Orders for May fell .3% versus estimates of a .7% decline and an upwardly revised 1.1% fall in April.
Recommendations
SLGN rated Overweight at JP Morgan. GGC cut to Reduce at UBS. Citi SmithBarney raised AAPL to Buy. Citi said to Buy BWA and sell SUP. Citi reiterated Sell on STX, target $10. Citi reiterated Sell on GDT, target $51. Citi said favorite metal stocks are AA, NEM and FCX. Goldman Sachs reiterated Outperform on GDT, IGT, ADP, CEN, PAYX, VZ, INTC, AMD and CAL. Goldman reiterated Underperform on BPL. Goldman said Semi Industry Assoc. data were very good overall, possible weakness at NSM and TXN.
Mid-day News
U.S. stocks are modestly lower mid-day as a report showed U.S. unemployment held steady at 5.6% and 112,000 jobs were created, below expectations. Interest rates plunged on the news, with the 10-yr T-note now yielding 4.45%, down almost 50 basis points from its recent high. The U.S. economy has now generated 1.3 million new jobs since the beginning of the year, the best 6 months of job creation since the stock market bubble burst in 2000, Bloomberg reported. The Fed's increase in interest rates, which theoretically should reduce home sales, may actually spur home buying and raise prices, the NY Times reported. The Los Angeles and Long Beach, California, twin ports had record international cargo for the third year in a row, fueled by increased trade, labor shortages and new security regulations, the LA Times reported. U.S. travel during the summer season is forecast to surpass the record pace of 2000, according to the Travel Industry Association of America. Republican incumbent Senator Lisa Murkowski and former Democratic Governor Tony Knowles of Alaska both support increased oil drilling in Alaska, as do most Alaskans, the AP reported. Pennsylvania's Senate approved a bill to legalize as many as 61,000 slot machines in the state in a bid to cut property tax bills by about 20% and borrow billions of dollars for public works, the AP said. Starbucks is the subject of efforts to form a union at a company location in New York City, the Philadelphia Inquirer reported. OAO Yukos, Russia's biggest oil exporter, said production may stop at some fields as early as next week after its bank accounts were frozen because of a $3.4 billion tax claim. Boston Scientific said it's voluntarily recalling 200 of its drug-coated Taxus devices after one person died and 16 were injured because of possible defects in the delivery system, Bloomberg reported. HealthSouth founder Scrushy enlisted company employees to work on his $3 million lake house and also used HealthSouth planes, helicopters and automobiles for personal purposes, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my gaming, homebuilding and security longs are rising, offsetting losses in my internet and telecom equipment longs. I have not traded and the Portfolio is still 75% net long. After growing at its fastest rate in 20 years, fueling inflation fears, the U.S. economy appears to be downshifting to a more sustainable and less inflationary rate of growth. As interest rates plunge, the bears will likely shift their main argument away from inflation and back to a significantly weakening economy, which will prove to be another mistake. Historically, U.S. stocks perform their best when investor expectations are for moderate growth and inflation rather than runaway growth and high inflation. I expect stocks to rally on Tuesday, barring a major terrorist attack over the weekend.
NASDAQ 2,007.68 -.39%
Leading Sectors
Homebuilders +2.24%
Utilities +1.01%
Oil Service +.51%
Lagging Sectors
Software -1.12%
Disk Drives -1.25%
Semis -1.87%
Other
Crude Oil 38.40 -.75%
Natural Gas 6.15 -1.0%
Gold 398.70 +.58%
Base Metals 109.94 +.06%
U.S. Dollar 87.97 -.93%
10-Yr. T-note Yield 4.45% -2.32%
VIX 14.98 -1.38%
Put/Call .88 -5.38%
NYSE Arms 2.37 -15.66%
Market Movers
AAPL -4.6% after saying the next version of its iMac computer will be about two months late.
CMX -5.4% after saying the attorney general of Washington sate has demanded information about business practices in the company and its recently acquired AdvancePCS unit.
JUNO +10.8% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
DLI +12.44% after saying it would be acquired by Church & Dewight and Kelso & Co. for $385 million in cash.
*Homebuilders + across the board on interest rate decline.
ESPD -25.4% after lowering 2Q estimates and multiple downgrades.
MAMA -12.3% after Billionaire Mark Cuban sold his stake.
NFLX -9.8% as strong subscriber growth did not meet optimistic expectations.
SY -11.83% after cutting 2Q forecast.
PPP -10.77% after deeming its Hungarian development well "disappointing."
Economic Data
Unemployment Rate for June came in at 5.6% versus estimates of 5.6% and 5.6% in May.
Average Hourly Earnings for June rose .1% versus estimates of a .3% rise and a .3% rise in May.
Change in Non-farm Payrolls for June was 112k versus estimates of 250K and a downwardly revised 235K in May.
Change in Manufacturing Payrolls for June was -11K versus an estimate of 30K and a downwardly revised 24K in May.
Average Weekly Hours for June came in at 33.6 versus an estimate of 33.8 and 33.8 in May.
Factory Orders for May fell .3% versus estimates of a .7% decline and an upwardly revised 1.1% fall in April.
Recommendations
SLGN rated Overweight at JP Morgan. GGC cut to Reduce at UBS. Citi SmithBarney raised AAPL to Buy. Citi said to Buy BWA and sell SUP. Citi reiterated Sell on STX, target $10. Citi reiterated Sell on GDT, target $51. Citi said favorite metal stocks are AA, NEM and FCX. Goldman Sachs reiterated Outperform on GDT, IGT, ADP, CEN, PAYX, VZ, INTC, AMD and CAL. Goldman reiterated Underperform on BPL. Goldman said Semi Industry Assoc. data were very good overall, possible weakness at NSM and TXN.
Mid-day News
U.S. stocks are modestly lower mid-day as a report showed U.S. unemployment held steady at 5.6% and 112,000 jobs were created, below expectations. Interest rates plunged on the news, with the 10-yr T-note now yielding 4.45%, down almost 50 basis points from its recent high. The U.S. economy has now generated 1.3 million new jobs since the beginning of the year, the best 6 months of job creation since the stock market bubble burst in 2000, Bloomberg reported. The Fed's increase in interest rates, which theoretically should reduce home sales, may actually spur home buying and raise prices, the NY Times reported. The Los Angeles and Long Beach, California, twin ports had record international cargo for the third year in a row, fueled by increased trade, labor shortages and new security regulations, the LA Times reported. U.S. travel during the summer season is forecast to surpass the record pace of 2000, according to the Travel Industry Association of America. Republican incumbent Senator Lisa Murkowski and former Democratic Governor Tony Knowles of Alaska both support increased oil drilling in Alaska, as do most Alaskans, the AP reported. Pennsylvania's Senate approved a bill to legalize as many as 61,000 slot machines in the state in a bid to cut property tax bills by about 20% and borrow billions of dollars for public works, the AP said. Starbucks is the subject of efforts to form a union at a company location in New York City, the Philadelphia Inquirer reported. OAO Yukos, Russia's biggest oil exporter, said production may stop at some fields as early as next week after its bank accounts were frozen because of a $3.4 billion tax claim. Boston Scientific said it's voluntarily recalling 200 of its drug-coated Taxus devices after one person died and 16 were injured because of possible defects in the delivery system, Bloomberg reported. HealthSouth founder Scrushy enlisted company employees to work on his $3 million lake house and also used HealthSouth planes, helicopters and automobiles for personal purposes, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my gaming, homebuilding and security longs are rising, offsetting losses in my internet and telecom equipment longs. I have not traded and the Portfolio is still 75% net long. After growing at its fastest rate in 20 years, fueling inflation fears, the U.S. economy appears to be downshifting to a more sustainable and less inflationary rate of growth. As interest rates plunge, the bears will likely shift their main argument away from inflation and back to a significantly weakening economy, which will prove to be another mistake. Historically, U.S. stocks perform their best when investor expectations are for moderate growth and inflation rather than runaway growth and high inflation. I expect stocks to rally on Tuesday, barring a major terrorist attack over the weekend.
Friday Watch
Earnings of Note
Company/Estimate
None of note.
Splits
WIT 3-for-1
Economic Data
Unemployment Rate for June estimated at 5.6% versus 5.6% in May.
Average Hourly Earnings for June estimated up .3% versus an increase of .3% in May.
Change in Non-farm Payrolls for June estimated at 250K versus 248K in May.
Change in Manufacturing Payrolls for June estimated at 30K versus 32K in May.
Average Weekly Hours for June estimated at 33.8 versus 33.8 in May.
Recommendations
Goldman Sachs reiterated Outperform on KO, MRVL, AGR/A and Underperform on FSS, QGENF. IRF will benefit from expanding its line of semiconductors used in specialized applications, Business Week reported. MRH may rise as the company buys back stock, Business Week reported. BTI will boost its earnings per share 15% by selling its U.S. unit to R.J. Reynolds Tobacco, Business Week reported.
Late-Night News
Asian indices are lower on weakness in U.S. technology shares. Jordan would send troops to Iraq if its interim government asked for military help, making it the first Arab state to agree to do so, Reuters reported. Merrill Lynch got approval to set up a fund-management venture with the investment-banking unit of Bank of China, the Shanghai Securities News reported. Marvell Technology took business away from China's Semiconductor Manufacturing International because it wasn't satisfied with quality and gave it to Taiwan Semi and Chartered Semi, the Commercial Times said. New Mexico Governor Bill Richardson told Senator Kerry he doesn't wan to be considered as a possible running mate, the AP reported. An astronomer using the Hubble Space Telescope found as many as 100 planets circling other stars, the BBC reported. Toyota Motor plans to add production of Prius hybrid-electric cars at a second plant in Japan to meet higher-than-planned demand, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.75 to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on a better-than-expected jobs report and a decline in the price of oil. My short-term trading indicators are giving mixed signals and the Portfolio is 75% net long heading into tomorrow.
Company/Estimate
None of note.
Splits
WIT 3-for-1
Economic Data
Unemployment Rate for June estimated at 5.6% versus 5.6% in May.
Average Hourly Earnings for June estimated up .3% versus an increase of .3% in May.
Change in Non-farm Payrolls for June estimated at 250K versus 248K in May.
Change in Manufacturing Payrolls for June estimated at 30K versus 32K in May.
Average Weekly Hours for June estimated at 33.8 versus 33.8 in May.
Recommendations
Goldman Sachs reiterated Outperform on KO, MRVL, AGR/A and Underperform on FSS, QGENF. IRF will benefit from expanding its line of semiconductors used in specialized applications, Business Week reported. MRH may rise as the company buys back stock, Business Week reported. BTI will boost its earnings per share 15% by selling its U.S. unit to R.J. Reynolds Tobacco, Business Week reported.
Late-Night News
Asian indices are lower on weakness in U.S. technology shares. Jordan would send troops to Iraq if its interim government asked for military help, making it the first Arab state to agree to do so, Reuters reported. Merrill Lynch got approval to set up a fund-management venture with the investment-banking unit of Bank of China, the Shanghai Securities News reported. Marvell Technology took business away from China's Semiconductor Manufacturing International because it wasn't satisfied with quality and gave it to Taiwan Semi and Chartered Semi, the Commercial Times said. New Mexico Governor Bill Richardson told Senator Kerry he doesn't wan to be considered as a possible running mate, the AP reported. An astronomer using the Hubble Space Telescope found as many as 100 planets circling other stars, the BBC reported. Toyota Motor plans to add production of Prius hybrid-electric cars at a second plant in Japan to meet higher-than-planned demand, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.75 to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on a better-than-expected jobs report and a decline in the price of oil. My short-term trading indicators are giving mixed signals and the Portfolio is 75% net long heading into tomorrow.
Thursday, July 01, 2004
Thursday Close
S&P 500 1,128.94 -1.04%
NASDAQ 2,015.55 -1.57%
Leading Sectors
Nanotechnology +.98%
Defense +.94%
Restaurants +.72%
Lagging Sectors
Semis -3.72%
Networking -4.01%
Disk Drives -4.03%
Other
Crude Oil 38.59 -.44%
Natural Gas 6.21 -.08%
Gold 396.40 unch.
Base Metals 109.87 +.50%
U.S. Dollar 88.85 +.06%
10-Yr. T-note Yield 4.56% -.39%
VIX 15.20 +6.0%
Put/Call .93 +19.23%
NYSE Arms 2.81 +162.62%
After-hours Movers
JUNO +9.80% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
ESPD -12.83% after lowering 2Q estimates.
NFLX -3.06% after saying 2Q subscriber forecast at high end of range.
NBR -3.52% after cutting 2Q and 04 forecast.
Recommendations
Goldman Sachs raised CZN to Outperform. Goldman reiterated Outperform on ISG, NUE, MON, IACI and IGT.
After-hours News
U.S. stocks finished lower today on a rise in energy prices and weakness in technology, over earnings concerns. After the close, Australia and Malaysia said they may soon start talks on a free-trade agreement that would accelerate plans for a regional agreement with 10 south-east Asian countries, the Australian Financial Review reported. Verizon Wireless agreed to buy Qwest Communications International's wireless assets for $418 million, adding capacity in cities including Denver, Phoenix and Seattle. Nielsen Media Research may proceed with its plans to introduce a new local tv ratings system in Los Angeles next week after a California judge denied Univision TV Group's bid for a delay, Bloomberg reported. Lockheed Martin received a definite order for 22 F/A-22 fighter jets from the U.S. Air Force, setting the value of the contract first announced in March at $2.03 billion, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I took a few more profits in the afternoon, leaving the Portfolio 75% net long. It appears to me that investors are overreacting to recent economic data and the rise in energy prices. This may be a result of the coming holiday weekend and repositioning into the new quarter. I would like to see a reversal of the recent selling by not later than next Tuesday.
NASDAQ 2,015.55 -1.57%
Leading Sectors
Nanotechnology +.98%
Defense +.94%
Restaurants +.72%
Lagging Sectors
Semis -3.72%
Networking -4.01%
Disk Drives -4.03%
Other
Crude Oil 38.59 -.44%
Natural Gas 6.21 -.08%
Gold 396.40 unch.
Base Metals 109.87 +.50%
U.S. Dollar 88.85 +.06%
10-Yr. T-note Yield 4.56% -.39%
VIX 15.20 +6.0%
Put/Call .93 +19.23%
NYSE Arms 2.81 +162.62%
After-hours Movers
JUNO +9.80% after announcing its board has declared a one-time cash dividend of $60 million payable to the holders of its common and preferred stock.
ESPD -12.83% after lowering 2Q estimates.
NFLX -3.06% after saying 2Q subscriber forecast at high end of range.
NBR -3.52% after cutting 2Q and 04 forecast.
Recommendations
Goldman Sachs raised CZN to Outperform. Goldman reiterated Outperform on ISG, NUE, MON, IACI and IGT.
After-hours News
U.S. stocks finished lower today on a rise in energy prices and weakness in technology, over earnings concerns. After the close, Australia and Malaysia said they may soon start talks on a free-trade agreement that would accelerate plans for a regional agreement with 10 south-east Asian countries, the Australian Financial Review reported. Verizon Wireless agreed to buy Qwest Communications International's wireless assets for $418 million, adding capacity in cities including Denver, Phoenix and Seattle. Nielsen Media Research may proceed with its plans to introduce a new local tv ratings system in Los Angeles next week after a California judge denied Univision TV Group's bid for a delay, Bloomberg reported. Lockheed Martin received a definite order for 22 F/A-22 fighter jets from the U.S. Air Force, setting the value of the contract first announced in March at $2.03 billion, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I took a few more profits in the afternoon, leaving the Portfolio 75% net long. It appears to me that investors are overreacting to recent economic data and the rise in energy prices. This may be a result of the coming holiday weekend and repositioning into the new quarter. I would like to see a reversal of the recent selling by not later than next Tuesday.
Mid-day Update
S&P 500 1,126.51 -1.25%
NASDAQ 2,014.60 -1.62%
Leading Sectors
Defense +1.11%
Nanotechnology +1.07%
Restaurants +.64%
Lagging Sectors
Networking -3.45%
Disk Drives -3.67%
Semis -4.08%
Other
Crude Oil 38.70 +4.59%
Natural Gas 6.24 +1.38%
Gold 396.20 +.84%
Base Metals 109.87 +.50%
U.S. Dollar 88.84%
10-Yr. T-note Yield 4.60% +.43%
VIX 15.39 +7.25%
Put/Call 1.0 +28.21%
NYSE Arms 2.58 +142.99%
Market Movers
CAH -24.7% after saying 2004 profit missed forecasts and U.S. attorneys are probing its accounting.
YHOO -5.2% after Citi SmithBarney cut to Hold from Buy.
RIMM +3.6% on a continuation of yesterday's strong move after better-than-expected earnings report and forecast.
ELX -18.1% after cutting 4Q and 1Q forecasts, multiple downgrades.
DRS +22.69% after LLL offered to buy the company for $1.1 billion in cash.
IRGI +16.5% after CRL agreed to buy it for about $1.5 billion in cash and stock.
BNNY +10.77% after saying it may put itself up for sale.
SYPR -26.7% after lowering 2Q estimates, but raising 04/05 sales guidance.
ISIL -10.5% after Schwab SoundView cut rating to Neutral, saying it experienced a slowdown in business at the end of the second quarter.
WMAR -8.2% after lowering 2Q forecast.
Economic Data
Initial Jobless Claims for last week came in at 351K versus estimates of 342K and 350K prior week.
Continuing Claims came in at 2966K versus estimates of 2937K and 2953K prior.
Construction Spending for May rose .3% versus expectations of a .7% rise and an increase of 1.2% in April.
ISM Manufacturing for June came in at 61.1 versus estimates of 61.0 and 62.8 in May.
ISM Prices Paid for June came in at 81.0 versus estimates of 82.0 and 86.0 in May.
Recommendations
Goldman Sachs reiterated Outperform on MCK, MON, IGT, MSFT, STZ, GCI, HOT, AMGN, DNA and FS. Goldman reiterated Underperform on DJ. Citi SmithBarney initiated PNR with a Buy, target $40. Citi reiterated Buy on FON, target $22. Citi reiterated Buy on APCS, target $11. Citi reiterated Buy on SBUX, target $46. NUE rated Sector Underperform at CIBC. LOW rated Overweight and HD rated Underweight at JP Morgan. FRO ratied Overweight at JP Morgan. AMSG, DVA rated Overweight at JP Morgan.
Mid-day News
U.S. stocks are lower mid-day on rising energy prices and weakness in technology shares. Ousted Iraqi dictator Saddam Hussein refused to sign a legal document in court today, insisted on being called President and defended his country's invasion in 1990 of Kuwait, saying "Kuwait is an Iraqi territory. It was not an invasion," Agence France-Presse reported. The ISM Manufacturing Index held close to a 20-year high in June and construction spending increased for a fourth straight month, Bloomberg reported. Senator John Kerry may make his running-mate selection as early as Tuesday, the Boston Globe reported. Delta Air plans to use RFID tags to monitor all bags it handles at domestic airports, the NY Times reported. United Airlines is trying to reassure its 40 million frequent fliers that the U.S. government's loan rejection won't hurt service, the Washington Post reported. Information-technology companies such as Internet jewelry retailer Blue Nile were among 29 venture-backed companies that went public in the second quarter as venture capitalists began to recoup on investments, the Wall Street Journal said. Members of al-Qaeda led by al-Zarqawi in Iraq are targeting females U.S. military personnel, the Washington Times reported. The Houston Police will buy as much as $3.6 million worth of Taser stun guns during the next five years, Bloomberg said. Copper futures rose in New York for a second day on concern a strike in Chile, the world's largest producer, would reduce supplies from a mine owned by Falconbridge and AngloAmerican, Bloomberg said. Crude oil is rising for a second day on concerns that a terrorist attack could limit supplies over the three-day weekend, Bloomberg reported. Ford Motor said U.S. sales of cars and trucks fell 7.7% in June from a year earlier, however DaimlerChrysler's sales rose 5.2%, Bloomberg said. Shares of U.S. REITS may rise as job growth boosts office and apartment occupancies for the first time since 2000, helping landlords weather higher rates, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today on weakness in my technology longs. I took profits in a few long positions this morning, leaving the Portfolio with 100% net long market exposure. The market's manic behavior of late is frustrating, but quite profitable for nimble investors. A couple of weeks ago, inflation was the worry on rising commodity prices and a 20-year high in U.S. economic growth. Commodity prices have fallen over the last 2 weeks and a few economic reports have come off their highs, thus resulting in concerns the economy is slowing too much. U.S. growth is likely slowing from its torrid pace to more sustainable levels, which should alleviate some concerns over inflation. I continue to believe technology shares will outperform in the second half of the year, notwithstanding today's weakness. A significant rally is unlikely today, ahead of tomorrow's jobs report and the three-day weekend. However, with soaring ARMS index and Put/Call readings, a substantial fall in the afternoon is unlikely as well. The rise in oil today is of concern, but likely a countertrend move that will reverse next week.
NASDAQ 2,014.60 -1.62%
Leading Sectors
Defense +1.11%
Nanotechnology +1.07%
Restaurants +.64%
Lagging Sectors
Networking -3.45%
Disk Drives -3.67%
Semis -4.08%
Other
Crude Oil 38.70 +4.59%
Natural Gas 6.24 +1.38%
Gold 396.20 +.84%
Base Metals 109.87 +.50%
U.S. Dollar 88.84%
10-Yr. T-note Yield 4.60% +.43%
VIX 15.39 +7.25%
Put/Call 1.0 +28.21%
NYSE Arms 2.58 +142.99%
Market Movers
CAH -24.7% after saying 2004 profit missed forecasts and U.S. attorneys are probing its accounting.
YHOO -5.2% after Citi SmithBarney cut to Hold from Buy.
RIMM +3.6% on a continuation of yesterday's strong move after better-than-expected earnings report and forecast.
ELX -18.1% after cutting 4Q and 1Q forecasts, multiple downgrades.
DRS +22.69% after LLL offered to buy the company for $1.1 billion in cash.
IRGI +16.5% after CRL agreed to buy it for about $1.5 billion in cash and stock.
BNNY +10.77% after saying it may put itself up for sale.
SYPR -26.7% after lowering 2Q estimates, but raising 04/05 sales guidance.
ISIL -10.5% after Schwab SoundView cut rating to Neutral, saying it experienced a slowdown in business at the end of the second quarter.
WMAR -8.2% after lowering 2Q forecast.
Economic Data
Initial Jobless Claims for last week came in at 351K versus estimates of 342K and 350K prior week.
Continuing Claims came in at 2966K versus estimates of 2937K and 2953K prior.
Construction Spending for May rose .3% versus expectations of a .7% rise and an increase of 1.2% in April.
ISM Manufacturing for June came in at 61.1 versus estimates of 61.0 and 62.8 in May.
ISM Prices Paid for June came in at 81.0 versus estimates of 82.0 and 86.0 in May.
Recommendations
Goldman Sachs reiterated Outperform on MCK, MON, IGT, MSFT, STZ, GCI, HOT, AMGN, DNA and FS. Goldman reiterated Underperform on DJ. Citi SmithBarney initiated PNR with a Buy, target $40. Citi reiterated Buy on FON, target $22. Citi reiterated Buy on APCS, target $11. Citi reiterated Buy on SBUX, target $46. NUE rated Sector Underperform at CIBC. LOW rated Overweight and HD rated Underweight at JP Morgan. FRO ratied Overweight at JP Morgan. AMSG, DVA rated Overweight at JP Morgan.
Mid-day News
U.S. stocks are lower mid-day on rising energy prices and weakness in technology shares. Ousted Iraqi dictator Saddam Hussein refused to sign a legal document in court today, insisted on being called President and defended his country's invasion in 1990 of Kuwait, saying "Kuwait is an Iraqi territory. It was not an invasion," Agence France-Presse reported. The ISM Manufacturing Index held close to a 20-year high in June and construction spending increased for a fourth straight month, Bloomberg reported. Senator John Kerry may make his running-mate selection as early as Tuesday, the Boston Globe reported. Delta Air plans to use RFID tags to monitor all bags it handles at domestic airports, the NY Times reported. United Airlines is trying to reassure its 40 million frequent fliers that the U.S. government's loan rejection won't hurt service, the Washington Post reported. Information-technology companies such as Internet jewelry retailer Blue Nile were among 29 venture-backed companies that went public in the second quarter as venture capitalists began to recoup on investments, the Wall Street Journal said. Members of al-Qaeda led by al-Zarqawi in Iraq are targeting females U.S. military personnel, the Washington Times reported. The Houston Police will buy as much as $3.6 million worth of Taser stun guns during the next five years, Bloomberg said. Copper futures rose in New York for a second day on concern a strike in Chile, the world's largest producer, would reduce supplies from a mine owned by Falconbridge and AngloAmerican, Bloomberg said. Crude oil is rising for a second day on concerns that a terrorist attack could limit supplies over the three-day weekend, Bloomberg reported. Ford Motor said U.S. sales of cars and trucks fell 7.7% in June from a year earlier, however DaimlerChrysler's sales rose 5.2%, Bloomberg said. Shares of U.S. REITS may rise as job growth boosts office and apartment occupancies for the first time since 2000, helping landlords weather higher rates, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today on weakness in my technology longs. I took profits in a few long positions this morning, leaving the Portfolio with 100% net long market exposure. The market's manic behavior of late is frustrating, but quite profitable for nimble investors. A couple of weeks ago, inflation was the worry on rising commodity prices and a 20-year high in U.S. economic growth. Commodity prices have fallen over the last 2 weeks and a few economic reports have come off their highs, thus resulting in concerns the economy is slowing too much. U.S. growth is likely slowing from its torrid pace to more sustainable levels, which should alleviate some concerns over inflation. I continue to believe technology shares will outperform in the second half of the year, notwithstanding today's weakness. A significant rally is unlikely today, ahead of tomorrow's jobs report and the three-day weekend. However, with soaring ARMS index and Put/Call readings, a substantial fall in the afternoon is unlikely as well. The rise in oil today is of concern, but likely a countertrend move that will reverse next week.
Thursday Watch
Earnings of Note
Company/Estimate
BMET/.36
CAG/.42
FLML/.07
Splits
ARBA 1-for-6
CNT 2-for-1
IRM 3-for-2
PTEN 2-for-1
KWK 2-for-1
TEVA 2-for-1
Economic Data
Initial Jobless Claims for last week estimated at 342K versus 349K prior week.
Continuing Claims estimated at 2937K versus 2967K prior.
Construction Spending for May estimated +.7% versus +1.3% in April.
ISM Manufacturing for June estimated at 61.0 versus 62.8 in May.
ISM Prices Paid for June estimated at 82.0 versus 86.0 in May.
Total Vehicle Sales for June estimated at 16.8M versus 17.8M in May.
Domestic Vehicle Sales for June estimated at 13.5M versus 14.3M in May.
Recommendations
Goldman Sachs reiterated Outperform on STZ. Goldman reiterated Underperform on ELX and QLGC. Goldman said momentum shifting away from low-fare airlines, would shift out of AAI, FRNT, JBLU and into AMR, CAL, ALK. Goldman said MSFT win in Mass. appeal clears the last hurdle regarding use of cash, reiterated Outperform.
Late-Night News
Asian indices are mostly higher after Japan said business confidence rose to a 13-year high and U.S. interest rates fell. Iraq's new leadership and coalition government are drawing up a plan for the withdrawal of coalition troops, the Financial Times said. China will soon loosen controls and allow more money out of the country as part of efforts to move its currency toward full convertibility, Shanghai Securities News reported. Time Warner has made a preliminary offer to buy Metro-Goldwyn-Mayer, the Wall Street Journal reported. The U.S. raised its reward for al-Zarqawi, an al-Qaeda linked terrorist operating in Iraq, from $10 million to $25 million, the State Department said. Saddam Hussein will appear before a special tribunal today to hear charges arising from his 23-year dictatorship. TradeSports.com is showing that the chances of Hillary Clinton being named the Democratic VP Nominee are rising 14.0% to 16.8%., while John Edwards' chances are falling 5.6% to 52.0%.
Late-Night Trading
Asian Indices are -.25 to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in Asia, falling oil prices and stronger-than-expected construction/ISM reports. My short-term trading indicators are still giving buy signals and the Portfolio is 150% net long heading into tomorrow.
Company/Estimate
BMET/.36
CAG/.42
FLML/.07
Splits
ARBA 1-for-6
CNT 2-for-1
IRM 3-for-2
PTEN 2-for-1
KWK 2-for-1
TEVA 2-for-1
Economic Data
Initial Jobless Claims for last week estimated at 342K versus 349K prior week.
Continuing Claims estimated at 2937K versus 2967K prior.
Construction Spending for May estimated +.7% versus +1.3% in April.
ISM Manufacturing for June estimated at 61.0 versus 62.8 in May.
ISM Prices Paid for June estimated at 82.0 versus 86.0 in May.
Total Vehicle Sales for June estimated at 16.8M versus 17.8M in May.
Domestic Vehicle Sales for June estimated at 13.5M versus 14.3M in May.
Recommendations
Goldman Sachs reiterated Outperform on STZ. Goldman reiterated Underperform on ELX and QLGC. Goldman said momentum shifting away from low-fare airlines, would shift out of AAI, FRNT, JBLU and into AMR, CAL, ALK. Goldman said MSFT win in Mass. appeal clears the last hurdle regarding use of cash, reiterated Outperform.
Late-Night News
Asian indices are mostly higher after Japan said business confidence rose to a 13-year high and U.S. interest rates fell. Iraq's new leadership and coalition government are drawing up a plan for the withdrawal of coalition troops, the Financial Times said. China will soon loosen controls and allow more money out of the country as part of efforts to move its currency toward full convertibility, Shanghai Securities News reported. Time Warner has made a preliminary offer to buy Metro-Goldwyn-Mayer, the Wall Street Journal reported. The U.S. raised its reward for al-Zarqawi, an al-Qaeda linked terrorist operating in Iraq, from $10 million to $25 million, the State Department said. Saddam Hussein will appear before a special tribunal today to hear charges arising from his 23-year dictatorship. TradeSports.com is showing that the chances of Hillary Clinton being named the Democratic VP Nominee are rising 14.0% to 16.8%., while John Edwards' chances are falling 5.6% to 52.0%.
Late-Night Trading
Asian Indices are -.25 to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in Asia, falling oil prices and stronger-than-expected construction/ISM reports. My short-term trading indicators are still giving buy signals and the Portfolio is 150% net long heading into tomorrow.
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