Thursday, February 26, 2004

Thursday Close

S&P 500 1,144.91 +.11%
NASDAQ 2,032.57 +.47%


Leading Sectors
Homebuilders +3.55%
Networking +1.46%
Gaming +1.38%

Lagging Sectors
Drugs -.17%
Papers -.34%
Defense -.65%

Other
Crude Oil 35.37 -.39%
Natural Gas 5.41 +.26%
Gold 395.90 +.10%
Base Metals 112.90 +.13%
U.S. Dollar 87.66 +.47%
10-Yr. Long-Bond Yield 4.03% +.67%
VIX 14.83 -.67%
Put/Call .63 -17.11%
NYSE Arms .88 +12.82%

After-hours Movers
ADSK +12.6% after significantly beating 4Q estimates and raising guidance substantially.
MCDTA +7.0% after beating 4Q and reiterating 1Q guidance.
CHINA +2.9% after strong 4Q.
ILXO +17.45% on $1B takeover offer by Genzyme. GENZ -4.3%.
MRVL +4.9% on strong 4Q and 2-for-1 split announcement.

Recommendations
Goldman Sachs reiterates Attractive rating on AMR and raises estimates as strengthening demand offsets higher oil prices.

After-hours News
U.S. markets finished mostly higher today, as strength in homebuilding and technology shares offset weakness in the defense sector. After the close, Business Objects(BOBJ) pulled out of 2 investor conferences next week, leading traders to speculate a secondary is coming. The U.S. may limit exports of scrap steel to ensure that the raw material used to make steel bars and other products is in sufficient supply to meet domestic demand, citing the Korean Trade Promotion Agency. Four Season may offer to buy Savoy Group, the owner of London's Claridge's hotel, for as much as $1.5 billion, the London-based Times said. Genentech said it won U.S. approval for its Avastin drug, the first caner drug that chokes off a tumor's blood supply. The U.S. Justice Department will seek to block Oracle's $9.4B hostile bid for Peoplesoft. "A more meaningful pick-up in hiring cannot be far away, as capital spending is now growing at a 15-20% rate in the current quarter," said Deutshe Bank's Joseph LaVorgna. As well, Fed Governor Susan Bies, in a speech to the NY Forecasters Club, said "job growth may pick-up perhaps substantially over the course of the year."

BOTTOM LINE: The Durable Goods report makes me more confident in my 5%+ GDP prediction for 1Q. I am seeing comments by CEO's that lead me to believe that they FINALLY believe in the strength of the recovery. Their confidence, combined with recent data points showing a stretched labor force and some supply shortages, lends more credence to recent Fed talk of a pick-up in job creation soon. I didn't make any change today, thus leaving the Portfolio with 75% net long market exposure.

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