Friday, March 05, 2004

Friday Close

S&P 500 1,156.86 +.17%
NASDAQ 2,047.63 -.36%

Leading Sectors
Homebuilders +3.26%
Restaurants +1.65%
Gaming +1.58%

Lagging Sectors
Semis -.86%
Software -.87%
Iron/Steel -2.03%

Crude Oil 37.26 +1.69%
Natural Gas 5.44 -.26%
Gold 401.60 +2.14%
Base Metals 109.87 +.48%
U.S. Dollar 88.17 -1.10%
10-Yr. Long-Bond Yield 3.84% -4.32%
VIX 14.48 +.56%
Put/Call .78 +14.71%
NYSE Arms 1.37 +52.22%

After-hours Movers
None of note.

Goldman Sachs says ACV up on speculation of a takeover by L'Oreal. They would not chase stock at current levels. GS saying tight inventory at retailers should limit markdowns going forward. Goldman interprets the March 3rd letter from the CBO as an incremental shift towards supporting gov. drug price negotiation under Medicare, with potential negative implications for the role of private-sector managed care companies in negotiating drug price discounts.

After-hours News
The S&P 500 rose for the seventh day in eight, led by homebuilders, financials and consumer cyclicals after a report showed the economy generated fewer jobs than expected. This report resulted in a substantial bond market rally and a falling dollar, which in turn led to the eventual rally in U.S. stocks. After the close, Delphi said it faces potential losses of $10M a day if 2 suppliers halt shipments because of a price dispute, DJ Newswire reported. Crude Oil is now trading near a 1-yr. high on unrest in Venezuela. Martha Stewart Living shares plunged 36% from their intra-day high after Stewart was found guilty on 4 different charges.

BOTTOM LINE: The Portfolio finished the day slightly higher, as weakness in my tech positions was offset by strength in biotech and homebuilding stocks. The Portfolio is 100% net long heading into trading next week. The Morgan Stanley Tech Index is at a critical juncture technically. I suspect, after weekend reflection, investors will bid tech higher in the coming week. Interest rates near 50-yr lows, a P/E of 18.7 and falling for the S&P 500 on 04 estimates, strong GDP growth near 20-yr. highs, strong corporate profitability near all-time highs, strong consumer/corporate spending, improving debt-service ratios, a stabilizing U.S. currency and record low inflation are all characteristics of the current market environment and all very positive for U.S. equities. I will discuss potential negatives I see in this weekend's commentary.

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