Wednesday, March 31, 2004

Mid-day Update

S&P 500 1,125.98 -.09%
NASDAQ 1,993.51 -.36%

Leading Sectors
Airlines +2.75%
Fashion +1.36%
Hospitals +.72%

Lagging Sectors
Software -.63%
Disk Drives -1.0%
Computer Boxmakers -1.07%

Crude Oil 35.05 -3.31%
Natural Gas 5.75 -.02%
Gold 427.20 +1.04%
Base Metals 113.40 +1.0%
U.S. Dollar 87.62 -.90%
10-Yr. Long-Bond Yield 3.87% -.54%
VIX 16.58 +1.97%
Put/Call .91 +49.18%
NYSE Arms .94 +23.68%

Market Movers
QLGC -21.2% after the company said 4Q sales missed its forecast.
BBY +8.0% after beating 4Q estimates and raising 1Q guidance.
CC +6.0% after meeting 4Q estimates and announcing the acquisition of ITN for $284M and privately held MusicNow.
TSG +18.1% after boosting 1Q and 04 estimates.
REDF +44.8% after announcing an agreement with YHOO to promote online shopping and content across both portals.
PLMO +11.58% after JP Morgan made positive comments.
USNA -8.4% after lowering 1Q estimates.

Economic Data
Chicago Purchasing Manager report for March was 57.6 versus a forecast of 61.0.
Factory Orders for February were +.3% versus a +1.5% estimate.

RDWR raised to Buy 2 at UBS, target $31. WDC raised to Overweight at Thomas Weisel. LLY raised to Buy at Merrill Lynch, target $80. ALKS added to Focus 1 list at Merrill, target $20. Bank of America said investors should sell bonds issued by European telecom companies as intensifying competition and regulation will dent earnings. XTO raised to Overweight at Prudential, target $31. ADSK price target raised to $38 at Pru. BBY raised to Buy at Legg Mason, target $65. is recommending for-profit education stocks APOL, CECO, COCO, DV, EDMC, STRA, favorites are STRA and DV. TSC also recommending homebuilders DHI, KBH, LEN, PHM and SPF. Goldman Sachs reiterates Underperform on QLGC. Goldman reiterated Outperform on X, CCE, BBY, VZ, SBC and CCU. Citi Smith Barney said to Buy APCC ahead of quarter, $31 target. Citi upgraded LLY to 2M, target $72. Citi reiterated Buy on CCU and DIS.

Mid-day News
U.S. stocks are modestly lower on weaker-than-expected economic reports. At last count, Wall Street firms have contributed $5.5 million to Bush's re-election campaign, compared with $1.2 million to John Kerry's campaign, according to the Center for Responsive Politics, a nonpartisan organization. A recent analysis by the center found that many of Kerry's biggest donors on Wall Street actually have given far more generously to Bush's re-election effort. Goldman Sachs says the number of dividend increases announced this year continues to run ahead of the record levels in 2003. Exelon and Entergy, the biggest U.S. nuclear-power generators, and five other companies will seek government funding for design and licensing of new reactors. The U.S. Homeland Security department's campaign to encourage the public to prepare for terrorism hasn't spurred the majority of Americans to act, USA Today reported. A recent poll by the Council for Excellence shows 21% of Americans believe a major terrorist attack on U.S. soil is likely in the next few months. OPEC agreed to reduce oil production quotas starting tomorrow by 4.1%, threatening to drive gas prices higher and impede world economic growth, reported Bloomberg. Crude Oil fell after the Energy Department reported that U.S. inventories surged to the highest level in 19 months.

BOTTOM LINE: The Portfolio is down slightly today as my longs are mixed and shorts are up. I have not made any trades today and net market exposure is still 100% long. It is positive that violence in Iraq, below-expectations economic reports, confirmation of OPEC production cuts and a fire at America's third largest oil refinery could not send shares significantly lower or oil prices higher. Thus, while it is hard to game the last day of the quarter, I expect a rally later in the day.

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