MId-day Update

S&P 500 1,106.91 -.61%
NASDAQ 1,908.23 -.64%

Leading Sectors
Oil Service +2.46%
Airlines +1.72%
Energy +1.68%

Lagging Sectors
Semis -2.94%
Disk Drives -4.11%
Insurance -5.92%

Other
Crude Oil 54.40 +1.42%
Natural Gas 6.78 -1.04%
Gold 419.30 +1.13%
Base Metals 112.89 -.48%
U.S. Dollar 87.61 -.31%
10-Yr. T-note Yield 4.03% -.57%
VIX 15.94 +3.37%
Put/Call 1.19 +12.26%
NYSE Arms 1.47 +6.62%

Market Movers
SNDK -25.1% after missing estimates and lowering 4Q guidance and multiple downgrades.
AAPL +12.9% after substantially beating 4Q estimates, raising 1Q outlook and multiple upgrades.
GM -5.1% after missing 3Q estimates substantially, lowering 04 guidance, S&P credit downgrade and announcing 12,000 job cuts in Europe.
FHCC +15.2% after CVH agreed to buy it for about $1.8B. in cash and stock.
NVLS -9.6% after meeting 3Q estimates and lowering 4Q guidance substantially.
AIG -4.5% on news that Eliot Spitzer named it in a lawsuit for "steering and bid rigging."
CAAS +42.0% on continuing optimism over its addition into the Halter USX China Index.
EYET +13.4% on ACL news.
ADBL +15.8% on AAPL earnings report.
RNVS +18.3% after saying AstraZeneca will continue as planned with Phase III trials to determine Cerovive's effect on disability and neurological recovery in acute ischemic stroke patients.
PPDI +8.4% after beating 3Q estimates.
SYNA +8.6% on AAPL earnings report.
IMDC +4.7% on JP Morgan upgrade to Overweight.
PII +4.5% after beating 3Q estimates and raising 04 guidance.
MLI -12.0% after disappointing 3Q results and worries over slowing sales to China.
ACL -12.3% after saying its treatment for the leading cause of blindness among the elderly wasn't better than Novartis AG's drug.
CVH -9.7% on FHCC purchase.
MMC -11.3% on Spitzer lawsuit.
QLGC -7.5% after beating 2Q estimates, but Merrill downgrade to Neutral.
LIN -8.2% after lowering 3Q forecast and multiple downgrades.
*Alternative Energy stocks up across the board on high oil prices and positive commentary.

Economic Data
Trade Balance for August was -$54.0B versus estimates of -$51.4B and -$50.5B in July.
Import Price Index for September rose .2% versus estimates of a .5% increase and a 1.4% gain in August.
Initial Jobless Claims for last week were 352K versus estimates of 2859K and 2856K the prior week.
Continuing Claims were 2845K versus estimates of 2859K and 2856K prior.

Recommendations
Goldman Sachs reiterated Attractive view of Chemical industry. Goldman reiterated Outperform on ASN, AMGN, BIIB, DNA, GILD, AIG, DIS, DO, RIG and UNH. Goldman reiterated Underperform on CVH and FHCC. Citi SmithBarney rated VRSN Buy, target $26. Citi reiterated Buy on WMT, target $65. Citi sees modest earnings upside surprises at TYC, CBE, ROK, EMR, ITT. Citi reiterated Buy on LRCX, target $35. Citi reiterated Sell on SNDK, target $21. Citi reiterated Buy on ALL, target $55. Citi reiterated Buy on TLAB, target $11. Citi reiterated Buy on ARLP, target $67. Citi reiterated Buy on LLTC, target $44. IMDC and AAPL raised to Overweight at JP Morgan. PPG raised to Buy at Bank of America, target $68. LIN cut to Underperform at Bear Stearns. AAPL raised to Outperform at Bear Stearns. LSTR raised to Overweight at JP Morgan.

Mid-day News
U.S. stocks are modestly lower mid-day on continuing fears over high energy prices, lawsuits and earnings. Hennes & Mauritz's expansion to Italy and Eastern Europe comes as Europe's largest clothing retailer still seeks to meet financial goals in the U.S., the NY Times said. FedEx will open 150 branches in the Serbian sector of Bosnia, also known as Republika Srpska, under an agreement with the Bosnian postal services, the AP reported. Vietnam prisoners of war who appear in a documentary called "Stolen Honor" criticizing Senator Kerry have joined forces with the anti-Kerry Swift Boat Veterans for Truth to campaign against Kerry, the Washington Post reported. Citigroup, the world's largest bank, said third-quarter profit rose 13%, buoyed by revenue from consumer lending and share sales in Asia, Bloomberg said. Nokia said profit will probably drop for a second consecutive quarter as it cuts prices to win back market share, Bloomberg reported. UnitedHealth Group, the biggest U.S. health insurer, said third-quarter profit rose 47% after the company controlled costs and gained customers through the July purchase of Oxford Health Plans, Bloomberg reported. Bank of America said quarterly profit rose 29% as it boosted lending and earned more fees from consumer banking, Bloomberg said. Lehman Brothers retained first place as the top stock research firm for a second year in an annual money-manager survey by Institutional Investor magazine. Merck CEO Gilmartin said the drugmaker may accelerate new-drug development and cost-cutting after the withdrawal of its Vioxx painkiller because of a link to heart risks, Bloomberg reported. Crude oil is rising after an Energy Dept. report showed that U.S. supplies of distillate fuels, including heating oil and diesel, fell last week, Bloomberg reported. General Motors cut its 2004 profit forecast after posting its first loss on North American car manufacturing in six years, Bloomberg said. New York Attorney General Spitzer sued Marsh & McLennan and arrested two American International Group executives in his first prosecution of the insurance industry, Bloomberg said.

BOTTOM LINE: The Portfolio is unchanged mid-day as strength in my alternative energy and internet longs is offsetting weakness in my restaurant and wireless longs. I have not traded today and the Portfolio is still 100% net long. While the tone of the market is negative, declines are muted on light volume. Interest rates are falling again as investors continue to speculate high energy prices will slow world growth substantially. On the positive side, companies with good earnings reports are being rewarded substantially and measures of investor anxiety are rising again. I expect U.S. stocks to rise modestly from current levels into the close on short-covering.