Mid-day Update

S&P 500 1,106.75 -.65%
NASDAQ 1,930.36 -.32%

Leading Sectors
Semis +1.55%
I-Banks +1.11%
Boxmakers +1.02%

Lagging Sectors
Insurance -3.01%
Iron/Steel -5.06%
HMOs -7.82%

Other
Crude Oil 53.20 -.88%
Natural Gas 7.05 +3.66%
Gold 421.60 +.96%
Base Metals 113.21 +.08%
U.S. Dollar 86.83 -.22%
10-Yr. T-note Yield 4.04% -.05%
VIX 14.91 +1.36%
Put/Call .94 +23.68%
NYSE Arms 1.18 +19.19%

Market Movers
TASR +8.5% after beating 3Q estimates and raising 04 forecast.
MMC -4.8% on lingering worries over Spitzer probe.
UNH -8.5% after the NY Post reported that New York Attorney General Spitzer is widening a probe of insurance brokers' fees to include HMOs.
TXN +7.9% after beating 3Q estimates, reiterating 4Q guidance and making positive comments.
UNM -9.8% on Spitzer probe.
MOND +31.0% after Constellation Brands offered $1.3 billion in cash to acquire it.
SSNC +19.2% after beating 3Q estimates, raising 4Q guidance and Suntrust upgrade to Buy.
PH +8.6% after beating 1Q estimates and raising 2Q outlook.
SWK +9.2% after beating 3Q estimates and raising 4Q/04 guidance.
CKFR +10.4% after beating 1Q estimates and raising 2Q forecast.
RTRSY +7.9% after meeting 3Q estimates and giving positive outlook.
STN +4.4% after beating 3Q estimates and raising 4Q outlook.
ETH +7.2% after beating 1Q estimates and making positive comments on 05.
JEF +8.3% after substantially beating 3Q estimates.
AET -10.3% on Spitzer probe.
WLP -6.7% on Spitzer probe.
BCC -11.5% on profit-taking after beating 3Q estimates.
NUE -8.22% on continuing worries over slowing demand from China.

Economic Data
Consumer Price Index for September rose .2% versus estimates of a .2% increase and a .1% gain in August.
CPI Ex Food & Energy for September rose .3% versus estimates of a .2% gain and a .1% rise in August.
Housing Starts for September were 1898K versus estimates of 1950K and 2020K in August.
Building Permits for September were 2005K versus estimates of 1950K and 1969K in August.

Recommendations
Goldman Sachs reiterated Outperform on IBM, EMC, CMA, DO, RIG and STN. Goldman reiterated Underperform on FRX. Citi SmithBarney said to Sell WEN and Buy MCD. Citi also said to Sell CSX and Buy CNI. Citi reiterated Buy on MSFT, target $33. Citi reiterated Sell on LF, target $10. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on MMM, target $86. Citi reiterated Buy on ASD, target $46. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on CKFR, target $39. FST rated Buy at UBS, target $38. KWK rated Buy at UBS, target $48. WGR rated Buy at UBS, target $37. FLYI cut to Reduce at UBS, target $1.50. DAL cut to Reduce at UBS, target $2. SGU cut to Reduce at UBS, target $8. BHE rated Buy at Bank of America, target $37. PLXS rated Sell at Bank of America, target $9.

Mid-day News
U.S. stocks are modestly lower mid-day on worries over mounting legal duress in the insurance industry. New York Attorney General Spitzer began investigating health insurance policies sold by brokers to individuals, large corporations and local government, the NY Post reported. U.S. hedge funds opposed to a plan to require them to register as financial advisers have asked U.S. regulators to explore other ways to improve disclosure, the NY Post said. Canadian health-lobby organizations are pressuring their government to prohibit Internet-based pharmacies from selling drugs to the U.S., because they say the sales will lead to higher pharmaceutical prices and shortages in Canada, the Wall Street Journal reported. Senator Kerry is wrong when he says the 2001 battle of Tora Bora in Afghanistan was a "missed opportunity" in which the U.S. had al-Qaeda leader Osama bin Laden surrounded and let him escape, retired General Tommy Franks wrote in today's NY Times. The U.S. Army has been ordered to prepare a plan to shorten the 12-month tours of duty soldiers now serve in Afghanistan and Iraq, the NY Times reported. Google's new free search tool that indexes a computer's content for easy retrieval could allow public PC users to see other people's e-mails, passwords and data, the AP reported. Senator Kerry may have overstated President Bush's positions on Social Security and the draft as well as his responsibility for a shortage of flu shots, the NY Times reported, citing experts and candidate statements. The NHL, which has missed six days of its regular season because of a labor dispute, is now canceling games 45 days in the future instead of 30, TSN network of Canada reported. General Motors may face costs of $38 million per day if strikes bring its plants across Europe to a standstill, Reuters reported. Iraq is on course to hold its first free elections in January, UN Secretary General Annan said, calling on all nations to support the country, Bloomberg reported. EMC, the world's largest maker of data storage computers and software, said third-quarter profit rose as the company snatched sales from competitors and clients spent more on storage to meet government regulations, Bloomberg said. Boston Scientific, the world's largest maker of heart stents, said third-quarter net income more than doubled to $258 million after the company stemmed damage from three recalls of its top-selling product in the U.S., Bloomberg said. Merck said Vioxx's planned successor, Arcoxia, didn't elevate the risk of heart disease compared with a generic pain pill in a one-year study, Bloomberg reported. McDonald's started selling New York Reuben and Turkey BLT sandwiches at some U.S. and Canadian locations last quarter to take sales from Subway Restaurants, Bloomberg reported. Crude oil futures are falling for a second day in NY on speculation that high prices may dent the growth in oil demand and prompt development of increased production capacity, Bloomberg said. U.S. consumer prices accelerated in September, a gain that may strengthen the Fed's resolve to increase interest rates, Bloomberg said.

BOTTOM LINE: The Portfolio is higher mid-day on strength in my security, internet and retail longs. I have not traded and the Portfolio is still 125% net long. The tone of the market has deteriorated today as major U.S. insurance companies continue to fall substantially as a result of the Spitzer probes. As well, oil has risen from its lows for the day. On the positive-side, measures of investor anxiety are rising, technology stocks are mostly higher, leaders are beginning to break-out, interest rates are lower and another measure of consumer inflation remained relatively tame. I expect U.S. stocks to rise modestly into the close from current levels on short-covering and bargain-hunting.