Wednesday, February 23, 2005

Wednesday Close

S&P 500 1,190.80 +.56%
Dow 10,673.79 +.59%
NASDAQ 2,031.25 +.05%
Russell 2000 620.54 +.42%
DJ Wilshire 5000 11,718.47 +.54%
S&P Barra Growth 572.45 +.48%
S&P Barra Value 614.04 +.64%
Morgan Stanley Consumer 582.51 +.65%
Morgan Stanley Cyclical 759.02 +.82%
Morgan Stanley Technology 462.90 -.18%
Transports 3,611.74 +2.02%
Utilities 345.38 +.72%
Put/Call .86 +13.16%
NYSE Arms .75 -48.98%
Volatility(VIX) 12.39 -5.71%
ISE Sentiment 149.00 +4.93%
US Dollar 82.68 +.33%
CRB 299.16 +.50%

Futures Spot Prices
Crude Oil 51.32 +.29%
Unleaded Gasoline 131.45 +.24%
Natural Gas 6.30 -.10%
Heating Oil 148.74 +.29%
Gold 435.90 -.05%
Base Metals 128.61 -.13%
Copper 149.05 -.30%
10-year US Treasury Yield 4.26% -.55%

Leading Sectors
Transports +2.02%
HMOs +1.76%
Oil Service +1.63%

Lagging Sectors
Semis -.42%
Gaming -.54%
Disk Drives -1.42%

After-hours Movers
APPB +6.88% after better-than-expected same-store-sales.
MATK +4.17% after saying it will replace Banknorth Group(BNK) in the S&P MidCap 400 after the close of trading on March 1.
FWHT -19.03% after missing 1Q revenue estimates and lowering 05 outlook.
SGMS -6.3% after beating 4Q estimates and saying it is working to eliminate a "material weakness" in its accounting.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
- Goldman Sachs: Reiterated Underperform on KO. Reiterated Outperform on RAI.
- Lehman Brothers: Reiterated Overweight on CPS, target $46.
- Oppenheimer: Reiterated Buy on RDWR, target $40. Reiterated Buy on OSI, target $52.
- Morgan Stanley: Reiterated Overweight on DDR, target $46. Reiterated Overweight on IPCR, target $44.
- Raymond James: Downgraded MHS and ACDO to Underperform.
- UBS: Reiterated Buy on HYSL, target $60.
- Prudential: Reiterated Overweight on OMC, target $97. Reiterated Overweight on RBK, target $50.
- Banc of America: Upgraded JBL to Buy, target $30.

After-hours News
US stocks finished modestly higher today on optimism over merger activity and strength in energy-related stocks. After the close, Martha Stewart is determined to return as CEO of Martha Stewart Living Omnimedia despite a potential ban by the SEC, Newsweek reported. Hedge funds hold more capital to use for acquisitions and more lucrative incentive structures than private equity groups, the Financial Times reported. “Unless private equity groups recognize the weapons at the disposal of hedge funds they risk becoming dinosaurs,” said David Rubenstein, Carlyle Group co-founder. Playmates Holdings Ltd., which owns the toy rights for the Teenage Mutant Ninja Turtles, is seeking acquisitions in the US, Europe and Japan, the South China Morning Post reported. AT&T may be liable for as much as $500 million in fees related to its prepaid calling cards after US regulators rejected the company’s request for an exemption, Bloomberg reported. Northrop Grumman or General Dynamics may be shut out of production work on the US Navy’s new destroyer program, worth at least $13.5 billion, under a plan submitted to the Pentagon, Bloomberg said. Colombian Foreign Minister Carolina Barco said her country plans to start easing its dependence on US aid in about 2 years as the economy grows fast enough to fund the fight against drug-funded terrorism on its own, Bloomberg reported. Chiron’s John Lambert, president of the company’s vaccine unit, resigned after contamination at a plant in England caused a shortage of influenza shots in the US during the 04-05 season, Bloomberg said.

BOTTOM LINE: The Portfolio finished slightly lower today as losses in my computer hardware and steel shorts more than offset gains in my alternative energy longs. I covered a few shorts in the afternoon, thus leaving the Portfolio 25% net long. The tone of the market weakened modestly into the afternoon as the advance/decline line finished near its daily lows, volume declined and sector performance was mostly positive. Technology stocks underperformed throughout the day and most measures of investor anxiety fell. Today’s action appeared to be the result of a technical bounce from yesterday’s sharp sell-off and I continue to expect weakness to resurface over the coming weeks.

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