Wednesday Close

Indices
S&P 500 1,184.07 +.23%
DJIA 10,486.02 +.26%
NASDAQ 1,999.14 -.01%
Russell 2000 616.21 +.28%
DJ Wilshire 5000 11,670.94 +.23%
S&P Barra Growth 570.81 +.06%
S&P Barra Value 608.89 +.39%
Morgan Stanley Consumer 581.78 +.10%
Morgan Stanley Cyclical 745.74 +.25%
Morgan Stanley Technology 453.70 -.06%
Transports 3,713.66 -.20%
Utilities 362.35 -.35%
Put/Call .98 +13.95%
NYSE Arms 1.15%
Volatility(VIX) 13.15 -3.87%
ISE Sentiment 148.00 -20.0%
US Dollar 84.68 +.02%
CRB 308.07 -.23%

Futures Spot Prices
Crude Oil 55.91 +.11%
Unleaded Gasoline 165.81 -.07%
Natural Gas 7.53 -.37%
Heating Oil 158.58 +.11%
Gold 428.90 -.07%
Base Metals 129.08 +1.36%
Copper 150.50 -.23%
10-year US Treasury Yield 4.42% -.90%

Leading Sectors
Oil Service +1.99%
Energy +1.75%
Biotech +1.44%

Lagging Sectors
Iron/Steel -.71%
Internet -.87%
Homebuilders -1.06%

After-hours Movers
MW +3.5% on strong March same-store-sales.
BBBY +5.5% after beating 4Q estimates.

Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on AIG and DELL.

Afternoon/Evening Headlines
Bloomberg:
- Goldman Sachs CEO Paulson said his analysts are “totally independent” from energy traders, responding to criticism about a Goldman oil report on the last day of the first quarter that helped send prices higher by suggesting crude may rise as high as $105/bbl.
- Shares of Archer Daniels Midland fell more than 12%, the biggest decline since 1987, on concern that a drop in the price of ethanol will erode the company’s earnings.
- Investors would be able to obtain the disciplinary history of stockbrokers on the Internet under legislation approved today by the US House of Representatives.
- Dell repeated its first-quarter profit and sales forecast and said it plans to spend $2 billion on a stock buyback this quarter.
- Bed Bath & Beyond, the largest US home-furnishing retailer, said fourth-quarter net income rose to $181 million, helped by new stores.
- Russia, which defaulted on $40 billion of domestic bonds in 1998, said it may pay back its entire $110 billion of foreign debt as soon as 2007 as record oil prices swell government revenue.

New York Post:
- New York City police issued 51% more tickets to drivers for talking on hand-held mobile phones in the first four months of fiscal 2005 than a year earlier.

BOTTOM LINE: US stocks finished most higher today as optimism over lower long-term interest rates more than offset worries over slowing growth. The Portfolio finished higher on gains in my Chinese ADR shorts, Computer longs, Retail longs and Energy longs. I took profits in a few trading longs in the afternoon and added a few new shorts, thus leaving the Portfolio market neutral. The tone of the market weakened into the afternoon as the advance/decline fell to its lows of the day, sector performance was mixed and volume was modest. Energy-related stocks outperformed into the afternoon, while Homebuilding shares underperformed and measures of investor anxiety were lower. Overall, today’s market action was slightly negative, considering the drop in long-term interest rates, stabilizing energy prices and the market’s oversold state. I plan to remain relatively conservative until the major indices break from the recent trading range. I suspect this will come during earnings season.

Mid-day Scoreboard

Indices
S&P 500 1,186.01 +.39%
DJIA 10,498.28 +.38%
NASDAQ 2,003.97 +.25%
Russell 2000 617.62 +.51%
DJ Wilshire 5000 11,683.94 +.33%
S&P Barra Growth 571.54 +.19%
S&P Barra Value 609.34 +.46%
Morgan Stanley Consumer 582.03 +.14%
Morgan Stanley Cyclical 746.73 +.39%
Morgan Stanley Technology 455.18 +.26%
Transports 3,721.89 +.02%
Utilities 362.69 -.25%
Put/Call .85 -1.16%
NYSE Arms .89 +2.63%
Volatility(VIX) 13.18 -3.58%
ISE Sentiment 134.00 -27.57%
US Dollar 84.68 +.02%
CRB 308.56 -.07%

Futures Spot Prices
Crude Oil 56.20 +.29%
Unleaded Gasoline 167.40 -.83%
Natural Gas 7.64 +.96%
Heating Oil 159.80 -1.42%
Gold 429.20 +.61%
Base Metals 129.08 +1.36%
Copper 150.80 +1.58%
10-year US Treasury Yield 4.42% -.95%

Leading Sectors
Biotech +1.71%
Oil Service +1.74%
Energy +1.62%

Lagging Sectors
Internet -.32%
Telecom -.51%
Homebuilders -.62%

BOTTOM LINE: US stocks are modestly higher mid-day on optimism over falling long-term interest rates. The Portfolio is higher on gains in my Chinese ADR shorts, Retail longs, Energy longs and Computer Longs. I exited a few trading longs into this morning’s strength, thus leaving the Portfolio’s market exposure at 25% net long. The tone of the market is modestly positive as the advance/decline line is higher, sector performance is mostly positive and volume is modest. Consumer stocks are underperforming, while Energy-related shares are outperforming and measures of investor anxiety are mixed. Today’s overall market action is mixed, considering another decline in long-term interest rates, the market’s oversold state and the stabilization of energy prices. I continue to believe the lows for the year will be made over the coming weeks, making for a much more positive second half in equities. I expect US stocks to trade mixed into the close as optimism over falling long-term interest rates is offset by concerns over slowing global growth and earnings.

Today's Headlines

Bloomberg:
- Hennes & Mauritz AB, Europe’s largest clothing chain, said fiscal first-quarter profit rose 29%, more than analysts expected, as textile prices fell following the end of quotas on exports from countries such as China.
- Global economic expansion is at a “turning point” with growth slowing to 3.1% this year after the fastest increases in four years.
- Iraq’s National Assembly today named Kurdish leader Jalal Talabani as the country’s first democratically elected president in more than 50 years.
- Fed Chairman Greenspan told Congress he supports a new regulator for Fannie Mae and Freddie Mac if it has the power to rein in the growth of the two mortgage lenders.
- The yen fell against the dollar, approaching a five-month low, on speculation Japanese investors are shifting funds toward higher-yielding bonds in the US and Europe at the start of their financial year.
- Fannie Mae staff falsified signatures and doctored figures that may have been used to improve earnings, the mortgage lender’s regulator Armando Falcon said today in testimony before Congress.
- The SEC passed a rule guaranteeing that all investors get the best price on all electronic stock trades.
- US 10-year T-notes rose for the first day this week after comments from Fed Chairman Greenspan reduced speculation the central bank may view rising energy prices as contributing to faster inflation.
- Crude oil is nearly unchanged today after the Energy Department said US refiners boosted stockpiles for an eighth week.

The Wall Street Journal:
- Allied Domecq Plc’s Dunkin’ Donuts and the Baskin Robbins ice-cream chain would be put up for sale if Pernod Ricard SA’s joint bid with Fortune Brands for Allied is successful.
- Google and Yahoo! are finding that a growing number of clicks on search-linked pop-up ads are being made to inflate a company’s advertising bills.
- Holdings of US growth and value funds show signs of overlap, citing a report by Merrill Lynch.
- Saudi Crown Prince Abdullah is expected to meet President Bush later this month to talk about various issues, which will probably include high energy prices and the war against terrorism.
- MBIA is being investigated over an agreement with a re-insurer separate from the one that triggered its earnings restatement.
- Nucor and other steel producers are supplying growing amounts of products for residential home construction that usually relies on wood frames.

LA Times:
- California’s growing problem with obesity may cost the state $28.7 billion this year in health-care costs and lost productivity, which is 32% more than five years ago.

Philadelphia Inquirer:
- Comcast Corp. has added a cable channel for gay and lesbian viewers as part of its video-on-demand services.

USA Today:
- High-speed Internet connections may become even faster with the adoption of technology that could boost speeds by as much as 16-fold.

AP:
- Voters in Kansas voted by a margin of 70% to 29% to approve an amendment to their state constitution to ban gay marriage and civil unions, joining 17 US states with similar bans.

Interfax:
- OAO Mobile Telesystems, Eastern Europe’s largest mobile-phone company, will invest $50 million in its Uzbek unit this year to broaden coverage in the Central Asian state.

Tex Report:
-Exports of stainless steel from Japan declined 8.5% in February from a year earlier to 113,555 metric tons.

Edaily:
- Posco and BHP Billiton may spend as much as $10 billion to build a steel mill and iron ore mine in India.

Links of Interest

Market Internals
Movers & Shakers
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Releases

Summary of Weekly Petroleum Data for the Week Ending April 1, 2005.

Morning Buy/Sell Recommendations

Goldman Sachs:
- Reiterated Outperform on DNA and A.
- Reiterated Outperform on RIMM, sees 30% upside.

Smith Barney:
- Reiterated Buy on RIMM, target $96.
- Reiterated Buy on WY, target $75.
- Reiterated Buy on SEBL, target $11.
- Reiterated Buy on CSCO, target $30.
- Reiterated Buy on BJS, target $62.
- Reiterated Buy on MEE, target $54.

Morgan Stanley:
- Raised PFE to Overweight, target $32.
- Reinstated ATG Overweight, target $40.
- Said steel prices may fall in the second half, ending six straight quarters of increases, as demand growth slows in China, the US and Europe.
- Reiterated Overweight on CP, target $40.
- Reiterated Overweight on N, target $50.

Merrill Lynch:
- Raised ATYT, ALTR, BRCM, AMIS, MXIM to Buy.

Legg Mason:
- Raised IGT to Buy, target $35.
- Rated WMS Buy, target $33.

Prudential:
- Downgraded NCX to Underweight, target $35.
- Downgraded WLK to Underweight, target $24.

Bear Stearns:
- Rated CMOS Outperform, target $12.
- Rated MTSN Outperform, target $12.

Deutsche Bank:
- Raised IPG to Buy, target $16.

Piper Jaffray:
- Raised JCP to Outperform, target $63.

JP Morgan:
- Rated ATU Overweight.

UBS:
- Downgraded RSAS to Reduce, target $11.
- Raised BHI to Buy, target $55.
- Reiterated Buy on IBM, target $107.
- Reiterated Buy on RIMM, target $95.