Thursday, June 24, 2004

Mid-day Update

S&P 500 1,143.90 -.02%
NASDAQ 2,024.05 +.15%


Leading Sectors
Homebuilders +3.80%
Fashion +2.13%
Nanotechnology +1.89%

Lagging Sectors
Oil Service -.72%
Broadcasting -.73%
Telecom -1.45%

Other
Crude Oil 37.73 +.43%
Natural Gas 6.47 +.94%
Gold 402.50 +1.72%
Base Metals 110.06 +1.80%
U.S. Dollar 88.69 -.82%
10-Yr. T-note Yield 4.65% -.97%
VIX 14.49 +3.65%
Put/Call .58 -29.27%
NYSE Arms 1.10 +83.33%

Market Movers
T -9.32% after lowering 04 forecast and multiple downgrades.
ATYT +8.7% after beating 3Q estimates and raising 4Q forecast.
TASR +8.8% on continued speculation over Sharper Image deal and short squeeze.
OVTI +9.3% after beating 4Q estimates, restating 1-3 quarters.
UNTD -16.92% after comments by Schwab that competition is heating up and co. will cut prices and miss quarter.
ALD -11.3% after saying it's under investigation by the SEC.
DLM -9.0% after missing 1Q estimates and lowering 4Q/05 forecast.
*Education companies are down across the board after U.S. regulators raised their probe of CECO to a formal inquiry and a newspaper reported COCO may have helped students file fraudulent loan applications.
*Homebuilders up across the board on a fall in interest rates, strong new home sales and positive comments by TOL CFO.

Economic Data
Durable Goods Orders for May fell 1.6% versus expectations of a 1.5% rise and a 2.6% fall in April.
Durable Goods Orders Less Transportation for May fell .7% versus expectations of a 1.3% rise and a 1.7% fall in April.
Initial Jobless Claims for last week were 349K versus a 340K estimate and 336K prior week.
Continuing Claims were 2967K versus estimates of 2875K and 2892K prior.
New Home Sales for May were 1369K versus estimates of 1125K and 1192K in April.
Help Wanted Index for May was 39 versus estimates of 39 and 38 in April.

Recommendations
Goldman Sachs reiterated Attractive view of steel sector, favorites are NUE and ISG. Goldman reiterated Outperform on BBY, UPS and BSX. Goldman reiterated Underperform on T and SGP. Citi SmithBarney says to Buy BJ ahead of same-store-sales release, target $30. Citi said to Buy LPX and WY on weakness. Citi reiterating Sell on MU, target $12. Citi reiterated Buy on GIS, target $51.50. Citi reiterated Sell on T, target $14. Citi reiterated Buy on CVH, target $58. Citi reiterated Buy on COGN, target $41. Morgan Stanley raised USFC to Overweight, target $40. SGP raised to Overweight at Morgan Stanley, target $25. MCIA cut to Underperform at CSFB, target $10. XMSR rated Buy at Legg Mason, target $35. TSA rated Overweight at JP Morgan. MSFT raised to Buy at Bank of America, target $35.

Mid-day News
U.S. stocks are mixed today as falling interest rates and stable energy prices are offsetting Middle-eastern violence and mixed economic reports. The eight UK servicemen who were seized by Iran have arrived at the British Embassy in Tehran and appear to be in good condition, Bloomberg reported. Washington Mutual obtained the first-ever patent for a bank branch, the NY Daily News reported. The average tuition increase at state colleges and universities is expected to be 9% as the U.S. economy improves, down from the average of 14% in 03, the Wall Street Journal reported. One in three Americans would exclusively use a mobile phone rather than a fixed line, the NY Times reported. A group backed by veteran Democrats and vital to Senator Kerry's presidential bid employed felons to conduct door-to-door voter registration campaign in at least three key states, the AP reported. LA-area hotels and the hotel workers' union have halted negotiations after the hotels rejected a union call for contract expiration dates that could lead to a nationwide strike, the LA Times reported. Office vacancy rates in the Boston area are declining after about three years of increases, the Boston Herald reported. "All of the demographic groups we sell to are increasing in both size and affluence," Toll Brothers' CFO told CNBC. Violence erupted today in Iraq, with insurgents targeting Iraqi police forces, killing 66 Iraqis and 3 U.S. soldiers, Bloomberg said. France's economy will probably grow 2.3% this year, the fastest pace since 2000, as demand from China and the U.S. boosts exports and encourages investment, Bloomberg reported. Time Warner's AOL unit agreed to buy closely held Advertising.com for $435 million in cash to offer more customized services such as tracking responses to marketing campaigns, Bloomberg reported. U.S. new home sales surged 14.8% in May to a record, boosted by job and income gains this year that have offset a rise in mortgage rates, Bloomberg reported. Fifteen U.S. cities will get federal assistance in identifying and arresting their most violent criminals, the Justice Department said. The U.S. House Energy and Commerce Committee approved a measure designed to ban "spyware" computer programs that install themselves and monitor users' Web-surfing habits without their knowledge, Bloomberg said. NATO leaders may agree to help train Iraqi security forces, as requested by the country's interim prime minister, when they meet in Turkey next week, Bloomberg reported. The dollar and interest rates are falling today after U.S. orders for durable goods unexpectedly declined and bombs exploded in Turkey and Iraq, Bloomberg reported.

BOTTOM LINE: The Portfolio is having another very good day today as my Chinese ADR, security and RFID-related longs are rising substantially. I have not traded today and the Portfolio is still 150% net long. I expect U.S. stocks to rise modestly into the close as falling interest rates, a rising ARMS reading, short-covering and strength in technology shares offset Middle-east violence, mixed economic reports and a low Put/Call ratio.

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