What The Smart Money Is Doing Right Now

The major averages moved mostly sideways for the session with with slight gains posted. A "no change" decision from the FOMC meeting had little effect on price action, as news headlines were dominated by the countdown to war with Iraq. Recent buying in the market suggests a considerable amount of short-covering has likely taken place, though we may not get an indication of real buying interest until we see more upside. War is not considered to be a predictable affair, so smart money these days remains sidelined. On an encouraging note, the bellwether semiconductors and broker/dealers posted nice gains. All three major indexes are parked above their 50-day moving averages.

The Dow Jones Industrial Average ($INDU.X | Quote | Chart | News | PowerRating) closed +0.64% at 8,194.23. The S&P 500 ($SPX.X | Quote | Chart | News | PowerRating) closed +0.42% at 866.45. The Nasdaq ($COMPQ | Quote | Chart | News | PowerRating) closed +0.59% at 1,400.55.

Biggest advancers were oil service ($OSX.X | Quote | Chart | News | PowerRating), +4.21%, biotechnology ($BTK.X | Quote | Chart | News | PowerRating), +3.08%, broker/dealers ($XBD.X | Quote | Chart | News | PowerRating), +2.77%, gold and silver ($XAU.X | Quote | Chart | News | PowerRating), +2.57%, and semiconductors ($SOX.X | Quote | Chart | News | PowerRating), +1.78%.

Biggest decliners were insurance ($IUX.X | Quote | Chart | News | PowerRating), -0.46%, banks ($BIX.X | Quote | Chart | News | PowerRating), -0.30%, and software ($GSO.X | Quote | Chart | News | PowerRating), -0.07%.

In economic news, housing starts disappointed with 1.622 million vs. an expected 1.728 million, and building permits came in at 1.786 million vs. an expected 1.745 million.

The Ten Year Note (TYH3 | Quote | Chart | News | PowerRating) was -170 at 114 005.

The US dollar (DXH3 | Quote | Chart | News | PowerRating) was +0.09 at 101.40.

Volume was average, with the NYSE coming in at 1,519,063,000 and the Nasdaq at 1,589,560,000.

Market breadth was positive, with NYSE advancing issues over declining issues by a ratio of 1.19, and up volume over down volume by a 2.18 ratio. Nasdaq advancing issues over declining issues came in at 1.24, and up volume beat down volume by a 2.45 ratio.

The VIX was -0.68 at 35.78. The TRIN was +0.34 at 0.54.

Topping the Dow were:

McDonalds (MCD | Quote | Chart | News | PowerRating), +4.45% at 14.31, DuPont (DD | Quote | Chart | News | PowerRating), +3.56% at 40.08, Boeing (BA | Quote | Chart | News | PowerRating), +3.45% at 27.83, General Motors (GM | Quote | Chart | News | PowerRating), +2.74% at 34.12, Hewlett Packard (HPQ | Quote | Chart | News | PowerRating), +2.07% at 16.74, and Alcoa (AA | Quote | Chart | News | PowerRating), +1.58% at 21.14.

Stocks in the news:

Tobacco stocks were under pressure today with the U.S. Justice Department's order to pay $289 billion from 50 years of fraudulent marketing practices. RJ Reynolds (RJR | Quote | Chart | News | PowerRating), -8.50% at 33.57, and Altia (MO | Quote | Chart | News | PowerRating), -5.99% at 32.64.

Personal computer maker Gateway (GTW | Quote | Chart | News | PowerRating), -2.92% at 2.33, announced it will lay off 1,900 workers and close 76 retail stores in an effort to save $400 million per year.

Doughnut retailer Krispy Kreme (KKD | Quote | Chart | News | PowerRating), -5.29% at 33.10, posted fourth-quarter earnings $0.01 ahead of expectations with profits of $0.19 per share. Profits were down 32% from a year ago.

Catalog retailer Williams-Sonoma (WSM | Quote | Chart | News | PowerRating), -4.50% at 21.20, beat its fourth-quarter earnings expectations by $0.01 with profits of $0.67 per share, though said earnings for the fiscal first-quarter will come in lower than expected.

Oil and gas operations company Conoco Philips (COP | Quote | Chart | News | PowerRating), -0.15% at 50.92, was downgraded by First Albany to "sell" with a new price target of $30.

Mobile home maker Winnebago Industries (WGO | Quote | Chart | News | PowerRating), -17.84% at 25.05, missed its second-quarter earnings expectations by $0.02 with profits of $0.64 per share.

Transportation company C.H. Robinson (CHRW | Quote | Chart | News | PowerRating), -1.79% at 32.11, was downgraded by Morgan Stanley to "underweight" from "equal-weight".

Also in the transportation business, Expeditors International of Washington (EXPD | Quote | Chart | News | PowerRating), +0.25% at 35.61, had coverage initiated on it by Morgan Stanley at "underweight".

Semiconductor equipment maker Applied Materials (AMAT | Quote | Chart | News | PowerRating), +3.12% at 13.54, announced it will eliminate 2,000 jobs to lower costs. The company is the world's largest maker of computer chip production equipment.

Food processing company Kraft Foods (KFT | Quote | Chart | News | PowerRating), -2.59% at 28.93, was upgraded by Banc of America to "buy" from "neutral".

Household and personal product maker Procter and Gamble (PG | Quote | Chart | News | PowerRating), +1.30% at 86.62, raised its third-quarter guidance to 13-14% earnings per share growth vs. a consensus of 11-13%.

Railroad stocks have had their estimates reduced by UBS Warburg who believes it will be a tough first-quarter for the sector. Companies with reduced estimates are: (UNP | Quote | Chart | News | PowerRating), +1.58% at 55.60, (BNI | Quote | Chart | News | PowerRating), +1.50% at 24.91, (CSX | Quote | Chart | News | PowerRating), -0.17% at 27.98, (NSC | Quote | Chart | News | PowerRating), +0.58% at 18.90, and (KSU | Quote | Chart | News | PowerRating), -0.43% at 11.50.

Computer hardware company Tech Data (TECD | Quote | Chart | News | PowerRating), +5.52% at 24.25, beat its fourth-quarter earnings per share by $0.03 with profits of $0.58 per share.

danielb@tradingmarkets.com