A Plan For News-Driven Markets

The
major indexes posted slight gains for the day
as market action in
Iraq dominated the news. Volume was light, indicating a lack of participation
from players as an outcome for the war is awaited. It is difficult to anticipate
just what will bring a decisive finish to the conflict, or how long it will
take. In news-driven markets like the one we’re in, perhaps the best plan for a
trader is to do nothing. Price action for the day opened lower, and pushed
higher throughout the session.

The Dow Jones Industrial
Average

(
$INDU.X |
Quote |
Chart |
News |
PowerRating)
closed +0.25% at 8,286.60. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)

closed +0.20% at 875.84. The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating)
closed +0.40% at
1,402.76.

Leading today were chemicals

(
$CEX.X |
Quote |
Chart |
News |
PowerRating)
, +5.17%, healthcare
(
$HCX.X |
Quote |
Chart |
News |
PowerRating)
,
+5.16%,
Internet
(
$GIN.X |
Quote |
Chart |
News |
PowerRating)
, , and oil service
(
$OSX.X |
Quote |
Chart |
News |
PowerRating)
,
+4.40%.

Lagging today were gold and
silver

(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
, -2.08%, telecoms
(
$XTC.X |
Quote |
Chart |
News |
PowerRating)
, -0.86%, and
biotechnology
(
$BTK.X |
Quote |
Chart |
News |
PowerRating)
, -0.85%.

In economic news, initial
claims
were at 421K vs. expectations of 415K, leading indicators came
in at an expected -0.4%, the Philadelphia Fed disappointed with a reading
of -0.80% vs. an expected -1.0%, and the treasury budget was -96.3
billion vs. expectations of -98.0 billion.

The Ten Year Note
(
TYH3 |
Quote |
Chart |
News |
PowerRating)
was -080 at 113 105.

The US dollar
(
DXH3 |
Quote |
Chart |
News |
PowerRating)
was -0.48 at 101.63.

Volume was below
average
, with the NYSE coming in at 1,408,575,000 and the Nasdaq at
1,569,598,000.

Market breadth was positive,
with NYSE advancing issues over declining issues by a ratio of 1.39, and up
volume over down volume by a 1.54 ratio. Nasdaq advancing issues over declining
issues came in at 1.23, and up volume beat down volume by a 1.60 ratio.

The

VIX
was -0.92 at 35.26. The

TRIN
was +0.25 at 0.90.

Biggest Dow advancers were:

Caterpillar
(
CAT |
Quote |
Chart |
News |
PowerRating)
, +1.66% at 50.62, Intel
Corp

(
INTC |
Quote |
Chart |
News |
PowerRating)
, +1.61% at 18.27, Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating)
, +1.50% at
24.92, Altria
(
MO |
Quote |
Chart |
News |
PowerRating)
, +1.41% at 34.29, Hewlett Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating)
,
+1.23% at 17.17, and American Express
(
AXP |
Quote |
Chart |
News |
PowerRating)
, +1.10% at 36.70.

Stocks in the news:

Conglomerate Textron Inc.
(
TXT |
Quote |
Chart |
News |
PowerRating)
, -15.71% at 28.15, sold off after issuing an earnings warning due to a
slowdown in business jet deliveries from its Cessna Aircraft division.

Audio retailer Tweeter Home
Entertainment Group

(
TWTR |
Quote |
Chart |
News |
PowerRating)
, -9.545 at 4.93, declined after saying that
it expects to lose $0.06-0.10 per share for its fiscal second-quarter vs. a
consensus estimate for a profit of $0.02.

Natural gas utilities company
El Paso
(
EP |
Quote |
Chart |
News |
PowerRating)
, +16.36% at 6.40, rallied on news it will pay out $1.7
billion to the state of California to settle a lawsuit to end charges of
manipulation.

Food processing company
McCormick

(
MKC |
Quote |
Chart |
News |
PowerRating)
, +1.83% at 25.58, is to replace HealthSouth
(
HRC |
Quote |
Chart |
News |
PowerRating)
,
closed for trading, in the S&P 500 Index. Replacing McCormick S&P 400 is real
estate company Mack-Cali
(
CLI |
Quote |
Chart |
News |
PowerRating)
, +4.88% at 30.91.

Electronic instrument and
control company Jabil Circuit
(
JBL |
Quote |
Chart |
News |
PowerRating)
, +7.00% at 18.48, rallied after
reporting earnings in line with expectations, with profits of $0.16 per share.

Shoe maker Nike
(
NKE |
Quote |
Chart |
News |
PowerRating)
,
+5.53% at 52.85, has beat its third-quarter earnings by $0.01 with profits of
$0.47 per share.

Grocery store operator
Supervalu

(
SVU |
Quote |
Chart |
News |
PowerRating)
, -3.55% at 14.10, has issued a profit warnings for its
fiscal fourth-quarter due to pressure on its distribution.

Oil and gas company
Occidental Petro

(
OXY |
Quote |
Chart |
News |
PowerRating)
, -1.49% at 30.24, has been downgraded by Deutsche
Securities to “hold” from “buy”.

Software and programming
company Manhattan Associates
(
MANH |
Quote |
Chart |
News |
PowerRating)
, -4.91% at 19.93, has been
downgraded by JP Morgan to “neutral” from “overweight”.

Internet infrastructure company
Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating)
, -1.26% at 14.04, has announced that it will
buy The Linksys Group for $500 million in stock. The Linksys Group provides
networking products for the home and small office.

Financial services company came
in with upside earnings surprises this morning with Lehman Brothers
(
LEH |
Quote |
Chart |
News |
PowerRating)
,
-0.26% at 59.53, beating its first-quarter earnings expectations by $0.18 with
profits of $1.15 per share, Morgan Stanley
(
MWD |
Quote |
Chart |
News |
PowerRating)
, +1.44% at 40.05,
beating its first-quarter earnings by $0.20 with profits of $0.82 per share, and
Goldman Sachs
(
GS |
Quote |
Chart |
News |
PowerRating)
, -0.27% at 70.08, beating its first-quarter
earnings expectations by $0.33 with profits of $1.29 per share.

In the biotechnology sector
Genetech

(
DNA |
Quote |
Chart |
News |
PowerRating)
, -3.40% at 35.15, has been downgraded by CSFB to “underperform”
from “neutral”.

Transportation company
Federal Express

(
FDX |
Quote |
Chart |
News |
PowerRating)
, +2.93% at 56.80, has been upgraded by Morgan
Stanley to “overweight’ from “equal-weight”.

Oil company Royal Dutch
(
RD |
Quote |
Chart |
News |
PowerRating)
, -0.24% at 40.54, has been upgraded by Lehman Brothers to “overweight”
from “equal-weight”.

Retailer Ross Stores
(
ROST |
Quote |
Chart |
News |
PowerRating)
,
+5.14 at 38.04, has been upgraded by CSFB to “outperform” from “neutral”.

Furniture maker Herman
Miller

(
MLHR |
Quote |
Chart |
News |
PowerRating)
, -0.61% at 16.06, has guided lower for the fourth-quarter
and now expects to earn $0.01-0.06 per share vs. previous estimates of $0.17 per
share.


danielb@tradingmarkets.com