Why Today’s Move In Bonds Is Important

Stocks
are moderately in the red this midday.
 The major indices were
pressured from the start as cautious comments from Dell
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, a downgrade
on General Motors
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, and negative economic reports instigated a
broad-based decline. Stocks did briefly turn green after the better than
expected Michigan Consumer sentiment numbers, but soon fell back into the red.
Fears of deflation are plaguing the market today as the April CPI number came in
worse than expected. Earlier this week, prices at the producer level also
declined. Without pricing pressure, corporate profits and new hiring could be
hampered. The bond market continued its stellar rally today sending yields on
the 10-year notes to 45-year lows.  

The Dow Jones Industrial
Average

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is -0.44% at 8,674.88. The S&P 500
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is -0.49% at 941.48. The Nasdaq
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is -0.79% at 1539.01.

The day’s leading sectors are
Healthcare
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, +1.27%, Telecoms
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$XTC.X |
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,
+1.21%, Internet
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, +0.76%, and Gold and Silver
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,
+0.73%.

Weak today are
Semiconductors

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, -2.19%, Airlines
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$XAL.X |
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,
-1.96%, Retail $RL.X.X|$RLX.X], -1.21%, and Biotechs
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,
-1.14%.

In economic news, April
Building Permits
came in at 1.708 million vs. estimates of 1.700 million,
Core CPI
for April flat vs. +0.1%, CPI for April -0.3% vs. -0.7% vs.
-0.1%, Housing Starts  for April 1.630 million vs. 1.743 million.
Michigan Consumer Sentiment 
for May came in at 93.2 vs. 87.0. 

The 10-year U.S. Note
is +125 at 117 260.

The dollar is -0.99 at
94.42. 

Gold is +3.90 at 356.60

Crude Oil  +0.24 at
28.65

Volume is at 615,000,000
on the NYSE, and at 800,000,000 on the Nasdaq.

Market breadth is negative,
with NYSE declining issues over advancing issues by a ratio of 1.31, and down
volume over up volume by a 1.73 ratio. Nasdaq advancing issues over declining
issues at 1.54, and down volume over up volume is at a 1.83 ratio.

Top Dow stocks are:

AT&T
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, +4.81% at 18.28,
Hewlett Packard

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, +1.36% at 17.87, Johnson & Johnson 
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,
+0.81% at 55.64, and SBC Communications
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+0.48% at 24.88.  

Stocks in the news:

Top PC maker Dell Computer
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is off 2.2% on heavy volume. Yesterday the company reported first
quarter results in line with analysts’ estimates. However, the company did put
pressure on the market as Dell CFO Jim Schneider said, “We don’t expect
significant near-term improvement in economic conditions.” 

General Motors
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is off 2.10% on heavy volume. Prudential Securities downgraded the auto giant to
“sell” from “hold” due to negative industry outlooks. Prudential also lowered
fiscal 2003 and 2004 targets.

Real Networks
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RNWK |
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is down almost 4% on heavy volume. The shares of the Internet media company are
under pressure today as CFO, Brian Turner is resigning due to health reasons.  

Tanox
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is
higher by 17% on super heavy volume. An FDA advisory panel recommended approval
for its asthma drug, Xolair. Xolair is being co-developed by Tanox, Novaritis
and Genentech.  


vincentm@tradingmarkets.com