Will This Bellwether Take Us Higher?

The markets are mixed at
mid-day, as positive earnings reports from Dow stocks 3M Co., Johnson & Johnson
and Citibank have failed to attract buyers. This has been the theme of earnings
season so far, which has set a negative tone going forward. All three major
averages remain below their 50-day moving averages. Bellwether semis are
attempting to lead us higher, as volume on the session has been light so far.

The Dow Jones Industrial
Average

(
$INDU.X |
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is -0.81% at 8,516.73 The S&P 500
(
$SPX.X |
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is -0.79% at 894.62. The Nasdaq
(
$COMPQ |
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is
unchanged at 1376.19.

The biggest winners are
networking

(
$NWX.X |
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, +1.87%, gold and silver
(
$XAU.X |
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,
+1.03%, and semiconductors
(
$SOX.X |
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, +0.71%.

The day’s biggest laggards are
airlines
(
$XAL.X |
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, -4.15%, broker/dealers
(
$XBD.X |
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,
-2.34%, and Internet
(
$GIN.X |
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PowerRating)
, -2.23%.

In economic news, housing
starts
came in at 1.835 million vs. expectations of 1.680 million.
Building permits
were at 1.880 million vs. expectations of 1.710. million. 

The 10-year U.S. Note
is +060 at 113 315.

The Dollar is -0.47 at
100.47.

Gold is +0.50 at 356.30.

Crude Oil is -0.33 at
33.58.

Volume is at 641,899,000
on the NYSE and at 729,344,000 on the Nasdaq.

Market breadth is mostly
negative
, with NYSE declining issues over advancing issues by a ratio of
1.91, and down volume over up volume by a 3.15 ratio. Nasdaq advancing issues
over declining issues came are at 1.60, and down volume is over up volume by a
1.43 ratio.

Leading the Dow down are:

Alcoa
(
AA |
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, -3.79% at
21.31, Merck Co.
(
MRK |
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PowerRating)
, -2.67% at 56.78, General Electric
(
GE |
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, -2.27% at 24.31, Boeing
(
BA |
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, -1.80% at 32.69,
International Paper

(
IP |
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, -1.60% at 37.50, and JP Morgan
(
JPM |
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PowerRating)
, -1.49% at 25.80.

Stocks in the news:

Regional bank BB&T Corp.
(
BBT |
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PowerRating)
, -5.81% at
35.20, announced that it will acquire First Virginia Banks for $3.38 billion in
stock.

Automaker Ford
(
F |
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PowerRating)
, -0.39% at 10.12, sold off
despite reporting fourth-quarter earnings above expectations.

Chinese online media company Sohu.com
(
SOHU |
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PowerRating)
,
+14.45% at 9.98, rallied after reporting earnings in line with expectations.

Computer hardware maker Dell Computer
(
DELL |
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PowerRating)
, +0.19% at 24.87, has been downgraded by UBS Warburg to “neutral”
from “buy”.

Motorcycle maker Harley Davidson
(
HDI |
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PowerRating)
, -9.70: at 42.53, beat its fourth-quarter earnings expectations by
$0.03 with profits of $0.49 per share.

Discount broker Charles Schwab
(
SCH |
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PowerRating)
, -8.43% at 10.75, missed its fourth-quarter earnings by $0.01 with
profits of $0.07 per share.

From the Dow 30 Index:

Aluminum maker Alcoa
(
AA |
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Chart |
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PowerRating)
,
-3.79% at 21.31, sold off in sympathy with competitor Alcan
(
AL |
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,
-5.03% at 30.04, who announced fourth-quarter earnings short of expectations.

Conglomerate 3M Co.
(
MMM |
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PowerRating)
,
+0.33% at 126.74, beat its quarterly earnings expectations by $0.01 and raised
its first-quarter guidance.

Automaker General Motors
(
GM |
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PowerRating)
,
+0.52% at 40.209, was upgraded by UBS Warburg to “buy” from “neutral”.

Drug maker Johnson & Johnson
(
JNJ |
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PowerRating)
, -0.26% at 54.65, beat its fourth-quarter earnings by $0.01 with
profits of $0.48.

Money center bank Citibank
(
C |
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Chart |
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PowerRating)
,
-1.33% at 36.31, beat its fourth-quarter earnings by $0.01 with profits of $0.47
per share.

danielb@tradingmarkets.com