Here’s What Merrill Thinks About Retail

Stocks were
lower on light volume today.

The US weekly chain store sales index was up 1.2% for the past week. Sales were
up 4.1% on a year-over-year basis. Retailers such as J.C. Penney
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,
Gap
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, Tiffany
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, and May
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were
all up from either upgrades or better-than-expected third-quarter results.
Merrill Lynch said it expects retail stocks to outperform the market through Q1
’04. The
FCC ordered local phone carriers to allow customers to keep their home numbers even
if they switch entirely to wireless service. The Wall Street Journal
reported that Richard Strong may face criminal charges for improper trading
in Strong mutual funds. Gold made a 7-year high. At an annual meeting, Cisco
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CEO John Chambers said the company may pay a dividend “at some time.” Assets at
Putnam Investments fell $14 billion last week. Putnam is the first firm charged
in the widening mutual fund trading scandal.

The Dow Jones Industrial
Average

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fell 18.74 at 9739.79. The S&P 500
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slipped 0.54 at 1046.57. The Nasdaq
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lost 10.89 at 1930.75

The day’s leading sectors were S&P Health Index
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,
+0.42%, Pharmaceuticals
(
$DRG.X |
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, +0.55%,
Gold and Silver

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, +0.30%, and Amex Gold Bugs
(
$HUI.X |
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,
0.27%.

Weak today were Biotech Index

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, -3.05%, Airlines
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-1.87%, Dow Jones Internet Commerce
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ECM.X |
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-1.54%, and Internet
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, -0.743%.

No Economic
news releases today.

The dollar
was +0.01 at 93.06.

Gold was +0.90 at
388.10.

Crude Oil was +.28 at
31.16.

Volume was
1,161,636,000 on
the NYSE, and
1,623,902,000 on the Nasdaq.

Market breadth was negative,
with NYSE declining issues over advancing issues by 1.57 and down over up volume
by 1.90; Nasdaq issues declining over advancing issues at 1.89, and down volume
over up volume at 2.22 .

Top Dow stocks were:

Du Pont
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, +0.43 at 40.85, ExxonMobil
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,
0.29 at 36.05, and Johnson & Johnson
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,
+0.35 at 49.08.

Stocks in the news:

EchoStar Communications
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reported lower-than-expected third-quarter earnings late Monday. On revenue of
$1.45 billion, it earned $35.1 million and lowered its 2004 earning forecast to
8 to 23 cents a share.

RSA Security
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announced higher
order rates and customer activity for the fourth quarter. The company expects
fourth-quarter earnings to be at the high end of its previous range of 4 to 7
cents. Shares rose 1.20 to 14.12.

Cablevision
(
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said it would restate 2003 quarterly statements to include a
$15 million expense that was improperly recorded. It lost $104 million for the
third quarter on revenue of $975.8 million.

Oracle
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said that it may
withdraw its $7.3 billion bid to take over PeopleSoft
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because the
company offered refunds of license fees if it was bought out and the new owners
do not support existing products.

If you have any comments or questions, please
feel free to email me.

Brice
Wightman

bricew@tradingmarkets.com