OPEC’s Decision, Plus, Mercedes: Made In China?

Stocks are lower as oil prices jump. The EIA reported that crude
oil inventories fell 1.8 million barrels. Gasoline inventories fell 900K  
Distillate stocks rose 2.5 million.

OPEC will increase production by 500K barrels per day in what some see
as mainly a symbolic gesture.  Oil is at
a 7-week high and over $56. OPEC produces 40% of the world’s crude. The cartel
anticipates an additional 1.5 million barrel per day demand in Q4. Saudi
Minister Al-Naimi said OPEC is well supplied and the limited refining capacity
is causing a bottleneck and resulting higher prices. OPEC President Al-Sabah
said “There is enough supply in the market. We are confident we can reach the
fourth quarter with enough supply.”

The CPI for May fell -0.1%, slightly less than expected and the first
dip in ten months. Core was 0.1%, also slightly less than expected 
Business Inventories rose +0.3%, less than expected.  Empire
Manufacturing
was 11.6.  Industrial production rose +0.4  
Capacity utilization was 79.3%. 

Bear Stearns
(
BSC |
Quote |
Chart |
News |
PowerRating)
reported 2.56 vs a 2.37 estimate; revenues were
$1.9.

Illinois Tool Works
(
ITW |
Quote |
Chart |
News |
PowerRating)
said Q2 will be between 1.22 -1.26 vs
1.35 Street estimate. The company also lowered its 2005 outlook.

International Flavors and Fragrances
(
IFF |
Quote |
Chart |
News |
PowerRating)
said earnings will take
a  $0.06 – $0.07/share due to contaminated paprika.

Tommy Hilfiger
(
TOM |
Quote |
Chart |
News |
PowerRating)
lowered guidance and said it will delay the
release of its Q4 and full year results.

Industrial production in China rose in May. China Shenhua Energy–the
world’s biggest IPO–made a weak debut in China after being priced near the
low of the range. Also in China, Daimler-Chrysler
(
DCX |
Quote |
Chart |
News |
PowerRating)
received a
license to manufacture Mercedes-Benz cars at a joint venture factory in Beijing.
Cadillacs and BMWs have also been manufactured in China recently.

Investor’s Intelligence reports that the bears are getting scarce.
Current reading: Bulls: 52.7%, Bears 29.3%. This is the lowest percentage of
bears since December and indicates complacency in the market.

The Mortgage Bankers Association reports that mortgage applications
rose 17.4% last week.

Strong sectors are:  Oil Services

(
$OSX.X |
Quote |
Chart |
News |
PowerRating)

+1.09%   Gold
(
$HUI.X |
Quote |
Chart |
News |
PowerRating)

+0.83%    Oil  
(
$XOIX.X |
Quote |
Chart |
News |
PowerRating)
+0.64%

      

Weak sectors are:   Airlines
(
$XAL.X |
Quote |
Chart |
News |
PowerRating)

-1.34%    Disk Drives
(
$DDX.X |
Quote |
Chart |
News |
PowerRating)
-1.20%
   Semis

(
$SOX.X |
Quote |
Chart |
News |
PowerRating)
-1.13% 

Dow -32.68 10,514.89
Nasdaq -10.38 2058.66
S&P 500 -3.17 1200.74

The dollar is -0.45 at
88.81

Crude Oil is +1.33 at
57.30

Gold is +1.90 at 428.50

ce=”Arial” size=”2″ face=”Arial”>Volume is 720 million on the NYSE and
703 million on the Nasdaq.

Market breadth is negative.

NYSE Issues
Advancing 1281 Up Vol 269
Declining 1768 Down Vol 354
1.38 1.31
Nasdaq
Advancing 1157 Up Vol 215
Declining 1658 Down Vol 432
1.43 2.00

Stocks in the News

Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating)
and Alkermes
(
ALKS |
Quote |
Chart |
News |
PowerRating)
said that a Phase
II study showed that people who used inhaled insulin had blood sugar levels
similar to those who used injectable insulin. Further, 80% of patients preferred
the inhaled system over the injection system.

Lazard
(
LAZ |
Quote |
Chart |
News |
PowerRating)
reported 0.31 vs a 0.24 estimate; revenues were shy
of Street estimates.

Viacom will split into two companies in an effort to unlock shareholder
value. One company will be called Viacom and will include Paramount, the cable
networks and the home video unit. The other–to be called CBS and led by Les
Moonves–will be comprised of the CBS and UPN networks. The spinoff is expected
to be completed in Q1 2006.

Phillips Electronics said “Economic indicators around the world point
to reduced growth rates.”

Symantec
(
SYMC |
Quote |
Chart |
News |
PowerRating)
was upgraded at Prudential to overweight from
neutral weight.

Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating)
is cutting its flu vaccine output to 18-26 million
doses from the previous 25-30 million doses. The company guided lower.

Firearms Training Systems
(
FATS |
Quote |
Chart |
News |
PowerRating)
was awarded a $4 million
contract with the U.S. Army National Guard.

Atari
(
ATAR |
Quote |
Chart |
News |
PowerRating)
beat by a penny but was light on revenues.

Kohl’s
(
KSS |
Quote |
Chart |
News |
PowerRating)
was downgraded at Robert Baird.

Morgan Stanley said that iPod
(
AAPL |
Quote |
Chart |
News |
PowerRating)
inventory concerns are overblown.

Brice Wightman