The Day After Katrina

Stocks were lower Tuesday, reacting to high energy
prices. At one point, the Dow was off by triple digits. Crude oil and
gas futures hit record highs, with oil touching $70.85 before pulling back to
close at $69.85. Analysts worry that high energy prices may slow the economy.

With 92% of the rigs closed, Gulf oil production is being affected.
Valero
(
VLO |
Quote |
Chart |
News |
PowerRating) said its St Charles refinery will be closed 1-2 weeks. 
Chevron
(
CVX |
Quote |
Chart |
News |
PowerRating) continues to produce some oil but shut down refineries
in Mississippi and Louisiana. President Bush may tap the Strategic Petroleum
Reserve.

Oil service stocks were in focus; Schlumberger
(
SLB |
Quote |
Chart |
News |
PowerRating) gained 0.80
and Halliburton
(
HAL |
Quote |
Chart |
News |
PowerRating) rose 2.04.

Home improvement giant Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating) fell 0.69 and Lowe’s
(
LOW |
Quote |
Chart |
News |
PowerRating) lost 1.71. Wal-Mart
(
WMT |
Quote |
Chart |
News |
PowerRating), off 0.41, said its stores in the
region would remain closed. (full
story)

Insurers Allstate
(
ALL |
Quote |
Chart |
News |
PowerRating) fell 0.51 and AIG
(
AIG |
Quote |
Chart |
News |
PowerRating) was off
0.30.

After the close, ADC Telecom
(
ADCT |
Quote |
Chart |
News |
PowerRating) beat by 0.02 and guided
in-line. Sigma Designs
(
SIGM |
Quote |
Chart |
News |
PowerRating) beat by 0.03.

Consumer confidence picked up unexpectedly in August, with the
Conference Board’s index rising to 105.6 from 103.6 in July. Factory orders
fell 1.9% in July, less than expected, but still the largest drop since April
2004. Chain store sales for the last week in August fell 1%.

A NYSE member was charged with making a death threat against a
seatholder who is suing to block the Archipelago deal. Police had been
investigating a telephone message left by Edward Reiss, 65, who turned himself
in and was charged with misdemeanor aggravated harassment charges before being
released. William Higgins and three other NYSE members are attempting to block
the NYSE acquisition of Archipelago.

Chevron CEO David O’Reilly said $70 oil was unsustainable and will
ultimately reduce consumption. Steve Forbes predicted the oil bubble will
burst, and that prices would fall to $30-$35 within a year. Forbes said an oil
market burst will make the year 2000 high tech bubble “look like a picnic” and
says the current high price of oil is due to speculators and that demand from
India and China only account for a small part of the price rise. Other
economists fear that a jump in oil prices caused by supply disruptions may slow
the U.S. economy.

Bloomberg reported that Carl Icahn may make a tender offer for 10% of
Time Warner
(
TWX |
Quote |
Chart |
News |
PowerRating). Icahn already has a 2.6% stake in the company with
hedge fund partners. Earlier in August, Icahn met with TWX CEO Richard Parsons,
demanding the company buy back $20 million in stock and spin off its cable TV
unit. Time Warner is the world’s largest media company. The stock is trading up
0.46 at 17.93.

Strong Sectors were:   Oil Services 
(
OSX |
Quote |
Chart |
News |
PowerRating)
+1.97%    Oil 

(
XOI |
Quote |
Chart |
News |
PowerRating)
+1.81%    Natural Gas

(
XNG |
Quote |
Chart |
News |
PowerRating)
+1.42%

Weak sectors
were:   Airlines

(
XAL |
Quote |
Chart |
News |
PowerRating)
-2.96%    Disk Drives

(
DDX |
Quote |
Chart |
News |
PowerRating)
-2.77%   

ATI Technologies
(
ATYT |
Quote |
Chart |
News |
PowerRating)
cuts its Q4 revenue forecast.

Infineon
(
IFX |
Quote |
Chart |
News |
PowerRating) signed a deal to supply components to Microsoft for
the new XBox.

Abercrombie & Fitch
(
ANF |
Quote |
Chart |
News |
PowerRating) said that August comps rose 24%; the company also reaffirmed its
outlook. Also, President and CEO Robert Singer is leaving the company.

A Chinese research group survey found that Baidu.com
(
BIDU |
Quote |
Chart |
News |
PowerRating) is
gaining market share against Google
(
GOOG |
Quote |
Chart |
News |
PowerRating).

Finish Line
(
FINL |
Quote |
Chart |
News |
PowerRating) guided lower for Q2. (full
story)

Profits at China’s CNOOC rose 68% in the first half of 2005.

Brice Wightman