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Stocks slip in pre-market after PPI data

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The July producer price index fell 0.9%, which was more than the 0.3% decline economists were expecting. The core rate (excluding food and energy prices) actually rose 0.2% of a percent and that's what seems to have spooked traders in the pre-market, as many economists were expecting a rise of 0.1%.

Currently we are seeing S&P futures give back some early gains and are now down 1.2 points, NASDAQ futures have given back earlier gains and are now down 10 points and Dow futures are down 10 points. Fair value for the S&P 500 today is $3.52. HL Camp & Company has their computers set for program buying at $5.08 and set for selling at $1.96. Fair value for the NASDAQ-100 today is $7.75.

President Bush allows limited research funds

Last night, President Bush announced that the government would allow some funding for limited medical research on human embryo cells. In last night's Market Wrap on premierinvestor.net we discussed some of the stocks associated with stem cell research that are publicly traded. All three of the stocks discussed are seeing their stock prices slip lower this morning. Shares of Geron (NASDAQ:GERN) are trading $13.64 this morning after finishing at $14.94 yesterday. StemCells Inc. (NASDAQ:STEM) is trading below last night's close of $6.45 at $5.72 and Aastrom Biosciences (NASDAQ:ASTM) are down $0.23 to $2.02 in pre-market trading.

Goldman cuts estimates for software stocks

Analyst Rick Sherlund at Goldman Sachs is cutting numbers on some stocks in the software sector this morning. Mr. Sherlund notes that he doesn't believe that street estimates do not properly "capture the magnitude of IT spending constraints." For Oracle (NASDAQ:ORCL), Mr. Sherlund is cutting estimates there as he sees server growth to -5% from flat growth in the August quarter, applications to flat from +5% (vs. Oracle's guidance of +15%). Cutting FY02 EPS to $0.46 from $0.48 (consensus is at $0.50).

For Siebel Systems (NASDAQ:SEBL) he's cutting FY01 estimates to $0.56 from $0.60 and FY02 estimates from $0.70 to $0.60. The average estimate on Wall Street is $0.59 for FY01 and $0.73 for FY02.

For the past two sessions, in the "hot list" on OptionInvestor.com, we've been noting the weakness in shares of Oracle (NASDAQ:ORCL) and Siebel Systemst (NASDAQ:SEBL) and today's news from Mr. Sherlund now gives hint to what we were seeing. Is PeopleSoft (NASDAQ:PSFT) seeing the same types of challenges ahead? We're not sure, but that stock has been on my short-list (bearish) for traders that past two sessions.

Jeff Bailey
Senior Market Technician

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