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Airlines up on wings of UAL

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The Airline Index (XAL.X) 42.69 +4.24% is this morning's biggest gainer as shares of UAL Corp. (NYSE:UAL) $4.59 +10% tack on further gains to a recent 2-session 62% gain after the passenger carrier said revenue passenger miles for October rose 17% over year-earlier levels to 9.1 billion, as capacity increased 4.6%. The company also said that its load factor rose 7.3 percentage points to 70.7%.

This is thought as good news for one of the world's largest commercial carriers after the company recently announced an agreement with two of its unions on pay cuts and said its German bankers agreed to restructure about $500 million in debt that was due over the next two months.

Shares of wireless phone makers Nokia (NYSE:NOK) $17.15 -4.7% and Motorolla (NYSE:MOT) $9.66 -1.92% are under pressure after a morning note out of CSFB's Asian Tech Daily saying that China will disallow distribution of cell phones with built-in video cameras because it is considered spy equipment. CSFB says this could hurt MOT and NOK, and delay the recovery of the handset industry. The source of this news is not clear, nor is it clear if this would affect phones with built-in cameras of any kind (or just video). Reuters reported yesterday that 9.5 million camera phones were sold in the first nine months of 2002, with Japanese makers such as Sharp, NEC, and Panasonic dominating the market; NOK and ERICY lagged far behind the leaders.

Shares of IBM (NYSE:IBM) $80.98 -0.67% trade down fractionally after the company filed SEC documents stating it would sell 19.3 million shares.

Shares of helthcare provider Tenet Healthcare (NYSE:THC) $27.24 +3.7% are trading higher after the company announced it has received an audit request from the Kansas City office of the Office of Audit Services of the Depart of Health and Human Services. The letter states that the objective of the audit is to determine whether outlier payments to Tenet hospitals were paid in accordance with Medicare laws and regulations. In recent sessions, shares of Tenet have plummeted from the $45 level after two physicians at one of its hospitals were accused of performing unnecessary medical procedures while its Redding California Medical Center was being investigated for false billing.

The major indexes are all showing marginal gains ahead of today's FOMC decision on interest rates. The Dow Industrials (INDU) trades higher by 36 points at 8,714 with aerospace components Boeing (NYSE:BA) $32.93 +4.47% and Honeywell (NYSE:HON) $26.99 +4.65% offsetting marginal weakness in Coca Cola (NYSE:KO) 46.29 -2.35% and Exxon/Mobil (NYSE:XOM) $34.93 -1.82%.

The S&P 500 Index (SPX.X) is edging up 2 points at 917 with a rebound in healthcare sectors HMO Index (HMO.X) 551 +3.7% and Morgan Stanley Health Providers (RXH.X) 302 +1.92%.

The NASDAQ Composite (COMPX) 1,408 +0.52% and NASDAQ-100 Index (NDX.X) 1054 +0.38% edge higher with strength in the Fiber Optic Index (FOP.X) 44.3 +4.3% and Internet Index (INX.X) 84.26 +2.5% offsetting marginal weakness in the Biotechnology Index (BTK.X) 363 -0.91 as Amgen (NASDAQ:AMGN) $46.22 -7.7% gets hit lower after being downgraded by UBS to "hold" from "buy" based on valuation. Amgen was also sued by an Israeli group for patent infringement related to its Enbrel drug. The plaintiff, Isral Bio-Engineering Project, seeks damages based on royalties or license fees paid to a third party and triple damages for alleged willful infringement of the patent.

Jeff Bailey

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