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Stocks pull back from highs

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The Dow Industrials (INDU) 8,408 +0.58% has pulled back from its earlier session highs of 8,500 as components Philip Morris (NYSE:MO) $37.23 -13% picks up some downside momentum and SBC Communication (NYSE:SBC) $24.89 -5% started dropping rather precipitously in the past hour after addressing attendees at the seventh annual UBS Warburg Global Telecom Conference.

SBC's Chief Executive Edward Whitacre Jr. said "I believe the outlook for change is good right now," he said. SBC and other Bell operators have much at stake as the FCC looks to modify rules requiring them to lease portions of their networks to competitors at a discount price.

Whitacre said the company has slowed investment until such issues are resolved.

The company is projected to spend $7.5 billion on capital projects for 2002, and is planning to spend $5 billion on such items in 2003. Whitacre said the company could spend more if the FCC's ruling is favorable.

"We're trying to be extremely conservative at this time," he said. "We do have some room to revise up."

Whitacre also said SBC will sell its stake in French telecommunications company Cegetel by early next year. Meanwhile, Whitacre said he hopes Cingular Wireless, co-owned by SBC and BellSouth Corp. (NYSE:BLS) $26.23 +1.47%, will be involved in some sort of wireless consolidation in the near future.

The Oil Service Index (OSX.X) 81.72 -1.90% has taken over today's sector loser from the Utility Index (UTY.X) 232 -1.72%.

As alerted to in today's market monitor, share of Southern Company (NYSE:SO) $25.50 -7.27% saw volume pickup to the downside just prior to the company confiring that it has received a subpoena to provide info to a federal grand jury in the Northern District of California. The subpoena covers a number of broad areas, including specific information regarding electricity production and sales activities in California. SO's former subsidiary, Mirant Corp. (NYSE:MIR) $1.90 -1.04%, participated in energy marketing and trading in California during the period relevant to the subpoena. Mirant was spun off from Southern Company in April 2001.

The S&P 500 Index (SPX.X) 882 +0.67%, now looks to hold onto a 6 point gain after trading a session high 894, while the NASDAQ- Composite (COMPX) 1,349 +2.25% holds a 29 point gain with the tech-heavy NASDAQ-100 Index (NDX.X) 1,001 +3.02 attempting a close back above the psychological 1,000 level.

Sector action still has the Fiber Optic Index (FOP.X) 39.43 +7.82% holding today's top sector performance, after finding intra-day resistance at our 80.9% retracement level of 40.81 (retracement from 22.92-44.42). The 40 level is a point where we'd expect some market maker resistance after a nice rally, then some giveback of gains from the recent highs.

Jeff Bailey

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