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Blanchard files suit against JP Morgan and Barrick

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Shares of gold producer Barrick Gold (NYSE:ABX) $15.68 -1.38% are weighing on today's rally in the Gold/Silver Index (XAU.X) 76.55 +2.51% after gold commodity dealer Blanchard & Company said it has filed a $2 billion suit accusing Barrick Gold and J.P. Morgan Chase (NYSE:JPM) $24.04 -3.91% of collaboration to manipulate the price of gold and making $2 billion in short-selling profits by suppressing gold prices at the expense of individual investors.

Despite this news, gold stocks recoup the bulk of yesterday's gains as the likelihood of a U.S-led war with Iraq intensifies following the Bush administration's comments expressing dissatisfaction with Iraq's 12,000-page banned weapons declaration.

White House spokesman Ari Fleischer said, "We have learned much about the declaration, although the review is not complete. The president is concerned about omissions in the declaration and about the problems in the declaration."

This news has also found stocks sinking back near their session lows with the S&P 500 Index (SPX.X) 888.75 -1.57% trying to withstand yet another "sell program" near the 890 level. So far this session, bulls have been absorbing the program executions, but the intra-day rebounds have been lower from 895, then 894 and just recently 891.

Sector action remains negative with the Semiconductor Index (SOX.X) 296.57 -7.50% extending earlier losses and breaking below the psychologically important 300 level.

Video rental chain Blockbuster (NYSE:BBI) $13.01 -32% continues its torrid decline and breaks to a 52-week low after guiding 2002 EPS to $1.03-$1.10, which was well below consensus. BBI blamed the shortfall on a slowdown in sales due to a large number of movie titles available for sale at deeply discounted prices, while this year's DVD gift-giving phenomenon and a compressed holiday shopping season has limited consumer's leisure time.

The disappointing outlook from Blockbuster also finds shares of Movie Gallery (NASDAQ:MOVI) $15.02 -17.24% trading sharply lower on heavy volume of 5.6 million shares. However, MOVI did announce that it currently remains comfortable with its previous Q4 guidance of $0.35-$0.38, but did say that in the 3-weeks since Thanksgiving, its business has experienced a similar trend, and currently its same-store revenues for the quarter are at the low end of the range of its earlier guidance for an increase in the mid-to-high single digits.

Jeff Bailey

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