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Crude Oil back above $33 on "war talk"

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The March Crude Oil futures (cl03h) $33.10 +1.31% are back above the $33 level after last night's State of the Union address had President Bush seemingly focused and showing conviction toward the ouster of Iraq's President Saddam Hussein. With March crude looking to test Monday's contract high of $33.53, the action in the futures market has the CBOE Oil Index (OIX.X) 250.59 +2.83% leading today's rather narrow list of sector winners, with Dow component Exxon/Mobil (NYSE:XOM) $33.83 +3.58% one of just two Dow components currently showing a gain on the session.

The major indexes have been in the red since the opening bell, with the Dow Industrials (INDU) 7,990 -1.2% sporting a 100-point decline here, but off its lows of 7,945.

Altria Group (NYSE:MO) $36.90 -3.85%, formerly known as Philip Morris reported Q4 earnings after the opening bell of $0.93 per share (excluding charges), which beat analyst's estimates of $0.92 per share, but guided full-year 2003 EPS lower. Altria executives said they see full year EPS between $2.60-$2.70 per share, which is at the low end of analyst's estimates of $2.71. Altria Group (MO) is the parent company of Philip Morris and Kraft Foods (NYSE:KFT) $31.75 -12%. Late yesterday, Kraft Foods posted a 70% jump in Q4 profits, but warned that 2003 profit would come in well below expectations as higher employee benefit costs, driven primarily by the incremental impact of higher pension and post retirement expenses is expected to impact 2003 EPS by approximately $0.07 per share. According to KFT, it sees 2003 EPS in the $2.10-$2.15 range, compared to consensus estimates of $2.25 per share.

The S&P 500 Index (SPX.X) 852 -0.7% and S&P 100 Index (OEX.X) 431 -0.77% are showing some relative strength in this morning's weakness. The NASDAQ-100 Index (NDX.X) 991 -1.03% losses are not overly bearish considering broader weakness in the technology- related sectors.

After a morning valuation upgrade of semiconductor equipment giant Applied Materials (NASDAQ:AMAT) $13.36 +0.98%, other semi- equipment names have KLA-Tencor (NASDAQ:KLAC) $35.18 +1.47% and Novellus (NASDAQ:NVLS) $30.74 +4.09% just now helping bolster the Semiconductor Index (SOX.X) 282.33 +0.06 to fractional gains.

The CBOE Internet Index (INX.X) 93.32 -1.94%, Networking Index (NWX.X) 152.22 -1.67%, Biotechnology Index (BTK.X) 334 -1.63% and Wireless Telecom Index (YLS.X) 54.20 -1.38% lead tech-sector weakness.

This morning's early sector loser has the Airline Index (XAL.X) 33.48 -2.9% leading sector declines as this index breaks to a 3-month low, retracement roughly 61.8% of its October-November rally of 26.12-45.93. Earlier this morning the Wall Street Journal reported that Delta Air Lines (NYSE:DAL) $9.75 -4.3% is set to launch a low-cost carrier service to serve the Northeast and Florida in an effort to compete with JetBlue (NASDAQ:JBLU) $28.05 -3.3%, Southwest Airlines (NYSE:LUV) $12.99 -1.59% and Airtran (NYSE:AAI) $5.50 -0.54%.

Jeff Bailey

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