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Stocks steadily higher as Powell addresses U.N.

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After dipping marginally red just prior to Secretary of State Colin Powell's address to the United Nations, the major indexes achieved their best levels of the morning session as the major indexes all traded their weekly pivot levels and have steadied near their highs.

Treasuries have seen a range bound trade this morning, but shortly after Secretary Powell began his speech, we did see a brief dip lower in the 10 and 30-year YIELDS below yesterday's lows, but a quick spat of selling in Treasuries have prices and YIELDS relatively unchanged, with a margin bid coming in. To me, this depicts a market simply taking a wait and see approach to Powell's speech.

So far, Mr. Powell has played tapes of Iraqi conversations that appear to have Iraqi officials playing a game of "hide and seek" with chemical weapons material. Mr. Powell also showed satellite surveillance of what appeared to be a pickup in transportation activity at a known weapons plant in Iraq, just two days prior to readmitting of U.N. weapons inspectors back into Iraq.

February gold futures (gc03g) 381 +0.52% have seen a rather steady trade since the 09:30 AM EST open for equity trading and here too, traders seem to be taking a wait and see approach to things, while the U.S. dollar Index (dx00y) 99.42 +0.29% has recovered from yet another 52-week low that was traded in the overnight session at 98.65. While the gold commodity itself sees new highs, equities as depcited by the Gold/Silver Index (XAU.X) 78.38 -1.58% see marginal selling and retrace the bulk of yesterday's gains. Impression here is that Powell's comments so far have not produced much of a "smoking gun" to sway U.N. officials toward an aggressive stance on military initiatives against Iraq.

Sector action is broadly positive with strength seen in the Semiconductor Index (SOX.X) 277.26 +2.79%. Technicals here have the Semiconductor HOLDRs (AMEX:SMH) $21.89 +2.62% just off their best levels of the session of $22.19, finding morning resistance right near the recent break of it neckline from a head/shoulder top pattern. Sector bellwether Intel (NASDAQ:INTC) $15.90 +1.59% is the morning's fourth most actively traded stock.

Shares of El Paso Corporation (NYSE:EP) $6.28 -21.5% are today's second-most actively traded stock after the company slashed it quarterly dividend to $0.04 from $0.2175. The company's Board of Directors said the decision to cut the dividend was a difficult decision, but the action will provide the company with approximately $425 million in cash per year and reduce the company's balance sheet leverage by more than 1.5% per year.

Jeff Bailey

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