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Quiet session finds indexes unchanged

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The major indexes continue to hover near the unchanged level after early morning gains faded on the heels of the Conference Boards release of its March leading indicators index which showed an expected decline of 0.2%.

Market volumes are somewhat anemic with the NYSE reported just 584 million shares trade, while NASDAQ is slightly heavier at just over 730 million shares. Market internals are holding the flat line with a slight tilt toward the positive on the big board with the NYSE showing 8 advancers for every 7 decliner and 100 stocks having traded a new 52-week high compared to just 7 stocks trading a new 52-week low. NASDAQ breadth is even with 14 advancers for every 14 decliners, while 119 stocks have reached new 52-week high compared to 23 stocks trading new 52-week lows.

On the political front, the Bush administration said it would be willing to delay or phase in some of its proposed $726 billion in tax cuts to make them more affordable, Treasury Secretary John Snow told The Wall Street Journal.

Snow said elimination of the dividend tax on individuals could be phased in over time, perhaps by cutting the tax in half the first year and then reducing the tax each year for the next 10 years, until it is fully eliminated.

The bond market has seen mild selling pressure today, but bonds have eased off their lows with the 10-year Treasury note down 4/32 at 99 5/32 to yield 3.98%, up from 3.96 percent in Thursday's session, as participants weighed impending record supply from a Treasury auction and Mr. Snow's comments.

This week, the government is set to conduct its regular monthly 2-year note sale. The Treasury announced today that it would sell $27 billion in 2-year notes on Wednesday, a size that matches the records seen over the past several months. Treasury watchers say they're expecting the government to boost its quarterly sales, where the details will be announced next week, in order to fund new spending and account for skimpier tax receipts that are tied to a weaker economy.

The government plans to sell 3-year notes in May for the first time since 1997. Analysts also predict, Treasury's regular sale of 5-year and 10-year notes could reach $54 billion, which would top the previous quarterly record of $44.5 billion set in 1996.

Monthly budget data issued Friday showed the federal government remains on track to record a record fiscal-year budget shortfall topping the $300 billion mark, according to Bush administration forecasts.

Today's word of a record Treasury auction has given a lift to gold equities with the Gold/Silver Index (XAU.X) 8.14 +1.68% now building gains for this afternoon's sector winner. New 52-week highs from eBay Inc. (NASDAQ:EBAY) $91.03 +0.92% and Yahoo! Inc. (NASDAQ:YHOO) $25.24 +0.59% have the CBOE Internet Index (INX.X) 109.20 +1.57% holding this afternoon's second biggest sector winner gains.

The Airline Index (XAL.X) 35.41 -2.74% has recouped some of this morning losses, but continues to be the only sector marking a greater than 1% decline. American Airlines parent AMR Corp. (NYSE:AMR) $4.14 -17.2% is off its lows of $3.81 after renewed bankruptcy threat as friction between labor unions and management build once again as unions representing American's flight attendants plans to hold a new election on whether to rescind cost concessions following disclosures that the company approved special benefits to shield managers benefits from any bankruptcy filing while seeking deep givebacks from unions.

Last week, the Fort Worth-based airline said it would file for bankruptcy immediately unless all of its major unions agreed to concessions, which totaled about $10 billion over six years for all workers.

Penny stocks (stocks under $5.00) Sun Microsystems (NASDAQ:SUNW) $3.34 +3.08% and Lucent (NYSE:LU) $1.59 +5.3% hold the top two spots in today's most active list, with technology bellwether from semiconductor, networking and software have Intel (NASDAQ:INTC) $18.50 -0.8%, Cisco Systems (NASDAQ:CSCO) $13.96 +0.07% and Microsoft (NASDAQ:MSFT) $25.24 -1.01% rounding out the top 5 most actively traded.

Late Thursday, the March Semiconductor Book-to-Bill was announced at 0.99 and was slightly below the 1.02 forecast. The 0.99 reading was flat with February's reading. That news finds the PHLX Semiconductor Index (SOX.X) 333.72 +0.22% trading a relatively tight range of 337-328 in today's trade, with Advanced Micro Devices (NYSE:AMD) $8.29 +3.2% holding upside gains after announcing it is ready to reveal its Opteron processor, which was first revealed in 1999, which hopes to allow the company exposure to sell chips to corporate customers in the more lucrative server market. AMD says the chip sports two major features for enhancing performance for linking chips and for speeding up the data flow between memory and the processor. Benchmarks from AMD suggest that the chip will increasingly outperform Intel's (INTC) equivalent Xeon chip.

Jeff Bailey

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