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Boeing and Embraer find relief

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Shares of Dow component and aerospace/defense contractor Boeing (NYSE:BA) $34.90 +5.21% lead the Dow Industrials (INDU) 9,038 +0.64% to a 58-point gain after a morning upgrade from Banc of America to "buy" from "neutral" on thoughts that the airline sector is turning the corner with new orders for commercial aircraft troughing and defense growth prospects still having further upside growth.

Today's gains for Boeing (BA) are partially built on news that discounter JetBlue Airways (NASDAQ:JBLU) $32.73 -5.43% placed an order with Brazialian aircraft manufacturer Embraer Empresa Brazil (NYSE:ERJ) $18.89 +13.3% for 100 new aircraft valued at $3 billion. JetBlue also said it has an option to purchase an additional 100 planes, bringing the potential value to $6 billion if all purchase options were exercised.

Today's upgrade from Banc of America and news out of JetBlue has both the Defense Index (DFX.X) 157.89 +2.37% and Airlines Index (XAL.X) 49.33 +0.73% among today's sector winners. Boeing (BA) is a component of the Defense Index (DFX.X), while the Airlines Index (XAL.X) benefits from gains in SkyWest (NASDAQ:SKYW) $16.24 +6%, Delta (NYSE:DAL) $14.39 +1.12% and KLM Airlines (NYSE:KLM) $9.85 +2%.

Today's sector action remains broadly positive with today's sector loser being the Gold/Silver Index (XAU.X) 74.44 -2.97%, which looks to have found selling on news that a commitment of traders report showed an "overly" bullish bias and long position by traders. The news looks to have been interpreted as a contrarian type of trade with the thought being that an overly bullish stance is therefore a negative. The June Gold futures contract (gc03m) 353 -2.43% is lower by $8.80.

The broader S&P 500 Index (SPX.X) 982 +0.68% has been pinned between 983 and 976 for the bulk of the morning session despite broader sector gains. Aside from defense and airlines, the Broker/Dealer Index (XBD.X) 527.71 +1.31% and GSTI Software Index (GSO.X) 129.79 +1.31% are holding near their session highs.

The Semiconductor Index (SOX.X) 377.76 -0.28% has paired the bulk of this morning 1% decline as news that an earthquake in Taiwan measuring 6.5 on the Richter scale now looks to have been absorbed. Taiwan Semiconductor (NYSE:TSM) $10.29 +0.39% has moved back into positive territory after a morning low of $10.10.

The Biotechnology Index (BTK.X) 463.17 +0.52% has also bid back to its best levels of the session. Component weakness in Human Genome Sciences (NASDAQ:HGSI) $14.45 -5.5% may have come from a scheduled presentation this morning at a Goldman Sachs conference, but I see the company has been rather active with presentations at JMP Securities and Needham & Company investment conferences in recent weeks.

ImClone (IMCLE) $35.74 +0.76% founder Sam Waksal was sentenced to the maximum 7 years in prison and ordered to pay over $4 million in fines for his participation in an insider-trading scandal. U.S. District Judge William Pauley rejected Mr. Waksal's plea for a lighter sentence based on ImClone's cancer research and Waksal's humanitarian works. Assistant U.S. Attorney Michael Schachter asked for a tough sentence, saying Waksal "told numerous, separate and distinct sets of lies" surrounding his family's sales of ImClone stock.

Today's sentencing and maximum penalty given for insider trading is thought to send a firm statement to other corporate executives regarding the sale or purchase of stock based on insider information.

Jeff Bailey

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