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Producer prices fall 0.3% in May

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Traders are looking at a mixed to higher open as the Labor Department reported that producer prices fell 0.3% in May, which was below economists' forecast for a 0.2% decline. Core prices, which exclude food and energy rose 0.1%, which was also just below forecast of +0.2%.

One of the largest declines seen in the PPI was at the finished energy goods price level, which dropped 2.6%, as wholesalers continue to adjust price lower after a run-up ahead of the Iraq war. Mens clothing prices fell 0.9%, heavy truck prices were down 0.8%. Meanwhile, communications equipment rose 0.6% and car prices rose 0.2%.

Further economic data released this morning showed the U.S. trade gap contracting 2% in April to $42 billion from March's record $42.9 billion. Despite a weaker U.S. dollar, exports fell 2.2% to $81 billion, the lowest level in a year, while imports fell 2.1% to $123 billion, largely due to a decline in crude oil prices.

So far in 2003, the trade deficit is up 26% from the year-ago pace. Economists say that while the weaker dollar has yet to see a more noticeable impact on the U.S trade deficit, consumer price sensitivity around the world is often not seen immediately and is a more gradual trend as currency purchasing power for imported goods here in the U.S. slowly becomes realized.

I've already had to change the title to this morning's update from "mixed to lower open" as September S&P futures (sp03u) now tick to the upside by 1.6 points to 1,001.00. NASDAQ futures (nd03u) are gaining 0.50 to 1,236.50, while Dow futures (dj03u) are up 5 points at 9,195.

Fair value for the S&P 500 today is $-1.20. That price will not change during the session. HL Camp & Company has their computers set for program buying at $0.24 and set for program selling at $-2.18.

Morning movers have Oracle (NASDAQ:ORCL) $13.33 gaining 57 cents to $13.90 after reporting quarterly earnings that beat estimates by 2-cent a share.

Intel (NASDAQ:INTC) $22.14 is down 14 cents at $22.00 after Deutsche Securities downgraded the stock to "hold" from "buy," citing uncompelling valuation at 29x their 2004 estimates. Deutshce maintained their $22 price target.

Foreign Markets

France-based consumer electronics maker Thomson (NYSE:TMS) fell 13% and weighed on the CAC 40 after cutting its first half operating profit estimates to around 140 to 150 million euro.

Asia/Pacific

Hong Kong.......Hang Seng.........9,855...+118.80..+1.22%

Japan...........Nikkei 225........8,980....+62.04..+0.70%

Taiwan..........Taiwan Weighted...4,881.....+3.47..+0.07%

Europe

France..........CAC 40............3,151.....-1.00..-0.03%

Germany.........DAX...............3,225.....+5.87..+0.18%

Switzerland.....Swiss Market......4,852....-27.50..-0.56%

United Kingdom..FTSE 100..........4,172....+10.70..+0.26%

Jeff Bailey

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