CLOSING COMMENTS 11-1-04

Last week the markets staged an uplifting pre-election rally, aided by falling energy prices, positive economic data (3.7% GDP in Q3) and solid earnings reports. The NASDAQ and S&P 500 led the way higher, as each gained 3.1% for the week. The S&P 500 rose 34 points to end the week at 1130, enough to give it a 1.6% gain for the year so far. The NASDAQ added 60 points, closing at 1975, which leaves it down just 1.4% for the year. The Russell added 16 points, or 2.8%, as small-caps continue to lead the way higher for the broader market, rising 4.8% year-to-date. The Dow also rallied 269 points, or 2.8%, leaving it down 4.1% for the year.

Seasonally this is a bullish time for the market and several additional reasons make the market appealing here. Oil prices, bolstered by favorable inventory supplies have declined nearly 9%. A decisive winner in Tuesday's Presidential Election would likely serve as another catalyst for stocks, and would certainly create reasons for performance-driven fund managers to push stocks higher into the end of the year.

Investors have continued to send Internet stocks higher, led once again by Google (GOOG), which despite a pullback late Friday, added another 18 points for the week. Yahoo! (YHOO) and eBay (EBAY) added to recent gains, and the IPO of Shopping.com (SHOP) rocketed, nearly doubling from its offering price, before retreating to end the week up 50%. Barry Diller's InterActive Corp (IACI) has taken a 19.9% stake in the company.

What can investors look for this week? With investors riveted by Tuesday's election, the week promises to be volatile. About 50 S&P 500 companies will announce results, leaving less than 10% of the Index's companies scheduled to report quarterly results after the end of this week. Monday morning, Tyco (TYC) issues results. Tuesday morning, Emerson (EMR) and Tenet Healthcare (THC) report. Wednesday morning, Cigna (CI) and InterActive Corp. (IACI) release earnings. Time Warner (TWX) also posts profits. After the close, EDS (EDS) and Qualcomm (QCOM) will attract the majority of investors' interest. Thursday afternoon, Nvidia (NVDA) posts results. Ford Motor Company (F) reports sales results for October on Tuesday, while General Motors (GM) issues them on Wednesday.

Morgan Stanley will hold a three-day Software, Services, Internet & Networking Conference in Scottsdale, Arizona. Companies presenting include Broadcom (BRCM), Electronic Arts (ERTS), Motorola (MOT), Oracle (ORCL) and Yahoo! Merrill Lynch hosts a Global Energy Conference on Wednesday. Nokia (NOK) holds an Investor Day in New York on Thursday.

Friday's October Employment Report will take a back seat to Presidential Election. Expectations are that the economy created 175,000 new jobs in October, and that the Unemployment Rate remained steady at 5.4%. Monday, the Institute for Supply Management will release its October Index at 10 am, which is expected to remain constant with last month's level at 58.5. September Personal Income and Consumption will also be announced, along with the month's Construction Spending. Wednesday, September Factor Orders will be reported. More significantly, traders have recently focused on the weekly report from the Department of Energy on the level of inventories for crude, gasoline, and distillates. Thursday, the European Central Bank will announce its decision on interest rates, third quarter productivity will be released, along with same-store sales results for October.

Stay Tuned!