U.S. MARKET AVERAGES

The major U.S. market averages have been trading slightly below the flat line, posting modest losses. The indices edged up at the start of the trading session but found it difficult to rise higher as economic data, showing part of Katrina’s and Rita’s impact weighed on the market sentiment. In addition, traders await the Fed Reserve’s chairman speech, expected to give signs about another interest rate increase.

Disappointing economic data release showed that consumer confidence in September dropped to 86.6 from 105.5 in August, although economists had expected a more modest decline of 98.0.

The Department of Commerce released a report showing that new home sales fell 9.9% to a seasonally adjusted annual rate of 1.237 million units in August from the revised July rate of 1.373 million units. Economists had expected sales to fall to a 1.363 million unit rate.

Crude oil futures have slipped after the broad rally on Monday, but still raise worries about oil supply as Rita’s damage is being assessed. Oil majors have started giving assessments from the storm, stating that impact was less than expected, but oil and gas stocks declined. Exxon Mobil fell by 0.7%, Chevron Corp. declined by 0.6%. A barrel of light crude was quoted at $65.45, down 37 cents.

The gold sector, which has been volatile throughout the past week, posts a steady decline of 2.8%. Semiconductor sector is another notable loser, down 1.2%.

Only a few sectors post considerable gains with the HMO sector rising by 1% on a New York Times report that WellChoice (WC: chart) is in talks to be acquired by WellPoint (WLP: chart).

At mid-day trading the Dow Jones industrial average rose 0.95, or 0.01 percent, to 10,444.58. The Standard & Poor's 500 index fell 1.64, or 0.13 percent, to 1,213.99, and the Nasdaq composite index fell 4.19, or 0.2 percent, to 2,117.27.
Bonds fell, with the yield on the 10-year Treasury note rising to 4.31 percent from 4.29 percent late Tuesday.

MOVERS AND SHAKERS

Taser International Inc. (TASR: chart) fell 8.9% after the stun gun company said that a previously came out abuse by the Securities and Exchange Commission has now been viewed formal. The company also said that the examination has been expanded to include possible illegal receiving of material non-public information by some people outside of the company trying to manage the stock price.

WellChoice Inc. (WC: chart) jumped 8% due to a media report that another insurer WellPoint (WLP: chart) is planing to buy it for $6.5 billion in cash and stock

Pepsi Bottling Group Inc. (PBG: chart) is expected to be in play, because the company reported third-quarter net income of $205 million, or 82 cents a share, as compared to $191 million, or 73 cents a share, for the same period in 2004. Analysts had been expecting earnings of 78 cents a share and the company planned record earnings per share for fiscal 2005.

J.P. Morgan rearranged its ratings on some oil companies today.

The broker upgraded Chevron Corp. (CVX: chart) to overweight from underweight, pointing the company's more desirable direction following the acquisition of Unocal.

The broker also upgraded BP (BP: chart) to overweight from neutral, citing the company's exposure to both U.S. refining and natural gas prices is allowing a benefit from the current product strength.

J.P. Morgan upgraded Royal Dutch Shell (RDS: chart) to overweight from neutral, because it believes the stock could be a good protection advantage given the broker's forecast of crude weakness later this year.

The broker downgraded Exxon Mobil (XOM: chart) to neutral from overweight, pointing the recent rise in the shares. Total (TOT: chart) was downgraded to neutral from overweight to follow a non-impressive combination of valuation and potential catalysts in comparison to other stocks.

ECONOMIC NEWS

Consumer confidence plummeted in September, according to a report from the Conference Board, with concerns about Hurricane Katrina and soaring gasoline prices contributing to the decline.

The Conference Board said that its Consumer Confidence Index fell to 86.6 in September from 105.5 in August. With the decrease, the index hit its worst level since October of 2003. Economists had expected a somewhat more modest decline to about 98.0.