U.S. MARKET AVERAGES

At mid-day trading the Nasdaq climbed 0.5%, boosted by U.S. technology stocks which advanced for a third straight session. The leading gainers were the semiconductor shares, lifted by Xilinx Inc, Cisco Systems, Altera Corp., and Broadcom Corp. The broader market was flat on disappointing December sales from Wal-Mart Stores Inc. and broker downgrades for Boeing Co. and Merck & Co.

A five-year drop in unemployment claims failed to lift market sentiment. However, the Dow and S&P inched up briefly after the Institute for Supply Management reported its non-manufacturing index rose to 59.8 in December from 58.5 in November, above a forecast for a rise to 59.0.

The nation's big retailers released reports, showing volatile but respectable holiday season as consumers saved most of their shopping for the days before and after Christmas. The early winners included Target Corp., Costco Wholesale Corp., Nordstrom Inc., Abercrombie & Fitch Co. and others.

Wal-Mart (WMT: chart), the world's largest retailer, fell short of expectations posting a 2.2% gain in same-store sales. The results missed the 2.4% estimate from analysts surveyed by Thomson Financial. Total sales rose 6.3%. The company also said its Q4 profits would come in at the low end of expectations.

The housing sector advanced 1.5%, following the release of data that showed a 2.5% decline in November index for pending sales of existing homes with Beazer Homes (BZH: chart)being the best performer in the group, climbing by more than 4% and setting a new high.

The semiconductor sector continued its recent advance, helped by Xilinx (XLNX: chart), which jumped more than 7% on raised outlook.

Energy stocks were notable movers to the downside, reflecting lower oil prices . The oil service sector declined about 2.5% with Global Industries (GLBL: chart) and Tidewater (TDW: chart) notable losers, each with a loss of about 4.5%.

Nuvelo (NUVO: chart) broke to a new 52-week high, rising 40% on news of a collaboration with Bayer. A number of important tech stocks, including Nokia (NOK: chart), Broadcom (BRCM: chart) and AMD (AMD: chart), reached fresh peaks.

Network Equipment Technologies (NWK: chart) dropped to a new 52-week low on a disappointing Q3 guidance prompting a larger-than-10% slide in its stock price. Tuesday Morning (TUES: chart)added to recent weakness to extend its low.

The Dow Jones industrial average was up 7.27 points, or 0.07%. The Standard & Poor''s 500 Index added 0.36 points, or 0.03%. The technology-laced Nasdaq Composite Index rose 10.57 points, or 0.47%.

MOVERS AND SHAKERS

Boeing (BA: chart) was downgraded by the Bank of America to neutral from buy, citing valuation. Analyst Nick Fothergill also cut his price target on the company by $1 to $72 on consideration that further upside to the stock appears limited, after a strong run in the shares since March 2003. A 50% drop in orders in 2006 is expected. A supply chain survey shows increasing risk in raw material price inflation and a risk of component shortages, and as a result the broker cut his 2007 aircraft delivery forecast to 437 planes from 453. The company’s shares fell 2.1%.

Computer Sciences (CSC: chart) gained 8.5%, following a report that private equity firm Blackstone Group and Hewlett-Packard Co are considering a buy out of the company.

Aeropostale Inc. (ARO: chart) said its comparable-store sales rose 11.4% in December, and the company boosted its fourth-quarter earnings forecast. The stock jumped 9.2%.

Gentiva Health Services (GTIV: chart) agreed to buy the provider of home healthcare and hospice Healthfield Group Inc. for $454 million in cash and stock with $55 million of Gentiva common stock and around $399 million in cash. Gentiva anticipates the transaction will be accretive to its fiscal 2006 results. Gentiva’s shares rose 7.9%.

ECONOMIC NEWS

Crude oil inventories showed a decline in the latest week, according to government statistics released Thursday, reversing course after a couple of weeks of gains. Stocks of gasoline and distillate fuel oil advanced during the period.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories dropped by 1 million barrels for the week ended December 30, falling to 321.6 million barrels from the prior week''s level of 322.6 million barrels. This followed an advance of 100,000 barrels in the previous week. Oil inventories were 12.5% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 1.4 million barrels, the government said, compared to the previous week''s slide of 1.2 million barrels. Gasoline stocks were 5.9% below their levels of last year. Inventories of distillate fuel oil rose by 2.1 million barrels in the most recent week.

The service sector saw continued growth in December, according to a report from the Institute for Supply Management, with the pace of growth accelerating somewhat faster than economists had been expecting.