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From Briefing.com: 4:20 pm : On the heels of last week's strong performance, Monday's market took a breather. The major averages traded in mixed, tightly range-bound fashion for most of the session, and they kept within close proximity of the unchanged mark. The Dow and S&P booked modest losses, while the Nasdaq registered a moderate gain.

The absence of a fresh catalyst helped halt the market's advance. For a Merger Monday, the M&A front was a light one. Reports were limited to a possible sale of Michaels Stores (MIK 38.35 +4.39) and Prudential PLC's (PUK 26.22 +2.27) rejection of Aviva PLC's takeover offer. Some M&A related news that did spur action was Verizon's (VZ 34.22 -0.19) indication that it does not intend to purchase Qwest (Q 6.79 -0.15) or Alltel (AT 65.45 -1.11). The company asserted that buying Vodafone's (VOD 22.35 -0.16) 45% stake in Verizon Wireless is its priority. Qwest and Alltel did not fare well, and their declines were behind the Telecom sector's 0.7% fall.

Overall, the corporate front was relatively uneventful. Amongst the most attention-grabbing were reports of Wal-Mart's (WMT 47.76 +1.07) plans for its ramped-up Chinese expansion, and General Motors (GM 20.85 -0.28) nearing a deal with the UAW. Wal-Mart helped the Consumer Staples sector (+0.3%) maintain positive footing. Healthcare (+0.2%), another defensive area of the market, demonstrated relative strength today. Both sectors had lagged during last week's broad-based rally, but enjoyed some renewed (albeit modest) buying interest today. A pair of pharmaceuticals received some added attention: Eli Lily (LLY 57.42 +0.33) rose following Barron's positive feature of the stock, and Schering-Plough (SGP 19.33 +0.85) enjoyed an analyst upgrade and announced an exclusive collaboration and licensing agreement with P.T.C Therapeutics.

Following their sharp pullbacks on Friday, prices across the energy fell significantly. Crude led the decline and dropped close to 4%. The declines have come alongside reports that inventory is at seven-year highs and following OPEC's reduced demand forecast. However, geopolitical concerns should continue to support prices. We remain bullish on the sector for that reason, as well as on account of tight market conditions and underlying fundamentals. BJ Services' (BJS 31.55 -1.25) reiterated guidance spoke to those points today. The company, which is a suggested holding in our portfolio for active investors, reaffirmed expectations for 20-25% top line growth and 45-52% EPS growth for FY06. Due to today's energy price action, selling across the sector was pervasive and took even that stock lower. The Energy sector levied a market-dragging 1.7% loss.

Despite some continued improvement within the Treasury market, rate-sensitive areas did not take a bullish cue. Instead, they experienced some consolidation of last week's solid gains. The Financial sector recovered just before the bell, but it closed at the flat line and did little to boost the market. Utilities fell 1.2%, and homebuilders were weak across the board. Some caution ahead of this week's housing data added to the latter area's decline. In a broader sense, anticipation of a few key items contributed to the market's performance today. This evening, Fed Chairman Bernanke will speak to the Economic Club of New York. Investors are anxious to gain insight into monetary policy, but, in our view, it is highly unlikely that the Chairman will provide any clues. The FOMC's policy decision will be announced next Tuesday. We continue to expect two more rate hikes, and we believe that the possibility of a third should not be dismissed. Anticipation ahead of tomorrow's Producer Price Index also contributed to the market's cautious stance. It's apt to be somewhat anticlimactic, though, because the Consumer Price Index has already been released. With respect to today's economic calendar, Leading Indicators was the only item. The data checked in relatively in-line with expectations, and had little effect on the stock and bond markets.

Aside from the Consumer Staples and Healthcare sectors, Technology (+0.4%) was another area that managed to sustain a gain. Particular pockets of strength included Yahoo, Oracle, and Google. Yahoo (YHOO 30.44 +0.37) was named Piper Jaffray's internet stock pick of the week, Oracle (ORCL 13.72 +0.12) attracted buyers ahead of its earnings report, and a federal judge ruled that Google (GOOG 348.19 +8.40) does not have to turn over consumer search data to the DoJ. Additionally, a rebound in semiconductors lent muscle to the sector's, and the Nasdaq's, outperformance. DJ30 -5.12 NASDAQ +7.63 SP500 -2.17 NASDAQ Dec/Adv/Vol 1508/1525/2.0 bln NYSE Dec/Adv/Vol 1840/1441/1.41 bln

12:28PM Applied Materials correction (AMAT) 17.50 +0.01 : Today's 6:26 comment regarding a change in membership of AMAT's Audit Commitee has been updated to more clearly indicate that Charles Y.S. Liu resigned as a member of the Audit Committee of its Board of Directors, not from the Board of Directors itself.

9:05AM QuickLogic expands Intel relationship by providing companion for Intel LAN group (QUIK) 5.02 : Co announces that they are expanding their relationship with Intel (INTC) by providing a companion device based on QuickLogic's QuickPCI family of programmable bridge controllers to connect Intel's PXA processor with Intel's wired Ethernet controllers.

11:37 am Eli Lilly (LLY)

57.48 +0.39: Over the weekend, Eli Lilly & Company was mentioned positively in Barron's, echoing the bullish outlook on LLY that we established last week on our Investor service. Given the company's growth outlook, "Lilly's current valuation still provides an attractive entry point," according to CSFB analyst Catherine Arnold who has an Outperform rating on the stock. Arnold sees the stock hitting $64 over the next 12-to-18 months, representing an increase of 15%, with upside expected to come from "underappreciated sales growth and leverage potential." Lilly has launched nine new products since Nov. 2001, more than any of its competitors and reflecting management's commitment to R&D, which last year accounted for 25% of total revenue and surpassed $3.0 bln for the first time ever. The Indianapolis-based company has five products targeting diabetes, osteoporosis, brain cancer and coronary problems that could be launched by the end of the decade and could potentially become blockbuster drugs with sales of over $1.0 bln if they get FDA approval.

HSBC Global Research analyst Kevin Scotcher voiced an even louder opinion on the stock, suggesting shares could possibly hit $81 within two years, a 42% premium from Friday's closing price, as a full-stage drug pipeline that is "key to sustaining growth over the long term" is expected to transform sales over the next five years.

The fact that Lilly has no major patent expirations until 2011, unlike that of rival Merck (MRK) whose cholesterol drug Zocor will be subject to generic competition when its U.S. patent expires in June, underscores our promising outlook for Lilly. Strangely, shares of Merck, despite continued litigation over its painkiller Vioxx, have climbed 11% in 2006 compared to a paltry 1.0% advance for shares of Lilly, which has paid about $700 mln to settle as many as 8,000 claims by plaintiffs charging that Zyprexa, Lilly's best selling drug with $2.5 bln in fiscal 2005 sales, had caused their diabetes.

With the major legal cloud, which has hung over the stock for years, being lifted, coupled with no immediate patent expiration threats and more aggressive R&D spending than its peers resulting in a potentially robust pipeline of new drugs, we view Eli Lilly as an attractive investment idea.

-- Brian Duhn, Briefing.com

10:13 am Wal-Mart (WMT)

47.38 +0.69: Wal-Mart Stores said it plans to hire 150,000 people in China over the next five years as it prepares for a major store expansion, according to The Wall Street Journal. While the world's largest retailer recorded sales of $312 billion in 2005, with approximately 80% generated in the United States, slowing growth and increasing regulatory hurdles in local communities have made international expansion an important part of the company's growth strategy.

The Bentonville, Arkansas-based retailer, which currently has 56 stores in China, expects to open 20 new stores in the country this year. Although it trails other global retail chains, such as France's Carrefour SA, which had 78 stores in China at the end of 2005, the company is rapidly training new staff to accelerate the expansion and to boost growth in the region.

Wal-Mart is currently not on the Ministry of Commerce list of the largest retailers in China, with respect to sales, according to the report. The company now employs about 30,000 people in the country, but that number is expected to grow substantially over the next few years as Wal-Mart continues to shift focus to China and other new markets.

Amid concerns of slowing growth at home, Wal-Mart shares have slipped more than 7% in the past twelve months. However, with new growth opportunities overseas expected to help drive future growth, the current multiple of 17.8x trailing twelve month earnings appears attractive for long-term investors and underscores the value proposition we highlighted on our Bargain Hunting column last October.

--Richard Jahnke, Briefing.com

09:21 am General Motors (GM)

21.13: On the heels of Friday's announcement that last year's net loss was $2 billion more than originally reported, the board is now asking for an investigation into the uncovered accounting errors, according to the Wall Street Journal. The board is seeking a full investigation into the cause behind the errors, which delayed the filing of its annual report and may delay the sale of its financing arm, GMAC. Further, according to the article, newly-elected board member Jerome York, who is backed by billionaire Kirk Kerkorian, has been successful in implementing parts of their turnaround strategy, persuading directors to cut their pay and the dividend by 50%.

Separately, there is speculation circulating that talks between GM and Delphi, the bankrupt auto parts manufacturer, are making headway. This weekend, GM negotiators were pursing a new cost-cutting initiative as senior officials met with United Auto Workers (UAW) and Delphi in the hope of securing an agreement on voluntary early-retirement packages, according to people familiar with the matter. According to a Delphi spokeman, Lindsey Williams, the talks have been "constructive, but we're not at the point of announcing anything." He hoped to be back at the negotiating table today.

GM's shares have been hovering around the $21 per share levels for the past few days, after falling to a near-term low of $19.21 on March 3rd. Share performance will remain news-driven as fundamentals remain cloaked in uncertainty. At this point, the risk is that the accounting issues will defer the sale of GMAC, which GM desperately needs. A resolution with Delphi will certainly be a catalyst for shares, but we still suggest investors proceed with caution.

--Kimberly DuBord, Briefing.com

09:11 am Williams-Sonoma (WSM)

42.46: Williams-Sonoma, the operator of 188 Pottery Barn stores, reported Q4 (Jan) earnings that were in line with Wall Street's forecasts. Excluding a $0.07 charge to consolidate its Hold Everything business into other existing brands, parent company Williams-Sonoma reported fourth quarter earnings of $1.09 per share, which was at the high end of management's previously reaffirmed guidance range of $1.07-1.09. The Street was looking for $1.05.

The company cited significant progress in its emerging brands, competitive advantages created throughout a more efficient supply chain network and the rolling out of new sourcing and logistical strategies designed to reduce customer returns, replacements, and damages. Gross margin, however, slipped 80 basis points to 44% due to higher inventory shrinkage, increased direct-to-customer shipping costs, expenses associated with daily store replenishment and increased markdowns. Net revenues rose 12% year/year to a record $1.21 bln (consensus $1.22 bln) and same-store sales rose 5.8% from a year ago.

Entering 2006 management remains focused on the three long-term strategic initiatives that have transformed the financial performance of WSM over the last several years -- driving sustainable top-line growth, increasing pre-tax operating margins as a percentage of net revenues, and enhancing shareholder value. Management announced plans to further utilize its strong cash position and to reflect its confidence in future profitability by returning value to shareholders in the form of the first cash dividend in its 23-year history as a publicly-traded company. Alongside a quarterly dividend of $0.10 a share that will be paid on May 24 to shareholders of record as of the close of business on April 26, the company's board also authorized a new two million share buyback program.

In an effort to drive sustainable top-line growth in its core brands, via the addition of 24 net new retail locations during the year, management forecasted Q1 and Q2 revenues of $789-803 mln (consensus $803.28 mln) and $858-872 mln (consensus $872.58 mln), respectively. For fiscal 2006, management expects adjusted earnings to grow 14-17% year/year to $2.15-2.19 (consensus $2.04) on revenues of $3.89-3.96 bln (consensus $4.01 bln), representing a year/year increase of 10-12%.

--Brian Duhn, Briefing.com

08:54 am Michaels Stores (MIK)

33.96: Shares of Michaels Stores are trading sharply higher in pre-market action, gaining more than 13%, after the arts and crafts retailer said it is exploring strategic alternatives to boost shareholder value, including a potential sale of the company. Michaels also announced that President and CEO Michael Rouleau is retiring, and that Jeffery Boyer and Gregory Sandfort will serve as co-presidents.

Chairman Charles Wyly, Jr. said, "We have completed a thorough review of the company's position, as well as the opportunities Michaels stores faces over the near and long term. With a rapidly evolving retail market, we are focused on all opportunities to enhance the strength of the Michaels business, attract new customers and more effectively respond to - and shape - their changing arts and crafts interests, even as we continue to build a world-class retail organization and infrastructure."

Michaels has retained JPMorgan as its financial advisor in this process, which it expects will take a "number of months" to complete. It also noted that there is no guarantee that a transaction will result and that it does not plan to disclose developments regarding its exploration until its board has approved a specific transaction.

Michaels Stores has increased its market capitalization from $310 million to approximately $4.5 billion over the past decade. As of January 28, the company was debt-free and had more than $450 million in cash and cash equivalents. Its shares, which are down 22% since last June, are trading at roughly 19.0x trailing twelve month earnings, which is in line with their 10-year historical average.

--Richard Jahnke, Briefing.com

08:45 am PetroChina (PTR)

98.80: Oil prices are retreating in electronic trading despite another attack on pipelines in Nigeria that cut another 75,000 barrels per day of output. With crude supplies fast approaching their highest levels in seven years, concerns over supply disruptions from Iran or Nigeria have eased. Crude for April delivery declined 36 cents, or 0.6%, to $62.41 per barrel. The upside in prices is being capped by record crude stocks.

Today PetroChina, China's largest oil producer, posted the largest profit of any Asian company, according to Bloomberg, on high energy price realizations. Net income increased 28% to 133.4 billion yuan ($16.6 bln) in 2005, or 0.75 yuan per share. This compares to last year's revised profit of 103.8 bln yuan, or 0.59 yuan per share. The result came in below analysts' average estimate of 139.6 bln yuan. Sales rose 39% year/year to 552.2 bln yuan. Profits ranked fourth in the world for an oil company, behind Exxon (XOM), BP Plc (BP), and Royal Dutch Shell, and surpassing Chevron (CVX).

The Beijing-based company projects its crude oil output will rise 5% this year to 826.6 mln barrels with gas production of 1.41 trillion cubic feet. Total output may grow to 1.06 bln barrels of oil equivalent. According to Bloomberg, only 2% of that growth is coming from fields in China.

China's insatiable appetite for crude is propelled by its surging economy, which is expected to grow 8% this year. According to the International Energy Agency, China's oil consumption, second only to the US, is expected to rise 5.9% this year to almost 7 mln barrels a day - two times the growth in 2006. In order to keep up with an economy that grew nearly 10% last year, China plans to seek out acquisitions outside its boarders to expand oil and gas reserves. CNOOC's (CEO) bid for Unocal (UCL) last year sparked a political firestorm in Washington that eventually led to the Chinese withdrawal. This was just a prelude to what is to come. These state-run enterprises are being pressured by the government to secure new opportunities, which we anticipate will include properties mainly in SEAsia.

--Kimberly DuBord, Briefing.com

09:40 am Covad: Needham & Co upgrades Hold to Buy. Target $3. Firm is saying they have become increasingly convinced that Covad mgmt will aggressively execute on its goal of making the company EBITDA-positive in Q3'06, and that the current leverage in DVW's earnings model could get us there sooner rather than later. They also believe that Covad's deepening ties with Internet service providers such as EarthLink could potentially expand to other major portals, as their relations with the RBOCs and mainstream broadband providers become increasingly contentious.

09:39 am CBRL Group: BB&T Capital Mkts downgrades Hold to Underweight . Firm is saying once the tender auction and the Logan's divestiture are completed, they believe the stock is more likely to trade down from current levels than up.

09:30 am Extreme Networks: Prudential upgrades Underweight to Neutral. Target $6. Fimr believes that a new product cycle around the BlackDiamond 12K platform and an improving financial position should limit downside. Firm also believes that the co may represent an attractive takeout candidate for financial or strategic buyers attracted to its upcoming products or solid financials, along with the ability to bring exposure to the metro Ethernet market at an attractive valuation relative to FDRY and CSCO.

09:29 am Evergreen Solar: RBC Capital Mkts downgrades Sector Perform to Underperform . Target $11. Fimr is saying that they believe the loss of the primary silicon supplier for their Marlboro facility will negatively impact margins through FY06. Longer-term, their established concerns on valuation, dilution and competition remain.

09:29 am NBTY Inc: RBC Capital Mkts upgrades Sector Perform to Outperform. Firm upgrades based on their view that NTY can realize meaningful margin expansion with only modest improvements in industry demand. Firm believes earnings momentum is likely to accelerate faster than expected over the next 2-3 qtrs. As a result, they see potential for upside to fiscal 2006 consensus estimates.

09:28 am Ultimate Software: Ferris Baker Watts initiates Buy. Target $26. Firm is saying that ULTI will be the major beneficary of the ongoing adoption of on-demand HR and payroll services. Firm anticipates the co will gain increasing market share in the mid-market segment given the superiority and lower price of its UltiPro product. Firm says co has yet to fully realize the benefits of cost efficiencies associated with the subscription model and anticipate strong annual recurring revenue growth with recurring revenue contributing between 75% and 80% total revenues in the long term, leading to accelerated earnings growth over the next three to five years.

09:26 am Pixelplus: WR Hambrecht initiates Hold. Firm intitates based on a significantly improved valuation since the IPO and their concerns over visibility into and the back-end loaded nature of wins at some of the co's expected higher volume customers and the practical cost-competitive advantage of the 3T vs. 4T architecture.

09:25 am DepoMed: WR Hambrecht initiates Buy. Target $12. Firm is saying that DepoMed's portfolio, which features two diabetes products, currently has two FDA approved products with estimated $100 mln U.S. sales potential, and a potential $1 bln diabetic neuropathic pain product moving into Phase 3 trials featuring the first once-a-day gabapentin with a profile they believe could be superior to Xenoport's (XNPT) gabapentin pro-drug which has 2x DEPO's valuation. In their view, either DEPO is significantly undervalued, or XNPT overvalued, or both.

09:22 am Crocs: Thomas Weisel initiates Outperform. Firm is saying that behind the unique combination of comfort, function and value, Crocs has found appeal across all age groups and genders. They believe Crocs' addressable market is more than $13 bln, supported by the quirky and charming brand image and rapid rise to prominence that have created a media stir.