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8:59AM Treasury Market : Flight to quality also perhaps boosting Treasuries on news that Freddie Mac has made several top-level management changes and will begin an investigation into employee misconduct. Might be seeing some rotation out of agencies and into treasuries. Ten-year up 18 ticks to yield 3.285%.
8:52AM General Dynamics to buy Veridian for $1.5 bln (GD) 68.61: Company announces plans to acquire VNX for $35 a share in cash. Assuming $270 mln in debt, the transaction comes to $1.5 bln, is expected to be immediately accretive to GD's earnings and should close by end of Q303.

8:51AM S&P futures vs fair value: -4.7. Nasdaq futures vs fair value: -6.5. Stage remains set for a lower open for the indices as the futures trade ticks lower... Noticeable losses in the major European bourses, FRE's news that it fired its COO, MOT's lowered Q2 (June) outlook, and several valuation-related downgrades have pressured the futures trade.

8:47AM Business Objects downgraded at RBC (BOBJ) 24.68: RBC Capital downgrades to Sector Perform from Outperform based on valuation, as the stock is near their $26 target.

8:43AM CuraGen Corp announces preclinical trial results (CRGN) 6.38: Announces that CR002, a preclinical fully human PDGF-D specific neutralizing monoclonal antibody generated with XenoMouse(R) technology, demonstrated activity in an animal model of nephritis, or kidney inflammation.

8:42AM Bristol-Myers upgraded at Leerink Swann (BMY) 26.93: Leerink Swann upgrades to Outperform from Market Perform, as firm does not believe that BMY's current sector-low valuation of 15x 2004 EPS reflects its near-term momentum in Abilify and atazanivir, nor its R&D pipeline, which firm believes is deserving of a premium valuation. Target is $35.

8:38AM Smith Intl cut to Underweight at JP Morgan (SII) 39.98: JP Morgan downgrades to Underweight from Neutral; while the shares are up significantly since the rig count began to accelerate late in Q1, firm believes the upside appears more limited as the growth rate of the domestic rig count begins to moderate.

8:38AM Axcelis Tech reaffirms Q2, appoints new interim CFO (ACLS) 6.60: Company reaffirms Q2 EPS loss of $0.10-0.12, vs Reuters Research consensus of ($0.10), and revs of $120-130 mln vs estimate of $81.8 mln. Co also appoints Stephen G. Bassett as interim CFO following departure of Neil Moses.

8:36AM Spinnaker Exp downgraded at UBS (SKE) 26.98: UBS Warburg downgrades to Neutral from Buy based on valuation, as the shares have appreciated 22% YTD, outperforming its small cap E&P peer group's 13% gain this year; raises target to $30 from $28.50.

8:36AM Treasury Market : Ten-year Treasury up half a point, nudging it's yield down to 3.30%. Two forces at work: (1) increased confidence that the Fed will ease another 25 bp at the next FOMC meeting June 25; (2) Fed is arranging overnight repo's in an effort to add liquidity to the system (Fed buying Treasuries).

8:33AM Photronics downgraded at First Albany (PLAB) 17.40: First Albany downgrades to Neutral from Buy based on valuation, as they think the shares are fairly valued at 20.7x their FY04 est, 3.3x tangible book, and 1.6x FY03 sales; also, firm is concerned about the co's mix going forward and wants to see high-end demand accelerate before becoming more constructive; target is $17.

8:29AM Adaptec downgraded at First Albany (ADPT) 8.31: First Albany downgrades to Neutral from Buy based on valuation, as the stock is near their $8.72 price target.

8:29AM Northrop Grumman to pay settlement of federal lawsuit (NOC) 85.40: The Wall Street Journal reports the co is expected to pay a settlement of $111.2 mln due to a federal lawsuit alleging NOC overcharged for various space projects during the 1990s. In addition, the military contractor could also have more exposure to federal suits totaling $1 bln in damages. This case resolution represents one of four the Justice Dept has pursued against the company.

8:28AM Anthem reaffirms Q2 in 8K (ATH) 74.15: Company reaffirms in its 8K that it expects to meet previous (April 30) EPS guidance of $1.20-1.25 for Q2 (Jun) vs Reuters Research consensus of $1.24.

8:28AM GRIC Comms expands Wi-Fi relationship with Sony (GRIC) 4.99: Announces an expansion of its business relationship with Sony Communication Network Corporation (SCN), that will allow SCN to offer its "So-net" customers in Japan, Hong Kong and Taiwan access to GRIC's global network, including nearly 1,500 Wi-Fi access locations.

8:28AM Providian downgraded at Raymond James (PVN) 10.11: Raymond James downgrades to Mkt Perform from Outperform, as the stock has reached their former target of $10.

8:25AM Regeneron Pharms upgraded at BofA (REGN) 15.86: Banc of America upgrades to Buy from Neutral, citing their enthusiasm over the prospects for the co's proprietary anti-angiogenesis drug candidate, VEGF Trap; firm anticipates that REGN will be able to partner VEGF Trap with a major pharma or biotech in a lucrative agreement in the next 12 months, and believes Axokine is not in the stock and FDA approval is upside; raises target to $26 from $9.

8:25AM S&P futures vs fair value: -3.4. Nasdaq futures vs fair value: -4.0. Futures trade continues to deteriorate and now indicates a modestly lower open for the indices... A host of downgrades prompted by stocks such as ADBE (at Smith Barney), MAS (at CSFB), and QLGC's (at Goldman) rapid advances has kept valuation concerns on the front burner... As such, widespread buying interest has been held in check in the futures market.

8:23AM Pre-Market Movers : Trading up: NPRO +67%, GENR +20%, LEND +18%, OXGN +16.5%, AKLM +12%, TFSM +8%, PCS +4.5%, XMSR +3.6%, SUNW +3.5%... Trading off: FRE -11.5%, MOT -5.4%, QLGC -3.4%, RFMD -3%, SWKS -2%, QCOM -1.6%,

8:18AM GlobalSantaFe upgraded at JP Morgan (GSF) 24.00: JP Morgan upgrades to Overweight from Neutral based on the following factors: 1) improved outlook for the int'l jackup mkt, 2) the bottoming of North Sea mkt, 3) less day rate risk of its newbuilds, and 4) attractive valuation.

8:16AM Safeway added to JP Morgan's Focus List (SWY) 19.42: JP Morgan adds SWY to their Focus List, saying centralization is on track and progress is being made with lowering labor costs; firm has factored in a rocky Q2 (much like Q1), with a slow stabilization in 2H03; target is $23.50.

8:13AM Freddie Mac terminates Pres/COO, announces CFO resignation (FRE) 59.87: Co announces the resignation of Pres/CFO Vaughn Clarke and termination of former Pres/COO David Glenn. Mr. Glenn was terminated because of serious questions as to the timeliness and completeness of his cooperation and candor with the Board's Audit Committee counsel, retained in January 2003 to review the facts and circumstances surrounding the principal accounting errors identified during the restatement process. The corporation has informed its regulator OFHEO, the SEC and the NYSE about the matters described in this release. FRE also announced the retirement of its CEO/Chairman.

8:13AM Sangamo BioSci presents presentation of preliminary data from new gene therepy initiative (SGMO) 5.35: Announces the presentation of preliminary data from their new therapeutic initiative -- the development of their zinc finger DNA binding protein (ZFP) technology for the treatment and potential cure of human diseases caused by genetic defects; data were presented on Saturday, June 7 at the 6th Annual Meeting of the American Society of Gene Therapy.

8:12AM Johnson & Johnson concerns highlighted in Barron's (JNJ) 52.75: The article focuses on the co's breakthrough drug coated stent called Cypher and highlights concerns over its high price and scarcity of supply. As a result of these issues, the article suggests the co might have lost "first mover advantage" to BSX given its expectations of having its own similar product by year end. Morgan Stanley's analyst recently lowered his price target to 49 due to concerns over Cypher sustainability. The stock currently trades at a premium relative to other big drug stocks at 19.8 times this year's expected earnings (avg p/e of sector is 18) and the S&P 500.

8:10AM Masco downgraded at CSFB (MAS) 25.12: CSFB downgrades to Neutral from Outperform based on valuation, as the stock has closed the valuation gap vs peers; raises target to $27 from $25.

8:08AM TiVo receives patent license from Gemstar-TV Guide; companies dismiss pending litigation (TIVO) 9.71:

8:07AM Mutual Fund Flow Data : Equity funds report net cash inflows totaling $1.5 bil for the week ended 6/4/03 - with Domestic sectors reporting inflows exceeding $3 bil and most going to Small Cap Growth funds ($895 mil); Non-Domestic sectors report outflows ($1.5 bil); Taxable Bond funds report net cash inflows of $2.4 bil with most going to Corporate Bond funds investing in High Yield ($1.45 bil) and Investment Grade ($413 mil) securities; High Yield Corporate Bond funds report the largest inflows since 2/26/03; Money Market funds report inflows totaling $5.8 billion, all to tax-exempt funds. Inflows to taxable funds were negligible (0.0% assets); Municipal Bond funds report inflows $169 mil.

8:06AM IMS Health cut to Underperform at Bear Stearns (RX) 18.30: Bear Stearns downgrades to Underperform from Peer Perform based on valuation, as the stock has exceeded their previous $17 target; firm sees fair value at $15-$16.

8:03AM Extreme Networks cut to Underperform at RBC; target $4 (EXTR) 6.65: The downgrade from Sector Perform is based on view that stock is pricing in an overly optimistic revenue outlook. Assuming a 30x multiple of 2004, EXTR's revs would have to grow by more than 30% in fiscal 2004 to justify its current price. Firm's $4 target is based on a sum of the parts valuation.

8:03AM Alcoa upgraded at Merrill Lynch, downgraded at UBS (AA) 25.93: Merrill Lynch upgrades to Buy from Neutral based on strong industry and co fundamentals as well as low valuation; aluminum industry fundamentals remain poised for a rally, as YTD aluminum inventories are down 11.9% and prices are up 6.6%; the missing ingredient remains the economy, which is beginning to show signs of improvement; target is $32. On the other hand, UBS Warburg downgrades AA to Reduce from Neutral based on valuation; also, while mgmt is taking important steps to restructure operations, both aluminum and downstream mkts could remain challenging near-term; target is $21.

8:01AM S&P futures vs fair value: +0.3. Nasdaq futures vs fair value: +0.5. : Futures indications suggesting a relatively flat open for the cash market... Lack of enthusiasm attributed to MOT's Q2 (June) earnings warning, dollar weakening against the euro, and underlying concerns surrounding the indices' overbought conditions.

7:58AM QLogic downgrade details (QLGC) 51.03: --Update-- Issue cut to Underperform from In-Line at Goldman Sachs. Although downgrade is based primarily on valuation, firm notes that QLGC and the HBA mkt are not without fundamental risks. Firm has been pointing to the SeptQ as the point of maximum risk for the two leading HBA vendors. While these industry concerns apply equally, if not more so, to Emulex's SeptQ, firm is only downgrading QLGC. (Notes that ELX has significantly lower expectations and lower valuation).

7:58AM Adobe Systems cut to Underperform at Smith Barney (ADBE) 37.29: Smith Barney downgrades to Underperform from In-Line based on valuation; shares have appreciated 135% since mid-Sept fueled by expectations for the just-released Acrobat 6.0 upgrade cycle as well as 2 qtrs of solid financial performance; while firm expects a solid Q2, recent share appreciation has stretched valuation to 34.2x, near peak levels; also, firm says in each of the last 3 launches ADBE shares peaked within a month of new product launch, and although a Photoshop upgrade is possible in Q4/Q1, the timing is uncertain and trends suggest caution is warranted. Target is $36.

7:51AM Pre-Market Movers: SUNW +3.5%, PCS +3.5%... MOT -3.6%, CHKP -2%, RFMD -1.2% :

7:49AM Sprint PCS upped to Buy at Merrill Lynch -- target $7 (PCS) 5.12: The upgrade from Neutral is based on view that 1) sequential results will improve, 2) opportunities to drive valuation improvement given co's low FCF margin and high leverage. Firm's price objective is $7, but thinks it's possible the shares could go higher.

7:49AM Lehman downgrades integrated oil sector, ConocoPhillips : Lehman lowers their view of the integrated oil sector to Negative from Neutral based on their belief that prices could begin to weaken in 2004 and that prices could avg substantially below their prior assumption of $20/barrel in 2005-06. Firm downgrades COP to Equal-Weight from Overweight, as the co's EPS sensitivity to changes of oil prices is relatively high, its relatively heavy debt load vs peers makes the co a bit more vulnerable under a less favorable commodity price environment, and firm remains skeptical of COP's ability to meet its rather ambitious upstream cost and production growth targets; COP target is $57.

7:44AM E*TRADE announces portable mortgages (ET) 8.12: Co announces a program enabling consumers to lock in today's low portable mortgage rates on a home loan and then transfer the rate to the next home they purchase. The program enables borrowers to transfer the terms of the loan to a new future residence, rather than paying off the existing loan and applying for a new loan at potentially higher market interest rates.

7:41AM RSA Security downgraded at CSFB (RSAS) 11.00: CSFB downgrades to Neutral from Outperform based on valuation; with the stock's 266.7% run since their July upgrade (vs Nasdaq +26.1%), the relative valuation discount has disappeared; raises target to $11 from $10.

7:40AM Whole Foods run may slow -- NY Times (WFMI) 50.19: A New York Times report suggests that slower store growth, potential labor issues and competitive threat from retooled competitor Wild Oats Markets could wilt the performance of WFMI. "Whole Foods may have to operate flawlessly to justify its lofty price-to-earnings ratio, now at 32. "I think it's fully valued," says Merrill Lynch analyst Monica Aggarwal. An analyst at T. Rowe Price, which in November was Whole Foods' third-largest shareholder, notes that co's store-opening program has been below expectations for the last year and a half or so.

7:39AM Check Point Sftwr cut to Underperform at CSFB (CHKP) 20.18: CSFB downgrades to Underperform from Neutral based on valuation as well as their belief that the co will continue to lose share to CSCO and NSCN as the mkt continues to migrate towards an appliance form factor; raises CHKP target to $17 from $16.

7:35AM QCOM also possibly impacted by MOT warning :

7:35AM Briggs & Stratton mentioned favorably in Barron's (BGG) 48.90: The maker of lawnmowers has increased by more than 50% since October with its recent 52 week high reaching $48.25 due to its double digit gains in lawnmower sales. The Co could see more upside by year end in light of increased sales, plant streamlining and other cost cutting measures in recent years. In addition, the co is diversifying its product offerings while its direct rival TECUA is having problems primarily outside of its lawn unit. It recently raised its guidance for the current fiscal year to approximately $75 mln or $3.28 per share. R.W. Baird analyst predicts earnings could be as high as $3.56 for this year with shares trading at 13.5 times that estimate, which is a 30% discount to the S&P 500.

7:34AM Sun Microsystems upgraded at Goldman Sachs (SUNW) 5.20: Goldman Sachs upgrades to In-Line from Underperform, citing stabilizing demand and relative valuation; given signs that some of SUNW's key end mkts have bottomed, the co is likely to see seasonal patterns that are closer to normal which, coupled with SUNW's relatively low valuation, should cause the stock to generally track its peers.

7:30AM Goldman downgrades QLGC, upgrades SUNW :

7:29AM Deutsche upgrades select staffing stocks : Deutsche Securities upgrades MAN, RECN, and RHI to Buy from Hold based on the early signs of an economic recovery, which are most evident in ISM data showing service sector growth as well as improving trends in the manufacturing sector; raises MAN target to $42 from $30, RECN to $28 from $19, and RHI to $24 from $14.

7:24AM Lehman cuts ADCT, NT, SONS, and TLAB : Lehman downgrades ADCT, NT, SONS, and TLAB to Underweight from Equal-Weight, saying these stocks represent the most excessive examples of valuations extended well beyond fundamentals. Firm also reiterates their Equal-Weight rating on LU and raises their target to $2 from $1.75 due to expected interest expense savings.

7:24AM Stocks potentialy impacted by MOT warning include RFMD, SWKS, TQNT, SLAB :

7:23AM Accredited Home Lenders guides above consensus (LEND) 17.95: Company issues upside preannouncement for Q2 (Jun), now sees Q2 EPS of $1.20-1.25 vs earlier guidance of $0.80-0.90 and Reuters Research consensus of $0.90; co also raises Y03 EPS to $3.50-3.75, compared to previously announced est of $2.25-2.50 and an R.R. estimate of $2.97. "The mortgage market has remained strong for the first five months of the year, and it now appears that we will show continued strength into the latter half of 2003."

7:16AM Valentis presents positive Phase 1 data for angiogenesis product (VLTS) 4.77: In the trial, there were no observed severe adverse events from the drug and Del-1 was well tolerated at all doses tested. "Based on our analysis of pre-clinical and clinical data, it has become very clear that Del-1 will be the primary driver of shareholder value for Valentis," commented the co's CEO.

7:16AM REMEC misses by $0.02 (REMC) 7.85: Company reports Q1 (Apr) loss of $0.12 per share, $0.01 worse than the Reuters Research consensus of ($0.11); revenues rose 37.7% year/year to $81.3 mln vs the $77.8 mln consensus.

7:15AM SBC upgraded at Lehman (SBC) 26.42: Lehman upgrades to Overweight from Equal-Weight based on early signs of an improving fundamental environment and improvements in areas to which SBC is most levered to a recovery - wireless and UNE-P; raises target to $30 from $26. Firm also raises their price targets on VZ to $48 from $45 and on BLS to $30 from $26.

7:12AM Early Research Calls : SBC upped to Overweight at Lehman on early signs of improving fundamental environment... CHKP cut to Underperform from Neutral at CSFB on valuation... RSAS lowered to Neutral at CSFB... RGEN raised to Buy at BofA... Telecom names SONS, NT, TLAB, ADCT cut to Underweight at Lehman... COP cut to EqualWeight at Lehman on valuation... MAS cut to Neutral at CSFB... AA upgraded at Merrill and downgraded at UBS... Deutsche upgrading staffing names MAN, RECN, RHI.

7:08AM Motorola now sees Q2 at breakeven (MOT) 8.89: -- Update -- Company now sees Q2 EPS at breakeven, vs Reuters Research consensus of $0.04, and revs of $6.0-6.2 bln vs est of $6.44 bln. Co cites lower-than-expected cellular handset sales in Asia due to impact of SARS and excess inventories. Results for the full yr will be lowered due to the decrease in guidance for Q2 and b/c the issues adversely impacting Q2 are now to some degree, expected to also impact the Q3 and possibly Q4. (Sympathy plays on this news include RFMD, SWKS, TQNT, SLAB, QCOM).

7:08AM Barron's interviews Seth Glickenhaus, whose fund has delivered returns of 17% a year on average since 1981. : The fund manager's outlook on the economy in the article is pessimistic with little or no enthusiasm for its prospects going forward. However, he still looks for stocks which have "abnormally" good prospects and price/earnings multiples that are "ridiculously" low. He mentions CFC, PGH, ORI and BTU favorably and advises to stay away from blue chips due to their multiples selling too high.

7:03AM Motorola lowers guidance (MOT) 8.89:

6:57AM S&P futures vs fair value: +2.2. Nasdaq futures vs fair value: +6.0.

http://finance.yahoo.com/mp#gnss

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