Schaeffer's Midday Options Update Features Coca-Cola, Oracle, Xilinx, U.S. Airways, and Applied Materials

Business Wire, Sept 15, 2004

CINCINNATI -- Today's Schaeffer's Midday Options Update Features Coca-Cola (NYSE:KO), Oracle (Nasdaq:ORCL), Xilinx (Nasdaq:XLNX), U.S. Airways (Nasdaq:UAIR), and Applied Materials (Nasdaq:AMAT). The Midday Options Update contains a brief commentary on the day's most notable activity and a table listing the most active calls and puts for the day. The Midday Options Update is published every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1M&PAGE=1

Schaeffer's Midday Options Update for Wednesday: Applied Sentiment for Applied Materials

In a session that was already jam packed with economic data, the Department of Energy dropped a bomb on traders today. The department announced this morning that crude supplies in the latest week plummeted by 7.1 million barrels to 278.6 million. Meanwhile, gasoline supplies followed suit, dipping by 1.6 million barrels to a total of 202.5 million barrels. Attempting to lighten the burden on traders today, OPEC convened its meeting in Vienna, stating that the "additional premium of about $10-15" per barrel to the price of oil to geopolitical tension and unanticipated oil demand growth. For more on the oil patch, please read, "Crude Oil Supplies Drop, OPEC Lifts Production Quota."

Recapping the tidal wave of economic data that arrived earlier in the session, the Commerce Department reported that business inventories grew 0.9 percent in July, easily outdistancing the 0.6-percent increase in sales. The figure surpassed economist expectations for a rise of 0.8 percent. Elsewhere, the Empire State Manufacturing index rose to 28.3 from August's revised number of 13.2. This report followed on the heals of an already improving manufacturing report out of the Federal Reserve, which stated that U.S. factory output rose modestly by 0.1 percent to 116.6 in August, while July's gains were upwardly revised. Despite the improvement, the latest numbers from the Fed arrived well below economist expectations for a 0.4-percent gain. Capacity utilization remained unchanged in August at 77.3 percent. For more in depth coverage, please read, "Industrial Production Edges Higher, Manufacturing Expands."

Coca-Cola (NYSE:KO) took the fizz out of the blue-chip sector today, after warning that earnings for the second half of 2004 would fall short of prior guidance due to weak volumes in North American and Germany and unseasonably cool weather in Northern Europe. KO executives now anticipate third-quarter profits between 46 and 48 cents per share, excluding an impairment charge, compared to the Street's view of 54 cents. Second-half earnings are expected to arrive lower, narrowing to 88-92 cents per share. The consensus had expected 99 cents. For a refill on KO data, check out, "Coca-Cola Warns."

Mixed data arrived on the tech sector arrived last night after the market close. Oracle (NASDAQ:ORCL) briefly lifted traders' spirits after posting earnings of $509 million, or 10 cents per share, on revenue of $2.2 billion. Comparatively, ORCL posted earnings of $440 million, or eight cents per share, for the same quarter last year. The report managed to squeak past the Street's projections of nine cents per share. Reversing course within the sector, Xilinx (NASDAQ:XLNX) indicated that it now expects second-quarter revenue to arrive down five to seven percent. The semiconductor concern received a downgrade to "market perform" from "outperform" following the news. For more on ORCL and XLNX, read, "Oracle Beats While Xilinx Retreats."

The storm is getting worse for U.S. Airways (NASDAQ:UAIR), as shares of the beleaguered airline plunged more than 22 percent after the company announced that it will be delisted from the Nasdaq as of September 22. The stock's ticker also changed to USAIRQ today, as a result of its Chapter 11 bankruptcy.

At 12:35 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,244.1) is down 0.71 percent and the S&P 500 Index (SPX - 1120.83) is lower by 0.66 percent. The Nasdaq Composite (COMP - 1894.2) is down 1.11 percent. At 12:36 p.m. in the options pits, 1,196,947 calls and 901,926 puts traded for a composite put/call ratio across all five exchanges of 0.75. The CBOE put/call ratio for equity options weighed in at 0.64.

Semiconductor concern Applied Materials (NASDAQ:AMAT), like every other chips concern, has had a rocky ride so far this year. The stock has declined more than 35 percent since hitting a near-term high of 25.94 in November 2003, roiling under resistance at its 10-week and 20-week moving averages. And despite riding the recent resurgence in technology stocks, AMAT has begun to pullback from overhead resistance at the 17.50 level, a region that has troubled the equity since mid-July. Furthermore, the security has underperformed the ailing COMP on a relative-strength basis since the beginning of the year.