U.S. MARKET AVERAGES

Recently stocks edged down after the Philadelphia Federal Reserve reported a drop in almost every broad indicator it uses to measure the health of its region's manufacturing.

In morning and mid-day trading major U.S. averages have been keeping near the flat line with insignificant ups and downs. Markets have been deprived of vigor as investors digested Labor Department jobless claims report and consumer prices index for August and assumed a cautious position on uncertainty of how high energy costs and Katrina’s aftermath would affect the U.S. economy.

The low inflation numbers gave investors good ground to hope that the Fed Reserve will not increase interest rates.

The Labor Department reported that 68,000 people became jobless as a result of Hurricane Katrina and filed for unemployment benefits last week.

Gold sector is again one of the biggest gainers together with energy stocks and oil service space advanced by 1.3%. The biotech space gained 1.1%.

The airline sector declined 2.5% on reactions to bankruptcy filing from Northwest and Delta.

McDonald’s (MCD: chart) stood out among the best Dow component performers rising 2%. Altria (MO: chart) and AIG (AIG: chart) were also up 1.5% and 1% respectively.

Hewlett-Packard (HPQ)) was the biggest decliner among the blue chip, down 1%.

MOVERS AND SHAKERS

UICI (UCI: chart) jumped 15% after it has agreed to be bought by an assembly of private equity firms headed by Blackstone Group.

Bear Stearns (BSC: chart) fell 2.1% due to its earnings report that stated earnings of $378.3 million, or $2.69 a share, which is only little higher than the expectations of $2.38 a share.

Google (GOOG: chart) dropped 0.9% after the search engine priced its secondary offering at a slight decrease.

Motorola (MOT: chart) was 0.8% higher after a report in The Wall Street Journal saying that the company took advisers to explore the sale of its automotive unit.

Boeing (BA: chart) could be in play after Prudential Equity Group warned about possible feedbacks from a machinists' strike.

ECONOMIC NEWS

The Federal Reserve Bank of Philadelphia revealed that its diffusion index of current manufacturing activity dropped to 2.2 for September compared to a reading of 17.5 for August. September represented the lowest reading in 3 months, the Philly Fed reported.

Consumer prices continued higher in the month of August, according to a report from the Department of Labor, although the increase came in line with economist estimates. Nonetheless, the report did not include much of the impact of Hurricane Katrina.

The Labor Dept. said that the consumer price index rose 0.5 percent in August, matching the increase seen in the previous month. Most economists had been expecting prices to increase by 0.5 percent.

The increase in consumer prices was largely due to a sharp rise in energy prices, which rose 5.0 percent in August following a 3.8 percent increase in July. The increase reflected a 7.9 percent increase in prices for energy commodities and a 1.3 percent increase in prices for energy services.

The report also showed that the core CPI, which excludes food and energy prices, rose by 0.1 percent for the fourth consecutive month. The increase came in slightly below economist expectations of an increase of 0.2 percent.