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Millions of Americans are going mobile with their Internet access. We're increasingly relying on mobile devices for all sorts of activities, but growth in Internet access is downright staggering.

Last spring, a survey by the Pew Internet and American Life Center found that 40 percent of adults used their mobile phones to access the Internet, e-mail or instant messaging. This represents an 8 percent increase over the prior year.

Stocks continued their slide today as traders are holding tight until they get the Fed's word on the economy. Bernanke & Co. are expected to wrap things up tomorrow, so we could see another round of lower closing prices. 

The Dow closed down 96.50 points at 9,241.45; the Nasdaq finished at 1,969.73, down 22.51; and the S&P 500 fell back below 1,000 to finish the day's session at 994.35, down 12.75 points. 

Stocks in the Russell 2000 were down 9.75 points to end at 562.12. 

Oil closed at $69.38, down $1.22 and gold was at $946.20, up $1.20.
Bucking the downward trend were small-caps like Avanir Pharmaceuticals (Nasdaq:AVNR) up 30%; EchoStar (Nasdaq:SATS) up 19%; and Ivanhoe Energy (Nasdaq:IVAN) up 15%.  

Trending down with the broader markets many small-cap outpaced the market's fall, including Anthracite Capital (NYSE:AHR), down 30%; Javelin Pharamceutical (Amex:JAV), down 27%; Petroleum Development (Nasdaq:PETD), down 22%; and Flotek Industries (NYSE:FTK), down 20%. 

*****Have you noticed that analysts are starting to downgrade stocks? Sprint Nextel (NYSE:S), Yum Brands (NYSE:YUM), PETsMART (Nasdaq:PETM), MBIA (NYSE:MBI) and Aegon (NYSE:AEG) were all marked down by analysts yesterday.  
Coverage was initiated on American Express (NYSE:AXP) at "Sell" by Ladenburg Thalman. Boeing (NYSE:BA) and Research in Motion (Nasdaq:RIMM) have also been downgraded in the last few days.  

So what gives? If everyone's so bullish right now, why are stocks getting downgraded?  
First, stocks have rallied strongly since March. And second, there's no guarantee that earnings can continue to rise. The analysts may be playing it safe, but investors should take note.  

*****AIG (NYSE:AIG) has doubled in the last three days. If there was ever a company that shouldn't double, it's AIG. The government owns something like 90% of the company. And it's actively selling off its important pieces to pay off debt. It's highly unlikely there will be any return for common shareholders.  

And if a completely speculative stock like AIG is moving, we might expect to see others. And sure enough, General Motors, which now carries the ominous name Motors Liquidation Company (MTLQQ.PK), has very nearly doubled in the last week. I don't think that's a good sign for the health of the stock market.

*****Word is that more traders think the dollar may have put in an important low. That would be bad for stocks and commodities. To follow the action, watch the iShares Barclay's 20+ Treasury Bond Fund (TLT).

When this ETF rallies, stocks are usually selling off. And the chart for TLT shows a pretty decent looking double bottom at $90.

*****The latest FOMC meeting starts today. Nobody really expects the Fed to raise interest rates. Even the inflation crowd has to admit that the economic recovery is too frail for higher rates. Still, judging by the declines in the stock market, investors are nervous about what the Fed has to say.

Alan Greenspan used to try to let his words act as monetary policy. Instead of actually moving rates, he would voice his bearish opinion, in the hope that he could keep a lid on asset prices.

It didn't work. And I hope Bernanke doesn't make the same mistake. There's no substitute for actual changes in rates. And despite the weak economy, investors could probably use a message about asset bubbles and risk.  

*****The Managed America Internet video conference aired last night with great success. You can still catch it if you missed. There's a replay available HERE if you're interested in discovering the trends that will affect your investments for the next couple of years and how you can profit from them.

Ian Wyatt
Editor
Daily Profit

P.S. Investors have been asking me about commodities plays. They know that long term inflation will kick in once the recovery starts to ramp up and that will drive commodities, and the share prices of the underlying stocks, through the roof. My Global Commodity Investing advisory service is benefiting from current commodity prices and will provide one of the only safe havens for profits when inflation picks up. Click here to find out more about Global Commodity Investing.

 

So what jingle-linga-ling brings your cell phone to life? Beethoven’s 5th? Your sweetheart’s favorite love song? Some Grateful Dead?

That’s ringtone. But what about the beeps and blips that someone hears while waiting for you to pick up? That’s ringback.

In an impersonal world, consumers enjoy personalizing mobile phones in many ways, and adding ringback tones appears to be a growing fad — plus there’s a potential for video content. NMS Communications Corp. (Nasdaq:NMSS) is making some noise about becoming a leading player in this blossoming market, and has made some strategic changes to its business model while serving up a suite of added services.

Investors in NMS Communications might like the sound of that, since this Framingham, Mass., company has posted losses for the past two years. Now this 20-year-old company is feeling the Groove (as in Groove Mobile; more on this later).

NMS Communications is transitioning from a nuts-and-bolts, equipment and products sort of company, to a company with a services-oriented focus. And it could lead to a divorce of its NMS Communications voice, video and data platform business from its LiveWire Mobile suite of managed personalization services.

Of the four analysts surveyed by Thomson Reuters, three have NMS Communications as a “buy,” with another calling the stock a “hold,” with a median price target of $2.50.

NMS appears to be pinning its future on the cutting-edge mobile media services field. Shares hit a 52-week low of $1.16 on Friday, three days after NMS reported first-quarter results. The stock traded as high as $1.97 last June 4, but has not . . .

After rising during morning trading, the Russell 2000 (NYSE:IWM) hit resistance at 733.59 at 10:45 a.m. ET, and has continued to slide in Wednesday’s trading action. At 1:59 p.m. ET, the Russell was down 6.12, or 0.84%, at 723.67.

Federal Reserve Bank of Kansas City President Thomas Hoenig gave the bears support after he said late Tuesday that inflationary pressures “now stand at unacceptably high levels.” Hoenig is not a current voting member of the policy-making Federal Open Market Committee. U.S. consumers are feeling the pinch on their wallet, especially with oil prices surging to record highs. In recent trading, June crude oil contracts were up $1.51 to $123.35 a barrel.

A rising U.S. dollar combined with a positive productivity report kept investors bullish during early trading. In afternoon trading, the greenback is up to $1.5387 versus the euro. The U.S. dollar closed at $1.5524 against the Euro on Tuesday.

Also encouraging the bulls was the Labor Department’s Wednesday morning announcement that non-farm business productivity increased at an annual rate of 2.2% during the first quarter. Economists anticipated a 1.5% increase. Unit labor costs rose slower than expected at an annual rate of 2.2%, compared with . . .

Small-cap stocks pushed higher in early trading action, lifted by a surge in the U.S. dollar, and by yet another economic report that surprised on the upside. At 9:54 a.m. ET, the Russell 2000 (NYSE:IWM) was up 1.52, or 0.21%, at 731.31.

The greenback was on a roll this morning, gaining about 0.9% versus the euro, which would put the buck on a pace to close at the highest level since late March. Dollar strength also was noted against the yen, with dollar/yen rates up nearly 0.7% into the U.S. stock market opening.

Equities markets were lower in after-hours trading, but started to move toward the green after the monthly productivity report beat expectations. The headline figure for productivity came in at a gain of 2.2%, which was above the forecast for a rise of 1.6%. Typically, the productivity report has only a modest impact on stocks, but it did appear to move the S&P 500 about four handles. Perhaps of greater significance is that the productivity report was yet another economic release that topped the forecast, feeding good news to a market that might need it with small caps closing at 13-week highs Tuesday. There’s an old saying in the market that “you have to feed a bull, not necessarily a bear.”

Despite the jump in the U.S. dollar, crude oil prices were still hovering in rare air after setting record intraday and closing price values Tuesday. Amid supply concerns out of Africa, geopolitical strife in the Middle East and analyst forecasts calling for sharp gains in crude oil in coming months, “black gold” remains strong and . . .

Small-caps stocks were expected to open slightly lower in line with a mild overnight dip in most stock index products. The Russell 2000 (NYSE:IWM) was off about 0.1% in after-hours trading, which would translate to a cash opening near 729.

The productivity report, which came out at 8:30 a.m. ET, was better than forecast, with the headline number up 2.2%, compared with the median prediction for a gain of 1.6%.

The U.S. dollar was on a roll this morning, up 0.6%, or nearly 100 bps versus the euro, and up 0.4% against the yen, which should provide some support to the market if the dollar can hold those gains during the U.S. trading session.

In overseas trading, European shares had a nice recovery move, climbing from a loss of 0.8% to a gain of 0.3%. Equities in Asia were mixed, but tilted to the negative side, with Japan’s Nikkei up 0.38%, Hong Kong’s Hang Seng down 2.48% . . .

Small-cap stocks had a relatively sleepy pullback Monday, as climbing crude oil prices and a soft dollar offset an upside surprise in economic data from the ISM Non-Manufacturing Survey. The Russell 2000 (NYSE:IWM) dipped 1.39, or 0.19%, to 724.35.

The ISM Non-Manufacturing Survey came in at 52%, which was well above the median forecast for 49.5%, but neither investors nor analysts seemed ready to say that an economic growth trend for the services sector was at hand. The report sparked a brief bid in equities when it was released, but it had very little staying power throughout the day and lost the spotlight as crude oil prices began climbing.

Crude oil prices soared to a fresh record high, zooming past $120 dollars a barrel for the first time. Crude prices have jumped about 9% from last week’s low, and remain a concern for the U.S. economy, consumer spending habits and sentiment heading toward the summer driving season.

Even before the crude oil surge, equities were on the defensive this morning following weekend news that Microsoft (Nasdaq:MSFT) had retracted a bid for Yahoo! Inc. (Nasdaq:YHOO), dulling some of the merger and acquisition hype built up by the recent Mars/Wrigley (NYSE:WWY) deal. Investors pounded Yahoo! shares, which tumbled 15% on the news.

In addition to rising energy prices, other commodity markets were on a roll Monday, with the Commodity Research Bureau Index of a broad swath of physical goods climbing 1.4%, with copper prices soaring 3% to a record peak amid supply disruptions out of Chile and a lift from the ISM data. With crude oil prices and other . . .

Small-cap stocks started out the week in the red, but the early dip in equities did not live up to the selling interest suggested by overnight trends and a surprisingly stout ISM Non-Manufacturing Survey sparked a bout of buying that lifted stocks back toward steady levels. At 10:01 a.m. ET, the Russell 2000 (NYSE:IWM) was down 1.05, or 0.1%, at 724.69.

The ISM Non-Manufacturing Survey came out at 52%, which was well above the median forecast of 49.5%, and the highest point since December. The reading also snapped three consecutive months of contractions, which is a plus for the economic outlook.

The market had a bit of the merger blues this morning after weekend news that Microsoft (Nasdaq:MSFT) pulled out of negotiations for a takeover bid of internet services company Yahoo! Inc. (Nasdaq:YHOO). Yahoo shares took it in the chin on the news, sinking 18% in early trading Monday. The deal was reportedly close to fruition and the failure to close might take some excitement out of the M&A picture — at least in the short run. That said, wireless phone company Sprint (NYSE:S) was up 7% on news that the firm could be a takeover target.

Marvel Entertainment Inc. (NYSE:MVL) shot up nearly 8% this morning . . .

Consumers are cutting the cord, severing the tether to the landlines that once were mandated to talk to the world. No longer are they feeling beholdin’ to AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) or any of the other traditional providers of Plain Old Telephone Service.

Viva la revolution cellular.

Admittedly, wireless services are not without shortcomings. Dropped calls are not completely a thing of the past, but recent technology developments, combined with a network buildout by the carriers, are making strides in minimizing callus interruptus.

One of the hotter technologies under development is known as “femtocell,” and an 8-year-old Massachusetts company, Airvana Inc. (Nasdaq:AIRV), is working to help take it mainstream. Think of it as something akin to a cell tower of your very own: rather than depending on an outside signal that might fade inside a building, the femtocell is a small base station that delivers cellular communication over a broadband Internet connection. Adding range in the home to the home on the range — or in the condo complex — could help popularize 3G wireless services in the important U.S. market.

Airvana has a portfolio of network infrastructure products based on Internet Protocol technology, which provides the missing link between wireless service . . .

As a business analyst and investment editor, John Christy III, CFA, has long been recognized as one of the advisory community's leading experts on global investing.

Although he offers global coverage in his Forbes International Investment Report, the stocks he recommends are typically those that can easily be bought, such as ADRs and ETFs, by U.S. investors on domestic exchanges.

Attesting to the diversity of his recommendations Christy looks at two new small-cap positions — an "outsourcing" play based in the Philippines and an advertising company in China — as well as a small-cap fund play on Japan.

"India is not the only game in town when it comes to outsourcing," says Christy, noting that the Philippines has been "quietly" developing its own outsourcing industry. And within this sector, he says, eTelecare Global Solutions, Inc. (Nasdaq: ETEL) is a leading player.

The $200-million-market-cap company is based in Manila, but also has 3,000 employees in the United States. He says that customers include Sprint Nextel Corp. (NYSE: S) and AT&T Inc. (NYSE: T). Its 2007 revenue, he says, should be about $250 million.

Christy says that ETEL went public last March at $13.50, but has since slumped.

"Investors have been nervous about ETEL's exposure to Vonage, one of its key customers. But at less than 11 times estimated 2008 earnings, the market appears to be pricing in a lot of bad news and ignoring ETEL's strong growth potential," Christy says.

Over the next three to five years, he says, analysts expect 20% annualized earnings growth. In time, he says, ETEL should sign up more customers who can offset the Vonage exposure.

Palm, Inc. (Nasdaq: PALM) shares are rising in early trading after investment bank JPMorgan Chase & Co. (NYSE: JPM) upgraded the Sunnyvale, Calif.-based smartphone maker to “overweight” from “underweight.” In a note to investors, JPMorgan said it expects Palm to introduce several new phone models during 2008 and stronger-than-projected sales of its Centro smartphone.

Sprint Nextel Corporation’s (NYSE: S) exclusive Centro deal is ending and JPMorgan projects that Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) will introduce their own version of the Windows-based mobile phone. The investment bank also said that a new operating system will be released in late 2008, which will prompt increased product activity in early 2009.

JPMorgan projects a fiscal 2008 loss of $0.38 a share, and a loss of $0.09 per share during fiscal 2009. Wall Street analysts, on average, expect a 2008 loss of $0.17 per share and a 2009 loss of $0.05 per share.

In other news, Palm’s CFO Andrew Brown is scheduled to make a presentation at Thomas Weisel Partners Technology, Telecom & Internet Conference 2008 at 7:25 p.m. ET.

Cell phone-maker stocks rose during Friday’s trading after Motorola, Inc. (NYSE: MOT) said it is contemplating selling or spinning off its struggling handset business.

In morning trading, PALM shares are up 5.48%, or $0.33, at $6.35. Over the last 52 weeks, shares have ranged from $4.25 to $9.93.

The Russell 2000 (NYSE: IWM) and the Dow rose for the third day in a row on news of upbeat earnings from tech heavyweights. The small-cap index added 21.51 points, or 2.78%, to 795.64. The Dow Jones Industrial Average (INDU) rose 153.56 points, or 1.14%, to 13,657.86.

Stocks gained out of the gate following news that Cisco Systems Inc. (Nasdaq: CSCO), the world’s largest maker of computer-networking equipment, saw its fiscal fourth-quarter profit increase 25% to $1.9 billion, compared with $1.54 billion a year earlier.

Adding to the positive sentiment was Sprint Nextel Corp. (NYSE: S), after the Reston, Va.-based wireless provider reported a year-over year rise in the number of its subscribers and posted quarterly income that beat analysts’ expectations.

Separately, the Mortgage Bankers Association reported that more Americans are taking out loans to buy homes. The trade group’s Market Composite Index, which measures mortgage loan application volume, rose 8.1% to 656.5 from a level of 607.1 last week.

The Russell 2000 (NYSE: IWM) is the day’s biggest mover as the rally extends into the second half of trading. At 1:22 p.m. the small-cap index had added 23.98 points, or 3.10%, to 798.11. The Dow Jones Industrial Average (INDU) was up 105.27 points, or 0.78%, to 13,609.57.

Stocks were buoyed this morning by news of strong earnings from tech sector heavyweights, and the bulls have remained in charge even after the National Association of Realtors released a mixed forecast of annual U.S. home sales.

Existing-home sales will total 6.04 million in 2007, below the 6.48 million recorded in 2006, the Washington, D.C.-based trade group reported after the start of trading.

“Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who’ve been on the sidelines,” NAR senior economist Lawrence Yun said.

The Russell 2000 (NYSE: IWM) has gained more than 2% and the Dow Jones Industrial Average (INDU) is also up on good news from the housing sector and upbeat earnings from major players.

At 10:29 a.m. ET the Russell 2000 had added 20.67 points, or 2.67%, to 794.80. The Dow was up 84.62 points, or 0.63%, to 13,588.92.

More Americans are taking out loans to buy homes, according to the Mortgage Bankers Association. The Washington, D.C.-based trade group reported before the opening that its index measuring mortgage loan application volume increased 8.1% to a seasonally adjusted level of 656.5 for the week ended August 3, from 607.1 the previous week.

That’s a sign that Americans are willing to take out mortgages to purchase a home despite the tighter lending rules that have followed the slump in the U.S. housing sector and the subprime meltdown.

The Russell 2000 futures are up this morning, signifying the small-cap index will open in positive territory helped by news of an increase in mortgage applications.

The Mortgage Bankers Association's index, which gauges the volume of applications for mortgages to purchase new homes, rose 8.1% to 656.5 from a level of 607.1 last week. The group’s refinance index, a measure of the amount of loans refinanced, also increased 9.1% to 1881.1 from 1724.1 the previous week.

Shares of Cisco Systems Inc. (Nasdaq: CSCO) are trading higher ahead of the bell and lifting sentiment after the world's largest maker of computer-networking equipment reported it is raising its sales forecast on demand for high-speed Internet gear and Web-based phone systems.

In contrast, Sprint Nextel Corp. (NYSE: S) reported that quarterly earnings tumbled 95% on account of higher expenditures and lower mobile profits. The wireline communications juggernaut recorded earnings of $0.01 per share. However, excluding items and amortization, earnings were $0.25 per share, while analysts on average were expecting $0.22 per share. The current quarter earnings compare with earnings of $0.10 per share for the second quarter of 2006.

If smart phones like Palm’s Treo have arrived, could broadband wireless be far behind? Smart phones can support data-intensive applications such as Voice-over-IP, video gaming, video conferences and movies, all of which need much bigger pipes to transport data than cellular phone networks can provide. Consumers and businesses want to have the same experience with the broadband Internet on their mobile phones as they have at home or in the office.

People on the move are still tethered to hotspots when it comes to gaining access to the Internet; their-WiFi enabled connections do not reach beyond 100-300 feet. On their cellular phones, interrupted service is sometimes a problem with voice calls, and Internet capabilities are mostly out of the question.

Telecommunications companies such as Verizon Communications Inc. (NYSE: VZ), Sprint Nextel Corp. (NYSE: S) and AT&T Inc.’s (NYSE: T) Cingular revived their mobile Internet data services by investing in broadband wireless networks, which commonly go by the moniker 3G. These third-generation networks are capable of transporting more data, equivalent to broadband connections available in homes and offices, but are concentrated in densely populated metropolitan centers. Their signals cannot reach the entire area of a city, let alone rural regions.