The green shoots are getting harder to keep pumping up as it seems that Wall Street is starting to demand some visible improvements rather than the continued notion of just "less-bad" data. The weak manufacturing data today makes it look like the factories are taking a European summer vacation.

The good news is that producer inflation has not yet started working itself into the system, based on PPI data. The housing starts looked unbelievably better than estimates, but that was due to apartment projects rather than single-family activity.

Here were today's unofficial closing bell levels:

DJIA
S&P500
NASDAQ

Top Analyst Calls

Analyst Douglas Harned of Sanford C. Bernstein chopped his price targets on several defense stocks today, including Lockheed Martin Corp. (NYSE: LMT). "Trends in the defense budget remain the most important driver of defense stocks, and the cash flow outlook is strong for the defense businesses," said Harned in a note to clients.

Harned cut LMT's price target from $104 to $96, but he reiterated an "outperform" rating on the stock. Lockheed Martin remains the analyst's top pick in the defense sector, thanks to its strong overall growth potential and support from its F-35 Joint Strike Fighter program. Despite his forecast for a reduction in supplemental defense budgets, Harned expects the F-35 program will remain fully funded.

Time Warner Inc (NYSE: TWX) has breached the $18 mark and is trading at $18.02, up 29 cents or 1.64% as of 10:10 a.m. It has analyst upgrades from Morgan Stanley and Sanford Bernstein to thank. It briefly traded as high as $18.05 before the open and also traded over 500,000 shares in pre-market activity for the first trading day in some time.

Morgan Stanley has raised its "Equal Weight" rating to an "Overweight." The firm believes the cable spin-off of Time Warner cable after the Adelphia merger will be a very positive catalyst for the shares of TWX. The firm has a target price of $26. Most "overweight" ratings out of Morgan Stanley and other firms tend to value stocks with a projected 20% or 30% rise from current prices, yet this analyst call pointed to upside of nearly 50%. The research noted an implied 30% to 35% discount to intrinsic valuations.

Sanford Bernstein has also raised the shares to an "Outperform" rating this morning. The research firm has hiked its $18 target up to $21.00. The firm is citing the developments of the Adelphia merger leading to Time Warner Cable having its own stock. The firm has also been impressed with the strategic changes at AOL after it went from a subscriber model to a free model.

These two upgrades are potentially the first of several such upgrades we expect to see in the coming days and weeks.

Jon Ogg is a partner at 24/7 Wall St. He does not own securities in the companies he covers.

Yesterday I liveblogged the speech given by Microsoft CEO Steve Ballmer at the Sanford C. Bernstein Strategic Decisions Conference, and if you read that, you already know: Microsoft is planning to keep investing significant dollars in operating expense, despite the shock-and-awe felt by the Street.

But now that the transcript's available on Microsoft's web site, I'd like to point you to a couple of Ballmer's justifications for this expense. He says that it's important to be on the front end of innovation (not exactly the place Microsoft's been known to be these last several years) and that the hardest decision was, what to invest in? "   When I first talked to Bill Gates about this and some of our other senior technology guys, Ray Ozzie, they came back with a list of, I don't know, 70 things. I said, Bill, you can't have a list of 70 things. He said, but there's 70 things, Steve. And I said, you've got to pare it down. He said, no ... with an R&D budget that's going to come on $7 billion, we could probably afford to do 60 or 70 different things."

What are those 70 things, though? The one thing he talked about most: obliterating paper. You heard me right. Steve Ballmer told the investors gathered at his talk, "I look in this audience, and I see a lot of paper and pencil. Ten years from now, I won't see paper and pencil if we in the hardware industry do our jobs right. Pencil and paper will be replaced by superior technology that is digital." If he has anything to do with it, it will be Microsoft that profits from the death of paper and pencil.