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Contributors: Douglas McIntyre Jon C. Ogg

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Wednesday, July 12, 2006

Market Wrap for July 12, 2006


DJIA 11,013.18; Down 121.59 (1.09%)
NASDAQ 2,090.24; Down 38.62 (1.81%)
S&P500 1,258.60; Down 13.92 (1.09%)
10YR Bond 5.10%

This was just one of those days where very little actually felt great. The US Trade Deficit came in at $63.8 Billion, but oil inventories fell a whopping 6 million barrels and that pushed oil prices closer to the $75.00 per barrel mark at $74.95 on oil futures shortly before today's stock market close. The markets weren't crazy that Iran refused to immediately respond to offered incentives and a recommendation by world powers that Iran should be sent to the UN Security Council for punishment. Eyes were also glued earlier to reports that Israel had made military strikes in southern Lebanon as 2 soldiers had been kidnapped by Hezbollah and others died in an attack.

Higher oil prices failed to beat out weak potential spending trends with Exxon Mobil (XOM) closing up 0.03% at $64.00 and Schlumberger (SLB) closing up 0.3% at $67.05.

Stem cell stocks held up in a weak market because of a vote coming next week now on broader stem cell funding. Aastrom Bio (ASTM) closed up 4.3% at $1.44, Geron (GERN) closed up 0.1% at $6.67, and StemCells (STEM) closed up 8.4% at $2.44.

Halliburton (HAL) gave up 0.9% to close at $74.88 after reports that it would lose exclusivity over a multi-billion dollar contract for international troop support afetr allegations of bilking.

Gannett (GCI) gave up 2.2% to close at $55.63 after earnings posted another 8+% decline.

Dell, IBM, and Apple traded down on roughly the same sort of research notes today. Dell (DELL) closed down 4.4% more at $22.38 after UBS trimmed estimaes for 2007 and 2008 and cut its target from $26.00 down to $24.00. IBM (IBM) fell 1.2% to close at $75.50 after JPMorgan research noted a worsening environment. Apple (AAPL) fell 4.8% to close at $52.95 as it was noted as having limited upside and may warn by Credit Suisse research, even though Citigroup said this was actually an attractive in-point.

Microsoft (MSFT) fell another 1.9% to close out at $22.65 after the E.U. handed down fines of $357+ million (and maybe more coming) for it not divulging proper and requested information in its long-standing case in the EU over its openness with outside developers.

Even shares of KLA-Tencor (KLAC) fell 3.6% to close down at $41.00 after being the sole cause of the rally on Tuesday.

India's Infosys Technologies Ltd. (INFY) shook a bad market after posting solid earnings ahead of estimates; INFY rose 5.1% to close at $82.05.

Secure Computing (SCUR) won the Pig of the Day award by falling 38% to close down at $4.99 after it issued an earnings warning and an acquisition at the same time.

Brunswick (BC) fell a sharp 7% to close down at $29.55 after disclosing boat orders falling sharply would make the company miss earnings expectations. This even affected shares of competitor Polaris Industries (PII) sending its shares down 2.7% to close at $40.65.

Biotech was a tale of two companies: Genzyme (GENZ) posted solid results and its shares were up 8.2% at $62.77; conversely, Genetech (DNA) fell 3.6% to close at $80.98 after it beat earnings but posted weak individualized drug sales. Biogen-Idec (BIIB), Genentech's partner on Rituxan, also fell 0.98% to close at $45.56.

Gilead (GILD) was halted as the FDA approved it and Bristol Meyers (BMY) AIDS combination pill of 3 drugs in one for AIDS treatment; unfortunately this was widely expected according to notes and the stock only 0.15% at $61.85; BMY closed down 1.5% at $25.08.

Even Merck (MRK) fell another 1.5% to close at $36.70 as the New Jersey jury began deliberations in its trial,a lthough no verdict was announced.

Stock options probes continued to take their toll on companies. Corinthian Colleges (COCO) closed down 3.2% at $13.57 after disclosing it was conducting its own review of optiosn granting back to 1999. Sycamore Networks (SCMR) closed down a sharp 4.5% at $3.76 after a suit reportedly showed a memo that employees used to get around stock option grant date issues.

Cooper Tire & Rubber (CTB) fell 3.8% to close at $10.41 after Standard & Poors said that CTB was being booted out of the S&P 500 Index because it was the least weighted component so that when-issued Windtream (WIN) could become an S&P component next Monday.

Yankee Candle (YCC) gave up further ground to close down 13% to close down at $21.19 after lowering guidance in yet another summer, an act that is becoming a common theme yearly.

Despite selling its U.K. soup and sauce unit for $845 million, Campbell Soup (CPB) followed the markets lower and closed down 1.5% at $37.33.

We wouldn't be fair if we left out the new DJIA pigs. Home Deport (HD) closed down another 2.2% to close at $33.61 and Wal-Mart (WMT) closed down another 2.1% at $45.15. Best Buy (BBY) also gave up 5.7% to close down at $47.70 on broader consumer slowdown fears.

Tomorrow we have our weekly jobless claims and we also have weekly natural gas inventories. We'll also see if Japan really does change its near-zero percent interest rate policy.

Jon C. Ogg
July 12, 2006

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