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Thursday, July 13, 2006

Market Wrap for July 13, 2006


The markets were already going to open weak and trade lower today, but heated escalation between Israel and Lebanon and a missile strike in Haifa, Israel and word that the Israeli captured soldiers may be sent to Iran sent the market reeling lower.

Oil hit new highs in crude in New York trading, and that put it at $76.90 highs. Even though this was great for oil companies they were not immune from a negative market. Exxon Mobil (XOM) rose only 0.3% to $64.12 and Schlumberger (SLB)

Israeli ADR stocks traded in the US took it on the chin with additional selling on fears that the escalating fighting would lead to real war. Koor Industries (KOR) fell 5.2% to close at $9.30; Nice Systems (NICE) fell 5% to $24.66; Partner Communications (PTNR) fell 2.9% to $8.06; even Teva Pharmaceuticals (TEVA) fell 3.5% to $30.51. The one counter trending stock was Magal Security (MAGS) closing up 19% at $11.50 as they make security equipment and monitoring systems for all measures of security.

The most influential analyst call came out of Merrill Lynch today. It wasn't the largest impact on a stock, but the widest market fallout because of the call. They downgraded Wal-Mart (WMT) from a Buy to a Hold and trimmed estimates for 2006 and 2007; WMT fell $0.88 to $44.27.

Disney (DIS) also fell 4.1% to close at $28.68 after CIBC downgraded shares to an Underperform rating.

Merck (MRK) won a trial against an older woman who had lost 100 pounds and she sued; the jury said that Vioxx was not the cause of her heart attack. MRK shares rose 0.4% to close at $36.86.

Yahoo! (YHOO) and Microsoft (MSFT) reported that they were testing interoperability of their instant messengers; unfortunately they both closed lower in weak markets; YHOO closed down $1.15 at $32.23 and MSFT closed down at $0.38 at $22.26. (TRFC) rose as much as 10% intraday, but closed down 4.5% at $4.56 after announcing that it was selected by AOL for traffic monitoring.

Dell (DELL) fell another 3% to $21.69 after releasing their awaited new pricing plan, mainly as no one was impressed and the poor market right now; they at least didn't issue another revenue warning.

AT&T (T) fell 3.1% to $26.32 after a federal judge had been given more condition-power over telecom mergers; its merger partner BellSouth (BLS) fell 2.7% to $34.31.

SAP (SAP) fell 6.5% to close at $47.03 after posting a warning to future results in a guidance call.

Warner Music (WMG) was one of the big losers by closing down 17.6% at $24.50 after a European court decision may bar any merger between Sony's music unit and Bertelsmann AG, leading fears that a merger

between Warmer and EMI may have antitrust issues.

Cree (CREE) was another pig today afetr falling 21% to $17.78 on an earnings warning, as was Multi-Fineline (MFLX) losing 22% to close at $21.56 after its earnings warning.

Tekelec (TKLC) fell 11.5% to $10.34 after a disappointing earnings report the day before.

Nastek Pharma (NSTK) gave up a painful 15% at $12.86 after disclosing the FDA has sent it a non-Approvable letter for one of its key products in its pipeline.

International Paper (IP) even fell victim to a poor market after disclosing it would repurchase up to $3 billion in shares and look for more international divestitures. IP closed down 1.2%at $31.72.

Cowen & Co (COWN) priced its IPO for 11.2 million shares at $16.00, which was well under the $19.00 to $21.00 expected range. The market greeted COWN with a resounding thud; COWN closed down at $15.86.

To show just how bad the market was and how many commodity-related stocks have massive
amounts of good news already baked in, Chaparrel Steel (CHAP) handily beat earnings and
declared a 2 for 1 stock split. Its shares fell 9%to close at $66.56.

Shares of Ford (F) closed down 4.3% at $6.58 after cutting its stock dividend in half and reducing director compensation.

The market gave General Electric (GE) a bit of a boot ahead of toimorrow morning's earnings release, with GE shares closing down 1.1%at $32.69.

Somehow, some way, by some minor act of God, or by some bottom fishers shares of Home Depot (HD) actually closed up on the day. There wasn't really specific real news, but shares managed to close up 1.4% at $34.08.

Jon C. Ogg
July 13, 2006

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