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Thursday, July 06, 2006

Market Wrap for July 6, 2006

Main Stock Tickers: AAPL MSFT MO RAI AD EBAY BTU WGII SUPG RICK PGL NVTL SIRI XMSR OPWV DTAS KFT PRX HD WMT INSM

DJIA 11,225.30; Up 73.48 (0.66%)
NASDAQ 2,155.09; Up 1.75 (0.08%)
S&P500 1,274.07; Up 3.16 (0.25%)
10YR Bond 5.185%
VIX 13.65; Down 0.50

Today was another strong day after mixed retail sales, a slightly lower ISM reading, and a tobacco-led DJIA rally.

Microsoft (MSFT) rose 0.55% to close at $23.48 on reports that it would try to introduce an iPod killer to compete with Apple (AAPL); shares of AAPL fell 2.1% to close at $55.77 on the news.

Altria (MO) was the golden boy of the DJIA today. MO closed up 6% to close at $77.76 after the Florida Supreme Court finally ruled on the Engle case and most aspects of the case were in favor of the tobacco industry by essentially tossing out most of the $145 Billion in damages the industry faced. Other tobacco names fared well too: Reynolds American (RAI) rose 4% to close at $118.95, Carolina Group (CG) rose 5.4% to $53.00, and Loews Corp (LTR) rose 1.4% to $36.01.

ADVO (AD) was a monster winner as the direct mail company received a $37.00 buyout offer from Valassis Communications (VCI); AD rose 45.8% to close at $35.59 and VCI suffered as it fell 15.7% to close down at $19.57.

Washington Group (WGII) rose 2.7% to close at $56.24 after raising guidance.

Supergen (SUPG) fulfilled its duties to receive part of a milestone payment and rose almost 11% to close at $3.94

Chicago's electric company, Peoples Energy (PGL), rose 8.5% to close at $39.06 after reports that WPS Resources (WPS) has engaged the company in merger talks. It is amazing this acquisition hasn't happened sooner.

Novatel Wireless (NVTL) shares rose 2.1% to close at $10.74 after itraised its formal guidance.

Rick's Cabaret (RICK), yes a topless joint, shares rose 9% to close at $6.63 after posting significant year over year sales gains.

The satellite radio wars have heated up. Sirius (SIRI) beat quarterly subscription additions and XM (XMSR) missed many estimates for its quarterly subscription additions. Shares of SIRI rose 1.1% to close at $4.53 and XMSR fell 2.6% to close at $14.11.

Unfortunately, even a strong market couldn't help the losers of the day.

Openwave (OPWV) had a horrific day after falling 32% to close at $7.77 on an earnings warning and another disclosure of a stock options inquiry. That marks a 2-year low for a company that was already off 50%.

Digitas (DTAS) was the victim of the highest impact call from an analyst today. DTAS fell 6.8% to close at $10.41 after W.R.Hambrecht downgraded it from a Buy all the way down to a Hold rating.

Kraft (KFT) fell 2.45% to close at $30.37 after Altria's Florida win should speed up the full spin-off of the former kraft unit, which in turn will significantly increase the float by about ten-fold.

Par Pharma (PRX) fell hard by 26% to close at $13.47 after an earnings restatement.

eBay (EBAY), in a drop that is becoming habitual, fell another 5.3% to close at $26.85 at another yearly-low after it disclosed its head of the PayPal unit is leaving the company.

Home Depot (HD) was also down most of the day, but Jim Cramer on CNBC recommended buying HD as the carnage has become too much and selling Lowe's (LOW). This was ahead of maria Bartoromo's exclusive CEO interview right after the close. HD rose to close only down 0.17% at $34.75 and LOW closed down 0.5% at $30.26.

Wal-mart (WMT) fell 0.7% to close at $46.70 after posting lower than expected June s-s-s numbers of 1.2%.

Insmed (INSM) fell 9.22% to close at $1.28 after an adverse court ruling.

Tomorrow is the end of the short post-holiday week. We will see the highly-anticipated jobs numbers, which will either confirm a the ADP employment reading yesterday or will confirm market talk that it had been given too rosy of a reading yesterday morning. Next week we should also start seeing the beginning of traditional deluge of earnings announcements from corporate America.

Jon C. Ogg
July 6, 2006
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