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Thursday, September 21, 2006

Market Wrap (Sept. 21, 2006)

DJIA 11,533.23; Down 79.96 (0.69%)
NASDAQ 2,237.75; Down 15.14 (0.67%)
S&P500 1,318.03; Down 7.15 (0.54%)
10YR-Bond 4.648%

Stocks had shown a mixed day up until noon, but the Philadelphia Fed release showed weakening business conditions with a negative reading to -0.4, down from 18.5 in August and short of estimates of 12.0 reading. This index usually is irrelevant to the markets, but today was an exception because this puts fears that the economic slowing may be harder and faster than the street expects. Weekly Jobless Claims rose 7,000 in the last week to 318,000; and the August Leading Indicators fell by a -0.2% reading.

The big news for the consumer of getting $4.00 generic drug prescriptions via Wal-Mart (WMT) potentially all over the country by sometime next year. This is viewed as a margin killer and even WMT fell $0.41 to $48.46.

The Wal-Mart move is horrible for drug store chains like Walgreens (WAG) and CVS (CVS), with WAG losing 7.4% to $46.25 and CVS losing 8.3% to $32.48. It also hurt companies in the PBM’s (prescription benefit managers) such as Express Scripts (ESRX), Medcohealth (MHS), and Caremark (CMX) with ESRX -3.4%, MHS -3.8% and CMX -4.3% respectively.

Rising oil prices offset declining natural gas prices, and the Oil Services HOLDRs (OIH) rose 1.9% to $124.90; ExxonMobil (XOM) rose 1% to $64.78.

OraSure (OSUR), a maker of quick HIV tests, rose a sharp 21% to $8.54 after the US CDC issued a new initiative to make HIV/AIDS awareness proactive by making testing routine for those aged 16 to 64.

FedEx (FDX) posted earnings slightly ahead of plan and raised some of its guidance targets on an ex-pilot pay basis; FDX closed down 1.4% to $106.01.

Hewlett-Packard (HPQ) fell 5.2% to $34.87 after reports that new superstar CEO Mark Hurd may have had a more direct role in the recent illegal investigation scandal plaguing the company.

A couple of good analyst calls failed to boost key tech names. Microsoft (MSFT) was raised to a ‘Buy’ at A.G.Edwards, but its shares fell 1.1% to $26.88; and Cisco Systems (CSCO) was raised to Outperform at Piper Jaffray, but it closed down 1.1% at $23.01 despite briefly putting in new two-year highs.

Yahoo! (YHOO) gave 1.1% to close at $25.34 up another on reports that it was considering acquiring social networking site Facebook for about $1 Billion.

Time Warner Telecom (TWTC) closed with a slight 0.4% loss at $17.89 as it priced over 39 million shares at $17.50 in an increased secondary offering.

Home Diagnostics (HDIX) rose 5% to $12.61 compared to its $12.00 pricing of just under 6.6 million shares in its reduced price IPO.

Riverbed Technology (RVBD) was a solid IPO with it pricing 8.4 million shares at $9.75, above the $7.00 to $8.50 range. Its shares closed up a sharp 58% to close at $15.48, above the $9.75 pricing.

Warner Chilcott Ltd. (WCRX) closed down 0.3% at $14.95 compared to its $15.00 reduced price IPO of some 70.6 million shares.

Shares of Tribune (TRB) rose over 4% to $32.05 as the company held a board meeting that was to discuss alternatives for part or all of the various operations.

Jon C. Ogg
September 21, 2006

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