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Week in Review


Have a great weekend!


Market Recap

Geopolitical tensions, terrorist attacks in India, weak earnings, and jittery sentiment from equity traders all combined sending the financial markets notably lower for the week. The tech-laden NDX led the way lower dropping nearly 5%. Not helping matters, the missile attacks back and forth between Israel and Lebanon sent oil to a record high, touching $78 a barrel.

KLA-Tencor (KLAC) had positive comments out of the Semicon West meeting which inspired a short-lived, short covering rally. A lack of follow-through and the aforementioned global issues sent traders to the sidelines.

As we've discussed previously, the action underscores a combination of global tightening and a draining of liquidity as rates move higher around the globe. Risk aversion may also become a phrase we hear more of in light of the action and a re-test of the June lows seems reasonable based on the technical picture.

We noted previously that the technical condition of the markets suffered a sizable setback and will take time to repair. That seems to be what's currently unfolding so caution continues to be warranted.

Top Headlines

Former CEO of Goldman Sachs (GS) Henry Paulson was sworn in as Treasury secretary and stressed the importance of the United States role in the global economy. (Mon 10th)

Bill Gates said there was a possibility of further delays in the release of the much anticipated Microsoft (MSFT) Windows Operating System Vista which is slated to hit shelves in January. (Tue 11th)

A well orchestrated terrorist attack in Bombay, India during rush hour claimed the lives of over 200 people when seven separate bombs hit the commuter rail network. However, Indian stocks rose by a surprising 3% a day after the brutal attacks. (Tue 11th)

The EU fined Microsoft (MSFT) $357 million for failing to obey a 2004 antitrust order to share technical information with rivals to better communicate with Windows. (Wed 12th)

Oil prices hit a record high of $78 this week amid tensions with Iran, conflict in the Middle East, and explosions on Nigerian pipelines. (Thurs 13th)

The Bank of Japan ended its 6 year era of a zero interest policy by raising a key interest rate by 25 basis points for the first time in six years. (Fri 14th)

Semiconductor supplier KLA-Tenor Corp. (KLAC) lifted the semiconductor industry early in the week by saying its bookings exceeded expectations. (Tue 11th)

Israel attacked Lebanon and sent troops over the border for the first time in six years after Hezbollah guerillas kidnapped two Israeli soldiers. President Bush supported Israel and said it had the right to protect itself. (Thurs 13th)

Claims for unemployment benefits jumped by 19,000 well over market expectations and retail sales in May dipped further supporting the evidence of a slowing economy. (Thurs 13th)

Earnings Snapshot

  • Aluminum producer Alcoa (AA) reported a 62% jump in 2nd quarter profit driven by high aluminum prices but sales were softer than expected. (Mon 10th)
  • PepsiCo's (PEP) 2nd quarter earnings rose 14% to 80 cents per share beating analyst's expectations. Volume growth was driven by a 23% spike in non-carbonated drinks. (Thurs 13th)
  • General Electric's (GE) 2nd quarter earnings increased by 4% meeting analysts' expectations. The company reported improvement in 5 of its 6 main divisions. (Fri 14th)
  • EMC Corp. (EMC), the maker of data storage equipment, disappointed investors by lowering its profit and revenue forecasts for 2006. (Fri 14th)
  • Genentech Inc. (DNA) beat analysts' expectations, but investors focused on soft sales from one of their primary drugs Avastin. (Tue 11th)

Market Movers: Winners & Sinners

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No positions in stocks mentioned.

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