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Week in Review

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See you on Monday!

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Market Recap


The markets began the week on edge after a weekend of uncertainty regarding the conflict in the Middle East. When it appeared the magnitude of Israeli attacks would subside and peace could be reached in Iran's nuclear standoff, nervous money came off the table as gold and oil sold off sharply despite the validity of the reports. Investors awaiting earnings reports from tech heavyweights this week were sidetracked when Target (TGT) slashed its July sales forecast hinting at a slowdown in consumer spending sending the "Four Sisters" right to critical levels.

As mentioned in this week's Cup of Jo, the markets received a much needed bounce on dovish comments from Fed Chairman Bernanke during his testimony on Capitol Hill. However, the volume on this rally lacked conviction and we suspected much of this bounce was short covering. The reversal we saw on Thursday seemed to confirm this notion.

Tech earnings this week have not provided relief to investors. Shares of chipmakers Intel (INTC) and Advanced Micro Devices (AMD) were hit hard on pricing pressures. Yahoo (YHOO) hit a 52 week low and Dell (DELL) hit a 5 year low after disappointments. Google (GOOG) impressed the Street, but shares remained flat on high expectations that hang over its head. One tech bellwether that did impress the Street was Apple (APPL) as its industry leading iPod continues to sizzle.




Top Headlines

The nation's second largest retailer Target (TGT) cut its July same store sales view providing further evidence of a consumer slowdown as oil prices continue to rise. (Mon 17th)

The Labor Department reported a larger than expected rise in wholesale prices of 0.5% in June, but the increase in core inflation excluding food and energy was in-line. The consumer price index (CPI) for the month of June slowed to its lowest level in four months, but core CPI was 0.1% higher than the consensus estimate driven by higher rental rates. (Tue 17th & Wed 18th)

Stocks and bonds received a much needed boost after Federal Reserve Chairman Ben Bernanke told Congress that a slowing economy should moderate inflation down the road despite high oil prices. (Wed 19th)


Earnings Snapshot

Citigroup (C) reported an 8% rise in second quarter earnings but missed Wall Street's estimate by a penny. Investment and corporate banking fueled gains, but retail banking revenue was derailed by an inverted yield curve. (Mon 17th)

Internet portal provider Yahoo (YHOO) disappointed investors after posting a 78% drop in second quarter profit after consideration of stock option charges and a one time special gain last year. (Tue 18th)

International Business Machines (IBM) reported an 11% rise in quarterly profit, but revenue growth remained stifled in their two largest divisions, services and hardware. (Tue 18th)

Shares of Dell (DELL) fell to a 5 year low after the PC maker lowered its second quarter outlook. (Fri 21st)

Drug maker Eli Lilly (LLY) matched Wall Street estimates, but trimmed its projected sales growth. (Fri 21st)

Microsoft (MSFT) surpassed income estimates and announced plans to buyback $20 billion worth of shares. (Thurs 20th)

Merrill Lynch (MER) reported a 42% rise in quarterly profit beating analysts' forecasts. However, investors focused on future earnings being hurt as volatile stock markets continue to cool. (Tue 18th)

The world's largest beverage maker Coca-Cola Co. (KO) beat Wall Street expectations by 2 cents driven by a 7% rise in second quarter profit. (Tue 18th)

Johnson & Johnson (JNJ) reported a better than expected rise in profit as revenue increased by 5% but investors sent the stock lower on concerns of its long term growth prospects. (Tue 18th)

Troubled car maker Ford (F) lost $123 million in the second quarter due to poor sales and restructuring costs. (Thurs 20th)

Apple (AAPL) easily beat Wall Street estimates fueled by continued success of its industry leading iPod. (Wed 19th)

Bank of America (BAC) reported higher than expected profit boosted by its acquisition of MBNA Corp. JP Morgan Chase (JPM) also beat estimates. (Wed 19th)

Pfizer (PFE) announced its adjusted earnings rose 10% and that it would still meet 2006 guidance despite selling its consumer products division. (Thurs 20th)

Shares of chipmaker Intel (INTC) fell after reporting a 57% drop in profit due to a price war with rival Advanced Micro Devices (AMD) who also was hurt by aggressive price cuts. (Fri 21st)

Caterpillar (CAT) reported strong results and raised guidance on favorable conditions in mining, energy, and infrastructure development industries. (Fri 21st)

Google (GOOG) more than doubled its second quarter profit beating analysts' expectations as it continues to take market share away from rivals. (Thurs 20th)


Market Movers: Winners and Sinners

No positions in stocks mentioned.

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