The S&P/Case–Shiller 20-City Home Price Index rose by 1% in May, but showed a year over year decline of 4.5%. The Conference Board’s measure of Consumer Confidence remains weak in July at 59.5 where the neutral zone is 90 to 120. The Present Situation component fell to 35.7 the lowest since February. New Home Sales fell 1.0% in July to a 312,000 annual rate. The supply of new homes is at a record low of 164,000 units. The Dow Jones Industrial Average traded lower on Tuesday to 12,493.39 moving further away from its May 2nd high at 12,876.00. The NASDAQ traded down from 2851.63 to 2832.27 then rebounded with a new day’s high at 2851.72 in afternoon trading. The NASDAQ remains below its May 2nd high at 2887.75.
Asian stocks rose modestly on Tuesday with the Nikkei 225 gaining 0.4% to 10,098. The Hang Seng popped 1.3% to 22,572. European stocks traded back and forth around the flat line and ended their sessions mixed. The FTSE 100 was fractionally higher at 5,929. The DAX was also fractionally higher at 7,349. The CAC 40 slipped 0.7% to 3,789. The yield on the 10-Year U.S. Treasury note declined from 3.037 percent to 2.940 as a minor flight to quality trumps the fear of a U.S. downgrade by the rating agencies. The U.S. Treasury auctioned $35 billion 2-Year notes at 0.417% with a bid to cover at 3.14 times, which was a reasonable investor reception. Gold stayed below Monday’s all time high at $1624.3 the Troy ounce trading as low as $1607.8. Crude oil declined from $99.98 per barrel to $97.76 then rebounded to $100.62 on the weak dollar. The euro versus the US dollar traded between 1.4361 and 1.4524. The U.S. Treasury market must absorb $35 billion 5-Year notes on Wednesday and $29 billion in 7-Year notes on Thursday.
Energy
BP (BP) swung to a $5.62B net profit in Q2 from a $17.2B loss a year earlier – when it took massive charges from the Gulf spill – although the company missed expectations due to an 11% drop in oil and gas production. Valero (VLO) missed estimates by 14 cents on revenue of $31.3B. Occidental Petroleum (OXY) beat estimates by 9 cents on revenue of $6.17B. National-Oilwell (NOV) beat estimates by 12 cents on revenue of $3.51B. Patriot Coal (PCX) missed estimates by 17 cents on revenue of $632.2M. Weatherford International (WFT) beat estimates by 2 cents on revenue of $3.05B. Sunpower Corp (SPWRA) is cut to Sell from Hold at Stifel Nicolaus. In afternoon trading: Shares of Helix Energy (HLX) are up about 15.25%. Shares of Weatherford International are up about 9.5%. Shares of Patriot Coal are down about 12.5%. Shares of InterOil (IOC) are down about 10%.
Energy Select Sector SPDR (XLE) was trading at $79.03 at 4:00 PM on Tuesday, down 0.48% on the day – up 15.79% year-to-date.
Materials
Sigma-Aldrich (SIAL) missed estimates by a penny on revenue of $637M. Tronox (TROX) is initiated with a Buy and $220 target price at Ticonderoga. Morgan Stanley moves Russian mining giant Norilsk Nickel (NILSY) to Underweight from Equalweight. In afternoon trading: Shares of AK Steel (AKS) are down about 17%, while shares of United States Steel (X) are down about 8.75%. Shares of Wausau Paper (WPP) are up about 15%. Shares of Rare Element (REE) are up about 9.75%.
The Materials Select Sector SPDR (XLB) traded at $39.42 at 4:00 PM on Tuesday, down 1.08% on the day – up 2.63% year-to-date.
Industrials
UPS (UPS) posted 2Q EPS of $1.05 (beating estimates by a penny) on revenue of $13.2B. Avery Dennison (AVY) beat estimates by 3 cents on revenue of $1.72B. Illinois Tool Works (ITW) missed estimates by 3 cents on revenue of $4.6B (missing consensus by $65M), guides for Q3 EPS of $0.95-$1.03 (below $1.06 consensus), and guides for 2011 EPS of $3.72-$3.88 (below $3.92 consensus). Lockheed Martin (LMT) beat estimates by 23 cents on revenue of $11.6B (beating consensus by $130M), narrows its 2011 revenue guidance to $46B-$47B (from $45.75B-$47.25B), raises 2011 EPS guidance to $7.35-$7.55 (from $6.95-$7.25) and repurchased $1B in shares in Q2. PACCAR (PCAR) missed estimates by 3 cents on revenue of $3.96B. 3M Company (MMM) beat estimates by a penny on revenue of $7.7B (beating consensus by $80M), guides for 2011 EPS of $6.32-$6.47 (ahead of $6.29 consensus), reaffirms guidance for 6-7.5% 2011 organic sales volume growth. JetBlue Airways (JBLU) missed estimates by a penny on revenue of $1.15B. Cummins (CMI) beat estimates by 41 cents on revenue of $4.64B. Navios Maritime Partners (NMM) is lifted to Buy from Hold at Deutsche Bank. Eagle Bulk Shipping (EGLE) and Genco Shipping (GNK) are both Sell from Hold at Deutsche Bank, which takes Excel Maritime (EXM) to Hold from Buy. In afternoon trading: Shares of GeoEye (GEOY) are up about 16.75%. Shares of PACCAR are down about 11%.
The Industrial Select Sector SPDR (XLI) traded at $36.13 at 4:00 PM on Tuesday, down 1.85% on the day – up 3.61% year-to-date.
Consumer Discretionary
Ford’s (F) Q2 net income slipped to $0.65 a share from $0.68 (beating estimates by 5 cents), while revenue rose to $35.5B from $31.3B. Amazon (AMZN) is due to release its Q2 earnings after the close, when it is expected to report net profit fell to $0.34 from $0.45 a year earlier but that revenue surged to $9.37B from $6.57B. RadioShack (RSH) missed estimates by 6 cents (on a 53% drop in sales) on revenue of $941.9M. RadioShack announced it will begin offering Verizon products in September. Under Armour (UA) beat estimates by 4 cents on revenue of $291.3M. Office Depot (ODP) beat estimates by 6 cents on revenue of $2.7B. PetSmart (PETM) is initiated with an Outperform at RBC Capital. TJX Companies (TJX) is begun with a Buy rating and $68 price objective at Bank of America-Merrill Lynch. Meredith Corp (MDP) is picked up as an Overweight at Piper. Lazard lowers both Guess Inc (GES) and Warnaco Group (WRC) to Neutral from Buy. Rent-A-Center (RCII) is reduced to Hold from Buy at Stifel Nicolaus. In afternoon trading: Shares of Netflix (NFLX) are down about 6.5% after the company said that recently announced price hikes could dramatically hit subscriber growth and lead to Q3 earnings missing analyst forecasts. Shares of RadioShack are up about 19.25%. Shares of Office Depot are up about 11%, while shares of OfficeMax (OMX) are up about 8.5%. Shares of Group 1 Automotive (GPI) are up about 15%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.75 at 4:00 PM on Tuesday, down slightly on the day – up 8.93% year-to-date.
Consumer Staples
SuperValu (SVU) beat estimates by 2 cents on revenue of $11.1B. Hershey Foods (HSY) beat estimates by a penny on revenue of $1.33B. Herbalife (HLF) is begun with a Buy at Suntrust. In afternoon trading: Shares of China-Biotics (CHBT) are up about 12%. Shares of Yuhe International (YUII) are up about 11.25%. Shares of SuperValu are up about 7%. Shares of Star Scientific (CIGX) are up about 6.75%. Shares of Inter Parfums (IPAR) are down about 8.25%.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.37 at 4:00 PM on Tuesday, down 0.25% on the day – up 7.03% year-to-date.
Healthcare
Amylin Pharmaceuticals (AMLN) missed estimates by 3 cents on revenue of $158.1M. Biogen Idec (BIIB) reported Q2 EPS of $1.36 (in-line) on revenue of $1.2B. Watson Pharmaceuticals (WPI) beat estimates by 2 cents on revenue of $1.1B. Waters (WAT) missed estimates by 6 cents on revenue of $448M. Kinetic Concepts (KCI) missed estimates by 6 cents on revenue of $519.8M. Covidien (COV) beat estimates by 7 cents on revenue of $2.93B. Anadys Pharmaceuticals (ANDS) is increased to Outperform from Neutral at Wedbush. Computer Programs & Systems (CPSI) is now Neutral from Overweight at Piper Jaffray. HCA Holdings (HCA) gets downgraded to Neutral from Buy at Goldman Sachs. In afternoon trading: Shares of Cardiome (CRME) are up about 25.5%. Shares of Waters are down about 8.25%.
The Health Care Select Sector SPDR (XLV) traded at $34.94 at 4:00 PM on Tuesday, down 0.81% on the day – up 10.90% year-to-date.
Financials
Deutsche Bank (DB) Q2 net profit rose 3.3% to €1.2B ($1.74B) (versus consensus of €1.3B), with lower trading volumes and a €155M write-down of Greek bonds offsetting increased income from consumer banking and asset management. AIG (AIG) has received preliminary approval from a judge to pay $450M to resolve claims it cheated a workers’ compensation program. Royal Bank of Canada (RY) may spend up to C$1B ($1.06B) to buy asset management firms that will strengthen its U.K., Europe and Asia operations. T. Rowe Price Group (TROW) missed estimates by 2 cents on revenue of $713.7M. Simon Property Group (SPG) beat estimates by 7 cents on revenue of $1.04B. Regions Financial (RF) beat estimates by 4 cents. Waddell & Reed Financial (WDR) beat estimates by a penny on revenue of $3.09B. CIT Group (CIT) missed estimates by 11 cents. UBS’s (UBS) Q2 net profit halves to 1B Swiss francs ($1.26B) as operating income drops to 7.2B francs from 9.2B francs, with earnings hurt by lower client activity and currency movements. Salient MLP & Energy Infrastructure (SMF) is upgraded to Outperform from Market Perform with a $27 target. Associated Estates (AEC) gets increased to Outperform from Neutral at brokerage Robert W. Baird with a new objective of $21. BB&T Corp (BBT) is rasied to Buy from Hold at Rochdale. In afternoon trading: Shares of Bancorp South (BXS) are up about 12.25%. Shares of MGIC Investment (MTG) are up about 8%. Shares of Lennox International (LII) are down about 9%. Shares of FirstMerit (FMER) are down about 8%.
The Financial Select Sector SPDR (XLF) traded at $15.19 at 4:00 PM on Tuesday, down slightly on the day – down 4.76% year-to-date.
Information Technology
Texas Instruments’ (TXN) Q2 net profit fell 13% to $672M but beat expectations as revenue slipped 1.1% to $3.46B, with earnings hurt by the March earthquake in Japan, declining orders from Nokia, and weak demand for PCs and TVs. Western Union (WU) beat estimates by 5 cents on revenue of $1.4B. Lexmark (LXK) beat estimates by 33 cents on revenue of $1.04B. ARM Holdings (ARMH) reported Q2 net profit +21% Y/Y to £26.6M ($43.2M) and revenue +18% to £117.8M, boosted by demand for its microchip designs, which are used smartphones, tablets and TVs. Google (GOOG) gets picked up with a Buy at Credit Agricole. ComScore (SCOR) is a new Neutral at Piper Jaffray. F5 Networks (FFIV) is lifted to Buy from Neutral at Ticonderoga. Finisar (FNSR) is boosted to Buy from Hold at Citigroup. ValueClick (VCLK) is upgraded to Overweight from Underweight at Piper Jaffray. Volterra Semiconductor (VLTR) is now Overweight from Neutral at Piper Jaffray. STEC Inc (STEC) is reduced to Under Review from Buy at Needham Research. NVIDIA (NVDA) is now Sell from Hold at Needham due to secular challenges in core graphics. STMicroelectronics (STM) is moved to Underperform from Neutral at Exane BNP Paribas. In afternoon trading: Shares of Sanmina-SCI (SANM) are up about 21%. Shares of Volterra Semiconductor are up about 17.75%. Shares of Lexmark are up about 17.75%. Shares of Tellabs (TLAB) are up about 11.75%. Shares of Limelight Networks (LLNW) are up about 10.5%. Shares of Broadcom (BRCM) are up about 10.25%. Shares of Unisys (UIS) are down about 11.5%.
The Technology Select Sector SPDR (XLK) traded at $26.77 at 4:00 PM on Tuesday, up 0.45% on the day – up 6.27% year-to-date.
Telecommunications Services
Sprint (S) is raised to Outperform from Sector Perform by RBC Capital. In afternoon trading: Actives: Shares of Sprint are down about a half of a percent. Shares of Level 3 (LVLT) are down about 4%. Shares of AT&T (T) are up about 0.4%. Shares of Verizon (VZ) are also up about 0.4%. Shares of Frontier (FTR) are up about a half of a percent. Shares of Vodafone (VOD) are up about 2.25%.
The NASDAQ Telecommunications Index (IXTC) traded at $209.86 at 4:00 PM on Tuesday, up 0.21% on the day – down 6.88% year-to-date.
Utilities
El Paso Electric (EE) gets cut to Hold from Buy at Argus due to valuation concerns. In afternoon trading: Actives: Shares of Genon Energy (GEN) are down about 1.8%. Shares of Exelon (EXC) are relatively unchanged. Shares of Duke Energy (DUK) are down about a quarter of a percent. Shares of AES Corp (AES) are down about a quarter of a percent. Shares of PPL Corp (PPL) are up about a quarter of a percent. Shares of Southern (SO) are relatively unchanged. Shares of PSE&G (PEG) are up about 0.3%.
The Utilities Select Sector SPDR (XLU) traded at $33.82 at 4:00 PM on Tuesday, down 0.35% on the day – up 7.91% year-to-date.
STOCKS: BP, VLO, OXY, NOV, PCX, WFT, SPWRA, HLX, IOC, SIAL, TROX, NILSY, AKS, X, WPP, REE, UPS, AVY, ITW, LMT, PCAR, MMM, JBLU, CMI, NMM, EGLE, GNK, EXM, GEOY, F, AMZN, RSH, UA, ODP, PETM, TJX, MDP, GES, WRC, RCII, NFLX, OMX, GPI, SVU, HSY, HLF, CHBT, YUII, CIGX, IPAR, AMLN, BIIB, WPI, WAT, KCI, COV, ANDS, CPSI, HCA, CRME, DB, AIG, RY, TROW, SPG, RF, WDR, CIT, UBS, SMF, AEC, BBT, BXS, MTG, LII, FMER, TXN, WU, LXK, ARMH, GOOG, SCOR, FFIV, FNSR, VCLK, VLTR, STEC, NVDA, STM, SANM, TLAB, LLNW, BRCM, UIS, S, LVLT, T, VZ, FTR, VOD, EE, GEN, EXC, DUK, AES, PPL, SO, PEG
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