Initial Jobless Claims rose to 417,000 in the latest week well above the 350,000 recessionary threshold. The Dow Jones Industrial Average traded up at the open to 11,406.39 on the news that Warren Buffet invested $5 billion in Bank of America (BAC). The Dow then reversed into the red to an afternoon low at 11,121.14. The NASDAQ was held back at the open by Apple Inc (AAPL) which traded as low as $365.00. The opening range was 2464.98 to 2482.90, before breaking into the red with an afternoon low at 2417.95.
Asian stocks followed U.S. stocks higher on Thursday with the Nikkei 225 up 1.54% to 8,772 and the Hang Seng up by 1.47% to 19,752. European stocks were higher in morning trading but slipped into the red just as the U.S. indices did. The FTSE 100 fell 1.44% to 5,131; the DAX slumped 1.71% to 5,584 and the CAC 40 slipping 0.65% to 3,119. The yield on the 10-Year US Treasury note continued to rise and on Thursday from 2.163 percent to 2.312 then consolidated that range. The U.S. Treasury auctioned $29 billion 7-Year notes at 1.58% with a bid to cover at 2.76 and an indirect bid of 51.7%, so there was demand from foreign central banks.
Gold continued to decline into Thursday after setting a new all-time high at $1917.9 the Troy ounce on Tuesday. The low Thursday morning was $1705.4, down $212.5 which is a warning that the parabolic bubble has popped. A factor was that CME raised margin requirements. Gold rebounded in afternoon trading into the green above $1760.0. Crude oil traded up from $84.93 to $86.56 then declined to $83.01 below the 200-week simple moving average at $83.89 then consolidated that range. The euro versus the US dollar traded down from 1.4474 to 1.4332 then consolidated.
Energy
While major corporations slash thousands of employees, Halliburton (HAL) plans to hire 11,000 workers in North America in 2011. SeaDrill Limited (SDRL) beat estimates by 65 cents and revenue by $10M. Oiltanking Partners (OILT) is picked up as a Buy at Citigroup. EnCana (ECA) is cut to Hold from Buy at Benchmark. In afternoon trading: Shares of ATP Oil & Gas (ATPG) are up about 10.25%. Shares of Clean Energy Fuels (CLNE) are up about 5.75%. Shares of General Maritime (GMR) are down about 7.25%. Shares of Uranium Resources (URRE) are down about 6.5%.
Energy Select Sector SPDR (XLE) was trading at $64.56 at 4:00 PM on Thursday, down 2.11% on the day – down 5.41% year-to-date.
Materials
Thompson Creek Metals (TC) is begun with a Buy at BB&T Capital. BHP Billiton (BHP) gets taken to Buy from Hold at Societe Generale. Arcelor Mittal (MT) is cut to Neutral from Buy at Nomura. In afternoon trading: Actives: Shares of Alcoa (AA) are down about 1.4%. Shares of Yamana Gold (AUY) are up about 2.1%. Shares of Cemex (CX) are down about 1.3%. Shares of Freeport McMoran (FCX) are up about 1.3%. Shares of Vale (VALE) are down about 0.6%.
The Materials Select Sector SPDR (XLB) was trading at $33.23 at 4:00 PM on Thursday, down 1.10% on the day – down 13.49% year-to-date.
Industrials
Lindsay Corp (LNN) is a new Hold at KeyBanc Capital. Kennametal (KMT) is picked up as an Outperform at Credit Suisse. RailAmerica (RAIL) is raised to Buy from Hold at Stifel Nicolaus with a $15 target. Toro (TTC) is taken to Buy from Neutral at Janney. Graco (GGG) gets downgraded to Hold from Buy at BB&T Capital. In afternoon trading: Shares of YRC Worldwide (YRCW) are up about 21.75%. Shares of A123 Systems (AONE) are up about 11.5%. Shares of Beacon Roofing Supply (BECN) are up about 7.25%. Shares of Delta Air Lines (DAL) are down about 6.6%. Shares of JetBlue Airways (JBLU) are down about 6.25%.
The Industrial Select Sector SPDR (XLI) was trading at $30.30 at 4:00 PM on Thursday, down 1.88% on the day – down 13.11% year-to-date.
Consumer Discretionary
Signet Group (SIG) beat estimates by 17 cents and revenue by $31M. Guess? (GES) beat estimates by 3 cents and revenue by $21M, sees FQ3 Revenue at $650M-$665M (versus consensus of $689M), EPS of $0.71-$0.74 (versus consensus of $0.85), and expects FY2011 Revenue at $2.74B-$2.78B (versus consensus of $2.79B) and EPS of $3.25-$3.35 (versus consensus). Collective Brands (PSS) beat estimates by 5 cents and revenue by $16M. The company’s board said it will conduct “a review of strategic and financial alternatives,” including a possible sale. Express (EXPR) beat estimates by 2 cents and revenue by $7M. American Eagle (AEO) is upgraded to Neutral from Sell at Lazard Capital Markets. Shares of Collective Brands are up about 21.5%. Shares of PulteGroup (PHM) are up about 10.5%. Shares of Brown Shoe Company (BWS) are down about 9.5%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $35.38 at 4:00 PM on Thursday, down 1.99% on the day – down 5.43% year-to-date.
Consumer Staples
Diageo’s (DEO) FY EPS excluding items rose 16% to £0.836 ($1.37), beating forecasts of £0.789, with strong growth in emerging markets but continuing difficulties in Europe. The company says it is targeting underlying sales growth of 6%, improving margins by two percentage points to 31% in the next three years, and double-digit percentage earnings growth in the medium term. Hormel Foods (HRL) beat estimates by 2 cents and revenue by $40M, and raised FY11 EPS guidance to $1.70-1.75 from an earlier $1.67-1.73. In afternoon trading: Shares of Hormel Foods are down about 7.5%. Actives: Shares of Altria Group (MO) are down about 1.5%. Shares of Coca Cola (KO) are down about 2.1%. Shares of Wal-Mart (WMT) are down about 1.1%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $29.92 at 4:00 PM on Thursday, down 1.53% on the day – up 2.06% year-to-date.
Healthcare
Achillion Pharmaceuticals (ACHN) is initiated with an Outperform and $9 price objective, while Inhibitex (INHX) also gets picked up an Outperform and $6 target price, both at Robert W. Baird. StemCells (STEM) is picked up as a Buy rating at Roth Capital. Universal Health (UHS) is picked up as a Buy at Auriga. United Therapeutics (UTHR) is reduced to Hold from Buy at Auriga. In afternoon trading: Shares of Patterson Companies (PDCO) are down about 10.75%. Shares of Human Genome Sciences (HGSI) are down about 6.5%. Shares of Xoma Ltd. (XOMA) are up about 7.5%. Shares of StemCells are up about 7%.
The Health Care Select Sector SPDR (XLV) was trading at $31.84 at 4:00 PM on Thursday, down 1.70% on the day – up 1.08% year-to-date.
Financials
Barclays (BCS) CEO Robert Diamond yesterday told CNBC that large U.S. and U.K. banks “are much safer and much sounder” than before the financial crisis in 2008. Credit Agricole’s (CRARY) Q2 net profit falls 10.6% to €339M ($488M) but soundly beats forecasts of €193.3M after a lower-than-expected €640M writedown of its Greek operations. WisdomTree (WETF) is initiated with an Overweight at Piper Jaffray. Pennsylvania R.E.I.T. (PEI) is boosted to Outperform from Market Perform at Keefe Bruyette. In afternoon trading: Shares of Life Partners Holdings (LPHI) are down about 19%. Shares of Bank of America (BAC) are up about 10% after Warren Buffett announced he will take a stake in the company, paying $5B for 50,000 cumulative preferred shares.
The Financial Select Sector SPDR (XLF) was trading at $12.66 at 4:00 PM on Thursday, down slightly on the day – down 20.63% year-to-date.
Information Technology
Apple (AAPL) co-founder Steve Jobs is to step down as CEO and be replaced by COO and interim CEO Tim Cook. But Jobs, who has been on a medical leave since January, is staying on as Chairman. Samsung cites Kubrick A German court has upheld Apple’s (AAPL) request to prevent Samsung (SSNLF) from selling the latest version of its Galaxy Tab tablet computers in Germany because they were too similar to the iPad. Applied Materials (AMAT) beat estimates by 2 cents and revenue by $100M, and sees FQ4 Net sales down in the range of $1.96B-$2.38B (decrease by 15%-30% Q/Q) and Non-GAAP EPS at $0.16-$0.24 (versus consensus of $0.33) amid slowing PC sales and a weakening economy. Google (GOOG) has agreed to pay $500M to settle a criminal investigation into ads from Canadian pharmacies that led to the illegal import of prescription drugs into the U.S. In its first report as a publically traded company, Zillow (Z) reported Q2 EPS of $0.00 on revenue of $15.8M. TiVo (TIVO) beat estimates by 5 cents and revenue by $13M, and issues Q3 revenue guidance at $49M-$51M (versus $49.6M consensus). SAP AG (SAP) is begun with a Buy recommendation at the Royal Bank of Scotland. Overland Storage (OVRL) is picked up as a Speculative Buy and $4 price target at Benchmark. Maxwell Tech (MXWL) is picked up as a Buy at ThinkEquity. Shanda Games (GAME) is up sharply before the bell after getting a Buy-from-Hold boost at Deutsche Bank. F5 Networks (FFIV) is boosted to Buy from Hold with an $84 objective at Stifel Nicolaus. Synchronoss Tech (SNCR) is boosted to Outperform from Neutral with a $36 target price by brokers Robert W. Baird. Hewlett-Packard (HPQ) is moved to Sector Perform from Outperform at RBC Capital Markets. Brokerage Collins Stewart cuts China Sunergy (CSUN) to Neutral from Buy with a target of $1.60, and also moved Hanwha SolarOne (HSOL) to Neutral from Buy. In afternoon trading: Shares of Energy Conversion Devices (ENER) are up about 26%. Shares of Zillow are up about 22%. Shares of Universal Display Corp (PANL) are up about 18.5%. Shares of TiVo are up about 18.5%.
The Technology Select Sector SPDR (XLK) was trading at $23.34 at 4:00 PM on Thursday, down 1.44% on the day – down 7.34% year-to-date.
Telecommunications Services
The FCC has asked AT&T (T) for more details about why it needs to acquire T-Mobile (DTEGY) following the accidental disclosure earlier this month that the U.S. carrier could widen its high-speed wireless service to 97% of the country for $3.8B, less than one-tenth of the $39B it would pay for T-Mobile. In afternoon trading: Shares of Sprint Nextel (S) are down about 6.5%. Shares of Partner Communications Co (PTNR) are down about 5.75%. Shares of Towerstream (TWER) are down about 5.5%. Shares of Leap Wireless (LEAP) are down about 4.5%. Shares of China Unicom (CHU) are up about 4.75%.
The NASDAQ Telecommunications Index (IXTC) was trading at $180.01 at 4:00 PM on Thursday, down 2.59% on the day – down 20.13% year-to-date.
Utilities
Veolia Environnement (VE) is now Neutral from Outperform at Credit Suisse. In afternoon trading: Shares of Tokyo Electric Power (TKECF) are down about 7.5%. Shares of Genon Energy (GEN) are down about 5.5%. Shares of RWE AG (RWEOY) are down about 5%. Shares of Dynegy (DYN) are down about 4.5%. Shares of AES Corp (AES) are down about 4.25%. Shares of National Grid (NGG) are down about 3.75%
The Utilities Select Sector SPDR (XLU) was trading at $33.05 at 4:00 PM on Thursday, down 1.64% on the day – up 5.46% year-to-date.
STOCKS: HAL, SDRL, OILT, ECA, ATPG, CLNE, GMR, URRE, TC, BHP, MT, AA, AUY, CX, FCX, VALE, LNN, KMT, RAIL, TTC, GGG, YRCW, AONE, BECN, DAL, JBLU, SIG, GES, PSS, EXPR, AEO, PHM, BWS, DEO, HRL, MO, KO, WMT, ACHN, INHX, STEM, UHS, UTHR, PDCO, HGSI, XOMA, BCS, CRARY, WETF, PEI, LPHI, BAC, AAPL, SSNLF, AMAT, GOOG, Z, TIVO, SAP, OVRL, MXWL, GAME, FFIV, SNCR, HPQ, CSUN, HSOL, ENER, PANL, T, DTEGY, S, PTNR, TWER, LEAP, CHU, VE, TKECF, GEN, RWEOY, DYN, AES, NGG
