The Dow Jones Industrial Average held above Friday’s intra-day low at 11,139.00 on the first wave down at Monday’s open. After a morning rebound to 11,311.10 the Dow plunged to 10,839.52 in afternoon trading versus the 200-week simple moving average at 10,741. The NASDAQ opened below Friday’s low of 2464.87 to 2446.26 then rebounded to 2489.39 in morning trading then declined to 2366.40 in afternoon trading. Both the Dow and NASDAQ consolidated the day’s losses in the final hour of trading.
Asian stocks plunged again on Monday following the S&P downgrade of the US Credit Rating. The Nikkei 225 declined 2.18% to 9,098. The Hang Seng fell 2.17% to 20,491. European stocks opened lower then stabilized on the ECB plan to support the bonds of Italy and Spain, but that buoyancy did not hold. The FTSE 100 slumped by another 2.62% to 5,109. The DAX plunged 5.02% to 5,923. The CAC 40 plunged by 4.68% to 3,125. The yield on the 10-Year U.S. Treasury note rose slightly to 2.589 percent on the US credit rating downgrade, but then a flight to quality trumped the downgrade as this yield declined to 2.327 before consolidating. The U.S. Treasury auctions $32 billion in 3-Year notes on Tuesday, $24 billion 10-Year notes on Wednesday and $16 billion in 30-Year bonds on Thursday. W
What will the Federal Reserve have to say about the U.S. credit rating downgrade following their FOMC meeting on Tuesday? S&P downgraded the debt of Fannie Mae (FNM) and Freddie Mac (FMCC) Monday morning, which added to the downside for US stocks. Gold popped to another all time high of $1721.8 the Troy ounce from an overnight low of $1678.7. Crude oil declined from $85.73 to $80.17 per barrel below the 200-week simple moving average at $83.96. The euro versus the US dollar traded up to 1.4399 then declined to 1.4135 then consolidated.
Rio Tinto (RIO) and Mitsubishi Corp. (MSBHY) have offered to buy the 14% in Australia's Coal & Allied (CAIQF) they don't already own for A$1.49B ($1.56B). Quicksilver Resources (KWK) beat estimates by 2 cents and revenue by $29M. BP Plc (BP) gets hoisted to Hold from Sell at brokerage Collins Stewart. Rosetta Resources (ROSE) is raised to Outperform from Market Perform at BMO Capital. Royal Dutch Shell (RDS.A) is upgraded to Outperform from Perform with an $80 objective at Oppenheimer. In afternoon trading: Over 2x average daily volume: Shares of General Maritime (GMR) are down about 30%; shares of Quicksilver are down about 23%; shares of GMX Resources (GMXR) are down about 22%; and shares of Encore Energy Partners (ENP) are down about 20%.
Energy Select Sector SPDR (XLE) was trading at $62.28 at 4:00 PM on Monday, down 8.51% on the day – down 8.75% year-to-date.
Rio Tinto (RIO) and Mitsubishi Corp. (MSBHY) have offered to buy the 14% in Australia's Coal & Allied (CAIQF) they don't already own for A$1.49B ($1.56B). Silver Wheaton (SLW) missed estimates by 4 cents and revenue by $26.5M. Scotts Miracle-Gro (SMG) missed estimates by 29 cents and revenue by $50M. Martin Marietta (MLM) is moved to Hold from Sell at Citigroup. Domtar Corp. (UFS) is now Neutral from Underweight at JP Morgan, which moves Cubic Corp (CUB) to Overweight from Neutral. In afternoon trading: Over 2x average daily volume: Shares of Lundin Mining (LUNMF) are down about 19%; shares of Westlake Chemical (ALK) are down about 16%; and shares of LyondellBasell Industries (LYB) are down about 14%.
The Materials Select Sector SPDR (XLB) traded at $31.81 at 4:00 PM on Monday, down 7.31% on the day – down 17.18% year-to-date.
Rio Tinto (RIO) and Mitsubishi Corp. (MSBHY) have offered to buy the 14% in Australia's Coal & Allied (CAIQF) they don't already own for A$1.49B ($1.56B). Boeing (BA) is added to Goldman’s list of Conviction Buys. JP Morgan moves Cubic Corp (CUB) to Overweight from Neutral. Interline Brands (IBI) gets downgraded to Hold from Buy at BB&T Capital. CSX Corp (CSX) is lowered to Neutral from Outperform at Robert W. Baird. In afternoon trading: Over 2x average daily volume: Shares of Altra Holdings (AIMC) are down about 31%; shares of Dryships (DRYS) are down about 24%; shares of Higher One Holdings (ONE) are down about 20%; and shares of Fuel Tech (FTEK) are down about 20%.
The Industrial Select Sector SPDR (XLI) traded at $29.52 at 4:00 PM on Monday, down 7.05% on the day – down 15.34% year-to-date.
Weight Watchers (WTW) is launched with an Outperform at Credit Suisse. HomeAway (AWAY) is a new Overweight at JP Morgan. TJX Cos. (TJX) is added to the Conviction Buy List at Goldman, which also takes The Jones Group (JNY) to Neutral from Sell. Hyatt Hotels (H) and Starwood Hotels (HOT) are upgraded to Outperform from Berform by Bernstein. OfficeMax (OMX) is now Neutral from Buy at Goldman. K-Swiss (KSWS) gets cut to Neutral from Buy at Sterne Agee. Summit Hotel (INN) is moved to Hold from Buy at KeyBanc Capital Markets. In afternoon trading: Shares of The Talbots (TLB) are down about 23.5%. Shares of OfficeMax are down about 21%. Over 2x average daily volume: Shares of Jamba (JMBA) are down about 19%; shares of AirMedia Group (AMCN) are down about 18.5%; and Shares of Dana Holding (DAN) are down about 16.5%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $34.06 at 4:00 PM on Monday, down 6.27% on the day – down 8.95% year-to-date.
Tyson Foods (TSN) beat estimates by 6 cents, but missed revenue by $50M. Coca-Cola (KO) is added to the Conviction Buy List at Goldman Sachs. Procter & Gamble (PG) is upgraded to Outperform from Market Perform by Sanford Bernstein. In afternoon trading: Shares of Central European Distribution (CEDC) are down about 14.5%. Shares of Pilgrim’s Pride (PPC) are down about 13%. Over 2x average daily volume: Shares of Imperial Sugar (IPSU) are down about 16.5%; and shares of Rite Aid (RAD) are down about 12.5%.
The Consumer Staples Select Sector SPDR (XLP) traded at $28.78 at 4:00 PM on Monday, down 3.78% on the day – down 1.81% year-to-date.
Citadel has new Neutrals on Vertex Pharma (VRTX), Forest Labs (FRX), The Medicines (MDCO), and Dendreon (DNDN). It begins Seattle Genetics (SGEN) with a Reduce and has Adds on Human Genome Sciences (HGSI) and Biogen (BIIB). In afternoon trading: Shares of HCA Holdings (HCA) are down about 17.25%. Shares of Dendreon are down about 16.5%. Shares of AEterna Zentaris (AEZS) are down about 12.5%. Over 2x average daily volume: Shares of Zoll Medical (ZOLL) are down about 24%; shares of Biodel (BIOD) are down about 16.5%; shares of Keryx Biopharmaceuticals (KERX) are down about 11.75%; and shares of Medivation (MDVN) are down about 11.5%.
The Health Care Select Sector SPDR (XLV) traded at $30.18 at 4:00 PM on Monday, down 5.12% on the day – down 4.19% year-to-date.
Berkshire Hathaway (BRK.A) unit National Indemnity has offered to buy Transatlantic Holdings (TRH) for $3.25B ($52 a share - 15% premium). AIG (AIG) reportedly intends to sue Bank of America (BAC) over hundreds of mortgage-backed securities and will seek to recover more than $10B in losses on $28B of investments. AIG is also preparing similar suits against other major banks, including Goldman Sachs (GS), JPMorgan Chase (JPM) and Deutsche Bank (DB). Home lending in the second quarter tumbled as residential originations contracted nearly 20% from a year earlier. Bank of America (BAC) was the biggest loser with volume down 29%, Wells Fargo (WFC) was off 24%, and Chase (JPM) fell just 5%. Fidus Investment (FDUS) is a fresh Outperform at BB&T Capital. Berkshire Hathaway is boosted to Outperform from Market Perform at Keefe Bruyette. ProAssurance (PRA) is increased to Buy from Hold with Wunderlich. Waddell & Reed (WDR) is upgraded to Buy from Neutral at Sterne Agee. Wells Fargo (WFC) is now Buy from Neutral at Sterne Agee with a $33 target. Royal Bank of Scotland (RBS) is raised to Neutral from Reduce at Nomura. ProLogis (PLD) is lifted to Hold from Underperform at Jefferies. In afternoon trading: Over 2x average daily volume: Shares of Royal Bank of Scotland are down about 14%; shares of Bank of America are down about 13.25%; and shares of Citigroup (C) are down about 11%.
The Financial Select Sector SPDR (XLF) traded at $12.16 at 4:00 PM on Monday, down 9.48% on the day – down 23.78% year-to-date.
BroadSoft (BSFT), a developer of communications software for service providers, reported Q2 revenue of $32.2M and EPS of $0.29 (versus consensus of $28.9M and $0.12), and expects 2011 revenue of $127M-$130M and EPS of $0.90-$0.95 (above consensus of $125.2M and $0.75). EMC Corp (EMC) is upgraded to Buy from Hold with a $28 price objective at Auriga. NetApp (NTAP) is now Buy from Hold at Auriga with a $57 target price. Atmel (ATML) is lifted to Outperform from Perform at FBR Capital. Lender Processing Services (LPS) is lowered to Underperform from Neutral at Macquarie. F5 Networks (FFIV) is now Neutral from Buy at SunTrust. In afternoon trading: Over 2x average daily volume: Shares of DG FastChannel (DGIT) are down about 23.5%; shares of Camtek (CAMT) are down about 21.25%; shares of JinkoSolar (JKS) are down about 19%; and shares of Web.com (WWWW) are down about 16%.
The Technology Select Sector SPDR (XLK) traded at $22.96 at 4:00 PM on Monday, down 5.63% on the day – down 8.85% year-to-date.
Verizon (VZ) has activated a contingency plan to limit disruption after 45,000 unionized workers, mainly at its wireline unit, went on strike following the failure of contract talks. Portugal Telecom (PT) is taken to Neutral from Underweight at JP Morgan. In afternoon trading: Shares of Clearwire (CLWR) are down about 15%. Shares of Level 3 Communications (LVLT) are down about 11%. Shares of Sprint Nextel (S) are down about 10.75%. Over 2x average daily volume: Shares of Radcom (RDCM) are down about 14.25%; shares of Telephone And Data Systems (TDS) are down about 13%; shares of Global Crossing (GLBC) are down about 10.25%; and shares of Iridium Communications (IRDM) are down about 10%.
The NASDAQ Telecommunications Index (IXTC) traded at $173.45 at 4:00 PM on Monday, down 7.57% on the day – down 23.04% year-to-date.
Ameren (AEE) is upgraded to Hold from Sell with a higher target of $29 at Wunderlich. Veolia Environnement (VE) is downgraded to Hold from Buy at brokers Brean Murray. In afternoon trading: Shares of Tri-Tech (TRIT) are down about 27.5%. Shares of Veolia are down about 11.5%. Shares of Tokyo Electric Power (TKECF) are down about 10.5%. Shares of AES Corp (AES) are down about 10%. Shares of Genon Energy (GEN) are down about 9.75%. Shares of Amerigas (APU) are down about 9%. Shares of Calpine (CPN) are down about 9%.
The Utilities Select Sector SPDR (XLU) traded at $30.20 at 4:00 PM on Monday, down 5.30% on the day – down 3.64% year-to-date.
STOCKS: RIO, MSBHY, CAIQF, KWK, BP, ROSE, RDS.A, GMR, GMXR, ENP, SLW, SMG, MLM, UFS, CUB, LUNMF, ALK, LYB, BA, IBI, CSX, AIMC, DRYS, ONE, FTEK, MTW, AWAY, TJX, JNY, H, HOT, OMX, KSWS, INN, TLB, JMBA, AMCN, DAN, TSN, KO, PG, CEDC, PPC, IPSU, RAD, VRTX, FRX, MDCO, DNDN, SGEN, HGSI, BIIB, HCA, AEZS, ZOLL, BIOD, KERX, MDVN, BRK.A, TRH, AIG, BAC, GS, JPM, DB, WFC, FDUS, PRA, WDR, RBS, PLD, C, BSFT, EMC, NTAP, ATML, LPS, FFIV, DGIT, CAMT, JKS, WWWW, VZ, PT, CLWR, LVLT, S, RDCM, TDS, GLBC, IRDM, AEE, VE, TRIT, TKECF, AES, GEN, APU, CPN
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