Mortgage Applications tumbled 9.6% last week with for purchases near a fifteen year low. The demand for refinancings slumped 12.2%. According to ADP, the private sector added just 91,000 workers in August. The Chicago PMI came in at 56.5 in August down from 58.8 in July. The Dow Jones Industrial Average surged higher Thursday morning up more than 100 points to a morning high at 11,712.60 versus the 50-day and 200-day simple moving averages at 11,916 and 11,993. There was afternoon weakness into the red with a day’s low at 11,528.08. The NASDAQ jumped to 2611.58 in morning trading versus its 50-day and 200-day simple moving averages at 2656 and 2704. The NASDAQ weakened in afternoon trading to a day’s low in the red at 2557.74.
Asian stocks traded higher on Wednesday again following the gains on Wall Street. The Nikkei 225 lagged with a fractional gain to 8,955. The Hang Seng gained 1.64% to 20,535. In Europe, the markets shrugged off weak consumer confidence trading significantly higher. The FTSE 100 climbed by 2.39% to 5,395. The DAX surged by 2.50% to 5,785. The CAC 40 powered up by 3.07% to 3,257. The yield on the 10-Year US Treasury traded down from 2.192 percent to 2.137 then rose to 2.234 in the final hour of trading, still within the post-FOMC range of 2.360 to 1.973. Gold declined to $1813.6 the Troy ounce then rebounded to $1842.7 then consolidated the day’s range. Crude oil traded down from $89.18 per barrel to $87.67 then up to $89.54. The euro versus the US dollar traded down from 1.4466 to 1.4362.
Energy
Exxon Mobil (XOM) has gained access to major oil and gas reserves with the signing of an Arctic exploration deal with Rosneft. Exxon and the Russian company will invest $3.2B to develop blocks in the Kara Sea that contain an estimated 110B barrels of oil equivalent, and an area in the Black Sea with 9B barrels of oil. Bailiffs today raided BP’s (BP) Moscow offices in relation to a lawsuit filed by minority shareholders of TNK-BP over BP’s aborted pact with Rosneft. Tesoro (TSO) is raised to Outperform from Sector Perform at RBC Capital. Berry Petroleum (BRY) is cut to Neutral from Positive at Susquehanna. In afternoon trading: Shares of North American Energy Partners (NOA) are up about 6.4%. Shares of CGG Veritas (CGV) are up about 5.6%. Shares of ATP Oil & Gas (ATPG) are down about 5.8%.
Energy Select Sector SPDR (XLE) was trading at $68.64 at 4:00 PM on Wednesday, up 0.75% on the day – up 0.57% year-to-date.
Materials
DuPont (DD) is a new Equal Weight at Barclays. Barclays launches LyondellBasell (LYB), Air Products (APD), and Celanese (CE) with Overweights. Century Aluminum (CENX) is now Neutral from Sell at Goldman, which gives Reliance Steel (RS) a raise to Buy from Neutral. DRDGOLD (DROOY) is moved to Equal Weight from Underweight at Morgan Stanley. Steel Dynamics (STLD) is now Neutral from Buy at Goldman. Worthington Industries (WOR) gets downgraded to Sell from Neutral at Goldman. In afternoon trading: Shares of ADA-ES (ADES) are up about 10.1%. Shares of Omnova Solutions (OMN) are down about 7.6%.
The Materials Select Sector SPDR (XLB) was trading at $35.34 at 4:00 PM on Wednesday, up 0.26% on the day – down 7.99% year-to-date.
Industrials
Joy Global (JOYG) beat estimates by 7 cents, but missed revenue by $70M, and sees FY12 revenue at $4.3-4.5B and EPS of $5.70-6.00. DryShips (DRYS) missed estimates by 13 cents and revenue by $40M. In afternoon trading: Shares of NF Energy Saving Corp of America (NFEC) are up about 12.6%. Shares of YRC Worldwide (YRCW) are up about 10.6%. Shares of Energy Recovery (ERII) are down about 9.1%. Shares of Dryships are down about 6.8%. Shares of Altra Holdings (AIMC) are down about 6.3%. Shares of American Semiconductor (AMSC) are down about 6.2%. Shares of Mueller Water Products (MWA) are down about 6.1%.
The Industrial Select Sector SPDR (XLI) was trading at $32.40 at 4:00 PM on Wednesday, up 0.68% on the day – down 7.08% year-to-date.
Consumer Discretionary
Sony (SNE), Toshiba (TOSBF) and Hitachi (HIT) intend to merge their small and medium sized display operations. State-owned Japanese company Innovation Network will then invest ¥200B ($2.6B) in the new entity and receive a 70% stake, leaving the three firms with 10% each. The merged entity will replace Sharp (SHCAY), which is due to receive a $1B investment from Apple (AAPL), as the largest maker of small panels used in smartphones and tablet PCs. Yesterday, Carl Icahn fired another shot in his battle with Clorox (CLX), saying his board nominees would try to sell the company if elected. He also agreed to walk away from a two-year attempt to take over Lions Gate (LGF). Vera Bradley (VRA) beat estimates by 5 cents and revenue by $7M, sees FQ3 revenue of $107M-$110M (versus consensus of $107.33M) and EPS of $0.26-$0.28 (versus consensus of $0.29), and expects FY12 revenue of $438M-$443M (versus consensus of $436M) and EPS of $1.32-$1.35. Phillips-Van Heusen (PVH) beat estimates by 12 cents with revenue in-line with estimates. Intercontinental Hotels Group (IHG) is begun with a Buy at Jefferies. Columbia Sportswear (COLM) is resumed with a Market Perform and $61 price objective at FBR Capital. Francesca’s (FRAN) is a new Neutral at Goldman Sachs, and is begun with a Buy ($32 price target) at Jefferies. Cedar Fair (FUN) gets a Buy-from-Hold hoist at Keybanc Capital. UBS lifts DR Horton (DHI) and Lennar (LEN) to Buy from Neutral. Credit Suisse cuts Toyota Motor (TM) and Honda Motor (HMC) to Neutral from Outperform. In afternoon trading: Shares of Francesca’s are down about 10.4%. Shares of Lion’s Gate are down about 7.1%. Shares of Pier 1 Imports (PIR) are down about 7%. Shares of Melco Crown Entertainment (MPEL) are down about 7%. Shares of Vera Bradley are up about 8.4%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $37.57 at 4:00 PM on Wednesday, up 0.62% on the day – up 0.43% year-to-date.
Consumer Staples
Yesterday, Carl Icahn fired another shot in his battle with Clorox (CLX), saying his board nominees would try to sell the company if elected. He also agreed to walk away from a two-year attempt to take over Lions Gate (LGF). Brown-Forman Corporation (BF.B) missed estimates by 2 cents, but beat revenue by $96M, and sees FY12 EPS of $3.45-3.85. In afternoon trading: Shares of The Fresh Market (TFM) are up about 9.5%. Shares of Star Scientific (CIGX) are down about 7%. Shares of Hansen Natural (HANS) are down about 5.6%. Actives: Shares of Altria Group (MO) are up about 0.4%. Shares of Coca Cola (KO) are up about 0.6%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $30.89 at 4:00 PM on Wednesday, up 0.32% on the day – up 5.39% year-to-date.
Healthcare
Onyx Pharmaceuticals (ONXX) is assumed with a Hold at Brean Murray. NuPathe (PATH) is lowered to Neutral from Buy at Lazard. In afternoon trading: Shares of Pacira Pharmaceuticals (PCRX) are down about 9.2%. Shares of Complete Genetics (GNOM) are down about 5.7%. Shares of Avanir Pharmaceuticals (AVNR) are down about 5.7%. Shares of Optimer Pharmaceuticals (OPTR) are up about 6.4%. Shares of Keryx Biopharmaceuticals (KERX) are up about 6.1%. Shares of NuVasive (NUVA) are up about 5.5%.
The Health Care Select Sector SPDR (XLV) was trading at $33.40 at 4:00 PM on Wednesday, up 0.69% on the day – up 6.03% year-to-date.
Financials
Bank of America (BAC) was reportedly warned by AIG (AIG) in January about a potential lawsuit over problematic mortgages and knew by March that the latter would probably seek over $10B, but BofA made no mention of the threat until AIG filed suit this month. As it looks to streamline its operations and strengthen its finances in the face of its massive legal liabilities, Bank of America (BAC) reportedly plans to sell its correspondent mortgage business. Apollo Residential Mortgage (AMTG) is a new Neutral at JP Morgan. Allianz SE (AZSEY) gets a Buy-from-Neutral boost at Goldman. Midsouth Bancorp (MSL) is moved to Strong Buy from Market Perform at Raymond James. Jefferies Group (JEF) is now Neutral from Buy at Rochdale Securities. In afternoon trading: Shares of FelCor Lodging Trust (FCH) are up about 8.5%. Shares of ETrade (ETFC) are up about 6.2%. Shares of MGIC Investment (MTG) are down about 6.1%. Shares of The PMI Group (PMI) are down about 5.7%.
The Financial Select Sector SPDR (XLF) was trading at $13.38 at 4:00 PM on Wednesday, up 1.29% on the day – down 16.11% year-to-date.
Information Technology
The FBI, Justice Department and SEC are reportedly investigating Oracle (ORCL) for possible bribery in its foreign dealings, including in software sales to governments in Western and Central Africa. Sony (SNE), Toshiba (TOSBF) and Hitachi (HIT) intend to merge their small and medium sized display operations. State-owned Japanese company Innovation Network will then invest ¥200B ($2.6B) in the new entity and receive a 70% stake, leaving the three firms with 10% each. The merged entity will replace Sharp (SHCAY), which is due to receive a $1B investment from Apple (AAPL), as the largest maker of small panels used in smartphones and tablet PCs. BMC Software (BMC), Citrix Systems (CTXS), and Red Hat (RHT) are all initiated at Outperform with Wells Fargo. Wunderlich assigns Buys on Concur (CNQR), Constant Contact (CTCT), IntraLinks (IL), Lionbridge Technologies (LIOX), LivePerson (LPSN), LogMeIn (LOGM), RealPage (RP), RightNow (RNOW), Salesforce.com (CRM), Ultimate (ULTI), and Vocus (VOCS), and it has a new Hold on NetSuite (N). Pacific Crest assigns Outperforms on Altera (ALTR) – $50 price objective and Lattice Semiconductor (LSCC) – $9 price objective, and it has a Market Perform on Xilinx (XLNX). Cognex (CGNX) is cut to Neutral from Overweight at Piper Jaffray. TriQuint Semi (TQNT) is taken to Equal Weight from Overweight by Barclays. In afternoon trading: Shares of Openwave Systems (OPWV) are up about 22.5% after the company took legal action against Apple (AAPL) and RIM (RIMM) to protect its intellectual property for mobile internet access.
The Technology Select Sector SPDR (XLK) was trading at $24.44 at 4:00 PM on Wednesday, down 0.24% on the day – down 2.98% year-to-date.
Telecommunications Services
Telefonica S.A. (TEF) is moved to Market Perform from Underperform by Sandord Bernstein. The Obama administration fired a legal broadside to block AT&T’s (T) $39 billion acquisition of T-Mobile, launching its biggest challenge yet to a takeover and dealing the carrier a potentially costly blow. In afternoon trading: Shares of Deutsche Telkom (DTEGY) are down about 7.3%. Shares of Towerstream (TWER) are up about 6.3%. Shares of Sprint Nextel (S) are up about 6.2%. Shares of Clearwire (CLWR) are up about 5.9%. Shares of SBA Communications (SBAC) are up about 5.1%.
The NASDAQ Telecommunications Index (IXTC) was trading at $193.40 at 4:00 PM on Wednesday, up 0.22% on the day – down 14.19% year-to-date.
Utilities
In afternoon trading: Shares of Dynegy (DYN) are up about 10.8%. Actives: Shares of Duke Energy (DUK) are up about 0.7%. Shares of Southern (SO) are up about a quarter of a percent. Shares of Genon Energy (GEN) are up about 3%. Shares of AES Corp (AES) are up about 1.8%. Shares of Exelon (EXC) are up about 0.6%. Shares of CenterPoint Energy (CNP) are up about a half of a percent. Shares of PPL Corp (PPL) are up about 1.6%. Shares of Calpine (CPN) are up about 3.5%.
The Utilities Select Sector SPDR (XLU) was trading at $33.89 at 4:00 PM on Wednesday, up 0.65% on the day – up 8.14% year-to-date.
STOCKS: XOM, BP, TSO, BRY, NOA, CGV, ATPG, DD, LYB, APD, CE, CENX, RS, DROOY, STLD, WOR, ADES, OMN, JOYG, DRYS, NFEC, YRCW, ERII, AIMC, AMSC, MWA, SNE, TOSBF, HIT, SHCAY, AAPL, CLX, LGF, VRA, PVH, IHG, COLM, FRAN, FUN, DHI, LEN, TM, HMC, PIR, MPEL, BF.B, TFM, CIGX, HANS, MO, KO, ONXX, PATH, PCRX, GNOM, AVNR, OPTR, KERX, NUVA, BAC, AIG, AMTG, AZSEY, MSL, JEF, FCH, ETFC, MTG, PMI, ORCL, BMC, CTXS, RHT, CNQR, CTCT, IL, LIOX, LPSN, LOGM, RP, RNOW, CRM, ULTI, VOCS, N, ALTR, LSCC, XLNX, CGNX, TQNT, OPWV, RIMM, TEF, T, DTEGY, TWER, S, CLWR, SBAC, DYN, DUK, SO, GEN, AES, EXC, CNP, PPL, CPN
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