This morning, investors learned that Durable Goods Orders for April declined 3.6% which was an unexpected negative report on economic activity. The Federal Housing Finance Agency (FHFA) reported that home prices declined 2.5% in the first quarter, the largest quarterly decline since the fourth quarter of 2008. The Dow Jones Industrial Average traded as low as 12,310 in the opening half hour then rebounded above its 50-day simple moving average at 12,409 in afternoon trading with the close back under this key level. The NASDAQ dipped to 2740 and rebounded to 2771 well shy of its 50-day at 2783.
Asian stocks were mixed on Wednesday with the Nikkei 225 down 0.6% to 9,423. The Hang Seng Index was essentially flat on its session. European stocks slipped in early trade on Wednesday, but ended their sessions higher with the FTSE 100 up 0.2%, the DAX up 0.3% and the CAC 40 also up 0.3%. The yield on the U.S. Treasury 10-Year note traded up from 3.092 percent to 3.140, as the 200-day simple moving average remains resistance at 3.084. The U.S. Treasury auctioned $35 billion 5-Year notes at 1.813% with a bid to cover ratio of 3.20 times, which is considered a solid auction.
Comex gold continued a short term up trend trading as high as $1532.5 the Troy ounce on Wednesday. Nymex crude oil traded down to $98.20 per barrel then rebounded to $101.63. The euro traded mostly between 1.40 and 1.41 on Wednesday. On Tuesday the Dow Industrial Average slipped 25 points to 12,356 up 6.7% year to date. The NASDAQ lost 13 points to 2746 and is now only 3.5% higher on the year.
Energy
The Commodity Futures Trading Commission is seeking $150M in damages in a civil lawsuit against oil traders for allegedly making $50M by manipulating oil prices. Suntech Power (STP) missed estimates by 18 cents, but beat revenue by $13.48M. Halliburton (HAL) is hoisted to Overweight from Equal Weight at Morgan Stanley. Frontline (FRO) is taken to Neutral from Buy at Sterne Agee. In afternoon trading: Shares of Frontline are down about 7%. Shares of LDK Solar (LDK) are down about 5.75%. Shares of General Maritime (GMR) are down about 5.5%. Shares of Yingli Green Energy (YGE) are down about 5.25%. Shares of Cabot Oil & Gas (COG) are up about 7%. Shares of Key Energy Services (KEG) are up about 7%. Shares of National Oilwell Varco (NOV) are up about 6.25%. Shares of Plains Exploration & Production (PXP) are up about 6%.
The Energy Select Sector SPDR (XLE) was trading at $75.77 at 4:00 PM on Wednesday, up 1.69% on the day – up 11.02% year-to-date.
Materials
Schnitzer Steel (SCHN) gets a Buy-from-Neutral boost at Davenport. In afternoon trading: Shares of Yongye International (YONG) are down about 7.5%. Shares of Noranda Aluminum Holding (NOR) are up about 7.25%. Shares of Westlake Chemical (WLK) are up about 6.5%. Shares of Endeavour Silver (EXK) are up about 6%. Shares of Silvercorp Metals (SVM) are up about 5%.
The Materials Select Sector SPDR (XLB) traded at $38.84 at 4:00 PM on Wednesday, up 1.41% on the day – up 1.12% year-to-date.
Industrials
GE Capital (GE) is selling its remaining A$5B ($5.3B) Australia and New Zealand mortgage books to non-bank lender Pepper Homeloans at a non-specified discount. Box Ships (TEU) is covered with a Buy at Cantor Fitzgerald. RSC Holdings (RRR) is raised to Buy from Neutral at Goldman. In afternoon trading: Shares of HEICO (HEI) are up about 11.25%. Shares of Genco Shipping & Trading (GNK) are up about 5.5%. Shares of Foster Wheeler (FWLT) are up about 5.5%. Shares of U.S. Airways (LCC) are down about 5.25%. Shares of Delta Air Lines (DAL) are down about 5%.
The Industrial Select Sector SPDR (XLI) traded at $36.96 at 4:00 PM on Wednesday, up 0.85% on the day – up 5.99% year-to-date.
Consumer Discretionary
Google (GOOG) is set to introduce a system that will enable shoppers to pay for goods at store checkouts with phones instead of credit cards. Retailers in the new program include Macy’s (M), American Eagle (AEO) and Subway. Mastercard (MA) is also involved. Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) have formed a joint venture called clearXchange to take on PayPal (EBAY) by allowing consumers to use their checking accounts to send each other money using an email address or a cellphone number. Federal prosecutors are investigating several former Avon Products (AVP) employees for bribing foreign officials. Toll Brothers (TOL) missed estimates by 8 cents and revenue by $1.8M. Bridgepoint Education (BPI) is upgraded to Overweight from Neutral at Piper Jaffray, which takes Career Education (CECO) to Neutral from Underweight. In afternoon trading: Shares of Collective Brands (PSS) are down about 15.5% after missing estimates by 40 cents and revenue by $46M. Shares of Express (EXPR) are down about 12.25% as a disappointing management forecast for the current quarter raised fears that the momentum is ebbing. Shares of Bridgepoint Education are up about 15%. Shares of Carter’s (CRI) are up about 14%. Shares of California Pizza Kitchen (CPKI) are up about 10.5%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $39.70 at 4:00 PM on Wednesday, up slightly on the day – up 6.12% year-to-date.
Consumer Staples
Costco Wholesale (COST) beats estimates by 3 cents and revenue by $500M. In afternoon trading: Shares of Inter Parfums (IPAR) are up about 7.1%. Shares of Diamond Foods (DMND) are up about 6.2%. Shares of Central European Distribution (CEDC) are up about 4.1%. Shares of Pilgrim’s Pride (PPC) are down about 6.3%. Shares of Hormel Foods (HRL) are down about 5.8%. Shares of Yuhe International (YUII) are down about 5.7%.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.86 at 4:00 PM on Wednesday, down 0.65% on the day – up 8.70% year-to-date.
Healthcare
Cowen assigns Outperforms on Express Scripts (ESRX), Allscripts Healthcare Solutions (MDRX), McKesson (MCK), Medco Health Solutions (MHS), AmerisourceBergen (ABC), and Cardinal Health (CAH). Cowen assigns new Neutrals to Sxc Health Solutions (SXCI), Quality Systems (QSII), and Cerner (CERN). Ariad Pharmaceuticals (ARIA) is begun with a Buy rating and $11 price objective at brokers Brean Murray. Corcept Therapeutics (CORT) is covered with a new Outperform at Cowen & Company. Johnson & Johnson (JNJ) is upgraded to Outperform from Market Perform by Sanford Bernstein. Boston Scientific (BSX) is now Neutral from Sell at Goldman Sachs. In afternoon trading: Shares of Anacor Pharmaceuticals (ANAC) are up about 11%. Shares of Elan (ELN) are up about 5.8%. Shares of Vivus (VVUS) are up about 5.6%. Shares of Avanir Pharmaceuticals (AVNR) are down about 7.1%.
The Health Care Select Sector SPDR (XLV) traded at $35.62 at 4:00 PM on Wednesday, up slightly on the day – up 13.08% year-to-date.
Financials
State attorneys general have told five major banks to make a settlement over improper foreclosure practices or face at least $17B in civil lawsuits. The Treasury and AIG (AIG) have raised $8.7B after selling a combined 300M shares at $29 each, above the government’s break-even price of $28.73 but below yesterday’s close of $29.46. Google (GOOG) is set to introduce a system that will enable shoppers to pay for goods at store checkouts with phones instead of credit cards. Retailers in the new program include Macy’s (M), American Eagle (AEO) and Subway. Mastercard (MA) is also involved. Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) have formed a joint venture called clearXchange to take on PayPal (EBAY) by allowing consumers to use their checking accounts to send each other money using an email address or a cellphone number. Swiss Reinsurance (SWCEF) is picked up at Overweight by JP Morgan. STAG Industrial (STIR) is picked up at a Neutral at JP Morgan. Arthur J. Gallagher (AJG) is begun with a Buy and $33 target price at BGB Securities. Commerzbank AG (CRZBY) is upgraded to Reduce from Sell at WestLB. Chubb (CB) is lifted to Buy from Neutral at Janney Montgomery Scott. Essex Property (ESS) is increased to Hold from Sell at ISI Group.
The Financial Select Sector SPDR (XLF) traded at $15.49 at 4:00 PM on Wednesday, up slightly on the day – down 2.88% year-to-date.
Information Technology
The craze for Internet IPOs that escalated with LinkedIn (LNKD) last week and continued yesterday with Yandex’s (YNDX) listing is set to intensify this week or next as online games company Zynga plans to file for an offering. Google (GOOG) is set to introduce a system that will enable shoppers to pay for goods at store checkouts with phones instead of credit cards. Retailers in the new program include Macy’s (M), American Eagle (AEO) and Subway. Mastercard (MA) is also involved. Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) have formed a joint venture called clearXchange to take on PayPal (EBAY) by allowing consumers to use their checking accounts to send each other money using an email address or a cellphone number. Avago Technologies Ltd (AVGO) beat estimates by 4 cents and revenue by $6M. Compuware (CPWR) beat estimates by 2 cents, but missed revenue by $600M. Take-Two Interactive Software (TTWO) beat estimates by 21 cents and revenue by $35M. TiVo (TIVO) reported Q1 EPS of $1.04 (versus consensus of -$0.31), while beating revenue by $2M. Applied Materials (AMAT) beat estimates by a penny, but announced that FQ3 revenue would fall 3%-10% from $2.86B in FQ2 and come in below analyst expectations. Heartland Payment Systems (HPY) is increased to Buy from Neutral at Suntrust. Spreadtrum Communications (SPRD) is upgraded to Outperform from Market Perform at JMP Securities. Sapient (SAPE) is downgraded to Neutral from Buy at Goldman. NetLogic (NETL) is now Hold from Buy at Auriga. Global Payments (GPN) is moved to Neutral from Buy at Suntrust. Juniper Networks (JNPR) are cut to Hold from Buy at Auriga with a new target of $40.
The Technology Select Sector SPDR (XLK) traded at $25.80 at 4:00 PM on Wednesday, up 0.31% on the day – up 2.42% year-to-date.
Telecommunications Services
Leap Wireless (LEAP) is a new Positive at Citadel, which has a new Neutral on MetroPCS (PCS). Ntelos Holdings (NTLS) is now Overweight from Neutral at JP Morgan. Vodafone Group PLC (VOD) are reduced to Neutral from Buy at Nomura. In afternoon trading: Actives: Shares of Sprint Nextel (S) are up about a half of a percent. Shares of Level 3 Communications (LVLT) are down about a half of a percent. Shares of AT&T (T) are down about a quarter of a percent. Shares of Verizon (VZ) are down about 1.4%.
The NASDAQ Telecommunications Index (IXTC) traded at $219.69 at 4:00 PM on Wednesday, up 0.66% on the day – down 2.52% year-to-date.
Utilities
In afternoon trading: Actives: Shares of Genon Energy (GEN) are relatively unchanged. Shares of AES (AES) are up about 2.5%. Shares of Duke Energy (DUK) are down about a quarter of a percent. Shares of CenterPoint Energy (CNP) are up about 1.1%. Shares of Exelon (EXC) are down about 0.6%.
The Utilities Select Sector SPDR (XLU) traded at $33.63 at 4:00 PM on Wednesday, down 0.21% on the day – up 7.31% year-to-date.
STOCKS: STP, HAL, FRO, LDK, GMR, YGE, COG, KEG, NOV, PXP, SCHN, YONG, NOR, WLK, EXK, SVM, GE, TEU, RRR, HEI, GNK, FWLT, LCC, DAL, GOOG, M, AEO, MA, BAC, JPM, WFC, EBAY, AVP, TOL, BPI, CECO, PSS, EXPR, CRI, CPKI, COST, IPAR, DMND, CEDC, PPC, HRL, YUII, ESRX, MDRX, MCK, MHS, ABC, CAH, SXCI, QSII, CERN, ARIA, CORT, JNJ, BSX, ANAC, ELN, VVUS, AVNR, AIG, SWCEF, STIR, AJG, CRZBY, CB, ESS, LNKD, YNDX, AVGO, CPWR, TTWO, TIVO, AMAT, HPY, SPRD, SAPE, NETL, GPN, JNPR, LEAP, PCS, NTLS, VOD, S, LVLT, T, VZ, GEN, AES, DUK, CNP, EXC
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