The Dow Jones Industrial Average opened Wednesday trading around the flat line between 12,043 and 12,098 with the NASDAQ staying below Tuesday’s close. The Fed’s Beige Book was released at 2:00 pm and presented the familiar story that economic growth has slowed, and that the housing market remains an important drag on consumer confidence. After the Beige Book, the Dow traded to a new low for the day at 12,024 with the NASDAQ testing 2671.
U.S. stocks were little changed on Tuesday losing modest gains in the final minutes as Fed Chief Bernanke indicated that economic growth has slowed, but did not offer any hints that a QE3 was on the way. The Dow Industrial Average closed down 19 points on Tuesday to 10,071 up 4.3% year to date yet down 6.3% from the May 2nd high. The NASDAQ slipped just a point to 2702 on Tuesday up just 1.8% year to date and down 6.4% since its May 2nd high.
The euro stayed below 1.47 on Wednesday and dipped below 1.46. Asian stocks were mixed again on Wednesday with the Nikkei 225 up fractionally to 9,449 and the Hang Seng down 0.9%. European stocks were lower with the FTSE 100 down 1.0%, the DAX down 0.6% and the CAC 40 down 0.9%. The yield on the 10-Year US Treasury note moved back below 3% on Wednesday. The US Treasury auctioned $21 billion 10-Year notes at 2.967 with a relatively strong bid to cover at 3.23 percent. The indirect bid which includes foreign central banks was above average at 50.6 percent. After the auction the 10-Year yield declined to 2.931 percent. On Thursday the Treasury auctions $13 billion 30-Year bonds. Comex gold traded down from $1547.4 the Troy ounce to $1531.8 on Wednesday. Nymex crude oil rebounded from $98.02 to $101.89 as OPEC decided not to increase production, and as petroleum supplies were down this week.
Energy
An argument among OPEC ministers about production quotas started to look increasingly settled on the side of an output increase – the first change to quotas since January 2009 – after the cartel’s committee recommended as much, and the EIA unexpectedly forecast still-tight crude markets through 2012. LDK (LDK) reported Q1 revenue well ahead of last year but warned that Q2 would miss analysts’ estimates, seeing revenue of $710 million to $760 million vs. an expected $772 million. SunPower (SPWRA) raised revenue expectations, but lowered EPS estimates to $1.20-$1.70, below the $1.80 average estimate. Kinder Morgan (KMI) is a new Hold at Deutsche Bank. Cabot Oil & Gas (COG) is boosted to Buy from Hold at Canaccord Genuity. Sunpower (SPWRA) is now Underperform from Hold at Needham. Forest Oil (FST) gets downgraded to Neutral from Positive at Susquehanna. Solar and Nuclear stocks are struggling today. In afternoon trading: Sahres of Trina Solar (TSL) are down about 13%. Shares of Denison Mines (DNN) are down about 10.5%. Shares of Yingli Green Energy (YGE) are down about 10.25%. Shares of Canadian Solar (CSIQ) are dowm about 9.25%. Shares of Uranium Resources (URRE) are down about 7.5%. Shares of Uranium Energy (UEC) are down about 7.5%. Shares of LDK Solar (LDK) are down about 7%.
The Energy Select Sector SPDR (XLE) was trading at $73.78 at 4:00 PM on Wednesday, up 0.30% on the day – up 8.10% year-to-date.
Materials
Temple-Inland (TIN), maker of corrugated paper and building products, began mounting a sturdy defense to a $30.60/share ($3.4 billion in cash) offer from International Paper (IP) despite its 46% premium to Monday’s closing price. In afternoon trading: Shares of Silvercorp (SVM) are down about 11.25%. Shares of Molycorp (MCP) are down about 10.5%. Shares of China Shen Zhou (SHZ) are down about 10.25%. Shares of Endeavour Silver (EXK) are down about 8.75%. Shares of China GengSheng (CHGS) are down about 9%. Shares of Avalon Rare Metals (AVL) are down about 7.75%.
The Materials Select Sector SPDR (XLB) traded at $37.45 at 4:00 PM on Wednesday, down 1.03% on the day – down 2.50% year-to-date.
Industrials
Air Lease (AL) and AerCap (AER) are both assigned Overweights at Evercore with respective price targets of $31 and $18. Rentrak (RENT) is resumed with a Buy at brokers Collins Stewart, which says they are an ideal acquisition target with potential acquirers possibly including Arbitron (ARB), ComScore (SCOR), and Nielsen (NLSN). Foster Wheeler (FWLT) is upgraded to Buy from Hold at BB&T Capital. In afternoon trading: Shares of TBS International (TBSI) are down about 11.75%. Shares of A123 (AONE) are down about 9.5%. Shares of YRC Worldwide (YRCW) are down about 8.75%. Shares of A-Power Energy (APWR) are down about 8.25%.
The Industrial Select Sector SPDR (XLI) traded at $35.51 at 4:00 PM on Wednesday, down 0.87% on the day – up 1.84% year-to-date.
Consumer Discretionary
Private-equity firm Najafi Companies is supposedly in talks to buy Borders Group (BGPIQ:US) out of bankruptcy protection, competing with Gores Group for a bid to keep the chain going. Rentrak (RENT) is resumed with a Buy at brokers Collins Stewart, which says they are an ideal acquisition target with potential acquirers possibly including Arbitron (ARB), ComScore (SCOR), and Nielsen (NLSN). Visteon (VC) is picked up at Overweight at J.P. Morgan. Michelin (MCGFF) is moved to Outperform from Underperform at Credit Suisse. G-III Apparel (GIII) is upgraded to Buy from Hold at Keybanc Capital. Talbots (TLB) is cut to Neutral from Buy at UBS. In afternoon trading: Shares of China MediaExpress (CCME) are up around 40%. Shares of Rentrak (RENT) are up about 15.75%. Shares of Bob Evans (BOBE) are up about 10.75%. Shares of Ulta Salon (ULTA) are up about 10.5%. Shares of Home Inns & Hotels (HMIN) are down about 9.7%. Shares of Hovnanian (HOV) are down about 9.5%. Shares of American Apparel (APP) are down about 7.9%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $38.25 at 4:00 PM on Wednesday, down 0.78% on the day – up 2.25% year-to-date.
Consumer Staples
In afternoon trading: Shares of China-Biotics (CHBT) are up about 17.5%. Shares of Feihe International (ADY) are down about 8%. Shares of Medifast (MED) are down about 7.5%. Shares of Yuhe International (YUII) are down about 7.1%. Shares of Synutra International (SYUT) are down about 7.1%. Shares of Imperial Sugar (IPSU) are down about 4.8%. Shares of Winn-Dixie Stores (WINN) are down about 4.2%.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.10 at 4:00 PM on Wednesday, up slightly on the day – up 6.11% year-to-date.
Healthcare
Blue Shield of California announced that it will cap its profits at 2% of revenue, return $180 million to policyholders, hospitals and others, and begin to give annual credits to customers. Catalyst Health Solutions (CHSI) gets hoisted to Outperform from Market Perform at BMO Capital. Impax Labs (IPXL) is moved to Neutral from Overweight at JP Morgan. In afternoon trading: Shares of Pharmasset (VRUS) are up about 12%. Shares of GTx Inc (GTXI) are up about 5.25%. Shares of Impax Labs are down about 9%. Shares of Tengion (TNGN) are down about 8.5%. Shares of Biodel (BIOD) are down about 5.9%. Shares of Inhibitex (INHX) are down about 5.6%.
The Health Care Select Sector SPDR (XLV) traded at $35.09 at 4:00 PM on Wednesday, up slightly on the day – up 11.40% year-to-date.
Financials
Blue Shield of California announced that it will cap its profits at 2% of revenue, return $180 million to policyholders, hospitals and others, and begin to give annual credits to customers. American International Group (AIG) is a new Neutral at Goldman Sachs with a price objective of $31. Torchmark (TMK) is initiated with a Neutral at SunTrust. Franklin Resources (BEN) is now Buy from Neutral at Ticonderoga. Commerzbank AG (CRZBY) is upgraded to Buy from Hold at ING Group. Knight Capital Group (KCG) is upgraded to Buy from Neutral at Goldman. Deutsche Boerse AG (DBOEY) is boosted to Add from Neutral at WestLB. Raymond James (RJF) is up ahead of the open after being boosted to Buy from Neutral at Goldman up. CBOE Holdings (CBOE) gets cut to Sell from Neutral at Goldman, which also slashes Stifel Financial (SF) to Neutral from Buy. In afternoon trading: Shares of MGIC Investment (MTG) are down about 18.5%. Shares of Lehman Brothers (LEHMQ) are down about 17%. Shares of Radian Group (RDN) are down about 15.25%. Shares of The PMI Group (PMI) are down about 12.6%.
The Financial Select Sector SPDR (XLF) traded at $14.76 at 4:00 PM on Wednesday, down 0.91% on the day – down 7.46% year-to-date.
Information Technology
Facebook, Microsoft (MSFT), Yahoo (YHOO), Oracle (ORCL), Research In Motion (RIMM), Qualcomm (QCOM), Brocade (BRCD) and Avaya, along with 10 venture capital firms have filed letters with the FCC expressing support for AT&T’s (T) proposed $39 billion takeover of T-Mobile USA (DTEGY:US). Sprint Nextel (S); Google (GOOG) and Apple (AAPL) have yet to weigh in. Rentrak (RENT) is resumed with a Buy at brokers Collins Stewart, which says they are an ideal acquisition target with potential acquirers possibly including Arbitron (ARB), ComScore (SCOR), and Nielsen (NLSN). ViaSat (VSAT) is a new Market Perform at Morgan Keegan. Marvell (MRVL) is resumed with a Buy rating and $18 objective at Auriga. NetLogic (NETL) is a new Neutral at Lazard, which has a Buy and $52 target on Cavium Networks (CAVM). eBay (EBAY) is upgraded to Outperform from Market Perform at Pacific Crest. Genpact (G) gets upgraded to Neutral from Underweight at JP Morgan. Cogo Group (COGO) is moved to Neutral from Buy at Ticonderoga. In afternoon trading: Shares of Ciena (CIEN) are down about 18%. Shares of Cogo Group are down about 16.25%. Shares of Sina (SINA) are down about 12.5%. Shares of Renren (RENN) are down about 12.5%. Shares of Renesola (SOL) are down about 11%. Shares of Youku.com (YOKU) are down about 10.75%. Shares of JinkoSolar (JASO) are down about 10%.
The Technology Select Sector SPDR (XLK) traded at $25.10 at 4:00 PM on Wednesday, down 0.67% on the day – down 0.36% year-to-date.
Telecommunications Services
Facebook, Microsoft (MSFT), Yahoo (YHOO), Oracle (ORCL), Research In Motion (RIMM), Qualcomm (QCOM), Brocade (BRCD) and Avaya, along with 10 venture capital firms have filed letters with the FCC expressing support for AT&T’s (T) proposed $39 billion takeover of T-Mobile USA (DTEGY:US). Sprint Nextel (S); Google (GOOG) and Apple (AAPL) have yet to weigh in. Verizon (VZ) is upgraded to Outperform from Perform with a $42 target at Oppenheimer. Clearwire (CLWR) is raised to Buy from Hold at Kaufman Brothers. In afternoon trading: Shares of PAETEC (PAET) are down about 7%. Actives: Shares of Level 3 (LVLT) are down about 0.7%. Shares of Sprint are down about 2.3%. Shares of AT&T are up slightly. Shares of Verizon (VZ) are up about 1.5%.
The NASDAQ Telecommunications Index (IXTC) traded at $210.98 at 4:00 PM on Wednesday, down 1.48% on the day – down 6.39% year-to-date.
Utilities
In afternoon trading: Shares of Tokyo Electric Power (TKECF) are down about 8.25%. Shares of Tri-Tech (TRIT) are down about 5.9%. Actives: Shares of Genon Energy (GEN) are up about 1.3%. Shares of CenterPoint (CNP) are down about 0.9%. Shares of Duke Energy (DUK) are up about a quarter of a percent. Shares of PPL (PPL) are down about 1.7%. Shares of Questar (STR) are up about 2.9%. Shares of Exelon (EXC) are up about a half of a percent. Shares of AES (AES) are up slightly. Shares of Southern (SO) are up about 0.6%.
The Utilities Select Sector SPDR (XLU) traded at $33.16 at 4:00 PM on Wednesday, up 0.24% on the day – up 5.81% year-to-date.
STOCKS: LDK, SPWRA, KMI, COG, FST, TSL, DNN, YGE, CSIQ, URRE, UEC, LDK, TIN, IP, SVM, MCP, SHZ, EXK, CHGS, AVL, AL, AER, RENT, ARB, SCOR, NLSN, FWLT, TBSI, AONE, YRCW, APWR, BGPIQ, VC, MCGFF, GIII, TLB, CCME, BOBE, ULTA, HMIN, HOV, APP, CHBT, ADY, MED, YUII, SYUT, IPSU, WINN, CHSI, IPXL, VRUS, GTXI, TNGN, BIOD, INHX, AIG, TMK, BEN, CRZBY, KCG, DBOEY, RJF, CBOE, SF, MTG, LEHMQ, RDN, PMI, MSFT, YHOO, ORCL, RIMM, QCOM, BRCD, T, DTEGY, S, GOOG, AAPL, VSAT, MRVL, NETL, CAVM, EBAY, G, COGO, CIEN, SINA, TENN, SOL YOKU, JASO, VZ, CLWR, PAET, LVLT, VZ, TKECF, TRIT, GEN, CNP, DUK, PPL, STR, EXC, AES, SO
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