The US Trade Deficit came in at $50.06 billion, as both exports and imports declined as the economy slows. The Dow Jones Industrial Average declined to 12,398.44 then rebounded to 12,544.13 versus Thursday’s high at 12,555.26. The NASDAQ declined to 2814.80 then rebounded to 2856.55 versus Thursday’s high at 2873.59.
Asian stocks were lower on Friday. The Nikkei 225 ended the day at 8,459 – down 2.09%. The Hang Seng ended the day at 18,502 – down 0.94%. European exchanges were also lower on Friday. The FTSE 100 ended the day at 5,435 – down 0.23% on Friday. The DAX ended the day at 6,131 – down 0.22%. The CAC 40 ended the day at 3,052 – down 0.63%. The yield on the 10-Year US Treasury declined from 1.639% to 1.556% then up to 1.642%.
Gold declined from $1593.6 the Troy ounce to $1556.4 then rebounded to $1596.0 still below the 50-day and 200-day simple moving averages at $1618.8 and $1682.9. Crude oil declined from $83.99 per barrel to $82.00 then up to $84.67. The euro versus the dollar declined from 1.2574 to 1.2440.
Shell (RDS.A) signed a preliminary agreement with truck-stop chain TravelCenters of America (TA) to supply liquefied natural gas for heavy-duty trucks at 100 fueling stations across the US beginning in 2013. Shell initiative should lower costs and should spark demand for the alternative fuel. Chesapeake Energy (CHK) confirmed its plan to sell its assets in Chesapeake Midstream Partners (CHKM) to Global Infrastructure Partners in three separate transactions for cash proceeds of more than $4 billion. SandRidge Energy (SD) has been initiated with an Outperform rating at RBD Capital. Chevron (CVX) has been upgraded to Buy from Hold with a $120 price target at Société Générale. Dow components – Chevron (CVX) down 0.46%, Exxon Mobil (XOM) down 1.07%.
Energy Select Sector SPDR (XLE) was trading at $64.41 at 3:30 PM on Friday, down 0.12% on the day – down 6.83% year-to-date.
KMG Chemicals (KMGB) beat FQ3 EPS estimates by a penny with better than expected revenue. Owens Corning (OC) has been upgraded to Buy from Neutral at Citigroup. Pall Corp (PLL): have been upgraded to Neutral from Underweight at JP Morgan. Praxair (PX) has been upgraded to Outperform from Neutral at Robert W. Baird. Air Products (APD) has been downgraded to Neutral from Outperform at Robert W. Baird. Dow components – Alcoa (AA) down 1.64%, DuPont (DD) up 0.27%.
The Materials Select Sector SPDR (XLB) was trading at $34.53 at 3:30 PM on Friday, up 0.52% on the day – up 3.07% year-to-date.
United Continental (UAL) has reached a tentative labor agreement with the Association of Flight Attendants, which covers staff from the company’s Continental subsidiary. Flight attendants are set to vote on the deal in the coming weeks. General Motors (GM) says it Opel unit plans to sell 30,000 cars in China. Even though this sales target is relatively low, it marks an important channel for the Europe-based automaker, who struggles to find buyers in Europe. Boeing (BA) and Airbus (EADSY.PK) are in competition over El Al Israel Airlines order for 15 and 20 wide-body jets over the next decade. Boeing is already providing the carrier with a $40 million loan contingent on a commitment to buy or lease new 787 Dreamliners by the end of the year. Airbus has countered by offering to repay the loan if El Al switches allegiance and buys it’s planes from them for the first time. DR Horton (DHI) and PulteGroup (PHM) have been upgraded to Buy from Neutral at Citigroup. Beazer Homes (BZH) has been downgraded to Sell from Buy at Citigroup. Lennar (LEN) has been downgraded to Sell from Neutral at Citigroup. Dow components – Boeing Co (BA) down 0.47, Caterpillar (CAT) down 0.92%, General Electric (GE) up 0.72%, 3M Company (MMM) up 0.12%, United Technologies (UTX) down 0.52%.
The Industrial Select Sector SPDR (XLI) was trading at $34.77 at 3:30 PM on Friday, up 0.67% on the day – up 3.02% year-to-date.
Nevada becomes the first U.S. state to adopt statutes to allow online gaming, as International Game Technology (IGT) received a unanimous recommendation from the Nevada Gaming Control Board for providing an interactive online gaming service provider and manufacturer license. Dish Network (DISH) has been defending the company’s controversial Auto Hop ad-skipping feature as a competitively necessary response to the explosion of cheap or free Internet video. McDonald’s (MCD) reported that global comparable sales were up 3.3% in May. Sales rose 4.4% in the US on demand for new breakfast items and Europe saw a 2.9% gain, but Asia/Pacific, Middle East and Africa sales dropped 1.7% for the month, and this caused shares to slip 2.6% premarket. Dow Components – Disney (DIS) up 1.14%, Home Depot up 1.32%, McDonalds (MCD) up 0.16%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $43.33 at 3:30 PM on Friday, up 0.70% on the day – up 11.05% year-to-date.
Jefferies upgraded Jack in the Box (JACK) to Buy with a price target of $31, as analysts at Jefferies expect JACK to see earnings upside from strong same-store sales and continued margin expansion. Yum Brands (YUM) plans to double its presence in Thailand, with a goal to reach 1,000 restaurants by 2020. The strategy falls in line with the company’s plans to stay aggressive in China and India.. Dow components – Kraft (KFT) up 0.29%, Coca Cola (KO) up 0.85%, Procter & Gamble (PG) down 0.10%, Wal-Mart (WMT) up 2.87%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.98 at 3:30 PM on Friday, up 0.53% on the day – up 4.59% year-to-date.
Cooper Companies (COO) missed Q2 earnings across the board on higher depreciation expenses and despite a 6% rise in total revenue year over year. The company cut guidance for the full year EPS. Onyx Pharmaceuticals (ONXX) – Bank of America-Merrill Lynch has upgraded ONXX to Buy from Neutral. Dow Components – Johnson & Johnson (JNJ) down 0.08%, Merck (MRK) down 0.07%, Pfizer (PFE) up 0.36%.
The Health Care Select Sector SPDR (XLV) was trading at $36.55 at 3:30 PM on Friday, up 0.49% on the day – up 5.36% year-to-date.
America’s 19 biggest banks are at least $50 billion short of meeting Basel III capital requirements under the new rules approved by the Federal Reserve on Thursday. The smaller banks are $10 billion short. The Fed surprised the banking industry by voting in favor of applying these complex regulations to all 7,307 FDIC-Insured financial institutions. The FHA is expected to announce a bulk sale program as the federal agency attempts to offload more troubled loans to investors. The move is expected to prevent or delay foreclosures for thousands of homeowners. The FHA has more than 700,000 loans in default, amounting to over 9% of the $1 trillion of debt that it insures. Citigroup has downgraded several regional banks – Wells Fargo (WFC), SunTrust (STI), KeyCorp (KEY), First Horizon (FHN), Zions’ (ZION), SVB Financial (SIVB), M&T (MTB), PNC Financial (PNC), and First Niagara (FNFG). Dow Components – American Express (AXP) up 0.54%, Bank of America (BAC) down 1.75%, JP Morgan Chase (JPM) up 1.11%, Travelers (TRV) down 0.06%.
The Financial Select Sector SPDR (XLF) was trading at $14.08 at 3:30 PM on Friday, up 0.79% on the day – up 8.31% year-to-date.
A judge has tentatively dismissed the IP litigation between Apple (AAPL) and Motorola Mobility (GOOG) and canceled the trial that would have began on Monday. Logitech (LOGI) will layoff off 450 employees, or 13% of its non-direct-labor workforce, as part of its previously-announced restructuring plan. Starting in FY14, this plan should save the company an annual $80 million in operating costs. RF Micro Devices (RFMD has been raised to Buy from Neutral at Davenport, saying that strong demand for the chip maker’s products should allow the company to meet or exceed Wall Street expectations in coming months. Cisco Systems (CSCO) has been initiated with a Buy rating at Citigroup with a $19 price target. Yahoo (YHOO) has been upgraded to Outperform from Market Perform at Bernstein, which says the recent deal with Alibaba reduces risks related to its Asian assets. Dow Components – Cisco Systems (CSCO) up 0.39%, Hewlett-Packard (HPQ) up 0.45%, IBM (IBM) down 0.13%, Intel Corp (INTC) up 1.33%, Microsoft (MSFT) up 0.21%.
The Technology Select Sector SPDR (XLK) was trading at $28.26 at 3:30 PM on Friday, up 0.82% on the day – up 11.04% year-to-date.
Comtech Telecommunications (CMTL) beat FQ3 EPS estimates by a nickel with better than expected revenue. Dow components – AT&T (T) up 1.14%, Verizon (VZ) up 1.27%.
The NASDAQ Telecommunications Index (IXTC) was trading at $181.65 at 3:30 PM on Friday, up 1.06% on the day – down 7.76% year-to-date.
First Energy (FE) reported that the leaked radioactive coolant at its Davis-Besse nuclear reactor in Ohio was cleaned up and no radioactivity escaped. An inspection required to resume operations after a month-long reactor shutdown for refueling and maintenance had revealed the leak. Aqua America (WTR) has been downgraded to Neutral from Buy at Janney Montgomery Scott. Dominion Resources (D) up 0.82%, Edison International (EIX) up 0.33%, First Energy (FE) up 0.17%, PG&E Corp (PCG) up 0.76%, Southern Company (SO) down 0.10%.
The Utilities Select Sector SPDR (XLU) was trading at $36.83 at 3:30 PM on Friday, up 0.24% on the day – up 2.36% year-to-date.
STOCKS: CVX, XOM, RDS.A, TA, CHK, CHKM, SD, AA, DD, KMGB, OC, PLL, PX, APD, BA, CAT, GE, MMM, UTX, UAL, GM, EADSY.PK, DHI, PHM, BZH, LEN, DIS, HD, MCD, IGT, DISH, KFT, KO, PG, WMT, JACK, YUM, JNJ, MRK, PFE, COO, ONXX, AXP, BAC, JPM, TRV, WFC, STI, KEY, FHN, ZION, SIVB, MTB, PNC, FNFG, CSCO, HPQ, IBM, INTC, MSFT, AAPL, GOOG, LOGI, RFMD, YHOO, T, VZ, CMTL, D, EIX, FE, PCG, SO, WTR