The message from the FOMC meeting is that QE2 will end at the end of this month, but the Federal Reserve will purchase U.S. Treasuries as mortgage securities and Treasuries mature. The federal funds rate remains at zero to 0.25% for an extended period, which began in December 2008. The Fed remains concerned about slowing growth and the depth of the housing depression. The Dow Jones Industrial Average traded as high as 12,208 Pre-FOMC and could not recapture that high afterwards and drifted into the red in the final hour of trading. The NASDAQ traded as high as 2693 after the Fed Statement, but slipped into the red as Bernanke’s press conference was coming to an end. According to the Federal Housing Finance Agency (FHFA), the regulator and conservator of Fannie Mae and Freddie Mac, home prices increased by 0.8% in April for the first monthly gain since May 2010.
US stocks continued their oversold rally on Tuesday with the Dow Industrial Average up 110 points to 12,190 up 5.3% year to date and down 5.3% since its May 2nd high at 12,876.00. The NASDAQ rose 57 points to 2687 now up 1.3% year to date but down 7.0% since its May 2nd high at 2887.75.
Asian stocks were mixed on Wednesday with the Nikkei 225 up 1.8% to 9,629 and with the Hang Seng virtually flat. European stocks began were little changed on Wednesday. The FTSE 100 was up fractionally. The DAX and the CAC 40 were down fractionally. The yield on the 10-Year U.S. Treasury note declined from 2.994 percent to 2.940 on Wednesday pre-FOMC meeting and press conference then rose to just above 3% into the final hour of trading. Comex gold traded up from $1542.0 to $1559.3 the Troy ounce on Wednesday pre-FOMC and this range held after the Fed Statement and Bernanke press conference. Nymex crude oil stayed above its 200-day simple moving average at $92.53 trading up from $93.24 to $95.40 per barrel pre-FOMC and afterwards traded up to $95.70 before consolidating. The euro versus the US dollar traded up from 1.4348 to 1.4440 pre-FOMC Statement and consolidated within this range post-Fed.
Energy
Gorman-Rupp Company (GRC) is a new Buy at Jefferies. Forest Oil (FST) is boosted to Buy from Hold Hold at Stifel Nicolaus. Western Refining (WNR) is raised to Buy from Hold at Deutsche Bank. Diamond Offshore (DO) is upgraded to Outperform from Market Perform at Wells Fargo. In afternoon trading: Shares of Western Refining are up about 10%. Shares of Canadian Solar (CSIQ) are up about 6.5%. Shares of CVR Energy (CVI) are up about 5.2%.
Energy Select Sector SPDR (XLE) was trading at $73.10 at 4:00 PM on Wednesday, down 0.29% on the day – up 7.11% year-to-date.
Materials
Reliance Steel (RS) is resumed with an Outperform at Credit Agricole. Rare Earth Mining stocks are up today amid heavy stockpiling in China that has raised fears over global supplies. In afternoon trading: Shares of China GengSheng Minerals (CHGS) are up about 27%. Shares of China Shen Zhou Mining (SHZ) are up about 27%. Shares of Zagg (ZAGG) are up about 18.5%. Shares of Rare Element (REE) are up about 7.5%.
The Materials Select Sector SPDR (XLB) traded at $37.75 at 4:00 PM on Wednesday, down 0.41% on the day – down 1.73% year-to-date.
Industrials
Pentair (PNR) is started with a Buy at Jefferies. Hexcel (HXL) is upgraded to Buy at KeyBanc Capital. In afternoon trading: Shares in Philips (PHG) are down about 10.5% after the conglomerate warned that weak demand in Western Europe will hurt results at its lighting and consumer lifestyle units. Shares of YRC Worldwide (YRCW) are up about 20.25% on reports that the railroad and freight trucking industry is recovering. Shares of China Ming Yang Wind Power (MY) are up about 11.25%.
The Industrial Select Sector SPDR (XLI) traded at $36.12 at 4:00 PM on Wednesday, down 0.55% on the day – up 3.58% year-to-date.
Consumer Discretionary
Online video website Hulu is considering its options after reportedly being approached by a potential buyer. The LA Times said the prospective suitor is Yahoo (YHOO), although TechCrunch reported a source as saying that the search company isn’t involved. Polo Ralph Lauren (RL) is picked up at Outperform with Wells Fargo. Spartan Motors (SPAR) is initiated with a Buy at BB&T Capital. Newell Rubbermaid (NWL) is now Strong Buy from Market Perform at Raymond James. La-Z-Boy (LZB) is lowered to Hold from Buy at Wall Street Strategies. In afternoon trading: Shares of Spartan Motors are up about 24%. Shares of Vitacostcom (VITC) are up about 11.25%. Shares of Blockbuster (BLOAQ) are down about 24%. Shares of La-Z-Boy are down about 10.25%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $38.74 at 4:00 PM on Wednesday, down 0.77% on the day – up 3.56% year-to-date.
Consumer Staples
Philip Morris (PM), Altria Group (MO) and other major cigarette makers could recoup $2B under a proposed deal with 46 states to settle a dispute over payments required by the landmark 1998 tobacco settlement. Pilgrim’s Pride (PPC) is raised to Buy from Hold at BB&T Capital. In afternoon trading: Shares of Pilgrim’s Pride are up about 13%. Shares of Orchids Paper Products (TIS) are up about 7%. Shares of Coca Cola Hellenic Bottling (CCH) are up about 5%. Actives: Shares of Walgreens (WAG) are down about 1.2%. Shares of Altria Group are down about a half of a percent. Shares of Wal-Mart (WMT) are down about a half of a percent.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.14 at 4:00 PM on Wednesday, down 0.64% on the day – up 6.24% year-to-date.
Healthcare
AstraZeneca (AZN) has agreed to sell its Swedish dental implants and medical devices unit Astra Tech to Dentsply (XRAY) for $1.8B. Dentsply (XRAY) is begun with a Buy at SunTrust. VCA Antech (WOOF) is initiated with an Outperform and $28 target at Barrington Research. Boston Scientific (BSX) is begun with a Buy at Stifel Nicolaus. Biogen Idec (BIIB) is upgraded to Outperform from Neutral at Credit Suisse. Forest Labs (FRX) is upgraded to Buy from Hold at Argus with a $46 target. Healthspring (HS) is hoisted to Positive from Neutral at Susquehanna. Luminex (LMNX) is lifted to Outperform from Perform at Leerink Swann. In afternoon trading: Shares of Achillion Pharmaceuticals (ACHN) are up about 24% as the company increases its stock offering to 9.6M shares and expects $52.9M in proceeds.
The Health Care Select Sector SPDR (XLV) traded at $35.13 at 4:00 PM on Wednesday, down 0.59% on the day – up 11.52% year-to-date.
Financials
Paul Allen, the former CEO of mortgage lender Taylor, Bean & Whitaker, has been sentenced to 40 months in jail for his role in a $3B fraud scheme. The fraud led to the collapse of Taylor Bean in August 2009 and contributed to the failure of Colonial Bank, while Deutsche Bank (DB) and BNP Paribas (BNPQY:US) lost nearly $2B. IntercontinentalExchange (ICE) is resumed with an Outperform at JP Morgan. Susquehanna Bank (SUSQ) is boosted to Outperform from Market Perform at Keefe Bruyette. HSBC Securities cuts Barclays PLC (BCS), Lloyds Banking Group PLC (LYG), and Royal Bank of Scotland (RBS) to Neutral from Overweight amid onerous regulatory reforms. Essex Property (ESS) is downgraded to Perform from Outperform at FBR Capital. UDR (UDR) is downgraded to Underperform from Perform at FBR Capital. Pacific Continental (PCBK) is downgraded to Hold from Buy at Wunderlich. Synovus (SNV) is now Hold from Buy with Wunderlich.
The Financial Select Sector SPDR (XLF) traded at $15.00 at 4:00 PM on Wednesday, down 0.60% on the day – down 5.96% year-to-date.
Information Technology
Online video website Hulu is considering its options after reportedly being approached by a potential buyer. The LA Times said the prospective suitor is Yahoo (YHOO), although TechCrunch reported a source as saying that the search company isn’t involved. Nokia (NOK) plans to merge its Navteq mapping unit with its services business to better exploit the surging demand for location-based services. The company has also finalized an agreement to outsource its Symbian software to Accenture (ACN). Jabil Circuit (JBL) beat estimates by a penny and revenue by $60M. Ceva (CEVA) is covered with an Outperform rating and $34 price objective at Oppenheimer. Gilat Satellite (GILT) gets picked up at a Perform and $5 target at Oppenheimer. China Sunergy (CSUN) is initiated with a Buy at Collins Stewart. EarthLink (ELNK) is assigned a Buy and $11 objective at Capstone. FriendFinder Networks (FFN) is a fresh Buy and $14 target at Ladenburg Thalmann. Hanwha SolarOne (HSOL) is upgraded to Buy from Neutral at Collins Stewart. Constant Contact (CTCT) is upgraded to Buy from Hold at Needham. F5 Networks (FFIV) is raised to Overweight from Equal Weight at Barclays Capital. In afternoon trading: Shares in Adobe (ADBE) are down about 5.5% after the company said it “experienced weaker-than-expected demand in EMEA” even as FQ2 earnings beat analyst expectations by 4 cents. Shares of China Sunergy are up about 22%. Shares of Hanwha SolarOne are up about 15.25%. Shares of Renesola (SOL) are up about 15.25%.
The Technology Select Sector SPDR (XLK) traded at $24.80 at 4:00 PM on Wednesday, down 0.72% on the day – down 1.55% year-to-date.
Telecommunications Services
In afternoon trading: Actives: Shares of Sprint Nextel (S) are down about 1.9%. Shares of Level 3 Communications (LVLT) are up about 0.7%. Shares of AT&T (T) are down about 0.4%. Shares of Clearwire (CLWR) are up about 10%. Shares of Verizon (VZ) are up slightly. Shares of Frontier Communications (FTR) are down about a quarter of a percent.
The NASDAQ Telecommunications Index (IXTC) traded at $205.67 at 4:00 PM on Wednesday, down 0.68% on the day – down 8.74% year-to-date.
Utilities
In afternoon trading: Actives: Shares of Genon Energy (GEN) are up slightly. Shares of Duke Energy (DUK) are down about a half of a percent. Shares of CenterPoint Energy (CNP) are up about 0.3%. Shares of PPL (PPL) are down about 0.75%. Shares of AES (AES) are down about a half of a percent.
The Utilities Select Sector SPDR (XLU) traded at $32.98 at 4:00 PM on Wednesday, down 0.66% on the day – up 5.23% year-to-date.
STOCKS: GRC, FST, WNR, DO, CSIQ, CVI, RS, CHGS, SHZ, ZAGG, REE, PNR, HXL, PHG, YRCW, MY, YHOO, RL, SPAR, NWL, LZB, VITC, BLOAQ, PM, MO, PPC, TIS, CCH, WAG, MO, WMT, AZN, XRAY, WOOF, BSX, BIIB, FRX, HS, LMNX, ACHN, DB, BNPQY, ICE, SUSQ, BCS, LYG, RBS, ESS, UDR, PCBK, NOK, ACN, JBL, CEVA, GILT, CSUN, ELNK, FFN, HSOL, CTCT, FFIV, ADBE, SOL, S, LVLT, T, CLWR, VZ, FTR, GEN, DUK, CNP, PPL, AES
