Retail Sales in July rose by 0.5%, slightly below expectations, but with the biggest gain since March. The University of Michigan consumer sentiment survey declined from 63.7 to 54.9 in August, the lowest reading since 1980. The Dow Jones Industrial Average traded between 11,157.31 and 11,346.67 Friday well above its post-FOMC low of 10,604.07. The low end of the range remains within the zone of the 200-week and 120-month simple moving averages at 10,742 and 10,570. The NASDAQ traded between 2481.50 and 2524.09 on Friday well above its post-FOMC low at 2331.65.
Asian stocks were mixed on Friday with the Nikkei 225 down 0.20% to 8,964 and the Hang Seng up 0.13% to 19,620. European stocks opened lower but weakness caused by sputtering economic growth in France was short-lived. Naked short selling has been banned in France, Italy, Spain and Belgium. The FTSE 100 was regained 2.98% to 5,317. The DAX rebounded by 3.45% to 5,998. The CAC 40 jumped 4.02% to 3,214. The yield on the 10-Year US Treasury note traded back and forth between 2.244 percent and 2.336 before declining to 2.225. This week’s U.S. Treasury auctions had mixed receptions – the 3-Year note was well-received but the 10-Year note and 30-Year bond were not. Gold stayed below Thursday’s all time high at $1817.6 the Troy ounce trading down from $1770.9 to $1725.8. Crude oil traded up from $84.02 per barrel to $87.37 staying above its 200-week simple moving average at $83.96 then consolidated that range. The euro versus the US dollar traded up from 1.4153 to 1.4289 then consolidated.
Energy
Niska Gas Storage (NKA) fell 17.9% on Thursday after the company indicated that market conditions remain challenging and continue to deteriorate. Cabot Oil & Gas (COG) was initiated as a Buy at Brean Murray with a $98 price target. Chesapeake Energy (CHK) is initiated with a Buy at Brean Murray, who also initiated Rex Energy (REXX) as a Hold. Eni SpA (E) was upgraded to Buy from Sell at Collins Stewart. Southwestern Energy (SWN) is upgraded to Outperform from Neutral at Robert W. Baird citing its industry-leading low-cost structure and solid management team. BP PLC (BP) is downgraded by Goldman Sachs to Neutral from Buy as the saying that the company is fairly discounting the company’s opportunities and challenges. China North East Petroleum (NEP) is downgraded to Perform from Outperform at FBR Capital.
Energy Select Sector SPDR (XLE) was trading at $66.80 at 4:00 PM on Friday, up 0.50% on the day – down 2.12% year-to-date.
Materials
Allegheny Tech (ATI) was upgraded to Hold from Sell at Citigroup. Alcoa (AA) was trading down 0.8% in mid-morning trading. DuPont (DD) moved sideways during Friday’s session. AngloGold Ashanti (AU) declined by 4.2% following Comex gold lower. Hecla Mining (HL) was down by 3.8%. Harmony Gold (HMY) slumped by 4.0%. On the plus side Molycorp (MCP) popped by 13.6% on sharply higher metals prices and a boost in sales volume from the two new subsidiaries the company acquired in April..
The Materials Select Sector SPDR (XLB) traded at $34.39 at 4:00 PM on Friday, up 0.50% on the day – down 10.47% year-to-date.
Industrials
RailAmerica (RA) appears to be undervalued according to Morgan Keegan who initiates an Outperform rating. Polaris Industries (PII) is upgraded to Outperform from Market Perform at Wells Fargo. Valspar (VAL) is upgraded to Overweight from Market Weight at JP Morgan. Boeing (BA) rebounded by 2.3% in mid-morning trading. Caterpillar (CAT) was up 2.4%. General Electric (GE) was up 0.9%. United Technologies (UTX) rallied by 1.5%.
The Industrial Select Sector SPDR (XLI) traded at $31.36 at 4:00 PM on Friday, up 1.82% on the day – down 10.07% year-to-date.
Consumer Discretionary
JC Penny (JCP) sees Q3 comparable store sales up by 2% to 3%, EPS of $0.15-0.20. JCP gross margins declined 110 basis points to 38.3% reflecting softer than anticipated selling environment. Nordstrom (JWN) reported Q2 earnings up 20% as the upscale retailer reported that designer merchandise was among its top sellers. Shares popped nearly 5%. Meanwhile, Nordstrom was upgraded to Buy from Neutral by Stifel Nicolaus with a $52 price objective. DeVry (DV) beat estimates on both EPS and revenues, but DV shares plunged about 17% on a sharp drop in student enrollment. DV was downgraded to Neutral from Outperform at Robert W. Baird with a price target lowered to $53 from $71. Apollo Group (APOL) was initiated with a Hold at Wunderlich, which established a price objective of $49. Bridgepoint Education (BPI) is initiated with a Buy and $31 target price and Capella Education (CPLA) is a Hold at Wunderlich. Autozone (AZO) is upgraded to Outperform at Oppenheimer. Bed Bath and Beyond (BBBY) is upgraded to Outperform by Oppenheimer. Starwood Hotels (HOT) is downgraded to Hold from Buy at Jefferies.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $36.02 at 4:00 PM on Friday, up 1.09% on the day – down 3.72% year-to-date.
Consumer Staples
Darling International (DAR) beat Q2 EPS by a penny and revenue by $19 million of $0.44 beats by $0.01. Revenue of $471M (+183% Y/Y) beats by $19M and shares declined 3.6%. Wendy’s (WEN) shares consolidated Thursday’s price pop with a decline of 1.4% on Friday. Same store says jumped 2.3%. According to Janney, Wendy is on its way to overtake Burger King to the number two spot. Brinker International (EAT), who owns the Chili’s and Maggiano’s restaurant brands continued Thursday’s rebound with a gain of nearly 1.0% on Friday. PetSmart (PETM) is upgraded to Outperform by Oppenheimer and shares tacked on 1.2%. Coca-Cola Hellenic (CCH) was downgraded to Underweight from Neutral at JP Morgan, but the stock rose by 7.5% on Friday.
The Consumer Staples Select Sector SPDR (XLP) traded at $29.50 at 4:00 PM on Friday, up 1.06% on the day – up 0.65% year-to-date.
Healthcare
Becton Dickinson (BDX) has been upgraded to Outperform from Neutral at Mizuho and shares are up 1.9%. Edwards Lifesciences (EW) is upgraded to Outperform from Perform at Credit Suisse and shares are up 6.1%. Johnson & Johnson (JNJ) tacked on 0.6% on Friday. Merck (MRK) rallied by 1.6%. Pfizer (PFE) rose by 1.3%. A low priced stock that popped on Friday was Mannkind Corp (MNKD). Mannkind was up on FDA nod for trails of a diabetes device, and by an upgrade by JMP Securities. The company is also moving forward on trails for inhaled insulin treatment.
The Health Care Select Sector SPDR (XLV) traded at $31.61 at 4:00 PM on Friday, up 0.89% on the day – up 0.35% year-to-date.
Financials
Bank of America (BAC) has reportedly problems in selling its 10% holding in China Construction Bank (CICHY), partly because Chinese banks are considering a wave of rights issues, share sales and new listings. One suitor, Kuwait’s sovereign wealth fund already holds large stakes in two other banks and does not wish to add to this exposure. The Virginia and Florida Attorneys-General filed civil suits against Bank of New York Mellon (BK), accusing the bank of cheating pension funds with improper prices for currency trades that the bank processed for them. American Capital Agency (AGNC): has been upgraded to Buy from Hold at Jefferies with a price target raised to $33 from $30. LaSalle Hotel (LHO) and Host Hotels (HST) are both downgraded to Hold from Buy at Jefferies. America Express (AXP) rebounded by 1.6% on Friday. JP Morgan (JPM) declined by 0.9%. Travelers (TRV) was higher by 0.3%.
The Financial Select Sector SPDR (XLF) traded at $12.74 at 4:00 PM on Friday, down 1.01% on the day – down 20.13% year-to-date.
Information Technology
Nvidia (NVDA) matched Street expectations in Q2 swinging to a net profit of $0.25 a share from a loss of $0.25 a year earlier and revenue climbed 26% to $1.01B. The graphics processor company raised guidance, but shares slumped by 2.8%. Emulex (ELX), a maker of enterprise storage adapter cards is trading down 5.0% after reporting quarterly results. The company beat on the top and bottom line the forward guidance was below expectations. Renren (RENN) reported in-line quarterly results and shares rose 2.8%. Bottomline Technologies (EPAY) beat earnings estimates and shares popped 6.7%. Broadcom (BRCM)is initiated with a Market Perform at William Blair. Adobe Sytems (ADBE) was downgraded to Underperform from Sector Perform at RBC Capital. PMC-Sierra (PMCS) is initiated with a Buy at Wunderlich with a $10 price target. NetLogic (NETL) is initiated with a Buy at Wunderlich, which has a Hold on Cavium Networks (CAVM). Hewlett-Packard (HPQ) is upgraded to Buy from Hold at Jefferies. F5 Networks (FFIV) was upgraded to Outperform from Market Perform at William Blair. Oracle (ORCL) was upgraded to Buy from Outperform at Credit Agricole.
The Technology Select Sector SPDR (XLK) traded at $24.09 at 4:00 PM on Friday, up 0.58% on the day – down 4.37% year-to-date.
Telecommunications Services
AT&T (T) has hired Bank of America to advise it on possible asset sales to help smooth the way for antitrust regulators to approve the company’s $39 billion acquisition of T-Mobile (DTEGY). Shares were lower by 0.8%. Clearwire Corp (CLWR) popped by 17% on Friday. Level 3 Communications (LVLT) was up 4.3%. Vodafone (VOD) rebounded by 2.3%. Verizon (VZ) slipped by 0.7%. Boingo Wireless (WIFI) popped by 6.8%.
The NASDAQ Telecommunications Index (IXTC) traded at $189.57 at 4:00 PM on Friday, up 1.09% on the day – down 15.88% year-to-date.
Utilities
Shares of AES Corp (AES) are up about 2.3%. Shares of Veolia Environment (VE) gained 5.5%. Shares of Duke Energy (DUK) slipped lower by 0.9%. Public Service Enterprise Group (PEG) tacked on 1.0%. Progress Energy (PGN) declined by 1.5%. Southern Company (SO) lost 0.7%. Shares of Sempra Energy (SRE) gained 0.3%.
The Utilities Select Sector SPDR (XLU) traded at $31.65 at 4:00 PM on Friday, down 0.75% on the day – up 0.99% year-to-date.
STOCKS: NKA, COG, CHK, REXX, E, SWN, BP, NEP, ATI, AA, DD, HL, HMY, MCP, RA, PII, VAL, BA, CAT, GE, UTX, JCP, JWN, DV, APOL, BPI, CPLA, AZO, BBBY, HOT, DAR, WEN, EAT, PETM, CCH, BDX, EW, JNJ, MRK, PFE, BAC, BK, AGNC, HST, LHO, AXP, JPM, TRC, NVDA, ELX, RENN, BRCM, ADBE, PMCS, NETL, CAVM, HPQ, FFIV, T, CLWR, LVLT, VOD, VZ, WIFI, AES, VE, DUK, PGN, SO, SRE
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