Initial Jobless Claims came in at 400,000 and last week’s reading was revised upward to just above 400,000, so claims have been at or above 400,000 for 17 weeks in a row. The report included the note that the FAA funding dispute had no impact on this data. Keep in mind that the recessionary threshold is 350,000. U.S. stocks opened lower on concerns from Europe and the U.S. economy. The Dow Jones Industrial Average plunged to 11,523.92 in morning trading then consolidated in the afternoon before trading below 11,450 into the final half hour of trading. The NASDAQ slumped to 2595.70 in the morning then fell below 2575 in the final half hour of trading.
Asian stocks were mixed as the Bank of Japan intervened in the currency market to prop up the dollar versus Japanese yen. The Nikkei 225 rose just 0.23% to 9,659. The Hang Seng slipped 0.49% to 21,885. European stocks continued their downward ways on Thursday as the Bank of England and European Central Bank keep interest rated unchanged. EU worries remain acute. The FTSE 100 slumped 3.2% to 5,406. The DAX plunged 3.4% to 6,415. The CAC 40 eroded by 3.9% to 3,320. The yield on the 10-Year US Treasury note declined from 2.650 percent to a new year to date low yield at 2.432 as the flight to quality intensified. Gold rose from $1658.6 to another new all time high at $1683.5 then declined to a day’s low at $1641.1. Crude oil declined from $92.59 to $86.04 versus the June 27th low at $89.61 and the February 15th low at $83.85. The 200-week simple moving average has been the longer term up trend at $83.97. The euro versus the U.S. dollar declined from 1.4370 to 1.4115.
Energy
Tesoro (TSO) beat estimates by 34 cents and revenue by $700M. Apache (APA) beat estimates by 3 cents and revenue by $80M. Cameco (CCJ) reported Q2 EPS of C$0.18 (in-line), while missing revenue by C$14M. El Paso (EP) beat estimates by 10 cents. Pioneer Natural Resources Company (PXD) beat estimates by 12 cents, but missed revenue by $4M, and sees 3QFY11 production costs to average at $12.00-$14.00 per BOE. McDermott (MDR) missed estimates by 5 cents, but beat revenue by $7M. MDR was down 17.5% in early-afternoon trading. Western Gas Partners (WES) reported Q2 EPS of $0.39 (versus consensus of $0.44) on revenue of $162M. Williams Companies (WMB) beat estimates by a penny, but missed revenue by $500M, increased full-year EPS guidance to $1.60, and maintained 2012 expectations. Transocean (RIG) missed estimates by 13 cents with revenue in-line with estimates. Lucas Energy (LEI) is launched with a Buy and a price objective of $5.50 at Brokerage C.K. Cooper. Exxon Mobil (XOM) was down 2.6% in early-afternoon trading. Chevron (CVX) declined by 3.9%.
Energy Select Sector SPDR (XLE) was trading at $68.56 at 4:00 PM on Thursday, down 7.1% on the day – up 0.5% year-to-date.
Materials
Rio Tinto’s (RIO) H1 net profit jumped 35% to $8.03B but missed expectations and shares traded down by 6.3% in early-afternoon trading. Chemtura Corporation (CHMT) beat estimates by a penny and revenue by $33M. Yamana Gold (AUY) beat estimates by a penny on revenue of $573.3M. New Gold (NGD) beat estimates by a penny, but missed revenue by $6M. Comex gold may have hit a new all time high at $1683.5 on Thursday, but shares of AUY and NGD slumped 2.8% and 1.7% respectively. Walter Energy (WLT) missed estimates by $1.77 and revenue by $154M. Walter Energy (WLT) is downgraded to Hold from Buy at Brean Murray. Shares of WLT were down 24% in early-afternoon trading.
The Materials Select Sector SPDR (XLB) traded at $34.51 at 4:00 PM on Thursday, down 6.5% on the day – down 10.2% year-to-date.
Industrials
Southwest Airlines (LUV) missed estimates by 5 cents and revenue by $30M. Avis Budget Group (CAR) beat estimates by 30 cents and revenue by $5M and shares rose by 3.6%. Dow components slumping in this sector include; Boeing (BA) by 3.6%, Caterpillar (CAT) by 4.2%, General Electric (GE) by 4.1% and United Technologies (UTX) by 4.0%. CAT and UTX are down significantly since setting all time highs over the past three months. CAT is down 22% from a May 2nd all time high at $116.55. UTX is down 17% from a July 7th all time high at $91.83.
The Industrial Select Sector SPDR (XLI) traded at $31.81 at 4:00 PM on Thursday, down 5.2% on the day – down 8.8% year-to-date.
Consumer Discretionary
Hitachi (HIT) and Mitsubishi Heavy Industries (MHVYF) have denied they’re in talks about merging some of their power and infrastructure operations despite Hitachi’s president saying on TV a deal were in the works. GM (GM) beat estimates by 35 cents and revenue by $2.7B, and automotive free cash flow rose 36% Y/Y to $3.8B. Tesla Motors (TSLA) missed estimates by 2 cents, but beat revenue by $9.2M, sees R&D spending increasing in Q3 and raised FY11 revenue guidance to $180M-$190M, from $170-$185M. Tiffany & Co (TIF) is taken to Neutral from Sell at Goldman Sachs. McDonald’s (MCD) gets an Overweight-from-Neutral boost at Piper Jaffray with a $98 price target. Aeropostale (ARO) was slashed by 23% in early-afternoon trading. Homebuilder Hovnanian Enterprises (HOV) slumped by 13.3%. Lamar Advertising (LAMR) lost 12%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $36.50 at 4:00 PM on Thursday, down 4.5% on the day – down 2.4% year-to-date.
Consumer Staples
Kraft (KFT) is to spin off its North American grocery business to its shareholders as part of a plan to split up into two companies; the grocery operations with revenue of about $16B, and a global snacks business with revenue of about $32B. KFT shares rebounded by 2.4% on the news. Uniliver’s (UL) H1 net profit rose 10% to €2.24B ($3.21B) from €2.04B last year and beat expectations as revenues increased 4.1% to €22.8B. Dean Foods Company (DF) beat estimates by a penny and revenue by $150M, sees Q3 EPS of $0.12-0.17 (versus consensus of $0.18), and reaffirms FY11 EPS of $0.67-0.75 (versus consensus of $0.71). Andersons (ANDE) beat estimates by 70 cents and revenue by $150M. Hormel Foods (HRL) is downgraded to Sell from Neutral at Goldman. Chiquita Brands (CQB) had its shares pealed by 16.6% in early-afternoon trading. Pilgrims Pride (PPC) was crushed by 15.3%.
The Consumer Staples Select Sector SPDR (XLP) traded at $29.54 at 4:00 PM on Thursday, down 3.0% on the day – up 0.8% year-to-date.
Healthcare
Dendreon’s (DNDN) Q2 report showed weak sales of its prostate cancer drug Provenge, prompting the firm to abandon its revenue guidance and cut jobs. Dendreon (DNDN) gets downgraded to Neutral-from-Outperform at Robert W. Baird. DNDN shares lost 2/3ds of its value on this news. Pfizer (PFE) reportedly plans to introduce a version of its popular Lipitor pill that consumers could buy without a prescription. The move would allow Pfizer to generate new sales from the world’s best-selling drug after it loses its patent protection in November. Valeant Pharmaceuticals International (VRX) beat estimates by 8 cents and revenue by $312M, but shares declined by 16.5%. SurModics (SRDX) beat estimates by 9 cents and revenue by $1.7M, and sees FY11 GAAP EPS at $0.03 to $0.13, compared to previous range of ($0.21)-($0.08). AstraZeneca (AZN) is hoisted to Hold from Underperform at Jefferies. Merge Healthcare (MRGE) is moved to Outperform from Neutral at Robert W. Baird. Nxstage Medical (NXTM) is now Market Perform from Underperform at Rodman & Renshaw. LHC Group (LHCG) is lifted to Hold from Underperform at Jefferies. Allergan (AGN) is now Neutral from Overweight at Piper Jaffray. Cadence Pharma (CADX) is downgraded to Buy from Strong Buy at Duncan-Williams with a new target of $12.
The Health Care Select Sector SPDR (XLV) traded at $312.70 at 4:00 PM on Thursday, down 3.6% on the day – up 0.6% year-to-date.
Financials
Lloyds (LYG) swung to an H1 pretax loss of £3.35B ($5.3B) from a profit of £1.3B a year earlier, due to a one-time charge for selling faulty payment-protection insurance and because of bad loans in Ireland and Australia. Shares declined by 12.9%. Health Care REIT (HCN) beat estimates by 3 cents and revenue by $45M. Ares Capital (ARCC) reported Q2 EPS of $0.34 (in-line). Ventas (VTR) beat estimates by 4 cents and revenue by $57M, and sees FY11 EPS of $3.17-3.23, up from $3.06-3.14 prior guidance. Hartford Financial (HIG) beat estimates by 2 cents on revenue of $2.99B, and announced $500M in new buybacks. Prudential (PRU) beat estimates by 16 cents and revenue by $540M. Lazard (LAZ) is lifted to Buy from Hold at Citigroup. Dow components in this sector slumped; American Express (AXP) by 3.1%, Bank of America (BAC) by 4.25%, and JP Morgan (JPM) by 2.9%.
The Financial Select Sector SPDR (XLF) traded at $13.73 at 4:00 PM on Thursday, down 4.8% on the day – down 13.9% year-to-date.
Information Technology
Hitachi (HIT) and Mitsubishi Heavy Industries (MHVYF) have denied they’re in talks about merging some of their power and infrastructure operations despite Hitachi’s president saying on TV a deal was in the works. U.K. software company Misys (MUSJF) has ended talks about being bought by U.S. financial data-processing firm Fidelity National Information Services (FIS), as the latter’s revised offer “materially undervalued the company.” Entropic Communications (ENTR) missed estimates by a penny and revenue by $3.5M. MEMC Electronic Materials (WFR) beat estimates by 21 cents and revenue by $45.8M. MEMC Electronics (WFR) is cut to Hold from Buy at Kaufman Bros. WFR slumped by 10.4%. Insight Enterprises (NSIT) beat estimates by 13 cents with revenue in-line with estimates, and sees FY11 EPS at $1.90-$.98 (versus consensus of $1.79). Solar (SOLR) beat estimates by 10 cents and revenue by $6M, and sees FY11 Revenue guidance to $1B-$1.1B, GM to 43%-45%, EPS at $1.55-$1.85. Activision (ATVI) beat estimates by 5 cents and revenue by $100M, and raised 2011 non-GAAP revenue forecast to $4.05B from $3.95B ($4.04B consensus) and raised 2011 non-GAAP EPS forecast to $0.77 from $0.73 ($0.75 consensus). Web.com Group (WWWW) beat estimates by 6 cents on revenue of $42.24M, and announced the purchase of privately held Network Solutions for $405M. Atmel (ATML) beat estimates by 4 cents and revenue by $3M, but shares declined by 12.3%. ON Semiconductor (ONNN) missed estimates by a penny, but beat revenue by $27M, and sees FQ3 Revenue at $895M-$925M. Akamai Tech (AKAM) is begun with a Buy at Merriman. KIT Digital (KITD) is begun with a Buy at Merriman. EMC Corp (EMC) is lifted to Buy from Hold at Brokerage firm Collins Stewart with a new target of $32. Echelon (ELON) is raised to Buy from Hold at Jefferies. FICO (FICO) is upgraded to Market Perform from Underperform at Keefe Bruyette. Sourcefire (FIRE) is upgraded to Buy from Neutral at UBS with a $32 target. Entropic Communications (ENTR) is lowered to Neutral from Overweight at JP Morgan and shares dropped 34.1%. NCI, Inc (NCIT) is now Underperform from Market Perform with Wells Fargo.
The Technology Select Sector SPDR (XLK) traded at $24.51 at 4:00 PM on Thursday, down 3.9% on the day – down 2.7% year-to-date.
Telecommunications Services
Deutsche Telekom’s (DTEGY) T-Mobile USA division, set to be acquired by AT&T (T), reports a Q/Q net loss of 50K subscribers during Q2, including a loss of 281K postpaid subs. Leap Wireless (LEAP) reported Q2 revenue of $760.5M, below a $779.5M consensus. The company had a net gain of 29K voice subscribers, but a net loss of 132K broadband subscribers. Clearwire (CLWR) missed estimates by 22 cents and revenue by $800M and shares fell by 20.5%. Sprint Nextel (S) is now Hold from Sell at Stifel Nicolaus. MetroPCS (PCS) declined by 10.7%.
The NASDAQ Telecommunications Index (IXTC) traded at $189.75 at 4:00 PM on Thursday, down 4.7% on the day – down 15.8% year-to-date.
Utilities
CenterPoint Energy (CNP) beat estimates by 5 cents, but missed revenue by $220M. Veolia Environment (VE) swung to an H1 net loss of €67.2M ($95.6M) from a €375M profit a year earlier, due to accounting fraud in the U.S. and problems in Southern Europe and North Africa. The company also lowered its full-year guidance and announced a restructuring. VE shares plunged by 20.5%. Ameren (AEE) missed estimates by 4 cents, but beat revenue by $50M, and narrowed FY11 EPS guidance to $2.30-$2.55, from $2.20-$2.60. Progress Energy (PGN) beat estimates by 7 cents with revenue in-line with estimates, and reaffirmed FY11 EPS of $3.00-3.12 (versus consensus of $3.13). TECO Energy (TE) reported Q2 EPS of $0.36 (in-line), while beating revenue by $21M, and sees FY11 EPS of $1.25-1.40 (versus consensus of $1.36).
The Utilities Select Sector SPDR (XLU) traded at $31.76 at 4:00 PM on Thursday, down 2.9% on the day – up 1.3% year-to-date.
STOCKS: APA, CCJ, EP, PXD, MDR, WES, WMB, RIG, LEI, RIO, CHMT, AUY, NGD, WLT, LUV, CAR, BA, CAT, GE, UTX, HIT, MHVYF.PK, GM, TSLA, TIF, MCD, ARO, HOV, LAMR, KFT, UL, DF, ANDE, HRL, CQB, PPC, DNDN, PFE, VRX, SDX, AZN, NXTM, LH, CG, CADX, LYG, HCN, ARCC, VTR, HIG, PRU, LAZ, AXP, BAC, JPM, HIT, MHCYF.PK, MUSJF.PK, FIS, ENTR, WFR, NSIT, SOLR, ATVI, WWWW, ATML, ONNN, AKAM, EMC, ELON, FIRE, ENTR, NCIT, DTEGY.PK, T, LEAP, CLWR, PCS, CNP, VE, AEE, PGN, TE
