Advanced Real GDP rose by a much less than expected 1.3% in the second quarter. Making matters worse is that First Quarter GDP was revised to 0.4% from 1.9%. The Chicago PMI came in at 58.0 in July, slightly below expectations. Michigan Consumer Sentiment fell to 63.7 in July. The Dow Jones Industrial Average opened lower and traded down to 12,083.45 before rebounding into the green at 12,243. The Dow drifted lower in afternoon trading to below 12,170 into the final half hour. The NASDAQ traded down to 2725 below its 50-day simple moving average at 2753 then rebounded back above the 50-day into the green with a morning high at 2780. The NASDAQ traded back and forth around the flat line in afternoon trading then slipped into the red below 2765 into the final half hour of trading.
Asian stocks declined on Friday with the Nikkei 225 down 0.7% to 9,833. The Hang Seng lost 0.6% to 22,440. European stocks slumped on the U.S. Debt Crisis and weak U.S. GDP, but unlike the U.S. markets the averages remained in the red. The FTSE 100 declined 0.8% to 5,827. The DAX lost 0.4% to 7,161. The CAC 40 fell 1.1% to 3,673. The yield on the 10-Year US Treasury note declined from 2.962 to a new low for the year at 2.773 percent on the weaker than expected GDP data, a flight to quality and probably some short covering. Gold traded up from $1610.6 to $1634.9 the Troy ounce setting another new all time high. Crude oil declined from $97.39 per barrel to $94.95. The euro versus the US dollar declined from 1.4362 to 1.4234 then rebounded to 1.4411.
Energy
Southwestern Energy (SWN) beat estimates by 4 cents and revenue by $56M. Chesapeake Energy (CHK) beat estimates by 4 cents on revenue of $3.3B. Arch Coal (ACI) missed estimates by 16 cents, but beat revenue by $30M, and sees FY’11 EPS of $1.75-2.15. Helmerich & Payne (HP) reported FQ3 EPS of $0.98 (in-line), while beating revenue by $12M. Total (TOT) missed estimates by 5 cents on revenue of $64B. Crosstex Energy (XTEX) is initiated with a Buy at Janney Montgomery Scott. Whiting Petroleum (WLL) is lifted to Buy from Neutral at Ticonderoga with a $65 price target. In afternoon trading: Shares of EV Energy Partners (EVEP) are up about 11.5%. Shares of Treaty Energy (TECO) are down about 8%.
Energy Select Sector SPDR (XLE) was trading at $76.45 at 4:00 PM on Friday, down 1.00% on the day – up 12.01% year-to-date.
Materials
Newmont Mining (NEM) missed estimates by 9 cents and revenue by $110M, but is maintaining its 2011 targets for production, costs applicable to sales, and capex. Methanex (MEOH) gets increased to Strong Buy from Outperform at Raymond James. In afternoon trading: Most Actives: Shares of Vale (VALE) are down about 1.3%. Shares of Cemex (CX) are up about 4.3%. Shares of Alcoa (AA) are relatively unchanged.
The Materials Select Sector SPDR (XLB) traded at $38.01 at 4:00 PM on Friday, down 1.12% on the day – down 1.04% year-to-date.
Industrials
Chinese airline and hotel operator HNA Group is in exclusive negotiations to buy a shipping container lessor co-owned by GE (GE) in a deal that could be worth over $1B. Republic Services (RSG) beat estimates by a penny with revenue in-line with estimates. Oshksoh (OSK) hit a 2-year low after its F3Q earnings report showed lower-than-expected margins in its key defense business. ITT Industries (ITT) beat estimates by 11 cents and revenue by $170M. United Continental (UAL) gets downgraded to Neutral from Buy at Ticonderoga. Eagle Bulk Shipping (EGLE) is lowered to Sell From Hold at Citigroup. Air France-KLM (AFLYY) is cut to Hold from Buy at Citigroup. Rockwell Automation (ROK) is reduced to Sell from Hold at Societe Generale. In afternoon trading: Shares of Embraer (ERJ) are up about 9.5%.
The Industrial Select Sector SPDR (XLI) traded at $34.68 at 4:00 PM on Friday, down 0.49% on the day – down 0.54% year-to-date.
Consumer Discretionary
Starbucks (SBUX) FQ3 earnings beat expectations as EPS jumped by a third to $0.36 and revenue rose 12% to $2.93B, boosted by the company attracting more customers who also spent more money. BSkyB (BSYBY) said it will buy back £750M ($1.23B) in shares and pay out a further £253M in dividends to placate shareholders who lost out after News Corp (NWS) dropped its takeover bid. Leggett & Platt (LEG) missed estimates by 2 cents, but beat revenue by $20M. Coinstar (CSTR) beat estimates by 11 cents, but missed revenue by $9M. Expedia (EXPE) beat estimates by 6 cents and revenue by $40M. Starbucks (SBUX) beat estimates by 2 cents with revenue in-line with estimates, comparable-store sales rose 8%, and sees fiscal 2012 growth of 15%-20%. Regal Entertainment Group (RGC) beat estimates by 5 cents, but missed revenue by $10M. American Axle & Manufacturing (AXL) beat estimates by 21 cents and revenue by $55M. Newell Rubbermaid (NWL) beat estimates by 4 cents and revenue by $20M, but lowers FY’11 EPS guidance to $1.55-1.62 from prior guidance of $1.60-1.67. Royal Caribbean (RCL) is now Neutral from Overweight at JP Morgan. Time Warner Cable (TWC) is taken to Buy from Strong Buy at S&P Equity Research. Gildan Activewear Inc (GIL) gets cut to Sell from Hold at Citigroup. In afternoon trading: Shares of True Religion Apparel (TRLG) are up about 13.5%. Shares of Regal Entertainment are up about 11.25%. Shares of Expedia are up about 10%. Shares of Blockbuster (BLOAQ) are down about 13.5%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $39.65 at 4:00 PM on Friday, down 0.48% on the day – up 5.99% year-to-date.
Consumer Staples
Nestle (NSRGY), Danone (DANOY) and Abbott Laboratories (ABT) are likely to bid for Pfizer’s (PFE) infant-nutrition unit, with Mead Johnson Nutrition (MJN) and Unilever (UL) also possibly interested. Pilgrim’s Pride (PPC) missed estimates by 39 cents, but beat revenue by $110M. Altria Group (MO) is boosted to Buy from Hold with a $29 target at Stifel Nicolaus, which also lifts Lorillard (LO) to Buy from Hold. In afternoon trading: Most Actives: Shares of Altria Group are up about 0.6%. Shares of Wal-Mart (WMT) are down slightly.
The Consumer Staples Select Sector SPDR (XLP) traded at $30.83 at 4:00 PM on Friday, down 0.64% on the day – up 5.19% year-to-date.
Healthcare
Nestle (NSRGY), Danone (DANOY) and Abbott Laboratories (ABT) are likely to bid for Pfizer’s (PFE) infant-nutrition unit, with Mead Johnson Nutrition (MJN) and Unilever (UL) also possibly interested. McKesson’s (MCK) FQ1 EPS excluding items rose to $1.27 from $1.16 a year earlier and comfortably beat expectations as revenues climbed 9% to $29.04B, and now expects 2011 non-GAAP GPS in the range of $3.68-$3.76, compared with a $3.74 consensus. Burned bits of plastic shrink wrap have been found in vials of Merck (MRK) vaccines produced at its West Point plant in Pennsylvania. Vertex Pharmaceuticals (VRTX) beat estimates by 33 cents and revenue by $85M. McKesson (MCK) beat estimates by 13 cents and revenue by $940M, and raised FY12 forecast EPS to a range of $6.09 to $6.29 per share. Community Health (CYH) beat estimates by 2 cents with revenue in-line with estimates. Antech (WOOF) beat estimates by a penny, but missed revenue by $7M. Amgen (AMGN) beat estimates by 8 cents and revenue by $180M, and sees FY’11 EPS at upper end of $5.00-5.20 and revenue at upper end of $15.1-15.5B. Merck (MRK) beat estimates by a penny and revenue by $420M. Coventry Health Care (CVH) beat estimates by 6 cents with revenue in-line with estimates. Amerigroup (AGP) missed estimates by 13 cents and revenue by $30M. Computer Programs & Systems (CPSI) is raised to Buy from Hold at Citigroup. Vertex Pharmaceuticals (VRTX) is boosted to Buy from Hold at Citigroup. ISTA Pharmaceuticals (ISTA) is downgraded to Hold from Buy at Stifel Nicolaus. In afternoon trading: Shares of Zoll Medical (ZOLL) are up about 25%. Shares of Jazz Pharmaceuticals (JAZZ) are up about 15.25%. Shares of Amerigroup are down about 18.5%.
The Health Care Select Sector SPDR (XLV) traded at $34.12 at 4:00 PM on Friday, down 0.52% on the day – up 8.32% year-to-date.
Financials
Developers Diversified Realty (DDR) beat estimates by a penny with revenue in-line with estimates. Federated Investors (FII) reported Q2 EPS of $0.41 (in-line), while missing revenue by $20M. MetLife (MET) reported Q2 EPS of $1.13 (in-line), while beating revenue by $700M. Genworth Financial (GNW) missed estimates by 15 cents with revenue in-line with estimates. Apartment Inv & Mgmnt Co. (AIV) beat estimates by 5 cents and revenue by $1M. Aon Corporation (AON) beat estimates by 1 penny and revenue by $50M. Weyerhaeuser (WY) missed estimates by 2 cents, but beat revenue by $50M. American International Group (AIG) is begun with a Hold at Citigroup. Assurant (AIZ) is now Buy from Neutral at Sterne Agee with a new objective of $46. Loyds Banking Group (LYG) is reduced to Hold from Buy at The Royal Bank of Scotland. Banco Bilbao Vizcaya Argentaria (BBVA) is downgraded to Hold from Buy at Citigroup.
The Financial Select Sector SPDR (XLF) traded at $14.80 at 4:00 PM on Friday, down 0.30% on the day – down 7.24% year-to-date.
Information Technology
Varian Semiconductor (VSEA) beat estimates by 3 cents with revenue in-line with estimates. VeriSign (VRSN) beat estimates by 3 cents with revenue in-line with estimates. Veeco Instruments (VECO) missed estimates by a penny and revenue by $9M. Qlik Technologies (QLIK) reported Q2 EPS of $0.02 (in-line), while revenue beat estimates by $4M. QLogic (QLGC) beat estimates by 4 cents and revenue by $1M. STEC (STEC) missed estimates by a penny and revenue by $80,000. Cadence Design (CDNS) beat estimates by 2 cents and revenue by $8M. Ariba (ARBA) reported FQ3 EPS of $0.20 (in-line), while beating revenue by $8M. Ingram Micro (IM) reported Q2 EPS of $0.37 (in-line), while beating revenue by $180M. KLA-Tencor (KLAC) beat estimates by 10 cents and revenue by $20M. NetLogic Microsystems (NETL) beat estimates by 8 cents and revenue by $1M. Maxim Integrated Products (MXIM) beat estimates by 3 cents with revenue in-line with estimates. Motorola Mobility (MMI) beat estimates by 3 cents and revenue by $200M, but the company’s profit outlook disappoints. Kaufman Brothers has a Hold and $17 price objective on Ciena (CIEN), and a Hold and $5 target price on rival Tellabs (TLAB). Adtran (ADTN) is a new Buy at Kaufman. STEC Inc (STEC) is now Hold from Buy at Benchmark Co. Constant Contact (CTCT) is cut to Neutral from Outperform By Robert Baird. Motorola Mobility (MMI) is moved to Market Perform from Outperform at Wells Fargo. Vistaprint (VPRT) is downgraded to Perform from Outperform with an objective of $32. In afternoon trading: Shares of TeleNav (TNAV) are down about 43% as Q4 beat estimates, but forecast disappointed. Shares of STEC are down about 39%. Shares of VistaPrint are down about 35%. Shares of Applied Micro Circuits (AMCC) are down about 21% after reporting Non-GAAP EPS of $0.01, which met the consensus estimate, but declined from $0.12 in the year-earlier quarter.
The Technology Select Sector SPDR (XLK) traded at $25.81 at 4:00 PM on Friday, down 0.81% on the day – up 2.46% year-to-date.
Telecommunications Services
Vodafone’s (VOD) shares rose 5.4% premarket following yesterday’s announcement it would receive a $4.5B dividend from Verizon Wireless, with the U.K. company using the money to pay £2B ($3.26B) to its shareholders. Verizon Communications (VZ), which owns 55% of Verizon Wireless to Vodafone’s 45%, will receive $5.5B. France Telecom (FTE) is looking to sell its Orange Switzerland subsidiary. The company is also evaluating its options for minority stakes it holds in Austrian and Portuguese carriers. In afternoon trading: Actives: Shares of Sprint (S) are down about 3.8%. Shares of Level 3 (LVLT) are up about 1.9%. Shares of AT&T (T) are up slightly. Shares of Vodafone are up about 4.4%. Shares of Frontier (FTR) are up about 0.7%. Shares of Verizon are down about 0.8%.
The NASDAQ Telecommunications Index (IXTC) traded at $203.15 at 4:00 PM on Friday, down slightly on the day – down 9.86% year-to-date.
Utilities
Calpine (CPN) missed estimates by 15 cents, but beat revenue by $180M. American Electric Power Company (AEP) missed estimates by 3 cents, but beat revenue by $10M, and sees FY’11 EPS of $3.00-3.20. AmeriGas (APU) is moved to Market Perform from Underperform with Wells Fargo. Southwest Gas Corp (SWX) is boosted to Buy from Hold at Citi. In afternoon trading: Shares of Veolia Environment (VE) are down about 9.9%. Shares of Tokyo Electric Power (TKECF) are down about 6.6%. Shares of Tri-Tech Holding (TRIT) are down about 6.3%.
The Utilities Select Sector SPDR (XLU) traded at $33.17 at 4:00 PM on Friday, down 1.01% on the day – up 5.84% year-to-date.
STOCKS: SWN, CHK, ACI, HP, TOT, XTEX, WLL, EVEP, TECO, NEM, MEOH, VALE, CX, AA, GE, RSG, OSK, ITT, UAL, EGLE, AFLYY, ROK, ERJ, SBUX, BSYBY, NWS, LEG, CSTR, EXPE, RGC, AXL, NWL, RCL, TWC, GIL, TRLG, BLOAQ, NSRGY, DANOY, ABT, PFE, MJN, UL, PPC, MO, LO, WMT, MCK, MRK, VRTX, CYH, WOOF, AMGN, CVH, AGP, CPSI, ISTA, ZOLL, JAZZ, DDR, FII, MET, CNW, AIV, AON, WY, AIG, AIZ, LYG, BBVA, VSEA, VRSN, VECO, QLIK, QLGC, STEC, CDNS, ARBA, IM, KLAC, NETL, MXIM, MMI, CIEN, TLAB, ADTN, CTCT, VPRT, TNAV, AMCC, VOD, VZ, FTE, S, LVLT, T, FTR, CPN, AEP, APU, SWX, VE, TKECF, TRIT
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