The US economy grew 1.7% in the second quarter according to the preliminary reading. The advanced reading out a month ago pegged GDP growth at 1.5% in the second quarter. The Dow Jones Industrial Average traded down to 13,081.27 then up to 13,144.81. The NASDAQ traded down to 3067.62 then up to 3087.24.
Asian stocks were mixed again on Wednesday. The Nikkei 225 ended the day at 9,070 – up 0.40%. The Hang Seng ended the day at 19,789 – down 0.12%. European exchanges opened lower on Wednesday and closed mixed. The FTSE 100 ended the day at 5,744 – down 0.56%. The DAX ended the day at 7,011 – up 0.11%. The CAC 40 ended the day at 3,414 – down 0.51%. The yield on the 10-Year US Treasury note rose 1.622% to 1.675% versus the five-week modified moving average at 1.649%.
Gold traded down from $1672.5 the Troy ounce to $1654.4 staying above the 200-day simple moving average at $1647.0. Crude oil traded down from $96.37 per barrel to $94.76 with the 200-day simple moving average at $96.72. The euro versus the dollar fell from 1.2572 to 1.2522 above its 50-day simple moving average at 1.2365.
Frontline (FRO) beat estimates by 2 cents on revenue of $219.4M. Credit Suisse covers Atwood Oceanics (ATW), Diamond Offshore Drilling (DO), Noble Corp. (NE), Ocean Rig UDW (ORIG), and Rowan Companies (RDC) at Outperform. It has new Neutrals on Ensco (ESV), Hercules Offshore (HERO), Seadrill (SDRL), and Transocean (RIG). Robert W. Baird has new Neutrals on Energy Transfer Partners (ETP) and ONEOK (OKS). Baird is establishing Outperforms on Energy Transfer Equity (ETE), Plains All American (PAA), and Sunoco Logistics (SXL).
Big Movers – Frontline (FRO) down 11.92%.
Dow components – Chevron (CVX) down 0.36%, Exxon Mobil (XOM) down 0.16%.
Energy Select Sector SPDR (XLE) was trading at $71.71 at 3:30 PM on Wednesday, down 0.50% on the day – up 3.72% year-to-date.
AkzoNobel (AKZOY) is upgraded to Outperform from Neutral at Credit Suisse. Molycorp (MCP) gets upgraded to Buy from Hold at Gabelli. Resolute Forest Products (RFP) is taken to Reduce from Hold at TD Securities. Schnitzer Steel (SCHN) is cut to Sell from Underperform at Crédit Agricole.
Big Movers – Molycorp (MCP) up 13.30%.
Dow Components – Alcoa (AA) up 0.71%, DuPont (DD) up 0.72%.
The Materials Select Sector SPDR (XLB) was trading at $35.72 at 3:30 PM on Wednesday, up 0.48% on the day – up 6.63% year-to-date.
Despite the drought, the net income of U.S. farmers is set to hit a record $122.2B, the USDA has forecast. Farmers inside the "drought belt" are filing insurance claims to offset the damage to their corn and soybean crops, while those outside in the northern plains could earn 39% more due to record prices. Equipment makers such as Deere (DE) and Kubota (KUB) could also benefit. Joy Global (JOY) missed estimates by 6 cents with revenue in-line with estimates. The company cut FY 2012 revenue guidance by $100M to $5.45B-$5.55B (versus consensus of $5.56B) and sees adjusted EPS at $7.05-$7.20 (versus $7.26). Dycom Industries (DY) missed estimates by 2 cents and revenue by $5M. Excel Maritime Carriers (EXM) missed estimates by a penny, while beating revenue by $8M. Eaton Corp. (ETN) is now Neutral from Buy at MKM Partners.
Big Movers – Dycom Industries (DY) down 18.59%.
Dow components – Boeing Co (BA) up 0.29%, Caterpillar (CAT) up 0.10%, General Electric (GE) up 0.53%, 3M Company (MMM) up 0.31%, United Technologies (UTX) down 0.31%.
The Industrial Select Sector SPDR (XLI) was trading at $36.53 at 3:30 PM on Wednesday, up 0.19% on the day – up 8.24% year-to-date.
GM (GM) may be struggling in Europe, but it intends to invest $1B over the next five years in Russia, one of the world's fastest-growing markets. Genesco (GCO) beat estimates by 23 cents and revenue by $10M. Zale (ZLC) beat estimates by 23 cents with revenue in-line with estimates. Jos. A. Bank Clothiers (JOSB) beat estimates by 10 cents and revenue by $9M. Arbitron (ARB) is now Neutral at Macquarie. Reed Elsevier (RUK) is lifted to Overweight from Neutral at JPMorgan. Lincoln Educational (LINC) is lowered to Perform from Outperform at Oppenheimer. Movado (MOV) is moved to Neutral from Buy at Citigroup. Viacom (VIAB) is lower to Hold from Buy with Wunderlich.
Dow Components – Disney (DIS) up 0.97%, Home Depot (HD) up 0.72%, McDonalds (MCD) down 0.56%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $45.65 at 3:30 PM on Wednesday, up 0.59% on the day – up 17.02% year-to-date.
Heinz's (HNZ) reported FQ1 EPS of $0.87 (beating by $0.07, while revenue slipped 1.5% to $2.79B (missing by $50M). The company affirms guidance for FY 2013 EPS of $3.52-$3.62 (versus consensus of $3.51). Despite the drought, the net income of U.S. farmers is set to hit a record $122.2B, the USDA has forecast. Farmers inside the "drought belt" are filing insurance claims to offset the damage to their corn and soybean crops, while those outside in the northern plains could earn 39% more due to record prices. Brown-Forman (BF.B) best estimates by 7 cents, while missing revenue by $14M. The Fresh Market (TFM) beat estimates by a penny and revenue by $6M. L’Oréal (LRLCY) is lowered to Neutral from Buy at UBS.
Dow components – Kraft (KFT) down 0.41%, Coca Cola (KO) down 1.08%, Procter & Gamble (PG) up 0.04%, Wal-Mart (WMT) up 0.54%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $35.625 at 3:30 PM on Wednesday, down 0.10% on the day – up 9.68% year-to-date.
WellPoint (WLP) Chairperson and CEO Angela Braly has stepped down, yielding to shareholder pressure following the health insurer's poor performance of late. EVP John Cannon will take over as interim CEO while WellPoint looks for a replacement, although he doesn't want the job permanently. Mettler-Toledo (MTD) is initiated with a Hold at WallachBeth. TearLab (TEAR) is begun with a Buy at Canaccord. Cyberonics (CYBX) is hoisted to Buy from Hold at Canaccord Genuity. WellPoint (WLP) is boosted by Sanford Bernstein to Market Perform from Outperform. Amerigroup (AGP) gets downgraded to Neutral from Buy at Monness Crespi.
Big Movers – Warner Chilcott (WCRX) down 20.41%.
Dow Components – Johnson & Johnson (JNJ) up 0.20%, Merck (MRK) up 0.74%, Pfizer (PFE) up 0.84%.
The Health Care Select Sector SPDR (XLV) was trading at $38.88 at 3:30 PM on Wednesday, up 0.41% on the day – up 12.09% year-to-date.
Bank of Montreal (BMO) is boosted to Buy from Hold at Canadian firm Desjardins. Bank of Nova Scotia (BNS) is now Neutral from Outperform at Credit Suisse.
Dow Components – American Express (AXP) down 0.03%, Bank of America (BAC) up 0.50%, JP Morgan Chase (JPM) up 0.59%, Travelers (TRV) down 0.02%.
The Financial Select Sector SPDR (XLF) was trading at $15.15 at 3:30 PM on Wednesday, up 0.36% on the day – up 16.58% year-to-date.
Apple (AAPL) and Qualcomm (QCOM) offered Taiwan Semiconductor (TSM) over $1B apiece to secure chip production capacity, only to have TSMC reject them in the name of maintaining flexibility. Apple has also been reportedly planning to shift production of its app processors from Samsung (SSNLF) to TSMC. Yingli Green Energy (YGE) missed estimates by 22 cents with revenue in-line with estimates. JA Solar (JASO) missed estimates by 23 cents and revenue by $8M. LTX-Credence (LTXC) beat estimates by a penny, while missing revenue by $0.6M. Progress Software (PRGS) is a new Neutral with Wedbush, which unveils Outperforms on Informatica (INFA) and TIBCO (TIBX). Angie’s List (ANGI) gets increased to Outperform from Perform at Oppenheimer. Wipro (WIT) is upgraded to Overweight from Neutral at HSBC Securities.
Dow Components – Cisco Systems (CSCO) up 0.21%, Hewlett-Packard (HPQ) up 0.53%, IBM (IBM) up 0.46%, Intel Corp (INTC) down 1.06%, Microsoft (MSFT) up 0.19%.
The Technology Select Sector SPDR (XLK) was trading at $30.64 at 3:30 PM on Wednesday, up 0.36% on the day – up 20.39% year-to-date.
Dow Components – AT&T (T) up 0.87%, Verizon (VZ) up 1.36%. The NASDAQ Telecommunications Index (IXTC) was trading at $197.82 at 3:30 PM on Wednesday, up 0.32% on the day – up 0.45% year-to-date.
Public Service Enterprise Group (PEG) gets slashed to Sell from Hold at ISI Group. Dominion Resources (D) down 1.54%, Edison International (EIX) up 0.87%, First Energy (FE) down 0.83%, PG&E Corp (PCG) down 0.30%, Southern Company (SO) down 0.31%.
The Utilities Select Sector SPDR (XLU) was trading at $36.59 at 3:30 PM on Wednesday, down 0.11% on the day – up 1.70% year-to-date.
STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KFT, KO, PG, WMT, JNJ, MRK, PFE, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, FRO, ATW, DO, NE, ORIG, RDC, ESV, HERO, SDRL, RIG, ETP, OKS, ETE, PAA, SXL, AKZOY, MCP, RFP, SCHN, DE, KUB, JOY, DY, EXM, ETN, GM, GCO, ZLC, JOSB, ARB, RUK, LINC, MOV, VIAB, HNZ, BF.B, TFM, LRLCY, WLP, MTD, TEAR, CYBX, WLP, AGP, WCRX, BMO, BNS, AAPL, QCOM, TSM, SSNLF, YGE, JASO, LTXC, PRGS, INFA, TIBX, ANGI, WIT, PEG
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