Initial Jobless Claims came in higher than expected at 408,000 well above the recessionary threshold of 350,000. Consumer Prices rose by a more than 0.5% in July and by 3.6% year over year. The Philly Fed Index plunged from +3.2 in July to -30.7 in August. Existing Home Sales fell 3.5% to an annual rate of 4.67 million. The Dow Jones Industrial Average was down more than 300 points in the first five minutes of trading and the morning low was down more than 500 points at 10,881.60 versus the 200-week simple moving average at 10,730. The NASDAQ was down more than 90 points in the first five minutes to 2408.65, and the afternoon low was down more than 135 points with a 2369.02. The August 9th low was 2331.65.
Asian stocks declined on Thursday on fears of a global economic slowdown. The Nikkei 225 traded down by 1.25% to 8,944 with the Hang Seng lower by 1.34% to 20,016. European stocks opened lower with declines between 1.00% and 1.50%, which cascaded to even lower levels on negative economic data from the States. The FTSE 100 slumped 4.49% to 5,092, the DAX plunged 5.82% to 5,603 and the CAC 40 was crushed by 5.48% to 3,076. The yield on the 10-Year US Treasury note continued to decline on Thursday to a record low yield at 1.973 as the flight to quality intensifies. Gold rallied to another new record high at $1832.0 the Troy ounce in late trading. Crude oil traded down from $87.53 per barrel to $81.15 on fears of an economic slowdown. Oil is now below its 200-week simple moving average at $83.94. The euro versus the US dollar traded down from 1.4450 to 1.4275.
Exxon (XOM) has sued the government to retain leases to one of its biggest oil discoveries ever, the Julia field in the Gulf of Mexico, which contains an estimated 1B barrels of recoverable oil. Canadian Solar (CSIQ) is lifted to Neutral from Underweight at Piper Jaffray. In afternoon trading: Shares of Parker Drilling (PKD) are down about 13.5%. Shares of Complete Production Services (CPX) are down about 13.25%. Shares of Key Energy Services (KEG) are down about 13.25%. Shares of Patriot Coal (PCX) are down about 13%. Shares of Magnum Hunter Resources (MHR) are down about 12%. Shares of ATP Oil & Gas (ATPG) are down about 12%.
Energy Select Sector SPDR (XLE) was trading at $64.38 at 4:00 PM on Thursday, down 5.79% on the day – down 5.67% year-to-date.
In afternoon trading: Shares of Noranda Aluminum Holding (NOR) are down about 11.75%. Shares of Ferro Corp (FOE) are down about 11.75%. Shares of Alumina (AWC) are down about 11.5%. Shares of AK Steel (AKS) are down about 11.5%. Shares of Graphic Packaging Holding (GPK) are down about 10.5%. Shares of Albemarle Corp (ALB) are down about 10%. Shares of Walter Energy (WLT) are down about 9.75%. Shares of Dow Chemical (DOW) are down about 9.5%. Shares of United States Steel (X) are down about 9.25%. Shares of Freeport McMoran (FCX) are down about 8.5%.
The Materials Select Sector SPDR (XLB) was trading at $32.52 at 4:00 PM on Thursday, down 5.82% on the day – down 15.33% year-to-date.
Danaher (DHR) gets initiated with an Outperform at Macquarie. United Rentals (URI) is now Neutral from Outperform at Macquarie. Bernstein moves both Ingersoll-Rand (IR) and Honeywell (HON) to Market Perform from Outperform. In afternoon trading: Shares of United Rentals are down about 17.25%. Shares of Meritor Inc (MTOR) are down about 14.25%. Shares of Swift Transportation (SWFT) are down about 13.75%. Shares of Kansas City Southern (KSU) are down about 13.25%. Shares of BE Aerospace (BEAV) are down about 11.5%.
The Industrial Select Sector SPDR (XLI) was trading at $29.59 at 4:00 PM on Thursday, down 5.54% on the day – down 15.16% year-to-date.
Sears’ (SHLD) Q2 losses widened by far more than forecast as weak sales and large discounts harmed margins. Adjusted EPS came in at a loss of $1.13 vs. $0.19 a year earlier and Street predictions of $0.64. Revenue slipped 1% to $10.33B but was above estimates. News Corp.’s (NWS) problems in the U.S. may have become exacerbated following the arrest of former News of the World show-business reporter James Desborough over phone-hacking. Dollar Tree Stores (DLTR) beat estimates by 2 cents, but missed revenue by $10M, and sees FY11 revenue of $6.53-6.62B, EPS of $3.82-3.95. Buckle (BKE) reported Q2 EPS of $0.50 (in-line), while beating revenue by $3.3M. SpectraSite (SSI) reported Q2 EPS of $0.29 (in-line), while missing revenue by $1.5M. Limited Brands (LTD) beat estimates by 2 cents with revenue in-line with estimates, issues Q3 EPS guidance of $0.17-$0.22 (versus consensus of $0.18), and sets FY11 EPS guidance to $2.35-$2.50 (versus consensus of $2.26). Harley-Davidson (HOG) is a new Buy at Keybanc. Oppenheimer upgrades McDonald’s (MCD) – $100 target, Panera Bread (PNRA) – $135 target, Domino’s Pizza (DPZ) – $32 target, and BJ’s Restaurants (BJRI) – $54 price target all to Outperform from Perform. Oppenheimer downgrades Starbucks (SBUX), Texas Roadhouse (TXRH), Einstein Noah (BAGL), and Sonic Corp (SONC) to Perform from Outperform. Abercrombie & Fitch (ANF) is raised to Outperform from Neutral with a $90 target price at brokers Robert W. Baird. Six Flags (SIX) is lifted to Buy from Neutral at Merriman. Borg Warner (BWA) is lifted to Neutral from Sell at Goldman Sachs. Goodyear Tire (GT) gets taken to Sell from Neutral at Goldman Sachs. In afternoon trading: Shares of Eastman Kodak (EK) are UP about 15% as investors are focused on the value of the photography pioneer’s digital-imaging patents. Shares of Hovnanian Enterprises (HOV) are down about 16%. Shares of MGM Resorts (MGM) are down about 14%. Shares of Beazer Homes (BZH) are down about 13.25%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $34.55 at 4:00 PM on Thursday, down 4.95% on the day – down 7.65% year-to-date.
Coca-Cola (KO) intends to invest $4B in China over the next three years, adding to the $3B it has spent since 2009, as it looks to build on “double-digit” growth in its third-largest market. Foster’s (FBRWY) has rejected for a second time SABMiller’s (SBMRY) A$9.51B ($9.97B) takeover offer as being too low after the U.K. brewer yesterday took its bid directly to shareholders. J.M. Smucker Company (SJM) beat estimates by 4 cents, but missed revenue by $60M. PriceSmart (PSMT) is picked up with a Buy at Janney Montgomery Scott. In afternoon trading: Shares of Star Scientific (CIGX) are down about 13%. Shares of Green Mountain Coffee (GMCR) are down about 10.5%. Shares of Supervalu (SVU) are down about 8%. Shares of J.M. Smucker are down about 7.5%. Shares of Whole Foods (WFM) are down about 7.25%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $29.69 at 4:00 PM on Thursday, down 1.79% on the day – up 1.30% year-to-date.
Par Pharmaceutical (PRX) is picked up at an Outperform by Leerink Swann. Biogen Idec (BIIB) is increased to Outperform from Perform with a $109 objective at Oppenheimer. In afternoon trading: Shares of Amarin Corp (AMRN) are down about 11.5%. Shares of Five Star Quality Care (FVE) are down about 11%. Shares of XOMA (XOMA) are down about 10.75%. Shares of Sunrise Senior Living (SRZ) are down about 10.5%. Shares of Agilent Technologies (A) are down about 10.5%. Shares of Zalicus (ZLCS) are down about 10.25%. Shares of Dendreon (DNDN) are down about 10.25%. Shares of MAKO Surgical (MAKO) are down about 10.25%.
The Health Care Select Sector SPDR (XLV) was trading at $31.11 at 4:00 PM on Thursday, down 3.29% on the day – down 1.24% year-to-date.
The Justice Department is reportedly investigating whether S&P improperly rated dozens of mortgage securities in the lead-up to the financial crisis. The SEC is also investigating S&P for any wrongdoing, and possibly Moody’s (MCO) and Fitch (FMLCF) as well. The NY Fed is reportedly demanding more information from big European banks about whether their U.S. units have the ability to fund themselves. In an indication of the recovery of the market for esoteric financial instruments, a bankruptcy court authorized an agreement to securitise loans from a $5.3B Lehman Brothers (LEHMQ) portfolio. Sterne Agee rolls out Buys on Visa (V) – $110 price target, MasterCard (MA) – $390 price target and Western Union (WU) – $21 price target. HCP, Inc (HCP) is now Neutral from Outperform with a $36 objective at Robert W. Baird. Invesco Mortgage Capital (IVR) is reduced to Hold from Buy with a new lower target of $19 at Wunderlich. In afternoon trading: Shares of The PMI Group (PMI) are down about 15%. Shares of MGIC Investment (MTG) are down about 13.25%. Shares of Ashford Hospitality (AHT) are down about 12.75%. Shares of Radian Group (RDN) are down about 12.5%. Shares of Barclays Bank (BCS) are down about 11.75%. Shares of Moody’s are down about 11.5%. Shares of The Royal Bank of Scotland (RBS) are down about 11.25%. Shares of Invesco Mortgage are down about 10.5%.
The Financial Select Sector SPDR (XLF) was trading at $12.38 at 4:00 PM on Thursday, down 4.84% on the day – down 22.38% year-to-date.
NetApp (NTAP) said it saw a “fairly dramatic slowdown” in the final three weeks of July and gave FQ2 revenue guidance below analyst expectations. China Mobile (CHL) has met Steve Jobs several times about introducing an iPhone based on the carrier’s own network standard, which Apple (AAPL) doesn’t support. International Rectifier (IRF) reported FQ4 revenue of $317.2M and EPS of $0.55 (beating consensus by $1.8M and $0.04), but FQ1 2012 revenue guidance of $290M-$310M (below Street forecast of $321.4M). Sina (SINA) reported Q2 EPS of $0.20 (versus consensus of $0.23), while beating revenue by $4M, and issues non-GAAP Q3 revenue guidance of $123M-$126M, advertising revenue at $100M-$102M and non-Advertising revenue at $23M-$24M. iSoftStone (ISS) reported Q2 revenue of $67M and EPS of $0.13 (beating consensus by $5.2M and $0.01), and raised its 2011 revenue guidance to $284M from $277M and EPS guidance to $0.57 from $0.55. CACI International (CACI) beat estimates by 27 cents and revenue by $5M, and expects FY12 revenue of $3.75B to $3.95B and EPS of $4.70 to $4.90 (versus estimates of $3.84B and $4.67). JDS Uniphase’s (JDSU) expects FQ1 2012 revenue of $400M-$425M (below consensus of $470.3M). Synopsys (SNPS) sees FQ4 revenue at $386M-$392M and EPS at $0.44-$0.46 and full-year revenue at $1.531B-$1.537B and EPS at $1.79-$1.81. Akamai Tech (AKAM) is initiated with an Underperform and $18 price target at Jefferies. Red Hat (RHT) is picked up with a Buy and $45 target at Citigroup. Arris (ARRS) is initiated with a Buy and $12 price target at Kaufman Bros. Kaufman has less bullish Holds on Harmonic (HLIT) and SeaChange (SEAC) with respective price objectives $6.50 and $9. SolarWinds (SWI) is begun with a Buy at Jefferies. Nokia (NOK) is now Hold from Underperform at Jefferies. NetApp (NTAP) is now Market Perform from Outperform with William Blair. In afternoon trading: Shares of Acme Packet (APKT) are down about 19.5%. Shares of Aruba Networks (ARUN) are down about 18.25%. Shares of Riverbed Technology (RVBD) are down about 15.75%. Shares of NetApp are down about 15.5%. Shares of TIBCO Software (TIBX) are down about 13.25%. Shares of JDS Uniphase are down about 13.25%. Shares of Cognizant Technology (CTSH) are down about 13%. Shares of Teradata (TDC) are down about 13%.
The Technology Select Sector SPDR (XLK) was trading at $23.08 at 4:00 PM on Thursday, down 4.86% on the day – down 8.38% year-to-date.
China Mobile (CHL) has met Steve Jobs several times about introducing an iPhone based on the carrier’s own network standard, which Apple (AAPL) doesn’t support. China Mobile (CHL) beat estimates by $0.82B yuan and revenue by 3.44B yuan. France Telecom (FTE) is taken to Neutral from Underperform at Credit Suisse. In afternoon trading: Shares of Global Crossing (GLBC) are down about 10.5%. Shares of Level 3 Communications (LVLT) are down about 9.75%. Shares of Leap Wireless (LEAP) are down about 9.5%. Shares of MetroPCS (PCS) are down about 6.5%. Shares of Sprint Nextel (S) are down about 6.25%.
The NASDAQ Telecommunications Index (IXTC) was trading at $180.02 at 4:00 PM on Thursday, down 5.89% on the day – down 20.12% year-to-date.
Veolia Environnement (VE) is cut to Neutral from Buy at UBS. In afternoon trading: Shares of Veolia Environment is down about 9.25%. Shares of RWE AG (RWEOY) are down about 7.75%. Shares of Dynegy (DYN) are down about 7.25%. Actives: Shares of Genon Energy (GEN) are down about 6.75%. Shares of Duke Energy (DUK) are down about a half of a percent. Shares of AES Corp (AES) are down about 4.5%. Shares of PPL Corp (PPL) are down about 0.3%. Shares of Southern Co (SO) are down about 1.1%.
The Utilities Select Sector SPDR (XLU) was trading at $32.59 at 4:00 PM on Thursday, down 1.18% on the day – up 3.99% year-to-date.
STOCKS: XOM, CSIQ, PKD, CPX, KEG, PCX, MHR, ATPG, NOR, FOE, AWC, AKS, GPK, ALB, WLT, DOW, X, FCX, DHR, URI, IR, HON, MTOR, SWFT, KSU, BEAV, SHLD, NWS, DLTR, BKE, SSI, LTD, HOG, MCD, PNRA, DPZ, BJRI, SBUX, TXRH, BAGL, SONC, ANF, SIX, BWA, GT, EK, HOV, MGM, BZH, KO, FBRWY, SBMRY, SJM, PSMT, CIGX, GMCR, SVU, WFM, PRX, BIIB, AMRN, FVE, XOMA, SRZ, A, ZLCS, DNDN, MAKO, MCO, FMLCF, LEHMQ, V, MA, WU, HCP, IVR, PMI, MTG, AHT, RDN, BCS, RBS, NTAP, CHL, AAPL, IRF, SINA, ISS, CACI, JDSU, SNPS, AKAM, RHT, ARRS, HLIT, SEAC, SWI, NOK, NTAP, APKT, ARUN, RVBD, TIBX, CTSH, TDC, FTE, GLBC, LVLT, LEAP, PCS, S, VE, RWEOY, DYN, GEN, DUK, AES, PPL, SO