Federal Reserve Chairman Ben Bernanke hinted at the possible need for additional monetary policy support as economic weakness may prove to be more persistent then expected, and that deflationary risks might re-emerge. The Dow Jones Industrial Average opened higher then popped to 12,611 on the Bernanke testimony with the NASDAQ at 2825. Both indices consolidated gains in afternoon trading with the Dow trading below 12,500 and the NASDAQ below 2800 in the final hour of trading.
Asian stocks rallied on Wednesday as China reported 9.5% GDP growth last quarter. The Nikkei 225 rebounded by 0.4% to 9,963. The Hang Seng which plunged 3.1% on Tuesday recovered by 1.2% to 21,927 on Wednesday. European stocks followed Asia’s upward move and gathered momentum on the heels of Bernanke’s testimony. The FTSE 100 rebounded 0.6% to 5,904. The DAX popped 1.3% to 7,268. The CAC 40 picked up 0.5% to 3,792. The yield on the 10-Year US Treasury note moved higher on Wednesday morning from 2.877 percent to 2.959. The US Treasury auctioned $21 billion 10-Year notes at 2.918 with a bid to cover at 3.17 times. This was reasonable well-received and the 10-Year yield dipped to 2.884 in late afternoon trading.
Gold traded to a new all time high at $1588.9 on Wednesday high above the May 2nd prior high at $1577.4. Crude oil traded below its 200-day simple moving average at $93.91 on Tuesday and above its 50-day SMA at $98.17 on Wednesday with a high at $99.21. Import prices declined by 0.5% in June on lower crude oil prices, but year over year import prices are up 13.6%. The euro versus the US dollar traded below its 200-day simple moving average at 1.3908 on Tuesday up to 1.4191 on Wednesday.
HollyFrontier (HFC) is a new Outperform at Credit Suisse. Clean Energy Fuels (CLNE) is upgraded to Buy from Underperform at Bank of America-Merrill Lynch. EXCO Resources (XCO) is increased to Buy from Hold at Stifel Nicolaus. Canadian Natural Resources (CNQ) is raised to Buy from Hold at Stifel Nicolaus. In afternoon trading: Shares of Clean Energy Fuels are up about 12.1%. Shares of General Maritime (GMR) are up about 7%. Shares of Complete Production Services (CPX) are up about 6.75%.
Energy Select Sector SPDR (XLE) was trading at $75.35 at 4:00 PM on Wednesday, up 0.75% on the day – up 10.40% year-to-date.
Cliffs Natural Resources (CLF) is a new Positive at Susquehanna. Carpenter Technology (CRS) is downgraded to Hold from Buy at KeyBanc. In afternoon trading: Shares of Golden Star Resources (GSS) are up about 9.5%. Shares of Jaguar Mining (JAG) are up about 7.5%. Shares of Zagg (ZAGG) are up about 7.3%. Shares of Hecla Mining (HL) are up about 7.2%. Shares of Silver Standard Resources (SSIR) are up about 7.1%.
The Materials Select Sector SPDR (XLB) traded at $39.60 at 4:00 PM on Wednesday, up 0.87% on the day – up 3.10% year-to-date.
Vitran (VTNC) is cut to Hold from Buy at BB&T Capital. In afternoon trading: Shares of TBS International (TBSI) are down about 16%. Shares of China Ritar Power (CRTP) are down about 14.25%. Shares of Fushi Copperweld (FSIN) are up about 6.8%. Shares of Box Ships (TEU) are up about 5.4%. Shares of Hill International (HIL) are up about 5.1%. Shares of A123 Systems (AONE) are up about 5%.
The Industrial Select Sector SPDR (XLI) traded at $36.91 at 4:00 PM on Wednesday, up 0.41% on the day – up 5.85% year-to-date.
Jay Rockefeller, a Democratic Senate committee chairman, last night became the first senior politician to call for U.S. investigations into the phone-hacking scandal at News Corp. (NWSA). eBay (EBAY) and Yahoo (YHOO) are new Neutrals at JPMorgan, which assigns Outperforms on Google (GOOG), Amazon.com (AMZN), and Netflix (NFLX). Omnicom Group (OMC) is a new Market Perform with Wells Fargo, which has Outperforms on WPP PLC (WPPGY), and Interpublic (IPG). Marriott (MAR) is moved to Outperform from Neutral at Robert W. Baird with a new target of $44. McGraw-Hill (MHP) gets a Buy-from-Neutral boost at Goldman Sachs. British Sky Broadcasting Group (BSYBY) is upgraded to Overweight from Equalweight at Barclays Capital. MGM Resorts International (MGM) is raised to Hold from Underweight by KeyBanc Capital Markets. Grand Canyon Education (LOPE) gets lifted to Outperform from Sector Perform at RBC Capital Markets. Dollar Tree (DLTR) is downgraded to Hold from Buy at BB&T Capital. Grupo Televisa (TV) is reduced to Sell from Neutral at Goldman. News Corp (NWSA) is now Hold from Buy at Argus following the tabloid scandal. In afternoon trading: Shares of Orbitz Worldwide (OWW) are down about 10.7%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.58 at 4:00 PM on Wednesday, up 0.52% on the day – up 8.47% year-to-date.
British American Tobacco (BTI) gets taken to Hold from Buy at brokerage Collins Stewart. L’Oreal (LRLCF) is lowered to Neutral from Buy at UBS. In afternoon trading: Shares of China-Biotics (CHBT) are up about 13%. Shares of Zhongpin (HOGS) are up about 5.75%. Shares of Farmer Brothers (FARM) are down about 5.9%. Shares of Lifeway Foods (LWAY) are down about 5.1%.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.41 at 4:00 PM on Wednesday, unchanged on the day – up 7.16% year-to-date.
A consortium comprising Apax Partners and pension funds has agreed to buy Kinetic Concepts (KCI) in a deal worth $6.3B ($68.50 / share vs. yesterday’s close of $64.49). JPMorgan launches Neutral rated coverage on Quest Diagnostics (DGX) and Laboratory Corp (LH). InterMune (ITMN) is a new Buy ($50 target) at Brean Murray. In afternoon trading: Shares of Ventrus Biosciences (VTUS) are down about 9.5%. Shares of Idenix Pharmaceuticals (IDIX) are up about 8.3%. Shares of Tengion (TNGN) are up about 8.2%. Shares of Biostar Pharmaceuticals (BSPM) are up about 6.5%. Shares of ResMed (RMD) are up about 6.2%.
The Health Care Select Sector SPDR (XLV) traded at $35.43 at 4:00 PM on Wednesday, up 0.40% on the day – up 12.48% year-to-date.
Reinsurer Validus Holdings (VR) has bid $3.5B ($55.95 / share – 14% premium) to buy Transatlantic Holdings (TRH), topping a $3.2B offer from Allied World Assurance (AWH). Capital One's (COF) Q2 net income surged 50% to $911M and easily beat expectations by 20 cents, while revenue climbed 2.2% to $3.99B and provisions for bad loans halved. COF also said it would sell $2B in shares to help it pay for its acquisition of ING Direct (ING). Bank of America's (BAC) $8.5B settlement over losses on mortgage bonds, which some investors object to, has come under further pressure. TD Ameritrade (AMTD) and Charles Schwab (SCHW) are each initiated with Outperforms at BMO Capital Markets, which has a Market Perform on E*TRADE (ETFC). Bank of Hawaii (BOH) is resumed with a Market Perform at Rodman & Renshaw. MB Financial (MBFI) is picked up at Perform by Oppenheimer, which has an Outperform and $70 objective on IberiaBank (IBKC). Washington Banking Co. (WBCO) is a new Outperform and $17 target price at Keefe Bruyette. SLM Corp (SLM) is initiated with a Positive at Citadel. In afternoon trading: Shares of Validus Holdings are down about 9.5%. Shares of Transatlantic Holdings (TRH) are up about 5.6%. Shares of ING Group (ING) are up about 5.3%.
The Financial Select Sector SPDR (XLF) traded at $14.99 at 4:00 PM on Wednesday, up slightly on the day – down 6.02% year-to-date.
Electronic Arts (ERTS) has agreed to buy PopCap Games, the provider of "Bejeweled" and "Plants vs. Zombies," for up to $1.3B in cash and shares. Research In Motion's (RIMM) co-CEOs and Chairmen have six months to 'prove' the management structure works or face the reintroduction of a measure to split the roles. RIM may be having a tough time but it's getting support from carriers, which are beginning to feel increasingly threatened by the growing prominence of Apple (AAPL) and Google (GOOG). ADTRAN (ADTN) beat estimates by 2 cents with revenue in-line with estimates. ASML (ASML) beat estimates by €0.06. eBay (EBAY) and Yahoo (YHOO) are new Neutrals at JPMorgan, which assigns Outperforms on Google (GOOG), Amazon.com (AMZN), and Netflix (NFLX). Volterra Semiconductor (VLTR) is cut to Hold from Buy by S&P Equity Research. In afternoon trading: Shares of LinkedIn (LNKD) are up about 10%. Shares of Sina (SINA) are up about 8.4%. Shares of Renren (RENN) are up about 8.2%. Shares of Powerwave Tech (PWAV) are down about 10%. Shares of ADTRAN are down about 8.7%.
The Technology Select Sector SPDR (XLK) traded at $25.86 at 4:00 PM on Wednesday, up 0.23% on the day – up 2.66% year-to-date.
MetroPCS (PCS) is begun with a Buy rating and $24 price objective at Kaufman Brothers. In afternoon trading: Actives: Shares of Level 3 (LVLT) are down about 0.8%. Shares of Sprint Nextel (S) are up slightly. Shares of AT&T (T) are up slightly. Shares of Centurylink (CTL) are down about 1.2%. Shares of Verizon (VZ) are down about 0.3%. Shares of Frontier (FTR) are up slightly. Shares of Clearwire (CLWR) are down about 6.2%.
The NASDAQ Telecommunications Index (IXTC) traded at $209.61 at 4:00 PM on Wednesday, down slightly on the day – down 6.99% year-to-date.
Northwestern Corp (NWE) is a new Outperform and $38 price target at brokers Robert W. Baird. In afternoon trading: Actives: Shares of Duke Energy (DUK) are down about a half of a percent. Shares of Genon Energy (GEN) are up about 1%. Shares of AES Corp (AES) are up about a half of a percent. Shares of Exelon (EXC) are down about 0.4%. Shares of Southern (SO) are up slightly. Shares of NRG Energy (NRG) are up about 1.3%.
The Utilities Select Sector SPDR (XLU) traded at $33.46 at 4:00 PM on Wednesday, down 0.27% on the day – up 6.76% year-to-date.
STOCKS: HFC, CLNE, XCO, CNQ, GMR, CPX, CLF, CRS, GSS, JAG, ZAGG, HL, SSIR, VTNC, TBSI, CRTP, FSIN, TEU, HIL, AONE, NWS, EBAY, YHOO, GOOG, AMZN, NFLX, OMC, WPPGY, IPG, MAR, MHP, BSYBY, MGM, LOPE, DLTR, TV, OWW, BTI, LRLCF, CHBT, HOGS, FARM, LWAY, KCI, DGX, LH, ITMN, VTUS, IDIX, TNGN, BSPM, RMD, VR, TRH, AWH, COF, ING, BAC, AMTD, SCHW, ETFC, BOH, MBFI, IBKC, WBCO, SLM, ERTS, RIMM, AAPL, ADTN, ASML, VLTR, LNKD, SINA, RENN, PWAV, PCS, LVLT, S, T, CTL, VZ, FTR, CLWR, NWE, DUK, GEN, AES, EXC, SO, NRG
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