Initial Jobless Claims came in at 410,000 still well above the 350,000 recessionary threshold. The Dow Jones Industrial Average traded up to 12,845.99 staying well below the 200-day simple moving average at 12,991.82. The Nasdaq traded up to 2928.17 below the 200-day SMA at to 2984.97.
Asian stocks were higher on Wednesday. The Nikkei 225 closed at 9,223 – up 0.87%. The Hang Seng closed at 21,524 – up 1.39%. European exchanges closed higher on Wednesday. The FTSE 100 ended the day at 5,752 – up 0.07%. The DAX ended the day at 7,185 – up 0.16%. The CAC 40 ended the day at 3,477 – up 0.44%. The yield on the 10-Year US Treasury traded between 1.642% and 1.695% staying below the 50-day and 200-day simple moving averages at 1.702% and 1.773%.
Comex gold rebounded from $1718.4 the Troy ounce to $1732.0 still between the 200-day and 50-day simple moving averages at $1665.3 and $1743.3. Nymex crude oil rebounded from $86.65 per barrel to $87.89 still below its 50-day and 200-day simple moving averages at $89.57 and $94.20. The euro versus the dollar rebounded from 1.2740 to 1.2831 trading around its 200-day simple moving average at 1.2803.
Boardwalk Pipeline (BWP) gets lifted to Outperform from Neutral at Credit Suisse. Petróleo Brasileiro (PBR) is reduced to Market Perform from Outperform at Raymond James. LinnCo (LNCO) is begun with a Neutral at Bank of America-Merrill Lynch and an Outperform at Robert W. Baird. Linn Energy (LINE) is a new Neutral at Bank of America-Merrill Lynch, Credit Suisse, and Goldman Sachs. Marathon Petroleum (MPC) is resumed with a Buy at Bank of America-Merrill. Matrix Service (MTRX) is initiated with a Buy at DA Davidson. MPLX LP (MPLX) is begun with a Buy at Citigroup. Pioneer Natural Resources (PXD) is a new Buy at Citigroup. Inergy (NRGY) is now Outperform from Neutral at Robert W. Baird. Inergy Midstream (NRGM) is now Outperform from Perform at Robert W. Baird. Lukoil (LUKOY) is upgraded to Outperform from Market Perform at Credit Suisse. Repsol (REPYY) gets a Buy-from-Hold hoist at brokerage boutique Kepler. Dow components – Chevron (CVX) is up about 0.4%. Exxon Mobil (XOM) is up about 0.4%. Energy Select Sector SPDR (XLE) was trading at $70.54 at 3:30 PM on Wednesday, up 0.44% on the day – up 2.04% year-to-date.
AK Steel (AKS) is now Neutral from Sell at Goldman Sachs. Cliffs Natural Resources (CLF) is lowered to Sell from Neutral at Goldman Sachs. K+S Aktiengesellschaft (KPLUF) is cut to Underweight from Equal Weight at JPMorgan. Dow Components – Alcoa (AA) is down slightly. DuPont (DD) is down about 0.6%. The Materials Select Sector SPDR (XLB) was trading at $35.88 at 3:30 PM on Wednesday, unchanged on the day – up 7.10% year-to-date.
Deere’s (DE) FQ4 net profit edged up 2.7% to $687.6M as EPS of $1.75 missed forecasts, although revenue climbed 14% to $9.79B and beat expectations. Joy Global (JOY) is boosted to Market Perform from Underperform at BMO Capital. Emerson Electric (EMR) is downgraded to Perform from Outperform at Oppenheimer. BE Aerospace (BEAV) is an Outperform at Imperial Capital. Wesco Aircraft (WAIR) is a new In-line at Imperial Capital. Dow components – Boeing Co (BA) is up about 0.9%. Caterpillar (CAT) is down slightly. General Electric (GE) is up about 0.3%. 3M Company (MMM) is down slightly. United Technologies (UTX) is up about 1.1%. The Industrial Select Sector SPDR (XLI) was trading at $36.24 at 3:30 PM on Wednesday, up 0.06% on the day – up 7.38% year-to-date.
Richard Schulze is now reportedly working separately with P-E firms Cerberus, TPG Capital and Leonard Green on a bid for Best Buy (BBY) despite previous speculation saying Cerberus had dropped out. Hedge fund Tiger Global disclosed it had acquired a 9.9% stake in Groupon (GRPN). Apollo (APO) and KKR (KKR) are unlikely to collaborate with Schulze on an offer. News Corp (NWS) is reportedly in preliminary negotiations to acquire CBS’s (CBS) Simon & Schuster book business. Kid Brands (KID) missed estimates by 7 cents and revenue by $7M. Zale (ZLC) missed estimates by 20 cents and revenue by $7M. Books-A-Million (BAMM) reported Q3 EPS of -$0.18 on revenue of $104.7M. Coach Inc. (COH) is initiated with an Outperform at Wells Fargo. Deckers Outdoor (DECK) is a new Outperform with Wedbush. Six Flags Entertainment (SIX) is started with a Neutral at Longbow. Expedia (EXPE) is taken to Equal-Weight from Underweight by Barclays. Yum Brands (YUM) is initiated with an Outperform at Macquarie. Penn National Gaming (PENN) is now Buy from Neutral at Lazard Capital. Skechers USA (SKX) is moved to Positive from Neutral at Susquehanna. Big Movers – Zale (ZLC) is down about 26.5%. Groupon (GRPN) is up about 14.5%. Skechers USA (SKX) is up about 10%. Dow Components – Disney (DIS) is up about 0.7%. Home Depot (HD) is up about 0.5%. McDonalds (MCD) is up about 0.4%. The Consumer Discretionary Select Sector SPDR (XLY) was trading at $46.545 at 3:30 PM on Wednesday, up 0.36% on the day – up 19.28% year-to-date.
Hostess Brands will again ask bankruptcy Judge Robert Drain to authorize its liquidation after mediation talks with the company’s striking bakers’ union failed to resolve their differences. Potential suitors for all or part of Hostess’ assets include Flowers Foods (FLO), which said on Monday that it has renegotiated lending terms to enable it to borrow additional cash. Archer Daniels Midland (ADM) is upgraded to Outperform from Market Perform by BMO Capital. Whole Foods (WFM) gets upgraded to Buy from Hold at Goldman. Brasil Foods (BRFS) is initiated with a Buy at Citigroup. Hormel Foods (HRL) is cut to Underperform from Outperform at Crédit Agricole. Dow components – Coca Cola (KO) is up about 0.5%. Procter & Gamble (PG) is up slightly. Wal-Mart (WMT) is down slightly. The Consumer Staples Select Sector SPDR (XLP) was trading at $35.132 at 3:30 PM on Wednesday, up 0.09% on the day – up 8.13% year-to-date.
Lazard launches Buys on Aetna (AET) and UnitedHealth (UNH). It has a new Neutral on WellPoint (WLP). Medicines Company (MDCO) is a new Outperform at Oppenheimer. Merck (MRK) is moved to Buy from Neutral at MKM Partners. Biogen Idec (BIIB), Celgene (CELG), and Threshold Pharmaceuticals (THLD) are all begun with Buys at Brean Capital. Infinity Pharmaceutical (INFI) is resumed with an Outperform at RBC Capital. Repros Therapeutics (RPRX) is resumed as a Buy at Roth Capital. HeartWare (HTWR) is moved to Market Perform from Outperform with Wells Fargo. St. Jude Medical (STJ) gets moved to Market Perform from Outperform with Wells Fargo. Big Movers – Sequenom (SQNM) is up about 13.5%. Vivus (VVUS) is up about 12.5%. Keryx Biopharmaceuticals (KERX) is up about 10%. St. Jude Medical (STJ) is down about 12%. Dow Components – Johnson & Johnson (JNJ) is down about 0.2%. Merck (MRK) is up about 0.75%. Pfizer (PFE) is up about 0.2%. United Health Group (UNH) is up about 0.8%. The Health Care Select Sector SPDR (XLV) was trading at $39.54 at 3:30 PM on Wednesday, down 0.05% on the day – up 13.98% year-to-date.
New York Attorney-General Eric Schneiderman reportedly plans to sue Credit Suisse (CS) for allegedly misleading investors who lost over $11.2B on mortgage bonds. A federal judge has allowed a lawsuit from the Federal Housing Finance Agency to go forward against Barclays (BCS) over the sale of $4.9B in questionable mortgage bonds to Fannie Mae (FNMA) and Freddie Mac (FMCC). Richard Schulze is now reportedly working separately with P-E firms Cerberus, TPG Capital and Leonard Green on a bid for Best Buy (BBY) despite previous speculation saying Cerberus had dropped out. Apollo (APO) and KKR (KKR) are unlikely to collaborate with Schulze on an offer. Credit Suisse assigns Outperforms on East West Bancorp (EWBC), First Republic Bank (FRC), Signature Bank (SBNY), and Susquehanna Bank (SUSQ). SVB Financial (SIVB) is taken to Buy from Hold at Citigroup. Realogy (RLGY) is a new Neutral at Citigroup. British Land (BTLCY) is moved to Overweight from Equal Weight at Morgan Stanley. First Republic Bank (FRC) is raised to Buy from Hold at Jefferies. Greenlight Capital (GLRE) gets upgraded to Buy from Neutral at UBS. Lloyds Banking Group (LYG) is lifted to Equal Weight from Underweight at Morgan Stanley. Webster Financial (WBS) is moved to Equal Weight from Overweight at Morgan Stanley. Commerce Bancshares (CBSH) is cut to Underweight from Equal-Weight at Morgan Stanley. Eaton Vance (EV) gets slashed to Sell from Neutral at Citigroup.
Big Movers – Ambac Financial (ABKFQ) is up about 12.5%. MBIA (MBI) is up about 12%. Dow Components – American Express (AXP) is up about 0.2%. Bank of America (BAC) is up about 1.25%. JP Morgan Chase (JPM) is up slightly. The Travelers Companies (TRV) is up about 0.5%. The Financial Select Sector SPDR (XLF) was trading at $15.635 at 3:30 PM on Wednesday, down 0.10% on the day – up 20.276% year-to-date.
Hewlett-Packard (HPQ) has taken an $8.8 billion write-down in its fourth-quarter earnings, including $5.3 billion on its acquisition of software company Autonomy. The FBI is reportedly investigating H-P’s accusations of accounting improprieties at Autonomy prior to H-P buying the software company and for which it took an $8.8B charge in FQ4. The company’s Q4 earnings beat estimates by 2 cents, but revenue missed estimates by $430M. Hewlett-Packard (HPQ) is moved to Market Perform from Outperform at Raymond James. H-P is also taken to Underperform from Neutral at Mizuho and to Sector Perform from Outperform at RBC Capital. The FTC is reportedly uncertain that it can successfully sue Google (GOOG) for placing links to its products and services above those of its competitors in search results. A judge has to decide how much Microsoft (MSFT) should pay for the use of Google (GOOG) wireless and video patents following the end of a week-long trial yesterday. Google wants $4B a year, although Microsoft reckons that $1M+ is all that Google deserves. The Department of Justice and the FTC plan to hold informal hearings next month on whether patent trolls, which license IP but don’t sell any tangible products, do more harm than good. A crackdown could well hurt the likes of Acacia (ACTG), InterDigital (IDCC) and Rambus (RMBS). Salesforce.com (CRM) beat estimates by a penny and revenue by $10.9M. The company expects FQ4 revenue of $825M-$830M and EPS of $0.38-$0.40 (versus consensus of $829.9M and $0.40). The company is setting FY14 revenue guidance of $3.8B-$3.85B (in-line with a $3.83B consensus). Millennial Media (MM) is a new Buy at Janney Montgomery Scott. NCR Corp. (NCR) is added to JPMorgan’s Focus List of favored equities. Research In Motion (RIMM) is raised to Hold from Underperform at Jefferies. Riverbed Technology (RVBD) is upgraded to Outperform at Northland Securities. ARM Holdings (ARMH) is downgraded to Outperform from Strong Buy at Raymond James. Intel (INTC) gets cut to Neutral from Buy at UBS.
Big Movers – China Digital TV Holdings (STV) is down about 38%. Nokia (NOK) is up about 14.5%. Dow Components – Cisco Systems (CSCO) is up about 0.6%. Hewlett-Packard (HPQ) is up about 2.7%. IBM (IBM) is up about 0.75%. Intel Corp (INTC) is down about 0.8%. Microsoft (MSFT) is up about 1.1%. The Technology Select Sector SPDR (XLK) was trading at $28.398 at 3:30 PM on Wednesday, up 0.35% the day – up 11.58% year-to-date.
America Móvil (AMX) is taken to Neutral from Buy at Citigroup. Dow Components – AT&T (T) is up about 0.3%. Verizon (VZ) is up about 0.6%. The NASDAQ Telecommunications Index (IXTC) was trading at $188.33 at 3:30 PM on Wednesday, up 0.59% on the day – down 4.37% year-to-date.
Big Mover – Centrais Eletricas Brasileiras (EBR) is down about 10.5%. The Big Names – Dominion Resources (D) is down about 0.6%. Edison International (EIX) is down about 1.1%. First Energy (FE) is down about 0.9%. PG&E Corp (PCG) is down about 0.8%. Southern Company (SO) is down about 0.9%. The Utilities Select Sector SPDR (XLU) was trading at $34.06 at 3:30 PM on Wednesday, down 0.79% on the day – down 5.34% year-to-date.
STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KO, PG, WMT, JNJ, MRK, PFE, UNH, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, BWP, PBR, LNCO, LINE, MPC, MTRX, MPLX, PXD, NRGY, NRGM, LUKOY, REPYY, AKS, CLF, KPLUF, DE, JOY, EMR, BEAV, WAIR, BBY, GRPN, APO, KKR, NWS, CBS, KID, ZLC, BAMM, COH, DECK, SIX, EXPE, YUM, PENN, SKX, FLO, ADM, WFM, BRFS, HRL, AET, UNH, WLP, MDCO, MRK, BIIB, CELG, THLD, INFI, RPRX, HTWR, STJ, SQNM, VVUS, KERX, CS, BCS, FNMA, FMCC, EWBC, FRC, SBNY, SUSQ, SIVB, RLGY, BTLCY, FRC, GLRE, LYG, WBS, CBSH, EV, ABKFQ, MBI, HPQ, GOOG, MFST, ACTG, IDCC, RMBS, CRM, MM, NCR, RIMM, RVBD, ARMH, INTC, STV, NOK, AMX, EBR