The University of Michigan Consumer Sentiment Survey came in at a weaker than expected reading of 71.8 for June, the lowest reading since February. May’s reading of Leading Indicators rose by a stronger than expected 0.8%. The Dow Jones Industrial Average traded higher to 12,073 on Friday morning then moved sideways staying in the green for the day and week. The NASDAQ opened at 2648 and drifted down to 2609 and closed below its 200-day simple moving average is 2641 for the third consecutive day.
On Thursday the Dow Industrial Average rose by 65 points to 11,962, up 3.3% year to date and down 7.1% since its May 2nd high at 12,876. The NASDAQ slipped 7 points on Thursday to 2624 and is down 1.1% year to date and down 9.1% since its May 2nd high at 2887.75.
Asian stocks slumped on Friday with the Nikkei 225 down 0.6% to 9,351 and the Hang Seng Index down 1.2%. European stocks opened lower, but rebounded strongly after the French and Germans agreed to discuss another bailout package for Greece in July. The FTSE 100 was up 0.4%. The DAX was up 0.8%. The CAC 40 was up 0.8%. The news of a pending Greek bailout resulted in market volatility; the yield on the 10-Year U.S. Treasury note rose from 2.909 percent to 2.980 then consolidated that range. Comex gold traded up from $1523.2 the Troy ounce to $1543.0. Nymex crude oil tested its 200-day simple moving average at $92.25 Friday morning then popped to $95.40 before drifting to a day’s low at $91.84. The euro versus the US dollar rose from 1.4130 to 1.4336.
Energy
Energy Transfer Equity (ETE) is taken to Hold from Buy with Wunderlich. Southern Union (SUG) is cut to Hold from Buy at Jefferies after yesterday’s acquisition related surge. In afternoon trading: Shares of BPZ Resources (BPZ) are up about 23%. Shares of Longwei Petroleum (LPH) are up about 8%. Shares of Matrix Service (MTRX) are up about 5.5%. Shares of InterOil (IOC) are down about 6.9%. Shares of Uranium Resources (URRE) are down about 5.5%.
Energy Select Sector SPDR (XLE) was trading at $71.69 at 4:00 PM on Friday, down 0.62% on the day – up 5.03% year-to-date.
Materials
Potash (POT) is moved to Buy from Hold at TD Newcrest. In afternoon trading: Shares of China Agritech (CAGC) are down about 12%. Shares of China Shengda Packaging (CPGI) are down about 8.5%. Shares of Eagle Materials (EXP) are up about 5.25%. Actives: Shares of Alcoa (AA) are down about 0.3%. Shares of Graham Packaging (GRM) are down about 1.6%. Shares of Freeport McMoran (FCX) are up about 0.4%.
The Materials Select Sector SPDR (XLB) traded at $36.64 at 4:00 PM on Friday, down 0.56% on the day – down 4.61% year-to-date.
Industrials
Enpro Industries (NPO) is assigned an Outperform rating and $57 price objective at Oppenheimer. A.O. Smith (AOS) gets a Buy-from-Neutral boost at KeyBanc Capital. Actuant (ATU) is raised to Buy from Neutral at UBS. DryShips (DRYS) is listed to Buy from Neutral at Sterne Agee. Diana Shipping (DSX) gets downgraded to Underperform from Market Perform at Credit Suisse. China Ming Yang Wind Power (MY) is cut to Neutral from Outperform at Credit Suisse. In afternoon trading: Shares of Harbin Electric (HRBN) are up about 27%. Shares of A-Power Energy (APWR) are down about 23.5%.
The Industrial Select Sector SPDR (XLI) traded at $35.45 at 4:00 PM on Friday, down slightly on the day – up 1.66% year-to-date.
Consumer Discretionary
Shares of Pandora Media (P) collapsed 24% during its second day of trading. The close of $13.26 was below the listing price of $16 as fears about competition and Pandora’s lack of profitability overshadowed initial enthusiasm for the stock. Staples (SPLS) is now Neutral from Buy at Nomura. In afternoon trading: Shares of Deer Consumer Products (DEER) are down about 20.5%. Shares of Pandora are down about 16.5%. Shares of China Xiniya Fashion (XNY) are down about 12.75%. Shares of Caribou Coffee (CBOU) are up about 11.5%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $37.95 at 4:00 PM on Friday, up 0.40% on the day – up 1.44% year-to-date.
Consumer Staples
Private equity firm Leonard Green has teamed up with CVC Capital to make an offer for BJ’s Wholesale Club (BJ), which has a market capitalization of $2.6B. In afternoon trading: Shares of Yuhe International (YUII) are down about 40.5%. Shares of Central Garden (CENT) are up about 12.25%. Shares of B&G Foods (BGS) are up about 5.5%. Shares of USANA Health (USNA) are up about 5.5%.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.14 at 4:00 PM on Friday, down slightly on the day – up 6.23% year-to-date.
Healthcare
Johnson & Johnson (JNJ) is initiated with a Market Perform rating and $70 price objective at Morgan Keegan. Morgan Keegan also has Market Performs on Medtronic (MDT) – $43 price target, Edwards Lifesciences (EW) – $97 price target, and Thoratec (THOR) -$35 price target. It has Outperforms on Abbott Labs (ABT) – $61 price target, Boston Scientific (BSX) – $8 price target, HeartWare (HTWR) – $87 price target, and St. Jude Medical (STJ) – $60 price target. Stryker (SYK) is a new Neutral at brokerage Collins Stewart, which begins Zimmer Holdings (ZMH) at a Buy. Pharmasset (VRUS) is a new Buy at Brean Murray. InterMune (ITMN) is upgraded to Overweight from Neutral at JP Morgan. MediaMind Tech (MNMD) is moved to Neutral from Buy at JPMorgan.
The Health Care Select Sector SPDR (XLV) traded at $34.77 at 4:00 PM on Friday, down 0.26% on the day – up 10.38% year-to-date.
Financials
Capital One (COF) has beaten out bids from GE Capital (GE) and CIT Group (CIT) to buy ING’s (ING) U.S. online bank for $9B. The purchase of ING Direct will enable Capital One to extend its offerings beyond credit cards and other consumer lending, and it expects the new unit to add to its EPS from next year. The SEC may bring civil fraud charges against credit-rating companies for their role in the financial crisis. The regulator is investigating S&P (MHP) and Moody’s (MCO), and is focusing on whether the agencies committed fraud by not doing the research necessary to adequately rate the subprime mortgages and other loans that underpinned mortgage-bond deals. The world’s largest banks are facing an extra capital requirement of 2.5% of their assets that would be on top of the ‘Basel III’ minimum of 7% set by regulators last year. The banks include Citigroup (C), JPMorgan (JPM), Bank of America (BAC), HSBC (HBC) and Barclays (BCS). Nasdaq OMX (NDAQ) has confirmed it has made a bid for a minority stake in LCH.Clearnet, operator of the world’s largest swaps clearing house. Citigroup’s (C) drawn-out efforts to sell consumer unit CitiFinancial have reportedly hit a stumbling block as potential bidders worry about the division’s health as a standalone business. Wells Fargo (WFC) will no longer offer reverse mortgages, as home prices are too unpredictable. FXCM Inc (FXCM) is initiated with a Hold at Deutsche Bank. FalconStor Software (FALC) is a new Buy and $6 target price at Wunderlich. Wintrust Financial (WTFC) is a picked up as an Outperform at Keefe Bruyette. First Commonwealth (FCF) is upgraded to Outperform from Market Perform at Keefe Bruyette. CACI International (CACI) is upgraded to Buy from Neutral at SunTrust, which also takes Capital One (COF) to Buy from Neutral.
The Financial Select Sector SPDR (XLF) traded at $14.89 at 4:00 PM on Friday, up 0.55% on the day – down 6.64% year-to-date.
Information Technology
Oracle (ORCL) is seeking billions of dollars in damages from Google (GOOG) for infringing patents and copyrights related to the use of the Java programming language in the latter’s Android software. Shares of Pandora Media (P) collapsed 24% during its second day of trading. The close of $13.26 was below the listing price of $16 as fears about competition and Pandora’s lack of profitability overshadowed initial enthusiasm for the stock. Harris (HRS) is a new Neutral at Goldman Sachs. Ciena (CIEN) is now Neutral from Sell at UBS. Oracle (ORCL) and SuccesFactors (SFSF) are each added to the U.S Focus List at Credit Suisse. Monster Worldwide (MWW) is moved to Buy from Neutral at UBS. Broadridge Financial (BR) gets raised to Overweight from Equal Weight at JPMorgan. Celestica (CLS) is cut to Sell from Hold at Citigroup. Research In Motion (RIMM) is reduced at JP Morgan (to Neutral), Citigroup, (to Sell), and Evercore (to Equal Weight). In afternoon trading: Shares of Research In Motion (RIMM) are down about 20% after the BlackBerry maker reported earnings and provided guidance that were both below analyst expectations. RIM said FQ1 net profit slumped to $695M from $769M even as revenue rose 16% to $4.9B, and it lowered its FY EPS outlook to $5.25-$6 from a prediction given in April of $7.50.
The Technology Select Sector SPDR (XLK) traded at $24.45 at 4:00 PM on Friday, down 0.51% on the day – down 2.96% year-to-date.
Telecommunications Services
In afternoon trading: Actives: Shares of Sprint Nextel (S) are down about 1%. Shares of Level 3 Communications (LVLT) are down about 1%. Shares of AT&T (T) are up about 1.75%. Shares of Verizon (VZ) are up about 1.25%. Shares of Frontier Communications (FTR) are up about 0.4%.
The NASDAQ Telecommunications Index (IXTC) traded at $200.05 at 4:00 PM on Friday, down 1.56% on the day – down 11.23% year-to-date.
Utilities
In afternoon trading: Actives: Shares of Genon Energy (GEN) are up about 2.9%. Shares of Duke Energy (DUK) are up about 0.3%. Shares of PPL (PPL) are down about 0.4%. Shares of AES (AES) are up about 0.8%. Shares of NRG Energy (NRG) are up about 1.8%. Shares of Southern (SO) are up 0.4%. Shares of American Electric Power (AEP) are up about 0.8%.
The Utilities Select Sector SPDR (XLU) traded at $32.99 at 4:00 PM on Friday, down 0.33% on the day – up 5.26% year-to-date.
STOCKS: ETE, SUG, BPZ, LPH, MTRX, IOC, URRE, POT, CAGC, CPGI, EXP, AA, GRM, FCX, NPO, AOS, ATU, DRYS, DSX, MY, HRBN, APWR, P, SPLS, DEER, XNY, CBOU, BJ, YUII, CENT, BGS, USNA, JNJ, MDT, EW, THOR, ABT, BSX, HTWR, STJ, SYK, ZMH, VRUS, ITMN, MNMD, COF, GE, CIT, ING, MHP, MCO, C, JPM, BAC, HBC, BCS, NDAQ, WFC, FXCM, FALC, WTFC, FCF, CACI, ORCL, GOOG, HRS, CIEN, SFSF, MWW, BR, CLS, RIMM, S, LVLT, T, VZ, FTR, GEN, DUK, PPL, AES, NRG, SO, AEP
