The U.S. Trade Deficit widened by a larger than expected margin at $50.23 billion versus a $44 billion estimate. This was the widest deficit since October 2008. The Dow Jones Industrial Average traded back and forth around the flat line between 12,478.25 and 12,538.65 on Tuesday until the minutes from the June 22nd FOMC meeting came out at 2:00 PM. The Dow moved to the day’s high at 12,570.58 on the Fed’s theme – worrying about slower economic growth. The NASDAQ opened below 2800 and traded as low as 2782.13 in morning trading before rebounding back to 2807.57 after the Fed minutes. Both the Dow and NASDAQ slipped back into the red in the final half hour of trading. US stocks slumped on Monday the Dow Industrial Average down 151 points to 12,506 up 8.0% year to date. The NASDAQ plunged 57 points to 2803, up 5.7% year to date.
Asian stocks were hard hit on Tuesday on Europe’s debt issues in Italy and Spain. The Nikkei 225 was down 1.4% to 9,926. The Hang Seng plunged 3.1% to 21,663. European stocks were lower by 1.5% to 2.3% before the US open, but stabilized as the EU scheduled a meeting to discuss the debt issues. By day’s end in Europe the FTSE 100 shaved its loss to 0.9%, the DAX declined by 0.9% and the CAC 40 lost 0.9%. The yield on the 10-Year US Treasury note stayed below 3.00% on Tuesday trading to a new year to date low of 2.814 overnight. The 10-Year yield then rose above 2.900 going into today’s auction. The U.S. Treasury auctioned $32 billion 3-Year notes at 0.67% with a bid to cover at 3.22 times. This was a tepid auction but not as weak as the auctions two weeks ago. The 10-Year yield rose slightly to 2.937 on the auction results, but then declined to below 2.90 into the close.
Gold stayed range bound on Tuesday first trading down from $1556.1 the Troy ounce to $1541.1 then rebounding in the afternoon to $1574.1. Gold thus remains below its May 2nd all time high at $1577.4. Crude oil traded down from $94.71 per barrel to $93.55 in morning trade holding its 200-day simple moving average at $93.78 then rebounded to $97.50 in afternoon trading. The euro versus the US dollar traded down to 1.3841 versus the 200-day simple moving average at 1.3907 then rebounded to 1.4060.
Energy
Iraq has signed a final draft agreement with Shell (RDS.A) and Mitsubishi (MSBHY) for a $12B deal to capture flared gas at southern oilfields. Arch Coal (ACI) is upgraded to Outperform from Sector Perform at RBC Capital. Tesoro (TSO) is dropped to Underperform from Buy at Bank of America-Merrill Lynch. In afternoon trading: Shares of Clean Energy Fuels (CLNE) are up about 15.5%. Shares of General Maritime (GMR) are up about 9.5%. Shares of Trina Solar (TSL) are down about 11%.
Energy Select Sector SPDR (XLE) was trading at $74.79 at 4:00 PM on Tuesday, down 0.37% on the day – up 9.58% year-to-date.
Basic Materials
Alcoa (AA) kicked off Q2 earnings seasons by reporting that net profit more than doubled to $322M and revenues jumped 27% to $6.59B, with higher aluminum prices helping offset increased raw materials prices. Alcoa did miss EPS estimates by a penny. International Paper (IP) has taken its $3.3B offer for Temple-Inland (TIN) directly to shareholders, although it’s not much more than a ploy to up the ante. Steel Dynamics (STLD), AK Steel (AKS), U.S. Steel (X), and Nucor (NUE) are all initiated with a Fair Value rating at CRT Capital. ArcelorMittal (MT) gets moved to Buy from Hold at Societe Generale. Sealed Air Corp (SEE) is boosted to Overweight from Equalweight at Barclays Capital. CRH Plc. (CRH) is moved to Neutral from Overweight at JP Morgan. In afternoon trading: Shares of Zagg (ZAGG) are up about 7.25%. Shares of Golden Star Resources (GSS) are up about 6.25%. Shares of Silver Wheaton (SLW) are up about 5.25%.
The Materials Select Sector SPDR (XLB) traded at $39.26 at 4:00 PM on Tuesday, down 0.41% on the day – up 2.21% year-to-date.
Industrials
Iraq has signed a final draft agreement with Shell (RDS.A) and Mitsubishi (MSBHY) for a $12B deal to capture flared gas at southern oilfields. Fastenal Company (FAST) beat estimates by a penny. Acuity Brands (AYI) is a new Hold and $52 objective at Kaufman Brothers. LMI Aerospace (LMIA) is launched with a Buy at Stifel Nicolaus. FreightCar America (RAIL) is picked up with a Buy at Sterne Agee. In afternoon trading: Shares of Beacon Power (BCON) are up about 6.5%. Shares of YRC Worldwide (YRCW) are down about 6.7%. Shares of American Superconductor (AMSC) are down about 5.3%.
The Industrial Select Sector SPDR (XLI) traded at $36.76 at 4:00 PM on Tuesday, down 0.97% on the day – up 5.42% year-to-date.
Consumer Discretionary
U.K. MPs have been listening to police testimony about the hacking scandal at News Corp. (NWSA), which has widened to include other problematic practices and spread to The Sun and The Times newspapers. News Corp. is now reportedly considering selling all its U.K. papers to save its deal to buy BSkyB (BSYBY), with some even saying Rupert Murdoch is no longer calling the shots. Starbucks (SBUX) is restructuring itself into three divisions – Americas, EMEA, and China & Asia Pacific – as it looks to increase international revenue to 50% of total sales from 20%. Susquehanna starts both Priceline.com (PCLN) and Amazon.com (AMZN) with Positives and respective price objectives of $670 and $265. Brokerage Robert W. Baird picks up Shutterfly (SFLY) with an Outperform recommendation and $75 target price, and has a new Neutral and $35 target on Digital River (DRIV). International Game Technology (IGT) is boosted to Buy from Neutral at Sterne Agee. Jarden (JAH) is lifted to Buy from Hold at Jefferies. Ann Inc (ANN) is now Underweight from Neutral at Piper Jaffray. WPP Group plc (WPPGY) gets downgraded to Neutral from Buy at Natixis. Rue21 (RUE) is reduced to Neutral from Buy at Nomura. In afternoon trading: Shares of Orbitz Worldwide (OWW) are up about 10%. Shares of Wolverine Worldwide (WWW) are down about 8.2%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.37 at 4:00 PM on Tuesday, down 0.49% on the day – up 7.91% year-to-date.
Consumer Staples
Procter & Gamble (PG) gets cut to Hold from Buy at Jefferies. In afternoon trading: Shares of Imperial Sugar (IPSU) are up about 8.5%. Shares of Farmer Brothers (FARM) are down about 7.9%. Actives: Shares of Altria Group (MO) are up about a half of a percent. Shares of Procter & Gamble are up about a half of a percent. Shares of Wal-Mart (WMT) are up about 0.8%. Shares of Phillip Morris (PM) are down about 1.9%.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.41 at 4:00 PM on Tuesday, down 0.32% on the day – up 7.16% year-to-date.
Healthcare
Gen-Probe (GPRO) is resumed at Outperform at Raymond James. In afternoon trading: Shares of Anadys Pharmaceuticals (ANDS) are up about 9%. Shares of Pharmacyclics (PCYC) are up about 6.5%. Shares of Inhibitex (INHX) are up about 6.2%. Shares of Zalicus (ZLCS) are up about 5.3%. Shares of Pluristem Therapeutics (PSTI) are down about 7.1%.
The Health Care Select Sector SPDR (XLV) traded at $35.29 at 4:00 PM on Tuesday, unchanged on the day – up 12.03% year-to-date.
Financials
MBIA (MBI) is ending a court case against Merrill Lynch (BAC) over protection sold against mortgage-debt defaults and will probably now settle instead, which would boost MBIA’s credit quality. Commerce Bancshares (CBSH) is picked up as an Outperform at Morgan Keegan. Synovus Financial (SNV) is now Neutral From Underperform at Bank of America-Merrill Lynch. Wintrust Financial Corp (WTFC) is now Outperform from Neutral at Robert W. Baird. ProLogis (PLD) AMD (AMD) is lowered to Market Perform from Outperform with a $37.50 price target at FBR Capital. In afternoon trading: Shares of MBIA are up about 8.9%. Shares of The PMI Group (PMI) are up about 5.25%.
The Financial Select Sector SPDR (XLF) traded at $14.98 at 4:00 PM on Tuesday, down 0.40% on the day – down 6.08% year-to-date.
Information Technology
Cisco (CSCO) is set to axe as many as 10,000 jobs, or 14% of its workforce, as part of its turn-around strategy. Cisco is also due to announce today a revamp of its most popular product, a switching system called the Catalyst 6500, as it looks to strike back against the likes of HP (HPQ) and recover falling market share in the segment. HP (HPQ) is reorganizing its PC, tablet and smartphone division as it looks to turn around. The plan is to broaden the use of HP’s WebOS operating system, which the company hopes will differentiate its products from those of Apple (AAPL) and those running Android (GOOG). Infosys Technologies (INFY) missed estimates by a penny. Novellus Systems (NVLS) beat estimates by 2 cents with revenue in-line with estimates. Oracle (ORCL) is begun with a Buy at Goldman Sachs, which gives Google (GOOG), Autodesk (ADSK), Red Hat (RHT), and Microsoft (MSFT) Neutrals. Hewlett-Packard (HPQ) is Hold at Jefferies, which assigns an identical rating on Dell Inc (DELL). Brokerage Robert W. Baird picks up Shutterfly (SFLY) with an Outperform recommendation and $75 target price, and has a new Neutral and $35 target on Digital River (DRIV). HiSoft Technology (HSFT) is hoisted to Buy from Neutral at UBS. Shanda Interactive (SNDA) is raised to Hold from Sell at The Royal Bank of Scotland. Alcatel-Lucent (ALU) is downgraded to Hold from Buy at Deutsche Bank. Maxim (MXIM) is cut to Neutral from Buy By UBS. ON Semiconductor (ONNN) is lowered to Neutral from Buy at UBS. In afternoon trading: Shares of Evergreen Solar (ESLR) are down about 31% after warning that common stock shareholders could lose their entire investment as the company looks to restructure its balance sheet. Shares of SemiLEDS (LEDS) are down about 12.6%. Shares of Microchip Tech (MCHP) are down about 12.5%. Shares of Quest Software (QSFT) are down about 11.6%. Shares of Novellus Systems (NVLS) are down about 10.4%. Shares of GT Solar International (SOLR) are down about 9.5%.
The Technology Select Sector SPDR (XLK) traded at $25.80 at 4:00 PM on Tuesday, down 0.88% on the day – up 2.42% year-to-date.
Telecommunications Services
Nine states have sent subpoenas to AT&T (T) and Sprint (S) in connection with AT&T’s proposed $39B purchase of T-Mobile USA (DTEGY). China Unicom (CHU) is cut to Neutral from Outperform at Credit Suisse. In afternoon trading: Actives: Shares of Sprint Nextel are up about 1.3%. Shares of AT&T are up about 1%. Shares of Level 3 (LVLT) are down about 0.4%. Shares of Verizon (VZ) are up about 0.4%. Shares of Clearwire (CLWR) are up about 2.6%. Shares of Frontier (FTR) are up slightly. Shares of Vodafone (VOD) are down about 0.5%.
The NASDAQ Telecommunications Index (IXTC) traded at $209.99 at 4:00 PM on Tuesday, down 0.98% on the day – down 6.82% year-to-date.
Utilities
In afternoon trading: Actives: Shares of Duke Energy (DUK) are up about 0.8%. Shares of Genon Energy (GEN) are down about a quarter of a percent. Shares of Exelon (EXC) are up about 1.5%. Shares of Centerpoint Energy (CNP) are up about 1.7%. Shares of AES Corp (AES) are up about a quarter of a percent. Shares of PPL Corp (PPL) are up about 0.9%. Shares of Southern (SO) are up about 0.9%.
The Utilities Select Sector SPDR (XLU) traded at $33.55 at 4:00 PM on Tuesday, up 0.45% on the day – up 7.05% year-to-date.
STOCKS: RDS.A, MSBHY, ACI, TSO, CLNE, GMR, TSL, AA, IP, TIN, STLD, AKS, X, NUE, MT, SEE, CRH, ZAGG, GSS, SLW, FAST, AYI, LMIA, RAIL, BCON, YRCW, AMSC, NWSA, BSYBY, SBUX, PCLN, AMZN, SFLY, DRIV, IGT, JAH, ANN, WPPGY, RUE, OWW, WWW, PG, IPSU, FARM, MO, WMT, PM, GPRO, ANDS, PCYC, INHX, ZLCS, PSTI, MBI, BAC, CBSH, SNV, WTFC, PLD, AMD, PMI, CSCO, HPQ, AAPL, GOOG, INFY, NVLS, ADSK, RHT, MSFT, DELL, HSFT, SNDA, ALU, MXIM, ONNN, ESLR, LEDS, MCHP, QSFT, SOLR, T, S, DTEGY, CHU, LVLT, VZ, CLWR, FTR, VOD, DUK, GEN, EXC, CNP, AES, PPL, SO
