The final reading for U.S. first quarter 2011 GDP was reported as a gain of 1.9%, which is too slow for job creation. Durable Goods Orders for May rose 1.9% as expected but was a weaker than expected read of 0.6% excluding transportation. The Dow Jones Industrial Average could not hold the 12,000 level and traded as low as 11,932.46 into the final half hour of trading on Friday. The NASDAQ declined from 2682 to 2647.46 into the final half hour of trading, which was below its 200-day simple moving average at 2652.
On Thursday, the Dow Industrial Average lost 60 points to 12,050 up 4.1% year to date and down 6.4% since its May 2nd high at 12,876.00. The NASDAQ gained 5 points to 2674 up just 1.3% year to date and down 7.0% since its May 2nd high at 2887.75.
Asian stocks were higher on Friday with the Nikkei 225 up 0.9% to 9,679 and the Hang Seng up 1.9%. European stocks opened higher on Friday on hopes that Greece will get a second bailout. Gains were cut as the day progressed and the closes were mixed. The FTSE 100 gained 0.4%. The DAX lost 0.4%. The CAC 40 was just below the flat line. The yield on the 10-Year U.S. Treasury note rose from 2.898 to 2.945 on Friday morning then declined to 2.846 on the continued flight to quality. Comex gold rebounded from $1516.2 the Troy ounce to $1526.5 then declined to $1498.5, well below its 50-day simple moving average at $1518.3. Nymex crude oil fell from $92.34 per barrel to $89.82 staying below its 200-day simple moving average at $92.71. The euro versus the US dollar traded down from 1.4305 to 1.4146.
Energy
Diamond Offshore (DO) is increased to Outperform from Market Perform ($85 objective) at FBR Capital. Kodiak Oil & Gas (KOG) is raided to Outperform from Market Perform at BMO Capital. In afternoon trading: Shares in Southern Union (SUG) are up about 17% after it received an unsolicited $4.9B ($39 per share) cash bid from Williams Companies (WMB). Shares of Holly (HOC) are down about 8%. Shares of CVR Energy (CVI) are down about 7.5%. Shares of Valero (VLO) are down about 6%. Shares of Western Refining (WNR) are down about 6%. Shares of Tesoro (TSO) are down about 6%.
Energy Select Sector SPDR (XLE) was trading at $70.93 at 4:00 PM on Friday, down 1.89% on the day – up 3.93% year-to-date.
Materials
Yamana Gold (AUY) is raised to Overweight from Neutral at HSBC. STR Holdings (STRI) is lowered to Accumulate from Buy at Craig-Hallum. In afternoon trading: Shares of STR Holdings are down about 16.5%. Shares of IAMGOLD (IAG) are down about 5.75%. Shares of Endeavour Silver (EXK) are down about 5.5%. Shares of Mercer International (MERC) are down about 5%. Shares of Ferro (FOE) are down about 4.75%. Shares of Silvercorp Metals (SVM) are down about 4.6%.
The Materials Select Sector SPDR (XLB) traded at $37.47 at 4:00 PM on Friday, down 0.64% on the day – down 2.45% year-to-date.
Industrials
Air France-KLM is boosted to Buy from Hold at Citigroup. In afternoon trading: Shares of China Ritar Power (CRTP) are down nearly 72% after being delisted from the NASDAQ stock market. Shares of AMR (AMR) are down about 7%. Shares of Delta Air Lines (DAL) are down about 5.5%. Shares of YRC Worldwide (YRCW) are up about 15.75%. Shares of SmartHeat (HEAT) are up about 6.5%.
The Industrial Select Sector SPDR (XLI) traded at $35.63 at 4:00 PM on Friday, down 1.14% on the day – up 2.18% year-to-date.
Consumer Discretionary
H&R Block (HRB) beat estimates by 2 cents and revenue by $10M. Comcast (CMCSA) is added to the Conviction Buy list at Goldman Sachs. Intercontinental Hotels Group (IHG) is now Buy from Neutral at Natixis. Tiffany (TIF) – $81 target, Coach (COH) – $67 target and Luxottica (LUX) are all now Neutral from Overweight at HSBC Securities. In afternoon trading: Shares of Blockbuster (BLOAQ) are up about 27%. Shares of China Automotive Systems (CAAS) are up about 15.75%. Shares of Pandora Media (P) are up about 7.25%. Shares of Caribou Coffee (CBOU) are up about 6.5%. Shares of Finish Line (FINL) are down about 7.1%. Shares of E-Commerce China Dangdang (DANG) are down about 6.5%.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $38.50 at 4:00 PM on Friday, down 0.98% on the day – up 2.91% year-to-date.
Consumer Staples
In afternoon trading: Actives: Shares of Rite Aid (RAD) are up about 1.7%. Shares of Wal-Mart (WMT) are down about 1.5%. Shares of Walgreen (WAG) are down about 2.6%. Shares of Kraft Foods (KFT) are up about 1%. Shares of Altria Group (MO) are down about 0.4%. Shares of CVS Caremark (CVS) are down about 1%. Shares of Procter & Gamble (PG) are down about 1.4%.
The Consumer Staples Select Sector SPDR (XLP) traded at $30.16 at 4:00 PM on Friday, down 2.27% on the day – up 2.90% year-to-date.
Healthcare
Lincare (LNCR) is launched as a Buy at UBS. Boston Scientific (BSX) gets downgraded to Neutral from Buy at UBS. In afternoon trading: Shares of Pharmacyclics (PCYC) are up about 7.5%. Shares of Zalicus (ZLCS) are up about 5.5%. Shares of Tenet Healthcare (THC) are down about 5%. Actives: Shares of Pfizer (PFE) are down about 1.9%. Shares of Boston Scientific are down about 3%. Shares of Bristol-Myers Squibb (BMY) are down about 1.2%.
The Health Care Select Sector SPDR (XLV) traded at $34.68 at 4:00 PM on Friday, down 1.17% on the day – up 10.10% year-to-date.
Financials
Trading in Italian bank stocks has been suspended following steep drops after Moody’s yesterday put them on negative outlook. Unicredit (UNCFF) was down 8%. Kohlberg Kravis Roberts & Co. (KKR) is a new Neutral at Credit Suisse. First Republic Bank (FRC) is a new Buy at at CRT Capital. Raymond James (RJF) is raised to Buy from Neutral with a $37 target at Ticonderoga. Artio Global Investors (ART) is upgraded to Neutral from Sell at Ticonderoga. In afternoon trading: Shares of First Marblehead (FMD) are up about 8.5%. Shares of E House China Holdings (EJ) are down about 6.7%.
The Financial Select Sector SPDR (XLF) traded at $14.76 at 4:00 PM on Friday, down 0.61% on the day – down 7.46% year-to-date.
Information Technology
The FTC and state attorney generals in California, Ohio and New York are investigating whether Google (GOOG) uses its dominance of Internet search to favor its own services over those of rivals in the results it provides. Accenture (ACN) beat estimates by 4 cents and revenue by $300M. TIBCO Software (TIBX) beat estimates by 3 cents and revenue by $18M. In afternoon trading: Shares in Micron (MU) are down about 13.5% after the chip maker reported that FQ3 net profit fell to $75M from $939M a year earlier while revenue declined 6.5% to $2.13B (missing estimates by 7 cents and $240M). Shares of SuccessFactors (SFSF) are down about 10%. Shares of SanDisk (SNDK) are down about 7.5%. Shares of Motricity (MOTR) are down about 6.75%. Shares of Brocade (BRCD) are down about 6.25%. Oracle’s (ORCL) FQ4 net profit beat expectations by 4 cents and rose to $3.21B from $2.36B a year earlier as revenues climbed to $10.8B from $9.51B, but shares are down about 4.1% on disappointment with the hardware servers division.
The Technology Select Sector SPDR (XLK) traded at $24.54 at 4:00 PM on Friday, down 1.72% on the day – down 2.58% year-to-date.
Telecommunications Services
AT&T (T) is a new Hold and $31 price objective at Kaufman Brothers. In afternoon trading: Actives: Shares of Sprint Nextel (S) are down about 1.2%. Shares of Level 3 Communications (LVLT) are down about 0.9%. Shares of AT&T are down about 0.75%. Shares of Frontier Communications (FTR) are down about 1%. Shares of Verizon (VZ) are down slightly. Shares of Vodafone Communications (VOD) are down about 1.6%.
The NASDAQ Telecommunications Index (IXTC) traded at $204.35 at 4:00 PM on Friday, down 2.02% on the day – down 9.33% year-to-date.
Utilities
DTE Energy (DTE) is rated Hold and set a $52 price target with Wunderlich. Exelon (EXC) and Constellation Energy (CEG) are begun with Buys at Wunderlich. RBC Capital initiates several electric utility stocks: Outperforms include CenterPoint Energy (CNP), CMS Energy (CMS), Exelon (EXC), PG&E Corp (PCG), and PPL Corp (PPL). Sector Performs include Consolidated Edison (ED), Dominion Resources (D), Edison International (EIX), Entergy (ETR), FirstEnergy (FE), Public Service Enterprise (PEG), Sempra (SRE), and Southern (SO). Underperforms include American Electric (AEP) and Duke Energy (DUK). Southern Co. is upgraded to Outperform from Neutral at Credit Suisse. American Water (AWK) is cut to Hold from Buy at Societe Generale.
The Utilities Select Sector SPDR (XLU) traded at $32.80 at 4:00 PM on Friday, up 0.31% on the day – up 4.66% year-to-date.
STOCKS: DO, KOG, SUG, WMB, HOC, CVI, VLO, ANR, TSO, AUY, STRI, IAG, EXK, MERC, FOE, SVM, CRPT, AMR, DAL, YRCW, HEAT, HRB, CMCSA, IHG, TIF, COH, LUX, BLOAQ, CAAS, P, CBOU, FINL, DANG, RAD, WMT, WAG, KFT, MO, CVS, PG, LNCR, BSX, PCYC, ZLCS, THC, PFE, BMY, UNCFF, KKR, FRC, RJF, ART, FMD, EJ, GOOG, CAN, TIBX, MU, SFSF, SNDK, MOTR, BRCD, ORCL, T, S, LVLT, FTR, VZ, VOD, DTE, EXC, CEG, CNP, CMS, EXC, PCG, PPL, ED, D, EIX, ETR, FE, PEF, SRE, SO, AEP, DUK, AWK
