Initial Jobless Claims came in at 387,000 still above the 350,000 recessional thresholds. Existing Home Sales fell 1.5% in May to an annual rate of 4.55 million. Leading Indicators rose 0.3% in May. The Philly Fed Index plunged to -16.6 in June, which is a surprise contraction. The Dow Jones Industrial Average traded up to 12,857.39 then down to 12,580.88 breaking back below its 50-day simple moving average at 12,745. The NASDAQ declined from 2930.93 to 2859.08 breaking back below its 50-day simple moving average at 2915.
Asian stocks were mixed on Thursday. The Nikkei 225 ended the day at 8,824 – up 0.82%. The Hang Seng ended the day at 19,265 – down 1.30%. European exchanges closed lower on Thursday. The FTSE 100 ended the day at 5,566 – down 0.99%. The DAX ended the day at 6,343 – down 0.77%. The CAC 40 ended the day at 3,114 – down 0.39%. The yield on the 10-Year US Treasury rose from 1.623% to 1.666% then declined to 1.594 on weaker than expected economic data.
Gold declined from $1608.2 the Troy ounce to $1564.8 versus the 50-day and 200-day simple moving averages at $1612.7 and $1673.6. Crude oil declined from $81.20 per barrel to $78.05 versus the October 4, 2011 low at $74.95. The euro versus the dollar traded down 1.2707 to 1.2535.
Energy
Core Labs (CLB) – HSBC Securities initiates the stock with a Neutral rating with a target price at $140. National Oilwell Varco (NOV) has been initiated with an Overweight rating at HSBC Securities with a price target at $97. Solazyme (SZYM) has been initiated with a Buy rating at ThinkEquity. Seadrill Limited (SDRL) – HSBC Securities upgrades the oil and gas exploration firm to Overweight from Equal Weight. Dow components – Chevron (CVX) down 1.60%, Exxon Mobil (XOM) down 2.25%.
Energy Select Sector SPDR (XLE) was trading at $63.20 at 3:30 PM on Thursday, down 3.82% on the day – down 8.58% year-to-date.
Materials
CEMEX S.A. (CX) has been upgraded to Neutral from Underweight at HSBC, who also upgrades France’s LaFarge (LFRGY) to Overweight from Equal Weight. Dow components – Alcoa (AA) down 2.80%, DuPont (DD) down 1.39%.
The Materials Select Sector SPDR (XLB) was trading at $34.11 at 3:30 PM on Thursday, down 3.01% on the day – up 1.82% year-to-date.
Industrials
The pilots union at American Airlines (AAMRQ.PK) has rejected the company’s final contract proposal, which will toss this dispute to a bankruptcy judge in New York. AO Smith (AOS) has been initiated with a Market Perform at BMO Capital. Southwest Airlines (LUV) has been initiated with an In-line rating at Imperial Capital with a price target at $10. The company’s costs have been growing faster with revenue growing more slowly than the legacy carriers. Dow components – Boeing Co (BA) down 1.12%, Caterpillar (CAT) down 1.46%, General Electric (GE) down 1.59%, 3M Company (MMM) flat, United Technologies (UTX) down 0.30%.
The Industrial Select Sector SPDR (XLI) was trading at $34.70 at 3:30 PM on Thursday, down 1.76% on the day – up 2.81% year-to-date.
Consumer Discretionary
Bed Bath & Beyond’s (BBBY) reported that their FQ1 EPS rose 24% to 89 cents beating expectations, while revenue climbed 5% to $2.22 billion, which was in line. Shares plunged 10.6% in after hours trading on Wednesday as FQ2 guidance was below consensus. The decline came after the stock hit an all-time high on Tuesday. Carmax (KMX) reported that FQ1 net profit slips to $120.75 million from $125.5 million. Carmax intends to open ten new superstores in FY 2013, up from five in FY 2012. Sonic (SONC) beat FQ3 EPS estimates despite a slight dip in total revenue. Same-store sales increased 2.8%. V.F. Corp (VFC) has been added to Citigroup’s list of Top Picks Live. Under Armour (UA) – The athletic apparel outfit has been downgraded to Neutral from Buy at UBS. Dow Components – Disney (DIS) down 0.10%, Home Depot down 1.82%, McDonalds (MCD) down 0.23%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $43.22 at 3:30 PM on Thursday, down 1.95% on the day – up 10.76% year-to-date.
Consumer Staples
Bed Bath & Beyond’s (BBBY) reported that their FQ1 EPS rose 24% to 89 cents beating expectations, while revenue climbed 5% to $2.22 billion, which was in line. Shares plunged 10.6% in after hours trading on Wednesday as FQ2 guidance was below consensus. The decline came after the stock hit an all-time high on Tuesday. ConAgra’s (CAG) in their FQ4 results reported that their Consumer Foods segment revenue was up 6.1% year over year to $2.15 billion. Consumer Foods revenue rose 6.8% to $1.264 billion. Expects EPS growth of 6% to 8% in FY13. Whole Foods (WFM) hit an all time highs and is initiated with a Buy rating at SunTrust. The TJX Companies (TJX) – The discount retailer recently traded at an all time high, has been upgraded to Outperform from Market Perform at Wells Fargo. Dow components – Kraft (KFT) up 0.36%, Coca Cola (KO) down 0.07%, Procter & Gamble (PG) down 0.53%, Wal-Mart (WMT) down 0.42%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.89 at 3:30 PM on Thursday, down 0.94% on the day – up 4.32% year-to-date.
Health Care
Johnson & Johnson (JNJ) will soon be settling a Department of Justice probe into the off-label marketing of its antipsychotic medication Risperdal. J&J will likely need to pay a penalty at $1.5 to $2.0 billion or slightly higher. Laboratory Corp (LH) – Canaccord Genuity initiated the stock with a buy rating. Jazz Pharmaceuticals (JAZZ) has been reinstated with an Overweight rating at Barclays. Onyx Pharmaceuticals (ONXX) has been initiated with a Buy rating at Deutsche Bank. Quest Diagnostics (DGX) has been initiated with a Hold rating at Canaccord Genuity. MedAssets (MDAS) has been upgraded to Buy from Neutral at UBS. NuVasive (NUVA) has been upgraded to Outperform from Market Perform at Wells Fargo. Dow Components – Johnson & Johnson (JNJ) down 0.60%, Merck (MRK) up 1.34%, Pfizer (PFE) up 0.82%.
The Health Care Select Sector SPDR (XLV) was trading at $37.11 at 3:30 PM on Thursday, down 1.17% on the day – up 6.98% year-to-date.
Financial
Chimera Investment (CIM) has been downgraded to Underperform from Neutral at Bank of America-Merrill Lynch. DCT Industrial Trust (DCT) has been downgraded to Underperform from Market Perform with Wells Fargo. Dow Components – American Express (AXP) down 0.32%, Bank of America (BAC) down 1.90%, JP Morgan Chase (JPM) down 0.85%, Travelers (TRV) down 0.89%.
The Financial Select Sector SPDR (XLF) was trading at $14.27 at 3:30 PM on Thursday, down 1.79% on the day – up 10.92% year-to-date.
Information Technology
Microsoft (MSFT) has received widespread industry backing and good reviews for Windows Phone 8 after introducing it yesterday. AT&T (T), Verizon (VZ), and T-Mobile (DTEFG.PK) have promised to support the new OS. Red Hat (RHT) lowered guidance on their FQ1 earnings call to $1.32-$1.34 billion, slightly below prior guidance of $1.34-$1.36 billion. Micron Technology (MU) missed FQ3 EPS of -$0.32 by twelve with a beat on the revenue line. ASML Holding (ASML) – The semiconductor stock has been initiated with an Outperform by Sanford Bernstein with a price target at $75.40. VeriFone (PAY) has been initiated with a Neutral rating at Susquehanna. Dow Components – Cisco Systems (CSCO) down 1.94%, Hewlett-Packard (HPQ) down 1.49%, IBM (IBM) down 1.35%, Intel Corp (INTC) down 1.84%, Microsoft (MSFT) down 1.13%.
The Technology Select Sector SPDR (XLK) was trading at $28.23 at 3:30 PM on Thursday, down 2.15% on the day – up 10.92% year-to-date.
Telecommunication Services
Microsoft (MSFT) has received widespread industry backing and good reviews for Windows Phone 8 after introducing it yesterday. AT&T (T), Verizon (VZ), and T-Mobile (DTEFG.PK) have promised to support the new OS. American Tower (AMT), Crown Castle (CCI) and private equity firms have made second-round bids for T-Mobile USA’s (DTEGF.PK) cellular towers. Koninklijke KPN (KKPNY) – The Dutch telecom titan traded sharply lower in Europe this morning after being downgraded to Neutral from Buy at UBS. NII Holdings (NIHD) has been downgraded to Market Perform from Outperform with Wells Fargo. Dow components – AT&T (T) down 0.07%, Verizon (VZ) up 0.70%.
The NASDAQ Telecommunications Index (IXTC) was trading at $182.25 at 3:30 PM on Thursday, down 2.62% on the day – down 7.45% year-to-date.
Utilities
AES Corp. (AES) has been initiated with a Neutral rating at Macquarie. Brookfield Infrastructure (BIP) has been initiated with a Neutral rating at Citigroup. EQT Corp (EQT) has been upgraded to Buy from Hold at Deutsche Bank. Xylem (XLY) has been upgraded to Buy from Neutral at Janney Montgomery Scott. CenterPoint (CNP) has been downgraded to Neutral from Outperform at Credit Suisse. Dominion Resources (D) up 0.18%, Edison International (EIX) up 0.04%, First Energy (FE) up 0.35%, PG&E Corp (PCG) up 0.22%, Southern Company (SO) up 0.41%.
The Utilities Select Sector SPDR (XLU) was trading at $36.34 at 3:30 PM on Thursday, down 0.79% on the day – up 1.00% year-to-date.
STOCKS: CVX, XOM, CLB, NOV, SZYM, SDRL, AA, DD, CX, LFRGY, BA, CAT, GE, MMM, UTX, AAMRQ.PK, AOS, LUV, DIS, HD, MCD, BBBY, KMX, SONC, VFC, US, KFT, KO, PG, WMT, CAG, WFM, TJX, JNJ, MRK, PFE, LH, JAZZ, ONXX, MDAS, NUVA, DGX, AXP, BAC, JPM, TRV, MET, CIM, DCT, CSCO, HPQ, IBM, INTC, MSFT, RHT, MU, ASML, PAY, T, VZ, DTEFG.PK, AMT, CCI, KKPNY, NIHD, D, EIX, FE, PCG, SO, AES, BIP, EQT, XLY, CNP
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