The Dow Jones Industrial Average opened higher to 12,730.09 but by 10:00 AM was down to 12,653.46. After a short period of stabilization the Dow slumped to 12,521.84 in afternoon trading, which is a test of the 200-day simple moving average at 12,523. The NASDAQ opened higher at 2896.56 but by 10:00AM was down to 2880.67. After stabilizing, the NASDAQ plunged to 2847.22, which is above its 200-day at 2827.
Asian stocks moved lower again on Tuesday. The Nikkei 225 ended the day at 8,488 – down 0.24%. The Hang Seng ended the day at 18,903 – down 0.79%. European exchanges traded back and forth around the flat line, but closes lower on Tuesday. The FTSE 100 ended the day at 5,499 – down 0.63%. The DAX ended the day at 6,390 – down 0.45%. The CAC 40 ended the day at 3,075 – down 0.87%. The yield on the 10-Year US Treasury note rose from 1.418% to 1.465% then declined to 1.393%, which is a new “flight to quality” low.
Gold declined to $1571.0 the Troy ounce then rose to $1584.0, and then declined to $1567.8 as the 50-day and 200-day simple moving averages decline to $1587.0 and $1658.3. Crude oil rebounded from $87.43 per barrel to $89.09 with the 50-day simple moving average at $86.34. The euro versus the dollar traded down from 1.2137 to 1.2045 setting a new 2012 low with the June 2010 low looming at 1.1880.
Energy
Rosneft said it will start talks with BP (BP) about acquiring the BP’s 50% stake in its TNK-BP Russian joint venture. Peabody (BTU) beat Q2 EPS estimates by twenty cents with a miss on the revenue line. Talisman Energy (TLM) has been upgraded to Buy from Hold at Canaccord Genuity. Berry Petroleum (BRY) has been downgraded to Hold from Buy at Stifel Nicolaus. CNOOC (CEO) ahs been downgraded to Underperform from Hold at Jefferies. Dow components – Chevron (CVX) down 2.29%, Exxon Mobil (XOM) down 1.40%.
Energy Select Sector SPDR (XLE) was trading at $66.75 at 3:30 PM on Tuesday, down 2.03% on the day – down 3.44% year-to-date.
Materials
Potlatch (PCH) beat Q2 EPS estimates by three cents with better than expected revenue. Air Products and Chemicals (APD) reported in-line FQ3 EPS with a miss on the revenue line. DuPont (DD) beat Q2 EPS estimates by two cent with a miss on the revenue line. Steel Dynamics (STLD) beat Q2 EPS estimates by a penny with a miss on the revenue line. Celanese (CE) beat Q2 EPS estimates by a nickel with a miss on the revenue line. Dow Components – Alcoa (AA) down 1.11%, DuPont (DD) down 2.04%.
The Materials Select Sector SPDR (XLB) was trading at $34.23 at 3:30 PM on Tuesday, down 1.81% on the day – up 2.18% year-to-date.
Industrials
Carlyle Group (CG) and BC Partners are in joint talks to buy United Tech’s (UTX) industrial businesses in a deal likely to be worth more than $3.5 billion. United Parcel Services (UTX) issued downside guidance for FY2012 this morning by lowering expected EPS to $4.50-$4.70 from $4.75-$5.00 versus the $4.83 analyst consensus citing greater uncertainties on behalf of their customers. Shares fell 3.7% pre-market. Illinois Tool Works (ITW) beat Q2 EPS estimates by a penny, but missed on the revenue line. Genesee & Wyoming (GWR) has been upgraded to Overweight from Equal-Weight at Morgan Stanley. Goodyear Tire (GT) has been upgraded to Neutral from Sell at Goldman, whose price target is $13. PulteGroup (PHM) has been downgraded to Negative from Neutral at Susquehanna. Dow components – Boeing Co (BA) down 1.65%, Caterpillar (CAT) down 0.58%, General Electric (GE) down 1.29%, 3M Company (MMM) down 1.63%, United Technologies (UTX) down 1.97%.
The Industrial Select Sector SPDR (XLI) was trading at $34.48 at 3:30 PM on Tuesday, down 1.43% on the day – up 2.16% year-to-date.
Consumer Discretionary
Domino’s Pizza (DPZ) beat Q2 EPS estimates by a penny with a miss on the revenue line. Under Armour (UA) reported that earnings were up 6% year over year and raised 2012 guidance and shares traded 3.8% higher premarket. Jarden (JAH) beat Q2 EPS estimates by four cents with in-line revenue. Burger King (BKW) has been initiated with a Neutral rating at Credit Suisse, whose price target it $16. Dunkin’ Brands (DNKN) has been initiated with a Neutral rating at Janney Capital. Apollo Group (APOL) has been initiated with an Overweight rating at JP Morgan, who initiated Neutral ratings on both Bridgepoint Education (BPI) and Capella Education (CPLA) Brinker International (EAT) has been initiated with a Neutral rating at Davenport, which initiates Buy ratings on Bravo Brio Restaurant (BBRG), Darden Restaurants (DRI), and Red Robin Gourmet Burgers (RRBG). Chipotle Mexican Grill (CMG) has been downgraded to Hold from Buy at Argus. DeVry (DV) has been downgraded to Perform from Outperform at Oppenheimer due to revenue and margin concerns. Dow Components – Disney (DIS) flat, Home Depot down 0.24%, McDonalds (MCD) down 1.23%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $42.73 at 3:30 PM on Tuesday, down 0.88% on the day – up 9.51% year-to-date.
Consumer Staples
Altria (MO) reported that their quarterly earnings increased by 9.3% year over year, and they raised 2012 full-year adjusted guidance. HSN (HSNI) has been initiated with a Market Perform rating at Wells Fargo. JC Penney (JCP) has been initiated with a Neutral rating at Atlantic Equities and an Outperform rating at Oppenheimer. RadioShack (RSH) has been downgraded to Sell from Neutral at UBS. Dow components – Kraft (KFT) down 0.43%, Coca Cola (KO) down 0.77%, Procter & Gamble (PG) down 0.65%, Wal-Mart (WMT) down 0.04%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $34.58 at 3:30 PM on Tuesday, down 0.46% on the day – up 6.43% year-to-date.
Health Care
Health Management Associates (HMA) has been downgraded to Hold from Buy at Jefferies. InterMune (ITMN) has been downgraded to Hold from Buy at Canaccord Genuity. Biogen Idec (BIIB) beat Q2 EPS estimates by 26 cents with a beat on the revenue line. Dow Components – Johnson & Johnson (JNJ) down 1.25%, Merck (MRK) down 1.92%, Pfizer (PFE) down 1.74%.
The Health Care Select Sector SPDR (XLV) was trading at $37.33 at 3:30 PM on Tuesday, down 1.24% on the day – up 7.61% year-to-date.
Financial
Regions Financial (RF) reported better than expected earnings pre-market and the stock rose by 3.3%. PrivateBancorp (PVTB) beat Q2 EPS by three cents. Synovus Financial (SNV) beat Q2 EPS estimates by a penny. American International Group (AIG) has been initiated with an Overweight rating at Evercore. Dow Components – American Express (AXP) down 0.75%, Bank of America (BAC) down 0.92%, JP Morgan Chase (JPM) up 0.15%, Travelers (TRV) down 1.46%.
The Financial Select Sector SPDR (XLF) was trading at $14.17 at 3:30 PM on Tuesday, down 0.63% on the day – up 9.00% year-to-date.
Information Technology
Texas Instruments’ (TXN) profit declined 34% to $446 million in the second quarter as revenue slid 4% to $3.3 billion. EPS beat forecasts by three cents. TXN offered sales guidance that was below consensus, warning that economic conditions are causing customers to become “increasingly cautious” in placing new orders. Cisco (CSCO) will lay off another 1,300 workers, or 2% of its workforce, which follows last year’s huge restructuring when Cisco slashed 6,500 jobs. VMware (VMW) will acquire Nicira, a start-up with very little revenue for $1.26 billion. Nicira provides software that helps networks run more efficiently, and this will help bolster VMware’s efforts to be a top IT infrastructure-management vendor. Akamai Technology (AKAM) has been initiated with an Outperform rating by William Blair. Dow Components – Cisco Systems (CSCO) down 5.79%, Hewlett-Packard (HPQ) down 1.67%, IBM (IBM) down 0.52%, Intel Corp (INTC) down 0.95%, Microsoft (MSFT) down 0.56%.
The Technology Select Sector SPDR (XLK) was trading at $28.12 at 3:30 PM on Tuesday, down 1.26% on the day – up 10.49% year-to-date.
Telecommunication Services
AT&T (T) reported that earnings rose 10% year over year in the second quarter on 5.1 million smartphone sales, 3.7 million iPhone activations, and shares rose 1.5% premarket. This followed the report that AT&T beat Q2 EPS estimates by three cents with a miss on the revenue line. MetroPCS (PCS) has been upgraded to Outperform from Neutral at Macquarie. Motorola Solutions (MSI) has been upgraded to Perform from Underperform at FBR Capital, who set a new price target at $49, on stronger-than-expected government sales. Crown Castle (CCI) and American Tower (AMT) have been downgraded to Equal Weight from Overweight at Evercore. Dow Components – AT&T Inc (T) down 2.85%, Verizon (VZ) down 1.56%.
The NASDAQ Telecommunications Index (IXTC) was trading at $169.76 at 3:30 PM on Tuesday, down 3.11% on the day – down 13.80% year-to-date.
Utilities
Portland General Electric (POR) has been upgraded by Goldman to Neutral-from-Sell. NorthWestern Corporation (NEW) beat Q2 EPS estimates by two cents with a miss on the revenue line. Dominion Resources (D) down 1.31%, Edison International (EIX) down 0.81%, First Energy (FE) down 0.90%, PG&E Corp (PCG) down 1.18%, Southern Company (SO) down 1.19%.
The Utilities Select Sector SPDR (XLU) was trading at $37.05 at 3:30 PM on Tuesday, down 0.99% on the day – up 2.97% year-to-date.
STOCKS: CVX, XOM, BP, BTU, TLM, BRY, CEO, AA, DD, PCH, APD, STLD, CE, BA, CAT, GE, MMM, UTX, CG, ITW, GT, PHM, DIS, HD, MCD, DPZ, UA, JAH, BKW, DNKN, APOL, BPI, CPLA, EAT, BBRG, DRI, RRBG, CMG, DV, KFT, KO, PG, WMT, MO, HSNI, JCP, RSH, JNJ, MRK, PFE, HMA, BIIB, ITMN, AXP, BAC, JPM, TRV, RF, PVTB, SNV, AIG, CSCO, HPQ, IBM, INTC, MSFT, TXN, VMW, AKAM, T, VZ, PCS, MSI, CCI, AMT, D, EIX, FE, PCG, SO, POR, NEW
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