Market Wrap For November 4: Economy Is Steady, Tapering Could Be Around The Corner
Stock futures declined before the equity markets opened after the ADP employment report showed a higher than expected 215,000 jobs were added during the month of November.
Investors and traders were spooked by the report that solidifies the Fed's case to begin tapering.
Traders and investors digested the San Francisco Fed chief's remarks that an end to QE does not mean the Fed is ready to boost the Fed Funds rate. John Williams further added that he believes the Fed would not raise the rates even if unemployment logged in at below 6.5 percent, as long as inflation continued to be low.
The Fed's Beige Book noted the economy expanded at a “moderate to modest” pace.
The Dow lost 0.16 percent, closing at 15,889.77.
The S&P 500 lost 0.13 percent, closing at 1,792.81.
The Nasdaq gained 0.02 percent, closing at 4,038.00.
Gold gained 1.92 percent, trading at $1,244.20 an ounce.
Oil gained 1.13 percent, trading at $97.13 a barrel.
Silver gained 3.70 percent, trading at $19.77 an ounce.
News of Note
MBA Mortgage Applications declined 12.8 percent compared to a decline in 0.3 percent a week ago.
The November ADP Jobs Report grew 215K, higher than the 185K consensus. The 215K gain is the highest since November 2012.
The International Trade deficit decreased by $2.4 billion to $40.6 billion in October.
November ISM Non-Manfucaturing Index came in at 53.9, missing the consensus of 55.5 and the prior reading of 55.4.
October New Home Sales came in at 444K, higher than the expected 429K and noticeably higher than the previous reading of 354K.
Crude inventories fell by 5.6 million barrels as disclosed by the EIA Weekly Petroleum Status Report
The Bank of Canada held its rates unchanged at 1 percent.
China's HSBC services PMI fell to 52.5 in November from 52.6 in October.
Japan is set to prepare an 18.6 trillion Yen (~$181 billion) stimulus package to counteract any potential impact of a rise in sales tax that is set to debut in April 2014.
The Eurozone's third quarter GDP rose 0.1 percent in the third quarter compared to a 0.3 percent rise in the previous quarter.
The European Union is set to fine a handful of multinational banks 1.7 billion euros for their role in rigging inter-bank interest rates.
Equities-Specific News of Note
3D Systems (NYSE: DDD) received three new analyst calls today, following a bullish report yesterday from FBR Capital. Brean Capital reiterated the company Buy rated as the company will show accelerated unit growth leading to higher margin materials revenue. The firm upped its price target to $86 from $77. Janney Capital Markets reiterated its Buy rating based on the industry's demand expanding faster than originally believed. The price target has been upped to $95 from a previous estimate $68. Finally, Credit Suisse (NYSE: CS) reiterated its Outperform rating based on positive observations from a company presentation in New York City and discussions with the CFO. The price target has also been increased to $76 from $65. Shares lost 0.60 percent, closing at $77.55.
Analysts at J.P. Morgan, (NYSE: JPM) Wells Fargo (NYSE: WFC) and Deustche Bank AG (NYSE: DB) offered their views on J.C. Penney's (NYSE: JCP) November store data. Shares of the struggling retailer fell 4.35 percent, closing at $18.98.
Analysts at Sterne Agee joined several of its peers who have in the past week offered a positive outlook for Deckers Outdoor Corp (NASDAQ: DECK)the company's line of UGG boots. The analysts raised its price target to $110 from a previous $88 while reiterating its Buy rating. Shares hit new 52 week highs of $87.82 before closing at $85.25, down 0.98 percent for the day.
eBay (NASDAQ: EBAY) has been downgraded to Equal Weight with a price target of $58 by analysts at Evecore. The analysts see less potential for outperformance in the near term. Shares lost 1.62 percent, closing at $51.09.
Citigroup (NYSE: C) has been downgraded to Hold from Conviction buy at Goldman Sachs. (NYSE: GS) Shares lost 0.13 percent for the day, closing at $52.06. Replacing Citigroup in the Conviction list is U.S Bancorp. (NYSE: USB) Shares of U.S. Bancorp gained 1.25 percent, closing at $39.00.
Groupon's (NASDAQ: GRPN) successful holiday weekend earned the company a $13 price target from analysts at Wunderlich who noted that now is a good time to enter the online discount market. Shares gained 0.06 percent for the day, closing at $9.10.
Hayden Capital Management has taken a stake in General Motors. (NYSE: GM) Kyle Bass' investment fund noted that the Detroit automaker “represents one of the most compelling risk/reward situations of any large cap in the world today.” Shares of General Motors hit new 52 week highs of $39.62 before closing at $38.72, up 1.52 percent on the day.
Pandora (NYSE: P) reported a gain on both yearly and monthly metrics this morning. Active listeners grew 16 percent year over year at the end of November to 72.4 million, up from 70.9 million in October. The company also reported total listening hours grew by 18 percent from a year ago to 1.49 billion hours, up from 1.47 billion in October. Shares gained 4.0 percent, closing at $29.40.
According to UBS, Facebook (NASDAQ: FB) could be added to the S&P 500 as soon as tonight. Deutsche Bank shares a similar sentiment but different time frame as such a move could happen soon. Shares of the social media company gained 4.04 percent, closing at $48.62.
Questcor (NASDAQ: QCOR) was the beneficiary of another negative Citron Research report. Citron revealed that it plans to release “a series of articles” about the company “over the coming months.” Shares lost 2.60 percent, closing at $56.12.
Carl Icahn, as he normally does, took to Twitter (NYSE: TWTR) as he continues his fight to get Apple (NASDAQ: AAPL) to unload some of its cash. @Carl_C_Icahn Gave $AAPL notice we'll be making a precatory proposal to call for vote to increase buyback program, although not at $150 billion level. Shares lost 0.26 percent, closing at $564.86.
Barrick Gold (NYSE: ABX) is set to announce Ned Goodman to its board. The billionaire Goodman is the CEO of Dundee Corporation, a wealth management, real estate and resources holdings firm following the retirement of its founder Peter Munk. Shares of the Canadian based company gained 1.10 percent, closing at $15.68.
Deere (NYSE: DE) announced an $8 billion expansion of the company's buyback program. The company also announced a $0.51/share quarterly dividend representing a forward yield of roughly 2.4 percent. Shares gained 3.23 percent, closing at $85.38.
Netflix (NASDAQ: NFLX) is in talks with officials in France for a potential launch in the country. Shares lost 1.77 percent, closing at $356.50.
Unilife (NASDAQ: UNIS) was the subject of a bear report from StreetSweeper in early morning trading. Shares fell as much as 8 percent after the report which mainly raised familiar and repeated concerns. Shares were boosted as Jefferies came out on the defense noting that the company continues to release announced deals with blue chip companies. Shares finished the day edging higher by 0.41 percent, closing at $4.86.
Las Vegas Sands (NYSE: LVS) saw its credit rating lifted to investment-grade by S&P. Standard & Poor lifted Las Vegas Sands' credit rating to BBB- from BB+ with a stable outlook. In other industry developments, Goldman Sachs downgraded Melco Crown Entertainment Limited (NASDAQ: MPEL) to Buy rated from Conviction Buy based on the company's momentum cooling down over the next six to 12 months. Las Vegas Sands hit new 52 week highs of $74.94 before closing the day at $74.51, up 3.92 percent. Melco Crown gained 1.93 percent, closing at $36.44.
Winners of Note
OncoMed Pharmaceuticals (NASDAQ: OMED) continues its huge run up since the begging of the month. Analysts at Jefferies issued a bullish report in support of the company's prospects with potentially 11 Phase 2 readouts by 2016. Shares are Buy rated with a $46 price target. Shares gained 7.04 percent, closing at $29.65.
BRE Properties (NYSE: BRE) could be on the selling block as Essex Property Trust (NYSE: ESS) offered to puchase the company for around $5 billion. BRE turned down a $60 a share offer earlier this year from Land & Buildings. BRE Properties gained 10.76 percent, closing at $59.11, trading as high as $61.50 during the day which marks new 52 week highs. Essex Property Trust lost 2.19 percent, closing at $150.65.
CF Industries (NYSE: CF) is in talks with financial advisors to evaluate an MLP and/or an MLP-like structure along with other financial options during a presentation at Citi's basic materials conference. Shares hit new 52 week highs of $237.43 before closing the day at $237.10, up 10.70 percent.
Decliners of Note
Last night investors discovered that Eddie Lampert sold a significant position in Sears Holdings (NASDAQ: SHLD). The company's CEO reduced his stake to 48.4 percent from 55.4 percent according to an SEC filing. Not helping the cause was a bearish report by Cleveland Research which claimed that the company's domestic comps experienced a “sharp deterioration” in November as the company has lost market share to J.C. Penney. Shares of Sears lost 8.33 percent, closing at $50.92.
Truquoise Hill (NYSE: TRQ) lost around quarter of its value after a rights issue as part of a $2.4 billion securities offering began trading on a when-issued basis. The offering has doubled the number of shares outstanding. Shares finished the day at $3.41, down 22.15 percent.
Earnings of Note
Express (NYSE: EXPR) plunged today following the company's earnings announcement pre market. The retailer reported its third quarter EPS of $0.23, below the consensus of $0.25. The company beat on revenue, reporting $503 million for the quarter, compared to the consensus of $499.67. The company issued a weak guidance and disappointing Thanksgiving week sales which were disclosed this morning. Shares lost 22.98 percent, closing at $19.00.
Quote of the Day
"You don't make spending decisions, investment decisions, hiring decisions, or whether-you're-going-to-look-for-a-job decisions when you don't know what's going to happen." - Michael Bloomberg
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