Market Wrap For January 9: All Eyes on Tomorrow's Job Report
Markets were relatively calm during Thursday's trading session as investors anticipate Friday's jobs report.
The December employment report is expected to show about 200,000 payroll jobs representing a steady growth and a clear sign that labor market and economy are both strong.
- The Dow lost 0.10 percent, closing at 16,445.91.
- The S&P 500 gained 0.03 percent, closing at 1,838.13.
- The Nasdaq lost 0.23 percent, closing at 4,156.19.
- Gold gained 0.16 percent, trading at $1,227.50 an ounce.
- Oil fell 0.05 percent, trading at $92.28 a barrel.
- Silver gained 0.03 percent, trading at $19.55 an ounce.
News of Note
Initial Jobless Claims fell 15K to 330K, lower than the consensus of 331K and lower than the previous reading of 345K. Continuing claims rose 50K to 2.86 million.
Bloomberg Consumer Comfort Index came in at -28.4.
EIA Natural Gas Inventory fell 157bcf.
The latest Freddie Mac survey indicates there is little change in mortgage rates. The average rate for a 30 year fixed mortgage fell slightly to 4.51 percent from a previous 4.53 percent in the prior week. The average for a 15 year fixed rate increased slightly to 3.56 percent from 3.55 percent. A year ago, the rates were 3.40 percent and 2.66 percent, respectively.
Analysts at Bank of America lowered its price forecast on gold to $1,150 an ounce from a previous $1,294 target. Silver was also cut to $18.38 an ounce from a previous $26.38.
The Bank of England has left its benchmark rate unchanged at 0.5 percent. The country's QE program also remains unchained at 375 billion pounds.
The ECB has also left its rates unchanged with its benchmark overnight lending rate remaining at 0.25 percent and deposit facility rate remaining at 0 percent.
China's CPI fell to 2.5 percent on year, below the forecast three percent in December from a previous 3 percent in November.
Equities-Specific News of Note
Analysts at Baird named SolarCity (NASDAQ: SCTY) a top pick for 2014. The analysts noted that the company is levered to the rapidly growing solar markets at both the commercial and residential ends. The analysts have an $81 price target. The analyst also noted that any weakness from the January 14 lock-up expiration of 51 million shares is a buying opportunity. Shares hit new 52 week highs of $69.91 before closing the day at $67.48, up 1.96 percent.
Analysts at Piper Jaffray upgraded shares of J.C. Penney (NYSE: JCP) to Overweight with an $11 price target. The analysts believe that yesterday's drop following the company's press release which lacked any numbers was overdone. Shares gained 3.80 percent, closing at $7.65.
Analysts at Northland Capital upgraded Liberty Media (NASDAQ: LMCA) to Outperform with a $160 price target. The analysts noted that the company's M&A activity is a positive in the long run. Shares gained 0.37 percent, closing at $140.06.
Analysts at JPMorgan downgraded Monsanto (NYSE: MON) to Neutral with a $115 price target. The analysts see the company facing risk from corn prices which could limit its pricing power. Longer terms, the company faces pressure from Glyphosate prices in the second half 2014 or 2015. Shares lost 2.90 percent, closing at $111.80.
Analysts at Morgan Stanley upgraded McDonald's (NYSE: MCD) to Overweight with a $115 target. The analysts noted that McDonald's “is cheap on an absolute and relative basis and offers a better risk/reward profile.” Shares gained 0.05 percent, closing at $95.46.
Analysts at Cowen began coverage on Twitter (NYSE: TWTR) with an Underperform rating and $32 price target. The analysts noted that Twitter's ad ROI is worse than its closest competitors, Facebook (NASDAQ: FB) and LinkedIn (NYSE: LNKD). Shares fell 3.83 percent, closing at $57.02.
Analysts at Bank of America upgraded DuPont (NYSE: DD) to Buy from Neutral with a $70 price target. The analysts see the company benefiting from an acceleration of global growth and ongoing portfolio improvements. The analysts also noted that the company could increase future dividends and that shares are cheap relative to its history and peers. Shares gained 1.28 percent, closing at $63.94.
Analysts at Jefferies upgraded Johnson & Johnson (NYSE: JNJ) to Buy with an increased price target of $108 from a previous $102. The analysts noted that valuation is at a 2 percent premium to the analysts 2015 estimates. Additionally, the company will benefit from new launches like Imbruvica. Shares gained 0.59 percent, closing at $94.72.
Analysts at Benchmark believe that Zillow (NYSE: Z) could miss the company's fourth quarter revenue forecast of $56 million due to moderating traffic growth. The analysts feel that the company's traffic growth has slowed from its peak in August. Shares lost 2.39 percent, closing at $87.06.
Analysts at Nomura began coverage on Bank of America (NYSE: BAC) with a Buy rating and $19 price target. The analysts noted that the company's “current business mix, improving efficiency, and higher rate sensitivity should support ~15 percent mid-cycle returns (on required capital) by 2016.” Shares hit new 52 week highs of $16.85 which was also its closing price for the day, up 1.63 percent.
Analysts at Nomura began coverage on Citigroup (NYSE: C) with a Buy rating and $70 price target. The analysts noted that “We see unparalleled ROE potential at Citigroup under the new capital rules, as Citicorp efficiency targets are realized by 2015 and Citi Holdings turns profitable.” Shares hit new 52 week highs of $55.28 before closing at $55.20, up 0.71 percent.
Analysts at Nomura began coverage on Goldman Sachs (NYSE: GS) with a Neutral rating and a $72 price target. The analysts noted “In our view, the negative impact on Goldman's FICC revenues from new regulation could be permanent given structural business model changes” and that “Higher-margin Investing & Lending, which has contributed 25 percent of pre-tax income in recent years, will also be downsized in an effort to become Volcker-compliant.” Shares lost 0.47 percent, closing at $177.60.
Analysts at Citi downgraded Exxon Mobil (NYSE: XOM) to Neutral from Buy with a $108 price target. The analysts noted that shares have “risen sharply in the last three months on expectations that it will recover from a difficult year for production and a record level of refining maintenance… We believe this return profile deserves a premium, which we now estimate is largely priced into the stock.” Shares lost 0.96 percent, closing at $99.77.
Analysts at Morgan Stanley downgraded Buffalo Wild Wings (NASDAQ: BWLD) to Underweight from Overweight with a price target lowered to $143 from $144. The analysts noted that the company's unit growth has peaked and that the downgrade also has to be with a valuation call. Shares lost 3.27 percent, closing at $146.53.
Apple's (NASDAQ: AAPL) Tim Cook will meet with Samsung's (OTC: SSNLF) counterpart Oh-Hyun Kwon to sort out their global patent wars. The meeting will take place on February 19 in San Jose. Shares of Apple lost 1.29 percent, closing at $536.52.
T-Mobile U.S. (NYSE: TMUS) announced a credit program of up to $350 to cover termination fees for users who want to ditch their current providers. Shares lost 0.63 percent, closing at $33.04.
IBM (NYSE: IBM) is set to invest $1 billion to establish possible business ventures around its Watson supercomputer. Shares lost 0.31 percent, closing at $187.38.
IRI data indicated that Green Mountain Coffee Roasters (NASDAQ: GMCR) K-cup growth has slowed down for the four weeks ending on December 29. Shares gained 0.12 percent, closing at $80.69.
Dish Network (NASDAQ: DISH) has signed agreements with several programmers to deliver live content to an online platform. Shares lost 2.55 percent, closing at $56.48.
Costco (NASDAQ: COST) reported that its net sales grew six percent to $11.53 billion in December. Comparable sales rose three percent, with U.S. raising five percent, and international rising one percent. Shares gained 3.91 percent, closing at $118.51.
A Tesla Model X (NASDAQ: TSLA) was spotted on the open road and an Instagram picture rapidly made its rounds across many news and trading desks. The working theory is that is the vehicle that will be showcased at the Detroit auto show next week. Shares lost 2.44 percent, closing at $147.59.
Winners of Note
A phase II trial of Intercept Pharmaceuticals (NASDAQ: ICPT) obeticholic acid for the treatment of a chronic liver disease has been stopped early as the company said there was clear evidence the treatment worked. The company said that a data monitoring board recommended it stop the trial because patients who took the drug were faring better than patients who were taking a placebo. Shares absolutely surged to new 52 week highs of $303.99 before closing the day at $275.49, up 280.56 percent.
Sangamo BioSciences (NASDAQ: SGMO) announced a partnership with Biogen (NASDAQ: BIIB) for the development of new therapies for two blood disorders. Sangamo will receive $20 million upfront with as much as $300 million in milestone payments and royalties. Shares of Sangamo surged to new 52 week highs of $19.12 before closing the day at $18.88, up 38.32 percent.
Analysts at Raymond James upgraded Angie's List (NASDAQ: ANGI) to Strong Buy from Outperform with a $23 price target. The analysts noted a good merchant survey result and favorable valuation levels for the positive nod. Shares gained 8.39 percent, closing at $14.85.
Barnes & Noble's (NYSE: BKS) new CEO said that the company is will look to leverage costs of its Nook devices with an outside partnership. The ultimate goal is to “de-risk” the business plan. Separately, the company reported its holiday sales fell 6.6 percent to $1.1 billion with comparable store sales falling 5.5 percent. Shares gained 7.04 percent, closing at $15.66.
United Continental (NYSE: UAL) reported a 12 percent rise in per-seat revenue in December. Shares rose to new 52 week highs of $46.19, before closing at $43.80 up 6.78 percent.
Decliners of Note
China's iResearch released a report indicating that Qihoo 360 (NASDAQ: QIHU) maintains a 14.4 percent share in the Chinese search market. The 14.4 percent iResearch quoted is below the 22.4 percent market share that has been mentioned by Qihoo's own numbers and third party CNZZ. Shares lost 8.80 percent, closing at $81.17.
Power Plugg (NASDAQ: PLUG) could serve as an example of what goes up must come down. After surging more than 400 percent, shares took a bit of a breather today on no fundamental news. Shares lost 27.03 percent, closing at $3.32.
Earnings of Note
Family Dollar (NYSE: FDO) reported its first quarter results this morning. The company reported an EPS of $0.68 which missed the consensus estimate of $0.69. Revenue of $2.5 billion missed the consensus estimate of $2.51 billion. The company cited a heightened promotional environment as a factor for its below consensus performance. The company also cut its second quarter guidance and sees an EPS in the range of $0.85 to $0.95 while the consensus estimate is $1.21. For the full year 2014, the company sees an EPS in a $3.25 to $3.55 range, below the consensus of $3.98. Shares lost 2.07 percent, closing at $64.97 but traded as low as $60.89 in the morning.
Alcoa (NYSE: AA) released its fourth quarter results after the market closed. The company reported an EPS of $0.04, below the consensus estimate of $0.06. Revenue of $5.6 billion came in ahead of the consensus of $5.43 billion. Shares were trading lower by 3.88 percent at $10.27 going in to the conference call.
Quote of the Day
Inflation is “the runt of the Fed's litter but one that promises to turn a sow's ear into a silk purse for those who watch it closely.” – PIMCO's Bill Gross in his latest investment letter.
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