Market Wrap For March 6: Investors Find Positives In Jobless Claims
U.S. stocks rose as investors digested jobless claims data which fell to a three month low ahead of Friday's monthly employment report.
The S&P 500 was lifted to a new all time high of 1,8881.94 while the Dow recorded modest gains. The Nasdaq finished in the red
The Fed's Bill Dudley believes that poor weather was responsible for eating away 0.5 percent to one percent of GDP growth in the first quarter, and now expects GDP to grow at under two percent in the quarter. Dudley also hinted that a rate hike may be possible as the 6.5 percent unemployment threshold is “already obsolete.”
- The Dow gained 0.38 percent, closing at 16,421.89.
- The S&P 500 gained 0.17 percent, closing at 1,877.03.
- The Nasdaq lost 0.13 percent, closing at 4,352.13.
Gold gained 0.78 percent, trading at $1,350.80 an ounce.
- Oil gained 0.42 percent, trading at $101.88 a barrel.
- Silver gained 1.03 percent, trading at $21.49.
News of Note
February Challenger Job-Cut Report declined 7.3 percent to 41,835 from January's 45,107.
Initial Jobless Claims fell 26,000 to 323,000, below the consensus of 338,000 and previous reading of 334,000. Continuing claims fell 8,000 to 2.91 million.
January Factory Orders declined 0.7 percent, more than the consensus of a 0.5 percent decline.
EIA Natural Gas Inventory declined 152bcf.
Crimea's parliament has unanimously approved a motion for the province to become a part of greater Russia. The people will vote on a referendum on March 16. Meanwhile, European Union leaders are holding a summit to discuss potential sanctions against Russia. Naturally, many world leaders are refusing to recognize any referendum and its outcome.
The Bank of England left its benchmark rate unchanged at 0.5 percent and its QE program unchanged at £375 billion.
The ECB has left its benchmark overnight rate unchanged at 0.25 percent and the deposit facility at zero percent is also unchanged.
China's Minister of Finance said that the country's 2014 GDP growth goal of 7.5 percent has a bit ‘wiggle-room.' "Let's say for instance, this year's economic growth is not 7.5 percent, but 7.3 percent or 7.2 percent. Does this count as around 7.5 percent? Yes, it counts," said Minister Lou Jiwei.
Analyst Upgrades and Downgrades of Note
Analysts at Standpoint Research downgraded Alcoa (NYSE: AA) to Hold from Buy. Shares lost 0.33 percent, closing at $12.06.
Analysts at Argus Research upgraded Anadarko Petroleum (NYSE: APC) to Buy from Hold. Shares gained 1.29 percent, closing at $86.51.
Analysts at Wedbush assumed coverage of Bed Bath & Beyond (NASDAQ: BBBY) with a Neutral rating and $66 price target. Shares lost 0.74 percent, closing at $68.26.
Analysts at S&P Capital IQ upgraded General Motors (NYSE: GM) to Strong Buy from Hold. Shares gained 0.08 percent, closing at $37.55.
Analysts at Wedbush maintained a Neutral rating on Home Depot (NYSE: HD) with a price target lowered to $78 from a previous $90. Shares lost 0.59 percent, closing at $82.42.
Analysts at Wedbush downgraded Lowe's Companies (NYSE: LOW) to Neutral from Outperform with a price target lowered to $50 from a previous $60. Shares lost 0.48 percent, closing at $50.11.
Analysts at Jefferies maintained a Hold rating on PetSmart (NASDAQ: PETM) with a price target raised to $68 from a previous $66. Shares gained 1.41 percent, closing at $67.60.
Analysts at Goldman Sachs maintained a Sell rating on Radioshack (NYSE: RSH) with a price target lowered to $1.00 from a previous $2.25. Shares lost 5.09 percent, closing at $2.05.
Analysts at Bank of America maintained a Neutral rating on Safeway (NYSE: SWY) with a price target increased to $40 from a previous $35. Shares hit new 52 week highs of $40.25 before closing the day at $39.50, up 0.05 percent.
Analysts at Baird upgraded Yum! Brands (NYSE: YUM) to Outperform from Neutral with a price target raised to $87 from a previous $79. Shares gained 3.30 percent, closing at $77.28.
Equities-Specific News of Note
DIRECTV (NYSE: DTV) and Disney (NYSE: DIS) are discussing a possible deal for DirecTV to secure online rights to Disney content. Shares of DIRECTV hit new 52 week highs of $80.23 before closing the day at $79.99, up 2.42 percent.
Comcast (NASDAQ: CMCSA) completed its deal to acquire FreeWheel with a price tag approaching $375 million. Shares gained 0.42 percent, closing at $52.11.
Toyota (NYSE: TM) is preparing to float a “green bond” and plans to raise $775 million to finance loans on hybrids, electric and other alternative fuel cars. Shares gained 1.20 percent, closing at $114.62.
Gilead Sciences (NASDAQ: GILD) initiated a recall of select lots of its Atripla treatment. The company initiated a nationwide recall of around 39,000 bottles which is a treatment for HIV-1 infection in adults and children over 12 years old. Shares lost 3.56 percent, closing at $79.92.
Deutsche Bank's (NYSE: DB) head of global compliance is departing the bank to join a private law firm. This comes at a time when the bank is facing a number of regulatory and legal issues. Shares gained 1.77 percent, closing at $48.32.
Wal-Mart's (NYSE: WMT) Sam's Club is offering a membership option for online shoppers for an annual fee of $45 a year. The annual fee gives clients access to order a wide variety of products. Shares gained 0.12 percent, closing at $74.89.
E-Commerce China Dangdang (NASDAQ: DANG) announced that Jun Zou, the company's Chief Financial Officer has tendered his resignation, citing personal reasons. Shares gained 0.39 percent, closing at $17.92.
Speaking to CNBC, Nike's (NYSE: NKE) CEO Mark Parker said that the company is setting a foundation for a new round of growth in China. Shares gained 1.03 percent, closing at $78.22.
Whitney Tilson revealed he has established a position in SodaStream (NASDAQ: SODA) and noted that he does not believe the product is a “fad.” Shares gained 3.20 percent, closing at $40.95.
Logitech (NASDAQ: LOGI) is guiding for its full year fiscal 2014 revenue to be $2.1 billion and its operating income to be $125 million. The company previously guided for its revenue to be under $2.1 billion with an operating income range of $120 million to $125 million. The company also approved a $250 million share buyback. Shares hit new 52 week highs of $16.88 before closing the day at $16.86, up 5.84 percent.
According to Bloomberg, the tobacco industry could see consolidation in the tobacco industry. One possible deal could include Reynolds American (NYSE: RAI) acquiring Lorillard (NYSE: LO) for $19 billion. Shares of Reynolds lost 0.69 percent, closing at $53.26 while Lorillard lost 2.04 percent, closing at $52.39.
Endo International (NASDAQ: ENDP) has received clearance and final FDA approval for its AVEED injection for the treatment of adult men with hypogonadism. Shares lost 3.37 percent, closing at $73.89.
Winners of Note
Pixelworks (NASDAQ: PXLW) has earned more than ten percent of its revenue from Apple according to 10-K filling released today. The company noted that sales to Hitachi represented more than 10 percent of revenue in each of 2013, 2012 and 2011. Sales to Apple and NEC represented more than ten percent of revenue in 2013. Shares surged 87.50 percent, closing at $9.00.
Two activist funds, PW Partners Atlas Fund and Luxor Capital Partners intend to nominate five representatives to the board of BJ's Restaurants. (NASDAQ: BJRI) The combined firms own 12.4 percent of the company. The company said that it will review the nominations ahead of its 2014 Annual Meeting. Shares surged 21.55 percent, closing at $33.62.
Decliners of Note
This morning, Staples (NASDAQ: SPLS) reported its fourth quarter results. The company announced an EPS of $0.33, missing the consensus estimate of $0.39. Revenue of $5.87 billion missed the consensus estimate of $5.98 billion. Income from continuing operations rose to $212 million from $90 million in the same quarter last year. Comparable store sales fell seven percent in the quarter as traffic slipped and on average, customers were spending less. Staples announced that it will close 225 stores in North America by the end of 2015. In terms of guidance, Staples sees its first quarter EPS to be $0.17 to $0.22, below the consensus estimate of $0.27. Shares fell to new 52 week lows of $11.16 before closing the day at $11.35, down 15.30 percent.
Pandora (NYSE: P) listener hours for February totaled 1.51 billion, an increase of nine percent in the same month last year. During that time, Pandora grew its market share of total U.S. radio listening to 8.91 percent from 8.25 percent. Active listeners rose from 67.6 million to 75.3 million. Pandora announced that it will discontinue reporting its monthly metrics with a final report in June 2014 which will cover the metrics for May 2014. The reports were originally intended to help advertisers make informed buying decisions but the company believes that advertisers have sufficient tools at their disposal to conduct their own analysis. Analysts at Cowen commented that it expected Pandora's active listeners to total 75.8 million and total listener hours to be 1.57 billion. The analysts also noted a pullback in shares is expected near all-time highs. Shares lost 5.58 percent, closing at $37.23.
Plug Power (NASDAQ: PLUG) priced a 3.9 million common share offering at $5.74. Shares closed yesterday at $6.75. The company said it will use the proceeds for working capital and other general purposes. Shares lost 5.78 percent, closing at $6.36.
Earnings of Note
This morning, Costco (NASDAQ: COST) reported its second quarter results. The company announced an EPS of $1.05, missing the consensus estimate of $1.17. Revenue of $26.31 billion missed the consensus estimate of $26.65 billion. Net profit for the quarter fell to $463 million from $547 million ago. Costco noted that weaker sales and lower gross margins in some non-food products during the holiday season cut in to its gross margins. Comparable sales rose four percent in the U.S with international unchanged. "The first four-week period of the quarter represented the majority of earnings underperformance," Costco said in its earnings report. Costco also reported February sales data which rose four percent to $7.9 billion. Comparable sales rose three percent in the U.S. and declined one percent internationally. Costco noted that it operates 649 warehouses and plans to open another 14 by the end of fiscal 2014. Shares lost 2.76 percent, closing at $113.26.
This morning, Joy Global (NYSE: JOY) reported its first quarter results. The company announced an EPS of $0.49, missing the consensus estimate of $0.64. Revenue of $839 million beat the consensus estimate of $835.38 million. Net income for the quarter fell to $48.86 million from $142.14 million in the same quarter last year. "While comparison with the first quarter of fiscal 2013 is difficult, I am pleased with our team's execution against plan in what is expected to be our slowest quarter of the fiscal year," said Ted Doheny, President and Chief Executive Officer. Joy Global revised prior guidance and sees its full year fiscal 2014 earnings being $3.10 to $3.50 per share, up from a previous guidance of $3.00 to $3.50 versus a consensus estimate of $3.29. Revenue is guided to be $3.6 billion to $3.8 billion versus a consensus estimate of $3.72 billion. Shares gained 2.38 percent, closing at $57.12.
This morning, Kroger (NYSE: KR) reported its fourth quarter results. The company announced an EPS of $0.78, beating the consensus estimate of $0.73. Revenue of $23.2 billion beat the consensus estimate of $23.14 billion. Net earnings for the quarter fell to $421.9 million from $462 million in the same quarter last year. Identical supermarket sales rose 4.3 percent in the quarter in a quarter which was dominated by weather issues. Kroger issued guidance and sees its full year 2015 EPS to be $3.14 to $3.25, above the consensus estimate of $3.13. These estimates include the impact of its merger with Harris Teeter. Shares hit new 52 week highs of $45.25 before reversing gains and losing 0.71 percent to close at $43.37.
Quote of the Day
“Robots will become omnipresent in our lives in a good way.” - Google's Eric Schmidt speaking at a conference in California yesterday.
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