Market Wrap For March 13: Bears Come Out Of Hibernation As Dow Suffers Largest Daily Loss Since February 3
U.S. stocks fell as worries piled up over China's economy and further tension in Ukraine.
China's combined industrial output growth slowed to 8.6 percent on year in January and February, below a forecast for a 9.5 percent rise and a previous reading of 9.7 percent.
The New York Times reported that Russia is massing forces and conducting military operations not far from the Ukraine border. Russia's actions occurred despite calls from Germany's Chancellor Angela Merkel warning Russia to abandon its 19th and 20th century politics or face economic and political retaliations.
- The Dow lost 1.41 percent, closing at 16,108.89.
- The S&P 500 lost 1.17 percent, closing at 1,846.35.
- The Nasdaq lost 1.46 percent, closing at 4,260.42.
- Gold gained 0.12 percent, trading at $1,372.10 an ounce.
- Oil gained 0.28 percent, trading at $98.26 a barrel.
- Silver lost 0.79 percent, trading at $21.19 an ounce.
News of Note
Initial Jobless Claims declined 9,000 to 315,000, below the consensus of 330,000. Continuing claims fell 48,000 to 2.85 million.
February Retail Sales rose 0.3 percent above expectations for a 0.2 percent gain.
February Export prices rose 0.5 percent, above expectations for a 0.2 percent rise.
February Import prices rose 0.9 percent, above expectations for a 0.5 percent rise.
January Business Inventories rose 0.4 percent, in-line with expectations. Sales declined 0.9 percent to $1,302.9 billion while inventory/sales ratio read 1.32.
The Bloomberg Consumer Comfort Index rose to -27.6 for the week ended March 9 from -28.5 in the previous week.
EIA Natural Gas Inventory declined 195bcf.
The euro traded at $1.3956, the highest level since October 2011.
India's consumer inflation fell for the third consecutive month, declining to 8.1 percent on year in February. Industrial output surprisingly grew 0.1 percent as analysts were expecting a contraction of 0.9 percent.
Analyst Upgrades and Downgrades of Note
Analysts at Barclays upgraded Alliant Techsystems (NYSE: ATK) to Equal-weight from Underweight with a price target raised to $157 from a previous $95. Shares gained 1.15 percent, closing at $134.78.
Analysts at Bank of America upgraded Activision Blizzard (NASDAQ: ATVI) to Buy from Neutral with a price target raised to $25 from a previous $20. Shares hit new 52 week highs of $21.50 before closing the day at $20.85, up 1.21 percent.
Analysts at Imperial Capital downgraded Caesars Entertainment (NYSE: CZR) to Underperform from In-line with a price target of $17. Shares lost 2.28 percent, closing at $23.55.
Analysts at Credit Suisse initiated coverage of E-Commerce China Dangdang (NYSE: DANG) with an Outperform rating. Shares lost 5.79 percent, closing at $15.79.
Analysts at Wunderlich initiated coverage of EMC Corporation (NYSE: EMC) with a Buy rating and $31 price target. Shares hit new 52 week highs of $27.68 before reversing gains and closing the day at $27.08, down 0.07 percent.
Analysts at FBR Capital downgraded Express (NASDAQ: EXPR) to Market Perform from Outperform with a price target lowered to $16 from a previous $25. Shares lost 0.75 percent, closing at $15.93.
Analysts at Wunderlich initiated coverage of NetApp (NASDAQ: NTAP) with a Hold rating and $44 pirce target. Shares lost 1.82 percent, closing at $37.16.
Analysts at KeyBanc upgraded Tim Hortons (NYSE: THI) to Buy from Hold with a $75 price target. Shares lost 1.26 percent, closing at $55.43.
Analysts at B. Riley & Co initiated coverage of Workday (NASDAQ: WDAY) with a Neutral rating and $107 price target. Shares lost 1.43 percent, closing at $101.16.
Equities-Specific News of Note
General Electric (NYSE: GE) has filed for the IPO of its consumer finance unit under the name Synchrony Financial and will trade on the New York Stock Exchange under the ticker SYF. The size of the IPO has yet to be finalized but it the company plans to sell around 20 percent of the unit at a $20 billion valuation. Shares of GE lost 1.63 percent, closing at $25.34.
OTR Global said that its checks indicate that Facebook's (NASDAQ: FB) news feed and FBX Exchange ad spend growth is slowing due to rising prices. Separately, Facebook officially introduced its Premium Video Ads after several delays. Shares lost 2.89 percent, closing at $68.83.
DreamWorks Animation (NYSE: DWA) announced that it will produce three new series aimed at children which will be distributed to Netflix (NASDAQ: NFLX) subscribers. Shares of DreamWorks lost 4.21 percent, closing at $27.30 while Netflix lost 1.49 percent, closing at $430.06.
Shell (NYSE: RDS/A) is planning to separate some of its Americas downstream businesses and reduce spending on its upstream segments in the region by 20 percent. The company also plans to sell off more nonstrategic assets. Shares lost 1.89 percent, closing at $71.06.
General Motors (NYSE: GM) said that it knew of faulty ignition switches as far back as 2001. The company has yet to determine the exact nature of the problem which has been linked to the deaths of 12 people. Shares lost 2.21 percent, closing at $34.09.
Actavis (NYSE: ACT) will launch a generic Celebrex product later this year after yesterday's favorable court ruling which invalidated Pfizer's (NYSE: PFE) patent. Shares lost 0.70 percent, closing at $210.90.
Chevron's (NYSE: CVX) Indonesia Deepwater Development gas project will be delayed up to 18 months according to the country's oil and gas minister. The company expects daily production to peak at 1.1B cf of natural gas and 31K bbl of condensate. Shares lost 1.04 percent, closing at $114.45.
Barnes & Noble (NYSE: BKS) disclosed that it has agreed to co-brand within the Microsoft Consumer Reader for content delivered by Nook Media. Shares lost 1.11 percent, closing at $21.39.
United Technologies (NYSE: UTX) issued downside first quarter guidance and sees its EPS to be $1.25, well below the consensus estimate of $1.39. Full year 2014 EPS is guided to be $6.55 to $6.85 versus a consensus estimate of $6.82. The company is aiming to increase revenue by mid-single-digit percentages annually until 2020. Shares lost 2.52 percent, closing at $112.89.
J.C. Penney (NYSE: JCP) is relaunching its home goods section today as the company fights back to regain lost market share and bring back traffic to their stores. Shares lost 1.79 percent, closing at $8.77.
Amazon.com (NASDAQ: AMZN) announced that the price of its Prime service will be raised to $99 a year. The change will be effective in seven days and existing members will see the new price when their membership is set to renew. Shares gained 0.21 percent, closing at $371.43.
The head of Nuances's (NASDAQ: NUAN) healthcare unit, Janet Dillione, is resigning from the company as of March 21. Shares lost 3.11 percent, closing at $14.95.
Lions Gate (NYSE: LGF) agreed to pay a $7.5 million settlement fee to the SEC relating to charges that the company failed to properly disclose hostile takeover defense measures when Carl Icahn attempted to acquire the company in 2010. Shares lost 3.19 percent, closing at $32.20.
Target (NYSE: TGT) executives were warned about a potential data breach but failed to act following FireEye's malware detection software discovered a breach before consumers information were offloaded from Target's servers. Shares lost 2.24 percent, closing at $59.73.
Winners of Note
This morning, Plug Power (NASDAQ: PLUG) reported its highly anticipated fourth quarter results. The company announced an EPS of -$0.08 in-line with the consensus estimate. Revenue of $8 million beat the consensus estimate of $7.45 million. Unadjusted net loss grew to $28.9 million from $8.47 million in the same quarter last year partially due to a charge related to a change in the fair value of a previous common stock warrant issue. Plug Power is predicting that its orders will rise more than four times this year to more than $150 million and the company is expecting to be EBITDA break even by the third quarter. Shares gained 17.65 percent, closing at $8.00.
Primero Mining (NYSE: PPP) said that it has successfully produced its annual threshold of 3.5 million ounces of silver from its San Dimas mine and will sell 1.25 million to 1.5 million ounces of silver at spot prices for its own account until August. Shares hit new 52 week highs of $7.67 before closing the day at $7.50, up 11.28 percent.
Tesaro (NASDAQ: TSRO) signed a global licensing deal with AnaptysBio for a portfolio of antibodies that could be used to further develop cancer immunotherapies. According to a press release “Therapeutic antibodies selected from these programs will form the basis of a strategic platform that will enable TESARO to develop novel monotherapy and combination-based approaches with immuno-oncology and other anti-cancer agents in a variety of indications. Antibody candidates from these programs are expected to enter clinical trials over the next 18 to 24 months.” Shares surged 27.49 percent, closing at $38.86.
Decliners of Note
This morning, Gogo (NASDAQ: GOGO) reported its fourth quarter results. The company announced an EPS of -$0.26, beating the consensus estimate of -$0.27. Revenue of $92.6 million beat the consensus estimate of $85.68 million. Service revenue rose 44 percent year over year to $69.7 million while equipment revenue rose 52 percent to $22.9 million in the same time period. Net loss for the quarter improved to $22.1 million from a net loss of $36.0 million in the same quarter last year as operating expenses rose to $107.0 million in the quarter from $73.1 million last year. Gogo issued guidance and sees its full year 2014 revenue to be $400 million to $422 million, versus a consensus estimate of $414.23 million. Shares fell 7.91 percent, closing at $21.99.
Earnings of Note
This morning, Dollar General (NYSE: DG) reported its fourth quarter results. The company announced an EPS of $1.01, missing the consensus estimate of $1.02. Revenue of $4.49 billion missed the consensus estimate of $4.62 billion. Net income in the quarter rose to $322 million from $317 million in the same quarter last year while same-store-sales rose 1.3 percent in the quarter. Dollar General's gross profit rate for the quarter fell 58 bps to 31.9 percent as the company recorded increased sales of consumables with lower margins. Dollar General issued downside guidance and sees its full year 2014 EPS to be $3.45 to $3.55, below the consensus estimate of $3.69. Shares lost 2.75 percent, closing at $57.66.
After the market closed, Aeropostale (NYSE: ARO) reported its fourth quarter results. The company announced an EPS of -$0.35, missing the consensus estimate of -$0.31. Revenue of $670 million missed the consensus estimate of $684.96 million.
Quote of the Day
"The exit has begun. The extent of the purchases of the Fed, the monthly amount that is being purchased is being reduced, and conditions for the continuation of that have been described.” - Stanley Fischer told the Senate Banking Committee at his confirmation hearing today.
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