Market Wrap For April 9: Investors Breathe Sigh Of Relief Over Rate Worries
U.S. stocks rose sharply after minutes from the Federal Reserve eased concerns over when the central bank would raise interest rates.
The decision to let go of the 6.5 percent unemployment rate threshold for raising interest rates was finalized in early March.
Additionally, the Fed's minutes contain no references to the six month period the Fed's Chief Janet Yellen previously hinted at.
Confidence was further restored to the market as many high momentum names such as Priceline Group, LinkedIn, Facebook, Yelp, and FireEye helped restore the Nasdaq index back to positive territory for 2014.
- The Dow gained 1.11 percent, closing at 16,437.18.
- The S&P 500 gained 1.09 percent, closing at 1,872.18.
- The Nasdaq gained 1.72 percent, closing at 4,183.90.
- Gold gained 0.11 percent, trading at $1,310.60 an ounce.
- Oil gained 0.93 percent, trading at $103.51 a barrel.
- Silver lost 1.01 percent, trading at $19.85 an ounce.
News of Note
MBA Mortgage Applications showed that Composite Index declined 1.6 percent, compared to a decline of 1.2 percent last week. Purchase Index rose 3.0 percent, compared to a gain of 1.0 percent last week. Refinance Index declined 5.0 percent, compared to a decline of 8.0 percent last week.
February Wholesale Trade Inventories rose 0.5 percent to $518.3 billion, falling short of the consensus of a gain of 0.6 percent and a gain of 0.8 percent in January. Sales rose 0.7 percent to $436.1 billion while the Inventory to Sales ratio came in at 1.19.
EIA Petroleum Inventories showed that Crude rose 4.0 million barrels, compared to a decline of 2.4 million barrels last week. Gasoline declined 5.2 million barrels, compared to a decline of 1.6 million barrels last week. Distillates gained 0.2 million barrels, compared to a gain of 0.6 million barrels last week.
Analyst Upgrades and Downgrades of Note
Analysts at UBS maintained a Neutral rating on Alcoa (NYSE: AA) with a price target raised to $12.50 from a previous $10. Shares gained 3.75 percent, closing at $13.00.
Analysts at Susquehanna upgraded Actavis (NYSE: ACT) to Positive from Neutral with a price target raised to $260 from a previous $200. Shares gained 5.57 percent, closing at $201.73.
Analysts at Citigroup maintained a Buy rating on Boeing (NYSE: BA) with a price target raised to $160 from a previous $155. Shares gained 2.20 percent, closing at $126.88.
Analysts at Bank of America upgraded CBOE Holdings (NASDAQ: CBOE) to Buy from Neutral with a price target raised to $58 from a previous $55. Shares gained 2.47 percent, closing at $52.37.
Analysts at Citigroup maintained a Neutral rating on CME Group (NYSE: CME) with a price target lowered to $74 from a previous $78. Shares gained 0.58 percent, closing at $69.53.
Analysts at Citigroup maintained a Buy rating on Du Pont (NYSE: DD) with a price target raised to $78 from a previous $73. Shares gained 1.12 percent, closing at $67.54.
Analysts at JPMorgan maintained an Overweight rating on Walt Disney (NYSE: DIS) with a price target raised to $88 from a previous $85. Shares gained 1.13 percent, closing at $80.47.
Analysts at Topeka upgraded FireEye (NASDAQ: FEYE) to Buy from Hold with an unchanged price target of $70. Shares gained 7.72 percent, closing at $56.39
Analysts at Morgan Stanley maintained an Overweight rating on Ford Motor (NYSE: F) with a price target lowered to $17 from a previous $20. Shares lost 1.61 percent, closing at $15.84.
Analysts at Susquehanna maintained a Positive rating on Facebook (NASDAQ: FB) with a price target lowered to $69 from a previous $72.
Analysts at Citigroup maintained a Neutral rating on IntercontinentalExchange Group (NYSE: ICE) with a price target lowered to $218 from a previous $225.
Analysts at Sterne Agee initiated coverage of Intuitive Surgical (NASDAQ: ISRG) with an Underperform rating and $440 price target. Shares lost 6.78 percent, closing at $456.64.
Analysts at Nomura initiated coverage of Kellogg (NYSE: K) with a Buy rating and $70 price target. Shares gained 2.69 percent, closing at $66.09.
Analysts at Topeka upgraded LinkedIn (NYSE: LNKD) to Buy from Hold with an unchanged price target of $230. Shares gained 4.16 percent, closing at $176.14.
Analysts at Citigroup maintained a Buy rating on Lockheed Martin (NYSE: LMT) with a price target raised to $217 from a previous $201. Shares gained 1.39 percent, closing at $158.83.
Analysts at Citigroup maintained a Buy rating on The NASDAQ OMX Group (NASDAQ: NDAQ) with a price target lowered to $45 from a previous $50. Shares gained 0.20 percent, closing at $34.88.
Analysts at Citigroup maintained a Buy rating on PPG Industries (NYSE: PPG) with a price target lowered to $220 from a previous $224. Shares gained 1.65 percent, closing at $195.67.
Analysts at UBS downgraded Walter Energy (NYSE: WLT) to Sell from Neutral with a price target lowered to $5 from a previous $8. Shares lost 6.23 percent, closing at $7.83.
Analysts at CRT Capital upgraded Yelp (NASDAQ: YELP) to Buy from Fairly Valued with an $87 price target. Shares gained 5.93 percent, closing at $71.24.
Equities-Specific News of Note
Goldman Sachs (NYSE: GS) is considering a move to shut down its dark pool, Sigma X. Shares gained 1.09 percent, closing at $158.26.
Toyota (NYSE: TM) has recalled more than 6.75 million vehicles across the world due to problems found with the steering columns, wiring harnesses and seat railings. Shares lost 1.23 percent, closing at $107.76.
The Weather Channel will return to DirecTV (NYSE: DTV) with a slight increase in carriage fees thanks to an intervention by Hilton Worldwide who insisted that DirectTV carry the Weather Channel to maintain its status as the hotel's “preferred” provider. Shares of DirecTV lost 0.52 percent, closing at $78.36.
Rackspace (NYSE: RAX) CTO John Engates said in an interview that the company offers a premium service for a premium price, and will therefore not match its competitors who recently cut their prices for similar services. Shares lost 0.77 percent, closing at $33.45.
Royal Dutch Shell (NYSE: RDS/A) and China National Petroleum (NYSE: SNP) have signed a long term agreement to work together on shale and deepwater projects as well as liquefied natural gas spheres and other upstream and downstream projects. Shares of Royal Dutch gained 1.10 percent, closing at $74.47 while shares of China National Petroleum hit new 52 week highs of $94.86 before closing the day at $94.34, up 3.85 percent.
Hewlett-Packard (NYSE: HPQ) will pay $108 million to settle SEC and DOJ probes related to potential violations of the Foreign Corrupt Practices Act. Shares gained 0.86 percent, closing at $32.73.
Sotheby's (NYSE: BID) released an SEC Schedule 14A which includes comments related to activist investor Dan Loeb's bid to land several seats on the company's board for his partners. Shares gained 1.12 percent, closing at $42.52.
Pepsi (NYSE: PEP) will collaborate with Senomyx (NASDAQ: SNMX) to find and create new flavors that can duplicate the salty taste without the salt. Shares of Pepsi gained 0.53 percent, closing at $83.92 while shares of Senomyx gained 5.68 percent, closing at $10.79.
Procter & Gamble (NYSE: PG) has sold its pet food brands which includes Eukenaba and Natura brands to Mars for $2.9 billion. Shares of Procter & Gamble gained 0.17 percent, closing at $81.49.
Comcast (NASDAQ: CMCSA) published a lengthy report to the FCC on why its acquisition of Time Warner Cable (NYSE: TWC) should receive approval. A transcript of the companies statement at it's Senate hearing could be seen here. Shares of Comcast gained 1.92 percent, closing at $49.79 while shares of Time Warner gained 1.78 percent, closing at $138.34.
Winners of Note
After pricing its IPO at $14, shares of iKang Healthcare Group (NASDAQ: KANG) began trading for the first time at $16.50 and traded as high as $17.25 before closing the day at $15.20, up 8.57 percent.
Facebook's (NASDAQ: FB) COO Sheryl Sandberg confirmed with CNBC she has no plans to leave the company nor any political ambitions. Separately, analysts at Susquehanna are forecasting that the company will soundly beat its first quarter estimates when it reports earnings on April 23. Shares gained 7.25 percent, closing at $62.41.
Athlon Energy (NYSE: ATHL) announced that it has entered into several agreements with third-party sellers to acquire producing properties and undeveloped acreage for $873 million. A large portion of the newly acquired assets are located in Martin County, Texas where wells are projected to produce 800 million barrels of energy, according to analysts at Topeka. Shares hit new 52 week highs of $38.94 before closing the day at $37.94, up 13.12 percent.
Decliners of Note
After the market closed on Tuesday, Intuitive Surgical (NASDAQ: ISRG) issued a profit warning and guided its first quarter revenue to be $465 million, well below the consensus estimate of $537.9 million. The company also disclosed it will take a $67 million pre-tax charge for “estimated costs of settling a number of product liability legal claims against the company.” Finally, the company reported that it had shipped 87 da Vinci units worldwide in the quarter compared to 164 a year ago. The company's full results are expected on April 22. Shares lost 6.78 percent, closing at $456.64.
Earnings of Note
This morning, Constellation Brands (NYSE: STZ) reported its fourth quarter results. The company announced an EPS of $0.81, beating the consensus estimate of $0.76. Revenue of $1.29 billion was in-line with estimates. Net income of $157 million included an incremental benefit of $200 million of operating income from the consolidation of results for its Crown and Mexican brewery. The company see its beer segment to grow in the mid-to-high single digits and is guiding its full year 2015 EPS to be $3.94 to $4.15 versus a consensus estimate of $3.95. Shares lost 1.03 percent, closing at $80.64.
This morning, Progressive (NYSE: PGR) reported its first quarter results. The company announced an EPS of $0.54, beating the consensus estimate of $0.39. Revenue of $4.68 billion beat the consensus estimate of $4.62 billion. Net income for the quarter rose to $118.5 million from $74.2 million in the same quarter last year. Net premiums earned for the quarter rose five percent to $1.37 billion. Shares lost 0.41 percent, closing at $24.06.
After the market closed, Bed Bath & Beyond (NASDAQ: BBBY) reported its fourth quarter results. The company announced an EPS of $1.60, in-line with the consensus estimate. Revenue of $3.2 billion missed the consensus estimate of $3.22 billion. Shares were trading lower by 4.73 percent at $64.70 following the earnings release.
Quote of the Day
“In the economic forecast prepared by the staff for the March FOMC meeting, real GDP growth in the first half of this year was somewhat lower than in the projection for the January meeting. The available readings on consumer spending, residential construction, and business investment pointed to less spending growth in the first quarter than the staff had previously expected. The staff's assessment was that the unusually severe winter weather could account for some, but not all, of the recent unanticipated weakness in economic activity, and the staff lowered its projection for near-term output growth.” – Comments from the Minutes of the Federal Open Market Committee
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