Market Wrap For May 9: Markets Marginally Higher, But Nasdaq Still Suffers
U.S. stocks struggled to stay in positive territory as earnings continue to come in mixed and investors and traders still showing a "risk-on" approach.
The Dow closed at new record highs as the S&P 500 struggled to stay in positive territory for most of the day. The Nasdaq saw a strong end to the trading session, closing the day at its daily highs, but still down for the week.
The Dow gained 0.20 percent, closing at 16,583.34.
the S&P 500 gained 0.15 percent, closing at 1,878.48.
The Nasdaq gained 0.50 percent, closing at 4,071.87.
Gold gained 0.09 percent, trading at $1,288.80 an ounce.
Oil lost 0.20 percent, trading at $100.06 a barrel.
Silver gained 0.09 percent, trading at $19.16 an ounce.
News of Note
March Wholesale Trade Inventories rose 1.1 percent to $525.2 billion, ahead of the consensus of a 0.5 percent gain. Sales rose 1.4 percent to $443.4 billion with an inventory to sales ratio of 1.18.
March Job Openings and Labor Turnover Survey fell to 4.014 million job openings from 4.125 million in February. Analysts were expecting 4.125 million job openings in March..
Germany's exports fell 1.8 percent in March after dropping 1.3 percent in February. Analysts were expecting a rise of one percent in March. The country's trade surplus fell to 14.8 billion euros in March from 15.8 billion in February.
United Kingdom's industrial production fell 0.1 percent in March from a 0.8 percent gain in February. Analysts were expecting a decline of 0.2 percent in March.
China's CPI fell to an 18-month low of 1.8 percent in April from 2.4 percent in March.
Canada reported a loss of 29,000 jobs in April compared to a gain of 42,900 in March. Analysts were expecting a gain of 12,000 jobs in April. Canada's unemployment rate remained unchanged at 6.9 percent.
Analyst Upgrades and Downgrades of Note
Analysts at ISI Group downgraded Apple (NASDAQ: AAPL) to Buy from Strong Buy with a price target raised to $675 from a previous $600. Shares lost 0.42 percent, closing at $585.54.
Analysts at Buckingham Research initiated coverage of Buffalo Wild Wings (NASDAQ: BWLD) with an Underperform rating and $116 price target. Shares lost 0.85 percent, closing at $141.64.
Analysts at Wells Fargo maintained an Outperform rating on DISH Network (NASDAQ: DISH). Meanwhile, analysts at Nomura maintained a Neutral rating on DISH with a price target raised to $49 from a previous $44. Also, analysts at Raymond James upgraded DISH to Market Perform from Underperform. Shares gained 0.81 percent, closing at $60.63.
Analysts at Macquarie initiated coverage of Deckers Outdoors (NASDAQ: DECK) with an Outperform rating and $95 price target. Shares gained 3.79 percent, closing at $79.89.
Analysts at Canaccord Genuity maintained a Hold rating on Gap (NYSE: GPS) with a price target raised to $47 from a previous $45. Shares gained 3.24 percent, closing at $40.52.
Analysts at Goldman Sachs downgraded SunEdison (NYSE: SUNE) to Buy from Conviction Buy. Shares lost 2.16 percent, closing at $16.74.
Analysts at Bank of America upgraded Twitter (NYSE: TWTR) to Neutral from Underperform with an unchanged $36 price target. Shares gained 0.28 percent, closing at $32.05.
Equities-Specific News of Note
Various media sources began reporting on Thursday evening that Apple (NASDAQ: AAPL) would be interested in acquiring Beats Electronics, the popular headphone maker and music streaming distributor, for $3.2 billion. While nothing is official yet, a YouTube video featuring Dr. Dre is leading some to believe his company will be acquired by Apple. Shares lost 0.42 percent, closing at $585.54.
Omnicom (NYSE: OMC) and European based Publicis officially terminated talks in what could have been a $35 billion merger citing numerous differences over which executives would remain in charge, regulatory approvals, tax complications and other issues. Shares gained 2.21 percent, closing at $67.66.
Goldman Sachs (NYSE: GS) said that its litigation expenses will remain high as the company increased its reserves to $3.7 billion from $3.6 billion. The company disclosed in a regulatory filing that it is under investigation by an undisclosed agency. Shares lost 0.13 percent, closing at $157.20.
Intel (NASDAQ: INTC) has purchased assets and talent from Ginger Software, a startup that includes a platform to create custom personal assistants with voice recognition and language-analysis. Shares lost 0.15 percent, closing at $26.30.
Barnes & Noble (NYSE: BKS) plans to double the number of its academic superstores and increase its college bookstores to 1,000 from the current 696 stores it operates. Shares gained 3.49 percent, closing at $16.60.
The Gap (NYSE: GPS) issued guidance and expects its first quarter EPS to be $0.56 to $0.57, above the consensus estimate of $0.53. The company noted that its net sales rose one percent to $3.77 billion, coming ahead of the consensus estimate of $3.7 billion. Shares gained 3.26 percent, closing at $40.52.
AOL's (NYSE: AOL) CEO and Chairman Tim Armstrong disclosed he purchased 55,600 shares of the company's stock on Thursday at $36.08 a share. Shares gained 3.71 percent, closing at $37.74.
Netflix (NASDAQ: NFLX) will raise the price of its streaming service for new subscribers by $1 per month to $8.99. Current customers will be unaffected for the next two years. Shares gained 2.15 percent, closing at $328.57.
Winners of Note
Friday morning, Polypore International (NYSE: PPO) reported its first quarter results. The company announced an EPS of $0.30, missing the consensus estimate of $0.32. Revenue of $161 million missed the consensus estimate of $161.72 million. Net income for the quarter rose to $13.6 million from $10.0 million in the same quarter a year ago with sales of lead-acid battery separators rising four percent year over year and lithium battery separator revenue rising 23 percent. The company announced a five-year agreement to supply Panasonic with Celgard-brand separators for electric vehicle lithium-ion batteries. The company also announced that it had authorized a 4.4 million share repurchase program. Shares gained 14.98 percent, closing at $39.92.
Decliners of Note
Thursday night, Rocket Fuel (NASDAQ: FUEL) reported its first quarter results. The company announced an EPS of -$0.18, beating the consensus estimate of -$0.29. Revenue of $74.4 million missed the consensus estimate of $76.21 million. Investors were focused on the company's second quarter revenue guidance of $88 million to $92 million, well below the consensus estimate of $101.8 million causing many analysts to turn negative. Analysts at Goldman Sachs downgraded Rocket Fuel to Neutral from Buy with a price target lowered to $25 from a previous $69. Analysts at BMO Capital Markets also downgraded Rocket Fuel to Market Perform from Outperform with a price target lowered to $25 from a previous $58. Analysts at Needham however maintained a Strong Buy rating with an unchanged price target of $75. Also, analysts at Oppenheimer maintained an Outperform rating on Rocket Fuel with a price target lowered to $44 from a previous $68. Shares plunged to new 52-week lows of $19.31 before closing the day at $21.83, down 21.50 percent.
RadioShack (NYSE: RSH) revealed that it will close fewer stores than originally planned after the company was unable to reach a deal over its outstanding loans. Shares lost 9.52 percent, closing at $1.33.
Earnings of Note
Friday morning, Hilton Worldwide (NYSE: HLT) reported its first quarter results. The company announced an EPS of $0.13, beating the consensus estimate of $0.09. Revenue of $2.36 billion beat the consensus estimate of $2.34 billion. Net income for the quarter rose to $123 million from $34 million in the same quarter a year ago as system-wide comparable REvPAR (revenue per room) rose 6.6 percent from a year ago. Total occupancy rate rose 1.9 percent to 69.8 percent as the company's gross operating profit improved 174 bps. During the quarter the company opened more than 9,000 rooms and approved 15,000 new rooms for development. The company is guiding its RevPAR to rise 5.5 percent to 7.0 percent for 2014. Shares gained 1.90 percent, closing at $23.07.
Polo Ralph Lauren (NYSE: RL) reported its fourth quarter results. The company announced an EPS of $1.68, beating the consensus estimate of $1.63. Revenue of $1.87 billion beat the consensus estimate of $1.83 billion. Net income for the quarter rose to $153 million from $127 million in the same quarter a year ago as the company's wholesales division saw revenue gains of 24 percent ot $983 million while retail sales rose five percent to $845 million. However, consolidated comp sales gains of two percent fell two percent and its gross profit rate dropped 190 bps to 57.9 percent. Looking forward towards 2015, the company said that it sees its net revenue rising only six percent to eight percent, compared to a growth of nine percent for the year through March 2014. Also, the company warned that its profit margins will fall 0.75 percent to 1.25 percentage points due to plans to spend $400 million to $500 million on capital projects to increase its square footage. Shares lost 2.09 percent, closing at $148.81.
Stratasys (NASDAQ: SSYS) reported its first quarter results. The company announced an EPS of $0.40, in-line with the consensus estimate. Revenue of $151.2 million beat the consensus estimate of $143.31 million. Net income for the quarter rose to $4.1 million from a net loss of $15.5 million in the same quarter a year ago as the company saw its product revenue rise 58 percent year over year to $129.3 million and services revenue rise 41 percent to $21.7 million. The company's recently acquired MakerBot contributed $20.6 million in revenue, a gain of 79 percent year over year. The company reported that its SG&A spend rose 56 percent year over year to $67.6 million while R&D expenses rose 56 percent to $16.8 million. The company is reiterating previous 2014 revenue guidance of $600 million to $680 million versus a consensus estimate of $674.8 million. The company is also guiding for its EPS to be $2.15 to $2.25 versus a consensus estimate of $2.21. Shares lost 4.69 percent, closing at $89.90.
Quote of the Day
"All that I am, or hope to be, I owe to my angel mother." - Abraham Lincoln.
Latest Ratings for AAPL
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