Market Wrap For March 3: Markets Lower On Ukraine Tension
U.S. stocks traded lower as investors worry Russia's next step in its use of military force in Ukraine.
The Dow saw its worst day in a month while other major indices finished noticeably lower. Investors moved away from equities and found what is believed to be a safe haven in gold and other commodities.
- The Dow lost 0.94 percent, closing at 16,168.03
- The S&P 500 lost 0.74 percent, closing at 1,845.73.
- The Nasdaq lost 0.72 percent, closing at 4,277.30.
- Gold gained 2.29 percent, trading at $1,351.90 an ounce.
- Oil gained 2.04 percent, trading at $104.68 a barrel.
- Silver gained 1.03 percent, trading at $21.46 an ounce.
News of Note
January Personal Income rose 0.3 percent month over month, ahead of expectations for a gain of 0.2 percent.
January Personal Spending rose 0.4 percent month over month rose 0.4 percent, ahead of expectations for a gain of 0.1 percent.
U.S. February PMI Manufacturing index rose to 57.1 from 53.7 in January and topped the consensus estimate of 56.6.
January construction Spending rose 0.1 percent ahead of the consensus estimate calling for a decline of 0.2 percent.
February ISM Manufacturing Index read 53.2, ahead of the consensus estimate of 51.9.
US February Global Manufacturing PMI rose to 53.3 from 52.9 in January.
U.S. Secretary of State John Kerry is travelling to Kiev to “reaffirm the United States' strong support for Ukrainian sovereignty” as Russian troops have taken control of Crimea and a full-scale invasion is more of a reality now than it has been just a few days ago.
China's HSBC manufacturing PMI fell to a seven-month low of 48.5 in February from 49.5 in January.
German manufacturing PMI fell to 54.8 in February from 56.5 in January.
United Kingdom manufacturing PMI rose to 56.9 in February from 56.7 in January.
Eurozone manufacturing PMI fell to 53.2 in February from 54 in January.
Analyst Upgrades and Downgrades of Note
Analysts at Canaccord Genuity reiterated Apple (NASDAQ: AAPL) with a Buy rating and raised their price target to $600 from a previous $570. Shares gained 0.29 percent, closing at $527.76.
Analysts at Bank of America upgraded RF Micro Devices (NASDAQ: RFMD) to Buy from Neutral with a $10 price target. Shares hit new 52 week highs of $7.24 before closing the day at $7.09, up 0.14 percent.
Analysts at Barclays downgraded SodaStream (NASDAQ: SODA) to Equal Weight from Overweight with a price target lowered to $40 from a previous $55. Shares lost 1.14 percent, closing at $39.03.
Analysts at R.W. Baird downgraded NewLink Genetics (NASDAQ: NLNK) to Neutral from Outperform with an unchanged price target of $40. Shares lost 11.58 percent, closing at $39.08.
Analysts at Canaccord Genuity upgraded Nokia (NYSE: NOK) to Buy from Hold with a price target raised to $10 from a previous $8. Shares gained 0.13 percent, closing at $7.59.
Equities-Specific News of Note
Apple (NASDAQ: AAPL) has launched CarPlay, a platform to connect an iPhone with a car's in-dash system. CarPlay, among other things, connects with an iPhone to make calls, texts, e-mails and provide mapping services. Shares gained 0.29 percent, closing at $527.76.
Mexican police have began questioning employees at Citigroup's (NYSE: C) Mexican subsidiary, Banco Nacional de Mexico for potential involvement of a $400 million scam uncovered last week. Shares of Citi lost 2.10 percent, closing at $47.61.
Ellen Degeneres' Oscars “selfie” caused Twitter (NYSE: TWTR) to crash. Service to the micro-blogging site was disrupted for more than 20 minutes shortly after 10 p.m. ET. Shares lost 2.19 percent, closing at $53.71.
Men's Wearhouse (NYSE: MW) said it has entered into a non-disclosure agreement with Jos. A. Bank (NASDAQ: JOSB) with a potential $65 per share offer on the table if Men's Wearhouse's due diligence turns out favorable. Shares of Men's Wearhouse gained 0.58 percent, closing at $54.10 while Jos. A. Bank hit new 52 week highs of $62.80 before closing at $62.31, up 0.37 percent.
According to Bernstein Research, and reported by Reuters, a majority of institutional investors support a split of PepsiCo (NYSE: PEP). Warren Buffet on the other hand would not favor a break up and said it makes sense for Pepsi to keep Frito-Lay and beverages under the same organizational umbrella. Shares lost 0.69 percent, closing at $79.52.
Unilver (NYSE: UL) is seeking $2 billion in a potential sale of its Ragu pasta sauce as part of the company's plan to shed off its non-core assets. Shares lost 1.93 percent, closing at $40.24.
Under new terms, and subject to shareholder approval, Bank of America (NYSE: BAC) is prohibited from redeeming the $2.9 billion in preferred stock issued to Berkshire Hathaway for five years and the stock will continue paying out a six percent dividend. The Bank can allocate the funds towards its Tier 1 capital. Shares of Bank of America lost 1.39 percent, closing at $16.30.
Statoil (NYSE: STO) said that it has successfully tested its Zafarani reservoir located offshore of Tanzania. Shares hi new 52 week highs of $27.17 before closing the day at $27.01, up 2.54 percent.
Microsoft's (NASDAQ: MSFT) business development chief Tony Bates and marketing EVP tami Reller are leaving the company. Bates was reported to be on Microsoft's CEO candidate list and said that he has received “several CEO offers in recent months” including one from GoPro, which recently filed for an IPO. Shares lost 1.38 percent, closing at $37.78.
Indonesia is considering reducing its export duty on mineral concentrates. Such a move would immensely benefit Freeport McMoRan (NYSE: FCX) and Newmont Mining (NYSE: NEM). Shares of Freeport gained 0.64 percent, closing at $32.83 while Newmont Mining gained 1.59 percent, closing at $23.63.
Valero Energy (NYSE: VLO) announced that its CEO Bill Klesse will step down on May 1 to be replaced with the company's President and COO Joe Gorder. Klesse has spent 45 years with the company and its predecessors. Shares gained 0.77 percent, closing at $48.35.
Due to “an error in the allocation of overhead expenses," SolarCity (NASDAQ: SCTY) will restate its results from the first quarter 2012 to the third quarter of 2013. The company intends to “recognize a downward adjustment of assets related to solar energy systems leased and to be leased and an upward adjustment to the costs of solar energy system sales." Analysts at Deutsche Bank defended shares and noted "numerous delays in GAAP financial statement release and evidence of ineffective internal controls will be a source of concern for investors in the near term. However, the company was very clear that there is no change in total overhead – merely a shift in how it is allocated. While these errors are concerning, they are largely the result of the rapid pace of expansion for SolarCity which is a positive." Shares lost 2.00 percent, closing at $83.26.
Pfizer (NYSE: PFE) is proceeding with its plans to commercialize an over-the-counter version of Lipitor. Shares lost 0.40 percent, closing at $31.98.
Hertz Global (NYSE: HTZ) has filed for an extension of its 10-K due to the company struggling with its financial statements following recent implementations of an enterprise resource planning system. Shares lost 2.71 percent, closing at $27.25.
Kroger (NYSE: KR) has contacted Safeway (NYSE: SWY) about buying some of its assets. Shares of Kroger gained 0.12 percent, closing at $41.99 while Safeway hit new 52 week highs of $38.70 before closing the day at $38.02, up 1.52 percent.
Caesars Entertainment (NYSE: CZR) announced that it will sell Bally's Las Vegas, The Cromwell, The Quad and Harrah's New Orleans to Caesars Acquisition Company (NASDAQ: CACQ) for $2.2 billion. Shares of Caesars Entertainment lost 1.43 percent, closing at $25.59 while Caesars Acquisition Company lost 0.87 percent, closing at $13.63.
The Gap (NYSE: GPS) opened its first Old Navy store in China over the weekend. Shares lost 1.14 percent, closing at $43.25.
Comcast (NASDAQ: CMCSA) plans to acquire FreeWheel, an ad serving platform, for $320 million. Shares lost 1.33 percent, closing at $51.00.
Ford (NYSE: F) and General Motors (NYSE: GM) along with other major manufacturers released their February sales figures. Shares of Ford lost 1.23 percent, closing at $15.20 while General Motors gained 0.03 percent, closing at $36.21.
Winners of Note
J.C. Penney (NYSE: JCP) said that it will try to provide monthly metric updates but doesn't expect to report monthly sales figures “any time soon.” Shares gained 9.34 percent, closing at $7.96.
Analysts at Cowen hypothesized that Plug Power's (NASDAQ: PLUG) recent agreement with Wal-Mart could result in similar contracts with other major U.S. companies like Coca-Cola and Procter & Gamble. Additionally, the company could expand its operations to Europe. Shares hit new 52 week highs of $5.83 before closing the day at $5.82, up 24.63 percent.
Decliners of Note
This morning, Nu Skin Enterprises (NYSE: NUS) reported its fourth quarter results. The company announced an EPS of $2.02, beating the consensus estimate of $1.97. Revenue of $1.05 billion missed the consensus estimate of $1.07 billion. Net income for the quarter rose to $125.27 million from $59.23 million in the same quarter last year. Revenue in China increased by 248 percent to $481.6 million from $138.3 million in the same quarter last year. Foreign currency fluctuations had a positive impact of six percent on the region's revenue. The number of actives increased 127 percent compared to the prior year. Nu Skin issued guidance and sees its first quarter EPS to be $0.90 to $0.94, below the consensus estimate of $1.32. Revenue is guided to be $650 to $670 million, below the consensus estimate of $755.75 million. Shares lost 10.67 percent, closing at $74.61.
As the tense military situation in Ukraine is showing no signs of calming down, investors are pondering the possibility that economic sanctions could be levied against Russia. Yandex (NASDAQ: YNDX), The Russian based search engine that recently inked a deal with Google could be at risk if economic sanctions against Russia pick up. U.S. Secretary of State John Kerry threatened Russia with economic sanctions over the weekend ahead of his visit to Ukraine this week. Shares of Yandex lost 14.00 percent, closing at $32.25.
Other Russian names affected include Qiwi PLC (NASDAQ: QIWI) that lost 16.75 percent, closing at $38.82. EPAM Systems (NYSE: EPAM) lost 23.63 percent, closing at $32.02 and Mobile TeleSystems OJSC (NYSE: MBT) lost 7.55 percent, closing at $15.92.
Darden Restaurants (NYSE: DRI) issued revised guidance and sees its third quarter EPS to be $0.82, below the consensus estimate of $0.93. The company is blaming weather related issues for a seven-cent impact on its earnings in addition to a six cent impact related to its strategic plans. The company reaffirmed it is on track with its plan to spin off its Red Lobster chain which the sale process “well under way.” Shares lost 5.35 percent, closing at $48.33.
Harsco (NYSE: HSC) announced that Patrick Decker has stepped down as President and Chief Executive Officer effective immediately to join Xylem as its new CEO. Shares lost 10.15 percent, closing at $22.57.
Earnings of Note
This morning, Stratasys (NASDAQ: SSYS) reported its fourth quarter results. The company announced an EPS of $0.50, beating the consensus estimate of $0.49. Revenue of $155.8 million beat the consensus estimate of $151.03 million. Net loss for the quarter lowered to $2.0 million from $3.5 million in the same quarter last year. Stratasys sold 10,963 3D printing and additive manufacturing systems in the quarter and for the full year sold 75,818 systems. Stratasys noted that it had invested $15.5 million in R&D projects in the quarter. Stratasys issued guidance and sees its full year 2014 EPS to be $2.15 to $2.25, versus a consensus estimate of $2.21. Full year revenue is guided to be $660 million to $680 million versus a consensus estimate of $672.14 million. Shares lost 2.47 percent, closing at $123.99.
After the market closed, URS Corporation (NYSE: URS) reported its fourth quarter results. The company announced an EPS of $0.26, beating the consensus estimate of $0.18. Revenue of $2.7 billion beat the consensus estimate of $2.68 billion.
Quote of the Day
“My advice to the trustee could not be more simple: Put 10 percent of the cash in short-term government bonds and 90 percent in very low-cost S&P 500 index fund.” – Warren Buffet answering where his wife's money will be invested in the event that the Oracle himself passes before her.
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