Market Overview

Market Wrap For May 7: Dow Banks Triple-Digit Point Gain While Nasdaq Closes Lower

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U.S. stocks were mixed as Federal Reserve Chair Janet Yellen presented a prepared testimony which did not rattle investors.

The Dow posted a triple-digit point gain after falling 43 points. The Nasdaq, on the other hand, declined as many momentum and Internet names were hit hard.

Russian President Vladimir Putin ordered Russian troops to withdraw from the border with Ukraine in what could potentially be a major breakthrough in what could be considered the worst crisis between the West and Russia since the Cold War.

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  • The Dow gained 0.72 percent, closing at 16,518.54.
  • The S&P 500 gained 0.56 percent, closing at 1,878.21.
  • The Nasdaq lost 0.32 percent, closing at 4,067.67.
  • Gold lost 1.43 percent, trading at $1,289.90 an ounce.
  • Oil gained 1.31 percent, trading at $100.80 a barrel.
  • Silver lost 1.58 percent, trading at $19.33 an ounce.

News of Note

MBA Mortgage Composite Index rose 5.3 percent compared to a decline of 5.9 percent last week.

MBA Mortgage Purchase Index rose 9.0 percent compared to a decline of 4.0 percent last week.

MBA Refinance Index rose 2.0 percent compared to a decline of 7.0 percent last week.

April Gallup U.S. Job Creation Index rose to +25 from _23 in March.

First Quarter Productivity declined 1.7 percent, more than the 1.2 percent decline expected.

Unit Labor Costs rose 4.2 percent, ahead of the 2.8 percent gain expected.

Crude Inventories declined 1.8 million barrels versus consensus of a gain of 1.2 million barrels.

Gasoline Inventories rose 1.6 million barrels versus a consensus of a gain of 0.1 million barrels.

Distillates Inventories declined 0.4 million barrels versus a consensus of a gain 1.2 million barrels.

U.S. April Global Composite PMI declined to 52.8 from 53.5 in March.

April Global Services PMI declined to 52.7 from 53.5 in March.

According to Bloomberg, Alibaba will sell around a 12 percent stake through its IPO and raise around $20 billion.

Analyst Upgrades and Downgrades of Note

Analysts at Morgan Stanley upgraded AbbVie (NASDAQ: ABBV) to Overweight from Equal-weight with a price target raised to $60 from a previous $47. Shares gained 3.69 percent, closing at $52.79

Analysts at Credit Suisse maintained an Outperform rating on Activision Blizzard (NASDAQ: ATVI) with a price target raised to $25 from a previous $24. Also, analysts at Wedbush maintained an Outperform rating on Activision with a price target raised to $30 from a previous $22. Shares gained 8.80 percent, closing at $21.01.

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Analysts at Citigroup maintained a an Equal-Weight rating on CBOE Holdings (NASDAQ: CBOE) with a price target lowered to $48 from a previous $49. Shares lost 1.77 percent, closing at $51.07.

Analysts at Longbow Research upgraded Chipotle Mexican Grill (NYSE: CMG) to Buy from Neutral with a $641 price target. Shares lost 0.22 percent, closing at $500.83.

Analysts at JPMorgan maintained a Neutral rating on DIRECTV (NYSE: DTV) with a price target raised to $87 from a previous $81. Also, analysts at Brean Capital maintained a Buy rating on DIRECTV with a price target raised to $96 from a previous $92. Shares hit new 52-week highs of $88.55 before closing the day at $88.26, up 7.98 percent.

Analysts at SunTrust Robinson Humphrey downgraded eBay (NASDAQ: EBAY) to Neutral from Buy with a price target lowered to $58 from a previous $62. Shares lost 0.75 percent, closing at $50.57.

Analysts at Citigroup maintained an Overweight rating on EOG Resources (NYSE: EOG) with a price target raised to $126 from a previous $124. Also, analysts at Wunderlich upgraded EOG to Buy from Hold with a price target raised to $124 from a previous $92. Shares gained 1.12 percent, closing at $104.79.

Analysts at Wedbush maintained an Outperform rating on Electronic Arts (NYSE: EA) with a price target raised to $43 from a previous $37. Also, analysts at Brean Capital maintained a Buy rating on EA with a price target raised to $38 from a previous $33. Finally, analysts at Credit Suisse maintained an Outperform rating on EA with a price target raised to $38 from a previous $29. Shares hit new 52-week highs of $34.02 before closing the day at $33.95, up 21.03 percent.

Analysts at JPMorgan maintained a Neutral rating on FireEye (NASDAQ: FEYE) with a price target lowered to $54 from a previous $75. Also, analyst at JPMorgan maintained a Neutral rating with a price target lowered to $54 from a previous $75. Shares plunged to new 52-week lows of $27.05 before closing the day at $28.65, down 22.84 percent.

Analysts at Deutsche Bank maintained a Buy rating on Groupon (NASDAQ: GRPN) with a price target lowered to $8 from a previous $12. Also, analysts at Northland Securities downgraded Groupon to Market Perform from Outperform with a price target lowered to $7 from a previous $12. Shares plunged to new 52-week lows of $5.18 before closing the day at $5.31, down 20.98 percent.

Analysts at UBS upgraded J.C. Penney (NYSE: JCP) to Neutral from Sell with a price target raised to $9 from a previous $4. Shares gained 7.79 percent, closing at $8.72.

Analysts at JPMorgan maintained an Overweight rating on Merck (NYSE: MRK) with a price target raised to $64 from a previous $60. Also, analysts at Morgan Stanley downgraded Merck to Equal-weight from Overweight. Shares lost 2.22 percent, closing at $55.84.

Analysts at Credit Suisse upgraded Office Depot (NYSE: ODP) to Outperform from Neutral with a price target raised to $7 from a previous $6.13. Shares gained 3.52 percent, closing at $5.00.

Analysts at S&P upgraded Tesla Motors (NASDAQ: TSLA) to Hold from Sell. Shares lost 2.86 percent, closing at $201.35.

Analysts at Cantor Fitzgerald upgraded TripAdvisor (NASDAQ: TRIP) to Buy from Hold with a price target raised to $94 from a previous $92. Also, analysts at JPMorgan maintained a Neutral rating on TripAdvisor with a price target raised to $83 from a previous $73. Shares gained 3.22 percent, closing at $83.99.

Analysts at JPMorgan maintained an Overweight rating on Walt Disney (NYSE: DIS) with a price target raised to $90 from a previous $88. Shares lost 0.91 percent, closing at $80.29.

Analysts at Credit Suisse maintained a Neutral rating on Whole Foods Market (NYSE: WFM) with a price target lowered to $40 from a previous $50. Shares plunged to new 52-week lows of $37.31 before closing the day at $38.93, down 18.81 percent.

Equities-Specific News of Note

Former Burberry CEO and now head of retail at Apple (NASDAQ: AAPL) Angela Ahrendt will receive a stock bonus of nearly $10 million after joining Apple on May 1. Shares lost 0.35 percent, closing at $592.33.

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Comcast's (NASDAQ: CMCSA) NBC Universal beat out several competitors to win the broadcast rights for the Olympic Games through 2032 in a deal valued at $7.65 billion. Shares lost 0.14 percent, closing at $51.74.

Google (NASDAQ: GOOG) (NASDAQ: GOOGL) has agreed to purchase Stackdriver, a developer of software that follows the performance and reliability of apps which operate as part of a cloud infrastructure. Also, the company bought Appetas, a start-up that provides restaurants tools for building a mobile-friendly site which can also accept reservations. Shares lost 1.04 percent, closing at $509.80.

According to Barron's, Exelis' (NYSE: XLS) spin-off of its military services could yield a 30 percent gain in share prices. Shares lost 0.34 percent, closing at $17.57.

Encana (NYSE: ECA) has agreed to purchase 45,000 Eagle Ford Shale acres in Texas (which include more than 400 drilling locations with an estimated 53,000 barrels of energy produced in the first quarter) from Freeport McMoRan for $3.1 billion. Shares of Encana hit new 52-week highs of $23.93 before closing the day at $23.57, up 4.38 percent while shares of Freeport gained 0.44 percent, closing at $33.99.

Sears Holdings (NASDAQ: SHLD) announced it will proceed with additional store closures as part of an ongoing initiative to cut losses. Shares gained 2.86 percent, closing at $41.74.

Winners of Note

This morning, Mondelez International (NASDAQ: MDLZ) reported its first quarter results. The company announced an EPS of $0.39, beating the consensus estimate of $0.35. Revenue of $8.64 billion was in-line with the consensus estimate. Investors appear to be more interested on the announcement that the company will team up with D.E. Master Blenders 1753 to form a new coffee company named Jacobs Douwe Egberts and is expected to generate revenue of more than $7 billion. Mondelez will receive an after-tax cash proceeds of approximately $5 billion and a 49 percent interest in the new company. Shares of Mondelez hit new 52-week highs of $38.47 before closing the day at $38.10, up 8.18 percent.

Related: Mondelez To Spinoff Coffee Business

Decliners of Note

This morning, King Digital (NASDAQ: KING) reported its first quarter results. The company announced an EPS of $0.61, beating the consensus estimate of $0.05. Revenue of $606.7 million beat the consensus estimate of $601.6 million. Profit for the quarter rose to $127.2 million from $52.7 million in the same quarter a year ago as the company saw success in its new mobile game Farm Heroes Saga which along with two other games were counted in the top ten grossing games on the Apple App Store and Google Play Store in the U.S. However, the company noted that its gross bookings were only up by one percent from the previous quarter, potentially suggesting that its games are seeing drops in usage. Candy Crush accounted for 67 percent of revenue, down from 78 percent in the previous quarter. Share hit new 52-week lows of $15.75 before closing the day at $16.25, down 13.38 percent.

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This morning AOL (NYSE: AOL) reported its first quarter results. The company announced an EPS of $0.34, missing the consensus estimate of $0.46. Revenue of $583.3 million beat the consensus estimate of $577.7 million. Net income for the quarter fell to $9.3 million from $25.9 million in the same quarter a year ago as the company posted charges related to restructuring write-downs. The company saw revenue declines of three percent in its display ad segment which saw a six percent growth in the previous quarter. Search ad revenues declined one percent after growing five percent in the previous quarter. The company announced that it will require Converto, a provider of an ad tech platform that uses algorithms to calculate ad views and conversions in a $101 million deal. Shares lost 20.62 percent, closing at $34.85.

Earnings of Note

This morning, Cognizant Technology Solutions (NASDAQ: CTSH) reported its first quarter results. The company announced an EPS of $0.62, beating the consensus estimate of $0.59. Revenue of $2.42 billion missed the consensus estimate of $2.43 billion. Net income for the quarter rose to $348.88 million from $284.21 million in the same quarter a year ago as the company it had a net headcount addition for the quarter of approximately 7,200. The company did however say that growth in North America will be negatively impacted due to lower spending by consumers who are adjusting to U.S. healthcare reforms. The company estimates its revenue will grow by at least 16.5 percent in 2014 which represents its slowest growth rate in five years. Shares lost 4.43 percent, closing at $47.02.

This morning, Duke Energy (NYSE: DUK) reported its first quarter results. The company announced an EPS of $1.17, beating the consensus estimate of $1.12. Revenue of $6.62 billion beat the consensus estimate of $6.44 billion. The company posted a net loss of $97 million in the quarter as compared to a net profit of $634 million in the same quarter as the company took a pre-tax charge of $1.4 billion related to the company's decision to exit its Midwest commercial generation business. The company noted that extreme cold weather translated to strong demand for energy across its service territories. The company reaffirmed prior fiscal 2014 guidance and sees its EPS to be in a range of $4.45 to $4.60 versus a consensus estimate of $4.55. Shares gained 1.03 percent, closing at $73.82.

After the market closed, Tesla Motors (NASDAQ: TSLA) reported its first quarter results. The company announced an EPS of $0.12, beating the consensus estimate of $0.06. Revenue of $713 million beat the consensus estimate of $700.22 million. Shares were trading lower by 4.3 percent at $192.84 following the earnings release.

After the market closed, SolarCity (NASDAQ: SCTY) reported its first quarter results. The company announced an EPS of -$0.82, missing the consensus estimate of -$0.72. Revenue of $63.54 million beat the consensus estimate of $53.39. Shares were trading higher by 5.05 percent at $50.12 following the earnings release.

After the market closed, Keurig Green Mountain reported its second quarter results. The company announced an EPS of $1.08, beating the consensus estimate of $0.95. Revenue of $1.1 billion missed the consensus estimate of $1.85 billion. Shares were trading higher by 6.44 percent at $98.15 following the earnings release.

Quote of the Day

“While conditions in the labor market have improved appreciably, they are still far from satisfactory. Even with recent declines in the unemployment rate, it continues to be elevated. Moreover, both the share of the labor force that has been unemployed for more than six months and the number of individuals who work part time but would prefer a full-time job are at historically high levels. In addition, most measures of labor compensation have been rising slowly--another signal that a substantial amount of slack remains in the labor market.” – Fed Chair Janet Yellen speaking to the Joint Economic Committee.

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