Market Wrap For June 3: Markets Run Out Of Steam
U.S. stocks were lower with the S&P 500, Dow Jones and Nasdaq indices all ending in the red.
In a lackluster trading session with little market moving move, investors are likely sitting on the sidelines until key data will be released later on this week.
All eyes will be on Friday's monthly nonfarm payroll data. Economists are expecting 218,000 jobs were created in May. The unemployment rate is projected to come in at 6.4 percent.
- The Dow lost 0.13 percent, closing at 16,722.34.
- The S&P 500 lost 0.04 percent, closing at 1,924.24.
- The Nasdaq lost 0.07 percent, closing at 4,234.08.
- Gold gained 0.18 percent, trading at $1,246.30 an ounce.
- Oil gained 0.29 percent, trading at $102.77 a barrel.
- Silver gained 0.41 percent, trading at $18.82 an ounce.
News of Note
ICSC Retail Store Sales rose 2.9 percent week over week after declining 1.2 percent last week.
May Gallup US ECI rose to -14 from -16 in April.
Redbook Chain Store Sales rose 3.5 percent year over year after rising 3.2 percent last week.
April Factory Orders rose 0.7 percent, coming ahead of estimates for a 0.5 percent gain but falling short of March's 1.5 percent gain.
JPMorgan May Global Manufacturing PMI rose to 52.2 from 51.9 in April.
China's HSBC PMI for May rose to 49.4 from 48.1 in April but fell short of analyst expectations for 49.7.
The European Central Bank is considering including potential fines in its stress tests of major banks.
According to the International Energy Agency, more than $48 trillion in investments will be required to meet the world's projected energy supply needs in 2035.
Analyst Upgrades and Downgrades of Note
Analysts at Credit Suisse downgraded Allergan (NYSE: AGN) to Neutral from Outperform. Shares lost 1.53 percent, closing at $169.61.
Analysts at Credit Suisse maintained a Neutral rating on Apple (NASDAQ: AAPL) with a price target raised to $600 from a previous $560. Also, analysts at Canaccord Genuity maintained a Buy rating on Apple with a price target raised to $710 from a previous $660. Shares gained 1.41 percent, closing at $637.54.
Analysts at Wedbush upgraded Broadcom (NASDAQ: BRCM) to Outperform from Neutral. Meanwhile, analysts at Stifel Nicolaus downgraded Broadcom to Hold from Buy while removing a previous price target of $34. Also, analysts at FBC Capital maintained an Outperform rating on Broadcom with a price target raised to $39 from a previous $36. Also of note, analysts at Credit Suisse maintained a Neutral rating on Broadcom with a price target raised to $33 from a previous $27. Shares gained 2.99 percent, closing at $35.88.
Analysts at Stifel Nicolaus maintained a Buy rating on Conn's (NASDAQ: CONN) with a price target raised to $61 from a previous $51. Shares lost 3.11 percent, closing at $48.32.
Analysts at Oppenheimer initiated coverage of Kroger (NYSE: KR) with an Outperform rating and $55 price target. Shares hit new 52-week highs of $47.92 before closing at $47.86, up 0.74 percent.
Equities-Specific News of Note
General Motors' (NYSE: GM) June U.S. sales rose 12.6 percent to 284,694 units. Analysts were expecting a rise of 6.4 percent for the month. Shares gained 1.12 percent, closing at $35.25.
Ford's (NYSE: F) June U.S. sales rose 3.0 percent to 254,084 units. Analysts were expecting a decline of 0.2 percent for the month. Shares rose 0.64 percent, closing at $16.55.
Toyota's (NYSE: TM) June U.S. sales rose 17.0 percent to 243,236. Analysts were expecting a gain of 11 percent for the month. Shares gained 0.86 percent, closing at $114.93.
Facebook (NASDAQ: FB) has acquired Pryte, a Finland based startup that offers short-term mobile data packages intended for individual apps. Shares lost 0.33 percent, closing at $62.87.
J.M. Smucker (NYSE: SJM) said that it has raised the price of its packaged coffee products around nine percent due to higher green coffee costs. The company also said that it left K-Cup prices the same. Shares gained 0.45 percent, closing at $102.93.
Intel (NASDAQ: INTC) launched its Core M CPUs which are scheduled to arrive in time for the holiday season. Shares hit new 52-week highs of $27.70 before closing the day at $27.66, up 1.47 percent.
Tesla's (NASDAQ: TSLA) CEO Elon Musk noted during the company's annual general meeting that he intends to retain his current role with the company for at least another four to five years. Musk also hinted that trucks and lower-cost vehicles are part of the company's longer term plans. Shares gained 0.12 percent, closing at $204.94.
SunEdison (NASDAQ: SUNE) announced it will partner with Huantai Group, a Chinese based solar wafer vendor to construct solar projects in China. Shares lost 0.43 percent, closing at $19.50.
NetApp (NASDAQ: NTAP) will offer $500 million worth of 3.375 percent senior notes due in 2021. Shares lost 2.45 percent, closing at $36.59.
Teva Pharmaceutical (NASDAQ: TEVA) has acquired Labrys Biologics, a producer of migraine medication for $200 million and up to $625 million in milestone payments. Shares lost 0.83 percent, closing at $51.52.
B/E Aerospace (NASDAQ: BEAV) will postpone its annual shareholder meeting to further evaluate the company's strategic alternatives. Shares gained 0.11 percent, closing at $96.72.
KKR (NYSE: KKR) has agreed to purchase Internet Brands for $1.1 billion. Shares gained 1.97 percent, closing at $23.35.
Newmont Mining (NYSE: NEM) said that it has stopped copper concentrate production in Indonesia. Shares gained 1.06 percent, closing at $22.82.
AT&T (NYSE: T) raised its full year fiscal 2014 revenue growth guidance to five percent from a previous four percent while reaffirming the company's prior EPS guidance to be in the low-end of the mid-single digit range with free cash flow of around $11 billion and capital expenditures of around $21 billion. However, AT&T also guided to no wireless service revenue growth in the second quarter due to ongoing price wars with other service providers. Shares lost 0.68 percent, closing at $35.20.
Winners of Note
Pilgrim's Pride (NYSE: PPC) confirmed it raised its bid to acquire Hillshire Brands (NYSE: HSH) to $55 per share. Shares of Pilgrim's Pride lost 2.24 percent, closing at $25.34 while shares of Hillshire Brands rose to new 52-week highs of $58.89 before closing the day at $58.65, up 9.48 percent.
Skyworks Solutions (NASDAQ: SWKS) revised its third quarter guidance and now expects its revenue to be $570 million compared to a previous guidance of $535 million. The company also raised its EPS guidance to $0.80 from a prior $0.73. The revised guidance is favorable when compared to the consensus estimates for revenue of $535.5 million and an EPS of $0.73. The company noted that it is succeeding in capitalizing on the growing opportunity within the Internet of Things. Shares hit new 52-week highs of $45.89 before closing at $45.65, up 5.99 percent.
Acadia Healthcare (NASDAQ: ACHC) has acquired the United Kingdom's second-largest independent health provider for $600 million in cash. The company said that the acquisition will be accretive to its 2014 earnings by $0.17 to $0.20 per share. Shares gained 14.13 percent, closing at $47.98.
Decliners of Note
PHH Corp (NYSE: PHH) has finalized the sale of its auto fleet leasing business to Element Financial for around $1.4 billion in cash. According to analysts at Compass Point, the company will only receive a net proceed of $750 million to $800 million. The net gain on sale of $250 million to $300 million is lower than what the analyst was expecting by around $100 million. Shares lost 6.61 percent, closing at $23.58.
Shares of Clovis Oncology (NASDAQ: CLVS) declined following Monday's disclosure that “three or four” patients involved in its Phase 2 data study for the treatment of non-small cell lung cancer had to begin insulin therapy after becoming resistant to metformin. Shares hit new 52-week lows of $38.22 before closing the day at $38.23, down 19.94 percent.
On Monday, Advanced Energy Industries (NASDAQ: AEIS) said that its CEO Garry Rogerson has decided to step down. Analysts at Needham noted that Rogerson was considered to be an influential force in implementing changes to the company to drive earnings growth. Shares lost 6.53 percent, closing at $17.76.
Earnings of Note
This morning, Dollar General (NYSE: DG) reported its first quarter results. The company announced an EPS of $0.72, missing the consensus estimate of $0.73. Revenue of $4.52 billion missed the consensus estimate of $4.56 billion. Net income for the quarter rose to $222.39 million from $220.01 million in the same quarter a year ago as comparable same-store sales rose 1.5 percent. However, the company's gross profit rate dipped 57 bps to 30.0 percent due to a consumables, tobacco and perishable sales cutting into the margin rate. In fact, sales gains in consumables outpaced non-consumables, led by increased sales in tobacco products, snacks, candy. The company guided its full year fiscal 2014 sales to rise by eight percent to nine percent with same-store sales rising three percent to four percent. The company expects its EPS for the full year to be $3.45 to $3.55. Shares gained 3.89 percent, closing at $56.41.
Quote of the Day
“The reliability and sustainability of our future energy system depends on investment. But this won't materialise unless there are credible policy frameworks in place as well as stable access to long-term sources of finance. Neither of these conditions should be taken for granted. There is a real risk of shortfalls, with knock-on effects on regional or global energy security, as well as the risk that investments are misdirected because environmental impacts are not properly reflected in prices.” – IEA's Executive Director Mario va der Hoeven commenting on the $48 trillion investment required to satisfy the estimated global energy needs in 2035.
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