Consumer Confidence And Housing Data Take A Back-Seat To Markets
U.S. stocks declined as the recent round of violence in Iraq may have escalated following reports that Syrian warplanes conducted raids in western Iraq, killing at least 50 people.
The CBOE Volatility Index, also referred to as the "fear index", rose more than ten percent, trading above the 12.0 mark.
Speaking at the Economic Club of New York, the Fed's Charles Plosser said that a rate hike in the third quarter with a one percent Fed Funds rate by the end of 2015 is a possibility.
“The weakest forecast anticipates a funds rate of nearly 1 percent by the end of 2015,” Plosser said in his speech. He added, “while the strongest forecast envisions a funds rate of about 4.7 percent in part because both inflation and unemployment "overshoot" their long-run and sustainable values and corrections must follow.”
- The Dow lost 0.70 percent, closing at 16,818.13.
- The S&P 500 lost 0.64 percent, closing at 1,949.98.
- The Nasdaq lost 0.42 percent, closing at 4,3503.36.
- Gold gained 0.08 percent, trading at $1,319.50 an ounce.
- Oil lost 0.15 percent, trading at $106.01 a barrel.
- Silver lost 0.0 percent, trading at $20.92 an ounce.
News of Note
ICSC Retail Store Sales rose 2.0 percent week over week after rising 0.4 percent last week.
S&P Case-Shiller Home Price Index through April rose 1.1 percent month over month and 10.8 percent year over year. Analysts were expecting a rise of 0.8 percent month over month and 11.4 percent year over year.
April FHFA Housing Price Index was flat month over month and rose 5.9 percent year over year. Analysts were expecting a rise of 0.5 percent month over month and 6.4 percent year over year.
Redbook Chain Store Sales rose 3.3 percent year over after rising 3.5 percent last week.
May New Home Sales rose to 504,000 from 425,000 in April, topping estimates of 440,000.
June Richmond Fed Manufacturing Survey read +3, falling short of expectations of a reading of +7, and falling short of May's +7 reading.
June Consumer Confidence rose to 85.2 from 82.2 in May, topping estimates of 83.7.
Russia's Gazprom confirmed that its gas flows to Europe (through Ukraine) were stable and not affected by its decision to cut off supplies to Ukraine.
The Bank of England's Governor Mark Carney hinted that any future rate hikes will be gradual and limited and the economy still has spare capacity that need to be filled prior to a rate hike.
Analyst Upgrades and Downgrades of Note
Analysts at JPMorgan maintained an Overweight rating on Apple (NASDAQ: AAPL) with a price target raised to $108 from a previous $89. Shares lost 0.61 percent, closing at $90.28.
Analysts at Morgan Stanley initiated coverage of Advance Auto Parts (NYSE: AAP) with an Overweight rating and $150 price target. Shares hit new 52-week highs of $133.92 before closing the day at $131.66, up 0.76 percent.
Analysts at Morgan Stanley initiated coverage of AutoZone (NYSE: AZO) with an Equal-weight rating and $575 price target. Shares lost 0.43 percent, closing at $530.67.
Analysts at UBS maintained a Neutral rating on Bed Bath & Beyond (NASDAQ: BBBY) with a price target lowered to $65 from a previous $69. Also, analysts at Morgan Stanley initiated coverage of Bed Bath & Beyond with an Underweight rating. Shares lost 0.56 percent, closing at $60.64.
Analysts at Morgan Stanley initiated coverage of Best Buy (NYSE: BBY) with an Overweight rating and $36 price target. Shares gained 1.72 percent, closing at $29.03.
Analysts at FBR Capital maintained an Outperform rating on CSX Corporation (NYSE: CSX) with a price target raised to $35 from a previous $33. Shares lost 1.75 percent, closing at $30.27.
Analysts at Morgan Stanley initiated coverage of Costco Wholesale (NASDAQ: COST) with an Overweight rating and $134 price target. Shares gained 0.95 percent, closing at $116.31.
Analysts at JPMorgan maintained a Neutral rating on Darden Restaurants (NYSE: DRI) with a price target lowered to $47 from a previous $52. Also, analysts at Credit Suisse maintained an Underperform rating on Darden Restaurants with a price target lowered to $43 from a previous $46. Shares lost 2.07 percent, closing at $46.77.
Analysts at Morgan Stanley initiated coverage of Dick's Sporting Goods Store (NYSE: DKS) with an Equal-weight rating and $50 price target. Share lost 1.56 percent, closing at $44.08.
Analysts at Northcoast Research upgraded Dollar Tree (NASDAQ: DLTR) to Buy from Neutral. Shares gained 0.50 percent, closing at $53.77.
Analysts at KeyBanc maintained a Buy rating on FMC Corporation (NYSE: FMC) with a price target lowered to $92 from a previous $98. Shares lost 0.23 percent, closing at $70.94.
Analysts at Morgan Stanley initiated coverage of Home Depot (NYSE: HD) with an Equal-weight rating and $90 price target. Shares lost 0.26 percent, closing at $80.43.
Analysts at Baird downgraded Integrys Energy (NYSE: TEG) to Neutral from Outperform with a price target raised to $68 from a previous $64. Shares gained 1.35 percent, closing at $69.27.
Analysts at Needham upgraded Micron Technology (NASDAQ: MU) to Strong Buy from Buy with a price target raised to $50 from a previous $40. Also, analysts at Jefferies maintained a Buy rating on Micron with a price target raised to $38 from a previous $32. Shares hit new 52-week highs of $32.97 before closing the day at $32.50, up 3.97 percent.
Analysts at Canaccord Genuity maintained a Buy rating on Pandora (NYSE: P) with a $43 price target. Shares gained 0.25 percent, closing at $28.27.
Analysts at Morgan Stanley initiated coverage of Staples (NASDAQ: SPLS) with an Underweight rating and $11 price target. Shares lost 1.42 percent, closing at $11.07.
Analysts at Morgan Stanley initiated coverage of Wal-Mart (NYSE: WMT) with an Overweight rating and $87 price target. Shares gained 0.24 percent, closing at $75.97. Shares gained 0.24 percent, closing at $75.97.
Analysts at Morgan Stanley initiated coverage of Williams-Sonoma (NYSE: WSM) with an Overweight rating and $82 price target. Shares hit new 52-week highs of $71.82 before closing the day at $70.95, up 0.30 percent.
Equities-Specific News of Note
Navistar (NYSE: NAV) announced that its Board of Directors approved an amendment to its Stockholder Rights Plan that turns the existing plan into a Tax Asset Protection Plan, in order to protect the long-term value of its tax assets. Shares gained 2.16 percent, closing at $38.35.
Loral Space & Communications (NASDAQ: LORL) turned down an $80 per share acquisition offer (valuing the company at $7 billion) from the Ontario Teachers Pension Plan. The Pension Plan and company will no longer pursue discussions for any future acquisition. Shares lost 1.89 percent, closing at $71.79.
Elizabeth Arden (NASDAQ: RDEN) announced it will exit certain under-performing segments, cut jobs and take a pre-tax charge of $65 million to $72 million before the first quarter of 2015. Shares lost 3.14 percent, closing at $27.41.
NetApp (NASDAQ: NTAP) guided an EPS growth of just under ten percent for the full fiscal year 2015, above the consensus estimate for a 6.5 percent growth. Shares gained 0.67 percent, closing at $36.09.
Duke Energy (NYSE: DUK) announced that it will build a three-site solar energy project in North Carolina. A 20 MW project will be finalized this year, with two other projects planned to be completed in 2015. Shares gained 0.01 percent, closing at $72.36.
Several consumer groups are lobbying the FTC to investigate CarMax (NYSE: KMX) and misleading marketing claims. Shares lost 3.54 percent, closing at $50.07.
Groupon (NASDAQ: GRPN) acquired SnapSaves, a Canadian based developer of a grocery coupon app with over two million users. The app allows users to submit pictures of a receipt to receive cash back on select items. Groupon will use the company's expertise to expand to the U.S. Shares gained 4.47 percent, closing at $6.78.
Ford's (NYSE: F) outgoing CEO Alan Mulally confirmed he will stay close to the company and assume an advisory role after his retirement. Shares gained 0.53 percent, closing at $16.97.
Staples (NASDAQ: SPLS) announced a new 110 percent price match guarantee on qualifying items in its store. Shares lost 1.42 percent, closing at $11.07.
Winners of Note
Vertex Pharmaceuticals (NASDAQ: VRTX) announced positive results from two Phase 3 studies of its lumacaftor and ivacaftor as a treatment for patients with cystic fibrosis. In a press release, the company said “All four 24-week combination treatment arms in the studies, known as TRAFFIC and TRANSPORT, met their primary endpoint of mean absolute improvement in ppFEV1 from baseline compared to placebo at the end of treatment. Mean absolute improvements in ppFEV1 of between 2.6 and 4.0 percentage points from baseline compared to placebo were observed across the studies, with mean relative improvements of 4.3 percent to 6.7 percent.” Shares surged to new 52-week highs of $98.80 before closing the day at $93.53, up 40.41 percent.
Decliners of Note
Google launched a new service named Google Domains which is a domain name registration service. The service supports up to 100 e-mail addresses as well as sub-domains will compete directly with Web.com Group (NASDAQ: WWWW) and Endurance International Group (NASDAQ: EIGI), who owns Domain.com, HostGator, BigRock and Bluehost. Shares of Web.com lost 19.94 percent, closing at $27.70 while shares of Endurance International lost 5.54 percent, closing at $15.00.
Earnings of Note
This morning, Walgreen (NYSE: WAG) reported its third quarter results. The company announced an EPS of $0.91, missing the consensus estimate of $0.94. Revenue of $19.4 billion missed the consensus estimate of $19.48 billion. Net earnings for the quarter rose to $722 million from $624 million in the same quarter a year ago as comparable-store sales rose 4.8 percent and the average basket size rose 2.9 percent. However, the company's gross margin rate dropped 40 bps to 28.1 percent and customer traffic was lower by 0.7 percent. The company said that it realized $367 million in synergies from its acquisition of Alliance Boots. Also, the company withdrew its fiscal 2016 objectives that were set in 2012 and will host a conference call in late July or early August to provide new financial objectives and metrics. Shares lost 1.70 percent, closing at $72.48.
Quote of the Day
"My overall view of the economy is fairly optimistic. After a first quarter buffeted by winter storms, I believe we are poised to grow at a rate somewhat above trend for the remainder of this year and next before reverting back to trend, which I see as about 2.4 percent. Steady employment growth and healthier household balance sheets will support consumption activity. The current data suggest economic strength is fairly broad based, as evidenced by recent indicators and the optimism expressed by firms in both the manufacturing and service sectors." - The Fed's Charles Plosser speaking at The Economic Club of New York.
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