Market Overview

Markets Close Higher Despite A Contraction In GDP

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U.S. stocks rebounded from a two-day decline despite the fact that the U.S. economy contracted 2.9 percent in the first quarter.

Investors showed little concern to the GDP figure which was negatively impacted by weather. The second quarter GDP figure, when released, may prove to be more market moving.

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  • The Dow gained 0.29 percent, closing at 16,867.51.
  • The S&P 500 gained 0.49 percent, closing at 1,959.53.
  • The Nasdaq gained 0.68 percent, closing at 4,379.76.
  • Gold lost 0.07 percent, trading at $1,320.40 an ounce.
  • Oil gained 0.56 percent, trading at $106.62 a barrel.
  • Silver lost 0.06 percent, trading at $21.08 an ounce.

News of Note

MBA Mortgage Composite Index declined 1.0 percent after declining 9.2 percent last week.

MBA Mortgage Purchase Index declined 1.0 percent after declining 4.7 percent last week.

MBA Mortgage Refinance Index declined 1.0 percent after declining 12.7 percent last week.

First Quarter GDP contracted 2.9 percent, worse than the 1.8 percent expected. In the fourth quarter, GDP contracted 1.0 percent.

First Quarter Corporate Profits rose 6.8 percent, better than the 5.3 percent rise in the fourth quarter.

May Durable Goods declined 1.0 percent to $238 billion. Analysts were expecting a gain of 0.4 percent in the quarter.

June U.S. Services PMI Flash Index rose to 61.2 from 58.1 in May.

EIA Crude Inventories rose 1.74 million barrels, higher than the decline of 1.6 million barrels expected.

EIA Gasoline Inventories rose 0.7 million barrels, lower than the gain of 1.5 million barrels expected.

EIA Distillates Inventories rose 1.2 million barrels, higher than the gain of 0.7 million barrels expected.

Analyst Upgrades and Downgrades of Note

Analysts at Credit Suisse maintained a Neutral rating on Apple (NASDAQ: AAPL) with a price target raised to $96 from a previous $85.71. Shares gained 0.09 percent, closing at $90.36.

Analysts at Macquarie maintained an Underperform rating on BlackBerry (NASDAQ: BBRY) with a price target raised to $7.25 from a previous $7.07. Shares gained 1.42 percent, closing at $9.98.

Analysts at Deutsche Bank maintained a Buy rating on Buffalo Wild Wings (NASDAQ: BWLD) with a price target raised to $175 form a previous $160. Shares gained 1.03 percent, closing at $163.87.

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Analysts at Deutsche Bank maintained a Hold rating on Chipotle Mexican Grill (NYSE: CMG) with a price target raised to $575 from a previous $550. Shares gained 0.65 percent, closing at $599.50.

Analysts at Bank of America downgraded Coach (NYSE: COH) to Underperform. Shares hit new 52-week lows of $33.60 before slightly reversing and closing the day at $34.10, up 0.03 percent.

Analysts at Buckingham Research initiated coverage of Footlocker (NYSE: FL) with a Buy rating and $58 price target. Shares hit new 52-week highs of $50.33 before closing the day at $49.86, up 0.79 percent.

Analysts at KeyBanc downgraded Harley-Davidson (NYSE: HOG) to Hold from Buy while removing a previous $80 price target. Shares lost 1.68 percent, closing at $69.47.

Analysts at Morgan Stanley initiated coverage of Kroger Company (NYSE: KR) with an Overweight rating and $60 price target. Shares gained 0.10 percent, closing at $49.22.

Analysts at FBR Capital maintained a Market Perform rating on Las Vegas Sands (NYSE: LVS) with a price target lowered to $80 from a previous $85. Shares gained 0.80 percent, closing at $75.42.

Analysts at Cowen & Company upgraded Men's Wearhouse (NYSE: MW) to Outperform from Market Perform with a price target raised to $65 from a previous $52. Shares gained 1.39 percent, closing at $55.98.

Analysts at Jefferies upgraded Walgreen (NYSE: WAG) to Buy from Hold with a price target raised to $87 from a previous $69. Meanwhile, analysts at FBR Capital maintained a Market Perform rating on Walgreen with a price target raised to $73 from a previous $68. Shares gained 2.39 percent, closing at $74.19.

Analysts at Morgan Stanley initiated coverage of Whole Foods (NYSE: WFM) with an Overweight rating and $50 price target. Shares gained 0.36 percent, closing at $39.09.

Analysts at FBR Capital maintained a Market Perform rating on Wynn Resorts (NASDAQ: WYNN) with a price target lowered to $215 from a previous $235. Shares gained 0.97 percent, closing at $203.60.

Analysts at JMP Securities maintained a Market Outperform rating on Zillow (NYSE: Z) with a price target raised to $150 from a previous $114. Shares gained 6.11 percent, closing at $140.36.

Equities-Specific News of Note

During its I/O conference, Google (NASDAQ: GOOG) revealed that Android has more than one billion active monthly users and that tablet app installs are up 236 percent year over year. Google also claimed that its Android tablets have a 62 percent market share. Google also detailed its Android Wear technology, Android Auto, Android TV and a Google Drive service with unlimited cloud storage for $10 a month. Shares gained 2.48 percent, closing at $578.65.

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Valeant's (NYSE: VRX) CEO Michael Pearson believes he can secure enough shareholder support for an Allergan (NYSE: AGN) bid. Shares of Valeant gained 4.50 percent, cloisng at $125.94 while shares of Allergan gained 2.25 percent, closing at $169.07.

Petrobras (NYSE: PBR) is considering selling some of its assets as part of its obligations to pay $6.7 billion to the Brazilian government. Shares lost 1.60 percent, closing at $14.74.

Intuitive Surgical (NASDAQ: ISRG) announced that its da Vinci Xi Surgical System received a CE Mark certification in Europe. The company can now sell its devices in Europe and other countries that rely on the CE Mark certification. Shares gained 0.70 percent, closing at $405.08.

General Motors (NYSE: GM) will set up a fund to compensate families and victims that suffered due to faulty ignition switch. Shares gained 1.39 percent, closing at $37.09.

Ford (NYSE: F) announced a recall of more than 5,500 F-150 trucks due to a motor position sensor magnet potentially installed incorrectly. Shares gained 1.36 percent, closing at $17.20.

The European Union authorities is set to approve Vodafone's (NYSE: VOD) $9.8 billion acquisition of ONO. Shares gained 1.13 percent, closing at $32.36.

Cliffs Natural Resources (NYSE: CLF) plans to idle its Pinnacle met coal mine for more than six months starting in late August. Shares gained 1.13 percent, closing at $14.36.

During an analyst presentation, Home Depot (NYSE: HD) said that it expects comparable sales growth of around 4.6 percent, operating margin to improve by 70 bps to 12 percent and EPS growth to grow by 17.6 percent. Shares gained 0.12 percent, closing at $80.53.

Lockheed Martin (NYSE: LMT) won a $1.9 billion contract from the U.S. Air Force to produce missile-warning satellites. Shares lost 0.04 percent, closing at $162.45.

Winners of Note

The Supreme Court ruled that Aereo's streaming TV service is a violation of Copyright laws. This led to gains in CBS (NYSE: CBS) as its CEO Leslie Moonves told CNBC the decision is a “terrific victory” as Aereo previously hinted that an unfavorable ruling would spell the end of its service. Moonves also hinted that it would not necessarily be open to a partnership with Aereo but would consider it, providing they get paid for its content. Shares of CBS gained 6.19 percent, closing at $62.48. Shares of other broadcasters also saw strong gains such as Sinclair Broadcast Group (NASDAQ: SBGI) whose shares gained 15.60 percent, closing at $33.80.

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Schlumberger (NYSE: SLB) said that it sees its EPS rising to $9 to $10 through margin expansion, revenue growth and share repurchases. The company is expected to renew its focus on exploration only in 2016 or 2017. Shares hit new 52-week highs of $114.44 before closing the day at $113.85, up 6.42 percent.

This morning, Barnes & Noble (NYSE: BKS) reported its fourth quarter results. The company announced an EPS of -$0.72, missing the consensus estimate of -$0.59. Revenue of $1.32 billion beat the consensus estimate of $1.19 billion. Net loss for the quarter improved to $42.55 million from $119.5 million in the same quarter a year ago as the company grew its College business through new contract acquisitions and implemented initiatives to improve its Retail store sales. The company's board of directors authorized a split of its retail segment from the NOOK business and will create two separate public companies by the end of the next quarter. Also, the company said that its full year fiscal 2015 comp bookstore sales will be down in the low-single digits as will college comps. Finally, the company said that it sees its losses in the NOOK segment to continue decreasing. Shares hit new 52-week highs of $22.75 before closing the day at $21.65, up 5.30 percent.

George Soros disclosed that he raised his ownership stake in Penn Virginia (NYSE: PVA) to 9.53 percent stake from 9.15 percent in March. Soros said that that a sale of the company is the best action the company could take to maximize value. Shares gained 12.39 percent, closing at $16.60.

Decliners of Note

A lift of the ban on U.S. oil exports is expected to show its toll on refiners' bottom line. The U.S. government granted permission for Pioneer Natural Resources and Enterprise Products Partners to export oil to foreign counties. Several refining stocks were lower today including Valera Energy (NYSE: VLO) whose shares lost 8.29 percent closing at $51.35.. Also, shares of Marathon Petroleum (NYSE: MPC) lost 6.34 percent closing at $80.97.. Refiners with smaller market caps also saw heavy selling such as PBF Energy (NYSE: PBF) whose shares lost 10.72 percent, closing at $28.07.

Earnings of Note

This morning, General Mills (NYSE: GIS) reported its fourth quarter results. The company announced an EPS of $0.67, missing the consensus estimate of $0.72. Revenue of $4.2 billion missed the consensus estimate of $4.42 billion. Net earnings for the quarter rose to $404.6 million from $366.3 million in the same quarter a year ago despite the fact that revenue was 2.9 percent lower than a year ago. U.S. branded goods retail saw its sales fall 1.4 percent to $2.44 billion while international sales fell 6.8 percent to $1.34 billion. However, revenue from convenience stores saw a 1.1 percent gain to $507.5 million. The company said that it will review its North American manufacturing and distribution networks to cut costs and generate $40 million in pretax savings. The company also guided towards a mid-single digits growth in net sales, a high single-digit rate rise in EPS. Shares lost 3.61 percent, closing at $51.76.

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This morning, Monsanto Group (NYSE: MON) reported its third quarter results. The company announced an EPS of $1.62, beating the consensus estimate of $1.56. Revenue of $4.25 billion missed the consensus estimate of $4.40 billion. Net income for the quarter fell to $858 million from $909 million in the same quarter a year ago as the company operates in what it calls the toughest macro agriculture environment in several years. Nevertheless, the company raised its full year EPS guidance to $5.10 to $5.20 from a previous guidance of $5.00 to $5.25. The company guided its free cash flow to be in the upper end of a $700 million to $800 million range. Also, the company approved a $10 billion share buyback program over the next two years. The company is committing towards buying $6 billion worth of stock in the near term. Shares hit new 52-week highs of $128.79 before closing the day at $126.73, up 5.06 percent.

After the market closed, Bed Bath & Beyond (NASDAQ: BBBY) reported its first quarter results. The company announced an EPS of $0.93, missing the consensus estimate of $0.91. Revenue of $2.66 billion missed the consensus estimate of $2.69 billion. Shares were trading lower by 5.68 percent at $57.64 following the earnings report.

Quote of the Day

“You are a totalitarian company that builds machines to kill humans.” - A heckler yelling during Google's demonstration of its Google Cloud.

Posted-In: Aereo AllerganEarnings News Econ #s Economics After-Hours Center Movers Best of Benzinga

 

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