Stocks Rebound From 2 Day Drop As The Fed Confirms The End Of QE Is Near
U.S. stocks rose following the FOMC minutes which stated that the Fed is on track for a final month of tapering in October.
The Fed plans to slash $15 billion from its monthly asset purchasing program at that time.
“Some committee members had been asked by members of the public whether, if tapering in the pace of purchases continues as expected, the final reduction would come in a single $15 billion per month reduction or in a $10 billion reduction followed by a $5 billion reduction,” the Fed wrote in its minutes while concluding that this is a “technical issue with no substantive macroeconomic consequences and no consequences for the eventual decision about the timing of the first increase in the federal funds rate.”
The Fed also stated that it sees real GDP expanding at a faster pace than potential output beginning in the second half of 2014 extending throughout the next two years.
- The Dow gained 0.47 percent, closing at 16,985.61.
- The S&P 500 gained 0.46 percent, closing at 1,972.83.
- The Nasdaq gained 0.63 percent, closing at 4,419.03.
- Gold gained 1.12 percent, trading at $1,331.90 an ounce.
- Oil lost 1.13 percent, trading at $102.23 a barrel.
- Silver gained 0.72 percent, trading at $21.17 an ounce.
News of Note
MBA Mortgage Composite Index rose 1.9 percent after declining 0.2 percent last week.
MBA Mortgage Purchase Index rose four percent after declining 0.7 percent last week.
MBA Mortgage Refinance Index rose four percent after rising 0.1 percent last week.
EIA Crude Inventories declined 2.4 million, more than the decline of 2.2 million barrels expected.
EIA Gasoline Inventories rose 0.6 million barrels, more than the decline of 0.2 million barrels expected.
EIA Distillates Inventories rose 0.2 million barrels, less than the 1.2 million barrels gain expected.
Analyst Upgrades and Downgrades of Note
Analysts at JPMorgan maintained an Overweight rating on Alcoa (NYSE: AA) with a price target raised to $18.50 from a previous $15. Meanwhile, analysts at Nomura maintained a Neutral rating on Alcoa with a price target raised to $12 from a previous $8. Also, analysts at UBS maintained a Neutral rating on Alcoa with a price target raised to $15.50 from a previous $15. Shares hit new 52-week highs of $15.76 before closing the day at $15.69, up 5.66 percent.
Analysts at Guggenheim Securities upgraded American Express (NYSE: AXP) to Buy from Neutral with a price target raised to $109 from a previous $105. Shares gained 0.18 percent, closing at $94.74.
Analysts at UBS maintained a Neutral rating on Applied Materials (NASDAQ: AMAT) with a price target raised to $24 from a previous $20. Shares gained 2.33 percent, closing at $23.27.
Analysts at Deutsche Bank maintained a Hold rating on B/E Aerospace (NASDAQ: BEAV) with a price target raised to $95 from a previous $94. Shares gained 1.29 percent, closing at $93.38.
Analysts at Oppenheimer upgraded Broadcom (NASDAQ: BRCM) to Outperform from Market Perform with a $45 price target. Shares gained 1.44 percent, closing at $38.16.
Analysts at Morgan Stanley added CNOOC (NYSE: CEO) its list of Short Research Tactical Ideas. Shares lost 0.83 percent, closing at $174.19.
Analysts at Buckingham Research downgraded Coach (NYSE: COH) to Underperform from Neutral with a price target lowered to $28 from a previous $32. Shares lost 1.37 percent, closing at $34.50.
Analysts at JPMorgan maintained an Underweight rating on Deere & Company (NYSE: DE) with a price target lowered to $83 from a previous $88. Shares lost 1.07 percent, closing at $89.16.
Analysts at Tigress Financial downgraded Facebook (NASDAQ: FB) to Neutral from Buy. Shares gained 3.47 percent, closing at $64.94.
Analysts at Pacific Crest downgraded Garmin (NASDAQ: GRMN) to Underperform from Sector Perform. Shares lost 4.57 percent, closing at $57.86.
Analysts at JPMorgan maintained a Neutral rating on General Mills (NYSE: GIS) with a price target raised to $52 from a previous $51. Shares gained 0.30 percent, closing at $53.26.
Analysts at BMO Capital Markets initiated coverage of Kate Spade & Co (NYSE: KATE) with an Outperform rating and $48 price target. Shares gained 2.86 percent, closing at $38.12.
Analyst at Credit Suisse upgraded KKR & Co (NYSE: KKR) to Outperform from Neutral. Shares gained 1.18 percent, closing at $24.85.
Analysts at JPMorgan maintained an Overweight rating on Las Vegas Sands (NYSE: LVS) with a price target lowered to $89 from a previous $91. Shares gained 1.08 percent, closing at $75.89.
Analysts at Jefferies maintained a Hold rating on Legg Mason (NYSE: LM) with a price target raised to $50 from a previous $46. Shares gained 0.20 percent, closing at $50.88.
Analysts at JPMorgan maintained an Overweight rating on Melco Crown (NASDAQ: MPEL) with a price target lowered to $46 from a previous $47. Shares gained 0.21 percent, closing at $34.01.
Analysts at Citigroup maintained a Buy rating on MetLife (NYSE: MET) with a price target raised to $64 from a previous $62. Shares gained 0.64 percent, closing at $56.35.
Analysts at Standpoint Research downgraded PetSmart (NASDAQ: PETM) to Hold from Buy. Meanwhile, analysts at Jefferies maintained a Hold rating on PetSmart with a price target raised to $70 from a previous $55. Shares gained 2.62 percent, closing at $70.55.
Analysts at JPMorgan downgraded Potash Corp (NYSE: POT) to Neutral from Overweight with a price target unchanged at $38.
Analysts at HSBC upgraded Schlumberger Limited (NYSE: SLB) to Overweight from Neutral with a price target raised to $135 from a previous $105. Shares gained 0.18 percent, closing at $116.96.
Analysts at JPMorgan maintained an Overweight rating on Verizon Communications (NYSE: VZ) with a price target raised to $58 from a previous $55. Shares gained 0.27 percent, closing at $48.90.
Analysts at Barclays initiated coverage of Walt Disney Company (NYSE: DIS) with an Equal-weight rating and $85 price target. Shares hit new 52-week highs of $87.29 before closing the day at $87.22, up 1.58 percent.
Analysts at JPMorgan maintained an Overweight rating on Wynn Resorts (NYSE: WYNN) with a price target lowered to $243 from a previous $249. Shares gained 1.92 percent, closing at $206.06.
Equities-Specific News of Note
Citigroup (NYSE: C) may settle its investigation with the DOJ for $7 billion. However, analysts at Morgan Stanley speculated that the actual settlement will be closer to $4 billion. Shares lost 0.08 percent, closing at $47.38.
Coty (NYSE: COTY) announced a new corporate structure and will divide its products under the categories of fragrance, skin care, color cosmetics, and body care. Shares lost 0.22 percent, closing at $17.92.
Boeing (NYSE: BA) finalized a $56 billion order to supply Emirates airline with 150 777X planes with an option to purchase an additional 50 airplanes in the future. Shares of Boeing finished the day unchanged at $126.79.
Keurig Green Mountain will manufacture Harris Teeter's branded K-Cup packs for the coffee brewing system. Shares of Keurig Green Mountain gained 0.59 percent, closing at $123.02.
General Mills (NYSE: GIS) plans to invest in new cereal brands to boost its sales. Shares gained 0.30 percent, closing at $53.26.
Michael Kors (NASDAQ: KORS) named Mark Brasher to a newly created role of President of Mens. Brasher is the former CEO and Chairman of the Americas at Hugo Boss. Shares gained 1.65 percent, closing at $91.38.
The U.K.'s Daily Mail reported that British American Tobacco (NYSE: BTI) will acquire the other 58 percent of Reynolds American (NYSE: RAI) that it currently does not own for as much as $75 a share. Shares of British American Tobacco gained 0.07 percent, closing at $122.05 while shares of Reynolds American hit new 52-week highs of $63.39 before closing the day at $62.67, up 2.22 percent.
CNBC contributor Herb Greenberg tweeted that Samsung plans to raise its DRAM output, placing competition on (NASDAQ: MU) Analysts at Sterne Agee defended Micron and stated that it doesn't believe Samsung plans on bringing new capacity online. Shares of Micron lost 0.72 percent, closing at $32.89.
American Airlines Group (NASDAQ: AAL) announced that it expects its second quarter passenger revenue per available seat mile to rise 5.5 percent to 5.6 percent. The company also said it sees its pre-tax margin improving by 12 percent to 13 percent compared to the same quarter a year ago. Shares gained 4.28 percent, closing at $41.99.
Due to British takeover rules, AbbVie (NYSE: ABBV) was forced to retract comments made by its CEO Richard Gonzalez who stated that major Shire (NASDAQ: SHPG) shareholders support his acquisition bid. Shares of AbbVie lost 1.22 percent, closing at $55.01 while shares of Shire gained 0.93 percent, closing at $235.08.
Seadrill (NASDAQ: SDRL) cancelled its plans to issue $1 billion in convertible debt, noting that the $1 billion was more of an “opportunity” and not a necessity. The company confirmed it will have approximately $1.5 billion in cash by the end of July on its books. Shares gained 2.82 percent, closing at $38.59.
Time Warner's (NYSE: TWX) CEO Jeff Bewkes denied rumors the company is open to being acquired by Google. Shares of Time Warner hit new 52-week highs of $73.07 before closing the day at $72.41, up 2.35 percent.
Winners of Note
America Movil (NYSE: AMX) announced that it plans to divest Mexican assets into a new independent company. The move follows Mexico's lower house approval of a telecom reform bill that would result in penalties on the company if it kept a combined wire line and mobile market share above 50 percent. America Movil confirmed that by divesting its assets its market share will fall below 50 percent. Shares gained 10.08 percent, closing at $22.83.
Decliners of Note
Apollo Global Management is accumulating its holdings of Molycorp bonds which will give the investment management firm a back-door control of the company in case it seeks to restructure its $1.5 billion of debt. Shares of Molycorp hit new 52-week lows of $1.85 before closing the day at $1.88, down 16.81 percent.
Lumber Liquidators Holdings (NYSE: LL) announced it will host a second quarter earnings update conference call on Wednesday at 5:00 p.m. ET. Shares may also be under pressure as takeover chatter surrounding a Lowe's acquisition are fading. Shares of Lumber Liquidators hit new 52-week lows of $69.65 before closing the day at $70.42, down 8.06 percent.
Shares of Portugal Telecom (NYSE: PT) were under pressure following concerns related to the financial status of Portuguese based Banco Espirito Santo, whose parent company Grupo Espirito Santo is a major shareholder in Portugal Telecom. Shares hit new 52-week lows of $2.75 before closing the day at $2.79, down 6.06 percent.
Quote of the Day
“Consumers seem to be buying homes and automobiles and even high ticket furniture which has kind of been in the doldrums since the great recession. But most segments of retail are a little like us, seeing more challenging sales certainly than we had hoped for early in 2014." - The Container Store CEO Kip Tindell painting an ugly picture on the state of business during the company's conference call on Tuesday before shares traded on Wednesday to new 52-week lows of $22.88. Shares closed the day at $24.80, down 8.39 percent.
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