Market Overview

Dow Suffers 300 Point Drop; S&P 500 And NASDAQ Also Tumble

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U.S. stocks posted steep losses as investors had plenty to worry about.

Unable to reach a last-minute settlement, Argentina defaulted on its debt obligations. Naturally, as a global economy, the credit of one country affects other countries worldwide.

The Labor Department reported that U.S. labor costs rose the most in five years.

After Thursday's sharp sell-off, the Dow and S&P 500 posted their first monthly drop since January.

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  • The Dow lost 1.88 percent, closing at 16,563.30.
  • The S&P 500 lost 2.00 percent, closing at 1,930.67.
  • The NASDAQ lost 2.09 percent, closing at 4,369.77.
  • Gold lost 0.80 percent, trading at $1,284.60 an ounce.
  • Oil lost 2.35 percent, trading at $97.91 a barrel.
  • Silver lost 0.74 percent, trading at $20.52 an ounce.

News Of Note

July Challenger Job-Cut Report rose to 46,887 from 31,434 in June.

Initial Jobless Claims rose 23,000 to 302,000, below estimates of 305,000. Continuing claims rose 31,000 to 2.54 million.

Second Quarter Employment Cost Index rose 0.7 percent from the first quarter, exceeding expectations of a 0.5 percent rise.

July Chicago PMI fell to 52.6 from 62.6 in June.

EIA Natural Gas Inventory rose 88 bcf, less than the 93 bcf gain expected.

Analyst Upgrades And Downgrades Of Note

Analysts at FBR Capital downgraded 3D Systems (NYSE: DDD) to Market Perform from Outperform with a price target lowered to $48 from a previous $83. Shares lost 10.59 percent, closing at $50.13.

Analysts at JPMorgan maintained an Overweight rating on Alcoa (NYSE: AA) with a price target raised to $24.50 from a previous $18.50. Shares lost 1.97 percent, closing at $16.39.

Analysts at Sterne Agee upgraded Buffalo Wild Wings (NASDAQ: BWLD) to Buy from Neutral with a $176 price target. Shares gained 0.10 percent, closing at $145.32.

Analyst sat Bernstein upgraded Cliffs Natural Resources (NYSE: CLF) to Market Perform from Underperform with a price target raised to $16 from a previous $13. Shares gained 1.28 percent, closing at $17.45.

Analysts at Citigroup maintained a Neutral rating on Domino's Pizza (NYSE: DPZ) with a price target raised to $79 from a previous $77. Shares lost 2.11 percent, closing at $72.00.

Analysts at Citigroup maintained a Buy rating on Dunkin' Brands (NASDAQ: DNKN) with a price target lowered to $50 from a previous $54. Shares lost 0.99 percent, closing at $42.86.

Analysts at Citigroup downgraded Eli Lilly and Company (NYSE: LLY) to Neutral from Buy with a price target raised to $66 from a previous $60. Shares lost 2.49 percent, closing at $61.06.

Analysts at Benchmark downgraded Glu Mobile (NASDAQ: GLUU) to Hold from Buy. Shares lost 18.70 percent, closing at $5.61.

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Analysts at Credit Suisse maintained an Outperform rating on Hess (NYSE: HES) with a price target raised to $120 from a previous $110. Shares lost 2.05 percent, closing at $98.98.

Analysts at CRT Capital downgraded L-3 Communications (NYSE: LLL) to Sell from Fairly Valued with a price target lowered to $90 from a previous $102. Also, analysts at Drexel Hamilton downgraded L-3 Communications to Hold from Buy while removing a previous $130 price target. Shares lost 12.27 percent, closing at $104.96.

Analysts at Bank of America initiated coverage of Michael Kors Holdings (NYSE: KORS) with a Buy rating and $120 price target. Shares lost 0.96 percent, closing at $81.48.

Analysts at Credit Suisse upgraded Open Text (NASDAQ: OTEX) to Outperform from Neutral with a price target raised to $65 from a previous $51. Shares surged to new 52-week highs of $56.97 before closing the day at $55.62, up 14.82 percent.

Analyst at Barclays maintained an Equal-Weight rating on Panera Bread (NASDAQ: PNRA) with a price target lowered to $165 from a previous $167. Shares lost 2.94 percent, closing at $147.30.

Analysts at Barclays upgraded SodaStream (NASDAQ: SODA) to Equal-Weight from Underweight with an unchanged $35 price target. Also, analysts at JPMorgan maintained a Neutral rating on SodaStream with a price target lowered to $40 from a previous $45. Shares gained 0.73 percent, closing at $33.00.

Analysts at JPMorgan maintained a Neutral rating on The Cheesecake Factory (NASDAQ: CAKE) with a price target lowered to $47 from a previous $50. Shares lost 1.38 percent, closing at $42.88.

Analysts at JPMorgan maintained a Neutral rating on United States Steel (NYSE: X) with a price target raised to $35 from a previous $24. Also, analysts at Nomura maintained a Buy rating on U.S. Steel with a price target raised to $40 from a previous $32. Shares hit new 52-week highs of $33.85 before closing the day at $33.49, up 1.39 percent.

Analysts at UBS downgraded Whole Foods Market (NASDAQ: WFM) to Neutral from Buy with a price target lowered to $41 from a previous $48. Also, analysts at JPMorgan downgraded Whole Foods to Neutral from Overweight with a price target lowered to $38 from a previous $48. Shares lost 2.28 percent, closing at $38.22.

Analysts at JPMorgan maintained an Overweight rating on Yelp (NYSE: YELP) with a price target raised to $100 from a previous $94. Also, analysts at Credit Suisse maintained an Outperform rating on Yelp with a price target raised to $93 from a previous $90. Taking the opposite side, analyst at UBS maintained a Neutral rating on Yelp with a price target raised to $80 from a previous $60 while analysts at Raymond James downgraded Yelp to Market Perform from Outperform while removing a previous $80 price target. Shares lost 11.16 percent, closing at $67.16.

Analysts at Deutsche Bank maintained a Buy rating on Yum! Brands with a price target lowered to $78 from a previous $90. Shares lost 4.95 percent, closing at $69.40.

Equities-Specific News Of Note

Target (NYSE: TGT) hired former PepsiCo and Wal-Mart executive Brian Cornell as its new CEO. Cornell will replace the company's CFO John Mulligan who has been acting as interim CEO following Gregg Steinhafel stepping down in May. Shares of Target lost 2.92 percent, closing at $59.59.

Tesla Motors (NASDAQ: TSLA) confirmed it has finalized a deal with Panasonic for the construction of its Gigafactory plant in the U.S. The company projected it will generate 35GWh of cells and 50 GWh of packs per year by 2020. Shares lost 2.46 percent, closing at $223.30.

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Boeing (NYSE: BA) finalized a $13 billion order with Japan based All Nippon to deliver 40 wide-body jets. Shares lost 1.48 percent, closing at $120.48.

Oracle (NYSE: ORCL) acquired TOA Technologies, a developer of cloud-based software for managing customer requests to a company's field service workers. Shares of Oracle lost 1.37 percent, closing at $40.39.

Nordstrom (NYSE: JWN) announced it will acquire Trunk Club for an undisclosed amount and will operate the new men's business independently. Shares of Nordstrom lost 1.37 percent, closing at $69.23.

Darden Restaurants (NYSE: DRI) announced it will use some of its Red Lobster proceeds to fund a $500 million accelerated buyback program. Shares gained 0.95 percent, closing at $46.75.

Apple (NASDAQ: AAPL) plans to lay off around 200 employees at Beats Electronics as part of a restructuring program. Shares lost 2.60 percent, closing at $95.60.

Winners Of Note

This morning, T-Mobile (NYSE: TMUS) reported its second quarter results. The company announced an EPS of $0.48, beating the consensus estimate of $0.40. Revenue of $7.20 billion beat the consensus estimate of $7.04 billion. The company added 1.5 million net customers, marking the fifth consecutive quarter of adding at least one million net new customers. However, the company's earnings took a backseat to confirmed reports that French carrier Iliad has made an offer to acquire a controlling stake in the company. Ilad has obtained financing from unnamed banks and would also consider a capital raise to offer $15 billion to acquire 56.6 percent in T-Mobile U.S at a price of $33 per share. Iliad said that it values the remaining 56.6 percent of T-Mobile U.S., which is owned by Deutsche Telekom at $40.50 per share. Shares of T-Mobile U.S. gained 6.46 percent, closing at $32.94.

This morning, Bunge Limited (NYSE: BG) reported its second quarter results. The company announced an EPS of $1.81, beating the consensus estimate of $1.39. Revenue of $16.79 billion beat the consensus estimate of $15.28 billion. Net income for the quarter rose to $272 million from $110 million in the same quarter a year ago, as the company benefited from oilseed processing margins and strong demand. The company noted that a record southern hemisphere soybean crop and growing demand resulted in an 11 percent gain in agribusiness sales to $12.86 billion. Revenues from sugar and bioenergy rose 26 percent to $1.19 billion, while milling product sales rose 8.6 percent to $553 million. However, sales of edible oil products fell approximately 13 percent to $2.099 billion and was also negatively impacted by one-time costs in logistics because of backlogs and short-term cost increases in maintenance. The company noted that it is expecting a “solid second half of the year” across its segments. Shares gained 7.03 percent, closing at $78.84.

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The E.W. Scripps Company (NYSE: SSP) and Journal Communications (NYSE: JRN) announced that the two companies will merge their broadcast operations and plan to spin off the new entity as a new publicly-traded company. In addition, the newspaper businesses will combine to form a new company called Journal Media Group. Shares of E.W. Scripps hit new 52-week highs of $22.66 before closing the day at $21.68 while shares of Journal Communications also hit new 52-week highs of $11.37 before closing the day at $10.88, up 24.20 percent.

Tessera (NASDAQ: TSRA) announced a multi-year patent licensing agreement with Micron that will cover its chip packaging IP portfolio and the two companies will also explore other possible joint development efforts. Shares of Tessera hit new 52-week highs of $26.61 before closing the day at $25.41, up 9.43 percent.

Decliners Of Note

This morning, Valeant Pharmaceuticals (NYSE: VRX) reported its second quarter results. The company announced an EPS of $1.91, beating the consensus estimate of $1.90. Revenue of $2.00 billion missed the consensus estimate of $2.04 billion. Net income for the quarter rose to $122.0 million from $10.8 million in the same quarter a year ago, as the company saw an 86 percent growth in revenue driven by strong growth in almost every business category. Same-store organic product sales growth was 4 percent in the quarter, while pro forma organic growth was 8 percent. Europe saw a same-store sales organic growth of 13 percent, Asia saw a same-store sales organic growth of 17 percent and the U.S. contact lens business helped contribute a 12 percent organic growth in the U.S. Valeant also released a presentation detailing its expectations through 2016, assuming it acquires Allergan. (NYSE: AGN) Valeant lowered its 2014 guidance to reflect the impact of a sale of assets to Nestle as the company unloaded products that compete with Allergan's. Valeant guided toward 2015 sales of $9.3 billion, ahead of the consensus estimate of $8.9 billion. However, Valeant's 2015 EPS guidance of $9.65 was nearly $1 below the consensus estimate. Shares of Valeant lost 6.71 percent, closing at $117.39.

This morning, Kellogg Company (NYSE: K) reported its second quarter results. The company announced an EPS of $1.02, in-line with the consensus estimate. Revenue of $3.69 billion missed the consensus estimate of $3.71 billion. Net income for the quarter fell to $295 million from $352 million in the same quarter a year ago, as the company saw declining sales in several key U.S. segments. U.S. Morning Foods saw a revenue decline of 5 percent to $820 million, while U.S. Snacks sales declined 2.6 percent to $893 million. However, U.S. Specialty sales rose 1.5 percent to $276 million. European sales rose 6.8 percent to $772 million, Latin America sales rose 5.3 percent to $320 million and Asia Pacific Sales dipped 1.6 percent to $243 million. Kellogg revised its full year fiscal 2014 EPS guidance to a range of $3.91 to $3.99 from a previous $3.97 to $4.05. Shares lost 6.12 percent, closing at $59.83.

Samsung reported a 10 percent growth in memory sales to $6.7 billion in its quarterly results and also hiked its 2014 DRAM industry bit supply forecast to low-30 percent growth and sees its production growing at a high-40 percent rate. Analysts at Morgan Stanley speculated that Samsung is increasing its capital expenditure to ramp up DRAM production in 2015, which doesn't bode well for its largest competitor, Micron (NASDAQ: MU) whose shares lost 6.09 percent, closing at $30.55.

Earnings Of Note

This morning, Time Warner Cable (NYSE: TWC) reported its second quarter results. The company announced an EPS of $1.89, beating the consensus estimate of $1.91. Revenue of $5.73 billion missed the consensus estimate of $5.75 billion. Net income for the quarter rose to $499 million from $481 million in the same quarter a year ago, as the company saw its average revenue per user grow by 1.7 percent to $106.98 and the company saw a record second-quarter subscriber volume growth. The company noted that it saw 42,000 residential triple play net additions, 67,000 residential high-speed data net additions, 79,000 residential net additions and business primary service unit and customer relationship net additions of 37,000 and 21,000, respectively. Shares lost 4.17 percent, closing at $145.10.

This morning, ConocoPhillips (NYSE: COP) reported its second quarter results. The company announced an EPS of $1.61, in-line with the consensus estimate. Revenue of $14.70 billion missed the consensus estimate of $15.40 billion. Net income for the quarter rose to $2.081 billion from $2.050 billion in the same quarter a year ago, as production in the quarter rose to 1.56 million barrels of energy per day from 1.55 million in the same quarter a year ago while total average realized prices were 5 percent higher. Production from the Bakken in North Dakota as well as Eagle Ford in Texas surged by 38 percent from a year ago to 208,000 barrels of energy per day. The company did, however, lower its third quarter production guidance to 1.435 million to 1.485 million barrels of energy per day because of maintenance issues. However, for the full fiscal year the production outlook's midpoint was raised to 1.525 million to 1.55 million barrels of energy per day. ConocoPhillips noted that it is on track to realize three percent to five percent volume and margin growth in the year. Shares lost 2.52 percent, closing at $82.50.

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After the market closed, LinkedIn (NYSE: LNKD) reported its second quarter results. The company announced an EPS of $0.51, beating the consensus estimate of $0.39. Revenue of $534.0 million beat the consensus estimate of $511.17 million.

After the market closed, Tesla Motors (NASDAQ: TSLA) reported its second quarter results. The company announced an EPS of $0.11, beating the consensus estimate of $0.07. Revenue of $858 million beat the consensus estimate of $835.03 million.

After the market closed, GoPro (NASDAQ: GPRO) reported its second quarter results. The company announced an EPS of $0.08, beating the consensus estimate of $0.07. Revenue of $244.61 million beat the consensus estimate of $237.73 million.

Quote Of The Day

“The IPO also furthers our goal to position GE Capital as a smaller, safer specialty finance leader, and achieve 75 percent of our earnings from our Industrial businesses by 2016. The Synchrony offering is an important first step in our planned, staged exit from the business. We continue to target completing our exit in late 2015 through a capital-efficient split-off transaction.” - General Electric CEO Jeff Immelt commenting on Syncrony Financial's IPO debut.

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