Market Overview

Thursday's Selling Momentum Continues Into Friday

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U.S. stocks picked up where they left off after Thursday's sharp sell-off as positive earnings reports yet again took a backstage to geo-political uncertainties.

Not helping the bull cause was nonfarm payrolls, rising by 209,000, less than the 233,000 expected. The jobless rate also ticked higher to 6.2 percent in July.

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  • The Dow lost 0.42 percent, closing at 16,493.37.
  • The S&P 500 lost 0.29 percent, closing at $1,925.15.
  • The NASDAQ lost 0.39 percent, closing at 4,352.64.
  • Gold gained 0.95 percent, trading at $1,295.00 an ounce.
  • Oil lost 0.64 percent, trading at $97.54 a barrel.
  • Silver lost 0.34 percent, trading at $20.42 an ounce.

News Of Note

June Personal Income rose 0.4 percent month over month, in-line with expectations.

June Personal Spending rose 0.4 percent month over month, in-line with expectations.

July Nonfarm Payrolls rose 209,000, below the consensus of 233,000.

July Unemployment Rate rose to 6.2 percent from 6.1 percent in June.

July ISM Manufacturing Index rose to 57.1 from 55.3 in June.

July Reuters/UofM Consumer Sentiment rose to 81.8 from a preliminary 81.3.

July Global Manufacturing PMI fell to 52.5 from 52.7 in June.

Analyst Upgrades And Downgrades Of Note

Analysts at Citigroup downgraded 3D Systems (NYSE: DDD) to Neutral from Buy. Also, analysts at Piper Jaffray downgraded 3D Systems to Neutral from Overweight with a price target lowered to $50 from a previous $63. Shares lost 4.39 percent, closing at $47.93.

Analysts at Barclays maintained an Equal-Weight rating on Anadarko Petroleum (NYSE: APC) with a price target raised to $126 from a previous $121. Shares lost 1.15 percent, closing at $105.62.

Analysts at CRT Capital maintained a Buy rating on B/E Aerospace (NASDAQ: BEAV) with a price target raised to $106 from a previous $100. Shares gained 0.20 percent, closing at $85.31.

Analysts at Oppenheimer downgraded Bed Bath & Beyond (NASDAQ: BBBY) to Market Perform from Outperform with a price target raised to $69 from a previous $66. Shares lost 2.65 percent, closing at $61.61.

Analysts at Barclays maintained an Equal-Weight rating on CME Group (NYSE: CME) with a price target lowered to $75 from a previous $76. Shares gained 0.32 percent, closing at $74.18.

Analysts at Barclays maintained an Overweight rating on Colgate-Palmolive (NYSE: CL) with a price target raised to $69 from a previous $68. Shares gained 0.87 percent, closing at $63.95.

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Analysts at Jefferies maintained a Hold rating on DIRECTV (NASDAQ: DTV) with a price target raised to $97 from a previous $95. Also, analysts at JPMorgan maintained a Neutral rating on DIRECTV with a price target raised to $95 from a previous $87. Shares lost 0.01 percent, closing at $86.04.

Analysts at Raymond James upgraded Expedia (NASDAQ: EXPE) to Outperform from Market Perform with a $100 price target. Also, analysts at JPMorgan maintained a Neutral rating on Expedia with a price target raised to $92 from a previous $80. Of note, analysts at Benchmark maintained a Buy rating on Expedia with a price target raised to $94 from a previous $85. Shares hit new 52-week highs of $84.85 before closing the day at $84.45, up 6.33 percent.

Analysts at Dougherty & Company downgraded GoPro (NASDAQ: GPRO) to Neutral from Buy. Shares lost 14.59 percent, closing at $40.97.

Analysts at Jefferies maintained a Buy rating on LinkedIn (NYSE: LNKD) with a price target raised to $300 from a previous $280. Also, analysts at CRT Capital maintained a Buy rating on LinkedIn with a price target raised to $230 from a previous $225. Shares gained 11.70 percent, closing at $201.78.

Analysts at Citigroup downgraded Ocwen Financial (NYSE: OCN) to Neutral from Buy. Also, analysts at Sterne Agee downgraded Ocwen to Neutral from Buy. Shares hit new 52-week lows of $27.59 before closing the day at $27.68, down 8.25 percent.

Analysts at Credit Suisse initiated coverage of Orbitz Worldwide (NYSE: OWW) with a Neutral rating and $10.50 price target. Shares gained 1.36 percent, closing at $8.97.

Analysts at Jefferies maintained a Hold rating on Time Warner Cable (NYSE: TWC) with a price target raised to $178 from a previous $150. Shares gained 0.54 percent, closing at $145.88.

Analysts at Cantor Fitzgerald maintained a Buy rating on Valeant Pharmaceuticals (NYSE: VRX) with a price target lowered to $167 from a previous $209. Also, analyst at Jefferies maintained a Buy rating on Valeant with a price target lowered to $141 from a previous $154. Shares gained 0.70 percent, closing at $118.21.

Equities-Specific News Of Note

According to Reuters, France based Iliad has obtained sufficient financing from BNP Paribas and HSBC for a $15 billion takeover of T-Mobile U.S. (NYSE: TMUS) Shares of T-Mobile U.S. gained 1.46 percent, closing at $33.42.

Whirlpool (NYSE: WHR) confirmed that Italian courts approved its 67 percent acquisition of Indesit. Shares gained 0.61 percent, closing at $143.51.

Citigroup (NYSE: C) has agreed to sell its 80 percent stake in Metalmark Capital Partners for an undisclosed sum as the bank sheds noncore business assets. Separately, Citigroup cut its exposure to Russia to $8.9 billion from a previous $9.4 billion. Also, the bank estimated it could lose up to $80 million in the event of an Argentinian downgrade by U.S. rating agencies. Shares lost 1.66 percent, closing at $48.10.

Allergan (NYSE: AGN) filed a lawsuit against Valeant Pharmaceuticals (NYSE: VRX) in addition to Pershing Square Capital Management and Bill Ackman alleging insider trading and a failure in disclosing legally required information in addition to other fraudulent activities. Shares of Allergan lost 0.17 percent, closing at $165.62 while shares of Valeant gained 0.70 percent, closing at $118.21

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Ford Motors' (NYSE: F) July unit sales rose 9.5 percent to 212,236. Shares lost 1.23 percent, closing at $16.81.

General Motors' (NYSE: GM) July unit sales rose 9.4 percent to 256,160. Shares lost 1.12 percent, closing at $33.44.

Honda (NYSE: HMC) July unit sales declined 3.9 percent to 135,908. Shares lost 0.80 percent, closing at $34.60.

Toyota Motor's (NYSE: TM) July unit sales rose 11.6 percent to 215,802. Shares lost 0.35 percent, closing at $117.59.

Winners Of Note

After pricing its IPO at $25, shares of Mobileye (NYSE: MBLY) began trading for the first time at $36 and traded as high as $39.40 before closing the day at $37.00, up 48.0 percent.

Scientific Games (NASDAQ: SGMS) announced that it has agreed to acquire Bally Technologies (NYSE: BYI) for $83.30 per share, representing a roughly 38 percent premium from Bally Technologies' closing price. The transaction is expected to close in the beginning of 2015 and create $220 million in annual cost synergies and $25 million in annual capex spending savings. The newly formed entity will also create accelerated utilization of tax attributes. Shares of Scientific Games gained 2.81 percent, closing at $8.78 while shares of Bally Technologies hit a new 52-week high of $84.66 before closing the day at $77.70, up 29.13 percent.

Decliners Of Note

This morning, ArcelorMittal (NYSE: MT) reported its second quarter results. The company announced an EPS of $0.03, missing the consensus estimate of $0.20. Revenue of $20.70 billion beat the consensus estimate of $19.79 billion. Net income for the quarter rose to $0.1 billion from a net loss of $0.8 billion in the same quarter a year ago as the company saw a 2.5 percent volume increase in steel shipments. The company has agreed to acquire a near 50 percent ownership stake in Guinea's Mount Nimba iron ore project for an undisclosed sum. ArcelorMittal also announced that it expects to miss its full-year earnings guidance because of lower commodity prices. The company said that its full-year fiscal 2014 EBITDA would come in above $7 billion compared to a previous guidance of around $8 billion based on a projecting iron ore price of $105/metric ton versus prior expectations of $120/metric ton. Shares lost 5.92 percent, closing at $14.31.

Earnings Of Note

This morning, Procter & Gamble (NYSE: PG) reported its fourth quarter results. The company announced an EPS of $0.95, beating the consensus estimate of $0.91. Revenue of $20.16 billion missed the consensus estimate of $20.47 billion. Operating income for the quarter rose to $3.24 billion from $2.65 billion in the same quarter a year ago as organic sales rose 3 percent and unit volume also rose 3 percent during the quarter. Sales from the Beauty division declining five percent to $4.629 billion; Grooming sales rose 5 percent to $2.072 billion; Health Care sales fell 1 percent to $1.81 billion; Fabric and Home Care sales fell 2 percent to $6.262 billion and Baby and Feminine sales rose 1 percent to $5.20 billion. The company said that it expects organic sales growth in the low- to mid-single digits in fiscal 2015 with net sales rising in the low single digit range, which may be impacted by 1 percentage point because of foreign exchange fluctuations. Finally, earnings per share is expected to grow in the mid-single digits. During the post earnings conference call, the company's CEO A.G. Lafley said that the company could shed as many as 100 brands through sales or eliminations over the next two years. Shares gained 3.01 percent, closing at $79.65.

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This morning, Chevron (NYSE: CVX) reported its second quarter results. The company announced an EPS of $2.98, beating the consensus estimate of $2.68. Revenue of $55.60 billion missed the consensus estimate of $56.93 billion. Net income for the quarter rose to $5.69 billion from $5.404 billion in the same quarter a year ago as the company benefited from higher crude oil and natural gas prices, which was enough to offset rising expenses and a decrease in production. Production in the quarter fell 1.5 percent from a year ago to 2.55 million barrels of energy per day following a planned maintenance at its facilities in Kazakhstan. The company noted that it is exploring five major expansion projects to reverse declining production trends and hopes to see production boosted by 20 percent by 2017. Shares lost 1.04 percent, closing at $127.90.

This morning, Burger King (NYSE: BKW) reported its second quarter results. The company announced an EPS of $0.25, beating the consensus estimate of $0.23. Revenue of $261.20 million missed the consensus estimate of $262.18 million. Net income for the quarter rose to $75.1 million from $62.9 million in the same quarter a year ago as the company grew comparable sales across all four regions and accelerated restaurant openings. Comparable sales grew 0.4 percent in the U.S. and Canada, reversing last year's 0.5 percent comparable sales decline. Europe, the Middle East and Africa saw its comparable sales rise 0.9 percent, Latin America and the Caribbean saw a 1.1 percent rise in comparable sales while Asia Pacific experienced the largest comparable sales growth at 3.7 percent. Shares lost 0.49 percent, closing at $26.25.

Quote Of The Day

"Earlier today, Panasonic and Tesla entered into a formal agreement to partner on the Gigafactory. Panasonic will invest in production equipment that it will use to manufacture and supply Tesla with battery cells. Tesla will prepare and provide the land, buildings and utilities for the Gigafactory, invest in production equipment for battery module and pack production, and be responsible for the overall management of the Gigafactory. Additional Gigafactory partners for production of cell precursor materials will be announced in the coming months to create a fully integrated industrial complex. Processed ore from mines will enter by railcar on one side and finished battery packs will exit on the other." - Elon Musk, Tesla Motors' CEO describing in a shareholder letter the company's much-hyped Gigafactory project.

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