Market Overview

Markets Mostly Higher Despite Initial Negative Reaction From FOMC Minutes

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U.S. stocks were mostly higher as the S&P 500 and Dow continue trading near historical all-time highs.

The S&P 500 briefly dipped into negative territory immediately following the Federal Reserves's minutes while the Dow trading lower but stayed in positive territory. The NASDAQ index saw the largest decline post FOMC minutes only to recover to intra-day highs and then give back all of its gains in late afternoon.

Members of the Federal Reserve committee voted nine to one to maintain the taper and a policy of maintaining lower than normal rates. Charles Plosser, Philadelphia Fed president, was the lone dissenter who believes that his peers are underplaying the improving labor market and inflation is marching toward a 2 percent target.

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  • The Dow gained 0.35 percent, closing at 16,979.13.
  • The S&P 500 gained 0.25 percent, closing at 1,986.51.
  • The NASDAQ lost 0.02 percent, closing at 4,526.48.
  • Gold lost 0.35 percent, trading at $1,292.10 an ounce.
  • Oil gained 0.64 percent, trading at $93.45 a barrel.
  • Silver gained 0.38 percent, trading at $19.49 an ounce.

News Of Note

MBA Mortgage Composite Index rose 1.4 percent after declining 2.7 percent last week.

MBA Mortgage Purchase Index declined 0.4 percent after declining 1 percent last week.

MBA Mortgage Refinance Index rose 3 percent after declining 4 percent last week.

EIA Crude Inventories fell 4.5 million barrels versus expectations of a decline of 1.1 million barrels.

EIA Gasoline Inventories rose 0.6 million barrels versus expectations of a decline of 1.6 million barrels.

EIA Distillates Inventories fell one million barrels versus expectations of a decline of 0.6 million barrels.

Analyst Upgrades And Downgrades Of Note

Analysts at Citigroup maintained a Buy rating on Dick's Sporting Goods (NYSE: DKS) with a price target raised to $53 from a previous $51. Also, analysts at UBS maintained a Buy rating on Dick's Sporting Goods with a price target lowered to $52 from a previous $53. Shares gained 1.88 percent, closing at $45.04.

Analysts at Barclays upgraded Dunkin' Brands Group (NASDAQ: DNKN) to Overweight from Equal-weight with a price target raised to $51 from a previous $48. Shares gained 1.34 percent, closing at $44.64.

Analysts at Deutsche Bank maintained a Buy rating on Foot Locker (NYSE: FL) with a price target raised to $55 from a previous $53. Shares hit new 52-week highs of $52.69 before closing the day at $52.40, up 0.85 percent.

Analysts at JPMorgan downgraded Hertz Global Holdings (NYSE: HTZ) to Neutral from Overweight with a price target lowered to $25 from a previous $32. Also, analysts at Deutsche Bank downgraded Hertz to Hold from Buy with a price target lowered to $25 from a previous $33. Shares lost 3.90 percent, closing at $30.33.

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Analysts at Deutsche Bank maintained a Hold rating on Home Depot (NYSE: HD) with a price target raised to $98 from a previous $85. Also, analysts at UBS maintained a Buy rating on Home Depot with a price target raised to $98 from a previous $91. Shares hit new 52-week highs of $91.07 before closing the day at $90.75, up 2.86 percent.

Analysts at Wedbush upgraded Ilumina (NASDAQ: ILMN) to Outperform from Neutral with a price target raised to $200 from a previous $165. Shares gained 1.45 percent, closing at $172.96.

Analysts at Barclays upgraded Panera Bread Company (NASDAQ: PNRA) to Overweight from Equal-Weight with a price target raised to $175 from a previous $165. Also, analysts at UBS maintained a Buy rating on Panera Bread with a price target lowered to $180 from a previous $200. Shares gained 0.55 percent, closing at $152.58.

Analysts at Deutsche Bank maintained a Buy rating on TJX Companies (NYSE: TJX) with a price target raised to $68 from a previous $62. Also, analysts at UBS maintained a Buy rating on TJX Companies with a price target raised to $67 from a previous $63.

Equities-Specific News Of Note

Last night Hertz Global Holdings (NYSE: HTZ) issued a full-year warning and expects its 2014 results to be “well below the low end” of its guidance because of operational challenges in the rental car and equipment segment as well ongoing account reviews. At the same time, the company's audit committee directed the company to conduct a review of its financial records dating back to fiscal 2011. It was reported that one of the company's prominent shareholders Fir Tree has requested the company replace its CEO. Shortly after, Carl Icahn revealed an 8.48 percent stake in Hertz and the activist investor said that he intends to talk with the company on "shareholder value, accounting issues, operational failures, under-performance." Shares lost 3.90 percent, closing the day at $30.33, but traded as low as $25.75.

JinkoSolar (NYSE: JKS) will supply 40 MW of solar PV modules for a power project in Chile with delivery commencing in the fourth quarter. Shares gained 1.61 percent, closing at $28.46.

Amazon.com (NASDAQ: AMZN) announced it signed deals in China to operate in a new free-trade zone in Shanghai. Shares gained 0.19 percent, closing at $335.78.

Bank of America (NYSE: BAC) has reportedly settled with federal and state authorities over the bank's role in mortgages during the financial crisis. The bank will pay $10 billion in cash and provide $7 billion in customer relief funds. Shares gained 0.45 percent, closing at $15.52.

Monsanto (NYSE: MON) stated it is on track for its 2014 EPS guidance of $5.10 to $5.20 despite headwinds in the agriculture industry. Shares gained 0.91 percent, closing at $120.92.

According to the Wall Street Journal, Walgreen (NYSE: WAG) pushed out its former CEO Wade Miquelon and other executives due to a $1.1 billion forecasting mistake. Shares lost 0.24 percent, closing at $62.00.

According to Bloomberg, private equity firm Hellman & Friedman has joined Bain in expressing interest in acquiring Shutterfly. (NASDAQ: SFLY) Shares gained 1.26 percent, closing at $50.47.

Caterpillar (NYSE: CAT) announced that its global machine sales fell 9 percent on a three-month basis in July, marking an improvement from a 10 percent decline in June and 12 percent decline in May. Shares gained 0.37 percent, closing at $107.70.

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Winners Of Note

This morning, The Hain Celestial Group (NASDAQ: HAIN) reported its fourth quarter results. The company announced an EPS of $0.90, beating the consensus estimate of $0.89. Revenue of $583.80 million beat the consensus estimate of $578.30 million. Net income for the quarter rose to $35.72 million from $25.93 million in the same quarter a year ago as the company saw strong sales growth across all regions. U.S. sales rose 13.2 percent from a year ago to $322.98 million; United Kingdom sales rose 65.5 percent to $200.47 million while Rest of World sales rose 5.7 percent to $60.38 million. The company noted that it benefited from strong momentum for organic and natural products across many channels. The Hain Celestial Group issued guidance and sees its fiscal 2015 EPS being in a range of $3.72 to $3.90 versus a consensus estimate of $3.73. Revenue is guided to be in a range of $2.72 billion to $2.8 billion, above the consensus estimate of $2.51 billion. Shares gained 11.02 percent, closing at $96.51.

This morning, American Eagle Outfitters (NYSE: AEO) reported its second quarter results. The company announced an EPS of $0.03, beating the consensus estimate of $0.00. Revenue of $710.60 million beat the consensus estimate of $689.95 million. Net income for the quarter fell to $5.813 million from $19.594 million in the same quarter a year ago, as comparable-store sales fell 7 percent in the quarter. The company's gross profit rate fell 40 basis points to 33.4 percent. American Eagle's interim CEO Jay Schottenstein commented that the results “do not reflect our potential,” but the company did build a “sustainable path to higher profitability.” The company issued guidance and sees its third quarter EPS being in a range of $0.17 to $0.19, versus the consensus estimate of $0.18. Comp sales are expected to decline at a mid-single-digit rate. Shares gained 11.99 percent, closing at $12.98.

Infineion announced it will acquire International Rectifier (NYSE: IRF) for $40 per share, or $3 billion in cash. The company stated that the combination of the two companies will benefit from greater R&D scale in addition to operational and manufacturing synergies. Shares of International Rectifier hit new 52-week highs of $39.50 before closing the day at $39.10, up 47.21 percent.

Decliners Of Note

This morning, JA Solar Holdings (NASDAQ: JASO) reported its second quarter results. The company announced an EPS of $0.14, missing the consensus estimate of $0.21. Revenue of $390.50 million missed the consensus estimate of $393.98 million. Net income for the quarter rose to RMB40.1 million ($6.5 million) from a net loss of RMB132.4 million ($21.3 million) in the same quarter a year ago as total shipments rose 47 percent year over year to 681.8 MW. Shipments of modules rose 76 percent from a year ago to 445.8 MW. Gross margin fell from 16.7 percent last quarter to 15.2 percent but higher than last year's 8.1 percent margin. The company raised its full-year fiscal 2014 shipment guidance to a range of 2.9 to 3.1 GW from a previous guidance of 2.7 to 2.9 GW. In the third quarter, the company expects its total cell module shipments to be between 730 to 760 MW. Shares lost 6.31 percent, closing at $9.36.

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Vringo (NASDAQ: VRNG) announced it will file a petition for an en banc review of the federal appeals court ruling the company recently received for its infringement suit against Google. Shares of Vringo lost 17.14 percent, closing the day at $1.16.

Earnings Of Note

This morning, Lowe's Companies (NYSE: LOW) reported its second quarter results. The company announced an EPS of $1.04, beating the consensus estimate of $1.03. Revenue of $16.60 billion beat the consensus estimate of $16.56 billion. Net earnings for the quarter rose to $1.039 billion from $941 million in the same quarter a year ago as comparable-store sales rose 4.4 percent. The company saw its gross margin rate improve by 20 basis points to 34.55 percent, while SG&A expense ratio declined by 40 basis points to 21.33 percent. Inventory in the quarter rose 2.3 percent to $9.315 billion. The company's CEO Robert Niblock stated that “we believe home improvement spending will continue to progress in tandem with strengthening job and income growth.” Lowe's issued guidance and sees its fiscal 2014 sales growing by 4.5 percent. Comp sales are expected to rise by 3.5 percent in the year. Shares hit new 52-week highs of $52.66 before closing the day at $52.33, up 1.57 percent.

This morning, Staples (NASDAQ: SPLS) reported its second quarter results. The company announced an EPS of $0.12, beating the consensus estimate of $0.11. Revenue of $5.20 billion beat the consensus estimate of $5.16 billion. Net income for the quarter fell to $81.88 million from $102.53 million in the same quarter a year ago as comparable-store sales fell 5 percent. The company noted that sales declines in computers and technology accessories, ink and toner and core office supplies were only partially offset by growth in facilities and breakroom supplies as well as copy and print services. The company also noted that staples.com grew its revenues by eight percent in the quarter while International sales declined 0.5 percent from a year ago to $941 million while European comparable store sales were lower by 1 percent because of a weakness in the company's European online business. Staples issued guidance and expects sales to decrease in third quarter versus a year ago and achieve an EPS of $0.34 to $0.39. Shares lost 2.58 percent, closing at $11.32.

This morning, The J.M. Smucker Company (NYSE: SJM) reported its first quarter results. The company announced an EPS of $1.34, missing the consensus estimate of $1.37. Revenue of $1.24 billion missed the consensus estimate of $1.37 billion. Net income for the quarter fell to $116 million from $126.6 million in the same quarter a year ago as the company saw a lower net price realization particularly related to coffee and the continued impact of the exit from its hot beverage private label business. In addition, increased promotional activity in the coffee segment was partially responsible for a gross profit rate decline of 30 basis points to 36.2 percent. U.S. Retail Coffee sales fell 2 percent from a year ago to $502.7 million; U.S. Retail Consumer Foods revenue fell 3 percent to $522.8 million while International, Foodservice and Natural Foods sales fell 1 percent to $298.3 million. The company stated that it expects fiscal 2015 net sales to increase at a rate slightly less than 5 percent, however the company only reaffirmed its previous full-year EPS guidance of $5.95 to $6.05. Shares lost 1.00 percent, closing at $102.42.

This morning, Target (NYSE: TGT) reported its second quarter results. The company announced an EPS of $0.78, missing the consensus estimate of $0.79. Revenue of $17.0 billion missed the consensus estimate of $17.38 billion. Net earnings for the quarter fell to $234 million from $611 million in the same quarter a year ago as U.S. comparable-store sales were flat and total transactions declined by 1.3 percent. Comp sales were lower by 11.4 percent in Canada. Of note, the company's results include a net pre-tax data breach expense of $11 million or $0.11 per share, a pre-tax early debt retirement loss of $285 million or $0.27 per share and a pre-tax impairment loss on undeveloped U.S. land of $16 million or $0.01 per share. Target U.S. saw its gross margin rate decline by 100 basis points to 30.4 percent while Canada's gross margin rate declined by 1,320 basis points to 18.4 percent. The company issued guidance and now sees its full year fiscal 2014 EPS being in a range of $3.10 to $3.30, lower than the company's previous guidance of $3.60 to $3.90. Shares gained 1.82 percent, closing at $60.33.

After the market closed, Hewlett-Packard (NYSE: HPQ) reported its third quarter results. The company announced an EPS of $0.89, in-line with the consensus estimate. Revenue of $27.59 billion beat the consensus estimate of $26.98 billion. Shares were trading lower by 1.05 percent at $34.75 following the earnings release.

Quote Of The Day

“We made a mistake when we overlooked the filing requirement. Berkshire had owned convertible notes of USG since 2008 and was effectively forced to convert the notes when they were called for redemption by USG in December 2013. This event triggered a filing requirement for Berkshire and we were late in realizing that fact.” - Berkshire Hathaway, commenting on a decision in which it will pay a civil penalty of $896,000 for failure to comply with pre-merger reporting regulation.

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