Markets Reverse Early Morning Losses; Still Lower On The Day
U.S. stocks declined as geopolitical concerns outweighed an improved economic read on second-quarter growth.
Ukraine's President stated that Russian troops had crossed in to Ukraine territory and were fighting alongside Russian supported separatists. Markets initially traded lower on the news, as the Dow was lower by more than 100 points in early trading before recouping more than half of those losses.
Meanwhile, figures from the U.S. Commerce Department showed that the economy expanded more than previously projected in the second quarter. A report by the Labor Department showed that the number of Americans filing for jobless benefits fell last week.
- The Dow lost 0.25 percent, closing at 17,079.57.
- The S&P 500 lost 0.17 percent, closing at 1,996.74.
- The Nasdaq lost 0.26 percent, closing at 4,557.69.
- Gold gained 0.53 percent, trading at $1,290.20 an ounce.
- Oil gained 0.76 percent, trading at $94.59 a barrel.
- Silver gained 0.44 percent, trading at $19.56 an ounce.
News Of Note
Second Quarter GDP has been revised higher to 4.2 percent growth (versus expectations of 3.9 percent) after previously projected at four percent.
Second Quarter Corporate Profits rose 6 percent versus a 2.9 percent decline in the first quarter.
Initial Jobless Claims declined 1,000 to 298,000 (versus expectations of 300,000) while continuous claims rose 25,000 to 2.53 million.
July Pending Home Sales rose 3.3 percent (versus expectations of a 0.5 percent gain) to 105.9.
EIA Natural Gas Inventory rose 75 bcf versus expectations of 88 bcf.
August Kansas City Fed Manufacturing Survey fell to +3 (versus expectations of +9) from +9 in July.
U.S. regulators will approve a final liquidity rule next week, which may exclude municipal bonds from being among banks' high-quality, highly liquid assets.
Kelley Blue Book is forecasting U.S. auto sales will fall 1 percent in August to 1.49 million vehicles.
Analyst Upgrades And Downgrades Of Note
Analysts at Bank of America maintained a Buy rating on AK Steel Holding (NYSE: AKS) with a price target raised to $13 from a previous $11. Shares lost 2.21 percent, closing at $10.62.
Analysts at Standpoint Research downgraded American Eagle (NYSE: AEO) to Hold from Buy. Shares lost 1.13 percent, closing at $14.03.
Analysts at KeyBanc maintained a Buy rating on Big Lots (NYSE: BIG) with a price target raised to $55 form a previous $53. Shares lost 1.58 percent, closing at $47.20
Analysts at UBS maintained a Buy rating on Burger King Worldwide (NYSE: BKW) with a price target raised to $34 from a previous $30. Shares gained 3.16 percent, closing at $31.31.
Analysts at UBS maintained a Neutral rating on DirectTV (NASDAQ: DTV) with a price target raised to $95 from a previous $82. Shares lost 0.07 percent, closing at $86.09.
Analysts at Raymond James downgraded GT Advanced Technologies (NASDAQ: GTAT) to Underperform from Market Perform. Shares lost 4.79 percent, closing at $17.68.
Analysts at RBC Capital maintained a Sector Perform rating on Genuine Parts (NYSE: GPC) with a price target maintained at $95. Meanwhile, analysts at SunTrust Robinson Humphrey downgraded Genuine parts to Neutral from Buy with a price target lowered to $92 from a previous $100. Shares lost 0.39 percent, closing at $87.46.
Analysts at Wunderlich maintained a Buy rating on Guess? (NYSE: GES) with a price target lowered to $27 from a previous $31. Also, analysts at Jefferies maintained a Hold rating on Guess with a price target lowered to $25 from a previous $27. Shares hit new 52-week lows of $23.24 before closing the day at $23.38, down 8.81 percent.
Analysts at UBS downgraded InterMune (NASDAQ: ITMN) to Neutral from Buy with a price target raised to $74 from a previous $52. Also, analysts at Cowen & Company initiated coverage of InterMune with a Market Perform and $74 price target. Shares hit new 52-week highs of S73.44 before closing the day at $73.21, up 0.04 percent.
Analysts at BTIG Research downgraded J.C. Penney (NYSE: JCP) to Neutral from Buy. Shares lost 3.12 percent, closing at $10.85.
Analysts at DA Davidson downgraded Lululemon (NASDAQ: LULU) to Neutral from Buy with a price target lowered to $44 from a previous $46. Shares lost 2.17 percent, closing at $40.59.
Analysts at SunTrust Robinson Humphrey maintained a Buy rating on Michaels Company (NASDAQ: MIK) with a price target raised to $22 from a previous $22. Also, analysts at Macquarie maintained a Neutral rating of Michaels with a price target raised to $17 from a previous $16. Shares gained 2.18 percent, closing at $16.90.
Analysts at Bank of America maintained a Buy rating on Steel Dynamics (NASDAQ: STLD) with a price target raised to $26 from a previous $23. Shares lost 1.49 percent, closing at $23.14.
Analysts at Wedbush initiated coverage of The Fresh Market (NYSE: TFM) with a Neutral rating and $34 price target. Shares lost 2.09 percent, closing at $33.73.
Analysts at Macquarie maintained a Neutral rating on Tiffany & Co (NYSE: TIF) with a price target raised to $115 from a previous $105. Also, analysts at Credit Suisse maintained an Outperform rating on Tiffany with a price target raised to $112 from a previous $104. Shares lost 0.11 percent, closing at $101.64.
Analysts at Raymond James downgraded Visa (NYSE: V) to Market Perform from Outperform. Shares lost 1.17 percent, closing at $214.60.
Analysts at Wedbush initiated coverage of Whole Foods Market (NASDAQ: WFM) with a Neutral rating and $40 price target. Shares lost 1.55 percent, closing at $39.19.
Equities-Specific News Of Note
A human study of an Ebola vaccine made by GlaxoSmithKline (NYSE: GSK) will begin within a couple of weeks, sooner than earlier projected. Shares gained 0.41 percent, closing at $48.87.
AIG's (NYSE: AIG) current CEO Bob Benmosche said that he moved up his timetable to step down from the company following a diagnosis with terminal cancer. Peter Hancock will assume top ranks on September 1. Shares lost 0.77 percent, closing at $55.73.
KB Home (NYSE: KBH) said that it plans to build 86 new homes in the Denver area in a gated community where pricing will start at $400,000. Shares lost 0.34 percent, closing at $17.59.
Noble Energy (NYSE: NBL) said that it found oil and gas at two wells in the Gulf of Mexico with the potential for each to produce as much as 100 million barrels of energy. Shares finished the day unchanged at $70.92.
The Securities and Exchange Commission announced it will not charge Xerox (NYSE: XRX) or its Affiliated Computer Services following a settlement with two executives. Shares hit new 52-week highs of $13.77 before closing the day at $13.76, up 0.36 percent.
Darden Restaurants (NYSE: DRI) said that it will postpone its annual meeting to October 10 from September 30 so shareholders have additional time to evaluate soon to be released proxy materials. Starboard Value filed proxy paperwork with a dozen nominees for Darden's Board of Directors. Starboard also said it will disclose a turnaround plan shortly which won't disrupt dividend payments. Starboard also claimed that Darden unnecessarily delayed the date of its meeting. Shares lost 0.63 percent, closing at $47.15.
Winners Of Note
This morning, Signet Jewelers (NYSE: SIG) reported its second quarter results. The company announced an EPS of $1.00, beating the consensus estimate of $0.99. Revenue of $1.23 billion beat the consensus estimate of $1.19 billion. Net income for the quarter fell to $58.0 million from $67.4 million in the same quarter a year ago, while organic net income was $79.9 million. Organic income excludes transaction, severance, and capital structure and financing items incurred because of the company's acquisition of Zale. Signet's same-store sales rose 4.8 percent in the quarter, while organic same-store sales were up 6.3 percent. E-commerce sales were particularly strong, rising 61.9 percent from a year ago to $50.5 million. Gross profit declined 180 basis points to 33.4 percent because of the addition of Sales. Organic gross margin was 34.8 percent. The company issued guidance and sees its same-store sales rising by 2 percent to 4 percent in the third quarter while earnings per share are expected to be -$0.11 to $0.01. For the full-year fiscal 2015 the company expects its EPS to be $4.47 to $4.71. The company noted that Zale operations are expected to be accretive to fiscal 2015 EPS by $0.18 to $0.24. In addition, the company expects to realize $150 million to $175 million in synergies from January 2015 to January 18. Shares hit new 52-week highs of $117.42 before closing the day at $116.37, up 7.72 percent.
Decliners Of Note
This morning, Genesco (NYSE: GCO) reported its second quarter results. The company announced an EPS of $0.34, missing the consensus estimate of $0.55. Revenue of $615.0 million beat the consensus estimate of $614.96 million. Net earnings for the quarter declined to $4.69 million from $8.34 million in the same quarter a year ago as a strong comparable sales gains and top-line performance in the company's direct businesses were not enough to offset a sales and gross margin shortfall at Lids Sports Groups. Comparable sales in the quarter rose 2 percent with a 5 percent increase in the Journeys Group; a 1 percent increase in the Schuh Group; and a 2 percent increase in the Johnston & Murphy Group, while Lids Sports Group saw a 2 percent decline. The company saw its operating income slide to $8.45 million from $12.73 million a year ago in the Lids Sports Group, while operating income rose at Journeys Group, Schuh Group and Licensed Brands. The company also saw its operating loss decline in its Johnston & Murphy Group. The company lowered its full-year fiscal 2015 EPS to a range of $5.10 to $5.20 from a previous range of $5.40 to $5.55. Shares lost 7.59 percent, closing at $81.94.
Earnings Of Note
This morning, Abercrombie & Fitch (NYSE: ANF) reported its second quarter results. The company announced an EPS of $0.19, beating the consensus estimate of $0.11. Revenue of $891.0 million missed the consensus estimate of $909.22 million. Net income for the quarter rose to $12.9 million from $11.4 million in the same quarter a year ago, as the company cut its marketing, general and administrative expenses by 6 percent while overall expenses for stores and distribution expenses fell by 10 percent. International comps fell 9 percent while U.S. comps were lower by 5 percent. The company noted its direct-to-consumer sales were 11 percent higher. Gross profit fell 180 basis points to 62.1 percent because of an increase in promotional activity throughout the quarter. The company issued guidance and expects its full-year earnings per share to be in a range of $2.15 to $2.35 based on the assumption that full-year comparable sales will decline by a mid-single-digit percentage, and gross margin will be slightly lower than it was a year ago. Shares lost 4.84 percent, closing at $41.87.
This morning, Coty (NYSE: COTY) reported its fourth quarter results. The company announced an EPS of $0.03, missing the consensus estimate of $0.05. Revenue of $1.03 billion missed the consensus estimate of $1.06 billion. Net income for the quarter was flat at $9.9 million compared to a year ago. Fragrances saw a 1 percent comparable gain; Skin & Body Care was flat, while Color Cosmetics declined 4 percent. By region, net revenue fell 9 percent from a year ago to $391.7 million; EMEA revenue rose 7 percent to $533.2 million while Asia Pacific revenue fell 11 percent to $116.6 million. Coty is targeting “modest growth” for the first half of fiscal 2015 despite challenging market conditions. The company also plans to maintain its share repurchase program, with $300 million remaining under the current authorization. Shares lost 3.44 percent, closing at $17.39.
This morning, Dollar General (NYSE: DG) reported its second quarter results. The company announced an EPS of $0.83, in-line with the consensus estimate. Revenue of $4.72 billion missed the consensus estimate of $4.77 billion. Net income for the quarter rose to $251.26 million from $245.48 million in the same quarter a year ago as same-store sales rose 2.1 percent along with customer traffic and average ticket price both higher in the quarter. The company saw its gross profit rate decline by 53 basis points to 30.8 percent due to an increase in markdowns, primarily relating to increased promotional activities and an unfavorable sales mix including tobacco and perishable products. The company confirmed it remains fully committed to its offer to acquire Family Dollar and will divest 700 stores to gain regulatory approval. The company also issued guidance and sees its full-year EPS being in a range of $3.45 to $3.55 while capital expenditures will be in a range of $450 million to $500 million. Shares of Dollar General gained 0.78 percent, closing at $64.20.
Quote Of The Day
"9.9.2014. Wish we could say more.” - Apple's press invite for an event scheduled for September 9 at 1:00 p.m. ET in Cupertino, California.
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