Dow Suffers Largest Daily Decline Since July, S&P 500 At 8-Week Lows On Global Growth Concerns
U.S. stocks tumbled with the three major indices each shedding more than 1.5 percent as global economic growth concerns surfaced.
The IMF lowered its global growth forecast for 2014 to 3.3 percent from a previous 3.4 percent. The agency also lowered its 2015 global growth projections to 3.8 percent from a previous 4.0 percent.
Economic data out of Europe is also troubling some investors, as Germany's industrial output fell 4 percent in August after expanding 1.6 percent in July. In fact, Germany's industrial output has fallen the most since 2009.
The Fed's Narayana Kocherlakota spoke at a form in South Dakota on Tuesday. “It would be inappropriate for the FOMC to reduce its level of accommodation if its outlook is that inflation will be below 2 percent over the following two years,” Kocherlakota said. “After all, if the FOMC were to tighten policy in such a situation, it would be deliberately delaying the progress of inflation toward the 2 percent objective. Such an action would weaken the credibility of the FOMC's stated two-year horizon.”
Also speaking Tuesday was the Fed's Bill Dudley, who said that it is “premature” to raise interest rates, at least right now. In a speech in New York, Dudley said that the “labor market still has too much slack and the inflation rate is too low.” Nevertheless, Dudley anticipates a mid-2015 rate hike as a possibility.
- The Dow lost 1.60 percent, closing at 16,719.39.
- The S&P 500 lost 1.51 percent, closing at 1,935.10.
- The Nasdaq lost 1.56 percent, closing at 4,385.20.
- Gold gained 0.27 percent, trading at $1,210.60 an ounce.
- Oil lost 1.85 percent, trading at $88.67 a barrel.
- Silver lost 0.17 percent, trading at $17.19 an ounce.
News Of Note
ICSC Retail Store Sales rose 3.9 percent year over year after rising 3.6 percent last week.
Redbook Chain Store Sales rose 5.4 percent year over year after rising 4.3 percent last week.
August Job Openings and Labor Turnover Summary rose to 4.835 million (versus expectations of 4.71 million) from 4.673 million in July.
According to the National Retail Forecast, holiday sales are expected to rise by 4.1 percent this year.
The Bank of Japan made no changes to its monetary stimulus and maintain its promise to increase its monetary base by 60 to 70 trillion yen ($547 billion to $638 billion) through the purchase of government bonds and risky assets.
Analyst Upgrades And Downgrades Of Note
Analysts at Bank of America reinstated coverage of Apple (NASDAQ: AAPL) with a Buy rating and $120 price target. Also, analysts at Susquehanna maintained a Positive rating on Apple with a price target raised to $120 from a previous $115. Shares lost 0.88 percent, closing at $98.74.
Analysts at Imperial Capital initiated coverage of BlackBerry (NASDAQ: BBRY) with an In-Line rating and $10 price target. Shares lost 3.15 percent, closing at $9.23.
Analysts at Citigroup initiated coverage of CBOE Holdings (NASDAQ: CBOE) with a Neutral rating and $55 price target. Shares lost 1.05 percent, closing at $53.85.
Analysts at Citigroup maintained a Neutral rating on CME Group (NYSE: CME) with a price target raised to $82 from a previous $73. Shares lost 1.97 percent, closing at $79.75.
Analysts at Oppenheimer maintained an Outperform rating on Citigroup (NYSE: C) with a price target lowered to $67 from a previous $68. Shares lost 1.93 percent, closing at $51.27.
Analysts at Jefferies maintained a Hold rating on Costco Wholesale (NASDAQ: COST) with a price target raised to $116 from a previous $115. Shares lost 0.74 percent, closing at $125.27.
Analysts at Bank of America downgraded Deere & Company (NYSE: DE) to Underperform from Neutral with a price target lowered to $82 from a previous $90. Shares lost 3.42 percent, closing at $80.01.
Analysts at Jefferies downgraded Dunkin' Brands Group (NASDAQ: DNKN) to Hold from Buy with a price target lowered to $47 from a previous $50. Shares lost 2.62 percent, closing at $43.78.
Analysts at Bank of America maintained a Neutral rating on F5 Networks (NASDAQ: FFIV) with a price target raised to $138 from a previous $120. Shares lost 3.48 percent, closing at $117.91.
Analysts at Morgan Stanley maintained an Underweight on General Motors (NYSE: GM) with a price target lowered to $27 from a previous $29. Shares lost 5.87 percent, closing at $31.77.
Analysts at Brean Capital maintained a Buy rating on Hewlett-Packard (NYSE: HPQ) with a price target raised to $45 from a previous $40. Shares lost 4.48 percent, closing at $35.22.
Analysts at Citigroup maintained a Buy rating on Intercontinental Exchange (NYSE: ICE) with a price target raised to $226 from a previous $205. Shares lost 1.38 percent, closing at $196.36.
Analysts at Goldman Sachs initiated coverage of Keurig Green Mountain (NASDAQ: GMCR) with a Buy rating and $166 price target. Shares hit new 52-week highs of $140.50 before closing the day at $139.75, up 4.88 percent.
Analysts at Deutsche Bank downgraded Las Vegas Sands (NYSE: LVS) to Hold from Buy with a price target lowered to $65 from a previous $74. Shares lost 2.94 percent, closing at $61.07.
Analysts at Deutsche Bank upgraded MGM Resorts (NYSE: MGM) to Buy from Hold with a price target raised to $30 from a previous $29. Shares lost 1.71 percent, closing at $21.80.
Analysts at JPMorgan maintained an Overweight rating on PepsiCo (NYSE: PEP) with a price target raised to $102 from a previous $95. Shares lost 0.29 percent, closing at $93.10.
Analysts at Piper Jaffray initiated coverage of UnitedHealth Group (NYSE: UNH) with an Overweight rating and $121 price target. Shares lost 1.06 percent, closing at $84.19.
Equities-Specific News Of Note
According to Reuters, Allergan (NYSE: AGN) would consider a bid of more than $200 per share to be acquired by Actavis (NYSE: ACT). Shares of Allergan hit new 52-week highs of $189.41 before closing the day at $186.20, up 1.68 percent. Shares of Actavis lost 0.23 percent, closing the day at $243.39.
McDonald's (NYSE: MCD) said that its Japanese operations could see a loss of $157 million this year due to soft demand and rising expenses. Shares lost 1.10 percent, closing at $92.81.
Coty (NYSE: COTY) said that it offered to acquire the Bourjois cosmetics brand from Chanel for $239 million. Chanel confirmed that it has entered exclusive negotiations with Coty. Shares gained 2.26 percent, closing at $16.30.
Glencore stated that it currently has no desire to pursue any sort of combination with Rio Tinto (NYSE: RIO). Shares of Rio lost 4.06 percent, closing at $49.38.
Copperfield Research tweeted that GoPro (NASDAQ: GPRO) is "not what it seems. Great product, great chart... But accounting has yet to be fleshed out well. Still working through details." Nevertheless, shares of GoPro hit new 52-week highs of $98.47 before closing the day at $93.85, up 0.06 percent.
Nokia (NYSE: NOK) intends to suspend a production plant in India as a longstanding tax dispute with the country continues. Shares lost 4.0 percent, closing at $8.17.
Boeing (NYSE: BA) expects its air freight traffic will more than double over the next 20 years. The company estimates carriers will purchase $240 billion worth of new freighters over the next two decades. Shares lost 2.33 percent, closing at $123.32.
Globalstar (NYSE: GSAT) said that it will host a conference call on Thursday at 4:30 PM ET to address Kerrisdale Capital's recent presentation. The conference call will include prepared remarks in addition to a question and answer session. Shares hit new 52-week lows of $2.10 before slightly rebounding and closing the day at $2.34, up 3.32 percent.
According to Fox Business News, Herbalife (NYSE: HLF) told investors that the FTC will not shut down the company following an investigation into pyramid scheme allegations, but a fine and/or sanctions are possible. Shares lost 3.42 percent, closing at $45.68.
Wal-Mart (NYSE: WMT) announced it will no longer offer health benefits for part-time employees who work fewer than 30 hours per week due to rising costs. Shares lost 0.06 percent, closing at $77.30.
Winners Of Note
Analysts at Susquehanna stated that Apple is in a position to take possession of GT Advanced Technologies' (NASDAQ: GTAT) equipment given the fact that Apple's prepayments to GT Advanced were structured as debt. Separately, the Wall Street Journal reported that Apple declined to utilize sapphire supplied by GT Advanced in its iPhone as the material proved to be “brittle, cracking when phones were dropped from various heights and angles.” Shares of GT Advanced gained 51.25 percent, closing at $1.21.
The FDA approved the use of Chimerix's (NASDAQ: CMRX) experimental drug (Brincidofovir) to treat a patient hospitalized in Dallas with Ebola. Shares hit new 52-week highs of $35.16 before closing the day at $33.23, up 5.59 percent.
Decliners Of Note
SodaStream (NASDAQ: SODA) issued a third quarter warning and expects to earn $8.5 million in operating income during the quarter, below the consensus estimate of $17 million. The company expects its revenue to be $125 million, falling short of the consensus estimate of $153 million. The company's CEO Daniel Birnbaum said that he is “very disappointed in our recent performance.” Shares hit new 52-week lows of $21.39 before closing the day at $21.52, down 21.94 percent.
The Street Sweeper released a negative report on Glu Mobile (NASDAQ: GLUU) saying that the company's Kardashian app is experiencing declining interest and popularity. Shares lost 7.31 percent, closing at $4.75.
AGCO (NYSE: AGCO) issued a third quarter and full-year warning, and expects its earnings per share to be in a range of $0.60 to $0.65, below the consensus estimate of $0.81. The company expects its full year earnings per share to be in a range of $4.10 to $4.30, also falling short of the consensus estimate of $4.82. Shares hit new 52-week lows of $41.56 before closing the day at $42.13, down 10.55 percent.
Earnings Of Note
After the market closed, Yum Brands (NYSE: YUM) reported its third quarter results. The company announced an EPS of $0.87, missing the consensus estimate of $0.89. Revenue of $3.35 billion missed the consensus estimate of $3.47 billion. Shares were trading flat at $69.73 following the earnings release.
Quote Of The Day
“We expect Europe's huge excess savings combined with aggressive ECB easing to lead to some of the largest capital outflows in the history of financial markets. At around 400 billion dollars each year, Europe's current account surplus is bigger than China's in the 2000s. If sustained, it would be the largest surplus ever generated in the history of global financial markets. This matters.” – Deutsche Bank's George Saravelos arguing that the euro will fall to $0.95 by 2017.
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