Market Wrap For January 30: Markets Focus on Good News

U.S. stocks rose on Thursday as investors and traders focused on the positives. Data showed that the economy expanded in the fourth quarter as consumer spending gained traction.

"Today the market is focused on the good news, or the developed world," Bill Stone, chief investment strategist at PNC Wealth Management told CNBC. "When you cut through all the clutter of the earnings news, it's pretty darn good, at least relative to expectations."

The Dow gained 0.70 percent, closing at 15,848.61.
The S&P 500 gained 1.13 percent, closing at 1,794.19.
The Nasdaq gained 1.77 percent, closing at 4,123.12.
Gold lost 1.54 percent, trading at $1,242.80 an ounce.
Oil gained 0.63 percent, trading at $97.97 a barrel.
Silver lost 2.00 percent, trading at $19.16 an ounce.

News of Note

Initial Jobless Claims rose 19K to 348K, above the 327K estimate with a prior reading of 329K. Continuing claims fell 16K to 2.99 million.
Fourth quarter GDP (initial estimate) rose 3.2 percent, in-line with the consensus. In the previous quarter, GDP grew 4.1 percent.
The Chinese manufacturing activity declined for the first time in six months in January as the HSBC PMI fell to 49.5 from 50.5 in December.
December Pending Home Sales fell 8.7 percent to 92.4, worse than the decline of 0.5 percent expected.
The weekly survey from Freddie Mac showed that on average, the 30-year fixed-rate mortgage fell to 4.32 percent from 4.39 in the previous week.
EIA Natural Gas Inventory declined 230 bcf.

Equities-Specific News of Note

Analysts at Wells Fargo removed Citigroup C from its “priority list” due to emerging market concerns, but maintained an Overweight rating. The analysts noted “Although we believe Citi shares are likely to be clouded by emerging market (EM) concerns, our Outperform recommendation remains underpinned by the following: (1) expectations for continued progress toward Citi's 10%+ ROTCE target by mid-2015; (2) resilient NII/NIM trends; (3) improved capital returns in 20142015; (4) S&B market share gains; (5) attractive valuation.” Shares gained 0.47 percent, closing at $48.30.

Following Las Vegas Sands' results yesterday, many analysts increased their price target based on strong growth prospects of the company's Macau properties. Shares gained 5.40 percent, closing at $77.92.

Analysts at JPMorgan said that a higher premium for pellets, lumps and higher quality ore bodes well for companies like Vale VALE, BHP Billiton BHP and Rio Tinto RIO. The analysts noted “As iron ore prices weakened into '14, iron ore miners such as Vale saw their share prices going down. However, miners may actually be realizing higher iron ore prices YTD for two reasons: (a) premiums for pellets, lumps and for higher quality ore are up, as a consequence of pollution controls in China, and (b) the potential risk of higher freight rates has mitigated with Brazil-China freight down ~USD9/ton. Add the two, and for a company like Vale, which has high quality ore and pellets, we may see higher than expected realized prices driving earnings surprises.” Shares of Vale lost 0.44 percent, closing at $13.51, BHP gained 1.23 percent, closing at $64.32 and Rio Tinto gained 0.81 percent, closing at $53.62.

Analysts at Jefferies said that Target TGT could face fines of $400 million to $1.1 billion from the Payment Card Industries for its credit card data breach. Additionally, the analysts noted that the data breach could hamper the company's ability to meet its $4 billion share buyback target for fiscal 2015 and will only buy back $1 billion worth of shares. The analysts maintained a Hold rating but lowered the price target to $56 from a previous $59. Separately, Target came out and said that its data breach could have been caused by the use of a vendor's credentials. Shares hit new 52 week lows of $56.65 before closing the day at $56.67, down 0.39 percent.

The European Court of Justice has recommended that Europe's top court reject an appeal by Mastercard MA against a European Union ban on cross-border card fees. The European Union raised the argument that the fees violate the EU's antitrust rules. Shares gained 2.52 percent, closing at $79.66.

Men's Wearhouse MW will increase its offer for Jos. A. Bank JOSB if “additional” value is found throughout the due diligence. According to Bloomberg, the five largest shareholders of Jos. A. Bank want the company to move forward with a merger. Shares of Men's Wearhouse gained 1.93 percent, closing at $46.99 while Jos. A. Bank gained 1.53 percent, closing at $55.70.

According to TechCrunch, Amazon.com AMZN is developing a P2P payment system which would bypass banks and payment processors that could potentially rival eBay's PayPal system. Shares of Amazon traded lower by 8.53 percent at $368.62 following its after hours earnings results.

SodaStream SODA announced a strategic partnership with Welch's to add juice drink options which should be available in the second half of 2014. Shares gained 0.30 percent, closing at $37.19.

9to5 Mac released documents which showed that Apple AAPL plans to begin sapphire production at an Arizona facility in February. GT Advanced GTAT will be producing large quantities of sapphire for Apple. Shares of Apple lost 0.19 percent, closing at $499.78 while GT Advanced gained 4.67 percent, closing at $10.08.

JetBlue Airways JBLU said that it has added 12 takeoff and landing slots at the Reagan National Airport in Washington. The airline hopes to take over slots that was occupied by the former American and U.S. Airways. Southwest Airlines LUV won 54 landing slots a the same airport. Shares of JetBlue gained 5.75 percent, closing at $8.99 while Southwest gained 2.96 percent, closing at $21.22.

Various news reports surfaced today suggesting that Microsoft MSFT could announce its next CEO as soon as next week. Shares gained 0.55 percent, closing at $36.86.

Nu Skin NUS is rumored to receive approval from the China Ministry of Commerce to hold its 2014 EXPO in Shanghai, leaving investors to speculate that the company may avoid any punishments or repercussions from the government. Shares gained 5.14 percent, closing at $84.65.

Goldcorp's GG hostile takeover offer for Canadian based Osisko Mining has taken a nasty turn. Osisko is taking Goldcorp to court accusing the company of using confidential information when it launched its bid at the beginning of the month. Goldcorp denied the allegations. Shares of Goldcorp fell 2.35 percent, closing at $24.15.

Johnson & Johnson JNJ said it has signed an agreement with Yale University to share information about hundreds of drugs and products in a move to make its data from clinical trials available to researchers. Shares gained 0.64 percent, closing at $89.47.

Winners of Note

Facebook FB was the recipient of many sell-side price target hikes following its impressive quarterly results yesterday. Analysts at BMO Capital reiterated a Market Perform rating while raising the price target to $60 from a previous $50. Analysts at Susquehanna reiterated a Positive rating and hiked the price target to $72 from a previous $698. Analysts at Jefferies reiterated a Buy rating and upped the price target to $80. Analysts at Janney reiterated a Buy rating and boosted the price target to $67 from $56. Shares hit new 52 week highs of $62.50 before closing the day at $61.08, up 14.10 percent.

Piggybacking off Facebook's strong mobile ad revenue results, investors turned bullish on Pandora P who, like Facebook, also receives a large portion of ad sales via mobile. Shares hit new 52 week highs of $37.95 before closing the day at $36.53, up 10.97 percent.

Under Armour UA demonstrated that the strong holiday sales momentum it reported in yesterday's earnings report continued into the new year as the company lifted its revenue guidance. The company is forecasting a full year 2014 revenue of $2.84 billion to $2.87 billion, ahead of the $2.77 billion consensus estimate. Shares hit new 52 week highs of $106.65 before closing the day at $104.76, up 22.93 percent.

This morning, Alexion Pharmaceuticals ALXN reported its fourth quarter results. The company announced an EPS of $0.87, beating the consensus estimate of $0.83. Revenue of $441.9 million beat the consensus estimate of $430.08 million. The company guided its full year 2014 EPs to a range of $3.70 to $3.80, above the consensus estimate of $3.46. The company sees itself collecting $2 billion to $2.02 billion in revenue, above the consensus estimate of $1.96 billion. The Street's biotech expert Adam Feuerstein tweeted that the company has “essentially moved its business operations from the U.S. and Switzerland to Ireland." Analysts at Cowen said that the move will cut the company's tax rate in 2014 to ten to 11 percent. Shares hit new 52 week highs of $169.98 before closing the day at $162.00, up 21.14 percent.

Decliners of Note

ITT Educational Services ESI reported its fourth quarter results this morning. The company announced an EPS of a $0.49 loss which may not compare to the consensus estimate of $1.09 profit. The company said that its total student enrollment declined by 5.8 percent to 57,542 in the fourth quarter. Accordingly, its operating margin fell 260 bps. Shares lost 21.11 percent, closing at $29.44.

This morning, hhgregg HGG reported its third quarter results. The company announced an EPS of $0.17, missing the consensus estimate of $0.28. Revenue of $707.1 million missed the consensus estimate of $774.6 billion. Comparable-store sales fell 11.2 percent in the period and gross profit margin fell 50 bps to 26.8 percent. The company forecasts that its full year 2014 EPS will fall in a range of $0.30 to $0.40, below its previous guidance of $0.70 to $0.90. Shares lost 19.32 percent, closing at $8.52.

This morning, Whirlpool WHR reported its fourth quarter results. The company announced an EPS of $2.97, missing the consensus estimate of $3.04. Revenue of $5.1 billion beat the consensus estimate of $4.98 billion. A heavy promotional caused the company to miss expectations, despite growing sales in North America by 9.6 percent. The company guided its 2014 EPS to a range of $12.00 to $12.50, roughly in-line with the consensus estimate of $12.26. Shares lost 6.64 percent, closing at $132.22.

This morning, Symantec SYMC reported its third quarter results. The company announced an EPS of $0.51, beating the consensus estimate of $0.42. Revenue of $1.7 billion beat the consensus estimate of $1.65 billion. The company guided its fourth quarter revenue to a range of $1.615 billion to $1.655 billion, below the consensus estimate of $1.67 billion. The company also guided its EPS in a $0.40 to $0.42 range, below the consensus estimate of $0.46. Shares lost 7.33 percent, closing at $22.38.

Earnings of Note

This morning, Potash Corp POT reported its fourth quarter results. The company announced an EPS of $0.31, missing the consensus estimate of $0.33. Revenue of $1.54 billion beat the consensus estimate of $1.36 billion. The company saw its sales volume grow by 13 percent, but this proved to be insufficient to make up for decline average potash prices which fell to $282 per metric ton in the quarter when a year ago it was $387. The company also issued weaker than expected guidance for the first quarter and expects to earn an EPS of $0.30 to $0.35, below the $0.46 consensus estimate. The company expects its full year 2014 EPS to fall in a range of $1.40 to $1.80, below the $2.01 consensus estimate. Share lost 1.85 percent, closing at $31.24.

This morning, Eli Lilly LLY reported its fourth quarter results. The company announced an EPS of $0.74, in-line with the consensus estimate. Revenue of $5.81 billion beat the consensus estimate of $5.46 billion. Sales of the company's antidepressant Cymbalta fell 38 percent to $883.2 million after the treatment lost a key patent protection in December. The company's CEO, John Lechleiter said "We anticipate launching several new medicines this year and returning our company to growth in 2015 and beyond.” Shares lost 1.19 percent, closing at $53.27.

This morning, Visa V reported its first quarter results. The company announced an EPS of $2.20, beating the consensus estimate of $2.16. Revenue of $3.2 billion beat the consensus estimate of $3.12 billion. The company reported that its payment volume growth rose 13 percent to $1.1 trillion and total processed transactions were up 13 percent to $16.0 billion. Shares gained 1.73 percent, closing at $220.88.

This morning, 3M Company MMM reported its fourth quarter results. The company announced an EPS of $1.62, in-line with the consensus estimate. Revenue of $7.6 billion missed the consensus estimate of $7.7 billion. The company affirmed its 2014 guidance and expects to earn an EPS in a range of $7.30 to $7.55, roughly in the mid-range of a $7.47 consensus. Shares lost 1.69 percent, closing at $128.05.

This morning, Exxon XOM reported its fourth quarter results. The company announced an EPS of $1.91, missing the consensus estimate of $1.92. Revenue of $110.86 billion missed the consensus estimate of $114.94 billion. The company's operating earnings suffered on weaker margins, mainly in refining and fell 48 percent to $916 million. E&P operating earnings declined 13 percent to $6.79 billion, as production declined 1.8 percent on an oil-equivalent basis. Shares lost 1.18 percent, closing at $93.99.

Related: In Praise of Small Cap Oil

After the market closed, Google GOOG reported its fourth quarter results. The company announced an EPS of $12.01, missing the consensus estimate of $12.29. Revenue of $16.86 billion beat the consensus estimate of $16.76 billion. Shares were trading higher by 0.62 percent at $1,142.46 going in to the company's post earnings conference call.

After the market closed, Chipotle Mexican Grill CMG reported its fourth quarter results. The company announced an EPS of $2.53, in-line with the consensus estimate. Revenue of $844.1 million beat the consensus estimate of $826.24 million. Shares surged higher by 9.94 percent at $543.02 going in to the company's post earnings conference call.

After the market closed, Amazon.com AMZN reported its fourth quarter results. The company announced an EPS of $0.51, missing the consensus estimate of $0.69. Revenue of $25.9 billion fell short of the consensus estimate of $26.37 billion. Shares of Amazon traded lower by 8.53 percent at $368.62 following its after hours earnings results.

Quote of the Day

“Fall seven times, stand up eight.” - Japanese Proverb

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