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Market Wrap For April 30: Markets Positive Despite Fed Tapering and GDP Rising Less Than Expected

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Market Wrap For April 30: Markets Positive Despite Fed Tapering and GDP Rising Less Than Expected

U.S. stocks rose as investors cheered the latest move by the Federal Reserve who stacked on another $10 billion to its tapering effort. By doing so, the central bank has lowered its asset purchases to $45 billion per month.

“Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions,” the FOMC statement read.

The Dow rose above its record closing high of 16,576.66 which it hit in the last trading day of 2013. The milestone was achieved despite April's GDP growing way below economists expectations.

Wednesday's trading session marks the end to a volatile April, just in time for the old saying "sell in May and go away" to kick-in.

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  • The Dow gained 0.27 percent, closing at 16,580.84.
  • The S&P 500 gained 0.30 percent, closing at 1,883.95.
  • The Nasdaq gained 0.27 percent, closing at 4,114.56.
  • Gold lost 0.48 percent, trading at $1,292.80 an ounce.
  • Oil lost 1.49 percent, trading at $99.77 a barrel.
  • Silver lost 2.08 percent, trading at $19.21 an ounce.

News of Note

MBA Composite Index declined 5.9 percent compared to a decline of 3.3 percent last week.

MBA Purchase Index declined 4.0 percent compared to a decline of 3.0 percent last week.

MBA Refinance Index declined 7.0 percent compared to a decline of 4.0 percent last week.

April ADP Jobs Report rose 220,000, above the 210,000 consensus and above March's 191,000 reading.

First Quarter GDP rose 0.1 percent, below the 1.2 percent consensus and 2.6 percent gain in the fourth quarter.

April Chicago PMI rose to 63.0 from 55.9 in March and topped the 56.9 consensus.

EIA Petroleum Inventories showed that Crude rose 1.7 million barrels, lower than the consensus of 2.2 million barrels. Gasoline rose 1.6 million barrels, ahead of the consensus for a decline of 0.4 million barrels. Distillates rose 1.9 million barrels.

Canada's GDP grew 0.2 percent in February, in-line with expectations but slower than January's 0.5 percent gain.

Fitch warned that further sanctions imposed on Russia could force the rating agency to cut the country's BBB credit rating. Fitch is already projecting the country's GDP to slow down to 1.5 percent growth in 2015.

Analyst Upgrades and Downgrades of Note

Analysts at Imperial Capital initiated coverage of 3D Systems (NYSE: DDD) with an Outperform rating and $60 price target. Shares gained 5.67 percent, closing at $47.34.

Analysts at Nomura maintained a Neutral rating on Charter Communications (NASDAQ: CHTR) with a price target raised to $135 from a previous $130. Shares lost 1.18 percent, closing at $135.53.

Analysts at Citigroup downgraded Coach (NYSE: COH) to Neutral from Buy with a $50 price target. Meanwhile, analysts at UBS downgraded Coach to Hold from Buy with a price target lowered to $45 from a previous $49. Shares hit new 52-week lows of $43.90 before closing the day at $44.65, down 2.32 percent.

Analysts at Stifel Nicolaus maintained a Buy rating on MGM Resorts (NYSE: MGM) with a price target raised to $33 from a previous $32. Shares gained 0.94 percent, closing at $25.22.

Analysts at Stifel Nicolaus maintained a Buy rating on Oracle (NYSE: ORCL) with a price target raised to $45 from a previous $43. Shares gained 1.89 percent, closing at $40.87.

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Analysts at DA Davidson upgraded RF Micro Devices (NASDAQ: RFMD) to Buy from Neutral with a price target raised to $11 from a previous $8.50. Shares hit new 52-week highs of $8.73 before closing the day at $8.44, up 4.33 percent.

Equities-Specific News of Note

Facebook (NASDAQ: FB) launched a mobile ad network, the Facebook Audience Network which will allow app developers to deliver targeted ads based on the platform's data and activity. Shares gained 2.79 percent, closing at $59.77.

Wal-Mart (NYSE: WMT) has teamed up with Autoinsurance.com to offer an auto insurance comparison service. Shares gained 0.05 percent, closing at $79.71.

Sanofi (NYSE: SNY) is working with bankers to find a buyer for its portfolio of mature drugs which could come with a $7 billion to $8 billion price tag. Shares gained 0.88 percent, closing at $53.80.

Red Hat (NYSE: RHT) has agreed to buy Inktank, a developer of software that allows companies to build scale-out storage systems for $175 million in an all-cash deal. Shares gained 0.24 percent, closing at $48.65.

General Electric (NYSE: GE) confirmed it had offered a bid of 12.3 billion euros ($16.9 billion) to acquire Alstrom's energy business. The offer consists of an enterprise value of 9.9 billion euros ($13.5 billion) and 2.5 billion euros ($3.4 billion) in cash. Shares of General Electric gained 0.45 percent, closing at $26.88.

According to Bloomberg, MasterCard's (NYSE: MA) approach to making transactions secure gives it an advantage over rival Visa. (NYSE: V) Shares of MasterCard gained 2.11 percent, closing at $73.55 while shares of Visa lost 0.03 percent, closing at $202.61.

Noble (NYSE: NE) announced that it will proceed with a planned spin-off of its standard specification rigs but will not do so in the form of an IPO. Instead, the company will spin-off the division as a dividend to shareholders in the third quarter. Shares lost 0.06 percent, closing at $30.82.

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Ford Motors (NYSE: F) announced that it will hire 12,000 new workers as business has grown faster than predicted. The move is part of a promise it made in 2011 to the United Auto Workers. Shares gained 0.97 percent, closing at $16.15.

Winners of Note

This morning, Energizer Holdings (NYSE: ENR) reported its second quarter results. The company announced an EPS of $1.88, beating the consensus estimate of $1.71. Revenue of $1.06 billion missed the consensus estimate of $1.08 billion. Net earnings for the quarter rose to $98.5 billion from $84.9 million a year ago but investors focused on news that the company will split into two public entities. The company announced that its Household Products and Personal Care divisions will split off some time in the second half of 2015. The reason for the spin-off, according to the company, is to leverage the brand and unlock more value for shareholders. Shares surged to new 52-week highs of $115.79 before closing the day at $111.69, up 14.31 percent.

This morning, WellPoint (NYSE: WLP) reported its first quarter results. The company announced an EPS of $2.30, beating the consensus estimate of $2.13. Revenue of $17.64 billion missed the consensus estimate of $17.96 billion. Net income for the quarter fell to $701.0 million from $885.2 million in the same quarter a year ago as the insurer adjusted to coverage changes brought on my the health care overhaul. Total membership in the quarter rose 1.3 million to 36.9 million members and the company's benefit expense ratio fell one percent to 82.7 percent due to an improvement in the Medicaid business. WellPoint issued full year guidance and estimates its EPS will be $8.40 or higher and the company is forecasting revenue of $73.5 billion or higher. Shares gained 5.55 percent, closing at $100.68.

Exelon (NYSE: EXC) has offered to purchase Pepco Holdings (NYSE: POM) for $27.25 a share, a near 30 percent premium to the average price of Pepco Holdings over the previous twenty days. Exelon is one of the nation's largest energy providers with business activities in 47 states and Canada. The company generates more than 35,000 megawatts of owned capacity with 2013 revenues of approximately $24.9 billion. Pepco Holdings provides around two million customers mostly in the Eastern U.S with regulated electricity service. The all-cash transaction has been unanimously approved by the board of directors of both companies will create the leading Mid-Atlantic electric and gas utility. Shares of Pepco Holdings surged to new 52-week highs of $26.88 before closing the day at $26.75, up 17.38 percent. Shares of Exelon didn't share similar gains which lost 3.18 percent, closing at $35.03. Some analysts weren't thrilled with the move. “Some investors might question Exelon's desire to increase the company's regulated exposure at a time when power markets appear to be recovering,” Wells Fargo analyst Neil Kalton told Reuters.

Related: Power Up: Exelon Agrees To Purchase Pepco for A Near 30 Percent Premium

NQ Mobile (NYSE: NQ) reported that an independent investigation led by a forensic accounting team at Deloitte and law firm Shearman & Sterling have thus far found no evidence that the company engaged in any fraudulent activity alleged by Muddy Waters. The company will report the final conclusion of the investigation team in its annual report. Shares gained 10.75 percent, closing at $12.36.

Decliners of Note

Panera Bread (NASDAQ: PNRA) reported its first quarter results after the market closed on Tuesday. The company announced an EPS of $1.55, beating the consensus estimate of $1.52. Revenue of $605 million beat the consensus estimate of $598.07 million. Despite the beat, weather related issues lowered the company's comparable sales came in at 0.1 percent despite a 2.9 percent rise in average check prices. Operating profit dropped 250 bps to 11.1 percent in the period due to the company's investments and growth initiatives. Panera Bread issued guidance and sees its full year EPS to be in a range of $6.80 to $7.00 compared to previous expectations of $6.80 to $7.05 and lower than the consensus estimate of $6.93. The company also lowered its guidance for comps to a range of 2.0 percent to 3.5 percent, compared to previous guidance of 2.0 percent to 4.0 percent. Analysts at Barclays reiterated an Equal-weight rating with a price target lowered to $174 from a previous $175. Meanwhile, analysts at Oppenheimer reiterated an Outperform rating with a price target lowered to $187 from a previous $200 and analysts at Wunderlich reiterated a Hold rating with a price target lowered to $180 from a previous $190. Shares lost 6.26 percent, closing at $152.97.

Twitter (NYSE: TWTR) reported its first quarter results after the market closed on Tuesday. The company announced an EPS of $0.00, beating the consensus estimate of -$0.03. Revenue of $250.5 million beat the consensus estimate of $240.9 million. Net income for the quarter rose to $183,000 from a net loss of $11 million in the same quarter a year ago as advertising revenue rose 125 percent year over year to $226 million and data licensing and other revenues rose 76 percent to $24 million. However, investors found Twitter's growth numbers to be of concern as monthly active users rose six percent quarter over quarter and 25 percent year over year to 255 million and mobile monthly active users rose eight percent quarter over quarter and 31 percent year over year to 198 million. Timeline views rose six percent quarter over quarter and only 15 percent year over year to 157 billion. Timeline views fell seven percent in the quarter. Twitter expects its second quarter revenue to be $270 million to $280 million versus a consensus estimate of $272.9 million. Twitter sees its full year revenue to be $1.2 billion to $1.25 billion, versus the consensus estimate of $1.24 billion. At least eight buy and sell-side analysts lowered their price targets such as analysts at UBS who reiterated a Sell rating with a price target lowered to $35 from a previous $42. Analysts at Cowen reiterated an Underperform rating with a price target lowered to $26 from a previous $32. On the bullish side, analysts at Topeka reiterated a Buy rating with a price target lowered to $60 from a previous $70. Shares fell to new 52-week lows of $37.24 before closing the day at $38.97, down 8.56 percent.

Related: Twitter's 'Spin' On Q1 Earnings May Not Be Enough

Earnings of Note

This morning, Barrick Gold (NYSE: ABX) reported its first quarter results. The company announced an EPS of $0.20, beating the consensus estimate of $0.19. Revenue of $2.63 billion beat the consensus estimate of $2.60 billion. Adjusted net earnings for the quarter fell to $238 million from $923 million in the same quarter a year ago primarily due to lower metal prices and lower gold sales volumes. Gold production for the quarter fell to 1.59 million ounces from 1.8 million ounces a year ago with an average gold price of $1,285 per ounce compared to $1,629 an ounce a year ago. Barrick Gold cut its 2014 copper forecast to 410 million to 440 million pounds, from previous guidance of 470 million to 500 million pounds due to a partial collapse of the main conveyor at its Lumwana mile in Zambia. Shares lost 1.13 percent, closing at $17.47.

This morning, Garmin (NASDAQ: GRMN) reported its first quarter results. The company announced an EPS of $0.55, beating the consensus estimate of $0.44. Revenue of $583.22 million beat the consensus estimate of $541 million. Net income for the quarter rose to $118.82 million from $88.67 million in the same quarter a year ago led by strong gains in fitness sales which rose 38 percent year over year to $100.3 million. Aviation sales rose 19 percent to $96 million and outdoor sales rose ten percent to $84 million. However, Garmin's automotive and mobile sales fell four percent year over year to $243 million. Garmin will issue full-year guidance during its second quarter report. Shares hit new 52-week highs of $59.55 before closing the day at $57.10, up 3.65 percent.

This morning, Actavis (NYSE: ACT) reported its first quarter results. The company announced an EPS of $3.49, beating the consensus estimate of $3.26. Revenue of $2.66 billion beat the consensus estimate of $2.59 billion. Net income for the quarter rose to $96.5 million from a net loss of $102.8 million in the same quarter a year ago as the quarterly results include the contribution from the Warner Chilcott acquisition. North American Brands revenue rose 358 percent to $594 million due to the Warner Chilcott acquisition and increased sales of legacy products such as Rapaflo and Generess. International revenue rose 12 percent to $647 million. Actavis announced that its financial forecast including Forest Labs will be made in the middle of the year after the transaction finalizes and that its standalone forecast provided at the end of January should be considered withdrawn. Shares gained 3.30 percent, closing at $204.33

This morning, Time Warner (NYSE: TWX) reported its first quarter results. The company announced an EPS of $0.91, beating the consensus estimate of $0.89. Revenue of $7.54 billion beat the consensus estimate of $6.61 billion. Net income for the quarter rose to $1.3 billion from $754 million in the same quarter a year ago as the company saw its Home Box Office revenue grow nine percent to $1.3 billion and the Lego Movie and 300: Rise of an Empire brought in $450 million and $330 million, respectively at the worldwide box office. Shares gained 2.66 percent, closing at $66.46.

After the market closed, MetLife (NYSE: MET) reported its first quarter results. The company announced an EPS of $1.37, missing the consensus estimate of $1.40. Revenue of $17.11 billion missed the consensus estimate of $17.67 billion. Shares were trading lower by 3.15 percent at $50.70 following the earnings release.

After the market closed, Yelp (NASDAQ: YELP) reported its first quarter results. The company announced an EPS of -$0.04, beating the consensus estimate of -$0.06. Revenue of $76.4 million beat the consensus estimate of $75.06 million. Shares were trading higher by 0.67 percent at $58.71 following the earnings release.

Quote of the Day

“The old saying goes that when the U.S. economy sneezes, the world catches cold. That still seems to be true enough, although Chinese influenza is gaining in importance. If both sneezed at the same time then instead of “God bless you” perhaps someone would cry out “God have mercy.” We're not there yet, although in this period of high leverage it's important to realize that the price of money and the servicing cost of that leverage are critical for a healthy economy.” – PIMCO's Bill Gross in a blog post on Wednesday.

Posted-In: Earnings News Short Sellers Guidance Econ #s Economics Federal Reserve After-Hours Center Best of Benzinga

 

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