Markets Slightly Lower As Bullard Hints Higher Rates Could Come Sooner Than Expected - Alcoa (NYSE:AA), Apple (NASDAQ:AAPL)

U.S. stocks were little changed as investors digested comments coming from head of the Federal Reserve Bank of St. Louis.

The Fed's Jim Bullard said that the 2.9 percent decline in the first quarter GDP is “giving me heartburn.” Bullard added that the worse than expected figure does not add up with other economic data.

“I think the market's right to shake this off,” Bullard added. “Looking forward over the next four quarters, most forecasters have three percent plus growth.”

Bullard also said that interest rates could rise as soon as the first quarter in 2015.

The Dow lost 0.13 percent, closing at 16,846.13.
The S&P 500 lost 0.12 percent, closing at 1,957.22.
The Nasdaq lost 0.02 percent, closing at 4,379.05.

Gold lost 0.42 percent, trading at $1,317.10.

Oil lost 0.88 percent, trading at $105.56 a barrel.
Silver lost 0.12 percent, trading at $21.09 an ounce.

News of Note

Initial Jobless Claims declined 2,000 to 312,000, above the consensus of 310,000. Continuing claims rose 12,000 to 2.57 million.

May Personal Income rose 0.4 percent month over month, in-line with expectations.

May Personal Spending rose 0.2 percent month over month, below the 0.4 percent gain expected.

EIA Natural Gas Inventory rose 110 bcf, higher than expectations for a gain of 102 bcf.

June Kansas City Manufacturing Survey declined to +6 from +10 in May and missed expectations of +9.

Analyst Upgrades and Downgrades of Note

Analysts at Barclays initiated coverage of Amazon.com AMZN with an Equal-weight rating and $300 price target. Shares lost 0.53 percent, closing at $325.69.

Analysts at Barclays maintained an Overweight rating on Bed Bath & Beyond BBBY with a price target lowered to $70 from a previous $80. Meanwhile, analysts at Citigroup maintained a Neutral rating on Bed Bath & Beyond with a price target lowered to $70 from a previous $72. Also of note, analysts at Raymond James maintained a Strong Buy rating on Bed Bath & Beyond with a price target lowered to $80 from a previous $83. Shares hit new 52-week lows of $54.96 before closing the day at $56.70, down 7.22 percent.

Analysts at Citigroup maintained a Buy rating on Darden Restaurants DRI with a price target lowered to $53 from a previous $60. Shares gained 0.69 percent, closing at $46.89.

Analysts at Barclays initiated coverage of eBay EBAY with an Equal-weight rating and $54 price target. Shares gained 0.30 percent, closing at $49.47.

Analysts at Barclays initiated coverage of Facebook FB with an Overweight rating and $78 price target. Shares lost 0.46 percent, closing at $67.13.

Analysts at Credit Suisse maintained a Neutral rating on General Mills GIS with a price target raised to $53 from a previous $51. Also, analysts at Stifel Nicolaus maintained a Buy rating on General Mills with a price target raised to $57 from a previous $55. Shares gained 0.52 percent, closing at $52.03.

Analysts at Barclays initiated coverage of Google GOOG with an Overweight rating and $650 price target. Shares lost 0.46 percent, closing at $576.00.

Analysts at Nomura initiated coverage of Intercept Pharmaceuticals ICPT with a Neutral rating and $294 price target. Shares lost 5.61 percent, closing at $239.42.

Analysts at Barclays initiated coverage of LinkedIn LNKD with an Equal-weight rating and $175 price target. Shares lost 1.90 percent, closing at $166.77.

Analysts at Canaccord Genuity maintained a Buy rating on Monsanto Company MON with a price target raised to $155 from a previous $135. Also, analysts at Credit Suisse maintained an Outperform rating with a price target raised to $148 from a previous $134. Shares lost 0.43 percent, closing at $126.18.

Analysts at Barclays initiated coverage of Netflix NFLX with an Underweight rating and $420 price target. Shares lost 1.04 percent, closing at $439.61.

Analysts at Jefferies maintained a Buy rating on Schlumberger SLB with a price target raised to $135 from a previous $119. Shares hit new 52-week highs of $117.56 before closing the day at $116.12, up 1.99 percent.

Analysts at Benchmark upgraded Take-Two Interactive TTWO to Buy from Hold with a price target raised to $25.31 from a previous $22.30. Shares gained 0.55 percent, closing at $21.77.

Analysts at Barclays initiated coverage of Twitter TWTR an Overweight rating and $46 price target. Shares gained 5.02 percent, closing at $41.44.

Analysts at Barclays initiated coverage of Yahoo! YHOO with an Equal-weight rating and $54 price target. Shares gained 1.23 percnet, closing at $33.66.

Equities-Specific News of Note

Philip Morris PM lowered its 2014 earnings guidance to a range of $4.87 to $4.97 from a previous range of $5.09 to $5.19 per share. The company left its six percent to eight percent profit growth estimates unchanged. Also, the company announced it acquired Nicocigs, an e-cigarette maker with a large presence in the U.K. market. Shares lost 2.70 percent, closing at $86.49.

Caesars Entertainment CZR said that it is likely to finalize a debt restructuring deal within a year. The company also said that it is eyeing the Japanese market and it can have no problem raising $5 billion to invest. Shares gained 0.23 percent, closing at $17.72.

According to Reuters, TreeHouse Foods THS is in talks to acquire Flagstone Foods. Shares hit new 52-week highs of $79.72 before reversing and closing the day at $78.36, down 0.32 percent.

Kroger KR announced it will purchase $500 million of its stock. Shares gained 0.35 percent, closing at $49.39.

Alcoa AA has agreed to acquire U.K. based Firth Rixson for $2.85 billion in stock and cash. Firth Rixson is an aerospace components maker with a focus on jet engins and Alcoa expects the acquisition to contribute $1.6 billion in revenue and contribute $350 million in EBITDA in 2016. Shares hit new 52-week highs of $15.18 before closing the day at $14.94, up 2.68 percent.

Winners of Note

Iron Mountain's IRM board of directors approved the company's transformation into a REIT, with an appropriate tax status effective for the taxable year beginning January 1, 2014. Naturally, a conversion to an REIT reduces the company's tax and increases shareholder returns. Shares surged to new 52-week highs of $36.00 before closing the day at $35.74, up 20.05 percent.

C&J Energy CJES and Nabors Industires NBR have agreed to merge and create a diversified completion and production services provider. Nabors Industries and its shareholders will receive $940 million in cash and 62.5 shares of C&J Energy for each one share owned. C&J Energy expects the deal to be accretive to its EPS in the first full year of joint operations. Shares of C&J Energy hit new 52-week highs of $34.93 before closing the day at $32.82, up 0.03 percent. Shares of Nabors Industries also hit new 52-week highs of $29.90 before closing the day at $29.00, up 6.23 percent.

Organovo ONVO reported positive results from a collaborate study with Roche using a 3D Human Liver Tissue. The study showed that Organovo's 3D Liver was able to distinguish between a hepatoxic drug from a similar non-toxic chemical analog. Shares gained 11.72 percent, closing at $8.20.

After pricing its IPO at $24, shares of GoPro GPRO began trading for the first time at $28.65 and traded as high as $33.00 before closing the day at $31.34, up 30.58 percent.

Decliners of Note

New York's attorney general is suing Barclays BCS for allegedly committing securities fraud in its dark pool and electronic trading division. According to a press release: “The complaint alleges Barclays has dramatically increased the market share of its dark pool through a series of false statements to clients and investors about how, and for whose benefit, Barclays operates its dark pool. Contrary to Barclays' representations that it has implemented special safeguards to protect clients from “aggressive” or predatory high-frequency traders, Barclays is accused of operating its dark pool to favor high-frequency traders.” Shares lost 7.38 percent, closing at $14.55.

South Korea's LG Househould & Health announced that it no longer has any interest in acquiring Elizabeth Arden RDEN after the company revealed a restructuring program. Shares lost 17.0 percent, closing at $22.41.

Earnings of Note

This morning, Lennar LEN reported its second quarter results. The company announced an EPS of $0.61, beating the consensus estimate of $0.51. Revenue of $1.82 billion beat the consensus estimate of $1.78 billion. Net earnings for the quarter rose to $137.7 million from $137.4 million in the same quarter a year ago as deliveries of homes rose 12 percent to 4,987. New home orders rose eight percent to 6,183 while the new orders dollar value rose 21 percent to $2.0 billion. Additionally, gross margin on home sales improved 140 basis points while operating margin on home sales also improved by 140 basis points to 14.7 percent. Lennar Homebuilding saw its operating earnings rise from $159.8 million a year ago to $234.5 million while Lennar Financial Services saw its operating earnings decline to $18.3 million from $29.2 million a year ago. Shares lost 0.48 percent, closing at $41.32.

This morning, Accenture ACN reported its third quarter results. The company announced an EPS of $1.26, beating the consensus estimate of $1.21. Revenue of $7.74 billion beat the consensus estimate of $7.55 billion. Net income for the quarter rose to $882 million from $874 million in the same quarter a year ago as the company benefited in the Americas where revenues grew to $3.64 billion from $3.44 billion in the same quarter a year ago. Revenue from Europe, Middle East and Africa rose 13 percent to $3.13 billion while Asia Pacific revenue slightly dipped to $969 million from $975 million. Communications, Media & Telecom saw a solid revenue growth of seven percent to $1.52 billion, as did Financial Services as revenue from the segment rose seven percent to $1.68 billion. Despite a beat in the quarter, the company lowered its fiscal year 2014 EPS guidance to a range of $4.50 to $4.54 from a previous range of $4.50 to $4.62. Shares lost 1.84 percent, closing at $81.53.

This morning, ConAgra Foods CAG reported its fourth quarter results. The company announced an EPS of $0.55, in-line with the consensus estimate. Revenue of $4.43 billion beat the consensus estimate of $4.40 billion. Net income for the quarter shifted to a net loss of $324.2 million from a net income of $192.2 million in the same quarter a year ago due to a previous warning that the company will report a write-down $681 million related to impairment charges. Sales of consumer foods fell 7.4 percent to $1.78 billion but commercial food sales rose one percent to $1.63 billion. Gross margin fell to 20.4 percent from 21.1 percent despite input costs declining two percent to $3.53 billion. ConAgra Foods issued guidance and sees its full year fiscal 2015 EPS to rise by a mid-single-digit. Shares gained 0.84 percent, closing at $28.97.

After the market closed, Nike NKE reported its fourth quarter results. The company announced an EPS of $0.78, beating the consensus estimate of $0.75. Revenue of $7.4 billion beat the consensus estimate of $7.34 billion. Shares were trading higher by 2.77 percent at $78.99 following the earnings report.

Quote of the Day

“The complaint alleges that Barclays falsified marketing material purporting to show the extent and type of high frequency trading in its dark pool. For example, Barclays removed from a marketing document intended for institutional investors the dark pool's then-largest participant – a high frequency trading firm Barclays knew engaged in predatory behavior in the dark pool. In response, one employee stated: “I had always liked the idea that we were being transparent, but happy to take liberties if we can all agree.” – A snippet from New York's attorney general building its securities fraud case against Barclays.

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