Markets Rally On Fed Minutes, Alcoa Kicks Off Earnings Season With Strong Beat

U.S. stocks rallied after the 2:00PM release of the Fed's September minutes which revealed that committee members continue to debate over the timing and language of a rate hike. Several officials questioned their guidance if short-term rates were likely to stay low for a “considerable” amount of time. Other members suggested current guidance is appropriate for the Fed to be patient. Finally, the Fed lowered their growth outlook due to a higher U.S. dollar and concern over global weakness. Speaking at the BMO Harris and Lakeland College Economic Briefing, Chicago Fed President Charles Evans suggested that a low labor-force participation rate, long-term unemployment, part-time work data and the job-finding market may suggest more slack in the labor market. “But we still aren't back to full labor market health,” Evans said. “At 5.9 percent, the unemployment rate remains above what most people think of as its long-run neutral level. For example, according to the central tendency in the FOMC's latest Summary of Economic Projections, the estimate of the neutral unemployment rate is between 5-1/4 to 5-1/2 percent, with my own judgment at the bottom of this range. This leaves a significant gap between our goal and current conditions. Alcoa unofficially kicked off earnings season with its results released after the closing bell. The company solidly beat the consensus estimates for earnings per share and revenue while reaffirming its fiscal 2014 outlook. Recommended: Have Markets Found The Next Dip? The Dow gained 1.64 percent, closing at 16,994.22. The S&P 500 gained 1.75 percent, closing at 1,968.89. The Nasdaq gained 1.90 percent, closing at 4,468.59. Gold gained 0.91 percent, trading at $1,223.40 an ounce. Oil lost 1.14 percent, trading at $87.84 a barrel. Silver gained 1.09 percent, trading at $17.47 an ounce.

News of Note

MBA Composite Index rose 3.8 percent after declining 0.2 percent last week. MBA Purchase Index rose 2.0 percent after remaining flat last week. MBA Refinance Index rose 5.0 percent after falling 0.3 percent last week. EIA Crude Inventories rose 5.0 million barrels after declining 1.4 million barrels last week. EIA Gasoline Inventories rose 1.2 million barrels after declining 1.8 million barrels last week. EIA Distillates Inventories rose 0.4 million barrels after declining 2.9 million barrels last week. Thomas Duncan passed away this morning following unsuccessful treatment for Ebola in Texas.

Analyst Upgrades and Downgrades of Note

Analysts at Macquarie initiated coverage of Alibaba BABA with a Neutral rating and $88 price target. Shares gained 0.72 percent, closing at $88.30. Analysts at Citigroup maintained a Neutral rating on BlackRock BLK with a price target raised to $350 from a previous $340. Also, analysts at Keefe Bruyette & Woods maintained an Outperform rating on Blackrock with a price target lowered to $365 from a previous $375. Shares gained 1.89 percent, closing at $324.89. Analysts at Citigroup maintained a Sell rating on Cisco Systems CSCO with a price target raised to $22 from a previous $20.50. Shares gained 0.10 percent, closing at $24.66. Analysts at Citigroup maintained a Buy rating on Deere & Company DE with a price target lowered to $93 from a previous $97. Shares gained 1.62 percent, closing at $81.31. Analysts at Macquarie upgraded EOG Resources EOG to Outperform from Neutral with a price target lowered to $120 from a previous $124. Shares gained 1.01 percent, closing at $94.56. Analysts at Piper Jaffray downgraded GoPro GPRO to Neutral from Overweight while maintaining a $90 price target. Shares lost 4.18 percent, closing at $89.93. Analysts at Northland Securities initiated coverage of Intel INTC with a Market Perform rating and $35 price target. Shares gained 2.39 percent, closing at $34.27. Recommended: What Makes A Good Trader? Ask This Guru Analysts at Tigress Financial initiated coverage of Tesla Motors TSLA with a Neutral rating. Shares lost 0.11 percent, closing at $259.28. Analysts at Citigroup maintained a Sell rating on The Travelers Companies TRV with a price target raised to $85 from a previous $79. shares gained 0.84 percent, closing at $94.45.

Equities-Specific News of Note

DuPont DD said that its $500 million investment on producing ethanol from corn crop waste will prove to be successful given elevated demand in renewable fuels. Shares lost 0.70 percent, closing at $68.52. UPS UPS said that it will introduce a new network of pickup locations at various stores where customers could retrieve their items. Shares gained 1.77 percent, closing at $98.14. According to Business Insider, Cisco CSCO is planning a massive reorganization of its switching and routing engineering operations that could affect up to one third of its entire workforce. Shares gained 0.10 percent, closing at $24.66. Apple AAPL officially sent out invites for its October 16 event. The invite read “It's been way too long.” Separately, Carl Icahn tweeted that he will send an open letter to Apple's CEO Tim Cook tomorrow and that it will be “interesting.” Shares gained 2.08 percent, closing at $100.80. eBay's EBAY September same-store sales rose 8.9 percent year over year, an improvement over August's 5.9 percent growth according to ChannelAdvisor. Shares gained 2.91 percent, closing at $54.51. Amazon.com AMZN saw its same-store sales rise 37.9 percent year over year, lower than August's 45.1 percent growth. Shares gained 1.80 percent, closing at $322.70. Cliffs Natural Resources CLF said that it is in no rush to sell non-core assets and that investors should be patient. Also, the rating agency S&P lowered its rating on company bonds by three levels to BB minus. Shares hit new 52-week lows of $2.57 before rebounding and closing the day at $7.97, up 2.57 percent. American Airlines Group AAL reported that its September revenue passenger miles fell 0.2 percent to 16.9 billion despite its total capacity rising 150 basis points to 80.0 percent. Shares lost 3.20 percent, closing at $33.00 Comcast CMCSA shareholders approved the company's merger with Time Warner Cable TWC but the final decision ultimately lays with government regulators who may not approve the merger until early 2015. Shares of Comcast gained 2.91 percent, closing at $54.77 while shares of Time Warner gained 3.17 percent, closing at $147.28. AT&T T will pay customers $105 million in refunds after collecting hundreds of millions of dollars in unauthorized charges on behalf of third parties. Shares gained 0.80 percent, closing at $35.15. Bloomberg reported that at least one vendor has halted shipments to the retailer ahead of the holiday shopping season because of its inability to obtain insurance policies that guarantee payment. In a blog post Sears responded by stating that it has the “financial flexibility and is meeting its obligations.” Shares lost 4.79 percent, closing at $28.85. SolarCity SCTY plans to offer a new financing option for customers linked to a solar power federal tax credit. Shares gained 3.54 percent, closing at $56.48. Akami AKAM will partner with China Telecom CHA to sell cloud security and performance acceleration products. The two companies will also work together in areas of network access and technology. Shares of Akami gained 2.46 percent, closing at $59.07 while shares of China Telecom gained 2.67 percent, closing at $61.14.

Winners of Note

Shares of Unilife UNIS continued to surge on higher than normal volume following its long-term agreement with Sanofi announced on Monday. Shares of Unilife gained 19.85 percent, closing at $3.14. Recommended: Merger Boosts Materials ETFs Disposable protective clothing manufacturer Lakeland Industries LAKE continues to surge on Ebola concerns. Shares hit new 52-week highs of $11.93 before closing the day at $11.62, up 15.85 percent.

Decliners of Note

Speaking at an Investor conference today, J.C. Penney JCP said that it expects its fiscal 2017 sales to be $14.50 billion. The company also said that it is expecting low single-digit growth for same-store sales in the current quarter versus mid-single-digit growth previously seen. Shares were briefly halted on a Circuit Breaker and closed the day at $8.19, down 10.88 percent. Last night Spirit Airlines SAVE disclosed its September load factor declined by 3.2 points to 81.5 percent. The company also said that its September revenue passenger miles rose 13.5 percent year over year due to an 18 percent increase in available seat miles. In terms of guidance Spirit Airlines expects its third quarter operating margin to be in the lower half of its guidance range and will update investors on October 15 with more detailed guidance for the third quarter. Shares lost 5.27 percent, closing at $60.17. In a statement, Apple said that it is “focused on preserving jobs in Arizona following GT Advanced Technologies GTAT surprising decision and we will continue to work with state and local officials as we consider our next steps.” GT Advanced will begin bankruptcy hearings tomorrow. Shares of GT Advanced lost 9.09 percent, closing at $1.10.

Earnings of Note

This morning, Costco Wholesale COST reported its fourth quarter results. The company announced an EPS of $1.58, beating the consensus estimate of $1.52. Revenue of $35.52 billion beat the consensus estimate of $35.33 billion. Net income for the quarter rose to $697 million from $617 million in the same quarter a year ago as comparable sales rose six percent in the quarter while net sales rose nine percent from a year ago. Shares hit new 52-week highs of $128.95 before closing the day at $128.73, up 2.76 percent. This morning, Monsanto MON reported its fourth quarter results. The company announced an EPS of -$0.27, missing the consensus estimate of -$0.23. Revenue of $2.63 billion beat the consensus estimate of $2.41 billion. Net loss for the quarter improved to $156 million from $249 million in the same quarter a year ago but net income for the full fiscal year improved to $2.7 billion from $2.5 billion in the same quarter a year ago as the company saw strength in its global seeds and traits businesses, its largest driver of growth. Shares gained 1.85 percent, closing at $109.73. After the market closed, Alcoa AA reported its third quarter results. The company announced an EPS of $0.31, beating the consensus estimate of $0.18. Revenue of $6.24 billion beat the consensus estimate of $5.69 billion. Shares were trading higher by 1.68 percent at $16.34 following the earnings release.

Quote of the Day

"She's your baby now. Try not to screw it up too badly." - Bill Gross in a 'goodbye' letter to PIMPCO.