Markets Unable To Hold On To Gains As Oil Continues To Plunge

U.S. markets ended the day mostly flat after giving up earlier gains.

The Dow traded higher by 142 points before ending the day in negative territory. The S&P 500 and Nasdaq indices closed the day almost unchanged. The CBOE Volatility Index fell 7.5 percent to 23.79.

Airline stocks traded mostly higher after coming under selling pressure due to Ebola fears that may be easing off. Airlines may have also benefited from falling oil prices as U.S. crude saw its steepest sell-off since 2012.

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• The Dow lost 0.04 percent, closing at 16,315.19.
• The S&P 500 gained 0.16 percent, closing at 1,877.70.
• The Nasdaq gained 0.32 percent, closing at 4,227.17.
• Gold gained 0.29 percent, trading at $1,233.10.
• Oil lost 4.39 percent, trading at $81.98 a barrel.
• Silver gained 0.24 percent, trading at $17.41.

News of Note

September NFIB Small Business Optimism Index fell to 95.3 (versus consensus of 95.8) from 96.1 in August.

ICSC Retail Store Sales rose 3.8 percent year over year after rising 3.9 percent last week.

Redbook Chain Store Sales rose 3.8 percent year over year after rising 5.4 percent last week.

The IEA lowered its oil demand projections now saying demand will increase by 700,000 barrels per day in 2014 from a prior estimate of 900,000 barrels per day.

Germany's Finance Ministry lowered its 2014 economic growth outlook to 1.2 percent from a previous estimate of 1.8 percent. The ministry lowered its 2015 GDP growth estimates to 1.3 percent from a previous 2.0 percent. German ten-year Bund yields traded as low as 0.80 percent, a record low.

Analyst Upgrades and Downgrades of Note

Analysts at UBS initiated coverage of Alibaba BABA with a Buy rating and $100 price target. Also, analysts at Bank of America initiated coverage of Alibaba with a Buy rating and $112 price target. Shares lost 0.20 percent, closing at $84.95.

Analysts at Credit Suisse maintained a Neutral rating on Apple AAPL with a price target raised to $110 from a previous $96. Shares lost 1.06 percent, closing at $98.75.

Analysts at Bank of America maintained a Buy rating on BlackRock BLK with a price target lowered to $350 from a previous $365. Also, analysts at Deutsche Bank maintained a Buy rating on BlackRock with a price target lowered to $377 from a previous $390. Shares gained 0.93 percent, closing at $306.74.

Analysts at Barclays maintained an Overweight rating on Buffalo Wild Wings BWLD with a price target lowered to $177 from a previous $187. Buffalo Wild Wings gained 2.75 percent, closing at $126.34.

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Analysts at Deutsche Bank maintained a Hold rating on CSX CSX with a price target raised to $33 from a previous $31. Shares gained 2.87 percent, closing at $32.61.

Analysts at Bank of America downgraded Corning GLW to Neutral from Buy with a price target lowered to $20 from a previous $24. Shares lost 0.40 percent, closing at $17.57.

Analysts at Bernstein upgraded EOG Resources EOG to Outperform from Market Perform with an unchanged $109 price target. Shares gained 0.10 percent, closing at $83.84.

Analysts at Credit Suisse maintained an Outperform rating on Facebook FB with a price target lowered to $90 from a previous $92. Shares gained 0.82 percent, closing at $73.59.

Analysts at Goldman Sachs downgraded Ford Motor F to Neutral from Buy with a price target lowered to $17 from a previous $21. Also, analysts at Buckingham Research upgraded Ford to Neutral from Underperform with an unchanged $13 price target. Shares gained 1.77 percent, closing at $13.78.

Analysts at Credit Suisse maintained an Overweight rating on Google GOOG with a price target raised to $745 from a previous $723. Shares gained 0.89 percent, closing at $537.94

Analysts at SunTrust Robinson Humphrey downgraded Home Depot HD to Neutral from Buy with a price target lowered to $95 from a previous $100. Shares lost 0.55 percent, closing at $90.10.

Analysts at Bank of America downgraded Las Vegas Sands LVS to Neutral from Buy with a price target lowered to $67 from a previous $72. Shares hit new 52-week lows of $58.00 before closing the day at $59.61, up 1.10 percent.

Analysts at Bank of America maintained a Buy rating on MGM Resorts MGM with a price target lowered to $26 from a previous $30. Shares gained 1.73 percent, closing at $20.62.

Analysts at Stifel Nicolaus initiated coverage of Michael Kors Holdings KORS with a Hold rating. Shares lost 0.14 percent, closing at $72.15.

Analysts at BTIG Research upgraded Netflix NFLX to Buy from Neutral with a $600 price target. Shares gained 2.40 percent, closing at $449.12.

Analysts at Barclays maintained an Overweight rating on Panera Bread PNRA with a price target raised to $185 from a previous $175. Shares gained 2.83 percent, closing at $164.41.

Analysts at RBC Capital Markets upgraded T Mobile U.S. TMUS to Outperform from Sector Perform with a price target lowered to $35 from a previous $36. Shares lost 1.89 percent, closing at $26.41.

Analysts at Bank of America downgraded Wynn Resorts WYNN to Neutral from Buy with a price target lowered to $195 from a previous $210. Shares gained 0.23 percent, closing at $173.84.

Equities-Specific News of Note

Costco COST plans to enter the Chinese market by selling online through Alibaba's Tmall Global Platform. Shares of Costco lost 0.57 percent, closing at $126.25.

CME Group CME said that it plans to reduce its global workforce by five percent to lower costs and ensure long-term growth continues. Shares gained 1.06 percent, closing at $79.85.

Mallinckrodt MNK released guidance for its full year fiscal 2015 and expects revenue to be $3.65 billion to $3.75 billion with Specialty Pharmaceuticals revenue being $2.87 billion to $2.92 billion. Shares lost 0.13 percent, closing at $85.99.

MoneyGram MGI said that its market share for transactions originating in the U.S. to Mexico has risen to 13 percent. MoneyGram also announced it renewed and expanded its partnership with Mexican-based Calimax and announced a network expansion through Chedraui Supermarkets.

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IBM IBM saw its SoftLayer unit added to a list of cloud infrastructure provider supporting SAP's SAP Hana Enterprise Cloud platform. Shares of IBM gained 0.15 percent, closing at $183.80 while shares of SAP gained 0.53 percent, closing at $68.61.

According to Geek Wire, Amazon.com AMZN will open “pop-up” stores in San Francisco and Sacramento as early as next week. Shares gained 0.61 percent, closing at $308.31.

Signet Jewelers SIG announced its current Chief Operating Officer will assume the Chief Executive Officer rank and will replace outgoing CEO Michael Barnes. Shares lost 3.31 percent, closing at $104.32.

Jeffrey Smith, CEO and Chief Investment Officer of Starboard Value was named as a non-executive Chairman of Darden Restaurants' DRI board of directors. Shares gained 2.23 percent, closing at $48.13.

Corvex Management disclosed a nearly four percent stake in Crown Castle CCI and recommends the company return $4 per share in quarterly dividends or $1.60 per share in dividends combined with a share buyback program prior. Shares hit new 52-week highs of $82.03 before closing the day at $80.80, up 2.97 percent.

Winners of Note

Domino's Pizza DPZ reported its third quarter results this morning. The company earned $0.63 per share, beating the consensus estimate of $0.61. Revenue of $446.6 million beat the consensus estimate of $434.06 million. Net income for the quarter rose to $35.6 million from $30.6 million in the same quarter a year ago as domestic same store sales rose 7.7 percent and international same store sales grew 7.1 percent. Shares hit new 52-week highs of $84.51 before closing the day at $84.30, up 11.33 percent.

Skyworks SWKS issued fourth quarter guidance and expects its revenue to be $718 million, above the consensus estimate of $679.5 million. The company guided its earnings per share to be $1.08, also above the consensus estimate of $1.01. Shares gained 7.92 percent, closing at $48.91.

Decliners of Note

NetScout NTCT announced on Monday that it has agreed to acquire Danaher's communications segment for $2.6 billion. Analysts at Wunderlich said today that the merger offers lots of unknowns and that "it could be several quarters before the company can prove the sum is greater than the parts."

Shares of several “Ebola-play” companies saw heavy selling pressure on large volume today including iBio IBIO whose shares fell 48.37 percent, closing at $1.26. Shares of Lakeland Industries LAKE fell 26.10 percent, closing at $21.43.

Earnings of Note

J.P. Morgan Chase JPM reported its third quarter results this morning. The company earned $1.36 per share, falling short of the consensus estimate of $1.38. Revenue of $24.25 billion beat the consensus estimate of $23.95 billion. Net income rose to $5.6 billion (including $1 billion in legal fees) from a net loss of $400 million a year ago. Consumer & Community Banking net income fell nine percent year over year to $2.468 billion; Corporate and Investment Bank net income fell 34 percent to $1.485 billion, Banking revenue fell six percent to $2.7 billion, Markets & Investor Services revenue rose 15 percent to $6.1 billion. Return on tangible equity was 13 percent in the quarter. shares lost 0.29 percent, closing at $57.99.

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Johnson & Johnson JNJ reported its third quarter results this morning. The company earned $1.50 per share, beating the consensus estimate of $1.43. Revenue of $18.47 billion beat the consensus estimate of $18.36 billion. Net earnings for the quarter rose to $4.75 billion (includes a net gain for after-tax special items of approximately $0.5 billion, driven by an after-tax net gain of approximately $1.1 billion from the divestiture of Ortho-Clinical Diagnostics) from $2.98 billion in the same quarter a year ago. Consumer revenue fell 0.6 percent from a year ago to $3.589 billion, Pharmaceutical sales rose 18.1 percent to $8.307 billion, Medical Device and Diagnostics sales fell 5.2 percent to $6.571 billion. Shares lost 2.13 percent, closing at $97.01.

Citigroup C reported its third quarter results this morning. The company earned $1.15 per share, beating the consensus estimate of $1.14. Revenue of $19.98 billion beat the consensus estimate of $18.99 billion. Net income for the quarter rose to $3.4 billion from $3.2 billion in the same quarter a year ago. Global Consumer Banking revenue rose four percent from a year ago to $9.63 billion, Institutional Clients Group revenue rose 14 percent to $8.371 billion and “Corporate/Other” revenue fell 81 percent to $8 million. Expenses rose 11 percent from a year ago to $11.463 billion while Citi Holdings assets fell 16 percent from a year ago to $103 billion. Shares gained 3.15 percent, closing at $51.47.

Wells Fargo & Company WFC reported its third quarter results this morning. The company earned $1.02 per share, in-line with the consensus estimate. Revenue of $21.20 billion beat the consensus estimate of $21.09 billion. Net income for the quarter rose to $5.7 billion from $5.6 billion in the same quarter a year ago. Net interest income rose $150 million from last quarter to $10.9 billion while non-interest income was flat at $10.3 billion. Total loans in the quarter rose $9.9 billion from last quarter to $838.9 billion due to growth in commercial and industrial, real estate construction and other segments. Shares lost 2.73 percent, closing at $48.83.

After the market closed, Intel INTC reported its third quarter results. The company earned $0.66 per share, beating the consensus estimate of $0.64. Revenue of $14.60 billion beat the consensus estimate of $14.41 billion. Shares were trading higher by 0.72 percent at $32.37 following the earnings report.

Quote of the Day

“Our biggest concern is that we are not sure as to what is happening.” – Laszlo Birinyi of Birinyi Associates noting that the S&P 500 index now has a 60 percent chance of reaching his year end target of 2,100, compared to an 80 percent probability last month.