Markets Rebound After Getting Crushed Intraday, Still Close Lower
U.S. stocks tumbled further on Wednesday and recovered significantly from intraday lows in a day of heavily volatility.
The Dow traded lower by more than 450 points, dipping below 16,000 levels the index hasn't seen since February. The index recovered most of the losses but still closed the day with a triple-digit decline.
The Fed's Beige Book hinted of a modest to moderate growth in most U.S. districts. Six districts showed moderate growth and five showed modest while a lone city -- Boston -- was mixed.
According to Bloomberg, Fed Chair Janet Yellen stated in a private meeting to the Group of 30 that the economy is on track to deliver 3-percent growth, and inflation will rise up to the 2-percent target as unemployment continues to fall.
A second health care worker in Texas contracted the Ebola virus. The victim flew a commercial flight earlier in the week renewing investor concerns over airline stocks. The CDC is contacting all passengers who flew on Frontier Airlines flight 114 from Cleveland to Dallas on October 13.
- The Dow lost 1.10 percent, closing at 16,149.60.
- The S&P 500 lost 0.80 percent, closing at 1,862.59.
- The Nasdaq lost 0.28 percent, closing at 4,215.32.
- Gold gained 0.47 percent, trading at $1,240.10.
- Oil lost 0.27 percent, trading at $81.62 a barrel.
- Silver gained 0.13 percent, trading at $17.42 an ounce.
News Of Note
MBA Mortgage Composite Index rose 5.6 percent after rising 3.8 percent last week.
MBA Mortgage Purchase Index fell 1.0 percent after rising 2.0 percent last week.
MBA Mortgage Refinance Index rose 11.0 percent after rising 5.0 percent last week.
October Empire State Survey fell to 6.17 (versus expectations of 20.5) from 27.5 previously.
September Producer Price Index declined 0.1 percent month over month (versus expectations of a 0.1 percent gain) after remaining flat in August. Core PPI remained flat month over month (versus expectations of a 0.1 percent gain).
September Retail Sales fell 0.3 percent (versus expectations of a 0.1 percent decline) after rising 0.6 percent in August.
August Business Inventories rose 0.2 percent (versus consensus of a 0.4 percent gain) to $1,752.3 billion. Sales fell 0.4 percent to $1,353.4 billion while the Inventory to Sales ratio came in at 1.29.
Germany's CPI remained flat in September holding at 0.8 percent on year.
U.K. unemployment for the three months ending in August fell to 6.0 percent (its lowest level since 2008) from 6.2 percent previously.
Chinese inflation fell in September to 1.6 percent (versus consensus estimate of 1.7 percent) on year from 2 percent in August
Analyst Upgrades And Downgrades Of Note
Analysts at Bank of America upgraded Applied Materials (NASDAQ: AMAT) to Buy from Neutral with a $25 price target. Shares gained 0.47 percent, closing at $19.42.
Analysts at Citigroup maintained a Buy rating on CBS (NYSE: CBS) with a price target lowered to $60 from a previous $64. Shares gained 1.64 percent, closing at $50.75.
Analysts at Credit Suisse maintained an Outperform rating on Caterpillar (NYSE: CAT) with a price target lowered to $108 from a previous $119. Shares lost 0.23 percent, closing at $92.59.
Analysts at Keefe Bruyette & Woods maintained a Market Perform rating on Citigroup (NYSE: C) with a price target raised to $54 from a previous $52. Shares lost 3.48 percent, closing at $49.68.
Analysts at Barclays maintained an Overweight rating on Delta Air Lines (NYSE: DAL) with a price target raised to $51 from a previous $49. Shares lost 1.25 percent, closing at $32.38.
Analysts at Jefferies maintained a Buy rating on Domino's Pizza (NYSE: DPZ) with a price target raised to $93 from a previous $85. Also analysts at Morgan Stanley maintained an Equal-Weight rating on Domino's with an $84 price target. Shares hit new 52-week highs of $84.73 before turning negative and closing the day at $83.65.
Analysts at Barclays maintained an Equal-Weight rating on Intel (NASDAQ: INTC) with a price target raised to $32 from a previous $30. Also, analysts at Pacific Crest maintained an Outperform rating on Intel with a price target raised to $39 from a previous $37 while analysts at Morgan Stanley downgraded Intel to Underweight from Equal-Weight with an unchanged $30 price target. Shares lost 2.68 percent, closing at $31.28.
Analysts at KeyBanc downgraded Treehouse Foods (NYSE: THS) to Underweight from Hold with a $70 price target. Shares lost 3.66 percent, closing at $79.00.
Analysts at Jefferies maintained a Buy rating on Wells Fargo & Company (NYSE: WFC) with a price target lowered to $57 from a previous $58. Also, analysts at Keefe Bruyette & Woods maintained a Market Perform rating on Wells Fargo with a price target lowered to $55 form a previous $56. Shares lost 2.01 percent, closing at $47.85.
Equities-Specific News Of Note
According to Reuters, Hewlett-Packard's (NYSE: HPQ) and EMC (NYSE: EMC) are no longer in talks for a merger after months of talks. Shares of Hewlett-Packard gained 1.74 percent, closing at $32.80 while shares of EMC lost 1.23 percent, closing at $27.27.
Alexion Pharmaceuticals (NASDAQ: ALXN) submitted a New Drug Application to Japan's Ministry of Health for asfotase alfa. Shares gained 0.80 percent, closing at $160.74.
Wal-Mart (NYSE: WMT) said that it plans to open 180 to 200 Neighborhood Markets stores in the next fiscal year as opposed to the 270 to 300 stores it plans to open this year. The company also said it will improve the customer experience at its stores through price, assortment, experience and access improvements. Finally, Wal-Mart projected its fiscal 2015 growth to be only 2 percent to 3 percent, down from prior estimates of 3 percent to 5 percent. Capital investments will be between $11.6 billion to $12.9 billion in fiscal 2016. Shares lost 3.57 percent, closing at $75.20.
Rio Tinto (NYSE: RIO) said that its third quarter iron ore output rose 5 percent from the previous quarter and 12 percent from a year ago to 76.8 million metric tons. Shares lost 1.26 percent, closing at $50.15.
SolarCity (NASDAQ: SCTY) filed to sell $200 million worth of solar asset-backed bonds to the general public with a minimum purchase requirement of $1,000 with maturity periods of one to seven years. Shares lost 1.69 percent, closing at $48.87.
Sears Holdings (NASDAQ: SHLD) announced that it appointed Ronald Boire as CEO of Sears Canada. Previously Boire was the company's chief merchandising officer. Shares gained 3.72 percent, closing at $29.55.
Google (NASDAQ: GOOG) announced the final release of Android L (Android 5.0), a Nexus 9 Tablet in addition to a streaming TV box set. Shares lost 1.47 percent, closing at $530.03.
Time Warner (NYSE: TWX) said during an investor presentation that it granted licensing rights to Netflix (NASDAQ: NFLX) to begin streaming all 10 seasons of "Friends" on January 1. Separately, Time Warner announced that HBO could become a stand-alone service in 2015 as the company guided its 2016 earnings per share to be $6 and closer to $8 by 2018. Shares of Time Warner gained 2.22 percent, closing at $72.21 while shares of Netflix lost 0.12 percent, closing at $448.59. Note: Netflix reported earnings after market close.
Statoil's (NYSE: STO) CEO Helge Lund announced he will leave the company and will assume a high ranking position at BG Group. Shares of Statoil lost 2.42 percent, closing at $23.42.
Winners Of Note
Gogo (NASDAQ: GOGO) said that it will provide Wi-Fi services for United Airlines' two-cabin domestic regional jet fleet, which consists of more than 200 aircrafts. Instillation will become later this year. Shares gained 6.82 percent, closing at $16.29.
Decliners Of Note
KeyCorp (NYSE: KEY) reported its third quarter results this morning. The company earned $0.23 per share, missing the consensus estimate of $0.26. Revenue of $998.0 million missed the consensus estimate of $1.04 billion. Net income for the quarter fell to $197 million from $229 million in the same quarter a year ago as non-interest income fell $42 million from a year ago due to $27 million in lower operating lease income and other leasing gains due to an early termination of a leveraged lease in the prior year. The company saw its book value per share increase to $11.77 from $11.65 last quarter. Analysts at Citigroup issued a midday upgrade to Buy from Neutral after shares fell more than 10 percent during the trading session. Shares hit new 52-week lows of $11.59 before closing the day at $12.14, down 5.82 percent.
AbbVie's (NYSE: ABBV) board of directors stated that it is reconsidering its recommendation to investors to approve its $55-billion takeover of Shire (NASDAQ: SHPG) due to proposed changes in U.S. tax rules that discourage takeovers of foreign firms as a tax-inversion. Shares of AbbVie gained 0.92 percent, closing at $54.63, while shares of Shire plunged 30.29 percent, closing at $170.49.
Earnings Of Note
BlackRock (NYSE: BLK) reported its third quarter results this morning. The company earned $5.21 per share, beating the consensus estimate of $4.74. Revenue of $2.85 billion beat the consensus estimate of $2.84 billion. Net income for the quarter rose to $890 million from $672 million in the same quarter a year ago as the company saw total long-term net inflows of $28.7 billion in the quarter. The company said that changes over the prior six years to its fixed income business has resulted in 87 percent of its taxable fixed income assets outperforming their benchmark. Shares gained 1.16 percent, closing at $310.31.
PNC Financial (NYSE: PNC) reported its third quarter earnings this morning. The company earned $1.79 per share, beating the consensus estimate of $1.71. Revenue of $3.84 billion beat the consensus estimate of $3.79 billion. Net income for the quarter remained flat at $1 billion from a year ago but rose to $1.79 per share from $1.77 a year ago. The company saw its net interest income fall 6 percent from a year ago to $2.104 billion while non-interest income rose 3 percent from a year ago to $1.737 billion. The company's Tier 1 capital ratio rose to 10.1 percent from 8.7 percent a year ago. Shares lost 4.40 percent, closing at $78.00.
Bank of America (NYSE: BAC) reported its third quarter results this morning. The company earned $0.42 per share, beating the consensus estimate of $0.32. Revenue of $21.23 billion fell short of the consensus estimate of $21.36 billion. Net income for the quarter fell to $168 million (including a $5.3 billion pre-tax legal charge) from $2.5 billion a year ago. Consumer and Banking net income rose to $1.856 billion from $1.787 billion a year ago; Consumer Real Estate Services net loss fell to $5.184 billion (due to the DOJ settlement) from net income of $990 million; Global Wealth and Investment management net income rose to $813 million from $720 million; Global Banking net income rose to $1.414 billion from $1.137 billion and Global Markets net income rose to $769 million from a net loss of $875 million. The bank's tangible book value per share rose to $14.13 from $13.62 a year ago. Shares lost 4.60 percent, closing at $15.76.
Netflix reported its third quarter results after market close. The company earned $0.96 per share, beating the consensus estimate of $0.93. Revenue of $1.41 billion was in line with the consensus estimate. Netflix issued guidance and sees its fourth quarter earnings per share being $0.44, which may not compare to estimates of $0.85 as revenue is projected to be $1.30 billion, which also may not compare to estimates of $1.49 billion. Shares were trading lower by 25.54 percent at $334.00 following the earnings release.
Las Vegas Sands (NYSE: LVS) reported its third quarter results after market close. The company earned $0.84 per share, missing the consensus estimate of $0.86. Revenue of $3.53 billion missed the consensus estimate of $3.72 billion. Shares were trading higher by 1.54 percent at $61.25 following the earnings release.
American Express (NYSE: AXP) reported its third quarter results after market close. The company earned $1.40 per share, beating the consensus estimate of $1.36. Revenue of $8.33 billion missed the consensus estimate of $8.35 billion. Shares were trading lower by 1.46 percent at $79.75 following the earnings release.
eBay (NASDAQ: EBAY) reported its third quarter results after market close. The company earned $0.68 per share, beating the consensus estimate of $0.67. Revenue of $4.35 billion fell short of the consensus estimate of $4.37 billion. Shares were trading lower by 2.51 percent at $48.98 following the earnings release.
Quote Of The Day
"We continue to focus on strong net neutrality, including interconnection, to prevent large ISPs from holding our joint customers hostage with poor performance in order to extract payments from us, other Internet content firms, and Internet transit suppliers such as Level 3 and Cogent." - Netflix commenting on Net Neutrality along with other topics including HBO original content in a business update following its earnings report.
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