10:40 am Consumer Sentiment on the Rise

The final reading for the University of Michigan Consumer Sentiment survey for May rose to 79.3 from a preliminary reading of 77.8. The final reading exceeded the Briefing.com consensus estimate of 77.5, yet the real headline is that the May number marks the highest reading since October 2007. This is a report that flies in the face of concerns about Greece and the eurozone, JPMorgan's trading loss, China's economic slowdown, and a global sell-off in equities that has seen nearly $4.0 tln of global equity market value erased since the end of April. Presumably, the drop in gas prices coupled with more encouraging reports of late surrounding the housing sector and the labor market have helped underpin consumer sentiment. Strikingly, the equity market did not respond enthusiastically to the headline number.

That could be interpreted as the market not believing this survey data will translate into encouraging hard data for consumer spending, or, perhaps, it is a report that is simply being swept under the rug by the specter of macro uncertainty that can easily sway sentiment to the downside. Either way, the takeaway is that this is a good number that has been greeted with an initially bad reaction. The Current Conditions Index jumped to 87.2 from 82.9 in April while the Expectations Index rose to 74.3 from 72.3 in April. The Expectations Index, according to Bloomberg.com, is at its highest point since July 2007.

10:38 am S&P Energy Index is down 0.1%, slightly underperforming the S&P 500

The S&P Energy Sector -0.1% is trading just below the unchanged broader market July crude oil is +0.4% at $91.02/barrel, June natural gas is -2.6% at $2.58/MMBtu, July RBOB is +0.2% at $2.83/gallon, and July heating oil is +0.4% at $2.84/gallon. Trading higher following earnings/guidance: FRO (+11.0%); Trading lower following earnings/guidance: TNP (-0.5%).

Sector News: GRH (+4.2%) GreenHunter Energy expanded equipment fleet in Appalachian region, CHK (+1.8%) Chesapeake Energy: CNBC's Kate Kelly reported that BlackRock (BLK) has increased its stake in CHK from 1 mln to 4-5 mln shares, WTI (+1.3%) W&T Offshore CEO disclosed buying 50K shares at $15.60 on 5/22, worth $780K, SGY (+1.0%) Stone Energy announced the appointment of David Welch as Chairman of the Board, BAS (+1.0%) Basic Energy Services announced it reauthorized a share repurchase program of up to ~$35.2 mln of its common shares, PACD (+0.8%) Pacific Drilling announced extension of initial term for the Pacific Scirocco to two years, CVI (+0.5%) CVR Energy: Dir/10% owner Carl Icahn bought 653,000 shares at 26.64-29.30 worth ~$19.0 mln, GGR (-5.0%) Geoglobal Resources filed for 9.6 mln share common stock offering by selling security holders. Broker Calls: CLR (+1.9%) Continental Resources initiated with a Outperform at Barrington Research; tgt $103, GPOR (+1.2%) Gulfport Energy upgraded at RBC Capital, COG (-2.3%) Cabot Oil & Gas downgraded at Tudor Pickering, GLNG (-0.9%) Golar LNG initiated with Overweight and $42 tgt at Evercore Partners.

09:51 am S&P Consumer Discretionary Index flat, in-line with the broader market

The consumer discretionary group is in-line with the broader market in early trade. The retail group is higher with the Retail HOLDRS Trust (RTH) 0.2% and the SPDR S&P Retail ETF (XRT) 0.3%. Trading higher following earnings/guidance: RUE +8.1%, HAS +0.5%... Trading lower following earnings/guidance: TLB -34.4% (also said did not reach merger agreement with Sycamore). Other notable mentions: RAD flat (filed for a mixed securities shelf offering for an undisclosed amount by co and selling stockholders), Leaders: GRPN 1% (Groupon reportedly testing a credit card reader that would rival Square, PayPal), CMCSA 0.6% (NBCU is reportedly in talks with MSFT to buy back its MSNBC.com stake)... Laggards: CBK -1.5% (files $75 mln mixed securities shelf offering), IHG -0.8% (discloses Patrick Cescau will become Chairman upon David's retirement), PAG -1.2% (announces redemption of 3.5% Senior Subordinated Convertible Notes due 2026).

Analyst related: Upgrades: ITW 1.1% (upgraded to Overweight from Neutral at JPMorgan), DORM 3.6% (upgraded to Buy from Hold at BB&T), CRI 1.9% (upgraded to Buy from Neutral at Citigroup), CBRL 0.2% (upgraded to Buy from Hold at Argus)... Downgrades: HNZ -0.7% (downgraded to Neutral from Overweight at JPMorgan, downgraded to Hold from Buy at Jefferies), LULU -0.5% (downgraded to Hold from Buy at KeyBanc), VIAB -0.5% (downgraded to Above Average from Buy at Caris)... Misc: ZZ +3%, SCSS +7% and TPX +6.3% seeing early strength; Hearing positive mention at Piper... GPC -0.3% (initiated with a Hold at Wunderlich), FB -1.6% (initiated with a Hold at Capstone).

09:39 am Verifone shares plunge over 12% following disappointing earnings

VeriFone (PAY $39.43 -5.58) reported second quarter earnings of $0.64 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.61, while revenues rose 61.6% year/year to $472 million versus the $471.51 million consensus; non-GAAP rev +64% YoY to $479 mln versus the $465-470 million guidance. The company issues guidance for the third quarter with EPS of $0.68-0.70, excluding non-recurring items, versus the $0.70 consensus and revenues of $495-500 million, may not be comparable to $502.23 million consensus. The company reaffirmed guidance for fiscal year 2012 with EPS of $2.60-2.66, excluding non-recurring items, versus the $2.67 Capital IQ Consensus and revenues of $1.90-1.925 billion, may not compare to the $1.92 billion consensus.

09:36 am Mentor Graphics shares fall over 4% following miss on revenues

Mentor Graphics (MENT $14.63 -0.57) reported first quarter earnings of $0.30 per share, ex-items of $0.06 better than the Capital IQ Consensus of $0.24, while revenues rose 7.8% year/year to $247.9 million versus the $254.94 million consensus. The company issued upside guidance for the second quarter with EPS of $0.17 versus the $0.16 consensus and revenues of approximately $240 million versus the $239.37 mln consensus. The company issued mixed guidance for fiscal year 2013 with EPS of $1.37, ex-items versus the $1.30 consensus and above prior guidance of $1.32 with revenues of approximately $1.1 billion versus the $1.1 billion consensus.

09:34 am Rue21 shares rise 2% following beat on earnings

rue21 (RUE $27.29 +0.29) reported first quarter earnings of $0.46 per share, $0.03 better than the Capital IQ consensus of $0.43, while revenues rose 18.9% year/year to $205.6 million versus the $210.0 mln consensus. The company issued downside guidance for the second quarter with EPS of $0.32-0.34 versus the $0.35 consensus. The comapny raised its FY13 guidance, but it's still below consensus; For FY13, company sees EPS of $1.76-1.81 versus the $1.83 consensus and vs prior guidance of $1.74-1.79.

09:33 am Talbots shares plunge over 28% after news that it will not reach merger agreement with Sycamore

Talbots (TLB $1.81 -0.76) announced that the exclusivity agreement with Sycamore Partners, which was executed on May 5, 2012 and twice extended through May 24, 2012, has expired. The Company has worked exclusively in good faith with Sycamore Partners to execute a transaction. Sycamore Partners informed the Company that it is not prepared to execute a transaction at this time. The Company remains open to pursuing a transaction with Sycamore Partners at $3.05 per share pursuant to an acceptable merger agreement providing for an appropriate level of closing certainty and supported by firm debt and equity financing commitments. The Company is no longer subject to exclusivity and therefore will actively explore other strategic alternatives and in the meantime will continue to be focused on executing its business plan and creating value for its shareholders.

Co also reported first quarter GAAP EPS of $0.02 versus the ($0.02) Capital IQ consensus with revenues of -8% year over year to $275.9 million versus $271.95 million consensus. "We are pleased to have achieved profitability in the first quarter, driven by improved merchandise margin compared to the prior year period as well as strong inventory and expense management. Overall, we continue to focus on further enhancing our product, re-engaging with our core customer and executing our key strategic initiatives as the Board continues to actively explore a full range of strategic alternatives." See 8:30 comment or more info on deal that fell though at $3.05.

03:14 am VeriFone trades lower after hours following earnings (PAY)

A number of stocks saw movement after hours including the following:

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: SMTC +3.0%.

Companies trading higher in after hours in reaction to news: UPI +4.5% (Uroplasty announces two new research and development initiatives to expand its commitment to using the co's neuromodulation technology to treat voiding dysfunctions), ROSG +3.6% (Rosetta Genomics appoints Ron Kalfus CFO), DLPH +2.9% (Delphi Automotive in exclusive negotiations to acquire motorized vehicles division of FCI; $0.24 accretive to EPS in 2013), CHK +2.2% (Chesapeake Energy: CNBC's Kate Kelly reporting that BlackRock (BLK) has increased its stake in CHK from 1 mln to 4-5 mln shares), BAS +1.7% (Basic Energy Services announces reauthorized share repurchase program of up to ~$35.2 mln of its common shares).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: PAY -9.0%.

Companies trading lower in after hours in reaction to news: DV -15.6.% (Bazaarvoice signs definitive agreement to acquire PowerReviews for ~ $151.9 mln; issues upside Q4, Q1, FY12 and FY13 revenue guidance following acquisition), NYMT -4.8% (New York Mortgage Trust announces public offering of 4 mln shares of common stock), DDD -3.0% (3D Systems acquires Bespoke Innovations reaffirms FY12 EPS of $1.00-1.25 vs $1.16 CIQ Estimates, reaffirms FY12 revs of $330-360 mln vs $348.1 mln consensus).

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