U.S. stocks rose as earning season unofficially kicked off with Citigroup reporting better than expected earnings.
The Dow Jones Industrial average set new intra-day records, hitting an all time high of 17,088.43 as investors appear to be comfortable with holding blue chips instead of technology and momentum companies. The Nasdaq index, while gaining today, under-performed the Dow Jones index.
- The Dow gained 0.66 percent, closing at 17,055.42.
- The S&P 500 gained 0.48 percent, closing at 1,977.10.
- The Nasdaq gained 0.56 percent, closing at 4,440.42.
- Gold lost 2.22 percent, trading at $1,307.70 an ounce.
- Oil gained 0.13 percent, trading at $100.96 a barrel.
- Silver lost 2.26 percent, trading at $20.98 an ounce.
News of Note
Secretary of State John Kerry will hold meetings with Iranian Foreign Minister Javad Zarif to finalize a nuclear agreement that would potentially remove international sanctions. Iran is currently in talks with the U.S., among other international powers with the hopes of finalizing a deal by the end of this week.
Russia's government affirmed its right to intervene in Ukraine following the death of a civilian on Russian soil.
World Trade Organization judges ruled that the U.S. imposition of tariffs on Chinese solar modules, steel products and other exports are in violation of global trade rules.
Analyst Upgrades and Downgrades of Note
Analysts at Jefferies maintained a Buy rating on AbbVie (NYSE: ABBV) with a price target raised to $71 from a previous $66. Shares lost 0.20 percent, closing at $54.85.
Analysts at Jefferies maintained a Buy rating on Abbot Laboratories (NYSE: ABT) with a price target raised to $52 from a previous $49. Shares gained 1.26 percent, closing at $41.82.
Analysts at Barclays upgraded Apple (NASDAQ: AAPL) to Overweight from Equal-weight with a price target raised to $110 from a previous $95. Also, analysts at Morgan Stanley maintained an Overweight rating on Apple with a price target raised to $110 from a previous $99. Shares hit new 52-week highs of $96.89 before closing the day at $96.45, up 1.29 percent.
Analysts at Deutsche Bank maintained a Hold rating on Bank of New York Mellon (NYSE: BK) with a price target raised to $36 from a previous $34. Shares gained 0.08 percent, closing at $37.64.
Analysts at Citigroup maintained a Buy rating on Barrick Gold (NYSE: ABX) with a price target lowered to $24 from a previous $26. Shares lost 2.13 percent, closing at $18.88.
Analysts at Jefferies maintained a Hold rating on Bristol-Myers Squibb (NYSE: BMY) with a price target raised to $43.50 from a previous $42. Shares gained 0.95 percent, closing at $49.08.
Analysts at Jefferies maintained a Hold rating on Eli Lilly and Company (NYSE: LLY) with a price target raised to $65 from a previous $60. Shares gained 0.27 percent, closing at $63.01.
Analysts at Jefferies downgraded FMC (NYSE: FMC) to Hold from Buy with a price target lowered to $78 from a previous $85. Shares lost 0.62 percent, closing at $68.83.
Analysts at Barclays maintained an Equal-weight rating on Ford Motor (NYSE: F) with a price target raised to $20 from a previous $19. Shares gained 0.46 percent, closing at $17.55.
Analysts at Citigroup maintained a Sell rating on Freeport-McMoRan (NYSE: FCX) with a price target raised to $31 from a previous $30. Shares lost 0.03 percent, closing at $38.70.
Analysts at Credit Suisse maintained an Outperform rating on Google (NASDAQ: GOOG) with a price target raised to $742 from a previous $735. Shares gained 0.98 percent, closing at $584.87.
Analysts at Deutsche Bank initiated coverage of Intercept Pharmaceuticals (NASDAQ: ICPT) with a Buy rating and $395 price target. Shares gained 1.74 percent, closing at $226.06.
Analysts at Jefferies maintained a Hold rating on Johnson & Johnson (NYSE: JNJ) with a price target raised to $114 from a previous $110. Shares gained 0.27 percent, closing at $105.38.
Analysts at Deutsche Bank maintained Buy rating on MetLife (NYSE: MET) with a price target raised to $67 from a previous $61. Shares gained 0.72 percent, closing at $56.14.
Analysts at Jefferies maintained a Buy rating on Pfizer (NYSE: PFE) with a price target raised to $38 from a previous $36. Shares gained 0.57 percent, closing at $30.24.
Analysts at ISI Group downgraded QUALCOMM (NASDAQ: QCOM) to Neutral from Strong Buy with a price target lowered to $85 form a previous $90. Shares lost 0.10 percent, closing at $79.52.
Analysts at Nomura downgraded TripAdvisor (NASDAQ: TRIP) to Neutral from Buy. Meanwhile, analysts at Credit Suisse maintained an Outperform rating on TripAdvisor with a price target raised to $125 from a previous $105. Shares lost 0.70 percent, closing at $104.05.
Analysts at Jefferies maintained a Hold rating on United States Steel (NYSE: X) with a price target raised to $31 from a previous $27. Shares lost 5.34 percent, closing at $26.17.
Analysts at JPMorgan downgraded Wells Fargo & Company (NYSE: WFC) to Neutral from Overweight with a price target lowered to $52 from a previous $54.50. Shares lost 0.35 percent, closing at $51.31.
Equities-Specific News of Note
LinkedIn (NYSE: LNKD) acquired Newsie, a provider of an alert service that notifies users when contacts have been mentioned on the Web for an undisclosed sum. Shares gained 1.99 percent, closing at $159.70.
Mylan (NASDAQ: MYL) has acquired Abbot Labs' (NYSE: ABT) ex-U.S. specialty and branded generics business for $5.3 billion. Shares of Mylan gained 2.07 percent, closing at $51.24 while shares of Abbot Labs gained 1.26 percent, closing at $41.82.
Las Vegas Sands (NYSE: LVS) is being sued in Macau and U.S. courts by a former business partner Asian American Entertainment for $5 billion due to the company disclosing trade secrets improperly. Shares gained 0.47 percent, closing at $74.95.
Alcoa (NYSE: AA) has agreed to a ten-year $1.1 billion deal to supply parts to United Technologies' (NYSE: UTX) Pratt & Whitney unit. Shares of Alcoa hit new 52-week highs of $16.25 before closing the day at $16.11, up 0.88 percent while shares of United Technologies gained 0.66 percent, closing at $114.88.
ConAgra Foods (NYSE: CAG) announced it acquired Chinese based TaiMei Potato Industries Limited for $93 million to expand its potato production. Shares gained 0.98 percent, closing at $30.89.
Manchester United (NYSE: MANU) agreed to a ten-year sponsorship deal with Adidas. Shares gained 4.84 percent, cloisng at $18.64.
General Electric (NYSE: GE) said that it will generate $30 billion of orders at the Farnborough Airshow. Shares gained 0.41 percent, closing at $26.66.
Home Depot (NYSE: HD) announced it will sell Stratasys' (NASDAQ: SSYS) 3D printers in 12 markets as part of a pilot program. Shares of Home Depot lost 0.19 percent, closing at $79.46 while shares of Stratasys gained 0.24 percent, closing at $104.62.
Embraer (NYSE: ERJ) has agreed to sell 50 second-generation planes to Trans States Holdings for almost $2.4 billion with an option to purchase 50 additional air-crafts in the future. Shares hit new 52-week highs of $40.37 before closing the day at $39.60, up 3.45 percent.
Sotheby's (NYSE: BID) and eBay (NASDAQ: EBAY) will partner to form a new online platform for bidding on art and other collectibles. Shares gained 1.01 percent, closing at $40.09 while shares of eBay lost 0.66 percent, closing at $51.16.
Shire (NASDAQ: SHPG) confirmed it received a $53 billion takeover offer from AbbVie (NYSE: ABBV) and may recommend the offer to shareholders. Shire shareholders would receive £24.44 in cash and 0.8960 shares of AbbVie for each Shire share held. Shares of Shire hit new 52-week highs of $255.70 before closing the day at $254.27, up 2.09 percent while shares of AbbVie lost 0.20 percent, closing at $54.85.
Bed Bath & Beyond (NASDAQ: BBBY) plans to float $1.5 billion worth of senior notes with maturity dates in 2024, 2034, and 2044 to finance general corporate purchases as well as a share buyback program. Shares gained 0.87 percent, closing at $60.13.
Winners of Note
Whiting Petroleum (NYSE: WLL) has agreed to acquire Kodiak Oil & Gas (NYSE: KOG) for $7 billion. Kodiak Shareholders will receive 0.177 shares of Whiting stock for each Kodiak share owned. The combination of the two companies accounted for more than 107,000 barrels of oil per day from the Bakken and Three Forks formations during the first quarter. Whiting Petroleum's CEO James Volker believes that the acquisition will give the company the means to raise production at the combined company faster than the company did as a standalone and have greater access to capital to accelerate development of oil production. The deal is expected to close in the first quarter. Shares of Whiting Petroleum gained 7.69 percent, closing at $84.58 while shares of Kodiak Oil & Gas hit new 52-week highs of $15.11 before closing the day at $14.91, up 4.78 percent.
Aecom Technology (NYSE: ACM) has agreed to acquire URS (NYSE: URS) for $4 billion in cash. URS shareholders will receive $33 in cash and 0.734 Aecom shares for each URS share held. Through the acquisition, Aecom, the largest engineering firm by revenue will become the largest publicly traded company based in Los Angeles. The sale comes at a time when activist investor Jana Partners was pushing for a sale of URS. Aecom's Chief Executive Officer Michael Burke noted that the combination of the two companies “creates an industry leader with the ability to deliver more capabilities from a broad global platform to reach more clients in more industry end markets.” Shares of Aecom gained 10.14 percent, closing at $34.98 while shares of URS hit new 52-week highs of $58.53 before closing the day at $58.40, up 12.26 percent.
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Kandi Technologies Group (NASDAQ: KNDI) reported that its joint venture with a Geely subsidiary resulted in sales of 4,114 Kandi-branded electric vehicles in the second quarter, marking a 238 percent increase from the first quarter. The company also hinted that the Chinese government's recent decision to lift a ten percent sales tax on electric vehicles will further boost demand. Shares surged 26.63 percent, closing at $18.64.
Decliners of Note
Riverbed (NASDAQ: RVBD) issued downside guidance to its second quarter results. The company is now guiding its revenue to be $264 million to $265 million, below previous guidance of $270 million to $280 million. The company is also guiding its EPS to be at the low end of its previous $0.26 to $0.28 guidance range. The company noted that it is operating in a “larger and more complex” environment with longer sales cycles. Following the new guidance, Elliot Management reaffirmed its offer to acquire the company for $21 per share. Shares lost 8.60 percent, closing at $18.60.
According to Barron's, GoPro's (NASDAQ: GPRO) “thrill-filled IPO adventure may end badly” due to accessory makers perfecting wearable mounts for smartphones. Barron's also noted that it is a matter of time before smartphone and wearable devices can offer a similar experience to what GoPro offers, and the company's competitive advantage, especially at 83 times earnings may erode. Shares lost 5.15 percent, closing at $36.84.
Analysts at CLSA noted that GT Advanced Technologies (NASDAQ: GTAT) is seeing poor yields in its sapphire furnaces due to poor quality alumina. The analysts believe that the company, along with Apple have been using a cheaper and less reliable form of alumina from China. As such, the analyst lowered his 2014 revenue forecast to $500 million, below the consensus estimate of $686.8 million with an EPS guided to a loss of $0.30, well below the consensus estimate of a $0.07 profit. Shares lost 4.92 percent, closing at $15.26.
Earnings of Note
This morning, Citigroup (NYSE: C) reported its second quarter results. The company announced an EPS of $1.24, beating the consensus estimate of $1.05. Revenue of $19.37 billion beat the consensus estimate of $18.93 billion. Net income for the quarter fell to $181 million from $4.18 billion in the same quarter a year ago as the company took a $3.8 billion charge to settle claims surrounding its sub-prime mortgage business. Not including the settlement charge, the bank's operating expenses of $11.77 billion fell around three percent from last quarter. Cost of credit fell 15 percent year over year to $1.73 billion while mortgage origination were 19 percent higher than they were a quarter ago. Overall revenue in consumer banking rose 0.9 percent from a quarter ago. The bank also confirmed a $7 billion settlement with the Department of Justice over its mortgage-backed securities business. Shares gained 3.02 percent, closing at $48.42.
Quote of the Day
"Whether we have the best individual players or whatever does not matter. You have to have the best team." - German right-back Philipp Lahm speaking following Germany's victory over Argentina in the World Cup finals.
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