Market Wrap For May 29: Investors Welcome Another Record High For The S&P 500

Jayson Derrick
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U.S. stocks gained on Thursday despite the Commerce Department reporting that U.S. gross domestic product declined at a one percent annualized rate in the quarter. Analysts were expecting GDP to decline 0.4 percent.

Pending home sales were below expectations but investors may have shrugged off the data in favor of initial jobless claims data which were positive.

The S&P 500 traded at new historical all time highs of 1,920.03 while the Dow continues to inch closer to its historical all time highs of 16,735.51.

  • The Dow gained 0.39 percent, closing at 16,698.74.

  • The S&P 500 gained 0.54 percent, closing at 1,920.03.

  • The Nasdaq gained 0.54 percent, closing at 4,247.95.

  • Gold lost 0.27 percent, trading at $1,256.30 an ounce.

  • Oil gained 0.78 percent, trading at $103.52 a barrel.

  • Silver lost 0.23 percent, trading at $19.01 an ounce.

News of Note

Initial Jobless Claims declined 27,000 to 300,000, below the consensus of 317,000 and a prior reading of 327,000. Continuing claims declined 17,000 to 2.63 million.

U.S. First Quarter GDP has been revised to a decline of one percent from 0.5 percent expected and rising 0.1 percent in the previous quarter.

U.S. First Quarter Corporate Profits rose 5.3 percent after rising six percent in the previous quarter.

The Bloomberg Consumer Comfort Index fell to 33.3 from 34.1 for the week ending May 25.

April Pending Home Sales Index rose 0.4 percent to 97.8 after rising 3.4 percent in March. April's figures fall below estimates for a 1.0 percent gain.

EIA Natural Gas Inventory rose 114 bcf, above the consensus for a gain of 110 bcf.

EIA Crude Inventories rose 1.7 million barrels, ahead of the 0.48 million gain expected

EIA Gasoline Inventories declined 1.8 million barrels, below the 0.28 million gain expected.

EIA Distillates Inventories declined 0.2 million barrels, below the 0.75 million gain expected.

The Obama administration revealed a new review process for approving U.S. liquefied natural gas exports. Under the new procedure, the Department of Energy would decide if a liquefied natural gas project is viewed as being in the country's best interest only after the Federal Energy Regulatory Commission issues a final review.

Analyst Upgrades and Downgrades of Note

Analysts at JPMorgan maintained a Neutral rating on 3D Systems (NYSE: DDD) with a price target lowered to $37 from a previous $40. Shares gained 1.84 percent, closing at $51.37.

Analysts at Bank of America maintained a Neutral rating on Apple (NASDAQ: AAPL) with a price target raised to $650 from a previous $615. Meanwhile, analysts at UBS maintained a Buy rating on Apple with a price target raised to $700 from a previous $625. Also, analysts at Baird maintained an Outperform rating on Apple with a price target raised to $665 from a previous $620. Shares hit new 52-week highs of $636.87 before closing the day at $635.38, up 1.82 percent.

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Analysts at JPMorgan upgraded Biogen (NASDAQ: BIIB) to Overweight from Neutral with a price target raised to $375 from a previous $300. Shares gained 3.58 percent, closing at $319.85.

Analysts at JPMorgan downgraded Celgene (NASDAQ: CELG) to Neutral from Overweight with a price target lowered to $170 from a previous $180. Shares lost 0.67 percent, closing at $153.26.

Analysts at RBC Capital Markets upgraded D.R. Horton (NYSE: DHI) to Outperform from Sector Perform with a price target raised to $27 from a previous $26. Shares gained 2.36 percent, closing at $23.88.

Analysts at Sterne Agee downgraded Dollar General (NYSE: DG) to Neutral from Buy with a price target lowered to $58 from a previous $63. Shares lost 2.01 percent, closing at $53.50.

Analysts at Sterne Agee upgraded Dollar Tree (NASDAQ: DLTR) to Buy from Neutral with a price target raised to $61 from a previous $54. Shares gained 0.91 percent, closing at $53.26.

Analysts at JPMorgan maintained a Neutral rating on Manchester United (NYSE: MANU) with a price target lowered to $17.50 from a previous $18.90. Shares gained 0.49 percent, closing at $16.27.

Analysts at Avondale Partners downgraded Michael Kors (NYSE: KORS) to Market Perform from Market Outperform with a price target lowered to $103 from a previous $113. Meanwhile, analysts at Buckingham Research maintained a Buy rating on Michael Kors with a price target raised to $118 from a previous $112. Also, analysts at Canaccord Genuity maintained a Buy rating on Michael Kors with a price target raised to $123 from a previous $119. Shares lost 4.88 percent, closing at $92.28.

Analysts at Morgan Stanley initiated coverage of Silver Wheaton (NYSE: SLW) with an Equal-weight rating and $25 price target. Shares gained 1.19 percent, closing at $20.45.

Analysts at Cantor Fitzgerald upgraded Twitter (NYSE: TWTR) to Buy from Hold. Shares gained 0.68 percent, closing at $34.00.

Analysts at Piper Jaffray upgraded VMware (NYSE: VMW) to Overweight from Neutral with a price target maintained at $111. Shares gained 2.72 percent, closing at $98.64.

Equities-Specific News of Note

Apple's (NASDAQ: AAPL) CEO Tim Cook said that its recently acquired Beats Music will still be offered on non-Apple platforms. Shares hit new 52-week highs of $636.87 before closing the day at $635.38, up 1.82 percent.

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RBC Capital Markets compiled a summary of price hikes at Chipotle Mexican Grill (NYSE: CMG). Overall, menu prices has risen 6.5 percent while side items and drinks rose 7.3 percent. Shares gained 1.33 percent, closing at $545.42.

Alcoa (NYSE: AA) announced it began its $100 million aerospace expansion at its La Porte plant to produce nickel based superalloy jet engine parts. Shares gained 1.57 percent, closing at $13.58.

Microsoft (NASDAQ: MSFT) and Salesforce.com (NYSE: CRM) will collaborate together so that Salesforce's CRM apps could run on Microsoft's Azure cloud development platform. Shares of Microsoft gained 0.82 percent, closing at $40.34 while shares of Salesforce gained 1.99 percent, closing at $54.40.

Japan's Prime Minister Shinzo Abe will visit Las Vegas Sands' (NYSE: LVS) casino resort in Singapore. Las Vegas Sands' CEO Sheldon Adelson said that he hopes a visit by the Prime Minister will speed up the country's gambling legislation. Shares gained 1.38 percent, closing at $77.01.

Data from IRI indicated that sales of Keurig Green Mountain (NASDAQ: GMCR) K-Cups grew at an 8.9 percent over the previous four-weeks after growing 15.4 percent over the previous four weeks. Shares lost 1.64 percent, closing at $112.48.

Netflix (NASDAQ: NFLX) will begin showing in 2015 a kids series developed by DreamWorks Animation (NYSE: DWA) based on the films How to Train Your Dragon. Shares of Netflix gained 3.48 percent, closing at $415.20 while shares of DreamWorks gained 0.47 percent, closing at $28.01.

The FDA has granted fast-track designation to Intercept Pharmaceutical's (NASDAQ: ICPT) for the use of obeticholic acid in the treatment of primary biliary cirrhosis. The company will complete a new drug application for obeticholic acid in the first half of 2015. Shares gained 3.86 percent, closing at $243.06.

Dish Network (NASDAQ: DISH) announced that it will begin accepting payments in the form of bitcoin beginning in the third quarter. Shares gained 0.61 percent, closing at $59.55.

Goodyear Tire & Rubber (NYSE: GT) announced it will spend $500 million on a new plant in the Americas. Shares lost 0.61 percent, closing at $26.00.

According to various Japanese media sources, Deutsche Telekom AG has agreed to Softbank's plans for Sprint (NYSE: S) to buy T-Mobile (NYSE: TMUS). Deutsche Telekom owns two-thirds of T-Mobile U.S. Shares of Sprint gained 2.61 percent, closing at $9.44 while shares of T-Mobile hit new 52-week highs of $35.50 before closing the day at $34.86, up 1.34 percent.

Winners of Note

This morning, Abercrombie & Fitch (NYSE: ANF) reported its first quarter results. The company announced an EPS of -$0.17, beating the consensus estimate of -$0.18. Revenue of $822 million beat the consensus estimate of $797.86 million. Net loss for the quarter worsened to $23.7 million from a net loss of $7.2 million in the same quarter a year ago as the company continues to operating in a “difficult teen retail environment.” Sales in the U.S. declined six percent to $504 million while international sales rose five percent to $318 million. Gross margin for the quarter fell 370 bps to 62.7 percent while inventory rose six percent to $486 million. The company maintained prior guidance for the full fiscal year and sees its EPS being in a range of $2.15 to $2.35 and comparable sales declining three to four percent. The company said that it could close 60 to 70 stores by the end of the year and that 67 percent of its store leases expires before 2017. Shares gained 5.75 percent, closing at $37.14.

Speaking at the Code Conference on Wednesday, BlackBerry's (NASDAQ: BBRY) CEO John Chen said that the company has an 80 percent chance of turning around. Previously, Chen estimated the company has a 50-50 chance of turning around. Separately, Chen said that BlackBerry will be cash flow positive by the end of the fiscal year. Shares gained 6.17 percent, closing at $7.74.

Tyson Foods (NYSE: TSN) has offered to purchase Hillshire Brands (NYSE: HSH) for $50 per share. Shares of Tyson Foods gained 6.13 percent, closing at $43.25 while shares of Hillshire Brands surged to new 52-week highs of $52.93 before closing the day at $52.76, up 17.73 percent.

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SunEdison (NYSE: SUNE) announced its “yieldco” subsidiary has filed for an initial public offering named TerraForm. The new listing will trade under the symbol TERP and has ownership of projects in the U.S., Canada, Chili with a capacity of 523.8MW with an average lifespan of 18 years. Before the end of 2016, TerraForm is expected to generate a minimum of $175 million in cash to be distributed. Shares gained 5.29 percent, closing at $20.50.

Sears Holdings (NASDAQ: SHLD) lowered the size of a credit facility to $300 million for Sears Canada which was paying fees for unused portions of the credit line. Shares gained 7.61 percent, closing at $41.15.

Decliners of Note

Last night, Tilly's (NASDAQ: TLYS) reported its first quarter results. The company announced an EPS of $0.02, in-line with the consensus estimate. Revenue of $111.1 million missed the consensus estimate of $113.23 million. Net income for the quarter fell to $0.6 million from $2.3 million in the same quarter a year ago as comparable store sales fell 6.8 percent. The company noted that it expects weak traffic trends and a highly promotional environment. As such, the company guided its second quarter EPS to a range of $0.03 to $0.07, noticeably lower than the consensus estimate of $0.13. The company also expects a high single-digit drop in comparable sales in the quarter. Shares plunged to new 52-week lows of $7.97 before closing the day at $8.77, down 17.11 percent.

Earnings of Note

This morning, Costco Wholesale (NASDAQ: COST) reported its third quarter results. The company announced an EPS of $1.07, missing the consensus estimate of $1.09. Revenue of $25.79 billion beat the consensus estimate of $25.76 billion. Net income for the quarter fell to $473 million from $459 million in the same quarter a year ago as comparable-store sales rose by four percent year over year. Excluding foreign exchange rate fluctuations, comparable store sales would have risen by six percent. Membership fees which accounted for 76 percent of the company's income rose 5.7 percent year over year to $561 million. Shares lost 0.09 percent, closing at $114.14.

This morning, Tech Data (NASDAQ: TECD) reported its first quarter results. The company announced an EPS of $0.72, missing the consensus estimate of $0.93. Revenue of $6.73 billion beat the consensus estimate of $6.48 billion. Net income for the quarter fell to $13.5 million from $17.8 million in the same quarter a year ago as operating income decline in the Americas and Europe. The company issued guidance and sees its year-over-year sales growth to be low to mid single digits in the Americans and Europe. Shares lost 4.26 percent, closing at $60.26.

After the market closed, Express (NYSE: EXPR) reported its first quarter results. The company announced an EPS of $0.06, missing the consensus estimate of $0.14. Revenue of $460.7 million missed the consensus estimate of $464.06 million. Shares were trading lower by 10.34 percent at $12.22 following the earnings report.

After the market closed, Lions Gate Entertainment (NYSE: LGF) reported its fourth quarter results. The company announced an EPS of $0.42, beating the consensus estimate of $0.40. Revenue of $721.9 million missed the consensus estimate of $843.36 million. Shares were trading lower by 8.09 percent at $27.14 following the earnings report.

Quote of the Day

"Despite deep cost cuts, most gold companies still burn cash. Companies have to battle against the industry's poor fundamentals, a battle most will continue to loose in our view. We believe short-termness will have to make way for a long-term value approach. We are yet to see this happen." - Comments from Citigroup's "The Global Gold Book" highlighting the outlook on gold.

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