U.S. stocks were mixed as the Dow finished in positive territory and the S&P 500 index turned negative after rising to within two points of its record close. The Nasdaq also turned negative towards the end of the day, declining for the third straight day.
Earnings continue to come in mixed and no one understands this better than Elon Musk as Tesla Motors was hit hard while SolarCity surged.
- The Dow gained 0.20 percent, closing at 16,550.97.
- The S&P 500 lost 0.14 percent, closing at 1,875.63.
- The Nasdaq lost 0.40 percent, closing at 4,051.50.
- Gold gained 0.02 percent, trading at $1,289.20 an ounce.
- Oil lost 0.51 percent, trading at $100.26 a barrel.
- Silver lost 0.86 percent, trading at $19.17 an ounce.
News of Note
Initial Jobless Claims declined 26,000 to 319,000, below the consensus of 330,000. Continuing claims declined 76,000 to 2.68 million.
The Bloomberg Consumer Comfort Index fell to 37.1 for the week ended May 4 from 37.9 in the previous week.
EIA Natural Gas Inventory rose 74 bcf, ahead of the consensus of a gain of 71 bcf.
The Fed released a proposed rule (section 622 of the Dodd-Frank Act) which “prohibits a financial company from combining with another company if the ratio of the resulting financial company's liabilities exceeds 10 percent of the aggregate consolidated liabilities of all financial companies.”
German industrial production fell 0.5 percent in March after rising 0.6 percent in February. Analysts were expecting an increase of 0.2 percent in March.
Chinese exports rose 0.9 percent on year in April after declining 6.6 percent in March. Analysts were expecting a drop of 1.7 percent in April.
The Bank of England left its overnight rate unchanged at 0.5 percent and made no changes to its 375 billion pound QE program.
The European Central Bank left its overnight lending rate unchanged at 0.25 percent and the deposit rate at zero percent.
Analyst Upgrades and Downgrades of Note
Analysts at Stifel Nicolaus maintained a Buy rating on Activision Blizzard (NASDAQ: ATVI) with a price target raised to $26 from a previous $24. Shares lost 1.00 percent, closing at $20.80.
Analysts at Jefferies maintained a Hold rating on Allergan (NYSE: AGN) with a price target raised to $160 from a previous $139. Meanwhile, analysts at JPMorgan maintained an Overweight rating on Allergan with a price target maintained at $190. Also, analysts at Piper Jaffray maintained a Neutral rating on Allergan with a price target raised to $170 from a previous $164. Shares lost 1.47 percent, closing at $163.43.
Analysts at Argus Research downgraded Chevron (NYSE: CVX) to Hold from Buy with a price target maintained at $130. Shares lost 0.90 percent, closing at $125.09.
Analysts at Bernstein downgraded Cliffs Natural Resources (NYSE: CLF) to Underperform from Market Perform with a price target lowered to $13 from a previous $24. Shares lost 2.91 percent, closing at $17.34.
Analysts at Gabelli upgraded Cree (NASDAQ: CREE) to Buy from Hold with a $61 price target. Shares gained 0.91 percent, closing at $45.40.
Analysts at Credit Suisse maintained a Neutral rating on Encana (NYSE: ECA) with a price target raised to $27 from a previous $22. Shares lost 2.63 percent, closing at $22.95.
Analysts at Barclays downgraded FedEx (NYSE: FDX) to Equal-weight from Overweight with a price target lowered to $140 from a previous $160. Shares lost 1.33 percent, closing at $136.70.
Analysts at Gabelli upgraded FireEye (NASDAQ: FEYE) to Hold from Sell Shares lost 4.19 percent, closing at $27.45.
Analysts at Bernstein maintained an Outperform rating on J.M. Smucker (NYSE: SJM) with a price target maintained at $112. Meanwhile, analysts at Goldman Sachs upgraded Smucker's to Neutral from Sell with a price target raised to $102 from a previous $91. Shares gained 0.59 percent, closing at $99.19.
Analysts at Bank of America maintained a Buy rating on Mondelez International (NASDAQ: MDLZ) with a price target raised to $44 from a previous $37. Also, analysts at Credit Suisse upgraded Mondelez to Outperform from Neutral with a price target raised to $42 from a previous $35. Shares lost 0.81 percent, closing at $37.79.
Analysts at JPMorgan upgraded SolarCity (NASDAQ: SCTY) to Overweight from Neutral with a price target maintained at $72. Meanwhile, analysts at Deutsche Bank maintained a Buy rating with an unchanged $90 price target. Also, analysts at Raymond James maintained an Outperform rating with a price target also unchanged at $75. Shares surged 12.35 percent, closing at $53.60.
Analysts at Morgan Stanley upgraded Twitter (NYSE: TWTR) to Equal-weight from Underweight. Shares gained 4.31 percent, closing at $31.96.
Analysts at Stifel Nicolaus maintained a Buy rating on Walt Disney (NYSE: DIS) with a price target raised to $90 from a previous $85. Shares gained 1.63 percent, closing at $81.60.
Analysts at Morgan Stanley upgraded Yelp (NYSE: YELP) with a $69 price target. Shares gained 1.04 percent, closing at $53.29.
Analysts at SunTrust Robinson Humphrey maintained a Buy rating on Zillow (NYSE: Z) with a price target raised to $110 from a previous $110. Shares gained 4.02 percent, closing at $97.39.
Equities-Specific News of Note
McDonald's (NYSE: MCD) reported that its global comparable-store sales rose 1.2 percent in April with growth being blat in the U.S., rising 0.3 percent in Europe and growing 2.9 percent in Asia/Pacific, Middle East and Africa. Shares lost 0.01 percent, closing at $101.95.
Costco's (NASDAQ: COST) reported that its net sales in April grew by seven percent to $8.56 billion with U.S. sales up five percent and international sales up two percent. Comparable sales rose five percent. Shares gained 2.46 percent, closing at $114.73.
L Brands (NYSE: LB) reported that its total sales rose five percent year over year to $2.39 billion with same-store-sales rising eight percent. Shares gained 4.76 percent, closing at $55.93.
Ford (NYSE: F) announced it had sold 96,829 vehicles in April, a gain of 29 percent from a year ago. Shares gained 2.26 percent, closing at $15.81.
Time Warner (NYSE: TWX) announced that it will off Time Inc to shareholders on May 23. Shares gained 0.32 percent, closing at $68.04.
General Electric (NYSE: GE) will sell its Wayne fuel-dispenser unit to a private firm Riverstone Holdings as part of GE's strategy to sell off $4 billion worth of industrial assets this year. Shares lost 0.34 percent, closing at $26.44.
Liberty Media (NASDAQ: LMCA) intends to spin off its cable assets into a new company named Liberty Broadband before the end of the year. Shares lost 0.44 percent, closing at $129.89.
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Discovery Communications (NASDAQ: DISCA) and Liberty Global (NASDAQ: LBTYA) have formed a 50/50 joint venture to acquire All3Media for $930 million. Shares of Discovery gained 2.26 percent, closing at $74.36 while shares of Liberty Global gained 0.80 percent, closing at $43.04.
The SEC will not recommend enforcement action against the former CEO of Chesapeake Energy (NYSE: CHK) Aubrey McClendon after a two-year probe. Shares hit new 52-week highs of $29.90 before reversing gains and closing the day at $29.14, down 1.59 percent.
Apache (NYSE: APA) will sell its non-operated interests in the Gulf of Mexico and several other projects to Freeport McMoRan (NYSE: FCX) for $1.4 billion. Shares of Apache gained 0.31 percent, closing at $88.03 while shares of Freeport McMoRan lost 0.44 percent, closing at $33.84.
Rio Tinto's (NYSE: RIO) CEO hinted that the company could begin considering growth options in 2015 after two years of heavy spending cuts. Shares lost 1.24 percent, closing at $54.31, down 1.27 percent.
Coca-Cola (NYSE: KO) plans to close two juice plants in Russia because of poor demand and the strength of local brands. Shares lost 0.44 percent, closing at $40.73.
Winners of Note
Last night, Keurig Green Mountain (NASDAQ: GMCR) reported its second quarter results. The company announced an EPS of $1.08, beating the consensus estimate of $0.95. Revenue of $1.1 billion beat the consensus estimate of $1.05 billion. Net income attributable to the company rose to $162.1 million from $132.4 million in the same quarter a year ago, as sales of single-serve K-cups rose 13 percent to $898 million, while sales of Keurig brewing machines and accessories rose nine percent to $137.6 million. Keurig also announced that it will expand its relationship with J.M. Smucker (NYSE: SJM) to make and sell Folgers, Millstone and other brands in formats that will work with the new Keurig brewing system. Also, the company authorized a new share repurchase program of up to $1 billion that expires in two years. Shares gained 12.99 percent, closing at $104.19.
Barclays (NYSE: BCS) announced that it plans to get rid of 19,000 jobs over the next three years, 7,000 of which will be in its investment banking division. The company will also create a “bad bank” to incorporate nearly $400 billion of risk-weighted assets from its retail banking operations in several European countries as well as some risky assets in its investment bank division. Within two years, the bank plans to increase its dividend payout up to 50 percent of adjusted earnings. Shares gained 7.39 percent, closing at $17.73.
Chelsea Therapeutics (NASDAQ: CHTP) has agreed to be sold to Danish based H. Lundbeck in a deal valued at $6.44 per share with an additional $1.50 per share payable based on the performance of Chelsea's Northera treatment for Parkinson's. Shares of Chelsea closed the day at $6.58, surging 31.60 percent.
Decliners of Note
Last night, Tesla Motors (NASDAQ: TSLA) reported its first quarter results. The company announced an EPS of $0.12, beating the consensus estimate of $0.06. Revenue of $713 million beat the consensus estimate of $700.22. Net loss for the quarter totaled $49.8 million compared with a net income of $11.2 million in the same quarter a year ago despite producing 7,535 Model S units in the quarter, up from 6,587 last quarter and above the company's guidance of 7,400. Tesla is guiding its second quarter Model S production to be 8,500 to 9,000 and to deliver 7,500. The company however said that it expects to marginally profitable in the quarter, compared to a consensus EPS of $0.27. Tesla's CEO Elon Musk said that Panasonic has signed a letter of intent for its proposed Gigafactory with construction set to begin next month. Shares lost 11.30 percent, closing the day at $178.59 but trading as low as $178.00.
This morning, AMC Networks (NASDAQ: AMCX) reported its first quarter results. The company announced an EPS of $1.04, missing the consensus estimate of $1.16. Revenue of $525 million beat the consensus estimate of $507.53. Net income for the quarter rose to $71.37 million from $61.52 million in the same quarter a year ago due to the popularity of its programs including The Walking Dead. However, adjusted earnings of $1.04 missed analysts' expectations of $1.16, reflecting the company's investments in new programming and higher marketing expenses. As a whole, operating expenses rose 48 percent year over year to $376.9 million. Shares hit new 52-week lows of $53.99 before closing the day at $59.97, down 8.47 percent.
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This morning, Dean Foods (NYSE: DF) reported its first quarter results. The company announced an EPS of -$0.05, missing the consensus estimate of $0.01. Revenue of $2.34 billion beat the consensus estimate of $2.27 billion. Net income for the quarter fell to a net loss of $9 million from a profit of $493 million a year ago as milk prices continue to reach all-time new highs. Milk prices in the quarter were 22 percent higher than a year ago. The company's revenue stayed almost flat year over year even though volumes declined by almost seven percent. Dean Foods issued guidance and sees its second quarter EPS to be a loss per share of $0.02 to $0.08, below the consensus estimate of a profit of $0.13. Full year 2014 EPS is guided to at least $0.60 from previous guidance of $0.73 to $0.86, below the consensus estimate of $0.76. Shares lost 5.21 percent, closing at $14.55.
Cobalt International Energy (NYSE: CIE) announced a $1.15 billion public offering of convertible senior notes due in 2024. The company intends to use the proceeds to fund its capital expenditures as well as general corporate purposes. Shares lost 5.85 percent, closing at $17.37.
Earnings of Note
This morning, Valeant Pharmaceuticals (NYSE: VRX) reported its first quarter results. The company announced an EPS of $1.76, beating the consensus estimate of $1.73. Revenue of $1.88 billion beat the consensus estimate of $1.04 billion. Net loss for the quarter narrowed to $22.6 million from $27.5 million in the same quarter a year ago as the company received a boost from the recent acquisition of Bausch & Lomb. Sales in developed markets rose 82 percent year over year to $1.4 billion while emerging market sales rose 61 percent to $464 million. Valeant and Bill Ackman's Pershing Square are attempting to force Allergan (NYSE: AGN) to hold a special shareholders meeting to change up the board of Allergan which the company and activist manager want to acquire. Shares of Valeant lost 1.63 percent, closing at $131.17.
This morning, Dish Network (NASDAQ: DISH) reported its first quarter results. The company announced an EPS of $0.38, missing the consensus estimate of $0.44. Revenue of $3.59 billion beat the consensus estimate of $3.58 billion. Net income for the quarter fell to $176 million from $216 million in the same quarter a year ago despite adding 40,000 subscribers in the quarter. Dish said that its EBITDA fell 0.5 percent to $695.4 million, below the consensus estimate of $721 million due to higher subscriber acquisition costs. The CEO of Dish, Charlie Ergen during the company's conference call said that it does not plan to make a move to acquire competitor DirecTV (NYSE: DTV) because the price tag on a potential deal would be too high. Ergen also hinted during the conference call that T-Mobile could be of strategic interest to Dish if Sprint did not proceed with a takeover. Shares of Dish lost 4.02 percent, closing at $60.14.
This morning, Priceline Group (NASDAQ: PCLN) reported its first quarter results. The company announced an EPS of $7.81, beating the consensus estimate of $6.93. Revenue of $1.64 billion beat the consensus estimate of $1.63 billion. Net income for the quarter rose to $331.2 million from $244.2 million in the same quarter a year ago as the group's hotel business booked over 83 million room nights in the quarter, up 32 percent from a year ago while gross bookings for the quarter rose 34.2 percent to $12.28 billion. Priceline said that it plans to boost its advertising spending in the second quarter after deferring some investments from the first period because of weather issues in North America. Shares lost 2.10 percent, closing at $1,108.00.
After the market closed, Monster Beverage (NASDAQ: MNST) reported its first quarter results. The company announced an EPS of $0.55, beating the consensus estimate of $0.49. Revenue of $536.1 million missed the consensus estimate of $542.3 million. Shares were trading lower by 0.03 percent at $66.10 following the earnings release.
Quote of the Day
"When I was teaching banking law prior to my appointment to the Board of Governors, I noticed an interesting disconnect in the best casebooks in the field. An introductory chapter on the history and purposes of bank regulation revealed a complicated set of issues concerning changes in the structure and activities of banks, which, among other things, suggested that the rationales for regulating banks might vary depending on the size, business model, and affiliations of a bank. Yet the remaining chapters of the casebooks treated bank regulation as a more or less unitary endeavor--with prudential rules applicable in about the same way to the activities and affiliations of all banking organizations, and only to banking organizations." - Fed Governor Daniel K. Tarullo speaking at the Federal Reserve Bank of Chicago Bank Structure Conference.
- Mid-Afternoon Market Update: Markets Turn Back As SolarCity Hangs Onto Gains
- Mid-Day Market Update: Keurig Green Mountain Jumps On Upbeat Earnings; Tesla Shares Slide
- Mid-Morning Market Update: Markets Gain; Wendy's Profit Beats Street View
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