U.S. stocks erased early morning gains and finished lower following reports that Ukrainian artillery forces engaged armored vehicles entering Ukraine from Russia.
Narayana Kocherlakota, Minneapolis Fed President, stated that labor strength in its current state appears to be far away from the Fed's goals.
“The fraction of people aged 25 to 54—our prime-aged potential workers—who actually have a job is still at a disturbingly low rate,” Kocherlakota said in a speech today. “Second, a historically high percentage of workers would like a full-time job, but can only find part-time work. Bottom line: I see labor markets as remaining some way from meeting the FOMC's goal of full employment.”
In addition, Kocherlakota said that he agrees with Congressional Budget Office's prediction that inflation won't rise to 2 percent until 2018.
Looking forward to the week ahead, CPI and housing starts will be on focus. The Fed will release the minutes from its July 29-30 meeting on Wednesday. Central bank leaders will convene in Jackson Hole on Thursday as both Janet Yellen and Mario Draghi will speak a the event.
- The Dow lost 0.30 percent, closing at 16,662.91.
- The S&P 500 lost 0.01 percent, closing at 1,955.06.
- The NASDAQ gained 0.27 percent, closing at 4,464.93.
- Gold lost 0.79 percent, trading at $1,305.30 an ounce.
- Oil gained 1.54 percent, trading at $97.05 a barrel.
- Silver lost 1.61 percent, trading at $19.58 an ounce.
News Of Note
- July Producer Price Index rose 0.1 percent month on month, in-line with expectations.
- July Core PPI rose 0.2 percent month on month, in-line with expectations.
- August Empire State Survey fell to 14.69 (versus expectation of 20) from 25.6 in July.
- July Industrial Production rose 0.4 percent, above the 0.3 percent expected.
- Capacity Utilization improved to 79.2 percent (in-line with expectations) from 79.1 percent.
- Preliminary August Reuters/UofM Consumer Sentiment declined to 79.2 (versus expectations of 82.3) from 81.8.
- Second Quarter E-Commerce Retail sales rose 4.9 percent quarter over quarter to $75 billion.
- Canada revised last week's employment report revising jobs gained from just 200 to 42,000.
Analyst Upgrades And Downgrades Of Note
Analysts at Credit Suisse maintained an Outperform rating on Advance Auto Parts (NYSE: AAP) with a price target raised to $160 from a previous $150. Also, analysts at Nomura maintained a Neutral rating on Advance Auto Parts with a price target raised to $135 from a previous $125. Shares lost 0.09 percent, closing at $131.47.
Analysts at Barclays maintained an Equal-Weight rating on Aercap Holdings (NYSE: AER) with a price target raised to $53 from a previous $24. Shares lost 1.32 percent, closing at $47.06.
Analysts at Nomura maintained a Buy rating on Berkshire Hathaway (NYSE: BRK-A) with a price target raised to $219,000 from a previous $208,000. Shares hit new 52-week highs of $$203,355.00 before closing the day at $201,227.00, down 0.80 percent.
Analysts at JPMorgan maintained an Overweight rating on Copa Holdings (NYSE: CPA) with a price target raised to $168 from a previous $163. Shares lost 0.25 percent, closing at $125.38.
Analysts at Credit Suisse downgraded E-Commerce China Dangdang (NYSE: DANG) to Neutral from Outperform. Taking the opposite side, analysts at JPMorgan upgraded Dangdang to Neutral from Underweight with a price target raised to $15 from a previous $7.50. Shares gained 0.91 percent, closing at $14.49.
Analysts at Argus Research downgraded JDS Uniphase (NASDAQ: JDSU) to Hold from Buy. Shares lost 0.69 percent, closing at $10.86.
Analysts at Wells Fargo downgraded KKR & Co (NYSE: KKR) to Market Perform from Outperform. Shares lost 2.08 percent, closing at $22.58.
Analysts at Nomura maintained a Buy rating on Kohl's (NYSE: KSS) with a price target raised to $65 from a previous $62. Also, analysts at MKM Partners maintained a Buy rating on Kohl's with a price target raised to $64 from a previous $63. Shares lost 0.05 percent, closing at $56.88.
Analysts at BTIG Research upgraded MBIA (NYSE: MBI) to Buy from Neutral. Shares gained 6.17 percent, closing at $10.49.
Analysts at Deutsche Bank maintained a Buy rating on Nordstrom (NYSE: JWN) with a price target lowered to $77 form a previous $78. Shares lost 5.21 percent, closing at $65.11.
Analysts at Jefferies maintained a Buy rating on Red Robin Gourmet Burger (NYSE: RRGB) with a price target lowered to $80 from a previous $90. Also, analysts at Wunderlich maintained a Buy rating on Red Robin with a price target raised to $92 from a previous $76. Shares gained 4.31 percent, closing at $54.90.
Analysts at Credit Suisse maintained an Underperform rating on The ExOne Company (NASDAQ: XONE) with a price target lowered to $21 form a previous $25. Also, analysts at Jeferies maintained a Hold rating on ExOne with a price target lowered to $30 from a previous $32. Shares lost 3.66 percent, closing at $27.61.
Analysts at Jefferies maintained a Buy rating on Vipshop Holdings (NYSE: VIPS) with a price target raised to $280 from a previous $240. Also, analysts at Macquarie maintained an Outperform rating on Vipshop with a price target raised to $270 from a previous $200. Shares gained 0.55 percent, closing at $218.49.
Analysts at JPMorgan maintained a Neutral rating on Walmart (NYSE: WMT) with a price target lowered to $78 from a previous $80. Also, analysts at Raymond James maintained an Outperform rating on Walmart with a price target lowered to $80 from a previous $83. Shares lost 0.66 percent, closing at $73.90.
Equities-Specific News Of Note
BHP Billiton (NYSE: BHP) said that it would consider a de-merger of itself by spinning off various mining assets into new entities to simplify its portfolio. Shares gained 1.83 percent, closing at $72.45.
NQ Mobile (NYSE: NQ) announced that its Chief Financial Officer KB Teo resigned because of “family reasons” after only 11 months on the job. Shares gained 1.09 percent, closing at $6.48 but traded as low as $5.10 in the morning.
The U.K.'s National Institute for Health and Care Excellence supported the use of Gilead Pharmaceuticals' (NASDAQ: GILD) Sovaldi therapy. Shares closed the day at new 52-week highs of $99.49, up 3.25 percent.
Deere & Company (NYSE: DE) announced it will place 600 employees on indefinite layoff at some of its agricultural factories because of poor market demand. Shares lost 0.11 percent, closing at $84.80.
NGL Energy Partners (NYSE: NGL) and Transmontaigne Partners (NYSE: TLP) said that they have ended discussions over NGL Energy's non-binding proposal to acquire the outstanding units of Transmontaigne. Shares of NGL Energy lost 0.57 percent, closing at $42.21 while shares of Transmontaigne gained 0.54 percent, closing at $43.03.
Noble Energy (NYSE: NBL) said that its Bright exploration well in the deep-water Gulf of Mexico came up dry. Shares gained 0.73 percent, closing at $70.01.
Darden Restaurants (NYSE: DRI) hired recruiting consultants to assist the company in finding a new CEO. Shares lost 1.53 percent, closing at $46.37.
Priceline Group (NASDAQ: PCLN) plans to offer a private offering of notes worth $1 billion. The company said part of the proceeds will be used for stock repurchases. Shares lost 1.14 percent, closing at $1,270.12.
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Steven Madden (NASDAQ: SHOO) announced it acquired Dolce Vita Holdings for $60.3 million. Shares gained 2.41 percent, closing at $33.10.
Last night the board of directors of Chiquita Brands International (NYSE: CQB) rejected Cutrale and Safra's Groups acquisition offer of $13 per share and noted that it plans to proceed with a merger of Fyffes. Shares of Chiquita Brands hit new 52-week highs of $13.77 before closing the day at $13.63, up 0.89 percent.
Winners Of Note
Coca-Cola (NYSE: KO) announced last night that it acquired a 16.7 percent stake in Monster Beverage (NASDAQ: MNST) as part of a strategic alliance. As part of the agreement, Monster Beverage will transfer its non-energy segments (such as Hansen's Natural Sodas, Huberts Lemonade) to be controlled by Coca-Cola. In exchange, Coca-Cola will transfer ownership of its energy segments including NOS and Full Throttle to Monster Beverage. Coca-Cola will now have two of its directors sitting on Monster Beverage's board. Shares of Coca-Cola gained 1.74 percent, closing at $40.88, while shares of Monster Beverage surged to new 52-week highs of $94.93 before closing the day at $93.50, up 30.50 percent.
Achillion Pharmaceuticals (NASDAQ: ACHN) disclosed that its HCV product candidate, ACH-3102, in combination with Sovaldi cured all 12 patients in a Phase 2 clinical trial. The company now plans to initiated a six-week treatment with ACH-3102 and sofosbuvir without ribavirin. Shares hit new 52-week highs of $10.20 before closing the day at $9.25, up 9.60 percent.
Decliners Of Note
This morning, Dillard's (NYSE: DDS) reported its second quarter results. The company announced an EPS of $0.80, missing the consensus estimate of $0.86. Revenue of $1.47 billion missed the consensus estimate of $1.53 billion. Net income for the quarter fell to $34.5 million from $36.5 million in the same quarter a year ago, as the company increased markdown activities. Gross margin declined 33 basis points, while SG&A expenses rose to $400.5 million from $398.2 million a year ago due to increased payroll expenses. The company sees its depreciation and amortization in 2014 being the same as it was a year ago at $255 million. Rentals are projected to come in one million lower in 2014 at $26 million interest and debt expenses is projected to fall to $61 million from $65 million a year ago. Capital expenditure is expected to rise from $95 million in 2013 to $150 million in 2014. Shares lost 8.21 percent, closing at $106.11.
A federal appeals court hearing Vringo's (NASDAQ: VRNG) case against Google has ruled against Vringo. As justification, the court cited a recent Supreme Court ruling that upheld the patentability of software concepts, but barred companies from patenting only an abstract idea on a computer. Shares collapsed to new 52-week lows of $0.67 before closing the day at $0.88, down 72.01 percent.
Earnings Of Note
This morning, The Estee Lauder Companies (NYSE: EL) reported its second quarter results. The company announced an EPS of $0.45, missing the consensus estimate of $0.56. Revenue of $2.73 billion beat the consensus estimate of $2.66 billion. Net earnings for the quarter rose to $257.7 million from $94.0 million in the same quarter a year ago due to growth across all segments and all regions. Sales in the Americas rose 11 percent from a year ago to $1.103 billion; Europe, the Middle East & Africa sales rose 15 percent to $1.132 billion; Asia/Pacific sales rose 12 percent to $489.9 million. In addition, the company saw revenue gains in all of its product categories from a year ago. Skin care revenues rose 14 percent to $1.205 billion; makeup sales rose 12 percent to $1.064 billion; hair care sales rose 6 percent to $134.9 million; and other sales rose 95 percent to $11.3 million. Looking forward, Este Lauder expects its global prestige beauty will grow 3 percent to 4 percent, higher than industry averages. Shares gained 0.34 percent, closing at $76.16.
This morning, JD.com (NASDAQ: JD) reported its second quarter results. The company announced an EPS of –RMB0.01 and revenue of RMB28.6 ($4.61 billion.) Net loss for the quarter fell to RMB582.5 million ($93.9 million) from RMB28.3 a year ago due to amortization of intangible assets resulting from assets and business acquisitions related to the Tencent strategic partnership. Gross margin improved to 11 percent from 5 percent a year ago. Active customer accounts rose to 38.1 million from 19.6 million a year ago, while fulfilled orders rose 126 percent from a year ago to 163.7 million. JD.com said that it will spend $569 million to $732 million in capex throughout 2014. The company issued guidance and expects its third quarter revenue to be in a range of $4.55 billion to $4.72 billion, below the consensus estimate of $4.77 billion. Shares lost 1.43 percent, closing at $29.58.
Quote Of The Day
"In a similar vein, earlier this year, the Congressional Budget Office predicted that inflation will not reach 2 percent until 2018—more than 10 years after the beginning of the Great Recession. I agree with this forecast. This means that the FOMC is still a long way from meeting its targeted goal of price stability." -Narayana Kocherlakota in a speech delivered Friday.
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