Market Levels
- US: Dow: 13250.10 (0.65%), S&P 500: 1415.51 (0.71%), NASDAQ: 3062.39 (1.04%)
- Europe: CAC: 3480.49 (0.90%), DAX: 6996.29 (0.71%), FTSE: 5834.51 (0.03%).
- Asia-Pacific: Australia: 4330.20 (1.14%), China: 2112.20 (-0.32%), Hong Kong: 19962.95 (-0.45%), India: 5362.95 (-0.32%), Japan: 9092.76 (1.84%).
- Metals: Gold: 1619.20 (0.78%), Silver: 28.21 (1.44%), Copper: 3.38 (0.99%)
- Energy: Crude Oil: 95.60 (1.35%), Natural Gas: 2.72 (-0.87%)
- Commodities: Corn: 8.07 (0.44%), Soya Bean: 16.25 (-0.57%), Wheat: 8.81 (1.79%)
- Currency: Euro (€) / US Dollar ($) (EURUSD): 1.2356 (-0.56%), British Pound Sterling (UK£) / US Dollar ($) (GBPUSD): 1.5737 (-0.33%), US Dollar ($) / Japanese Yen (¥) (USDJPY): 79.3650 (0.49%)
- 10 year US Treasury: 1.835% (0.019)
Market and Economy News Update
U.S. markets end higher: U.S. markets closed higher on Thursday after German Chancellor Angela Merkel restated her support for the European Central Bank’s plans to fight the region’s debt crisis. Strong quarterly profit and sales numbers from tech bellwether Cisco Systems, Inc. (NASDAQ:CSCO) also lifted investor sentiment. The Dow Jones Industrial Average (INDEXDJX:.DJI) added 85.33 points, or 0.65 percent, to end at 13250.11. The S&P 500 (INDEXSP:.INX) climbed 9.98 points, or 0.71 percent, to close at 1415.51, while the NASDAQ Composite (INDEXNASDAQ:.IXIC) jumped 31.46 points, or 1.04 percent, to finish the day at 3062.39.
Oil prices end higher: Oil prices rallied to a three month high on Thursday amid geopolitical concerns as Saudi Arabia recommended its citizens to leave Lebanon. The dispute over Iran’s nuclear program is also worrying investors after the Israeli ambassador to the U.S. said Israel would be willing to strike Iran’s nuclear facilities. Crude oil for September delivery jumped 1.4 percent, to settle at $95.60 a barrel on the New York Mercantile Exchange. Brent oil for September settlement rose 0.6 percent to $116.90 a barrel on the London-based ICE Futures Europe exchange.
Stocks in Focus
- Specialty retailer The Gap Inc. (NYSE:GPS) reported a 29 percent rise in second quarter net-income to $243 million, or 49 cents, from $189 million, or 35 cents a share, a year earlier. Analysts were looking for earnings of 48 cents a share. Sales increased 6 percent to $3.58 billion, while same store sales rose 4 percent during the quarter. The company also raised its full-year profit outlook.
- Aeropostale, Inc. (NYSE:ARO) reported second quarter profit of $71,000, or breakeven a share, compared to $2.9 million, or 4 cents a share, a year earlier. The apparel retailer provided a weak outlook for the current quarter, and said third quarter earnings are likely to between 25 cents to 30 cents a share. Analysts were expecting third quarter earnings of 38 cent a share.
- Marvell Technology Group Ltd. (NASDAQ:MRVL) posted second quarter earnings excluding one-time items of 24 cents a share, 2 cent short of analysts’ expectations. Revenue declined 9 percent to $816 million, also trailing estimates of $852 million.
- Network storage equipment maker Brocade Communications Systems, Inc. (NASDAQ:BRCD) posted better than expected third quarter earnings of $43.3 million, or nine cents a share. Revenue rose 10 percent to $555.3 million. The company also said chief executive Michael Klayko is planning to step-down after a seven-year tenure.
- International Business Machines Corp. (NYSE:IBM) has agreed to acquire privately held flash memory system provider, Texas Memory Systems, for an undisclosed amount.
- Discount retailer Dollar Tree, Inc. (NASDAQ:DLTR) reported second quarter profit of $119.2 million, or 51 cents a share, topping analysts’ expectations of 47 cents per share. Sales increased 10.5 percent to $1.7 billion while same-store sales rose 4.5 percent. Analysts were expecting revenue of $1.71 billion.
- Video game retailer GameStop Corp. (NYSE:GME) said second-quarter net income declined to $21 million or 16 cents a share, from $30.9 million, or 22 cents, a year ago. Sales slid 11 percent to $1.55 billion. Analysts were expecting earnings of 15 cents per share on $1.60 billion in revenue. The company raised its quarterly dividend by 67 percent to 25 cents a share, from 15 cents a share.
- Perrigo Company (NASDAQ:PRGO), the largest maker of private label over-the-counter pharmaceuticals in the country, reported fiscal fourth quarter adjusted earnings of $1.28 per share, one cent above the average analysts’ estimate. Revenue increased 18 percent to $831.8 million, but fell short of the average expectation of $852.7 million.
- Industrial conglomerate Illinois Tool Works Inc. (NYSE:ITW) has agreed to sell a majority stake in its Decorative Surfaces unit, to a fund managed by private equity firm Clayton, Dubilier & Rice, for about a billion dollars.
- Miami-based retailer Perry Ellis International, Inc. (NASDAQ:PERY) posted second quarter adjusted earnings of 1 cent per share, missing analysts’ average estimate of 3 cents per share. Revenue fell 2.3 percent to $209.4 million, slightly above estimate of $208.6 million. The company slashed its full-year earnings forecast
- Burlington Northern Santa Fe, the railroad that Berkshire Hathaway Inc. (NYSE:BRK.A) bought in 2010, is planning a two-part debt sale as soon as today for general corporate purposes.
- Battery maker A123 Systems, Inc. (NASDAQ:AONE) has secured a $465 million investment from Chinese auto parts maker Wanxiang Group Corp. that would give it majority control of the struggling Massachusetts-based company.
- Financial information provider Dun & Bradstreet Corp (NYSE:DNB) jumped 1.6 percent amid reports that the company is planning to put itself up for sale.
- Biotechnology company Idenix Pharmaceutical, Inc. (NASDAQ:IDIX) said the U.S. Food and Drug Administration put its experimental hepatitis-C drug IDX184, on partial hold, due to the potential for heart damage.
- Mining company Molycorp, Inc. (NYSE:MCP) fell 7.5 percent after it announced plans to raise up to $450 million in a debt and equity offering, to help fund construction at its mine in California.
- Apparel retailer The Buckle, Inc. (NYSE:BKE) reported second quarter profit of $23.2 million, or 49 cents per share, in line with Street expectations, while revenue rose 1 percent to $215.5 million, trailing estimates of $216.4 million. Same store sales fell 0.8 percent during the quarter.
- LSI Industries, Inc. (NASDAQ:LYTS) posted fourth quarter profit of 6 cents per share, missing the analysts’ consensus estimate of 10 cents per share. Revenue was down 4 percent to $71.20 million from $74.22 million in the year-ago period.
- Government information technology contractor CACI International Inc (NYSE:CACI) ended 7.2 percent lower after reporting a 5.5 percent fall in fourth quarter profit to $43.4 million from $45.9 million a year earlier. Revenue also slipped 1 percent to $948.9 million from $963.2 million.
- Kids clothes retailer Children’s Place Retail Stores, Inc. (NASDAQ:PLCE) reported a second quarter loss excluding items of 62 cents per share that came in narrower than consensus estimate of a loss of 66 cents per share. Revenue increased 5 percent to $360.8 million also topping expectations of $353.3 million. The company raised the low end of its full-year outlook, and now expects full-year adjusted earnings of $3.20 to $3.30 per share, compared with previous guidance of $3.15 to $3.30.
- Blyth, Inc. (NYSE:BTH) soared 17 percent to end at a four year high after the company announced plans to spin-off its health and wellness company, ViSalus, in an initial public offering worth $175 million.
- Oil and gas company Range Resources Corp. (NYSE:RRC) jumped 3.4 percent amid takeover rumors. Analysts at Capital One said that the company is a likely takeover target, and have reaffirmed their “add” rating on the stock with a target price of $89.
- British soccer club Manchester United PLC (NYSE:MANU) closed 1.99 percent lower at $13.77, below its initial public offer price of $14, despite announcing the arrival of Dutch star Robin Van Persie for $33 million.
Hedge Fund News Update
- Christopher Rokos, one of the founding partners of Brevan Howard Asset Management LLP, is planning to leave the hedge fund.
- New York hedge fund Jana Partners LLC which is pushing for changes at Canadian fertilizer company, Agrium Inc. (USA) (NYSE:AGU) (TSE:AGU), is facing resistance after the company said it had no plans to sell its retail division.
- Hong Kong-based Ward Ferry Management’s WF Asia Fund Ltd., is up 16 percent through July, against a gain of 0.9 percent in the Eurekahedge Asia Long-Short Equities Hedge Fund Index during the same period, Bloomberg reported.
- New hedge funds raised about $10.4 billion in the first half of the year that was slightly better than the $10.3 billion new funds took in the first half of last year, Absolute Return magazine reported.
- New York-based Harbinger Capital Management managed to erase some of the losses made earlier in the year, with gains of 28 percent in June, and 10.6 percent last month, according to a report in the New York Post.
Brokerage Upgrades and Downgrades on Thursday, August 16, 2012
- Abercrombie & Fitch Co. (NYSE:ANF) was upgraded to “outperform” from “neutral” by analysts at Wedbush with a target price of $45.
- Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) was lifted to “outperform” from “market perform” by analysts at JMP Securities with a target price of $10.
- Crocodile Gold Corp (TSE:CRK) was raised to “outperform” from “market perform” by analysts at Raymond James with a target price of $0.80.
- Kinder Morgan Inc (NYSE:KMI) was upgraded to “overweight” from “neutral” by analysts at JPMorgan Chase with a target price of $39.
- NorthWestern Corporation (NYSE:NWE) was lifted to “buy” from “hold” by analysts at KeyBanc Capital Markets with a target price of $39.
- Parex Resources Inc. (TSE:PXT) was raised to “buy” from “neutral” by analysts at UBS AG.
- Viropharma Inc (NASDAQ:VPHM) was upgraded to “above average” from “average” by analysts at Caris & Co. with a target price of $30.
- Sina Corp (NASDAQ:SINA) was lifted to “buy” from “neutral” by analysts at Bank of America with a target price of $63.
- AFC Enterprises, Inc. (NASDAQ:AFCE) was downgraded to “hold” from “buy” by analysts at Feltl & Co. with a target price of $26.
- Bally Technologies Inc. (NYSE:BYI) was lowered to “hold” from “buy” by analysts at Deutsche Bank with a target price of $49.
- Convergys Corporation (NYSE:CVG) was cut to “market perform” from “outperform” by analysts at Oppenheimer with a target price of $16.
- First Financial Holdings, Inc. (NASDAQ:FFCH) was downgraded to “market perform” from “outperform” by analysts at FIG Partners with a target price of $14.
- FSI International, Inc. (NASDAQ:FSII) was lowered to “hold” from “buy” by analysts at Needham.
- GNC Holdings Inc (NYSE:GNC) was cut to “hold” from “buy” by analysts at Deutsche Bank with a target price of $42.
- Great Basin Gold Ltd. (USA) (NYSEAMEX:GBG) was downgraded to “underperform” from “market perform” by analysts at BMO Capital Markets.
- Maxwell Technologies Inc. (NASDAQ:MXWL) was lowered to “neutral” from “overweight” by analysts at Piper Jaffray.
- Yucheng Technologies Limited (NASDAQ:YTEC) was cut to “neutral” from “buy” at Roth Capital.
