MARKET UPDATE
Stocks and just about everything else have one thing and one thing only
on the agenda, and it isn't how to sneak out early on a 3-day weekend.
The global market is looking to the unemployment data and the non-Farm
Payroll contractions for the month of June. Equities are lower on most
fronts ahead of the key data today.
DJIA futures are down about 45 points and S&P futures are down 5
points. Europe is lower as the UK's FTSE is down 0.6%, Germany's DAX
is down about 1%, and France's CAC is down over 1%. Asian stocks were
lower as well with Japan's NIKKEI 225 down at -0.6% and Hong Kong's
Hang Seng was down by -1.2%.
Bonds are trading firm this morning ahead of the jobs data with the
10-Year Treasury yield at 3.53% and the 30-Year yield is 4.33%.
Commodities are trading lower again after yesterday's oil inventory
data and on concerns over the jobs data. Oil was around $68 per barrel
on NYMEX WTI Crude.
ECONOMIC & MACRO EVENTS
These are today’s top economic data:
8:30 AM EST Unemployment and Non-Farm Payrolls (est. 9.6%; -350K)
8:30 AM EST Weekly Jobless Claims (est. -619K)
10:00 AM EST Factory Orders
10:30 AM EST Weekly EIA Natural Gas Inventories
Earnings: no major earnings
ANALYST UPGRADES & DOWNGRADES
Upgrades
Blue Coat Systems (BCSI) Started as Buy ar Auriga.
Cisco Systems (CSCO) Started as Buy at Deutsche Bank.
Continental Airlines (CAL) Raised to Overweight at Morgan Stanley.
Delta Airlines (DAL) Started as Overweight at Morgan Stanley.
Mechel Steel (MTL) Raised to Neutral at Credit Suisse.
Tata Motors (TTM) Raised to Buy at Deutsche Bank.
Downgrades
Dynegy (DYN) Cut to Sell at Deutsche Bank.
Hawaiian Airlines (HA) Cut to Equal Weight at Morgan Stanley.
Sempra (SRE) Cut to Hold at Deutsche Bank.
Southwest Airlines (LUV) Cut to Underweight at Morgan Stanley.
BULLISH EVENTS
NRG Energy (NRG) is indicated higher now that Exelon
(EXC) raised its offer to a fixed exchange ratio of 0.545 shares of
Exelon common stock per NRG share. This is about a 12% increase over
the initial exchange offer and represents value of over $3 billion to
NRG shareholders.
Philip Morris (PM) announced that the tobacco giant has
entered into an agreement to purchase Swedish Match South Africa
Limited. The purchase price is rather small compared to the company at
approximately $222 million.
American International Group (AIG) got hammered
yesterday on the reverse split. The troubled insurer has now agreed to
sell 100% of its ownership interests in Inversora Pichincha S.A. and
Interdinco S.A. with operations in Colombia to Banco Pichincha C.A. in
Ecuador. This might pay for a few days worth of interest to the
government.
Boeing (BA) is in talks with a supplier to acquire
manufacturing operations for the 787 Dreamliner. The company has been
under fire for having too many suppliers that are not all on the same
page and this may be an effort to consolidate those operations and that
effort.
Cisco Systems (CSCO) is not really trading higher this
morning because futures are lower. But the networking and
communications equipment giant was upgraded to a "Buy" rating at
Deutsche Bank in coverage this morning.
BEARISH EVENTS
Discovery Labs (DSCO) announced that the FDA is setting
newly defined standards to determine whether or not the company has
adequately demonstrated comparability of Surfaxin; this is believed to
be a hurdle to an ultimate approval.
Sepracor Inc. (SEPR) is getting hit hard after the
company provided an update on clinical trials for its SEP-225289 and
LUNESTA pediatrics. The endpoint was not reached. Shares are
indicated down over 10%.
First Solar Inc. (FSLR) is getting hit this morning.
The company was downgraded by JPMorgan to "Neutral" from Overweight
based upon forward valuations and a deteriorating solar environment.
Lear Corp. (LEA) is dead. The company reached an
agreement with most lenders and will be in Chapter 11 reorganization.
Guess where this leaves the common stock...
Illumina (ILMN) lowered its guidance after the close.
The company said that revenues declined in genetic-testing equipment.
It now sees revenue of $161 million for Q2, down from a prior range of
guidance of $168 million to $173 million.
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