Markets traded lower, giving back all of yesterday’s gains, as investors continue to worry about the financial turmoil in Europe in the face of rising Spanish and Italian bond yields – both of which rose above 6.0%. Domestic housing data added to the grim tone of investors. Most are hoping that the next two days of busy U.S. economic data reports yield some positive messages about the state of the U.S.
Month over month Pending Home Sales were down 5.5%, lower than the 0% move expected; in addition, Mortgage Applications were lower by 1.3% vs. a 3.8% gain in the previous week.
Market Indices/Statistics:
- Dow closed down 160.83 pts/-1.28% to 12,419.86
- S&P closed down 19.10 pts/-1.43% to 1,313.32
- Nasdaq closed down 33.63 pts/-1.17% to 2,837.36
- All 30 Dow stocks closed lower
- All 10 S&P 500 sectors closed down
- Telecom was the least negative sector (-0.55%); Energy was the biggest laggard (-2.97%)
- The VIX ended up 3.11 at 24.14
- Oil is down $3.44 to $87.32
- Nat Gas is down $0.043 to $2.442
- Gold is up $14.20 to $1,565.20
- Euro vs. Dollar is down $0.0121 to $1.2365
- Dollar vs. Yen is down $0.47 to $79.05
Companies in the News
Monsanto Co. (MON, +$1.66/+2.2% to $76.41) shares traded higher and is one of the S&P movers. The company increased its FY Non-GAAP EPS guidance to $3.65-$3.70 vs. estimates of $3.56. Strong selling seasons in its key seed and traits business enhanced by strength in the company’s herbicides and lawn and garden businesses are driving the profit growth. Positive customer reaction to expanded product-pricing strategy has helped boost sales as well.
The homebuilders were under pressure today as pending home sales and mortgage applications were both reported below expectations. Lennar Corp. (LEN, -$1.93/-6.7% to $26.82), Toll Brothers Inc. (TOL, -$1.46/-5.1% to $27.23), D.R. Horton, Inc. (DHI, -$0.81/-4.7% to $16.62), PulteGroup, Inc. (PHM, -$0.33/-3.5% to $9.19) and KB Homes (KBH, -$0.56/-7.2% to $7.24) were all down today.
Coal stocks were under pressure today after Patriot Coal (PCX, -$0.22/-8.5% to $2.38) was downgraded by UBS and CRT Capital Group citing “heightened uncertainty regarding the company’s refinancing status and weak cash flow outlook.” Patriot Coal operates in regions where high costs and low coal prices are making profits elusive. Alpha Natural Resource Inc. (ANR, -$0.75/-6.5% to $10.79), Walter Energy (WLT, -$2.20/-4.3% to $49.20), Consol Energy (CNX, -$1.29/-4.3% to $28.84) and Arch Coal (ACI, -$0.40/-5.5% to $6.91) traded lower today.
Research In Motion (RIMM, -$0.87/-7.8% to $10.35) continued its downward slide after announcing last night that the company hired JPMorgan and RBC to conduct a strategic review and to look for partnerships as the company warned it would likely report an operating loss in the first quarter.
Shutterfly, Inc. (SFLY, +$0.80/+3.00) shares were higher on news that the company acquired Photoccino, an Israeli company that has developed “ground breaking technologies for photo ranking.” Shutterfly believes this is an innovative solution which will make product creation and sharing easier for its customers.
Earnings
Booz Allen & Hamilton Inc. (BAH, +$1.98/+13.3% to $16.86) reported adjusted EPS of $0.44 vs. estimates of $0.41; revenue was $1.54 billion, below the $1.55 billion expected by analysts. Growth at the company’s defense, civil and intelligence businesses helped drive profits. The company also declared a regular and special cash dividend of $1.50 per share.
Lions Gate Entertain Corp. (LGF, -$0.06/-0.5% to $12.85) reported EPS of ($0.17) vs. estimates of $0.26; revenue was $645.2 million, better than the $643.1 million expected by analysts. Earnings were lower because of costs associated with the acquisition of Summit Entertainment while revenues were driven by success of the Hunger Games movie and the home entertainment release of The Twilight Saga: Breaking Dawn.
Coming Thursday:
Economic Reports: Challenger Job Cuts (YoY) (+11.2% expected) at 7:30 a.m.; June RBC Consumer Outlook (47.6 previously) at 8:00 a.m.; May ADP Employment Change (150k expected) at 8:30 a.m.; Q1 GDP (+1.9% expected), Q1 Personal Consumption (+2.9% expected), Initial Jobless Claims (370k expected) at 8:30 a.m., Chicago Purchasing Manager (56.8 expected) at 9:45 a.m. Earnings: Centrais Eletricas Brasileiras (est: $0.25), Esterline Tech Corp. (est: $1.27), Joy Global Inc. (est: $1.94), Quanex Building Products Corp. (est: ($-0.08)), RealD Inc. (est: ($-0.08)), SAIC Inc. (est: $0.33)
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