MIDDAY LUNCH

Dow 10935.61  +99.16, Nasdaq 2427.39  +28.63, S&P 1178.82  +11.10 

The market has started to fall from today’s session highs, but it’s still posting nice gains.   The pause comes as the S&P 500 nears the 1180 line, which hasn't been touched since late September 2008.

Strength remains broad based as advancing issues outnumber decliners by 3-to-1 in the S&P 500. Tech and Financials continue to be the leaders today.   Microsoft (MSFT) 30.49 +0.84, +2.83%, Google (GOOG) 569.04 +11.71 +2.10%, Qualcomm (QCOM)  42.64 +2.64, +6.12%, AIG (AIG) 35.36 +2.19, +6.62%, Citigroup 4.36 +0.21, +5.06%

Fed Chairman Bernanke began his testimony about the Fed's exit strategy from the extraordinary measures it has taken to pull the U.S. economy out of recession to the House Financial Services Committee.  In his testimony,  he stated that the language regarding low levels of interest rates for an extended period depends on the economy in which unemployment and capacity utilization are two key metrics in that assessment.

MORNING COFFEE

Euro Continues To Fall.  The euro fell to a 10-month low against the dollar after government officials said the European Union may need International Monetary Fund (IMF) help to bail out Greece and Portugal’s debt was downgraded by Fitch Ratings.

Durable Goods Orders Rise. For the third month in a row orders for durable goods rose in February +0.5%, while inventories and backlogs climbed by the most in more than a year, indicating the manufacturing rebound will keep propelling the U.S. recovery.

JPMorgan Get Tax Windfall. JPMorgan (JPM) is close to a deal with the FDIC that would allow the bank to receive as much as $1.4 billion in tax refunds. JPMorgan, which took over Washington Mutual's banking operations in 2008, reportedly plans to claim more than half of the $2.6 billion in tax refunds that WaMu is eligible for because of its heavy losses.

General Mills (GIS): Reported FQ3 EPS of $0.97 beating estimates by +$0.04 on revenue of $3.6 billion.

Lennar (LEN): Reported FQ1 EPS of -$0.04 beating estimates by +$0.26 on revenue of $574 million.

Adobe Systems (ADBE): Reported Q1 2010 EPS of $0.40 beating estimates by +0.03 on revenue of $859 million.  The company also gaveQ2 EPS guidance in-line and revenue above consensus. 

Upgrades

Tyson Foods (TSN): BB&T Capital Markets raised their rating from Hold to Buy.

Jacobs Engineering (JEC): JP Morgan raised their rating from Neutral to Overweight and raised their target price from $44.00 to $51.00.

Downgrades

Whole Foods (WFMI): Longbow lowered their rating from Buy to Neutral.

Under Armour (UA): FBR Capital lowered their rating from Outperform to Market Perform and placed a target price of $30.00 on the company.

Coverage Reiterated/Price Target Changed

PepsiCo (PEP): Stifel Nicolaus reiterated their Buy rating and raised their target price from $68.00 to $74.00.

Texas Instruments (TXN): Auriga U.S.A reiterated their Sell rating and raised their target price from $20.00 to $21.00.

Honeywell (HON): Oppenheimer reiterated their Outperform rating and raised their target price from $45.00 to $50.00.

·         Futures: Dow -0.35%. S&P -0.5%. Nasdaq -0.45%. Crude -1.8% to $80.45. Gold -0.8% to $1094.50.

·         Asia: Nikkei +0.4% to 10815. Hang Seng +0.1% to 21009. Shanghai +0.1% to 3057. BSE +0.2% to 17451.

·         Europe: London -0.5% to 5647. Paris -0.8% to 3921. Frankfurt -0.6% to 5979.

MORNING COFFEE

Google Redirects China Site.  Google (GOOG) has stopped censoring its search engine in China and plans to maintain sales and R&D teams in China. Visitors to Google’s China site are being redirected to their Hong Kong sight saying it's legal to have the Hong Kong service deliver uncensored results in simplified Chinese. The Chinese government says Google has broken its promise and is "totally wrong."

Toshiba Goes Nuclear. Toshiba (TOSBF) confirmed that it may work with Bill Gates and his company TerraPower to develop an advanced nuclear reactor.  The new reactor would be able to operate for up to 100 years without refueling, as opposed to current light-water reactors which must be refueled every few years. The news sent Toshiba shares up +3.6% in Tokyo trading.

Warren Buffett Buys Kahn Ventures. Berkshire Hathaway (BRK.A/BRK.B) has agreed to buy Kahn Ventures Inc, a wholesale distributor of distilled spirits, wine and beer in Georgia and North Carolina.  Buffett said the acquisition will "provide us with a solid platform for potentially acquiring other similar high quality wholesale distributors." Terms of the deal were not disclosed.

Phillips-Van Heusen (PVH): Reported Q4 EPS of $0.61 beating estimates by +$0.02 on revenue of $615 million.

Upgrades

Tiffany & Co (TIF): Jesup & Lamon raised their rating from Hold to Buy and placed a target price of $55.00 on the company.

Paychex (PAYX): Cowen & Co raised their rating from Underperform to Neutral.

Automatic Data (ADP): Cowen & Co raised their rating from Underperform to Neutral.

Baidu.com (BIDU): Kaufman Bros raised their rating from Hold to Buy and raised their target price from $540.00 to $690.00.

Downgrades

AFLAC (AFL): Bernstein lowered their rating from Outperform to Market Perform.

PETsMART (PETM): Janney Mntgmy Scott lowered their rating from Buy to Neutral.

Coverage Initiated

UnitedHealth (UNH): Susquehanna Financial initiated coverage with a Neutral rating.

Caterpillar (CAT): Avondale initiated coverage with a Market Outperform rating and a target price of $70.00

·         Futures: Dow +0.1%. S&P +0.15%. Nasdaq +0.15%. Crude flat at $81.25. Gold +0.1% to $1100.60.

·         Asia: Nikkei-0.5% to 10774. Hang Seng +0.3% to 20988. Shanghai -0.7% to 3053. BSE +0.2% to 17451.

·         Europe: London +0.8% to 5692. Paris +0.6% to 3952. Frankfurt +0.5% to 6017.

MORNING COFFEE

Heath Bill Passes House. In late night vote the House of Representatives approved the largest healthcare overhaul in four decades by a vote of 219-212. The bill failed to get a single Republican vote. The bill is a mixed bag for insurers, who stand to gain over 20 million new customers but further reduces government reimbursements to the industry.  The reduced reimbursements could be passed on through higher insurance cost. Pharmaceutical companies, emerge as the clear winner from the bill.

Lawsuits ready to be filed.  Currently 35-37 state attorney generals are ready to file lawsuits over the Health Care bill as soon as it is signed into law by President Obama.  The legal challenges say that the bill is unconstitutional, because it infringes on states right and requires citizens to purchase insurance and fines them if they do not.

IMF Warnes About Debt. IMF official John Lipsky issued a grim prognosis for the world's wealthiest nations warning the debt-to-GDP ratio for five of the G-7 countries (Germany and Canada were excluded) will approach or exceed 100% by 2014. In a statement he said, the rising debt "could undermine confidence in the economic recovery."

Tiffany (TIF): Reported Q4 EPS of $1.09 missing estimated by -$0.04 on revenue of $981.4 million.

Williams-Sonoma (WSM): Reported Q4 EPS of $0.86 beating estimates by +0.12 on revenue of $1.1 billion. 

Upgrades

Boeing (BA):  Oppenheimer raised their rating from Underperform to Outperform and placed a target price of $80.00 on the company.

Downgrades

VeriSign (VRSN): Oppenheimer lowered their rating from Outperform to Perform.

Jack In The Box (JACK): JP Morgan lowered their rating from Overweight to Neutral.

Coverage Initiated

MasterCard (MA): Argus initiated coverage with a Buy rating and a target price of $300.00.

Hansen Natural (HANS): Standpoint Research initiated coverage with a Buy rating and a target price of $54.00.

Imax (IMAX): Barrington Research initiated coverage with a Outperform rating and a target price of $20.00.

Coverage Reiterated/Price Target Changed

ConAgra (CAG): Credit Suisse reiterated their Neutral rating and raised their target price from $24.00 to $27.00.

Walt Disney (DIS): Credit Suisse reiterated their Outperform rating and raised their target price from $36.00 to $38.00.

Boeing (BA): Broadpoint AmTech reiterated their Buy rating and raised their target price from $76.00 to $100.00.

·         Futures: Dow -0.6%. S&P -0.8%. Nasdaq -0.6%. Crude -1% to $79.84. Gold -0.3% to $1104.30.

·         Asia: Nikkei +0.8% to 10825. Hang Seng -2.0% to 20933. Shanghai +0.2% to 3075. BSE -0.9% to 17411.

·         Europe: London -1% to 5594. Paris -1% to 3885. Frankfurt-0.9% to 5929.

CLOSING BELL

Dow 10741.98  -37.19, Nasdaq 2374.41  -16.87, S&P 1159.90  -5.93 

The market sold off today on a stronger dollar and fear that the health care bill will pass over the weekend. Volatility also spiked today with quadruple witching.  Stocks this week seemed to be tired this week after their recent run-up and no real catalyst to move them higher. 

Small cap stocks were under pressure today lead by Palm (PALM) 4.00 -1.64, -29.16%.  Palm was sold off after reporting earnings that missed estimates and analysis downgrades with one analysis saying the price will go to $0.00.  The Russell 2000 Small-Cap Index lost -1.1% today.

The dollar's gain today came amid continued headlines about proposed financial support for Greece.

The dollar’s gain today also dragged down commodities. The CRB Commodity Index fell -1.1%. Oil closed -1.8% lower at $80.68 per barrel. Gold prices closed -1.8% lower at $1107.60 per ounce, while silver closed -2.2% lower at $17.03 per ounce.

Advancing Sectors: Telecom +0.4%

Declining Sectors: Materials -1.0%, Energy -0.9%, Tech -0.8%, Financials -0.7%, Consumer Discretionary -0.6%, Industrials -0.4%, Utilities -0.2%, Consumer Staples -0.1%

Unchanged: Health Care

MIDDAY LUNCH

Dow 10727.85  -54.04, Nasdaq 2371.91  -19.87,S&P 1159.10  -7.06 

Small cap stocks are under pressure today lead by Palm (PALM) 4.26 -1.39, -24.60%.  Palm is being sold off after reporting earnings that missed estimates and analysis downgrades with one analysis saying the price will go to $0.00.

Airline stocks are also getting slammed today; the Amex Airline Index is down -2.6%.  AMR Corp (AMR) 9.09 – 0.44, -4.72% is one of the worst performers.

The stock market's fall has come in conjunction with the dollar's increased gains, the Dollar Index is at a fresh session high with a +0.8% gain. This has also pressured commodities to the downside. The CRB Commodity Index is down -1.5%.

Also pressuring stocks today is the possible vote on President Obama’s heath care bill which could occur on Sunday. 

MORNING COFFEE

Jobs Bill is Now Law.  President Obama signed a $17.6 billion jobs bill into law yesterday.  The new law will try to stimulate employment by providing tax breaks to businesses that hire new workers.

Foreclosed Homes Increase. The number of foreclosed homes that banks are trying to sell is rising and the rise will cause a further fall in home values.  Barclays Capital estimates that banks now hold 645,800 foreclosed homes in January up +4.6% from December.  

SunPower Restates Earnings.  SunPower (SPWRA) said it will restate its earnings for 2008-2010 after an internal investigation into accounting issues uncovered errors.  The investigation resulted in $33.2 million in additional expenses and a $16.9 million reduction in income.

Cintas (CTAS): Reported Q3 FY10 EPS of $0.32 beating estimates by +$0.02 on revenue of $862 million.  The company also reaffirmed Q4 EPS.

Palm (PALM): Reported Q3 FY10 EPS of -$0.61 missing estimates by -$0.19 on revenue of $366 million.

SunPower (SPWRA): Reported Q4 EPS of $0.50 beating estimates by +$0.01 on revenue of $548 million.

Downgrades

Palm (PALM):  Morgan Joseph lowered their rating from Hold to Underperform and placed a target price of $0.00 on the company.

Palm (PALM):  Kaufman Bros lowered their rating from Hold to Sell and placed a target price of $3.00 on the company.

Synaptics (SYNA): Oppenheimer lowered their rating from Outperform to Perform.

Coverage Initiated

CVS Caremark (CVS):  Caris & Company initiated coverage with an Average rating and a target price of $36.00.

Research In Motion (RIMM): Wunderlich initiated coverage with a Buy rating and a target price of $96.00.

Coverage Reiterated/Price Target Changed

FedEx (FDX): Credit Suisse reiterated their Neutral rating and changed their target price from $99.00 to $100.00.

U.S. Steel (X): Credit Suisse reiterated their Neutral rating and changed their target price from $45.00 to $56.00.

Oracle (ORCL): Jefferies reiterated their Buy rating and changed their target price from $28.00 to $29.00.

·         Futures: Dow +0.1%. S&P +0.1%. Nasdaq flat. Crude -0.7% to $81.61. Gold -0.5% to $1121.40.

·         Asia: Nikkei +0.8% to 10825. Hang Seng +0.2% to 21371. Shanghai +0.7% to 3068. BSE +0.3% to 17578.

·         Europe: London +0.7% to 5684. European +0.5% to 3958. Frankfurt +0.5% to 6040.