MORNING COFFEE

Fords Mercury Brand To Be Cut.  Reports say Ford (F) will likely close down its Mercury brand, which was first launched during the Great Depression. Mercury sales have been weak for some time and the vehicles are just rebranded Fords.

More Special Interest Spending. Congress is laying the groundwork for a possible federal bailout of underfunded multi-employer pension plans that are jointly run by companies and unions. Opponents argue the targeted aid is just another taxpayer giveaway to the unions and could cost tens of billions of dollars.

Upgrades

Nokia (NOK): MKM Partners raised their rating from Sell to Neutral.

Ulta Salon (ULTA): Robert W. Baird raised their rating from Neutral to Outperform and placed a target price of $30.00 on the company.

Coverage Initiated

Target (TGT): MKM Partners initiated coverage with a Buy rating and target price of $66.00.

Wal-Mart (WMT): MKM Partners initiated coverage with a Neutral rating and target price of $55.00.

Earning Reports

Guess? (GES): Reported Q1 EPS of $0.58 beating estimates by +$0.09 on revenue of $539 million. 

J Crew Group (JCG): Reported Q1 EPS of $0.68 beating estimates by +$0.11 on revenue of $414 million.

Novell (NOVL): Reported FQ2 EPS of $0.07 in-line with estimates on revenue of $204 million.

·         Futures: Dow +0.1% to 10242. S&P +0.1% to 1102. Crude +0.8% to $75.15. Gold +0.1% to $1,213.
10-year Tsy +0.1%. Euro +0.2%. Yen -0.1%.

·         Asia: Japan +1.3%. Hong Kong +1.7%. China flat. India +1.2%.

·         Europe: London +0.5%. Paris +0.1%. Frankfurt +0.4%.

MIDDAY LUNCH

Dow 10175.32  +200.87, Nasdaq 2256.61  +60.73, S&P 1092.21  +24.26 

Stocks have begun moving sideways near their session highs.  The strength of the market today has allowed the Volatility Index (VIX) also known as the fear index to fall -13%.

Trading volume is also strong with more than a half million shares have already exchanged hands on the NYSE. Advancing stocks currently outnumbers decliners by more than 10-to-1 on the Big Board.

Microsoft (MSFT) 26.02 +1.01, +4.04% shares are higher today after FBR Capital raised their rating on the company to Outperform citing valuation and product cycle.

Monsanto (MON) 48.70 -3.95, -7.51% shares are getting slammed today following the company's announcement that it was lowering its earnings outlook for fiscal 2010.

Afterhours today Guess? (GES) 37.58 +1.85, +5.19% is scheduled to release earnings.  Wall Street estimates are for the company to report earnings of $0.49 versus $0.35 a year ago.

The benchmark 10-year Note is down more than one full point to yield 3.33%.  Additionally, the Treasury is scheduled to release of results from an auction of 7-year Notes at the top of the hour.

MORNING COFFEE

BofA and Citi Hid Debt. Reports state that both Bank of America (BAC) and Citigroup (C) hid billions of dollars of debt from investors through accounting errors. Over the last three years, the two banks say they “accidentally”' classified some short-term repurchase agreements, or "repos," as sales instead of borrowing. Lehman Brothers (LEHMQ) had done the same thing before its bankruptcy to improve its balance sheet. Bank of America and Citigroup say the misclassifications were due to errors, and not an attempt to make themselves look less risky.

Apple Bigger Then Microsoft. At the close of trading yesterday, Apple (AAPL) surpassed Microsoft (MSFT) as the world's largest technology company by market capitalization. Apple's market value was $223 billion as compared to Microsoft's $219 billion.

Upgrades

Limited (LTD): Argus raised their rating from Hold to Buy and placed a target price of $32.00 on the company.

Microsoft (MSFT): FBR Capital raised their rating from Market Perform to Outperform and raised their target price from $31.00 to $32.00.

BP (BP): Oppenheimer raised their rating from Perform to Outperform and placed a target price of $55.00 on the company.

Coverage Initiated

Joy Global (JOYG): Broadpoint AmTech initiated coverage with a Buy rating and target price of $60.00.

Coverage Reiterated/Price Target Changed

Jo-Ann Stores (JAS): Wedbush reiterated their Outperform rating and raised their target price from $47.00 to $51.00.

Covidien (COV): RBC Capital Markets reiterated their Sector Perform rating and lowered their target price from $58.00 to $53.00.

Cracker Barrel (CBRL): Argus reiterated their Buy rating and raised their target price from $54.00 to $58.00.

Yahoo! (YHOO): Oppenheimer reiterated their Perform rating and lowered their target price from $21.00 to $19.00.

Earning Reports

Big Lots (BIG): Reported Q1 EPS of $0.68 beating estimates by +$0.01 on revenue of $1.2 billion.

Costco (COST): Reported FQ3 EPS of $0.68 beating estimates by +$0.02 on revenue of $17.4 billion.

Lenovo (LNVGY): Reported full-year net profit of $129 million ($1.42/share) missing estimates by -$16 million.

Dress Barn (DBRN): Reported FQ3 EPS of $0.60 missing estimates by -$0.01 on revenue of $666 million.

Tiffany & CO. (TIF): Reported Q ESP of $0.50 beating estimates by +$0.13 on revenue of $633.6 million. Tiffany also raised its full year profit forecast to a range of $2.55 to $2.60 per share, above the average Wall Street’s estimate of $2.51.

·         Futures: Dow +2.1%. S&P +2.6%. Nasdaq +2.6%. Crude +2.7% to $73.44. Gold -0.2% to $1211.50.

·         Asia: Japan +1.2% to 9640. Hong Kong +1.2% to 19431. China +1.1% to 2656. India +1.7% to 16666.

·         Europe: London +2.0%. Paris +2.1%. Frankfurt +2.4%.

CLOSING BELL

Dow 9974.45  -69.30, Nasdaq 2195.88  -15.07, S&P 1067.98  -6.08 

With bargains to be had the bulls were motivated to buy this morning.  The S&P 500had a broad-based gains that put it up almost +5% from yesterdays low. Despite the buying strength, stocks lacked a leadership which allowed the bears to come into the market later in the day to erase the gains.

Trading volume on the NYSE was close to 2 billion shares today. Typical trading volume on the NYSE has been closer to 1.2 billion shares per session over the past 200 sessions.

In Economic data total durable goods orders for April can in higher than expected, but orders less transportation missed expectations.

New home sales for April rose more-than-expected to an annualized rate of 504,000 units, the highest level in two years.

Walt Disney (DIS) 33.07 +0.75, +2.32% shares are higher today on news that the company has been in negotiations with two private equity firms to sell ABC, Disney has denied the report.  The news came out when the FBI arrested a Disney employee and her boyfriend for trying to sell insider information.

Advancing Sectors: Industrials +0.3%
Declining Sectors: Telecom -1.2%, Tech -1.1%, Consumer Staples -0.9%, Materials -0.8%, Financials -0.6%, Health Care -0.6%, Energy -0.3%, Consumer Discretionary -0.3%, Utilities -0.2%

MIDDAY LUNCH

Dow 10128.09  +84.34, Nasdaq 2238.95  +28.00, S&P 1085.13  +11.10 

Stocks are stronger today but are currently trading off their session lows.  More than 80% of the stocks in the S&P 500 are trading higher.  Industrials are among the best performers today up +1.7%.

Buyers have been active today scooping up bargains in the wake of the recent correction.

European debt concerns continue to drag down the euro, which has fallen -1.0% against the dollar.  The Euro remains fractionally above its four-year low of roughly 1.214.

Treasuries are under pressure. The benchmark 10-year Note is currently down more than -20 ticks bringing its yield to 3.25%.  The Treasury is scheduled to auction off 5-year Notes today.

In Economic data total durable goods orders for April can in higher than expected, but orders less transportation missed expectations.

Walt Disney (DIS) 33.53 +1.22, +3.77% shares are higher today on news that the company has been in negotiations with two private equity firms to sell ABC.  The news came out when the FBI arrested a Disney employee and her boyfriend for trying to sell insider information.

MORNING COFFEE

Apple Under Antitrust Investigation By DOJ. The Justice Department is in the early stages of an antitrust inquiry into Apple (AAPL) and its role in the digital music market. Officials have spoken to  record labels and online music companies about selling music online. The allegations are that Apple used its dominance to persuade music labels to block Amazon (AMZN) from access to soon-to-be released music.

Qata’s Sovereign Wealth Funds Looking At Citigroup. Qatar's sovereign wealth fund has  expressed interest in buying part of the Treasury's 27% stake in Citigroup (C).

Upgrades

Lowe's (LOW): Longbow raised their rating from Neutral to Buy and placed a target price of $29.00 on the company.

Home Depot (HD): Longbow raised their rating from Neutral to Buy and placed a target price of $39.00 on the company.

Fortune Brands (FO): Longbow raised their rating from Neutral to Buy and placed a target price of $54.00 on the company.

Citigroup (C): Oppenheimer raised their rating from Perform to Outperform and placed a target price of $4.78 on the company.

Downgrades

Waddell & Reed (WDR): FBR Capital lowered their rating from Outperform to Market Perform and lowered their target price from $42.00 to $32.00.

Dreamworks Animation (DWA): Jefferies lowered their rating from Buy to Hold and lowered their target price from $49.00 to $28.00.

Coverage Reiterated/Price Target Changed

BP (BP): Howard Weil reiterated their Market Perform rating and lowered their target price from $70.00 to $60.00.

AutoZone (AZO): Wedbush reiterated their Neutral rating and lowered their target price from $186.00 to $194.00.

Earning Reports

American Eagle (AEO): Reported Q1 EPS of $0.05 in-line with estimates on revenue of $659.5 million 

Toll Brothers (TOL): Reported FQ2 EPS of -$0.24 missing estimates by -$0.01 on revenue of $311 million.

TiVo (TIVO): Reported Q1 EPS of -$0.13 beating estimates by +$0.03 on revenue of $43.2 million.

·         Futures: Dow +0.6%. S&P +0.6%. Nasdaq +0.7%. Crude +2.7% to $70.58. Gold +1.2% to $1212.50.

·         Asia: Japan +0.7% to 9523. Hong Kong +1.1% to 19196. China +0.1% to 2626. India +2.3% to 16388.

·         Europe: London +1.7%. Paris +2.5%. Frankfurt +1.6%.

MORNING COFFEE

Dell Unveils iPad Competitor.  Dell (DELL) has unveiled the Streak, a tablet computer with a 5-inch screen running Google's (GOOG) Android operating system. The tablet will go on sale in the U.K. in June, and in the U.S. later this summer.

Toyota Stops Lexus Sales.  Toyota (TM) has suspended sales of Lexus LS vehicles in the U.S. following a worldwide recall of the model.  Toyota recalled about 3,800 Lexus LS cars in the U.S. due to a steering wheel problem, with 11,500 cars recalled globally.

Upgrades

Nike (NKE): Argus raised their rating from Hold to Buy and placed a target price of $82.00 on the company.

Gilead Sciences (GILD): Morgan Joseph raised their rating from Sell to Hold.

Murphy Oil (MUR): Benchmark raised their rating from Sell to Hold.

Coverage Initiated

Bank of NY (BK): Jefferies initiated coverage with a Buy rating and target price of $35.00.

State Street (STT): Jefferies initiated coverage with a Hold rating and target price of $42.00.

Northern Trust (NTRS): Jefferies initiated coverage with a Hold rating and target price of $53.00.

Earning Reports

Phillips-Van Heusen (PVH): Reported Q1 EPS of $0.83 beating estimates by +$0.04 on revenue of $619 million.

Medtronic (MDT): Reported Q4 EPS of $0.90 beating estimates by +$0.02 on revenue of $986 million.

AutoZone (AZO): Reported Q3 EPS of $4.12 beating estimates by +$0.53 on revenue of $1.82 billion.

·         Futures: Dow -2.1%. S&P -2.5%. Nasdaq -2.2%. Crude -3.7% to $67.64. Gold -0.5% to $1187.50.

·         Asia: Japan -3.1% to 9460. Hong Kong -3.5% to 18986. China -1.9% to 2623. India -2.7% to 16022.

·         Europe: London -2.7%. Paris -3.3%. Frankfurt -2.7%.