MORNING COFFEE

Jobless Claims Rise.  The number of people filing new claims for unemployment benefits unexpectedly rose last week by the largest amount in three months. Applications for unemployment benefits rose to 471,000 last week, up by 25,000 from the previous week. States with the largest losses were California and Michigan.

Financial Reform Goes Nowhere.  Yesterday Democrats were surprised when a vote to end debate on financial reform legislation failed. Democrats will try to lock in support ahead of another cloture vote scheduled for today.  Only when the debate is closed off will lawmakers be able to vote on passage of the bill itself.

FOMC Release Minutes. There were no surprises in the FOMC minutes released yesterday.  The Fed will postpone asset sales, most likely until after a rate hike sometime in the future.  The Fed forecast faster growth in 2011 and 2012, with some members taking differing opinions on the inflation outlook. The Fed also acknowledged the possibility of spillover effect on the U.S. from Greece's debt crisis.

Upgrades

UPS (UPS): Stifel Nicolaus upgraded their rating from Hold to Buy and placed a target price of $76.00 on the company.

FedEx (FDX): Stifel Nicolaus upgraded their rating from Hold to Buy and placed a target price of $102.00 on the company.

Hewlett-Packard (HPQ): Standpoint Research upgraded their rating from Hold to Buy.

Teva Pharm (TEVA): Standpoint Research upgraded their rating from Hold to Buy.

Accenture (ACN): Standpoint Research upgraded their rating from Hold to Buy.

Coverage Initiated

Amazon.com (AMZN): Stifel Nicolaus initiated coverage with a Buy rating and target price of $160.00.

Earning Reports.

Sears (SHLD): Reported Q1 EPS of $0.16 beating estimates by +$0.02 on revenue of $10 billion.

Staples (SPLS): Reported Q1 EPS of $0.28 beating estimates by +$0.01 on revenue of $6.1 billion.

Advance Auto Parts (AAP): Reported Q1 EPS of $1.19 beating estimates by +$0.19 on revenue of $1.8 billion.

Applied Materials (AMAT): Reported Q2 EPS of $0.22 Beating estimates by +$0.01 on revenue of $2.3 billion.

Limited Brands (LTD): Reported Q1 EPS of $0.25 beating estimates by +$0.06 on revenue of $1.9 billion.

PetSmart (PETM): Report Q1 EPS of $0.46 beating estimates by +$0.03 on revenue of $1.4 billion. 

·         Futures: Dow -0.55%. S&P -0.6%. Nasdaq -0.8%. Crude -0.7% to $69.38. Gold -0.7% to $1185.10.

·         Asia: Japan -1.5% to 10030. Hong Kong -0.2% to 19546. China -1.2% to 2556. India +0.7% to 16520.

·         Europe: London -0.3%. Paris -0.4%. Frankfurt -0.9%.