CLOSING BELL

Dow 9774.02  -96.28, Nasdaq 2109.24  -25.94, S&P 1030.71  -10.53 

Stocks attempted to erase some of the losses suffer yesterday, but in the final hour of trading things turned negative.

Some of the early gains were due to news that the financial reform bill's language regarding some $19 billion in new fees and taxes was removed. This allowed the financial sector to gain +1% in the early going, but the gains could not be maintained and the sector ended the day with a -1.1% loss.

A disappointing ADP Employment Change Report was released today, which showed that private payrolls for June increased by just 13,000 when economist had estimated a 60,000 increase.

Trading volume had been rather slow until the stock market's late slide caused an increase in trading so that share volume on the NYSE surpassed 1.4 billion shares.  Trading volume is expected to climb tomorrow as money managers make end-of-month and end-of-quarter portfolio rebalances.

Advancing Sectors: None
Declining Sectors: Technology -1.6%, Materials -1.3%, Telecom -1.3%, Consumer Discretionary -1.2%, Financials -1.1%, Consumer Staples -0.8%, Health Care -0.8%, Utilities -0.7%, Industrials -0.6%, Energy -0.6%

MORNING COFFEE

Verizon Gets iPhone. Verizon Wireless (VZ) will start selling the iPhone (AAPL) in January, bringing an end to AT&T's exclusive deal to sell the iPhone. Analysts say Verizon customers could buy as many as 3M iPhones per quarter.

Celgene Buys Abraxis. Celgene (CELG) has agreed to buy Abraxis BioScience (ABII) in a cash-and-stock deal that values the firm at $2.9 billion. The purchase will provide access to Abraxis' oncology treatments, including Abraxane, for breast cancer patients. The deal is a +17% premium to Abraxis' closing price yesterday.

Foreclosed Homes Were 1/3 Of Sales. Foreclosed properties accounted for 31% of the U.S. home sales in Q1, according to a new report by RealtyTrac.  Also accourding to RealtyTrac the average price for foreclosed properties was 27% below that of regular sales.

ADP Payrolls Miss Estimates.  ADP reported that U.S. companies increased their payrolls by only 13,000 in June.  Economist had estimated payrolls to increase by 60,000.  Many are wondering were the jobs are since the only really area the has shown job growth in the government sector.

Upgrades

US Bancorp (USB): FBR Capital raised their rating from Market Perform to Outperform and placed a target price of $28.00 on the company.

AstraZeneca (AZN): Jefferies raised their rating from Underperform to Hold.

Coverage Resumed

Johnson Controls (JCI): Kaufman Bros resumed coverage with a Buy rating and target price of $37.00.

Earnings Reports

General Mills (GIS): Reported FQ4 EPS of $0.41 in-line on revenue of $3.57 billion.  The company also guides FY11 EPS below consensus.

·         Futures: Dow +0.5%. S&P +0.7%. Nasdaq +0.55%. Crude +0.8% to $76.54. Gold +0.1% to $1244.10.

·         Asia: Japan -2.0% to 9383. Hong Kong -0.6% to 20129. China -1.2% to 2398. India +0.9% to 17701.

·         Europe: London +0.7%. Paris +0.8%. Frankfurt +0.6%.

MIDDAY LUNCH

Dow 9893.20  -245.32, Nasdaq 2153.72  -66.93, S&P 1045.93  -28.64 

The markets started the day off in the red and have struggled all day and the 10-year Note is now at its lowest level, 2.98%, since April 2009.

Selling today is broad based, but industrials are feeling the brunt of the selling.  The sector is off -3.7%.  Every single one of the industrial sector's components is in negative territory, with Textron (TXT)  17.05 -1.59, -8.52% and Boeing (BA) 63.99 -3.38, -5.02% leading the way lower.

Much of today’s selloff can be blamed on Japan’s recent economic data which suggested the country’s economy has stopped growing.

Additionally, the Conference Board's Consumer Confidence Index for June fell to 52.9 from 62.7 in the prior month. Economists had expected a reading of 62.0.

MORNING COFFEE

Japan’s Economy May Be Slowing. Japan's May industrial production slipped, as did household spending, and the unemployment rate unexpectedly increased. The data suggest Japan's economic recovery is slowing down.

Concerns Grow Over Glaxo Drug.  Two studies released found the GlaxoSmithKline (GSK) diabetes drug Avandia is unsafe.  The studies found a linked to an increased risk of heart attack and heart failure.  A vote on whether to withdraw the drug from the market will likely come next month.

Upgrades

Noble Corp (NE): FBR Capital raised their rating from Market Perform to Outperform and raised their target price from $36.00 to $42.00.

Downgrades

Ethan Allen (ETH): KeyBanc Capital Markets lowered their rating from Hold to Underweight and placed a target price of $13.00 on the company.

American Eagle (AEO): Brean Murray lowered their rating from Hold to Sell and placed a target price of $10.00 on the company.

Akamai Tech (AKAM): Akamai Tech lowered their rating from Buy to Neutral.

Coverage Reiterated/Price Target Changed

Lowe's (LOW): RBC Capital Markets reiterated their Outperform rating and lowered their target price from $30.00 to $27.00.

Home Depot (HD): RBC Capital Markets reiterated their Sector Perform from rating and lowered their target price from $37.00 to $34.00.

General Dynamics (GD):  Gleacher & Company reiterated their Neutral rating and lowered their target price from $87.00 to $73.00.

Earning Releases

Barnes & Noble (BKS): Reported FQ4 EPS of -$0.89 missing estimates by -$0.08 on revenue of $1.3 billion.

Micron Technology (MU): Reported FQ3 EPS of $0.92 beating estimates by +$0.43 on revenue of $2.3 billion. Earnings may not be comparable.

·         Futures: Dow -1.1%. S&P -1.3%. Nasdaq -1.4%. Crude -1.9% to $76.78. Gold -0.2% to $1236.20.

·         Asia: Japan -1.3% to 9571. Hong Kong -2.3% to 20249. China -4.3% to 2427. India -1.2% to 17557.

·         Europe: London -2.0%. Paris -2.5%. Frankfurt -2.2%.

MIDDAY LUNCH

Dow 10258.18  -35.37, Nasdaq 2247.76  -14.04, S&P 1088.54  -6.77 

The stock market has been stuck in negative territory all morning with energy stocks feeling the pressure.

Energy stocks are down -1.1% after oil prices fell -2.7% to $75.80 per barrel.  The fall comes on news that crude oil inventories for the week ending June 18 had a buildup of 2.02 million barrels when a draw of 800,000 barrels had been expected.  Some of the losers today are: Anadarko Petroleum (APC) 40.28 -1.44, -3.45%, Cheveron (CVX) 72.80 -1.20, -1.62%, and ConocoPhillips (COP) 53.75 -0.71, -1.30%.

Shares of homebuilders have fallen are down - 0.9% after new home sales for May missed estimates.  New home sales for May hit an annualized rate of 300,000 units, down -32.7% month-over-month to a record low.

After the market close Nike (NKE) 72.12 -0.34, -0.47% is scheduled to report earnings.  Estimates are for the company to report earnings of $1.06 versus $0.99 a year ago. Other companies due to report after the bell that are of interest are Darden Restaurants (DRI) 41.58 -0.81, -1.91% and Paychex (PAYX) 27.48 -0.25, -0.90%.

MORNING COFFEE

Ban On Drilling Reversed. In a decision yesterday, U.S. District Judge Martin Feldman ruled against the six-month moratorium on deepwater drilling in the Gulf of Mexico. In his ruling he stated that the ban incorrectly assumed that just because one rig failed, all companies and rigs constitute an imminent danger. Interior Secretary Ken Salazar said he would issue a new order within days to reinstate the ban.  Additionally, a White House spokesman said the ruling will be appealed.

S&P Makes Changes to Index.  S&P announced that CarMax Inc. (KMX) will replace XTO Energy Inc. (XTO) in the S&P 500 index.  Exxon Mobil Inc. (XOM) is acquiring XTO Energy in a deal expected to be completed on or about the date of the change, pending final approvals.

Mexico Sues Arizona.  Yesterday Mexico sued Arizona in federal court saying that the state's new immigration law unconstitutional, arguing that the country's own interests and its citizens' rights are at stake.  Mexico also said it has a legitimate interest in defending its citizens' rights and that the law would lead to racial profiling, hinder trade and tourism, and strain the countries' work on combating drug trafficking and related violence.  An interesting point not addressed in the suit is that Mexico’s own immigration laws are similar to the Arizona law and in many aspects much more strict than the Arizona law.

Upgrades:

Dreamworks Animation (DWA): Stifel Nicolaus raised their rating from Hold to Buy and placed a target price of $35.00 on the company.

Downgrade

Inergy (NRGY): Wunderlich lowered their rating from Buy to Hold.

Coverage Initiated

PacWest Bancorp (PACW): Wunderlich initiated coverage with a Buy rating.

Coverage Reiterated/Price Target Changed

Walgreens(WAG): Caris & Company reiterated their Above Average rating and lowered their target price from $40.00 to $36.00.

Salesforce.com (CRM): Caris & Company reiterated their Buy rating and raised their target price from $100.00 to $115.00.

Apple (AAPL): Gleacher & Company reiterated their Buy rating and raised their target price from $340.00 to $355.00.

Earnings:

Adobe (ADBE): Reported FQ2 EPS of $0.44 beating estimates by +$0.01 on revenue of $943 million.

Jabil Circuit (JBL): Reported FQ3 EPS of $0.40 beating estimates by +$0.07 on revenue of $3.5 billion.

CarMax (KMX): Reported Q1 EPS of $0.44 beating estimates by +$0.11 on revenue $2.26 billion.

Rite Aid (RAD): Reported Q1 EPS of -$0.09 beating estimates by +$0.05 on revenue of $6.4 billion.

·         Futures: Dow +0.4%. S&P +0.5%. Nasdaq +0.4%. Crude -0.4% to $77.51. Gold +0.4% to $1246.20.

·         Asia: Japan -1.9% to 9923.7. Hong Kong +0.2% to 20857. China -0.7% to 2570. India 0.0% at 17756.

·         Europe: London -0.5%. Paris -0.6%. Frankfurt -0.2%.

MORNING COFFEE

E-Reader Price Wars. Barnes & Noble (BKS) slashed the price of its Nook e-reader to $199 and unveiled a new Wi-Fi only model that costs just $149.  In response, Amazon (AMZN) said it will lower the price of its Kindle e-reader to $189 from $259. Both companies are concerned with the success of Apple's (AAPL) iPad.

Differences In Opinions Going Into G-20 Summit. Going into the G-20 summit countries are bringing different viewpoints on how to ensure a global economic recovery. The U.K. is pressing for success through austerity, and nations like China, Canada and Japan are leaning in that direction as well. The U.S. is pushing for more stimulus measures, not less, to provide continued support for economic growth.

FOMC Rate Decision. The Federal Reserve is scheduled to release their decision on interest rates today at 2:15 ET.  Economist are expecting the Fed to keep rates unchanged at 0%-25% and Wall Street will be looking at the wording of their decision for hints of future rate hikes.

Upgrades

Mattel (MAT): Caris & Company raised their rating from Above Average to Buy and raised their target price from $29.00 to $32.00.

Volcom (VLCM): Longbow raised their rating from Neutral to Buy and placed a target price of $25.00 on the company.

Coverage Initiated

Roadrunner Transportation (RRTS): Stifel Nicolaus initiated coverage with a Buy rating and target price of $18.00.

Roadrunner Transportation (RRTS): Robert W. Bairdinitiated coverage with an Outperform rating and target price of $20.00.

Coverage Reiterated/Price Target Changed

Cinemark (CNK): Caris & Company reiterated their Below Average rating and lowered their target price from $15.00 to $14.00.

Clean Harbors (CLH): Wedbush reiterated their Outperform rating and raised their target price from $72.00 to $76.00.

Earnings

Walgreen (WAG): Reported Q3 earnings of $0.57 missing estimates by -$0.01 on revenue of $17.2 billion.

·         Futures: Dow -0.3%. S&P -0.4%. Nasdaq -0.2%. Crude -1.3% to $76.80. Gold -0.4% to $1235.80.

·         Asia: Japan -1.2% to 10113. Hong Kong -0.5% to 20819. China +0.1% to 2589. India -0.7% to 17750.

·         Europe: London -1.4%. Paris -1.3%. Frankfurt -0.8%.