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%.