MORNING COFFEE

Jobless Claims Increase.  The labor department said that jobless claims rose to 472,000 for the week of June 26^th.  Economists were looking for claims to drop to 455,000.  Initial claims for unemployment insurance benefits are moving in the wrong direction, and many are questioning President Obama’s policies since they appear not to be working.

Possible Spain Downgrade. Moody's said it may downgrade Spain's triple-A sovereign rating by one or two notches.  In a statement Moody’s said: "In the short term, the government's accelerated fiscal consolidation combined with the higher borrowing costs currently facing the government, consumers, and businesses will likely depress growth."

Second Quarter Blues.  Investors will want to forget the second quarter.  Yesterday, the Dow closed down -1.1% to 9773.95, marking a -10.4% loss for the quarter.  This was the worst quarterly performance for the Dow since the beginning of 2009. The Nasdaq and S&P were down -12% and -11.9% for the quarter, respectively.

Upgrades

Xcel Energy (XEL): Robert W. Baird raised their rating from Neutral to Outperform and placed a target price of $23.00.

Smith & Wesson (SWHC): Merriman raised their rating from Neutral to Buy.

Downgrades

Lions Gate Entertainment (LGF): Jefferies lowered their rating from Buy to Hold and lowered their target price from $8.00 to $7.00.

Earnings

Apollo Group (APOL): Reported FQ3 EPS of $1.74 beating estimates by +$0.19 on revenue of $1.3 billion.

·         Futures: Dow -0.1%. S&P -0.1%. Nasdaq -0.3%. Crude -1.1% to $74.83. Gold -0.2% to $1243.

·         Asia: Japan -2.0% to 9191.6. Hong Kong -0.6% to 20129. China -1.0% to 2374. India -1.1% to 17509.

·          Europe: London -1.0%. Paris -1.4%. Frankfurt -0.7%.