MORNING COFFEE

McDonald’s May Drop Healthcare Plans. McDonald’s (MCD) is considering dropping its health insurance coverage for nearly 30,000 workers unless they receive a waiver from the Obama health care reform law and the potential costs to the company. This is the first  company to voice concerns over low cost, low benefits, “mini-med” plans that provide limited benefits to low-wage workers which could affect millions of workers.

Spanish Debt Rating Lowered. Moody’s (MCO) has followed other debt rating agencies by downgrading Spain’s government debt.  The company cut the rating by one notch from Aaa to Aa1, citing a weak economic outlook and continued doubt that Spain will reach its deficit-reduction targets.

JPMorgan Stops Foreclosures. JPMorgan Chase (JPM) is stopping more than 56,000 foreclosure proceedings until the company can review documents after the company became aware that employees may have signed affidavits without personally reviewing the documents. GMAC Mortgage also admitted recently that its employees signed foreclosure affidavits without any documents. 

Upgrades

ProLogis (PLD): Stifel Nicolaus raised their rating from Hold to Buy and placed a target price of $14.00 on the company.

Downgrades

Tellabs (TLAB): Morgan Keegan lowered their rating from Outperform to Market Perform.

Coverage Reiterated/Price Target Changed

Family Dollar (FDO): Wedbush reiterated their Neutral rating and raised their target price from $37.00 to $40.00.

Stericycle (SRCL): Wunderlich reiterated their Hold rating and raised their target price from $50.00 to $63.00.

Apple (AAPL): Stifel Nicolaus reiterated their Buy rating and raised their target price from $350.00 to $360.00.

Vonage (VG): Northland Securities reiterated their Outperform rating and raised their target price from $3.00 to $3.25.

Earnings Report

Family Dollar (FDO):  Reported earnings of $0.56 beating estimates by +$0.05.

McCormick (MKC): Reported earnings of $0.66 beating estimates by +$0.07.

·         Futures: Dow -0.01%. S&P -0.09%. Nasdaq -0.01%. Crude +0.21% to $78.02. Gold +0.27% to $1313.90.

·         Asia: Japan -1.99% to 93369. Hong Kong -0.09% to 22358. China+1.72% to 2656. India +0.57% to 20069.

·         Europe: London -0.11%. Paris -0.72%. Frankfurt -0.22%.

MIDDAY LUNCH

Dow 10828.13  +16.09, Nasdaq 2367.41  -2.36, S&P 1143.27  +1.11 

Stocks have worked their way into positive territory but have fallen of the session highs. 

The market started off in the red as traders had renewed worries about sovereign debt.   Some of those concerns were alleviated on speculation that European central banks will purchase troubled debt to keep debt markets somewhat stable.

Shares of Walgreen (WAG) 33.55, +3.20 are higher after the company reported better than expected earnings.  Shares of CVS Caremark (CVS) 31.47, +0.86 are also higher on Walgreen’s news.

Barclays PLC raised their target price on Oracle (ORCL) 27.17, +0.22, +0.82% from $31.00 to $32.00 and reaffirmed their Overweight rating on the company. 

Monsanto (MON) 48.06 -5.01, -9.44% shares are under pressure today on concerns about its new premium corn seeds and continuing uncertainty over the end of a European ban on genetically modified crops.

Nine of the ten major sectors are trading higher with Basic Materials leading the market up +0.62%.  Transportation is the only sector trading in negative territory down -0.08%.

MORNING COFFEE

Blackberry Unveils PlayBook. Research in Motion (RIMM) the maker of Blackberry phones unveiled a computer called the PlayBook.  The PlayBook runs on a new operating system and has a seven-inch screen and will not connect to a mobile phone networks. The tablet will compete against Apple's (AAPL) iPad and a host of other tablet computers rolling out for the holiday season running Google’s (GOOG) popular Android operating system. The company expects the PlayBook tablet to be available in the U.S. early next year.

S&P Warns On Ireland’s Debt. Standard & Poor's issued a warning that it may cut Ireland's credit rating again.  The possible cut is due to the cost of recapitalizing nationalized Anglo Irish Bank (AGCPF). The news comes a day after Moody's cut their rating.  The S&P warning sent Irish credit spreads and the cost of insuring Irish debt from default to new highs.

Upgrades

Las Vegas Sands (LVS): KeyBanc Capital Markets raised their rating from Underweight to Hold.

Downgrades

Alberto-Culver (ACV): Caris & Company lowered their rating from Above Average to Average.

Newmont Mining (NEM): Stifel Nicolaus lowered their rating from Buy to Hold.

Coverage Reiterated/Price Target Changed

Apple (AAPL): JMP Securities reiterated their Market Outperform rating and raised their target price from $290.00 to $335.00.

Southwest Air (LUV): Hudson Securities reiterated their Buy rating and raised their target price from $15.00 to $17.00.

New York Times (NYT): The Benchmark Company reiterated their Buy rating and lowered their target price from $11.00 to $9.00.

Seagate Tech (STX): RBC Capital Markets reiterated their Sector Perform rating and lowered their target price from $16.00 to $13.00.

Intuit (INTU): reiterated their Outperform rating and raised their target price from $45.00 to $52.00.

Electronic Arts (ERTS): Kaufman Bros reiterated their Buy rating and lowered their target price from $23.00 to $21.00.

Earning Reports

Jabil Circuit (JBL): Reported FQ4 EPS of $0.52 beating estimates by +$0.03 on revenue of $3.9 billion.

Paychex (PAYX): Reported FQ1 EPS of $0.36 Beating estimates by +$0.02 on revenue of $518 million.

·         Futures: Dow +0.19%. S&P +0.13%. Nasdaq +0.40%. Crude -0.68% to $76.00. Gold -0.59% to $1290.90.

·         Asia: Japan -1.12% to 9496. Hong Kong -1.03% to 22110. China -0.63% to 2611. India -0.06% to 20105.

·         Europe: London -0.35%. Paris -0.09%. Frankfurt +0.25%.

MIDDAY LUNCH

Dow 10830.81  -29.45, Nasdaq 2372.71  -8.51, S&P 1144.42   -4.25

Stocks are trading at session lows with lackluster trading. 

Airline stocks are strong today after the announcement that Southwest Airlines (LUV) 13.68 +1.40, +11.40% will be purchasing AirTran Holdings (AAI)  7.37 +2.82, +61.98% for  $1.4 billion.  The Amex Airline Index is up +2.4%, to its highest level in almost three years. Additionally the transportation sector is up +0.52%.

Telcomm stocks are also higher today up +0.6%.

Microchip Technology (MCHP) 31.08 +0.47, +1.55% shares are also showing nice gains today.

In commodity trading crude oil is currently trading at 76.17 -0.32 while gold is up +0.30 to 1298.40 per ounce.

The 10 yr Treasury is up +23 ticks bringing the yield down to 2.52%.

MORNING COFFEE

Wal-Mart In Talks With Massmart.  Reports say that Wal-Mart (WMT) is in talks to buy South Africa's Massmart for $4.2 billion.  An executive said "By Wal-Mart standards this is a pretty chunky deal, and shows our commitment to the market." The deal would help Wal-Mart's emerging markets strategy and reduce its dependency on U.S. sales.

Southwest To Buy AirTran.  Southwest Airlines (LUV) announced they will buy AirTran (AAI) for $1.4 billion or $7.69 per share.  The purchase opens up routs in Atlanta, Washington D.C., increases their presence in key markets like New York and Boston.

Upgrades

Franklin Resources (BEN): FBR Capital raised their rating from Market Perform to Outperform and raised their target price from $105.00 to $127.00.

Downgrades

Fortune Brands (FO): Davenport lowered their rating from Buy to Neutral.

Nike (NKE): Argus lowered their rating from Buy to Hold.

ValueClick (VCLK): Merriman lowered their rating from Buy to Neutral.

Coverage Reiterated/Price Target Change

Walgreens (WAG): Caris & Company reiterated their Above Average rating and lowered their target price from $36.00 to $34.00.

Finish Line (FINL): Wedbush reiterated their Outperform rating and lowered their target price from $21.00 to $20.00.

·         Futures: S&P +0.11%. 10-yr +0.17%. Euro -0.16% vs. dollar. Crude +0.43% to $76.82. Gold +0.13% to $1299.80.

·         Asia: Japan +1.4%. Hong Kong +1.0%. China +1.4%. India +0.4%.

·         Europe: London 0.0%. Paris +0.1%. Frankfurt +0.1%.

MORNING COFFEE

Oracle Plans to Acquire Chipmaker. CEO Larry Ellison during a conference yesterday said that the company is looking to purchase semiconductor companies and makers of industry- specific software.  Oracle has acquired more than 65 companies during the past five years.  Oracle’s computer hardware innovative started with its purchase of Sun Microsystems.

Durable Orders Fall.  The Commerce Department said durable goods orders fell -1.3% after a revised 0.7 percent increase in July. This was the largest decline in more than a year. Economists were looking for orders to fall -1.4%.  Ex-Autos and aircraft saw a +2.0% increase.

Coverage Initiated

American Water (AWK): Robert W. Baird initiated coverage with an Outperform rating and target price of $26.00.

Coverage Reiterated/Price Target Changed

Advanced Micro (AMD): FBR Capital reiterated their Market Perform rating and lowered their target price from $10.00 to $9.00.

Earning Reports

Nike (NKE): Reported FQ1 EPS of $1.14 beating estimates by +$0.13 on revenue of $5.2 billion.

KB Homes (KB): reported earnings of -$0.02 beating estimates by +$0.13.

·         Futures: S&P +0.27%. 10-yr +0.09%. Euro +0.73% vs. dollar. Crude +0.04% to $75.21. Gold +0.22% to $1299.10.

·         Asia: Japan -1.0%. Hong Kong +0.3%. China +0.1%. India +0.9%.

·         Europe: London -0.4%. Paris -0.2%. Frankfurt -0.5%.

MORNING COFFEE

Blockbuster Files For Bankruptcy.  Video rental company Blockbuster has files for chapter 11 bankruptcy protection and plans to keep stores open as it reorganizes.  The company has been under pressure as consumers switch to other ways to rent movies such as Netflix (NFLX), video on demand and Redbox.  CEO Jim Keyes said "After a careful and thorough analysis, we determined that the process announced today provides the optimal path for recapitalizing our balance sheet and positioning Blockbuster for the future as we continue to transform our business model to meet the evolving preferences of our customers."

McDonald's Raises Quarterly Dividend. McDonald's announced that it is raising their quarterly cash dividend by 11%.  The company will now pay a dividend of $0.61 per share and sees total cash of around $5 billion returned to shareholders in 2010 in the form of dividend and the share repurchase program.  The dividend is payable on December 15 to shareholders of record as of December 1.

Downgrades

Altria (MO): Stifel Nicolaus lowered their rating from Buy to Hold.

Coverage Initiated

Monsanto (MON): Stifel Nicolaus initiated coverage with a Hold recommendation.

Medco Health Solutions (MHS): FBR Capital initiated coverage with an Outperform recommendation and target price of $67.00.

Express Scripts (ESRX): FBR Capital initiated coverage with an Outperform recommendation and target price of $54.00.

Coverage Reiterated/Price Target Changed

Bed Bath & Beyond (BBBY): Wedbush reiterated their Outperform rating and raised their target price from $48.00 to $50.00.

Earning Reports

Rite Aid (RAD): Reported earnings of -$0.23 missing estimates by -$0.07.

Texas Industries (TXI): Reported earnings of-$0.20 missing estimates by -$0.09.

After the close Nike (NKE) is due to report earnings.  Analysts estimates are for the company to report earnings of +$1.01 versus year ago earnings of +$1.04.