MORNING COFFEE

Fitch Warns About U.S. Bank Exposure to EU. Yesterday the rating agency Fitch said that U.S. Banks face a “serious risk” to their credit worthiness if the EU debt crisis spreads beyond Greece, Ireland, Italy, Portugal and Spain. The news sent bank and financial stocks lower. Morgan Stanley (MS) Close 14.66 -1.27 (-7.79%), BofA (BAC): Close 5.90 -0.23 (-3.75%), Citigroup (C) Close 28.86 -1.16 (4.14%)

Spanish Yields Hit 7%. The eurozone debt contagion seems to be spreading out of control despite all attempts to control it by the ECB.  Spain is the latest casualty, as their yields passed 7%.   Wall Street already is very concerned about recent developments in Greece and Italy, now they have Spain thrown on top of the mess.  Additionally, because of bank exposure concerns to Italy and Spain, French yields costs are also rising.

Upgrades

Micron Technology (MU): MKM Partners raised their rating from Hold to Buy. Pre-market: 6.87 +0.13 (1.93%)

Downgrades

NetApp (NTAP): Collins Stewart lowered their rating from Buy to Neutral and lowered their target price from $52.00 to $40.00. Pre-market: 37.23 -3.51 (-8.62%)

Abercrombie & Fitch (ANF): ISI Group lowered their rating from Buy to Hold. After Hours: 47.94 -0.16 (-0.33%)

Coverage Initiated

Intercontinental Hotels Group (IHG): HSBC Securities initiated coverage with a Neutral rating. Pre-market: 16.71 -0.35 (-2.05%)

Royal Caribbean (RCL): HSBC Securities initiated coverage with a Neutral rating and target price of $30.00. Pre-market: 25.89 -0.18 (-0.69%)

Carnival (CCL): HSBC Securities initiated coverage with a Neutral rating and target price of $34.00. Pre-market: 31.13 -0.70 (-2.20%)

Verizon (VZ): Jefferies initiated coverage with a Buy rating and target price of $45.00. Pre-market: 36.55 -0.10 (-0.27%)         

AT&T (T): Jefferies initiated coverage with a Hold rating and target price of $33.00. After Hours: 28.77 -0.01 (-0.03%)

Under Armour (UA): Auriga initiated coverage with a Hold rating and target price of $82.00. After Hours: 81.00 +0.15 (0.19%)

Earning Reports

Applied Materials (AMAT): Reported EPS of $0.21 beating estimates by +$0.01. Pre-market: 12.18 -0.29 (-2.33%)

PETsMART (PETM): Reported EPS of $0.50 beating estimates by +$0.02. After Hours: 47.35 -0.31 (-0.65%)

J.M. Smucker (SJM): Reported EPS of $1.29 missing estimates by -$0.10. After Hours: 73.15 -0.03 (-0.04%)

Sears Holdings (SHLD): Reported EPS of -$2.57 missing estimates by -$0.33. Pre-market: 65.45 -2.85 (-4.17%)

Markets: 
Futures at 7:00: Dow -0.6%. S&P -0.75%. Nasdaq -0.6%. Crude -0.9% to $101.69. Gold -1.0% to $1757.10. 

Europe: London -2.5%. Paris -1.8%. Frankfurt -2.0%. 

Asia: Japan +0.2% to 8480. Hong Kong -0.8% to 18817. China -0.2% to 2463. India -1.9% to 16462.