MIDDAY LUNCH

Dow 10037.05  +18.77, Nasdaq 2153.92  -5.55, S&P 1060.02  -0.25 

Both the Nasdaq and S&P have just fallen into the red as sellers have entered the market. 

Blue chip names have remained strong for the most part, helping to keep the Dow above water.  Some holdings sporting gains include: McDonalds (MCD)  68.46 +1.14, +1.71%,  Proctor & Gamble (PG) 61.44 +0.62, +1.02%, Coca-Cola (KO) 51.96, +0.49, +0.95%, and Johnson & Johnson (JNJ) 60.89 +0.28, +0.46%.

In economic data today retail sales rose, but stores had to attract showers with heavy discounting.  June sales were up +3.1%, barely missing analyst estimates of +3.2%. Last year, June sales fell -4.9%.

Initial jobless claims came in at 454,000 for the week ending July 3, while economists had expected the number to come in at 460,000.  The four week average which is a better gage of jobless claims fell by -1,250 to 466,000.

MIDDAY LUNCH

Dow 9884.55  +140.93, Nasdaq 2121.43  +27.55, S&P 1043.34  +15.28 

The market gains have been broad based today, but stocks are off their high for the day and the strength in the market has helped reduce volatility, the VIX is down -7%.

Today’s market leaders are Conglomerates +1.96%, Basic Materials +1.83% and Technology +1.70%.  Tech holdings performing well today include: Cisco Systems (CSCO) 21.93 +0.59, +2.76%, Xilinx (XLNX) 26.21 +0.82%, +3.23%, and Microchip Tech (MCHP) 28.73 +0.85, +3.05%.

Commodity prices are higher with the CRB Index at 257.51 +4.01, +1.60%.  Gold is trading at 1,198.20 an ounce up +3.10 and Oil is at 73.75 +1.77.

MORNING COFFEE

KKR To Trade On NYSE. Government regulators approved Kohlberg Kravis Roberts & Co. request to list its shares on the NYSE.  According to the securities filing, co-founders Henry Kravis and George Roberts each own a 13% stake worth a combined $1.65B.  The shares will begin trading on July 15 with the ticker symbol KKR.

Stock Funds Losses Top 10%. The S&P 500 index fell -11.86%, taking back all of its +5.4% gain from the first quarter.  According to Lipper Inc. the average U.S. stock fund lost -10.42% in the quarter.  Large-cap growth funds fell the most, losing -12.29% followed by Midcap -10% and Small-cap -9.2%.  Government bond funds returned as much as +4.95% in the second quarter.

Upgrades

VeriSign (VRSN): Oppenheimer raised their rating from Perform to Outperform and set a target price of $33.00.

EMC (EMC): Oppenheimer raised their rating from Perform to Outperform and set a target price of $22.00.

Coverage Initiated

Eastman Chemical (EMN): Gleacher & Company initiated coverage with a Buy rating and target price of $70.00.

Rosetta Resources (ROSE): Howard Weil initiated coverage with a Market Outperform rating and target price of $30.00.

Tupperware (TUP): Caris & Company initiated coverage with an Above Average rating and target price of $48.00.

Coverage Reiterated/Price Target Changed

Apple (AAPL): Gleacher & Company reiterated their Buy rating and raised their target price from $355.00 to $370.00.

Earning Reports

Family Dollar Stores (FDO): Reported FQ3 EPS of $0.77 beating estimates by +$0.01 on revenue of $1.9 billion.

·         Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude +0.1% to $72.04. Gold -0.6% to $1187.40.

·         Asia: Japan  -0.6% to 9280. Hong Kong -1.1% to 19857. China +0.5% to 2421. India -0.8% to 17471.

·         Europe: London -0.7%. Paris -1.0%. Frankfurt -0.8%.

MORNING COFFEE

DOJ Probes HSBC Clients.  U.S. clients of HSBC (HBC) are being probed by the Justice Department over overseas accounts they failed to disclose to the IRS. Prior to now, the  probes into offshore tax evasion had focused primarily on Switzerland and UBS (UBS) clients.

Fed Has Mixed Thoughts On Economy. Dallas Federal Reserve President Richard Fisher said he believes the U.S. economy will likely slow down in the second half of the year, hurt by slow private consumption. Fisher also said there may be increased political pressure for an expansion of monetary easing, but said there's not much more the Fed can do. On the opposite side of the coin is Richmond Fed President Jeffrey Lacker.  He expects private consumption and corporate capital investment to expand sufficiently keeping the U.S. economy in a sustained recovery this year and next.

Upgrades

Cinemark (CNK): Caris & Company raised their rating from Below Average to Average and raised their target price from $14.00 to $16.00.

Downgrades

Intersil (ISIL): RBC Capital Mkts lowered their rating from Outperform to Sector Perform and lowered their target price from $20.00 to $15.00.

Coverage Initiated         

Campbell Soup (CPB): KeyBanc Capital Markets initiated coverage with a Hold rating.

Coverage Reiterated/Price Target Changed

Nokia (NOK): RBC Capital Markets reiterated their Sector Perform rating and lowered their target price from $14.00 to $11.00.

Juniper Networks (JNPR): RBC Capital Markets reiterated their Outperform rating and lowered their target price from $33.00 to $30.00.

eBay (EBAY): RBC Capital Markets reiterated their Outperform rating and lowered their target price from $30.00 to $25.00.

Futures: Dow +1.1%. S&P +1.2%. Nasdaq +1.55%. Crude +1.2% to $73.03. Gold +0.3% to $1211.10.

Asia: Japan +0.8% to 9338. Hong Kong +1.2% to 20084. China +1.9% to 2409. India +1.0% to 17614.

Europe: London +2.2%. Paris +3.1%. Frankfurt +2.2%.

MORNING COFFEE

U.S. Payrolls Decline. The Labor Department reported today that payrolls declined by 125,000 last month. Economist had estimated that payrolls would only fall by 100,000. The jobless rate fell to 9.5% from 9.7%.

Google Buys ITA. Google (GOOG) has purchased ITA Software for $700 million.  The purchase is Google’s largest acquisition and allows the company to enter the online travel industry. 

Sanofi-Aventis Looking To Buy Company. Reports say Sanofi-Aventis (SNY) is preparing for an acquisition that could be worth $20 billion.  Sources said CEO Chris Viehbacher briefed the board on the deal this week at a special meeting. The acquisition target has not been identified.

Upgrades

BJ's Wholesale (BJ): Jefferies raised their rating from Hold to Buy and raised their target price from $38.00 to $55.00.

Coverage Initiated

News Corp (NWSA): Wedbush initiated coverage with an Outperform rating and target price of $15.50.

CBOE Holdings (CBOE): Stifel Nicolaus initiated coverage with a Hold rating.

Coverage Reiterated/Price Target Changed

Harley-Davidson (HOG): Longbow reiterated their Buy rating and lowered their target price from $38.00 to $34.00.

BP (BP): The Benchmark Company reiterated their Buy rating and lowered their target price from $49.00 to $41.00.

Apollo Group (APLO): Stifel Nicolaus reiterated their Buy rating and lowered their target price from $70.00 to $60.00.

·         Futures: Dow 0.0%. S&P 0.0%. Nasdaq +0.2%. Crude -0.1% to $72.85. Gold +0.45% to $1212.10.

·         Asia, Japan  +0.1% to 9204. Hong Kong -1.1% to 19905. China +0.4% to 2383. India  -0.3% to 17461.

·         Europe London  +0.6%. Paris +0.2%. Frankfurt  +0.3%.

MIDDAY LUNCH

Dow 9714.70  -59.32, Nasdaq 2093.81  -15.43, S&P 1024.40  -6.31 

Stocks are trading off their lows after starting the next quarter in the red.

Wall Street traders had plenty to worry about after the Jobless Claims, Pending Home Sales and ISM Index all missed expectations. 

First 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 and the only sector showing job growth is government jobs.

Then the slide intensified after pending home sales figures showed a -30.0% month-over-month drop for May.  Economist had only expected a decline of only -12.5%.

Additionally, the ISM Manufacturing for June came in at 56.2, well below the expected reading of 59.0.

In stock news Microsoft (MSFT) 23.20 +0.19, +0.83% announced that they are discontinuing their Kin cell phone just two months after its release.

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%.