MORNING COFFEE

Bank Stress Test Released Today. European and U.S. traders will be on edge today as they await the announcement of stress-test results for 91 European banks in 27 different countries. . Some are questioning whether the test was tough enough to be credible, and which banks could fail and or require recapitalization.

Amazon Misses. Shares of Amazon (AMZN) are lower in the pre-market, following the company's Q2 earnings miss (see details below). Discounted merchandise and increased operating expenses both contributed to the EPS miss.  The company is also seeing increase competition for its eReader from several competitors including Apple’s (AAPL) iPad.

Banks Get Blasted. Pay czar Ken Feinberg is due to release his report citing 17 financial firms for making $1.6 billion in "ill-advised" payments to employees during the financial crisis. The report is designed to put political and public pressure on firms, since he does not have the authority to demand the payments back.  Additionally, many believe that it is un-American for the government to decide how much a citizen can make.

Upgrades

Microsoft (MSFT): The Benchmark Company raised their rating from Sell to Hold and placed a target price of $32.00 on the company.

Nokia (NOK): Wunderlich raised their rating from Hold to Buy.

Downgrades

Estee Lauder (EL): Stifel Nicolaus lowered their rating from Hold to Sell.

Travelers (TRV): Oppenheimer lowered their rating from Outperform to Perform.

SunTrust Banks (STI): FBR Capital lowered their rating from Outperform to Market Perform and lowered their target price from $34.00 to $27.00.

Coverage Reiterated/Price Target Changed

Microsoft (MSFT): Oppenheimer reiterated their Outperform rating and lowered their target price from $38.00 to $35.00.

Chubb (CB): FBR Capital reiterated their Market Perform rating and raised their target price from $63.00 to $65.00.

Earning Reports

Honeywell International (HON): Reported Q2 EPS of $0.60 beating estimates by +$0.03 on revenue of $8.2 billion.

Schlumberger (SLB): Reported Q2 EPS of $0.68 in-line on revenue of $5.9 billion. 

Amazon.com (AMZN): Reported Q2 EPS of $0.45 missing estimates by -$0.07 on revenue of $6.6 billion.

American Express (AXP): Reported Q2 EPS of $0.84 beating estimates by +$0.06 on revenue of $6.9 billion. 

Chubb (CB): Reported Q2 EPS of $1.41 beating estimates by +$0.01 on revenue of $2.9 billion.

Compuware (CPWR): Reported FQ1 EPS of $0.06 in-line on revenue of $207 million. $219M.

E*TRADE Financial (ETFC): Reported Q2 EPS of $0.12 beating estimates by +$0.23 on revenue of $534 million. 

McDonalds (MCD): Reported Q2 EPS of $1.13 beating estimates by +$0.01 on revenue of $5.95 billion.

Microsoft (MSFT): Reported FQ4 EPS of $0.51 beating estimates by +$0.05 on revenue of $16 Billion.

·         Futures: Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude -0.4% to $78.99. Gold +0.2% to $1197.60.

·         Asia: Japan +2.3% to 9431. Hong Kong +1.1% to 20815. China +0.4% to 2572. India +0.1% to 18131.

·         Europe: London -0.2%. Paris +0.4%. Frankfurt +3.1%.

MIDDAY LUNCH

Dow 10320.18  +199.65, Nasdaq 2238.29  +50.96,S&P 1092.57  +22.98 

Stocks are stronger today and are showing their best single session percentage gain in almost two weeks.

Industrial stocks are outperforming of the 56 stocks that make up the sector 54 are showing gains.  Caterpillar (CAT) 67.82 +0.95, 1.42%, Union Pacific (UNP) 73.81, +4.67, +6.77% and UPS (UPS) 63.61 +3.59, +5.98% all had very good earnings reports.

Commodities are also doing well today.  The CRB Commodity Index is up +1.7%, its best single-session advance in the past two weeks.

After the close today Microsoft (MSFT) 25.81 +0.70, +2.75% will report earnings, estimates are for the company to report EPS of $0.46 versus year ago years of $0.36.

Amazon (AMNZ) 118.83 +1.42, +1.22% will also be reporting after the close. Estimates are for the company to report EPS of $0.54 versus year ago years of $0.32.

MORNING COFFEE

Bernanke Upsets Market. Yesterday Fed Chairman Ben Bernanke gave his semi-annual monetary policy report to Congress.  His comments caused the markets to dive into negative territory. Bernanke called the economic outlook "unusually uncertain," and said the Fed is prepared to take additional actions as needed. He also said that the current policy is "already quite stimulative" and available future options "are not going to be conventional options." Bernanke sees "moderate" economic growth despite a "somewhat weaker outlook" and low inflation.

Upgrades

Wells Fargo (WFC): FBR Capital raised their rating from Market Perform to Outperform.

Downgrades

Netflix (NFLX): Canaccord Genuity lowered their rating from Buy to Hold.

Coverage Reiterated/Price Target Changed

Owens Corning (OC): Longbow reiterated their Buy rating and raised their target price from $41.00 to $42.00.

Baidu.com (BIDU): Brean Murray reiterated their Buy rating and raised their target price from $80.00 to $90.00.

Qualcomm (QCOM): FBR Capital reiterated their Outperform rating and lowered their target price from $49.00 to $47.00.

Earnings Reports

Eli Lilly (LLY): Reported Q2 EPS of $1.24 beating estimates by +$0.14 on revenue of $5.74 billion. 

Hershey Foods (HSY): Reported Q2 EPS of $0.51 beating estimates by +$0.05 on revenue of $1.23 billion.

Medco Health Solutions (MHS): Reported Q2 EPS of $0.83 beating estimates by +$0.04 revenue of $16.40 billion.

Nokia (NOK): Reported Q2 EPS of $0.11 in-line on revenue of $10 billion in-line. 

Baidu.com (BIDU): Reported Q2 EPS of $0.35 beating estimates by +$0.04 on revenue of $282 million.

eBay (EBAY): Reported Q2 EPS of $0.40 beating estimates by +$0.02 on revenue of $2.2 billion.

Qualcomm (QCOM): Reported FQ3 EPS of $0.57 beating estimates by +$0.03 on revenue of $2.7 billion.

Xilinx (XLNX): Reported FQ1 EPS of $0.58 beating estimates by +$0.05 on revenue of $595 million.

·         Futures: Dow +1.2%. S&P +1.4%. Nasdaq +1.2%. Crude +0.6% to $76.99. Gold -0.4% to $1187.60.

·          Asia: Japan -0.6% to 9221. Hong Kong +0.5% to 20590. China +1.1% to 2562. India +0.8% to 18113.

·         Europe: London +1.0%. Paris +1.8%. Frankfurt +1.6%.

CLOSING BELL

Dow 10120.53-109.43, Nasdaq  2187.33  -35.16, S&P 1069.59  -13.89 

The stock market spent most of the day near the neutral line until Ben Bernanke began his semiannual monetary report before the Senate Banking Committee this afternoon.  His comments about continued uncertainty in the economy and his note of the Fed's preparations to take more policy actions as needed sent stock lower.

Bank stocks before the comments were doing well after another batch of good earnings reports.  Morgan Stanley (MS) 26.80 +1.58, +6.26%, Wells Fargo (WFC) 26.06, +0.15, +0.58% and US Bancorp (USB) 23.07 -0.08, -0.35% all had better than expected earnings reports.  Financial were up as much as +1.5%, but ended the day losing -1.8%.

Yahoo! (YHOO) 13.91 -1.29, -8.49% shares got hit today, after beating their earnings estimates, but Citigroup downgraded the stock.

Advancing Sectors: None
Declining Sectors: Financials -1.8%, Consumer Discretionary -1.8%, Health Care -1.5%, Utilities -1.4%, Tech -1.4%, Energy -1.4%, Consumer Staples -1.0%, Industrials -0.4%, Materials -0.4%, Telecom -0.2%

MIDDAY LUNCH

Dow 10234.66  +5.53, Nasdaq 2217.62  -5.02, S&P 1082.97  -0.38 

Stocks are trading in mixed fashion with little movement from the neutral line.  Trading volume is also light this morning even after another batch of better than expected earnings reports.

Financial are slightly lower after President Obama signed the Dodd-Frank financial regulation bill into law today.

In the area of tech stocks, Apple (AAPL) 259.12 +7.23, +2.87% are higher today after the company posted a great earnings report.  Meanwhile shares of Yahoo! (YHOO) 13.95 -1.25, -8.22% are lower after they beat their earnings estimate, but Citigroup lowered their rating on the company.

MORNING COFFEE

Johnny Appleseed Would Be Happy. If Johnny Appleseed were alive today he would be jumping for joy, as Apple products seem to be sprouting up everywhere.  Apple (AAPL) easily beat their earnings estimates (see below). The company said it experienced "a phenomenal quarter," with "the most successful product launch in Apple's history with iPhone 4." Other quarter information: 3.27 million iPads sold in its first quarter on the market; iPhone unit sales +61% over the year-ago quarter; Mac unit sales +33%; Apple also forecast higher-than-expected Q4 sales.

Upgrades

Stryker (SYK): Maxim Group raised their rating from Hold to Buy and placed a target price of $59.00.

State Street (STT): Stifel Nicolaus raised their rating from Hold to Buy and placed a target price of $47.00.

Cintas (CTAS): Robert W. Baird raised their rating from Underperform to Hold and raised their target price from $22.00 to $28.00.

Downgrades

Seagate Tech (STK): Brean Murray lowered their rating from Buy to Hold.

Coverage Reiterated/Price Target Changed

Apple (AAPL): Stifel Nicolaus reiterated their Buy rating and raised their target price from $340.00 to $350.00.

Apple (AAPL): Kaufman Bros reiterated their Buy rating and raised their target price from $349.00 to $350.00.

Yahoo! (YHOO): The Benchmark Company reiterated their Hold rating and lowered their target price from $18.00 to $16.00.

Yahoo! (YHOO): Oppenheimer reiterated their Perform rating and lowered their target price from $19.00 to $18.00.

Earnings Reports:

Check Point Software (CHKP): Reported Q2 EPS of $0.58 beating estimates by +$0.02 on revenue of $261.1 million.

Comerica (CMA): Reported Q2 EPS of $0.39 beating estimates by +$0.16.

Textron (TXT): Reported Q2 EPS of $0.29 beating estimates by +$0.20 on revenue of $2.7 billion.

Altera (ALTR): Reported Q2 EPS of $0.58 beating estimates by +$0.05 on revenue of $469 million.

Apple (AAPL): Reported FQ3 EPS of $3.51 beating estimates by +0.40 on revenue of $15.7 billion.

Cintas (CTAS): Reported FQ4 EPS of $0.35 beating estimates by +$0.02 on revenue of $909 million.

Stryker (SYK): Reported Q2 EPS of $0.80 in-line on revenue of $1.8 billion.

Yahoo (YHOO): Reported Q2 EPS of $0.15 Beating estimates by +$0.01 on revenue of $1.1 billion.

·         Futures: Dow +0.1%. S&P +0.2%. Nasdaq +0.5%. Crude +0.5% to $77.94. Gold -0.1% to $1191.

·         Asia: Japan  -0.2% to 9279. Hong Kong +1.1% to 20487. China +0.3% to 2535. India +0.6% to 17977.

·         Europe: London +1.6%. Paris +1.6%. Frankfurt +1.0%.