U.S. stock futures were much higher this morning, indicating markets could open with strong gains a day after the Federal Reserve cut rates by half a point to 1% and indicated further measures will be taken as necessary. While Wall Street ended mixed, global markets took this, as well as other measures central banks around the world have been taking, as a good sign and stocks in Asia and Europe rallied. However, at 8:30 a.m. this morning, advanced GDP for the third quarter will be released, and will likely show the economy has contracted for the first time. Economists expect GDP fell 0.5-0.6% in the quarter. Weekly jobless claims is also due at the same time.
Exxon Mobil Corp. (NYSE: XOM) - sometime before the opening bell, Exxon is scheduled to report third-quarter earnings. Much like other oil producers that have already reported, posting huge profits for the quarter due to record high oil prices, so is Exxon expected to report sharply higher profit.
Delta Air Lines (NYSE: DAL) - after the merger was approved Wednesday, Delta completed its $2.8 billion acquisition of Northwest Airlines (NYSE: NWA) on Wednesday to become the world's biggest carrier. Shares of both carriers surged 6% in after-hours.
PepsiCo (NYSE: PEP) was upgraded to Buy from Hold at Deutsche Bank.
Fortress (NYSE: FIG) was upgraded at Citigroup to Hold from Sell.
Prudential (NYSE: PUK) was lifted to Overweight from Neutral at JP Morgan.
Keefe Bruyette upgraded Franklin Resources (NYSE: BEN) to Outperform from Market Perform and added shares to their Best Ideas List on valuation as they see an attractive risk/reward at current levels.
UBS upgraded ASML Holding (NASDAQ: ASML) to Buy from Neutral on valuation as they believe the company remains a market leader.
Oppenheimer raised Seattle Genetics (NASDAQ: SGEN) to Outperform from Perform on valuation following the recent weakness as they expect positive clinical news flow beginning in December.
Analyst downgrades:
UBS downgraded U.S. Steel (NYSE: X) to Sell from Buy and lowered its target to $30 from $60 citing deteriorating U.S. conditions and concerns about the company's high fixed costs in a falling steel price environment.
Royal Dutch Shell (NYSE: RDS.A) was downgraded to Underperform from Neutral at Credit Suisse.
China Unicom (NYSE: CHU) was lowered to Underweight from Neutral at JP Morgan.
While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.
Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.
Merrill upgraded Kraft Foods (NYSE: KFT) to Buy from Neutral citing progress in the company's turnaround plan, execution, and 2009 earnings growth.
Thomas Weisel raised Express Scripts (NASDAQ: ESRX) to Overweight from Market Weight and believes the company's core business remains strong and that valuation is attractive.
Friedman Billings upgraded shares of Symantec (NASDAQ: SYMC) to Outperform from Market Perform on valuation after checks indicated the company should meet Q2 expectations.
NeuStar (NSR) was upgraded to Outperform from Neutral at Baird.
Friedman Billings downgraded shares of Zions Bancorp (NASDAQ: ZION) to Market Perform from Outperform and lowered its target to $33 from $43 following the company's Q3 results, as they believe near-term credit trends and concerns surrounding its securities portfolio will limit upside. Shares were also downgraded at JP Morgan to Neutral from Overweight due to deteriorating credit trends.
Banc of America cut Monster (NASDAQ: MNST) to Neutral from Buy to reflect a lack of margin stability and their belief consensus estimates remain too high.
Barclays downgraded Avis Budget Group (NYSE: CAR) to Equal Weight from Overweight citing the global economic slowdown and refinancing risk.
Luxottica was also downgraded at HSBC to Neutral from Overweight.
JP Morgan cut AuthenTec (NASDAQ: AUTH) to Underweight from Neutral.
Analyst initiations:
Janney Montgomery believes Gladstone Capital's (NASDAQ: GLAD) management team and lower portfolio investment risk profile warrant a premium valuation. The firm started shares with a Buy rating and $13 target.
CommVault (NASDAQ: CVLT) was initiated with a Buy rating and $14 target at Cantor, as the firm finds the stock attractively valued given its secular growth rate potential.
KeyBanc is positive on Papa John's (NASDAQ: PZZA) management team, growth potential, cost initiatives, and differentiation. Shares were assumed with a Buy rating and $30 target.
Arris (NASDAQ: ARRS) was initiated at Jefferies with a Hold rating and $7 target.
Rigel Pharmaceuticals (NASDAQ: RIGL) was initiated at Banc of America with a Neutral rating and $21 target.
Morgan Stanley started Hansen Natural (NASDAQ: HANS) with an Equal Weight rating.
Merrill upgraded shares of AstraZeneca (NYSE: AZN) to Neutral from Underperform to reflect the company's pipeline momentum and lack of negative catalysts.
Keefe Bruyette upgraded Deutsche Bank (NYSE: DB) to Outperform from Market Perform on valuation as they believe DB should trade at a higher multiple.
Merrill cut Novo Nordisk (NYSE: NVO) to Underperform from Neutral as the firm sees better opportunities elsewhere in the sector.
Merriman downgraded Rackable Systems (NASDAQ: RACK) to Neutral from Buy following the company's mixed Q2 results to reflect its customer concentration and fluctuating margins.
Janus Capital (NYSE: JNS) was downgraded at JP Morgan to Underweight from Neutral.
Fortress (NYSE: FIG) was cut to Sell from Hold at Citigroup.
Analyst initiations:
UBS believes Apple (NASDAQ: AAPL) has a competitive advantage and their checks indicate new Macs, new iPhone colors and potentially new iPods may come early on in the second half of 2008. The firm initiated shares with a Buy rating and $195 target. UBS also initiated Dell Inc. (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) at Neutral.
KeyBanc initiated Bed Bath & Beyond (NASDAQ: BBBY) with an Underweight rating and $25 target based on slowing core growth at Bed Bath and likely margin erosion from the ramp in growth at Christmas Tree Shops and buybuy Baby.
Infineon (NYSE: IFX) was initiated with a Buy rating at Deutsche Bank.
U.S. stock futures were mixed Thursday morning ahead of the government preliminary report of U.S. second-quarter gross domestic product to be released at 8:30 a.m. EDT. Compare to the first quarter, where GDP grew at an annual rate of 1%, analysts are expecting an annual growth rate in the second quarter of 2.3% according to Briefing.com. Another wave of earnings will also wash Wall Street over this morning, while it's still digesting Wednesday's ones. The market will likely take a clearer direction once GDP is out.
[Update: GDP grew at a 1.9% pace in the second quarter came in well short of the 2.3% forecast. Futures are declining on economy and the XOM miss. Wall Street will likely open significantly lower.]
Reporting/reported this morning:
Exxon Mobil (NYSE: XOM) is expected to report second-quarter earnings before the open. If ConocoPhillips (NYSE: COP) and BP (NYSE: BP) results are any indication, XOM will likely post massive profits thanks to oil's skyrocketing prices and even break the record it has set for largest profit by a U.S. company. Analyst on average expect Exxon Mobil to earn $2.52 a share on revenue of $144 billion, according to a survey by Thomson Financial.
MasterCard Inc. (NYSE: MA) is expected to report earnings of $2.02 per share.
Kellog (NYSE: K) is expected to post earnings of 81 cents per shares.
Oil rose over $137 Monday after traders calculated that Saudi Arabia's announced production increase will not be able to replace production disruptions in Nigeria, Bloomberg News reported.
Oil rose $2.20 to $137.56 per barrel in Monday mid-day trading. The other major energy commodities also rose on the news. Heating oil jumped 8 cents to $3.85 per gallon, unleaded gasoline gained about 4 cents to $3.47 per gallon, and natural gas climbed about 23 cents to $13.22 per million BTUs.
Attacks on a Royal Dutch Shell (NYSE: RDS.A) platform and a Chevron (NYSE: CVX) pipeline last week halted production of 300,000 barrels of oil per day from Nigeria, Bloomberg News reported. The Nigerian unrest easily offset Saudi Arabia's announcement, at the Jeddah summit it hosted, that it would pump an additional 200,000 barrels per day. Oil's 'safety cushion' is low
Jim Dietz, independent energy trader, told BloggingStocks Monday, a weak dollar and speculator long positions have been factors in oil's more than 4-year bull market, but the No. 1 factor, in his interpretation, is the low 'safety cushion' between daily global oil supply and demand.
Oil surged $4.27 to $136.20 per barrel Friday after the dollar fell and reports confirmed that Israel had conducted a military exercise that analysts say rehearsed a potential bombing attack on nuclear targets in Iran, Bloomberg News reported Friday.
The other major energy commodities also surged Friday on the news. Heating oil jumped 11 cents to $3.82 per gallon, unleaded gasoline gained 8 cents to $3.43 per gallon, and natural gas climbed 26 cents to $13.12 per million BTUs.
Short-circuited oil sell-off
Under most circumstances, oil rises when the dollar falls, as holders of oil, which is priced in dollars, raise their prices to compensate for the reduced purchasing power of the dollar. The dollar Friday was set to record 3-cent weekly declines against the euro and British pound.
Further, geopolitical events re-entered the oil stage. Israel undertook a major military exercise earlier this month that American officials say appeared to be a rehearsal for a potential bombing attack on Iran's nuclear facilities, The New York Times reported Friday.
U.S. stock futures were mixed early Thursday morning after stocks closed Monday around three-month lows following a heavy selling session. It could be, though, that after such few days we might see a recovery of sorts in today's trading.
On Wednesday, stocks sank again after FedEx gave its grim outlook, Morgan Stanley reported results and Fifth Third's cut its dividend. The Dow industrials fell below the 12,000 mark during the session for the first time in three months, but ended down slightly above it, down 131 points, or 1.08%, the Nasdaq Composite dropped 28 points, or 1.14%, and the S&P 500 fell 13 points, or 0.97%.
Economic data today includes weekly initial jobless claims to be released at 8:30 a.m. EDT, the June Philadelphia Fed Index and Mays leading economic indicators, both due out at 10:00.
TheStreet.com's Jim Cramer says these stocks rise because they're doubly blessed. Integrateds fall because they aren't.
So many people have been puzzled why the major integrateds have not moved with the last $30 rally in oil's spot price. The answer?
They can't take advantage of it.
They either didn't believe, and therefore didn't drill, or they have been so in the crosshairs of sovereign lunacy that they haven't been able to. They didn't have the rigs or they judged that the rigs were so expensive that, like 1980, they would look like dopes when oil came back to $40-$50, where many thought it would. (Go back and check even last year's research for price targets, most of which were from the oil companies' themselves.)
Or maybe it didn't matter anyway. So many of the contracts these companies have signed with governments around the world are either being abrogated or just outright confiscated that you have to ask yourself "Who can invest under those scenarios?" Exxon (NYSE: XOM) (Cramer's Take) in Venezuela. Shell (NYSE: RDS.A) (Cramer's Take) and now BP (NYSE: BP) (Cramer's Take) in Russia. You can't continually invest billions and then write it off because the contracts you wrote don't mean anything.
Royal Dutch Shell (NYSE: RDS.A) closed at $85.07 Tuesday. Crude futures are down 1.88% to $126.43 according to Bloomberg.
RDS overall option implied volatility of 27 is near its 26-week average of 25 according to Track Data, suggesting non-directional fluctuations.
Alpha Natural (NYSE: ANR), an Appalachian coal producer with a market cap of $5.11 billion, closed at $72.73 Tuesday. Davenport & Company raised its rating to Buy with an $85 target price on May 27.
ANR overall option implied volatility of 65 is above its 26-week average of 58, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
MOST NOTEWORTHY: Salesforce.com, First Marblehead and The E.W. Scripps Co were today's noteworthy upgrades:
Jefferies upgraded shares of Salesforce.com (NYSE:CRM) to Buy from Hold following the company's Q1 results and recommends accumulating shares on any weakness from concerns around a slowdown in bookings. They believe that while bookings growth slowed in Q1, CRM's growth remains stellar and its market opportunity remains large.
Friedman Billings upgraded First Marblehead (NYSE:FMD) to Market Perform from Underperform. The firm believes most of the bad news is reflected in shares and that there are early indications of "thawing" within the private student loan ABS market.
Lehman upgraded the E.W. Scripps Co (NYSE:SSP) to Overweight from Underweight and expects the upcoming July 1st split of Scripps Networks Interactive from Scripps will give the company strategic opportunity by separating high growth cable from traditional newspapers and broadcasting.
According to people familiar with the matter, the Wall Street Journal reported that American International Group Inc's (NYSE: AIG) airplane-leasing unit is considering a split from the company. The people said International Lease Finance Corp have grown "increasingly concerned" the company will be hurt by AIG's financial troubles.
Royal Dutch Shell Plc (NYSE: RDS.A) and Spain's Repsol YPF SA (NYSE: REP) are pulling out of one of Iran's biggest gas projects, the $10B-plus development of phase 13 of South Pars, the world's largest gas field, the Financial Times reported.
WEB SITES:
Bloomberg reported that HSBC Holdings Plc (NYSE: HBC) set aside a smaller-than-forecast $3.2B for bad loans in the U.S. The bank also said its Q1 profit was higher than Q107.
Merck & Co. (NYSE: MRK) shares are dropping over 8% in premarket trading after it said its cholesterol pill Cordaptive failed to win approval from the U.S. Food and Drug Administration, less than a week after it was recommended for marketing in the European Union. While Merck intends to submit more data to the FDA, it is unclear it will succeed given even some European doctors said more research is needed on one of the drug's main components safety.
Who said higher oil prices aren't good? If you ask Royal Dutch Shell (NYSE: RDS.A) and BP (NYSE: BP), high oil prices are fantastic as the two oil giants beat forecasts when posting quarterly earnings Tuesday, reporting that net income, excluding unrealized gains from changes in inventory values, rose 12% to a record $7.8 billion and 48% to $6.6 billion respectively. Shell shares are climbing 5.7% in premarket trading and BP's over 4.8% as it seems investors think oil above $100 a barrel is here to stay.
Archer Daniels Midland Co. (NYSE: ADM), the world's largest grain processor, said third-quarter profit rose 42% to $517 million or 80 cents per share, topping analyst estimates of 69 cents per share, as it traded more grains and crushed more soybeans. Sales climbed 64% to $18.7 billion. Seems that being in agriculture lately is a positive and ADM shares are rising 3.75% in premarket trading.
MOST NOTEWORTHY: Auto & Truck Suppliers, Oplink Comm and The Wet Seal were today's noteworthy upgrades:
Baird upgraded the Auto & Truck Suppliers sector to Market Overweight from Market Weight citing valuations, lowered expectations, industry dynamics and a potential bottom in economic indicators. The firm upgraded Accuride Corp (NYSE: ACW) and Magna International (MGA) to Outperform from Neutral.
Merriman upgraded shares of Oplink Comm (NASDAQ: OPLK) to Neutral from Sell on valuation, as they believe Friday's sell-off fully reflects near-term operating concerns and that share price downside from here is limited.
Cowen raised The Wet Seal (NASDAQ: WTSLA) to Outperform from Neutral and has increased confidence that the new management's operational changes and cost cutting initiatives will lead to EPS upside.
OTHER UPGRADES:
BT Group (NYSE: BT) was raised to Equal Weight from Underweight at Morgan Stanley.
Societe Generale raised Royal Dutch Shell (NYSE: RDS.A) to Buy from Hold and ENI SpA (NYSE: E) to Hold from Sell.
Goldman raised Embarq (NYSE: EQ) to Neutral from Sell.
U.S. stock futures were much higher this morning, indicating markets could open with strong gains a day after the Federal Reserve cut rates by half a point to 1% and indicated further measures will be taken as necessary. While Wall Street ended mixed, global markets took this, as well as other measures central banks around the world have been taking, as a good sign and stocks in Asia and Europe rallied. However, at 8:30 a.m. this morning, advanced GDP for the third quarter will be released, and will likely show the economy has contracted for the first time. Economists expect GDP fell 0.5-0.6% in the quarter. Weekly jobless claims is also due at the same time..gif){kind=logo}
While other earnings may have disappointed last week, the news was good for oil giant 
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U.S. stock futures were mixed Thursday morning ahead of the government preliminary report of U.S. second-quarter gross domestic product to be released at 8:30 a.m. EDT. Compare to the first quarter, where GDP grew at an annual rate of 1%, analysts are expecting an annual growth rate in the second quarter of 2.3% according to Briefing.com. Another wave of earnings will also wash Wall Street over this morning, while it's still digesting Wednesday's ones. The market will likely take a clearer direction once GDP is out.
Oil rose over $137 Monday after traders calculated that Saudi Arabia's announced production increase will not be able to replace production disruptions in Nigeria, 
Oil surged $4.27 to $136.20 per barrel Friday after the dollar fell and reports confirmed that Israel had conducted a military exercise that analysts say rehearsed a potential bombing attack on nuclear targets in Iran, 
U.S. stock futures were mixed early Thursday morning after stocks closed Monday around three-month lows following a heavy selling session. It could be, though, that after such few days we might see a recovery of sorts in today's trading.
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