Chevron’s stock gets a lift after J.P. Morgan upgrades to overweight

Chevron Corp.’s stock gained 0.5% in morning trade Friday, while the energy sector and broader market declined, after the oil giant was upgraded at J.P. Morgan, which said the share price already reflects investor concerns. Analyst Phil Gresh raised his rating to overweight, after being at neutral since July 2012. He cut his stock price target to $86, which is 13% above current levels, from $90. The stock has tumbled 25% over the past three months, while the SPDR Energy ETF has dropped 19% and the Dow Jones Industrial Average has lost 9.7%. Among the reasons Gresh said he believes Chevron’s stock will start to outperform, recent investor concerns of a dividend cut are unfounded, sell-side sentiment is at a decade low, project execution issues are now well understood and appropriately discounted, that balance sheet remains “top tier” and free cash flow should start improving. He said the stock’s recent weakness “gives investors a chance to buy the stock at trough-like fundamentals and sentiment, with an opportunity to claw back relative underperformance over time.”

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Consumer sentiment tumbles in September

WASHINGTON (MarketWatch) — Consumer sentiment in September dove, according to the latest University of Michigan reading. The index fell to 85.7 from 91.9 in August, well below the MarketWatch-compiled consensus reading of 90.3. That’s the lowest level since September 2014.

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Verizon expected to take lead in mobile video, Wells Fargo analyst says

Wells Fargo analysts led by Jennifer Fritzsche said, after attending the 2015 CTIA-The Wireless Association show this week, they expect mobile video to dominate the discussion for the rest of the year. Verizon Communications Inc. is leading the way, Fritzsche said, as it prepares to launch its Internet-based mobile video service Go90 later this month. Dreamworks Animation Chief Executive Jeffrey Katzenberg said during the Verizon keynote, he expects to see a revolution in the future of content, with mobile as the key platform. AT&T Inc. is also gearing up to offer TV everywhere after acquiring DirecTV in July. Fritzsch wrote that she believes Sprint Corp. will enter the broadcast auction, but it will take time. Sprint is likely in the early stage of laying out a game plan, Fritzsche wrote. Shares of Sprint are up more than 15% in the year to date, outperforming Verizon’s stock, down 3%, and AT&T, down more than 2%. The S&P is down more than 5% in the year.

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Kroger raises guidance after second-quarter results beat earnings estimates

The Kroger Co. reported second quarter net earnings of $433 million, or $0.44 per share, compared with $347 million, or $0.35 per share, the year before. The FactSet consensus estimate was $0.39. Same-store sales, excluding fuel revenue, rose 5.3%. “Our core food business continued its strong performance and we benefitted from fuel margins that expanded throughout the quarter,” said CEO Rodney McMullen in a statement. Total sales rose 0.9% to $25.5 billion from $25.3 billion the year before, in line with the FactSet consensus estimate of $25.5 billion. Kroger raised its earnings guidance for fiscal 2015 to between $1.92 and $1.98 per share from $1.90 to $1.95. Kroger stock is up 10.3% for the year so far, ahead of the S&P 500’s 5.2% rise.

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U.S. stocks open lower, eye weekly gains

U.S. stocks opened slightly lower Friday but the main indexes were on track to end the holiday-shortened week with modest weekly gains. The S&P 500 opened 6 points, or 0.3% lower at 1,945. The Dow Jones Industrial Average slipped 61 points, or 0.4%, to 16,273. The Nasdaq Composite began the day down 24 points, or 0.5% at 4,773.

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Swiss franc falls to weakest level against euro since January

The franc fell to its weakest level against the euro Friday since the Swiss National Bank abandoned its peg to the euro back in January — a decision which triggered unprecedented volatility in the currency market. The euro strengthened after a reading on German consumer-price inflation was in-line with economists’ expectations. Output by Italian manufacturers also improved in July, official data showed. The euro appreciated 0.5% to 1.1037 francs. Policy makers from the Swiss National Bank are scheduled to meet next week. The franc surged against the euro on Jan. 15 after the SNB surprised the market with its announcement. At one point, the franc strengthened by as much as 30% against the euro.

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U.S. producer prices flat in August on lower gas costs

WASHINGTON (MarketWatch) – U.S. wholesale prices flattened out in August, held down a sharp decline in gasoline prices. The producer price index was unchanged last month on a seasonally adjusted basis, the Labor Department said Friday. Economists surveyed by MarketWatch had predicted a 0.2% decline. Excluding the volatile categories of food, energy and trade margins, core producer prices edged up 0.1%. The price of goods fell 0.6% while services increased 0.4%. Over the past year overall producer prices have fallen an unadjusted 0.8%, unchanged from July. The core rate has risen 0.7% in the same span, though inflationary pressure in the pipeline remained muted.

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Mattress Firm’s stock tumbles after profit miss and lowered outlook

Mattress Firm Holding Corp.’s stock plunged 12% in light premarket trade Friday, after the mattress retailer missed fiscal second-quarter profit and sales expectations, and cut its full-year earnings outlook. For the quarter ended Aug. 4, earnings rose to $21.9 million, or 61 cents a share, from $14.3 million, or 41 cents a share, in the same period a year ago. Excluding non-recurring items, adjusted EPS were 67 cents, below the FactSet consensus of 72 cents. Sales rose 61% to $661.1 million, just shy of the FactSet consensus of $664 million, although same-store sales growth of 2.8% beat expectations of 1.3%. The company raised the midpoint of its full-year sales outlook by $30 million, but cuts hits adjusted EPS guidance to $2.30 to $2.45, from $2.50 to $2.70, according to FactSet. Mattress Firm said the lowered EPS outlook was a result of volatility inside oil-affected markets, and the discontinuation of its Mattress Pro concept. The stock has gained 2.9% over the past three months, while the S&P 500 has lost 7.4%.

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Marvell Technology’s stock plunges after disclosing accounting probe

Marvell Technology Group Ltd.’s stock tumbled 16% in premarket trade Friday, after the semiconductor company disclosed in a regulatory filing that it was conducting an internal investigation of certain accounting and internal control matters. “The investigation consists of a review of certain revenue recognition issues in the second quarter of fiscal 2016 and any associated issues with whether senior management’s operating style during the period resulted in an open flow of information and communication to set an appropriate tone for an effective control environment,” the company stated in the filing. Specifically, the company said it was focused on 7% to 8% of revenue recognized that would have been received in the third quarter. The company said it sees preliminary fiscal second-quarter revenue of $711 million and a net loss of 74 cents a share, compared with year-earlier revenue of $962 million and earnings per share of 27 cents. Marvell said the results reflect weaker-than-expected demand for certain products, particularly in the storage market, as a result of a weaker global economy and a slow down in the PC market. The stock, which is on track to open at the lowest level since January 2013, has lost 27% over the past three months through Thursday, while the S&P 500 has declined 7.4%.

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Lululemon’s stock bounces after analyst recommends investors ‘build positions’

Lululemon Athletica Inc.’s stock climbed 1.1% in premarket trade Friday, bouncing from a sharp selloff in the previous session, after the yoga-gear seller was upgraded at Robert W. Baird & Co., which cited “compelling” valuation at current levels. Analyst Mark Altschwager raised his rating to outperform, after being at neutral for the past 15 months. Meanwhile, he cut his stock price target to $69, which is 29% above Thursday’s closing price of $53.54, from $73. On Thursday, the company beat fiscal second-quarter profit and sales expectations, and raised its full-year earnings outlook, but the stock plunged 16% to a nine-month low on concerns over a surge in inventory levels and disappointing gross margin. Altschwager said he believes inventory issues will correct during the second half of the year and gross margins could bottom in the fourth quarter. Coupled with encouraging sales momentum and product innovation, he said the pullback in the stock produced a “compelling” risk-versus-reward profile at current levels. “We believe investors should use near-term volatility to build positions,” Altschwager wrote in a note to clients. The stock has lose 4% year to date through Thursday, while the S&P 500 has dropped 5.2%.

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