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Market Recap: Bulls Take Their Profits


Texas Instruments set the stage for an ugly earnings day.


Disappointing earnings were the catalyst for bulls to take their profits. The Dow Industrials fell -104 points, or -0.82% to 12720, the S&P 500 dropped -12 points, or -0.88% to 1375, and the Nasdaq Composite closed -31 points, or -1.29% to 2376.

The tone for the day was set when semiconductor giant Texas Instruments (TXN) reported results for the first quarter last night after the bell. Although earnings were largely inline with consensus forecasts, the company issued downside guidance for 2Q less than analysts estimates. In its conference call, CEO Rich Templeton said in a prepared statement that the company was taking a conservative outlook for the second quarter "given the uncertainty in the near-term economy."

Shares of TXN were hit hard in today's session. When asked about the company's results, Professor Adam Katz responded, "… to be honest, it was expected. I think the big disconnect broadly speaking is that the Street is looking for signs of a second half recovery and as of now, there is no reason to assume we're going to get it." TXN dropped -5.8% to $28.82.

Notables in the semiconductor space included Intel (INTC) -1.5% to $22.10. Applied Materials (AMAT) dropped -3% to $18.42, and the broader Semiconductor HOLDRs Trust (SMH) lost -2.8% to $30.05.

Elsewhere in tech, Apple (AAPL) shares fell first time in a week. According to Bloomberg analysts at American Technology Research downgraded the company stating expectations were too high. Analyst Shaw Wu said while the company would likely "report a strong quarter relative to guidance and published consensus estimates, we are concerned whether it will be good enough." AAPL shares fell -4.29% to $160.85. Other notables in the sector were Research In Motion (RIMM) falling -3.6% to $121.60; Garmin (GRMN) lost -2.7% to $43.82, and Baidu (BIDU) fell -2.16% to $349.55. See Toddo's Answers I Really Wanna Know.

In other news, McDonald's (MCD) beat expectations with earnings rising to $946 million, or $0.81 per share, vs. analyst estimates of $0.70. Revenues came in at $5.614 billion vs. $5.4 billion cons. Profits were boosted in part by European comparable store sales which rose 11.1%. Although March comp. sales in the U.S. were slightly negative, the company said April figures were up 2%-2.5%. In all, comp sales increased 7.4% for the quarter.

"MCD is trading slightly off after reporting yet another insanely strong quarter. What's wrong with the stock? Nothing much; this is simply what happens when a company convinces the last of the doubters that yes, they are in fact this good." Nonetheless, MCD shares closed -0.55% to $58.35. Read Macke's Movers: Down Day for McDonald's.

In commodities, Crude oil made a new high closing +1.89 to 119.37. Gold added +2.10 to 916.80. Silver finished +0.285 to 17.645, and copper finished +10.75 to 400.55.

The dollar index fell -0.289 to 71.359.

Read Professor Bennet Sedacca's Is Oil Another Bubble?

For more Buzz insight, check out Minyanville's Buzz Bits.

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: AAPL, GOOG, FSLR, WYNN, LVS, IFX, FXI, MA, QQQQ, SPY, IWM, BCSI, SPX, VMW, MCD, GS, MER

Some bearish trade or investment ideas: MER, BIDU, SPY, QQQQ, IWM, SPX, NFLX, NYT, DUG (inverse), NILE, China, oil

See y'all on the hump! Have a great night!

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