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Stock Downgrades: Yum Brands Giving Investors Indigestion


Wall Street ratings agencies set the tone for today's stock market.

Why concern yourself with the fiscal cliff when it's far easier to simply fall off McGraw-Hill (MHP)? Shares suffered their steepest slide since our cliff crisis of late last year after the ratings agency skidded 13.78% in its single worst day since October 1987. The firm is handsomely paid to act as a financial gatekeeper but, as the saying goes, "who will guard the guards?" (Actually, the original Latin is, "Quis custodiet ipsos custodes?" but with Italian markets having imploded 4.5% on Monday, it's best to spare our continental cousins the cost of any $10 words.)

Gannett (GCI), whose Captivate Network pipes information into office lobby elevators, lost 6.70%, and now it can't even enjoy the mood muzak. Apple Inc. (AAPL), where employees lived in fear of being fired in lifts, tumbled another 2.49% but at least United Technologies (UTX), owner of Otis, hit a multi-year high. And Mercedes-Benz owner Daimler (PINK:DDAIF) dropped -4.14%. Embarrassing, especially for one unfortunate fan who just found they paved paradise and put up a parking lot.

Today in economics, a slight slippage is seen in the Institute for Supply Management's January non-manufacturing index at 10:00 a.m. Eastern. In earnings action, Archer Daniels Midland (ADM), BP Plc (BP), Estée Lauder (EL), Kellogg (K), NYSE Euronext, Sirius XM Radio (SIRI), Take-Two Interactive Software (TTWO), Toyota Motor (TM), UBS AG (UBS), Walt Disney (DIS), and Zynga (ZNGA) are all due to report results.

Alon USA Energy (ALJ): ALJ gets downgraded to Neutral from Buy at Goldman Sachs.

American Science & Engineering (ASEI): Troubled by soft bookings due to government delays, Benchmark Company reduces its rating to Hold from Buy. Its target price is $65. (BIDU): Shares in the Chinese Internet outfit are now Hold from Buy at Stifel Nicolaus, which highlights headwinds including increased investment spending and attendant pressure on margins.

Brookfield Properties (BPO): The stock is slashed to Sell from Hold at Stifel Nicolaus, which says there are simply too many unknowns at this point.

CIT Group (CIT): CIT is cut to Neutral from Buy at Nomura.

Constellation Brands (STZ): Citing uncertainty surrounding the Department of Justice's lawsuit, Stifel Nicolaus slashes the winemaker to Hold from Buy.

Gilead Sciences (GILD): GILD gets downgraded to Neutral from Overweight at Atlantic Equities.

Homebuilders: Barclays reduces Ryland Group (RYL) and Toll Brothers (TOL) to Underweight from Equal Weight and takes PulteGroup (PHM) and KB Home (KBH) to Equal Weight from Overweight.

Kohl's (KSS): KSS is cut to to Neutral from Buy at Citigroup.

Popular, Inc. (BPOP): The bank stock is moved to Equal-Weight from Overweight at Morgan Stanley.

Quiksilver (ZQK): Shares are trading lower today after getting cut to Neutral from Buy at B. Riley Caris, whose target price on the retailer is now $6.70.

Real Estate Investment Trusts: AvalonBay (AVB) and Equity Residential (EQR) are each reduced to Hold from Buy at Jefferies.

Royal Caribbean (RCL): Raymond James cuts the cruise company to Perform from Outperform.

Scientific Games (SGMS): Deutsche Bank slashes SGMS to Sell from Hold.

State Street (STT): STT gets taken to Neutral from Buy at Guggenheim.

Stryker (SYK): The medical device maker is moved to Neutral from Buy at UBS.

Yum Brands (YUM): The fast food firm, falling 5.58% to a fresh 52-week low before the opening bell, is now Neutral from Outperform with an amended $72 price objective at Robert W. Baird. The chief concern is an increasingly uncertain near-term outlook in China.

(See also: New Stock Coverage: Intel Only Semiconscious and Stock Upgrades: Miracle on 34th Street for Macy's)
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