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Stock Downgrades: Yum Brands Giving Investors Indigestion

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

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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.

Baidu.com (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)
No positions in stocks mentioned.
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