Top Stocks

By David Sterman

Long live the bond market bull.

It started running in 1980, when a series of interest rate increases by the Federal Reserve finally broke the back of inflation, and it galloped onward for more than three decades. Yet the bond market bull died a quiet death on July 25, 2012, when the yield on the 10-year Treasury note fell to just 1.43%.

Though 10-year Treasurys may see their yields drift lower once again if the U.S. economy slows down from its current pace, it's hard to see yields ever again falling to the levels we saw last July. Back then, a looming government shutdown threatened to imperil the U.S. economy, spooking the bond markets, though no such shutdown is likely to happen in the future. Congress woke up and realized the foolishness of that possibility. 

Electric car company Tesla Motors (TSLA) announced its first ever recall early Wednesday, due to a potentially weak mounting bracket in the left-hand latch of the back row of seats. The company emphasized that the voluntary recall, which affects 1,228 Model S vehicles made between May 10 and June 8, does not come after any customer complaints, injuries or litigation.

Tesla has offered to pick up the recalled cars and return them within a few hours with the new seat bracket in place.

Additionally, the company will provide a loaner Model S if needed. Many analysts and consumers approve of the way Elon Musk's Tesla is handling the recall, especially when compared with other bigger car companies that struggle with recalls: Chrysler is currently under scrutiny for issuing a rather late recall for millions of Jeep Grand Cherokees and Libertys that are at risk of catching fire. A National Highway Traffic Safety Administration investigation into the problem began in 2010.

 

It’s just not a very good environment for U.S. banks, even one as well run as U.S. Bancorp (USB). That’s why in my June 14 post I recommended selling shares of U.S. Bancorp to raise cash for the better opportunities that looked likely to emerge in emerging markets out of the current chaos.

Even if the Fed doesn’t take any overt action in the next few months to slow its $85 billion program of bond and mortgage-backed asset buying or to raise interest rates, I still think interest rates, especially mortgage interest rates, will continue to inch upwards.

You could already see two effects of that in U.S. Bancorp’s first quarter earnings report. For the quarter that ended on March 31, mortgage originations fell by 3% from the fourth quarter of 2012.

 

 

By The ETF Professor 

By Tom Aspray 

Stocks put in another good performance on Tuesday as the market was acting well heading into the widely anticipated Federal Open Market Committee announcement and Fed Chairman Ben Bernanke's press conference. The short-term downtrends in the advance/decline lines have now been broken, suggesting that the correction is over.

Rates were higher on Tuesday making further outflows from bond funds likely as we head into the summer. This is consistent with more gains for stock holders (MoneyShow) and more nervous times for bond holders.

 

Fourth-quarter profits for FedEx (FDX) came in higher than expected and shares rose on the news. Often considered a bellwether for the economy, FedEx is the world's biggest air-freight company. The company's size, along with barriers to entry in the industry, give FedEx the power to raise rates, which it also announced for its "FedEx Freight" service. That said, some investors are concerned that FedEx's decision to cut some routes between the United States and Asia will hamper future growth.  

Updated: 5:22 p.m. ET.

Stocks plunged Wednesday after Federal Reserve Chairman Ben Bernanke said a key program to keep interest rates low may start to end later this year.

But Bernanke said the Fed does not expect to start raising its key interest rate until probably the first half of 2015.

The Fed has been buying $85 billion a month in Treasury and mortgage-based securities. Bernanke told a news conference Wednesday that the Fed could start to trim the size of the purchases late this year, ending the purchases entirely in mid-2014.

The decision to trim the bond purchases would depend on the economy moving ahead, something the Fed expects. In its statement stating the current pace of bond buying will continue, the Fed said the downside risks to the economy have "diminished since the fall." 

By Brad Thomas, Intelligent REIT Investor

The recent dividend sell-off has created some good entry points for real estate investment trust investors, but true bargains -- with a wide margin of safety -- are harder to find.

Still there's one blue chip that is becoming noticeably undervalued, and the tailwinds are being driven by more than the whispers of Fed Chairman Ben Bernanke.

Digital Realty (DLR) -- a dominating global data-storage REIT with 123 properties and over 23.1 million square feet -- has been the target of a Highfields Capital Management short squeeze. Since May 8, Digital has been under the microscope, as the hedge fund contends that Digital's shares are worth only around $20, much less than the $59.89 pricing Wednesday.

 

By Richard Suttmeier

The Dow transportation average set its latest all-time high at 6,568.41 on May 20, two days below the Dow industrial average set its latest all time high at 15,542.40. 

On May 8, all eight of the transportation stocks I have been tracking (TheStreet) had "sell" ratings. Today six are rated "sell" and two rated "hold." On May 8, 83.2% of all stocks in this sector were rated "sell," and today 74.9% are rated "sell," still negative enough to rate the sector "avoid-source of funds."

Investors had that second chance to sell as Dow transports set another all-time high on May 20.

 

Information provided by Theflyonthewall.com 

 

By Kiran Moodley

 

In a week that has seen Boeing's (BA) Dreamliner meet its new challenger in the form of the Airbus A350, the U.S. firm maintains that the new European aircraft will not affect its share of the wide body market, claiming: "We've got them boxed and bracketed."

 

Randy Tinseth, vice president of marketing for Boeing Commercial Airplanes, was speaking on a day that saw strong orders for Boeing's Dreamliner range, as well as the launch of a newer model of the range, the 787-10, a stretched version of the aircraft.

 

Air Lease Corporation purchased 33 airplanes on Tuesday, ordering three 787-9s and 30 787-10s. GE Capital Aviation Services, International Airlines Group, Singapore Airlines and United Airlines have also all opted for the Dreamliner.

 

Information provided by Theflyonthewall.com

Wednesday's noteworthy upgrades include:

• Adobe (ADBE) upgraded to Buy from Neutral at BofA/Merrill
• Ball Corp. (BLL) upgraded to Outperform from Neutral at RW Baird
• CEMEX (CX) upgraded to Overweight from Equal Weight at Barclays
• Sonic (SONC) upgraded to Equal Weight from Underweight at Morgan Stanley
• LINN Energy (LINE) upgraded to Outperform from Sector Perform at Howard Weil

 

By Chris Ciaccia

 

Adobe Systems (ADBE) posted on Tuesday exceptionally strong second-quarter earnings, led by the strength in its transition to becoming a cloud computing company (TheStreet).

 

Adobe, which now offers its Creative suite of products differently than it previously had, announced that its Creative Cloud subscriptions hit 700,000 customers. The company also announced its Adobe Marketing Cloud bookings grew 25% year over year, resulting in the company beating earnings expectations. Adobe earned 36 cents a share on a non-GAAP basis, and generated $1.01 billion in revenue. Analysts were expecting the company to earn 33 cents a share on $1.01 billion in revenue.