Before the Open (Jun 23)

Good morning. Happy Friday. Happy Russell rebalancing day.
The Asian/Pacific markets closed mixed. China and South Korea moved up; India and the Philippines moved down. Europe is currently mostly down. Russia and Greece are up; France, Germany, Finland, Switzerland, Spain, the Netherlands, Italy, Portugal, Austria and the Czech Republic are down. Futures in the States point towards a mixed and flat open for the cash market.
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The dollar is down. Oil is up a small amount; copper is up. Gold and silver are up. Bonds are down.
The Russell does its rebalancing today. They rank stocks by market cap. Then top 1000 are the Russell 1000; the next 2000 are the Russell 2000. The combination of both is the Russell 3000. Pretty simple. No determining company strength or prospects – it’s entirely by market cap. There are a few other indexes, but those are the main ones. There will be Russell 2000 companies that get moved to the 1000 and vice versa, although I don’t know the exact number. There will also be companies that fall out and others that will be added for the first time. So today will be a very active day in terms of volume but not necessarily in terms of price movement. Some index fund managers will need to buy certain stocks while selling others, but in most cases the needed buying and selling will be equal.
Beyond this the market is doing fine overall. Most important with regards to the indexes is whether the small and mid caps can hold their 50-day MAs. I’ll discuss this over the weekend in the weekly report.
Stock headlines from barchart.com…
Morgan Stanley (MS -0.67%) and Bank of America (BAC -0.86%) gained almost 1% in pre-market trading and other bank stocks may open higher Friday after the Fed said that its stress tests showed all 34 banks exceeded minimum requirements.
Starbucks (SBUX -0.75%) was initiated with a recommendation of ‘Overweight’ at KeyBanc Capital Markets with a 12-month target price of $68.
Caterpillar (CAT +0.36%) slid over 1% in pre-market trading after it was downgraded to ‘Hold’ from ‘Buy’ at Deutsche Bank.
Acacia Communications (ACIA +1.59%) rose 1% in after-hours trading after it was initiated with a ‘Buy’ rating at D.A. Davidson with a 12-month target price of $61.
Prologis (PLD -0.71%) was upgraded to ‘Buy’ from ‘Neutral’ at Bank of America/Merrill Lynch with a price target of $65.
Sonic (SONC -0.07%) slumped 7% in after-hours trading after it reported Q3 revenue of $124 million, less than consensus of $124.7 million, and said Q2 system-wide comparable sales fell -1.2%, weaker than estimates of -1.0%.
Bed Bath & Beyond (BBBY +0.24%) tumbled over 8% in after-hours trading after it reported Q1 EPS of 53 cents, below consensus of 66 cents, and said that Q1 comparable same-store sales unexpectedly fell -2.0%, weaker than expectations of +0.3%. Pier 1 Imports (PIR +1.58%) fell over 3% and Williams-Sonoma (WSM +1.03%) fell over 2% on negative carryover from Bed Bath & Beyond
Lumentum Holdings (LITE -0.08%) gained over 1% in after-hours trading after it was initiated with a ‘Buy’ rating at D.A. Davidson with a 12-month target price of $77.
Armada Hoffler (AHH -0.51%) was downgraded to ‘Hold’ from ‘Buy’ at Stifel.
SMART Global Holdings (SGH +2.86%) rose 3% in after-hours trading after it reported Q3 revenue of $207 million, above consensus of $203.2 million.
Ocular Therapeutix (OCUL +4.53%) fell nearly 4% in after-hours trading after it said Antony Mattessich, who recently worked as MD at Mundipharma, will succeed Amar Sawhney as CEO on or before September 30.
American Software (AMSWA +8.13%) slid over 5% in after-hours trading after it reported preliminary Q4 revenue was down -9% y/y to $26.3 million.
Idera Pharmaceuticals (IDRA +1.17%) jumped over 13% in after-hours trading after it received Orphan Drug Status for its Melanoma IMO-2125 drug for patients with a certain type of metastatic melanoma.
Thursday’s Key Earnings
Accenture (NYSE:ACN) -4% after lowering guidance.
Bed Bath & Beyond (NASDAQ:BBBY) -7.9% AH on slipping sales.
Carnival (NYSE:CCL) -1.1% despite beating estimates.
Today’s Economic Calendar
9:45 PMI Composite Flash
10:00 New Home Sales
11:15 Fed’s Bullard: U.S. Monetary and Economic Policy
12:40 Fed’s Mester speech
1:00 PM Baker-Hughes Rig Count
2:15 PM Fed’s Powell speech
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings from Morningstar
this week’s Economic Numbers/Reports powered by ECONODAY