Are Choppy Waters Ahead? (ADBE, KMX, JBL, AZN, XRAY, CSUN, VIT)

After a solid start to the day, stocks sold off after the Fed predicted slower economic growth but didn’t offer any more plans for further stimulus with QE2 coming to an end. We’re expecting stocks to still drift lower through the summer, but think the bulk of the sell-off is over, and are expecting a more choppy market with some big up and down swings. As such, we’d look to dip a toe in on days of weakness but not get too aggressive yet.

The Chinese Solar Stocks Index was the top performing tickerspy Index on the day, led by China Sunergy (CSUN) with a 20% gain. The Chinese IT Stocks Index was the day’s worst performing tickerspy Index, with VanceInfo Technologies (VIT) down -7%.

Stocks stumbled on the day, with the Dow off -80 points to close at 12,110. The S&P lost -8 points to 1,287, while the Nasdaq fell -18 points to 2,669. Oil rose $1.24 to $95.41 a barrel, while gold jumped $7.00 to $1,553.40 an ounce.

On the economic front the Fed held interest rates steady as expected. Fed Chief Bern Bernanke said some problems that are slowing the economy, like housing, could continue into next year, but that the main causes of the soft patch, including high gas prices and supply disruptions from Japan, are only temporary. However, the central bank did lower its GDP forecast to between 2.7-2.9% from a prior outlook 3.1-3.3%.

In earnings news, Adobe Systems (ADBE), the maker of Photoshop and Flash, said its fiscal second-quarter profit jumped 54% to $229.4 million, or 45 cents per share, from $148.6 million, or 28 cents per share, a year earlier. Revenue rose 9% to $1.02 billion. Excluding one-time items, Adobe earned 55 cents a share. Analysts were expecting a profit of 51 cents a share on revenue of $966 million. California-based Adobe forecast a fiscal third-quarter profit of 50-56 cents a share on revenue of $1 billion to $1.05 billion. Analysts were expecting 54 cents on revenue of $1.02 billion. The company said it expects revenue to increase by 10% for the full year. The stock fell -6.3%. Thirty pros held Adobe Systems in their portfolios at the end of Q1 and more than 360 tickerspy members own the stock in their portfolios.

Shares of used car dealer CarMax (KMX) soared 7.0% after the company said its fiscal first-quarter profit rose 25% to $126.3 million, or 55 cents per share, from $101.1 million, or 44 cents per share, a year earlier. Revenue increased 18% to $2.68 billion and same-store sales jumped 6%. Excluding one-time items, CarMax earned 52 cents a share. Analysts were expecting a profit of 47 cents on revenue of $2.52 billion.

Shares of Jabil Circuit (JBL), the electronic parts maker, jumped 3.2% after the company said its fiscal third-quarter profit rose to $126.3 million, or 55 cents per share, from $101.1 million, or 44 cents per share, a year earlier as revenue soared 22% to $4.23 billion. Excluding one-time items, Jabil earned 57 cents a share. Analysts were expecting a profit of 56 cents on revenue of $4.14 billion. Florida-based Jabil said it expects to earn 52-60 cents a share in the current quarter on revenue of $4.1-$4.3 billion. Analysts were expecting a profit of 60 cents on sales of $4.29 billion. Nine pros counted Jabil Circuit among their top holdings at the end of Q1 and more than 210 tickerspy members own the stock in their portfolios.

British pharmaceuticals giant AstraZeneca (AZN) announced that it will sell its Astra Tech dental business to Dentsply International (XRAY) for $1.8 billion. DENTSPLY said the deal would boost its annual revenue by 25%. The transaction is expected to close in the second half of this year. Shares of Dentsply rose 1.9%, while AstraZeneca shares closed up fractionally.

Tags: ADBE, AZN, CSUN, JBL, KMX, VIT, XRAY