Bonds Say No Default (STEC, CERN, NWL, CSTR, MXWL, RLD)

It was a topsy-turvy day for stocks, as GDP came in less than expected and no progress was made on the debt ceiling front. Some traders stepped in midday on the assumption that the government isn’t so inept as to actually let the country go into a technical default, but in the end the market still closed lower. The bond market, however, seems to have taken a very cavalier approach about the whole situation while the equity market has been panicking this week. In fact, 10-year Treasury yields have fallen this week, which isn’t exactly the reaction one would expect in the face of a technical default or potential credit downgrade. Given that we think the bond market tends to be more rational than the stock market in many cases, we wouldn’t be too concerned about a big jump in rates just yet.

The Energy Storage and Battery Technology Stocks Index was the top performing tickerspy Index on the day, led by Maxwell Technologies (MXWL) with a 19% gain. The Photographic Equipment Stocks Index was the day’s worst performing tickerspy Index, with RealD (RLD) down -16%.

Stocks continued their recent slide, with the Dow falling -97 point to 12,143. The S&P dropped -8 points to 1,292, while the Nasdaq lost -10 points to close at 2,756. Oil fell -$1.74 to $95.70 a barrel, while gold rose $14.90 to $1,628.30 an ounce.

In economic news, the Commerce Department said second-quarter GDP rose 1.3%, below the 1.6% increase economists were expecting. Excluding volatile food and energy prices, the core personal consumption index rose 2.1% in the second quarter for the biggest jump since late 2009. Meanwhile, The Thomson Reuters/University of Michigan consumer sentiment survey fell to 63.7 in July from 71.5 in June, good for the lowest reading in more than two years. Economists were expecting a July reading of 64.3.

In earnings news, shares of data storage device maker STEC (STEC) plunged -39.1% after the company forecast third-quarter earnings and revenue well below Wall Street estimates. For the current quarter, STEC said it expects to earn 8-10 cents a share on revenue of $70-$72 million. Analysts were expecting a profit of 31 cents on revenue of $95.7 million. In the second quarter, STEC earned $9.7 million, or 18 cents per share, compared with $2.8 million, or 6 cents per share, a year earlier. Excluding one-time items, STEC earned 23 cents a share on revenue of $82.5 million. Analysts were expecting a profit of 24 cents on revenue of $83.9 million.

Shares of Cerner (CERN) jumped 7.2% after the health information technology company raised its 2011 profit forecast to $1.80-$1.83 a share from previous guidance of $1.78-$1.81 a share. The company upped its revenue guidance to $2.09-$2.12 billion from $2.07-$2.12 billion. For the second quarter, Cerner earned $72 million, or 42 cents a share, compared with $55.5 million, or 33 cents a share, a year earlier. Excluding one-time items, the company earned 44 cents a share. Revenue rose 15% to $524.2 million. Analysts were expecting a profit of 43 cents on revenue of $516.4 million.
Thirteen pros counted Cerner among their top holdings at the end of Q1 and nearly 200 tickerspy members own the stock in their portfolios.

Newell Rubbermaid (NWL) shares surged 8.0% after the maker of Rubbermaid plastic containers said its second-quarter profit rose to $146.7 million, or 49 cents per share, from $130.4 million, or 41 cents per share, a year earlier. Revenue rose 5% to $1.57 billion. On an adjusted basis, the company earned 46 cents share compared with 51 cents a year earlier. Analysts were expecting a profit of 42 cents on sales of $1.55 billion. The company lowered its full-year profit guidance to $1.55-$1.62 a share from $1.60-$1.67. Georgia-based Newell Rubbermaid also forecast earnings growth of 1%-3%, down from previous guidance of an increase of 3%-4%. Analysts were expecting a profit of $1.58. Ten pros counted Newell Rubbermaid among their top holdings at the end of Q1 and over 100 tickerspy members own the stock in their portfolios.

Shares of Coinstar (CSTR), the operator of the Redbox DVD rental business, fell -4.8% despite company saying its second-quarter profit rose to $26.7 million, or 83 cents per share, from $13.4 million, or 41 cents per share, a year earlier. Revenue soared 27% to $435.2 million. Excluding one-time items, the company earned 98 cents a share. Analysts were expecting a profit of 89 cents a share on revenue of $439.6 million. Coinstar reiterated full-year profit guidance of $2.90-$3.15 a share on revenue of $1.76-$1.85 billion. For the third quarter, the company expects a profit of 83-93 cents a share on revenue of $450-$470 million. Analysts were expecting a full-year profit of $3.05 on revenue of $1.8 billion and a third-quarter profit of 87 cents on revenue of $467.6 million.

Tags: CERN, CSTR, MXWL, NWL, RLD, STEC