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4:12 PM, Aug 12, 2010 --

  • DJIA down 58.8 (-0.6%) to 10,320
  • S&P 500 down 5.86 (-0.5%) to 1,084
  • Nasdaq down 18.4 (-0.8%) to 2,190

GLOBAL SENTIMENT

  • Hang Seng down 0.89%
  • Nikkei down 0.86%
  • FTSE up 0.4%

UPSIDE MOVERS

(+) EXP upgraded.

(+) NVAX announces positive respiratory virus vaccine study.

(+) RDEN costs cuts, higher revenue generate Q4 profit

(+) BKS Barnes & Noble nears deal with Ron Burkle on board seats

DOWNSIDE MOVERS

(-) CSCO beats with earnings but revenue guidance disappoints.

(-) BRCM downgraded.

(-) TXN downgraded.

(-) XLNX downgraded.

(-) BCS reports say job cuts may be announced.

(-) ALTR downgraded.

(-) MSFT downgraded.

(-) ARO downgrade.

(-) KSS declines after latest results.

(-) KBH says treasurer resigns.

(-) CRYP loss widens, misses Street view.

(-) HEAT beats earnings estimates.

MARKET DIRECTION

Stock averages finish lower though pared the day's losses late to close in the upper end of the session's range. It's the third straight decline for the major averages and comes as Cisco's (NASDAQ:CSCO) outlook weighed on tech shares and an unexpected rise in jobless claims added to the mounting signs of a weakening recovery.

Tech stocks were leading decliners and Cisco remained down 9% late in the day, after disappointing revenue guidance. Sara Lee (SLE) also missed with revenue and Kohl's (NYSE:KSS) cut its earnings outlook.

Stocks also fell after the Labor Department reported that the number of people filing for unemployment benefits rose last week to 484,000. The gain was small at 2,000, but economists had expected the number to drop. The report was yet one more sign that the recovery is slowing.

Crude oil futures ended at a one-month low as concern about the economic recovery remained, clouding hope that demand for oil would pick up. Oil for September delivery lost $2.28, or 2.9%, to settle at $75.74 a barrel, the lowest price since closing at $74.95 a barrel on July 12.

In company news:

Actively traded Cisco (CSCO) fell after the tech bellwether late Wednesday reported Q4 sales of $10.8 bln, in line with Street estimates of $10.8 bln. Non-GAAP EPS was $0.43 per share, a penny better than the Street view. In its conference call, CSCO said it expects Q1 revenue to be up 18% to 20% year-over-year, less than Wall Street was hoping for. Gross margin is seen at about 64%. Cash flow from operations are estimated at $1.2 to $1.5 billion for Q1.

In its conference call, CSCO said it expects Q1 revenue to be up 18% to 20% year-over-year, less than Wall Street was hoping for. Gross margin is seen at about 64%. Cash flow from operations are estimated at $1.2 to $1.5 billion for Q1.

Juniper Networks (NYSE:JNPR) slumped as Cisco warned that customers were becoming more cautious in the weak economy. In a note to clients, Wedbush Morgan analyst Rohit Chopra stated that Cisco's concerns "could potentially have negative implications for Juniper." The stock was also downgraded this morning.

Kohl's (KSS) reports Q2 EPS of $0.84 compared to $0.75 a year earlier and beating the Thomson Reuters mean analyst estimate for $0.82 by two cents. Net sales were $4.1 billion, an increase of 7.7% for the quarter. Comparable store sales for the quarter increased 4.6%.

For Q3, the company expects total sales to increase between 4.5% and 6.5%; comparable store sales to increase 2% to 4%; and gross margin as a percent of sales to increase 20 to 40 basis points over last year. EPS are put at $0.57 to $0.63. The Street expects $0.74.

For Q4, the company expects total sales to increase between 4.5% and 6.5%; comparable store sales to increase 2% to 4%; and gross margin as a percent of sales to increase 20 to 40 basis points over last year. EPS are put at $1.51 to $1.59. The Street expects $1.56. The company's updated guidance for fiscal 2010 is $3.57 to $3.70 per diluted share. Analysts on average look for $3.75.

Sara Lee Corp (SLE) fell after its 2011 earnings projection disapointed investors, even though it returned to the black in the fourth quarter. The food manufacturer anticipates earnings for the current fiscal year to fall between 93 cents and $1.02 a share on revenue of $11.2 billion to $11.5 billion. Analysts polled by Thomson Reuters expected earnings of 94 cents on revenue of $11.0 billion.

Barnes & Noble (NYSE:BKS) is near an agreement with billionaire Ron Burkle in which the bookstore chain will give him three board seats in exchange for dropping his lawsuit over limits on his stake in the company, according to Bloomberg, citing two people with knowledge of the matter. Burkle, along with his investment entity, will likely support a sale of the bookstore chain, the report said, citing the sources.

CVS Caremark (NYSE:CVS) is cutting prices for some of its Medicare services in a bid to regain business it has lost to rival firms, Bloomberg reported. CVS bids every year on the right to provide drugs to Americans covered by Medicare Part D. The results for the 2011 contracts are due later this month, the report said.

Pharmasset (VRUS) said its experimental drug for treatment of chronic hepatitis C infection was given the "fast track" designation from the Food and Drug Administration, according to Reuters report. In May, the drug showed short-term antiviral activity, according to the report. Fast track Status is the category given to a drug that treats unmet medical needs.

Novavax (NASDAQ:NVAX) said results from a pre-clinical toxicology study of its vaccine candidate to prevent respiratory syncytial virus (RSV) showed the vaccine to be safe and well-tolerated at all doses tested.

Source: Equities Update: Stocks Drop for Third Straight Session