Equities Sector Coverage: Stocks Move Higher to Test Key Resistance Level

Sector Recap  |

The Dow Jones Industrial Average rallied to 12,887.93 going into the final hour of trading. The NASDAQ traded up to 2930.13 then declined to 2913.89 before rebounding to a day’s high going into the final hour of trading. The S&P 500, Dow Transports and Russell 2000 continue to lag their 2011 highs at 1370.58, 5627.85 and 868.57 respectively.

Asian stocks closed higher on Monday on the Greek approval of austerity measures. The Nikkei 225 ending their session 8,999 – up 0.58% on the day. The Hang Seng closed at 20,887 – up 0.50% on the day. European stocks were also higher. The FTSE 100 ended their session at 5,898 – up 0.78% on the day; the DAX ended their session at 6,738 – up 0.68% on the day; and the CAC 40 ended their session at 3,385 – up 0.34% on the day.

The yield on the 10-Year US Treasury rose from 1.986 to 2.028 then declined to 1.955 versus its 50-day simple moving average at 1.945 then rose to 1.997 in afternoon trading. Gold rebounded from $1722.1 the Troy ounce to $1735.4 then fell to $1717.7 then rebounded above $1725 in afternoon trading. Crude oil rebounded from $99.09 per barrel to $101.00 well above the 50-day simple moving average at $99.21. The euro versus the dollar rallied from 1.3210 to 1.3282 then faded below 1.32 into the final hour of trading.

Energy

Iraq is to bar Exxon Mobil (XOM) from taking part in the country's fourth oil and gas licensing auction, which is scheduled for May, due to the company's deal to explore in Kurdistan. Arch Coal (ACI) missed estimates by 2 cents and revenue by $70M. Targa Resources Partners (NGLS) is a new Neutral and $41 price objective at Robert W. Baird. Oceaneering International (OII) gets added to the Conviction Buy List at Goldman Sachs, which also gives Buy-from-Neutral increases to both Noble Corp (NE) and Ensco (ESV). Swift Energy (SFY) is taken to Buy from Neutral at Suntrust. Arch Coal (ACI) is cut by both Brean Murray (Hold from Buy) and Crédit Agricole (Sell from Underperform). Helmerich & Payne (HP), Baker Hughes (BHI), and Patterson-UTI Energy (PTEN) are all taken to Neutral from Buy at Goldman. Buckeye Partners (BPL) is slashed to Sell from Neutral at Citigroup. FMC Technologies (FTI) is taken to Neutral from Buy at Global Hunter Securities. In afternoon trading: Shares of Gevo Inc (GEVO) are up about 19.5%. Shares of GMX Resources (GMXR) are up about 10%.

Energy Select Sector SPDR (XLE) was trading at $73.62 at 4:00 PM on Monday, up 0.79% on the day – up 6.50% year-to-date. The January change was +2.26%. The 2011 change was -1.29%.

Materials

DuPont (DD) is initiated with an Equal Weight at Morgan Stanley. ArcelorMittal (MT) gets upgraded to Neutral from Underperform at Credit Suisse. Keybanc cuts both U.S. Steel (X) and Steel Dynamics (STLD) to Hold from Buy. Silvercorp Metals (SVM) is cut to Market Perform from Outperform by BMO Capital. In afternoon trading: Heavily Traded Stocks: Shares of Alcoa (AA) are up about 0.4%. Shares of Freeport McMoran (FCX) are down about a half of a percent. Shares of Vale SA (VALE) are up about 2.2%. Shares of United States Steel (X) are down about 0.75%.

The Materials Select Sector SPDR (XLB) was trading at $37.15 at 4:00 PM on Monday, up 0.27% on the day – up 10.90% year-to-date. The January change was +10.99%. The 2011 change was -12.78%.

Industrials

GE (GE) intends to recruit 5,000 U.S. military veterans in the next five years and to spend $580M this year to open new aviation plants in Mississippi, Alabama and Ohio. Ingersoll-Rand (IR) is boosted to Outperform from Market Perform at Bernstein. Watsco (WSO) is upgraded to Neutral from Sell at UBS. In afternoon trading: Heavily Traded Stocks: Shares of General Electric (GE) are up about 0.9%. Shares of Corning (GLW) are relatively unchanged.

The Industrial Select Sector SPDR (XLI) was trading at $37.42 at 4:00 PM on Monday, up 1.22% on the day – up 10.87% year-to-date. The January change was +7.32%. The 2011 change was -3.21%.

Consumer Discretionary

Nevada Gold and Casinos (UWN) is a new Buy and $2.75 target price at Brokers William Smith. Shoe Carnival (SCVL) is now Buy from Neutral at Northcoast. H & R Block (HRB) is named a Short Research Tactical Idea at Morgan Stanley. Exide Technologies (XIDE) is cut to Hold from Accumulate at Ardour Capital. Lions Gate Entertainment (LGF) is lowered to Sell from Hold at Caris & Company. In afternoon trading: Heavily Traded Stocks: Shares of Ford Motor Company (F) are up about 1%. Shares of Sirius XM Radio (SIRI) are down about a quarter of a percent. Shares of News Corp (NWSA) are up about 1.4%. Shares of PulteGroup (PHM) are up about 2.7%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $42.65 at 4:00 PM on Monday, up 0.80% on the day – up 9.30% year-to-date. The January change was +5.89%. The 2011 change was +4.30%.

Consumer Staples

Authorities are trying to determine whether current or former Avon (AVP) executives ignored or even tried to conceal a 2005 internal audit that found that employees in China may have been bribing officials as the company sought entry into the country. Flowers Foods (FLO) Q4 earnings fell 27% as higher ingredient costs offset a sales improvement helped by last year's acquisition of Tasty Baking. Results missed estimates, with EPS at $0.17 vs. consensus $0.21. Lance (LNCE) reported Q4 EPS of $0.33 (versus consensus of $0.25), while beating revenue by $9.5M. Anheuser-Busch InBev (BUD) is a new Neutral at Credit Suisse. Procter & Gamble (PG) is named a Long Research Tactical Idea at Morgan Stanley. Sara Lee Corp (SLE) is moved to Outperform from Market Perform by Sanford Bernstein, which also takes its price target up to $24. United Natural Foods (UNFI) is increased to Outperform from Market Perform by BMO Capital. Estée Lauder (EL) is lowered to Neutral from Buy at Citigroup. In afternoon trading: Shares of AgFeed (FEED) are down about 74%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $32.75 at 4:00 PM on Monday, up 0.43% on the day – up 0.80% year-to-date. The January change was -1.42%. The 2011 change was +10.85%.

Health Care

Mannkind (MNKD) is a new Overweight at Piper Jaffray. Varian Medical (VAR) gets an Outperform-from-Neutral raise at Robert Baird, which takes its target up by $4 to $76. NuVasive (NUVA) is reduced to Neutral from Outperform at Robert Baird. In afternoon trading: Shares of Complete Genomics (GNOM) are up about 46%. Shares of Regeneron Pharmaceuticals (REGN) are up about 12.5%. Shares of Tengion Inc (TNGN) are up about 11.75%. Shares of Theravance Inc (THRX) are up about 11.75%.

The Health Care Select Sector SPDR (XLV) was trading at $36.08 at 4:00 PM on Monday, up 0.75% on the day – up 4.01% year-to-date. The January change was +3.20%. The 2011 change was +10.32%.

Financials

Prudential Financial (PRU) is reportedly interested in buying ING's (ING) Asian insurance operations in what could be Asia's second-biggest sale ever in the sector. AIA Group (AAIGF) and Korea Life Insurance are also eyeing the businesses, with AIA considering a bid of over $6B. Barclays (BCS) is now Neutral from Buy at Nomura and Hold from Buy at Société Générale. In afternoon trading: Shares of MF Global (MFGLQ) are down about 11%.

The Financial Select Sector SPDR (XLF) was trading at $14.70 at 4:00 PM on Monday, up 0.93% on the day – up 13.08% year-to-date. The January change was +8.12%. The 2011 change was -18.50%; the weakest performing sector for the year.

Information Technology

Orbotech (ORBK) reported Q4 EPS of $0.06 (versus consensus of $0.29, while missing revenue by $5M. FLIR Systems (FLIR) beat estimates by 4 cents, while missing revenue by $31M. Adobe Systems (ADBE) is an Outperform at Cowen. Advanced Micro Devices (AMD) is lifted to Outperform from Market Perform at Sanford Bernstein. NVIDIA (NVDA) is moved to Outperform from Market Perform with a $20 price target at FBR Capital. Trina Solar (TSL) is moved 180 degrees to Buy from Underperform at Bank of America-Merrill Lynch. Alcatel-Lucent (ALU) is taken to Sell from Hold at Société Générale. Monster Worldwide (MWW) is moved to Sell from Neutral at Citigroup. Broadcom (BRCM) and Marvell (MRVL) are both moved to Hold from Buy at The Benchmark Company to Hold from Buy due to valuation concerns. First Solar (FSLR) is downgraded to Hold from Buy by Brigantine. In afternoon trading: Shares of CyberDefender (CYDE) are up about 37%. Shares of Microvision (MVIS) are up about 12%. Shares of Diebold (DBD) are up about 11.5%.

The Technology Select Sector SPDR (XLK) was trading at $28.21 at 4:00 PM on Monday, up 0.64% on the day – up 10.84% year-to-date. The January change was +6.21%. The 2011 change was +1.03%.

Telecommunication Services

Vodafone (VOD) has confirmed it's considering a cash bid for Cable & Wireless Worldwide, with sources adding that the offer could come in at around £700M ($1.1B). Alcatel-Lucent (ALU) is taken to Sell from Hold at Société Générale. In afternoon trading: Shares of Cable & Wireless Worldwide (CBWWF) are up about 78.5%. Shares of TerreStar (TSTRQ) are up about 8.25%. Shares of Softbank (SFTBF) are up about 6.6%. Shares of Clearwire (CLWR) are up about 6.25%.

The NASDAQ Telecommunications Index (IXTC) was trading at $216.14 at 4:00 PM on Monday, up 0.62% on the day – up 9.75% year-to-date. The January change was +6.67%. The 2011 change was -12.62%.

Utilities

In afternoon trading: Heavily Traded Stocks: Shares of Genon Energy (GEN) are up about 0.4%. Shares of Duke Energy (DUK) are down about 0.3%. Shares of PPL Corp (PPL) are down about 2.1%. Shares of Exelon (EXC) are down about 1.5%. Shares of AES Corp (AES) are up about 2.1%. Shares of American Electric Power (AEP) are up about 0.9%.

The Utilities Select Sector SPDR (XLU) was trading at $34.76 at 4:00 PM on Monday, down 0.11% on the day – down 3.39% year-to-date. The January change was -3.61%. The 2011 change was +14.81%; the strongest performing sector for the year.

STOCKS: XOM, ACI, NGLS, OII, NE, ESV, SFY, HP, BHI, PTEN, BPL, FTI, GEVO, GMXR, DD, MT, X, STLD, SVM, AA, FCX, VALE, GE, IR, WSO, GLW, UWN, SCVL, HRB, XIDE, LGF, F, SIRI, NWSA, PHM, AVP, FLO, LNCE, BUD, PG, SLE, UNFI, EL, FEED, MNKD, VAR, NUVA, GNOM, REGN, TNGN, THRX, PRU, ING, AAIGF, BCS, MFGLQ, ORBK, FLIR, ADBE, AMD, NVDA, TSL, ALU, MWW, BRCM, MRVL, FSLR, CYDE, MVIS, DBD, VOD, CBWWF, TSTRQ, SFTBF, CLWR, GEN, DUK, PPL, EXC, AES, AEP

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