Equities Sector Coverage: Stocks Pare Gains But Still Closer Higher

Sector Recap  |

Energy

Chevron (CVX) expects Q3 results to beat analyst forecasts and come in at the same level as Q2, when it reported EPS of $3.85. Energy Transfer Partners (ETP) is increased to Outperform from Perform with a $47.75 target at Morgan Keegan. Boardwalk Pipeline Partners (BWP) is also upgraded to Outperform from Perform at Morgan Keegan. Patriot Coal (PCX) gets cut to Sell from Neutral at Goldman. First Solar (FSLR) is taken to Sell from Neutral at Ticonderoga. In afternoon trading: Shares of General Maritime (GMR) are up about 51.5%. Shares of Frontline (FRO) are up about 17.25%. Shares of Cal Dive International (DVR) are up about 13.5%. Shares of W&T Offshore (WTI) are up about 12.25%.

Energy Select Sector SPDR (XLE) was trading at $64.13 at 4:00 PM on Wednesday, up 0.53% on the day – down 6.04% year-to-date.

Materials

Alcoa (AA) got the Q3 earnings season off to a poor start after reporting that EPS more than doubled to $0.15 but came in way below reduced expectations of $0.23. Revenue jumped 21% to $6.4B and beat forecasts. In afternoon trading: Shares of Cemex (CX) are up about 18%. Shares of Aluminum of China (ACH) are up about 12%. Shares of Rare Element (REE) are up about 8.25%. Shares of Mechel (MTL) are up about 7.5%. Shares of Louisiana-Pacific (LPX) are up about 7.25%.

The Materials Select Sector SPDR (XLB) was trading at $32.79 at 4:00 PM on Wednesday, up 0.99% on the day – down 14.63% year-to-date.

Industrials

Acuity Brands (AYI) is a new Hold and $38 target price at Jefferies. Norfolk Southern (NSC) and C.H. Robinson (CHRW) are now Hold from Buy at Deutsche Bank. In afternoon trading: Shares of A123 Systems (AONE) are up about 21.75%. Shares of Excel Maritime (EXM) are up about 17%. Shares of Paragon Shipping (PRGN) are up about 16.25%. Shares of WABCO (WBC) are up about 7.5%. Shares of DryShips (DRYS) are up about 7.5%. Shares of US Airways (LCC) are up about 7.5%.

The Industrial Select Sector SPDR (XLI) was trading at $31.89 at 4:00 PM on Wednesday, up 1.27% on the day – down 8.55% year-to-date.

Consumer Discretionary

AMC Networks (AMCX) is a new Underweight at Morgan Stanley. Cheesecake Factory (CAKE) is started with a Sell at Goldman Sachs, which has new Neutrals on DineEquity (DIN), Brinker International (EAT), and PF Chang’s (PFCB). Priceline.com (PCLN) is begun with a Buy and $580 price objective at Jefferies. In afternoon trading: Shares of Liz Claiborne (LIZ) is up about 32.5% after the company agreed to sell its Liz Claiborne, Monet and Kensie fashion brands for $328 million in cash, allowing the cash-strapped apparel maker to reduce its debt. Shares of Hovnanian (HOV) are up about 10%. Shares of Beazer Homes (BZH) are up about 9.5%. Shares of Eastman Kodak (EK) are down about 9%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $38.08 at 4:00 PM on Wednesday, up 0.90% on the day – up 1.79% year-to-date.

Consumer Staples

Bank of America-Merrill Lynch launches Buys on Altria (MO) and Philip Morris (PM) and assigns new Neutrals on Reynolds American (RAI) and Lorillard (LO). Carrefour SA (CRRFY) is cut Neutral from Buy at JP Morgan. In afternoon trading: Shares of AgFeed (FEED) are up about 17.75%. Shares of Zhongpin (HOGS) are up about 14.5%. Shares of Farmer Brothers (FARM) are up about 7.75%. Shares of Imperial Sugar (IPSU) are up about 7.25%. Shares of Coffee Holding (JVA) are down about 8%. Shares of Diamond Foods (DMND) are down about 6.5%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.72 at 4:00 PM on Wednesday, down 0.79% on the day – up 4.81% year-to-date.

Healthcare

TE Connectivity (TEL) will replace Cephalon (CEPH) in the S&P 500 index after the close of trading on Friday. Cephalon is being acquired by Teva (TEVA) in a deal expected to be completed within the next few days. Align Technology (ALGN) is a new Neutral at Credit Suisse. Humana (HUM) and HealthSpring (HS) are each upgraded to Outperform from Perform at Oppenheimer, with respective increased price objectives of $87 and $45. WebMD Health (WBMD) is downgraded to Neutral from Buy at Goldman. In afternoon trading: Shares of Pacific Biosciences (PACB) are up about 28.25%. Shares of Gentiva Health Services (GTIV) are up about 16.25%. Shares of Metabolix (MBLX) are up about 13%.

The Health Care Select Sector SPDR (XLV) was trading at $32.60 at 4:00 PM on Wednesday, up slightly on the day – up 3.49% year-to-date.

Financials

Private-equity firm Bain Capital is in final negotiations to buy Japanese restaurant chain Skylark from Nomura (NMR) for up to ¥260B ($3.4B), including debt. Bank of America-Merrill Lynch has new Neutrals on SunTrust Banks (STI) and BB&T Corp (BBT). It begins Buys on U.S. Bancorp (USB), PNC Financial Services (PNC), and Wells Fargo (WFC). First Republic Bank (FRC) is initiated with a Buy at Cantor Fitzgerald. BNP Paribas (BNPQY) is upgraded to Buy from Hold at Societe Generale. Lloyds Banking (LYG) is lowered to Hold from Buy at Canaccord Genuity. Commerzbank AG (CRZBY) and Credit Agricole SA (CRARY) are both now Hold from Buy at Societe Generale, which cuts Natixis (NTXFF) by 180 degrees, to Sell from Buy. Waddell & Reed (WDR) is downgraded to Hold from Buy at Jefferies. Cullen/Frost Bankers (CFR) is cut to Underperform from Neutral at Sterne Agee.

The Financial Select Sector SPDR (XLF) was trading at $12.75 at 4:00 PM on Wednesday, up 2.53% on the day – down 20.09% year-to-date.

Information Technology

Hewlett Packard (HPQ) is reconsidering its plan to spin off or sell its PC arm, as new analyses show that the costs could outweigh the benefits. Matters continue to deteriorate for RIM (RIMM) as disruptions to its Blackberry service extend into a third day and spread further into Asia, having mainly affected Europe and Latin America until now. UPDATE: "BlackBerry subscribers in the Americas may be experiencing intermittent service delays this morning," RIM said in a statement. Samsung (SSNLF) says it will soon release amended versions of three Galaxy smartphones to bypass temporary sales bans in some European nations on handsets that violated an Apple (AAPL) patent. TE Connectivity (TEL) will replace Cephalon (CEPH) in the S&P 500 index after the close of trading on Friday. Cephalon is being acquired by Teva (TEVA) in a deal expected to be completed within the next few days. RBC Capital resumes Outperforms on Dow member Intel (INTC), along with Analog Devices (ADI), Cypress Semiconductor (CY), Marvell Technology (MRVL), and Texas Instruments (TXN). It starts Sector Perfoms on Altera (ALTR), Broadcom (BRCM), and Freescale (FSL), and names Sandisk (SNDK) a Top Pick. GT Advanced Technologies (GTAT) gets picked up at an Underperform at Jefferies. IAC/InterActiveCorp (IACI) is upgraded to Buy from Neutral at Goldman Sachs. Nokia (NOK) is moved to Neutral from Reduce at Nomura, but is now Sell from Neutral at WestLB. Xerox (XRX), Lexmark (LXK), and Brocade (BRCD) are each downgraded to Underweight from Neutral at JP Morgan, which takes Seagate Technology (STX) to Neutral from Overweight. Rackspace (RAX) is reduced to Hold from Buy at The Benchmark Company with a new target of $42. WebMD Health (WBMD) is downgraded to Neutral from Buy at Goldman. In afternoon trading: Shares of Broadsoft (BSFT) are up about 12%. Shares of Giant Interactive Group (GA) are up about 12%.

The Technology Select Sector SPDR (XLK) was trading at $25.27 at 4:00 PM on Wednesday, up 0.44% on the day – up 0.32% year-to-date.

Telecommunications Services

In afternoon trading: Actives: Shares of Sprint Nextel (S) are up about 8%. Shares of TerreStar (TSTRQ) are up about 7.5%. Shares of Clearwire (CLWR) are up about 7%. Shares of Telecom Italia (TI) are up about 5.8%. Shares of Premiere Global Services (PGI) are up about 5.4%. Shares of Turkcell (TKC) are up about 5.2%. Shares of NII Holdings (NIHD) are up about 5.1%. Shares of magicJack VocalTec (CALL) are down about 5.75%.

The NASDAQ Telecommunications Index (IXTC) was trading at $193.47 at 4:00 PM on Wednesday, up 0.83% on the day – down 14.15% year-to-date.

Utilities

Calpine (CPN) is initiated with a Buy at ISI Group, which has a Hold on rival Dynegy (DYN). In afternoon trading: Actives: Shares of Duke Energy (DUK) are down about a quarter of a percent. Shares of CenterPoint Energy (CNP) are down about 0.4%. Shares of Exelon (EXC) are up about 1.5%. Shares of PPL Corp (PPL) are up about 0.4%. Shares of Genon Energy (GEN) are up about 0.7%. Shares of AES Corp (AES) are up about 2.6%. Shares of NV Energy (NVE) are up about 1.1%.

The Utilities Select Sector SPDR (XLU) was trading at $33.66 at 4:00 PM on Wednesday, down 0.24% on the day – up 7.40% year-to-date.

STOCKS: CVX, ETP, BWP, PCX, FSLR, GMR, FRO, DVR, WTI, AA, CX, ACH, REE, MTL, LPX, AYI, NSC, CHRW, AONE, EXM, PRGN, WBC, DRYS, LCC, AMCX, CAKE, DIN, EAT, PFCB, PCLN, LIZ, HOV, BZH, EK, MO, PM, RAI, LO, CRRFY, FEED, HOGS, FARM, IPSU, JVA, DMND, TEL, CEPH, TEVA, ALGN, HUM, HS, WBMD, PACB, GTIV, MBLX, NMR, STI, BBT, USB, PNC, WFC, FRC, BNPQY, LYG, CRZBY, CRARY, NTXFF, WDR, CFR, HPQ, RIMM, SSNLF, AAPL, INTC, ADI, CY, MRVL, TXN, ALTR, BRCM, FSL, SNDK, GTAT, IACI, NOK, XRX, LXK, BRCD, STX, RAX, BSFT, GA, S, TSTRQ, CLWR, TI, PGI, TKC, NIHD, CALL, CPN, DYN, DUK, CNP, EXC, PPL, GEN, AES, NVE

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