Equities Sector Coverage: Healthcare and Tech Lead Stocks

Last week was the fourth consecutive down week for the Dow Jones Industrial Average and the NASDAQ. The Dow Industrial Average fell 70 points last week to 12,442 up 7.5% year to date. The NASDAQ slipped six points to 2797 up 5.4% year to date. According to the S&P/Case-Shiller Home Price Indices home prices fell to their lowest point since the housing bubble burst in mid-2006. The Chicago PMI fell to 56.6 in May from 67.6 in April as prices paid remained elevated at 78.6. The Conference Board’s reading for Consumer Confidence Index slipped to 60.8 in May from 66.0 in April, which is another weak reading given the 90 to 120 neutral zone for this data series. The Dow Industrial Average popped by 135 points in the first half hour of trading to 12,574 with the NASDAQ up 30 points to 2827. Both indices drifted lower following this weaker than expected economic data. The Dow Industrial Average faded to 12,481 in afternoon trading before rebounding above 12,525 in the final half hour of trading. The NASDAQ traded down to 2809 before rebounding to within five points of the day’s high in the final half hour of trading.

Japan reported that their jobless rate rose, and that factory output is anemic, yet the Nikkei 225 rallied 2.0% on Tuesday with the Hang Seng Index up 2.2%. European shares were also higher as the fear of a Greek bailout lessoned. The FTSE 100 was up 0.9%, the DAX up 1.9% and the CAC 40 up 1.6%. The yield on the 10-Year US Treasury note again traded back and forth around its 200-day simple moving average at 3.090 on Tuesday ending the day below that key level. Comex gold continued its trend higher with a test of $1541.0 the Troy ounce. Nymex crude oil traded as high as $103.39 per barrel. The euro was firm again on Tuesday crossing above 1.44 versus the dollar. US stocks followed the euro higher at the open on Tuesday.

Energy

Tesoro Logistics LP (TLLP) is launched at an Outperform with Wells Fargo. Forest Oil (FST) is lifted to Buy from Hold at Jefferies. Anadarko Petroleum (APC) is upgraded to Outperform from Market Perform at Wells Fargo. In afternoon trading: Shares of Parker Drilling (PKD) are up about 9.5%. Shares of LDK Solar (LDK) are up about 7.5%. Shares of Yingli Green Energy (YGE) are up about 5.5%. Shares of Precision Drilling (PDS) are up about 5%. Shares of Uranium Energy (UEC) are down about 6.5%. Shares of Uranium Resources (URRE) are down about 6.25%. Shares of Uranerz Energy (URZ) are down about 5.5%.

The Energy Select Sector SPDR (XLE) was trading at $77.11 at 4:00 PM on Tuesday, up 1.01% on the day – up 12.98% year-to-date.

Materials

U.S. chemicals producer Ashland (ASH) has agreed to buy privately held International Specialty Products for about $3.2B in cash in a bid to expand in high-growth markets such as personal care, pharmaceuticals and energy. Potash (POT) and Mosaic (MOS) are hoisted to Buy from Hold at Citigroup. Ferro (FOE) gets a Buy-from-Hold boost at Deutsche Bank. Scotts Miracle-Gro (SMG) is moved to Neutral from Overweight at JP Morgan. In afternoon trading: Shares of Yongye International (YONG) are up about 46.5% after getting a $50M investment from Morgan Stanley. Shares of Ashland are up about 11%.

The Materials Select Sector SPDR (XLB) traded at $39.75 at 4:00 PM on Tuesday, up 1.02% on the day – up 3.49% year-to-date.

Industrials

Almost 50 of the world’s leading airlines increased revenues from ancillary sales by 38% to €15.11B ($21.8B) last year as carriers offset higher fuel costs by generating extra income without raising basic fares. The top three carriers for total ancillary revenue are United Continental (UAL), Delta Air Lines (DAL) and American Airlines (AMR). Air Lease (AL) is a new Neutral at JP Morgan. AerCap (AER) is moved to Overweight from Neutral at JP Morgan. TASER (TASR) is taken to Underweight from Neutral at JP Morgan. In afternoon trading: Shares of SmartHeat (HEAT) are up about 15%. Shares of SatCon Technology (SATC) are up about 9%. Shares of Eagle Bulk Shipping (EGLE) are up about 8.25%.

The Industrial Select Sector SPDR (XLI) traded at $37.63 at 4:00 PM on Tuesday, up 0.91% on the day – up 7.92% year-to-date.

Consumer Discretionary

Volkswagen (VLKAY:US) has triggered a mandatory takeover offer for MAN by increasing its stake to over 30% as it looks to create Europe’s largest truck maker. However, VW’s offer of €95 a share, which values MAN at €13.8B ($19.7B), is below the latter’s share price today, and is possibly designed to put off MAN shareholders and allow VW to gradually buy shares in the market. Toll Brothers (TOL) is taken to Outperform from Market Perform at JMP Securities. Jack In The Box (JACK) is now Buy from Neutral at SunTrust. JMP Securities downgrades NVR Inc (NVR) and MDC Holdings (MDC) to Market Perform from Outperform. In afternoon trading: Shares of China Education Alliance (CEU) are down about 7.75%. Shares of China MediaExpress (CCME) are down about 7.75%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.44 at 4:00 PM on Tuesday, up 0.70% on the day – up 8.10% year-to-date.

Consumer Staples

Coca-Cola FEMSA (KOF) is upgraded to Hold from Sell at Deutsche Bank. In afternoon trading: Shares of Nash Finch (NAFC) are up about 9.25%. Shares of PriceSmart (PSMT) are up about 8.5%. Shares of Dole Food (DOLE) are up about 7.5%. Shares of Spartan Stores (SPTN) are up about 7%. Shares of Star Scientific (CIGX) are up about 5%.

The Consumer Staples Select Sector SPDR (XLP) traded at $32.31 at 4:00 PM on Tuesday, up 0.84% on the day – up 10.24% year-to-date.

Healthcare

Sagent Pharmaceuticals (SGNT) is resumed at Outperform at RBC Capital Markets. AMAG Pharmaceuticals (AMAG) is raised to Outperform from Neutral by brokers Robert W. Baird with a new target of $22. Cerner (CERN) gets added to the Top Picks List at FBR Capital. GlaxoSmithKline (GSK) gets cut to Sell from Neutral at Goldman. Medco Health Solutions (MHS) is removed from FBR Capital’s Top Picks. Medtronic (MDT) is moved to Sell from Hold at Argus due to an unfavorable valuation. In afternoon trading: Shares of AMAG are up about 11.5%. Shares of Complete Genetics (GNOM) are up about 10%. Shares of Optimer Pharmaceuticals (OPTR) are up about 9.25%. Shares of AEterna Zentaris (AEZS) are up about 7.25%. Shares of Biosante Pharmaceuticals (BPAX) are up about 6.25%.

The Health Care Select Sector SPDR (XLV) traded at $36.11 at 4:00 PM on Tuesday, up 1.18% on the day – up 14.63% year-to-date.

Financials

Goldman Sachs (GS) offered Libya’s sovereign-wealth fund the chance to become one of its largest shareholders after the bank lost almost $1.3B of the fund’s money in equity and currency trades during the financial crisis. NYSE Euronext (NYX) is looking to create two parallel clearing services if it buys LCH.Clearnet and if its merger with Deutsche Boerse (DBOEY:US), which owns Eurex Clearing, goes through. Goldman Sachs gets upgraded to Overweight from Neutral at JP Morgan with a $175 target. Education Realty Trust (EDR) is raised to Outperform from Market Perform at Keefe Bruyette. Radian Group (RDN) is raised to Overweight from Neutral at Piper Jaffray. In afternoon trading: Shares of Lehman Brothers (LEHMQ:US) are up about 15.5%.

The Financial Select Sector SPDR (XLF) traded at $15.84 at 4:00 PM on Tuesday, up 1.02% on the day – down 0.69% year-to-date.

Information Technology

The EU is examining Western Digital’s (WDC) $4.3B purchase of a Hitachi (HIT) unit and Seagate Technology’s (STX) $1.4B buy of a Samsung Electronics (SSNLF:US) operation. Activision Blizzard (ATVI) plans to set up a monthly subscription service for its ‘Call of Duty’ video game as it looks to exploit the massive popularity of the title. NVIDIA Corporation (NVDA) is a new Buy at Auriga with a price objective of $24. Citigroup starts Sourcefire (FIRE) with a Buy and $32 target price and has Holds on Fortinet (FTNT) and Websense (WBSN) with respective price objectives of $52 and $25. eBay Inc. (EBAY) is boosted to Buy from Hold at ThinkEquity. Novatel Wireless (NVLT) is now Neutral from Underweight at JP Morgan. Broadcom (BRCM) is moved to Outperform from Market Perform by BMO Capital with a new target price of $50. Motricity (MOTR) is moved to Sector Perform from Underperform at RBC Capital Markets. TravelZoo (TZOO) is upgraded to Outperform from Market Perform at Morgan Keegan. In afternoon trading: Shares of Sequans Communications (SQNS) are up about 20%. Shares of Meru Networks (MERU) are up about 15%. Shares of Travelzoo are up about 10.25%. Shares of GT Solar (SOLR) are up about 9%. Shares of Nokia (NOK) are down about 13.5% after warning what Q2 revenue would miss its previous targets due to sliding sales volumes and prices.

The Technology Select Sector SPDR (XLK) traded at $26.46 at 4:00 PM on Tuesday, up 1.38% on the day – up 5.04% year-to-date.

Telecommunications Services

In afternoon trading: Shares of Portugal Telecom (PT) are down about 13.5%. Actives: Shares of Level 3 Communications (LVLT) are down about 2%. Shares of Sprint Nextel (S) are up about 0.4%. Shares of AT&T (T) are up about 0.3%. Shares of Vodafone (VOD) are down about 0.6%. Shares of Frontier (FTR) are up slightly. Shares of Verizon (VZ) are up about a quarter of a percent.

The NASDAQ Telecommunications Index (IXTC) traded at $226.26 at 4:00 PM on Tuesday, up 1.26% on the day – up 0.39% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Genon Energy (GEN) are flat. Shares of Dynegy (DYN) are up about 2.8%. Shares of CenterPoint Energy (CNP) are up about 1.2%. Shares of American Electric Power (AEP) are down about 0.6%. Shares of Duke Energy (DUK) are up about 0.3%.

The Utilities Select Sector SPDR (XLU) traded at $33.87 at 4:00 PM on Tuesday, up 0.74% on the day – up 8.07% year-to-date.

STOCKS: TLLP, FST, APC, PKD, LDK, YGE, PDS, UEC, URRE, URZ, ASH, POT, MOS, FOE, SMG, YONG, UAL, AMR, AL, AER, TASR, HEAT, SATC, EGLE, VLKAY, TOL, JACK, NVR, MDC, CEU, CCME, KOF, NAFC, PSMT, DOLE SPTN, CIGX, SGNT, AMAG, CERN, GSK, MHS, MDT, GNOM, OPTR, AEZS, BPAX, GS, NYX, DBOEY, EDR, RDN, LEHMQ, WDC, HIT, STX, SSNLF, ATVI, NVDA, FIRE, FTNT, WBSN, EBAY, NVTL, BRCM, MOTR, TZOO, SQNS, MERU, SOLR, NOK, PT, LVLT, S, T, VOD, FTR, VZ, GEN, DYN, CNP, AEP, DUK