Equities Sector Coverage: Stocks Down on Economic News

U.S. stocks opened lower on Wednesday on continued weaker than expected economic data; ADP reported that the private sector only added only 38,000 jobs in May when 190,000 was expected. The national manufacturing ISM came in at 53.5 versus 60.4 in April. New orders fell to 51.0 versus 61.7 in April. Construction Spending for April rose by a less than expected 0.4% when 1.0% was the consensus. The Dow Jones Industrial Average traded as low as 12,282 with the NASDAQ as low as 2768 in the final half hour of trading.

Asian stocks were mixed on Wednesday with the Nikkei 225 up 0.3% to 9,720 and the Hang Seng down just 0.2%. European stocks drifted lower following weaker than expected US private sector jobs data. The FTSE 100 ended their session down 1.0% with the DAX and CAC 40 also down 1.0%. The yield on the 10-Year US Treasury note is trending below its 200-day simple moving average at 3.092 percent and traded as low as 2.950 on Wednesday. Comex gold is consolidating the decline from the all-time high of $1577.4 the Troy ounce on May 2nd to $1462.5 set on May 5th. Gold traded higher on Wednesday to $1551.6, which is another sign of risk aversion. Nymex crude oil fell below its 50-day simple moving average at $105.47 on May 5th and tested $94.63 on May 6th. Oil traded within this range on Wednesday, down from $103.31 per barrel to $99.91. The euro traded down from 1.4457 to 1.4328 on Wednesday as weak stocks dislocated somewhat to a weak dollar. On Tuesday, the Dow Industrial Average rallied 128 points to 12,570 up 8.6% year to date. The NASDAQ gained a solid 38 points to 2835 up 6.9% year to date.

Energy

Tesoro Logistics LP (TLLP) is begun as a Buy at Citigroup. Ensco (ESV) is now Buy from Neutral at UBS. TECO Energy (TE) gets cut to Underperform from Market Perform at Maquarie. In afternoon trading: Shares of Ion Geophysical (IO) are down about 6.25%. Shares of Yingli Green Energy (YGE) are down about 6%. Shares of Trina Solar (TSL) are down about 5.5%. Shares of General Maritime (GMR) are down about 5.25%. Shares of LDK Solar (LDK) are down about 5.25%. Shares of Golar LNG (GLNG) are UP about 5.5%.

The Energy Select Sector SPDR (XLE) was trading at $75.27 at 4:00 PM on Wednesday, down 2.39% on the day – up 10.29% year-to-date.

Materials

Sealed Air (SEE) has agreed to buy privately-held Diversey in a cash-and-stock deal worth $4.3B. Ashland (ASH) is moved to Neutral from Overweight at JP Morgan. In afternoon trading: Shares of Zagg (ZAGG) are up about 10%. Shares of Avalon Rare Metals (AVL) are down about 7.75%. Shares of Sealed Air are down about 7%. Shares of ADA-ES (ADES) are down about 6.75%. Shares of U.S. Energy (USEG) are down about 6.25%. Shares of Mercer International (MERC) are down about 6%.

The Materials Select Sector SPDR (XLB) traded at $38.51 at 4:00 PM on Wednesday, down 3.12% on the day – up 0.26% year-to-date.

Industrials

France’s Schneider Electric (SBGSY:US) has agreed to buy Telvent (TLVT), a developer of software for ‘smart’ electricity grids, for about $1.4B. The offer of $40 a share represents a 16% premium to Telvent’s close yesterday. Embraer SA (ERJ) is raised to Outperform from Perform at RBC Capital Markets. In afternoon trading: Shares of American Superconductor (AMSC) are down about 21.5% after the company delayed its quarterly report. Shares of SmartHeat (HEAT) are down about 11.5%. Shares of Beacon Power (BCON) are down about 6.5%. Shares of Federal Signal (FSS) are down about 6.5%. Shares of Fushi Copperweld (FSIN) are down about 6.5%. Shares of YRC Worldwide (YRCW) are down about 6.5%.

The Industrial Select Sector SPDR (XLI) traded at $36.40 at 4:00 PM on Wednesday, down 3.27% on the day – up 4.39% year-to-date.

Consumer Discretionary

California’s lower house has passed a bill that would require Internet companies such as Amazon (AMZN) to collect sales tax for online purchases by state residents. Phillips-Van Heusen (PVH) beat estimates by 7 cents with revenue in-line with estimates. Amazon (AMZN) and eBay (EBAY) are both begun with Equal Weights at Barclays. Tiffany & Co (TIF) is taken to Hold from Buy at Deutsche Bank. In afternoon trading: Shares of Dollar General (DG) are down about 8.25%. Shares of The Talbots (TLB) are down about 7.25%. Shares of Sotheby’s (BID) are down about 6%. Shares of Lions Gate Entertainment (LGF) are UP about 6%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $39.52 at 4:00 PM on Wednesday, down 2.27% on the day – up 5.64% year-to-date.

Consumer Staples

Dr Pepper Snapple (DPS) and Molson Coors Brewing (TAP) are each new Holds at Jefferies, which begins Hansen Natural (HANS) at a Buy. Walgreens (WAG) gets begun with a Buy at UBS. Rite Aid (RAD) is resumed at a Neutral by UBS. HJ Heinz (HNZ) gets cut to Sell from Neutral at Goldman with a new target of $49. In afternoon trading: Shares of Star Scientific (CIGX) are down about 11.5%. Shares of Seneca Foods (SENEA) are down about 9.25%. Shares of China-Biotics (CHBT) are down about 7.5%. Shares of Safeway (SWY) are down about 5.5%. Shares of SuperValue (SVU) are dowm about 5.25%.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.98 at 4:00 PM on Wednesday, down 1.02% on the day – up 9.11% year-to-date.

Healthcare

The FDA is reassessing the safety of birth control pills that contain the hormone drospirenone, including Bayer’s Yaz suite of products, which generated $1.47B in sales last year. Using a mobile handset may increase the risk of getting certain types of brain tumors, a report from a World Health Organization agency said. The SEC is investigating SAC Capital for possibly using inside information to profit from AstraZeneca’s (AZN) $15B takeover of biotechnology firm MedImmune in 2007. Pfizer (PFE) and Teva (TEVA) have settled a patent lawsuit over generic versions of Pfizer’s Neurontin epilepsy drug. In the deal, financial terms of which weren’t disclosed, Teva will be allowed to continue selling the copy of Neurontin under license from Pfizer. Sagent Pharmaceuticals (SGNT) is begun with a Buy rating and $28 price target at Needham. Hill-Rom (HRC) is initiated with an Outperform at Wells Fargo. In afternoon trading: Shares of Orexigen Therapeutics (OREX) are up about 17.25% after the diet pill developer said it would make a regulatory announcement about its highly anticipated obesity treatment Contrave this Friday.

The Health Care Select Sector SPDR (XLV) traded at $35.61 at 4:00 PM on Wednesday, down 1.38% on the day – up 13.05% year-to-date.

Financials

Attempts to repossess homes are being prevented in some cases by delinquent borrowers showing courts that banks failed to properly assign ownership of their mortgages after they were pooled into mortgage-backed securities. France’s Axa (AXAHF:US) has unveiled a five-year plan to boost profits and cut debt, the start of which is the sale of its Canadian business to Intact Financial (IFCZF:US) for C$2.6B ($2.7B). Citigroup (C) is a new Outperform at RBC Capital Markets. BlackRock (BLK) gets upgraded to Buy from Neutral at Goldman. T. Rowe Price (TROW) is now Neutral from Buy at Goldman. Ashford Hospitality Trust (AHT) is moved to Market Perform from Outperform at FBR Capital. Swedbank (SWDBY) and Danske Bank A/S (DNSKY) are both downgraded to Hold from Buy at Citigroup. In afternoon trading: Shares of E House China Holdings (EJ) are down about 9%. Shares of Radian Group (RDN) are down about 7.5%. Shares of Regions Financial (RF) are down about 6.25%. Shares of The PMI Group (PMI) are down about 5.5%.

The Financial Select Sector SPDR (XLF) traded at $15.31 at 4:00 PM on Wednesday, down 3.35% on the day – down 4.01% year-to-date.

Information Technology

France’s Schneider Electric (SBGSY:US) has agreed to buy Telvent (TLVT), a developer of software for ‘smart’ electricity grids, for about $1.4B. The offer of $40 a share represents a 16% premium to Telvent’s close yesterday. Yahoo (YHOO) has forged an agreement for Taiwan semiconductor company MediaTek to integrate the U.S. firm’s Web offerings into chips for mobile phones. Former Google (GOOG) CEO Eric Schmidt believes his biggest mistake as head of the search company was his inability to cope with the threat from Facebook. Schmidt also disclosed that Google has recently renewed a partnership with Apple (AAPL) to provides map technology to the iPhone and iPad. Elli Mae (ELLI) is picked up at Overweight at Piper Jaffray. Broadcom (BRCM) is boosted to Buy from Neutral at Nomura. Concur Tech (CNQR) is now Buy from Hold at Needham. Nokia (NOK) is downgraded to Neutral from Buy at Goldman, and taken to Underperform from Market perform by Sanford Bernstein. In afternoon trading: Shares of Telvent GIT are up about 15.5% on the takeover news. Shares in Nokia are down about 4.25% after plunging 14.4% yesterday following an earnings warning. The stock is trading at its lowest level in more than 13 years. Shares of Sequans Communications (SQNS) are down about 13%.

The Technology Select Sector SPDR (XLK) traded at $25.91 at 4:00 PM on Wednesday, down 2.08% on the day – up 2.86% year-to-date.

Telecommunications Services

Vimpel-Communications (VIP) beat estimates by 13 cents, but missed revenue by $20M. AT&T (T) gets a Buy-from-Hold boost at Hudson Square Research with a new price objective of $36. Verizon (VZ) is cut to Sell from Hold at Hudson Square. In afternoon trading: Shares of magicJack VocalTec (CALL) are down about 9.5%. Shares of General Communications (GNCMA) are down about 7.5%. Shares of Vodafone (VOD) are down about 5.25%. Shares of Cincinnati Bell (CBB) are down about 5%.

The NASDAQ Telecommunications Index (IXTC) traded at $219.66 at 4:00 PM on Wednesday, down 2.92% on the day – down 2.53% year-to-date.

Utilities

CenterPoint (CNP) is moved to Outperform from Neutral at Macquarie. In afternoon trading: Actives: Shares of Duke Energy (DUK) are down about 0.8%. Shares of Genon Energy (GEN) are down about 3.5%. Shares of CenterPoint are down about 0.4%. Shares of AES (AES) are down about 1.9%. Shares of Exelon (EXC) are down about 0.3%.

The Utilities Select Sector SPDR (XLU) traded at $33.52 at 4:00 PM on Wednesday, down 1.03% on the day – up 6.96% year-to-date.

STOCKS: TLLP, ESV, TE, IO, YGE, TSL, GMR, LDK, GLNG, SEE, ASH, ZAGG, AVL, ADES, USEG, MERC, SBGSY, TLVT, ERJ, AMSC, HEAT, BCON, FSS, FSIN, YRCW, AMZN, PVH, EBAY, TIF, DG, TLB, BID, LGF, DPS, TAP, HANS, WAG, RAD, HNZ, CIGX, SENEA, CHBT, SWY, SVU, AZN, PFE, TEVA, SGNT, HRC, OREX, AXAHF, IFCZF, C, BLK, TROW, AHT, SWDBY, DNSKY, EJ, RDN, RF, PMI, YHOO, GOOG, AAPL, ELLI, BRCM, CNQR, NOK, SQNS, VIP, T, VZ, CALL, GNCMA, VOD, CBB, CNP, DUK, GEN, AES, EXC