Durable Goods Orders dropped 4% last month, the biggest decline since January 2009. Economists were expecting a drop of just 1%. Excluding Transportations orders were down 3.2% instead of the projected flat reading. The S&P/Case-Shiller 20-City Composite of home prices dropped 1.1% in December from November and fell 4.0% year over year to a new housing depression low. The Conference Board’s reading on Consumer Confidence rose to a stronger than expected reading of 70.8 in February still well below the 90 to 120 neutral zones.
The Dow Jones Industrial Average declined to 12,952.82 at Tuesday’s open then rebounded to 13,018.52 on improved consumer confidence after reaching a new 52-week high at 13,027.52 on Monday. The Dow was above 13,010 going into the final half hour of trading. The NASDAQ traded down to 2966.61 then up to 2988.59 Tuesday setting a new year to date high. Dow Transports and Russell 2000 were lower on the day continuing to lag their 2011 all time highs at 5627.85 and 868.57 respectively. Transports closed below its 50-day simple moving average at 5171.
Asian stocks rebounded on Tuesday with the Nikkei 225 ending their session 9,723 – up 0.92% on the day. The Hang Seng ended their session at 21,569 – up 1.65% on the day. European stocks were higher pre-market on Tuesday, dipped into the red following weak US Durable Goods Orders, then rallied back into the green after an improving US consumer confidence reading. The FTSE 100 ended their session at 5,928 – up 0.21% on the day, the DAX ended their session at 6,888 up 0.56% on the day, and the CAC 40 ended their session at 3,454 – up 0.36% on the day. The yield on the 10-Year US Treasury declined from 1.941 percent to 1.895 then rose to 1.945 into the final hour of trading. Gold traded up from $1767.0 the Troy ounce to $1792.7, a new year to date high. Crude oil rebounded from $107.62 per barrel to $108.79 then declined to $106.30. The euro versus the dollar rebounded from 1.3394 to 1.3468.
Energy
Western Refining (WNR) missed estimates by 15 cents, while beating revenue by $230M. Pacific Ethanol’s (PEIX) Q4 comes up shy of estimates. Net sales came in at $241.8M, up 80% from $134.2M in the year-ago period. Net losses for the period were $2.4M compared to net loss of $12.1M last year. Atwood Oceanics (ATW) is moved to Equal Weight from Underweight by Morgan Stanley, which raises its recommendation on rival Rowan Cos (RDC) to Equal Weight from Underweight. Berry Petroleum (BRY) is moved to Buy from Neutral at Suntrust. Diamond Offshore (DO) is upgraded 180 degrees, to Overweight from Underweight at Morgan Stanley. OAO Gazprom (OGZPY) gets upgraded to Outperform from Neutral at Credit Suisse. Ensco (ESV) and Pacific Drilling (PACD) are each lowered to Equal Weight from Overweight at Morgan Stanley.
Energy Select Sector SPDR (XLE) was trading at $75.74 at 4:00 PM on Tuesday, down 0.33% on the day – up 9.56% year-to-date. The January change was +2.26%. The 2011 change was -1.29%
Big Movers: (PEIX) -25.5%, (AMRS) -11.5%.
Materials
Forest Laboratories (FRX) has disclosed positive top-line results in two Phase III trials of its Cariprazine schizophrenia drug. Newmont Mining (NEM) is cut to Hold from Buy at TD Securities, which trims its target to $73 from $78. Thompson Creek Metals (TC) is taken to Sell from Hold at Deutsche Bank.
The Materials Select Sector SPDR (XLB) was trading at $37.68 at 4:00 PM on Tuesday, up 0.32% on the day – up 12.48% year-to-date. The January change was +10.99%. The 2011 change was -12.78%.
Big Movers: (TC) -15%, (CHMT) 9.5%, (ZAGG) -9%.
Heavily Traded: (CX) -1.8%, (AA) +0.3%, (FCX) +0.7%, (VALE) +1.3%.
Industrials
Diana Shipping (DSX) beat estimates by a penny and revenue by $1M. USG Corp (USG) is now Overweight from Neutral at JPMorgan.
The Industrial Select Sector SPDR (XLI) was trading at $37.46 at 4:00 PM on Tuesday, down 0.13% on the day – up 10.99% year-to-date. The January change was +7.32%. The 2011 change was -3.21%.
Heavily Traded: (GE) +0.6%. (GLW) -1.25%, (DAL) +2.25%, (LCC) +4.7%.
Consumer Discretionary
Panasonic (PC) has named company veteran Kazuhiro Tsuga to replace Fumio Ohtsubo as President, with the latter to become Chairman. Tsuga, who is the head of Panasonic’s loss-making TV arm, takes over as the conglomerate heads for a record ¥780B ($9.7B) annual loss and amid a huge restructuring. Peugeot may this week announce plans to sell a 7% stake to GM (GM), sources say, as part of an alliance that could include developing engines and building vehicles together in the region. Callaway Golf (ELY) names Chip Brewer as its new CEO. Cablevision (CVC) missed estimates by a penny with revenue in-line with estimates. Apollo Group (APOL) lowered its estimate for Q2 enrollment for flat to low-single-digit growth from a previous estimate of 13% growth. JPMorgan raised its price target on Charter Communications (CHTR) to $75 from $64 (an 18% upside potential). Office Depot (ODP) reported Q4 EPS of $0.03 (versus consensus of by -$0.01), while missing revenue by $30M. Domino’s Pizza (DPZ) beat estimates by 3 cents, while missing revenue by $10M. AutoZone (AZO) beat estimates by 14 cents with revenue in-line with estimates. Vitamin Shoppe (VSI) beat estimates by 6 cents and revenue by $2M. McDonald’s (MCD) plans to expand its franchising in China, after relying almost exclusively on self-operated stores in China since it entered the market two decades ago. Walt Disney (DIS) and Discovery Communications (DISCA) are initiated with an Outperform by Sanford Bernstein, which has an Underperform on Time Warner (TWX). Viacom (VIA), News Corp (NWSA), CBS Corp (CBS), and Nielsen (NLSN) are all new Market Performs. Boyd Gaming (BYD) is assigned an In-Line and $9.00 target price at Imperial Capital. Apollo Group (APOL) is upgraded to Overweight from Equal Weight by Barclays. Isle of Capri (ISLE) is upgraded at FBR Capital to Outperform from Market Perform, which also increases its objective by $3 to $8 from $5. Clear Channel Outdoor (CCO) is cut to Neutral from Outperform with Wedbush. Cooper Tire (CTB) is now Hold from Buy at Deutsche Bank. Penn National Gaming (PENN) is moved to Market Perform from Outperform at FBR Capital with a price target of $44.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $43.35 at 4:00 PM on Tuesday, up 0.56% on the day – up 11.10% year-to-date. The January change was +5.89%. The 2011 change was +4.30%.
Big Movers: (CECO) -17.5%, (APOL) -14.75%, (ODP) +16%, (DPZ) +14%.
Consumer Staples
Fresh Del Monte Produce (FDP) missed estimates by 30 cents and revenue by $56M. Costco (COST) is begun with a Perform at Oppenheimer with a price objective of $90. Procter & Gamble (PG) gets a Buy-from-Neutral boost at Bank of America-Merrill Lynch. SABMiller plc (SBMRY) gets downgraded to Neutral from Buy at Nomura.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.17 at 4:00 PM on Tuesday, up 0.33% on the day – up 2.09% year-to-date. The January change was -1.42%. The 2011 change was +10.85%.
Heavily Traded: (KR) -0.2%, (PG) +1.1%, (WMT) +0.6%, (GIS) flat.
Health Care
Tenet Healthcare (THC) missed estimates by 4 cents and revenue by $170M. ViroPharma (VPHM) beat estimates by 21 cents with revenue in-line with estimates. UnitedHealth (UNH) snaps up two more senior-focused health plans with operations primarily in South and Central Florida (Preferred Care Partners and Medica HealthCare Plans). Human Genome Sciences’ (HGSI) Q4 beats estimates across the board as revenue jumped 113% Y/Y on strong sales of Benlysta and lower R&D expenses. Medicis Pharmaceutical (MRX) beat estimates by 3 cents with revenue in-line with estimates. Cerner (CERN) is begun with a Buy and $85 objective at Sterne Agee. Salix Pharmaceuticals (SLXP) is increased to Buy from Hold with a $54 target at Auriga.
The Health Care Select Sector SPDR (XLV) was trading at $36.40 at 4:00 PM on Tuesday, up 0.39% on the day – up 4.93% year-to-date. The January change was +3.20%. The 2011 change was +10.32%.
Big Movers: (ERT) +20%, (VVUS) -9%.
Financials
Morgan Stanley (MS) will have to post another $6.52B in collateral to counterparties and clearinghouses if Moody’s follows through on a warning it may cut the bank’s long-term debt rating by up to three notches. AIG (AIG) may not pay taxes for as long as a decade because of the way the Treasury unilaterally bent the tax code during AIG’s bailout, rails Andrew Ross Sorkin. Visa (V) and Vodafone (VOD) have forged a “worldwide partnership” on a mobile wallet service that will be available across all 30 countries that Vodafone operates in, starting with the U.K., Germany, the Netherlands, Spain and Turkey. Banco Santander (STD) has agreed to buy Poland’s Kredyt Bank from Belgium’s KBC Groep (KBCSF) in a move that will allow Santander to deepen its presence in one of Europe’s fastest-growing economies as profits slump in Spain. Barclays (BCS) is reportedly the unnamed bank that U.K. regulators are blocking from implementing two “highly abusive” tax schemes that would have cost the tax authority £500M. KKR (KKR) chiefs Henry Kravis and George Roberts each took home around $94M from the P-E firm last year. The Fed yesterday released the documents submitted by banks outlining their plans to fix foreclosure problems. Banks included are: Bank of America (BAC), Citigroup (C), JPMorgan (JPM) and Wells Fargo (WFC). Duff & Phelps (DUF) announced a 4.5M offering of its common stock that it says will be used to redeem units in Duff & Phelps Acquisitions held by some existing unit holders. Morgan Stanley (MS) will have to post another $6.52B in collateral to counterparties and clearinghouses if Moody’s follows through on a warning it may cut the bank’s long-term debt rating by up to three notches. U.S. authorities are investigating HSBC (HBC) for “historical transactions involving Iranian” and other parties subject to U.S. sanctions, the bank said yesterday.
The Financial Select Sector SPDR (XLF) was trading at $14.82 at 4:00 PM on Tuesday, up 0.27% on the day – up 14.00% year-to-date. The January change was +8.12%. The 2011 change was -18.50%; the weakest performing sector for the year.
Information Technology
Dell (DELL) has unveiled a major revamp of its enterprise hardware line, including new server flash memory products, a data warehousing appliance for SMBs, and a new architecture for virtualizing networking resources – the latter is aimed squarely at Cisco (CSCO) and its UCS servers. Yahoo (YHOO) looks to join the IP wars by threatening to sue Facebook unless it pays licensing fees on the Web portal’s patents, with Reuters reporting that these include those for the technical mechanisms in Facebook’s ads, privacy controls, news feed and messaging service. Finisar (FNSR) is lowered to Hold from Buy at Jefferies with a $22 price target, down from $24, citing potential risks posed by Cisco’s (CSCO) recently announced acquisition of Lightwire. Oppenheimer cuts Nokia (NOK) to Underperform from Perform on concerns about the pace at which the company is transitioning to Windows phones. Mentor Graphics (MENT) beat estimates by 8 cents and revenue by $4M. Tech Data (TECD) beat estimates by 11 cents, while missing revenue by $50M. LinkedIn (LNKD) is a new Market Perform at BMO Capital. Jive Software (JIVE) is a new Neutral at Robert W. Baird with a target of $21. Nokia (NOK) is now Underperform from Perform at Oppenheimer. Finisar (FNSR) is reduced to Hold from Buy at Jefferies. Infosys (INFY) gets downgraded to Neutral from Buy at Janney Montgomery Scott.
The Technology Select Sector SPDR (XLK) was trading at $29.08 at 4:00 PM on Tuesday, up 0.73% on the day – up 13.44% year-to-date. The January change was +6.21%. The 2011 change was +1.03%.
Big Movers: (CYDE) +62.75%, (SINA) +11.25%.
Telecommunication Services
Visa (V) and Vodafone (VOD) have forged a “worldwide partnership” on a mobile wallet service that will be available across all 30 countries that Vodafone operates in, starting with the U.K., Germany, the Netherlands, Spain and Turkey.
The NASDAQ Telecommunications Index (IXTC) was trading at $217.05 at 4:00 PM on Tuesday, relatively unchanged on the day – up 10.22% year-to-date. The January change was +6.67%. The 2011 change was -12.62%.
Heavily Traded: (S) -0.2%, (T) +0.6%, (CLWR) +3.5%, (PCS) -7%, (FTR) -0.2%, (VZ) up slightly.
Utilities
NRG Energy (NRG) missed estimates by 32 cents and revenue by $1.16B. Public Service (PEG) is now Neutral from Outperform at Credit Suisse.
The Utilities Select Sector SPDR (XLU) was trading at $34.90 at 4:00 PM on Tuesday, down 0.48% on the day – down 3.00% year-to-date. The January change was -3.61%. The 2011 change was +14.81%; the strongest performing sector for the year.
Heavily Traded: (GEN) -4.7%, (CNP) 0.4%, (OKS) -4.4%, (DUK) -0.2%.
STOCKS: WNR, PEIX, ATW, RDC, BRY, DO, OGZPY, ESV, PACD, AMRS, FRX, NEM, TC, CHMT, ZAGG, CZ, AA, FCX, VALE, DSX, USG, GE, GLW, DAL, LCC, PC, GM, ELY, CVC, APOL, CHTR, ODP, DPZ, AZO, VSI, MCD, DIS, DISCA, TWX, VIA, NWSA, CBS, NLSN, BYD, ISLE, CCO, CTB, PENN, CECO, FDP, COST, PG, SBMRY, KR, PG, WMT, GIS, THC, VPHM, UNH, HGSI, MRX, CERN, SLXP, ERT, VVUS, MS, AIG, V, VOD, STD, KBCSF, BCS, KKR, BAC, C, JPM, WFC, DUF, MS, HBC, DELL, CSCO, YHOO, FNSR, NOK, MENT, TECD, LNKD, JIVE, INFY, CYDE, SINA, S, T, CLWR, PCS, FTR, VZ, NRG, PEG, GEN, CNP, OKS, DUK
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