Equities Sector Coverage: Basic Materials Stocks Lead Market Rebound

Sector Recap |

U.S. exports trade deficitThe Trade Deficit in April was less than expected at $43.68 billion. The Dow Jones Industrial Average traded higher on Thursday with an oversold rebound to 12,183 in the final hour of trading with the NASDAQ rebounding to 2697. The Dow Industrial Average closed down 22 points on Wednesday 12,049 up 4.1% year to date yet down 6.4% from the May 2nd high. The NASDAQ dropped 27 points to 2675 on Wednesday up just 0.8% year to date and down 7.4% since its May 2nd high.

The Dow Transportation Average ended Wednesday down 0.4% year to date and the Philadelphia Semiconductor Index (SOX) down 0.7% year to date. Initial Jobless Claims were reported higher than expected at 427,000 in the latest week and well above the recessionary threshold of 350,000. Asian stocks were mixed on Thursday for the second day in a row with the Nikkei 225 up 0.2% to 9,467 and the Hang Seng Index down 0.2%. European stocks rebounded on Thursday with the FTSE 100 up 0.8%, the DAX up 1.3% and CAC 40 up 1.1%.

The yield on the 10-Year U.S. Treasury note remained below 3% on Thursday trading as low as 2.917 percent. The U.S. Treasury auctioned $13 billion 30-Year bonds at 4.238 with a bid to cover at 2.63 times. The indirect bids, which include central banks was reasonable at 38.4%. The yield on the 10-Year backed up to 3.02 percent after the auction. Comex gold traded higher on Thursday from $1534.0 to $1550.8 the Troy ounce. Nymex crude oil traded up from $100.74 and $102.44 per barrel on Thursday. The euro traded down from 1.4645 to 1.4482 on Thursday.

Energy

Exxon Mobil (XOM) has continued its strategy of picking up natural gas assets with the purchases of privately held Phillips Resources and related company TWP for $1.69B. Genesis Energy (GEL) is resumed at an Outperform and $31 objective at brokerage Robert W. Baird. National Oilwell Varco (NOV) and Cameron International (CAM) are both begun with Buys at Societe Generale. Oasis Petroleum (OAS) is upgraded to Outperform from Market Perform with Wells Fargo. Whiting Petroleum (WLL) is taken to Neutral from Buy at Ticonderoga. International Coal (ICO) is cut to Hold from Buy at Dahlman Rose ahead of its merger with Arch Coal (ACI). In afternoon trading: Shares of Uranium Energy (UEC) are up about 7.7%. Shares of GMX Resources (GMXR) are up about 7.5%. Shares of magnum Hunter Resources (MHR) are up about 6%.

The Energy Select Sector SPDR (XLE) was trading at $74.78 at 4:00 PM on Thursday, up 1.36% on the day – up 9.57% year-to-date.

Materials

Sealed Air (SEE) gets a Buy-from-Hold boost at Jefferies with a new target of $29. In afternoon trading: Shares of Intrepid Potash (IPI) are up about 8%. Shares of Mercer International (MERC) are up about 6.3%. Shares of Gammon Gold (GRS) are up about 5.9%. Shares of Zagg (ZAGG) are up about 5.5%. Shares of Endeavour Silver (EXK) are up about 5.5%. Shares of ADA-ES (ADES) are up about 5.25%. Shares of Mosaic (MOS) are up about 5%. Shares of Potash (POT) are up about 4.75%.

The Materials Select Sector SPDR (XLB) traded at $38.07 at 4:00 PM on Thursday, up 1.66% on the day – down 0.89% year-to-date.

Industrials

3M Co. (MMM) and United Technologies (UTX) are each initiated with Outperforms at brokers William Blair. Tyco (TYC) and ABB Ltd (ABB) are also initiated with Outperform ratings. MacQuarie Infrastructure (MIC) is a new Buy at BB&T Capital. Old Dominion (ODFL) is upgraded to Buy from Hold at Citigroup with a $43 target. In afternoon trading: Shares of SmartHeat (HEAT) are up about 7.6%. Shares of A-Power Energy (APWR) are down about 7.9%.

The Industrial Select Sector SPDR (XLI) traded at $35.78 at 4:00 PM on Thursday, up 0.76% on the day – up 2.61% year-to-date.

Consumer Discretionary

Hyatt Hotels (H) is a new Neutral at Janney Scott with a target price of $44. In afternoon trading: Shares of China MediaExpress (CCME) are down about 13.8%. Shares of Coldwater Creek (CWTR) are down about 6.5%. Shares of Mazda Motor (MZDAF) are down about 5.6%. Shares of Tempur-Pedic (TPX) are up about 9.5%. Shares of Home Inns (HMIN) are up about 7.25%. Shares of Interpublic Group (IPG) are up about 7.25%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $38.57 at 4:00 PM on Thursday, up 0.84% on the day – up 3.10% year-to-date.

Consumer Staples

Lorillard (LO) is added to the Key Calls List at UBS. In afternoon trading: Shares of Synutra International (SYUT) are up about 15%. Shares of China-Biotics (CHBT) are down about 14%. Shares of Yuhe International (YUII) are down about 11.75%. Actives: Shares of Altria Goup (MO) are up about 1%. Shares of Wal-Mart (WMT) are up about a half of a percent. Shares of Procter & Gamble (PG) are up about 0.8%.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.27 at 4:00 PM on Thursday, up 0.55% on the day – up 6.69% year-to-date.

Healthcare

Novartis' (NVS) Bexsero vaccine is effective in protecting young children against MenB, the most common cause of meningitis, late-stage studies of over 1,500 infants have shown. Elan (ELN) is raised to Buy from Neutral at UBS. MedAssets (MDAS) gets lowered to Market Perform from Outperform at Leerink Swann. In afternoon trading: Shares of Vertex (VRTX) are down about 9.5%. Shares of Orexigen (OREX) are down about 6.5%. Shares of Biosante (BPAX) are dowm about 6.25%. Shares of Antares (AIS) are up about 7.25%. Shares of Elan are up about 6.8%.

The Health Care Select Sector SPDR (XLV) traded at $35.46 at 4:00 PM on Thursday, up 1.05% on the day – up 12.57% year-to-date.

Financials

Citigroup (C) has become the latest victim of a security breach, with the bank confirming that hackers have obtained access to the data of hundreds of thousands of bank card customers after attacking Citi Account Online. The SEC is investigating whether Goldman Sachs (GS) and other major banks may have broken bribery laws in dealings with Libya's sovereign-wealth fund. American International Group (AIG) is picked up with a Buy rating and $34 price target at Deutsche Bank. Commerzbank AG (CRZBY) is hoisted to Hold from Sell at Citigroup. Nasdaq OMX (NDAQ) is now Buy from Hold with a $28 target at Stifel Nicolaus, which says their more optimistic outlook for the stock comes on the heels of NDAQ’s failed hostile bid for NYSE Euronext (NYX). In afternoon trading: Shares of Commerzbank are down nearly 24%. Shares of First Marblehead (FMD) are down about 8.5%. Shares of RAIT Financial (RAS) are up about 7%.

The Financial Select Sector SPDR (XLF) traded at $14.93 at 4:00 PM on Thursday, up 1.15% on the day – down 6.39% year-to-date.

Information Technology

The woe has continued for Nokia (NOK) today as S&P cut its debt rating on the company to BBB+/A-2 with a negative outlook. Shares in Texas Instruments (TXN) dropped 5% in post-market trading after the semiconductor company indicated that weak sales at Nokia (NOK), its only known cellular client, would hit its Q2'11 performance. Shares in Visa (V) and Mastercard (MA) fell yesterday after the Senate rejected a proposal to delay by six months a plan to limit debit-card swipe fees. InterXion (INXN) is begun with a Buy and $17 target at The Benchmark Company. Fabrinet (FN) is a new Neutral at JP Morgan. Autodesk (ADSK) is started at Sector Perform by RBC Capital Markets. Heartland Payment Systems (HPY) is now Buy from Neutral at Janney Scott. Research In Motion (RIMM) is reduced to Hold from Buy at Citigroup. Infineon Technologies AG (IFNNY) is moved to Equal-Weight from Overweight at Morgan Stanley. In afternoon trading: Shares of Heartland Payment are up about 8.5%. Shares of China TransInfo (CTFO) are down about 8.5%. Shares of Renren (RENN) are down about 8.75%.

The Technology Select Sector SPDR (XLK) traded at $25.12 at 4:00 PM on Thursday, up slightly on the day – down 0.28% year-to-date.

Telecommunications Services

In afternoon trading: Actives: Shares of Level 3 Communications (LVLT) are up about 3%. Shares of Sprint Nextel (S) are up about 1.6%. Shares of AT&T (T) are relatively unchanged. Shares of Verizon (VZ) are down about 0.6%. Shares of Frontier Communications (FTR) are up about 1.6%. Shares of American Tower (AMT) are down about a half of a percent.

The NASDAQ Telecommunications Index (IXTC) traded at $211.18 at 4:00 PM on Thursday, up slightly on the day – down 6.30% year-to-date.

Utilities

Aqua America (WTR) is a new Buy at Ladenburg Thalmann. Suez Environnement S.A. (GDFZY) is increased to Overweight from Neutral at JPMorgan. In afternoon trading: Shares of Ormat Technologies (ORA) are up about 10%. Shares of Tokyo Electric Power (TKECF) are up about 3.3%. Actives: Shares of PPL (PPL) are up about 0.4%. Shares of Exelon (EXC) are up about 0.3%. Shares of Duke Energy (DUK) are relatively unchanged.

The Utilities Select Sector SPDR (XLU) traded at $33.19 at 4:00 PM on Thursday, up slightly on the day – up 5.90% year-to-date.

STOCKS: XOM, GEL, NOV, CAM, OAS, WLL, ICO, ACI, UEC, GMXR, MHR, SEE, IPI, MERC, GRS, ZAGG, EXK, ADES, MOS, POT, MMM, UTX, TYC, ABB, MIC, ODFL, HEAT, APWR, H, CCME, CWTR, MZDAF, TPX, HMIN, IPG, LO, SYUT, CHBT, YUII, MO, WMT, PG, NVS, ELN, MDAS, VRTX, OREX, BPAX, AIS, C, GS, AIG, CRZBY, NDAQ, NYX, FMD, RAS, NOK, TXN, V, MA, INXN, FN, ADSK, HPY, RIMM, IFNNY, CTFO, RENN, LVLT, S, T, VZ, FTR, AMT, WTR, GDFZY, ORA, TKECF, PPL, EXC, DUK

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GDV.P.D Gabelli Dividend & Income Trust 6.00% Pfd Ser D 26.77 0.12 0.45 7,944

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