Equities Sector Coverage: Bulls Get the Green Light

Sector Recap |

Bulls Get the Green LightInitial Jobless Claims fell 12,000 to 365,000 still above the 350,000 recessionary threshold. Non-manufacturing ISM came in at 53.7 in August, just above expectations. The Dow Jones Industrial Average spiked higher at the open trading up to a day’s high at 13,291.38, which is shy of the year to date high at 13,336.66 set on May 1st. The NASDAQ surged to a day’s high at 3135.64, which sets a new year to date high.

Asian stocks were flat to higher on Thursday. The Nikkei 225 ended the day at 8,681 – up 0.01%. The Hang Seng ended the day at 19,209 – up 0.34%. European exchanges surged on the ECB’s new bond buying program. The FTSE 100 ended the day at 5,777 – up 2.11%. The DAX ended the day at 7,167 – up 2.91%. The CAC 40 ended the day at 3,510 – up 3.06%. The yield on the 10-Year US Treasury rose from 1.589% to 1.682% above the 50-day simple moving average at 1.590%.

Comex gold traded up from $1693.7 the Troy ounce to $1716.9 well above the 200-day simple moving average at $1645.8. Nymex crude oil rebounded from $95.73 per barrel to $97.71 then faded to $94.90 trading back and forth around its 200-day simple moving average at $96.63. The euro versus the dollar rebounded from 1.2564 to 1.2649 staying between its 50-day and 200-day simple moving averages at 1.2373 and 1.2842.

Energy

Gazprom (OGZPY) says FQ1 net profit fell 23.5% Y/Y on lower exports and retroactive payments to European customers that negotiated discounts. Mitcham Industries (MIND) beat estimates by 3 cents and revenue by $1.4M. Matrix Service (MTRX) beat estimates by 2 cents, while missing revenue by $3M. Atwood Oceanics (ATW) is covered at Outperform at BMO Capital. Big Movers – Heckmann Corp (HEK) up 9.82%. Dow components – Chevron (CVX) up 1.96%, Exxon Mobil (XOM) up 1.88%. Energy Select Sector SPDR (XLE) was trading at $71.97 at 3:30 PM on Thursday, up 1.78% on the day – up 4.11% year-to-date.

Materials

Harry Winston Diamond (HWD) missed estimates by 6 cents on revenue of $176.9M. AK Steel (AKS) is boosted to Buy from Neutral at Longbow. Randgold Resources (GOLD) gets upgraded to Overweight from Neutral at JPMorgan. Yara International (YARIY) is now Overweight from Neutral at HSBC Securities. Cliffs Natural Resources (CLF) is now Neutral from Buy at UBS. Harmony Gold Mining (HMY) is now Neutral from Overweight at JPMorgan. Big Movers – Owens Illinois (OI) up 10.14%. Dow Components – Alcoa (AA) up 2.82%, DuPont (DD) up 2.20%. The Materials Select Sector SPDR (XLB) was trading at $36.15 at 3:30 PM on Thursday, up 2.26% on the day – up 7.91% year-to-date.

Industrials

Met-Pro (MPR) missed estimates by 3 cents, while beating revenue by $1.5M. Navistar International (NAV) beat estimates by $2.56 and revenue by $360M. The company expects to save $70M-$80M annually with reduced size of workforce. UTI Worldwide (UTIW) missed estimates by 3 cents and revenue by $130M. Layne Christensen (LAYN) missed estimates by 18 cents and revenue by $3M. ABM Industries (ABM) missed estimates by 5 cents with revenue in-line with estimates. FuelCell Energy (FCEL) missed estimates by 2 cents and revenue by $2M. Korn/Ferry International (KFY) beat estimates by 4 cents and revenue by $15M. NCI Building Systems (NCS) beat estimates by 10 cents, while missing revenue by $10M. Sparton (SPA) beat estimates by 12 cents, while missing revenue by $1.2M. AeroVironment (AVAV) missed estimates by 3 cents and revenue by $5M. Flowserve (FLS) is a fresh Market Perform with William Blair. Stanley Black & Decker (SWK) is moved to Overweight from Equal-Weight at Morgan Stanley. Ingersoll-Rand (IR) is moved to Equal Weight from Overweight at Morgan Stanley.

Big Movers – Navistar International (NAV) up 15.97%, AAR Corp (AIR) up 11.65%, FuelCell Energy (FCEL) down 9.94%.

Dow components – Boeing Co (BA) up 1.06%, Caterpillar (CAT) up 2.32%, General Electric (GE) up 2.78%, 3M Company (MMM) up 1.37%, United Technologies (UTX) up 1.26%.

The Industrial Select Sector SPDR (XLI) was trading at $36.615 at 3:30 PM on Thursday, up 2.05% on the day – up 8.49% year-to-date.

Consumer Discretionary

Apple's (AAPL) TV and set-top ambitions remain bogged down in a morass of pay-TV industry intransigence. Disagreements include Apple's control of the user interface, its ability to sell directly to consumers rather than leasing hardware, and content deals. However, Apple has compromised over the latter issue, and is "furthest along" in talks with Time Warner Cable (TWC). Men's Wearhouse (MW) beat estimates by 3 cents with revenue in-line with estimates. The company also ups its FY12 guidance, now seeing earnings of $2.74 to $2.80 a share and revenue growth of 4.8% to 5.6%. For the current quarter, it sees sales growth coming in around 8.8% to 9.3%. Street estimates project revenue growth of 6%. Stewart Enterprises (STEI) beat estimates by 2 cents and revenue by $2.7M. Delta Apparel (DLA) missed estimates by 11 cents, while beating revenue by $10M. Hooker Furniture (HOFT) beat estimates by 5 cents with revenue in-line with estimates. H&R Block (HRB) reported FQ1 EPS of -$0.38 (in-line), while missing revenue by $5M. FQ1 meets on its EPS estimate but comes up short on its top line as total revenue dipped slightly Y/Y. Pep Boys-Manny Moe & Jack (PBY) is a new Neutral at Credit Suisse.



Big Movers – The Men’s Warehouse (MW) up 15.52%. Dow Components – Disney (DIS) up 1.75%, Home Depot (HD) up 1.25%, McDonalds (MCD) up 1.53%. The Consumer Discretionary Select Sector SPDR (XLY) was trading at $46.48 at 3:30 PM on Thursday, up 2.13% on the day – up 19.12% year-to-date.

Consumer Staples

General Mills (GIS) sees FQ1 results in-line with company expectations, putting its adjusted EPS below last year’s first-quarter results. Big Movers – Snyders-Lance (LNCE) up 11.60%. Dow components – Kraft (KFT) up 1.20%, Coca Cola (KO) up 1.24%, Procter & Gamble (PG) up 1.30%, Wal-Mart (WMT) up 1.29%. The Consumer Staples Select Sector SPDR (XLP) was trading at $35.96 at 3:30 PM on Thursday, up 0.98% on the day – up 10.68% year-to-date.

Health Care

Arena Pharmaceuticals (ARNA) is an Underperform at Credit Suisse. Cardiovascular Systems (CSII) is launched with an Outperform at Leerink Swann. Dendreon (DNDN) is initiated with a Buy at WallachBeth. Geron (GERN) gets initiated with a Market Perform at JMP Securities. ImmunoCellular Therapeutics (IMUC) is initiated with a Buy at Maxim Group. Jazz Pharmaceuticals (JAZZ) is a new Neutral at Cowen. Orexigen (OREX) is initiated with an Outperform at Credit Suisse.

Big Movers – Orexigen (OREX) up 17.72%, Merge Healthcare (MRGE) up 10.56%, Warner Chilcott (WCRX) down 10.33%.

Dow Components – Johnson & Johnson (JNJ) up 1.06%, Merck (MRK) up 1.44%, Pfizer (PFE) up 1.38%.

The Health Care Select Sector SPDR (XLV) was trading at $39.51 at 3:30 PM on Thursday, up 1.49% on the day – up 13.89% year-to-date.

Financial

American Capital Mortgage (MTGE) is initiated with a Buy at Wunderlich. Cash America International (CSH) is a new Market Perform at JMP Securities. CIT Group (CIT) is a new Perform at Oppenheimer. Harris & Harris (TINY) is begun with a Buy at Ascendiant Capital Markets. SunTrust Banks (STI) is moved to Overweight from Neutral at JP Morgan. Barclays (BCS) is moved to Neutral from Outperform at Credit Suisse.

Big Movers – Radian Group (RDN) up 18.48%, MGIC Investment (MTG) up 0.65%.

Dow Components – American Express (AXP) up 0.89%, Bank of America (BAC) up 4.15%, JP Morgan Chase (JPM) up 4.28%, Travelers (TRV) up 1.41%.

The Financial Select Sector SPDR (XLF) was trading at $15.49 at 3:30 PM on Thursday, up 2.18% on the day – up 19.15% year-to-date.

Information Technology

Apple's (AAPL) TV and set-top ambitions remain bogged down in a morass of pay-TV industry intransigence. Disagreements include Apple's control of the user interface, its ability to sell directly to consumers rather than leasing hardware, and content deals. However, Apple has compromised over the latter issue, and is "furthest along" in talks with Time Warner Cable (TWC). Following the unveiling of smartphones by Nokia (NOK) and Motorola (GOOG) yesterday, Amazon (AMZN) is due to hold an event today. A TV ad has already depicted a "Paperwhite" backlit Kindle e-reader, a 7-inch Kindle Fire, (most intriguingly) a bigger Fire, and perhaps its rumored smartphone. OCZ Technology (OCZ) warns it expects FQ2 revenue of $110M-$120M, below guidance of $130M-$140M and a consensus of $134.4M. SeaChange International (SEAC) missed estimates by 4 cents with revenue in-line with estimates. VeriFone (PAY) beat estimates by 5 cents, while missing revenue by $5M. FQ4 guidance is for revenue of $495M-$500M and EPS of $0.75-$0.77 versus a consensus of $520.2M and $0.74. Verint Systems (VRNT) beat estimates by 7 cents and revenue by $8M. Sigma Designs (SIGM) beat estimates by 19 cents and revenue by $3.3M. Activision Blizzard (ATVI) is upgraded to Overweight from Neutral at Piper Jaffray. Wright Express (WXS) is now Buy from Neutral at Janney Capital. ASML Holding (ASML) is slashed to Hold from Buy at Société Générale. Nokia (NOK) is now Sell from Hold at Deutsche Bank. OCZ Technology (OCZ) is downgraded to Hold from Buy at Needham. Seagate Technology (STX) is slashed to Hold from Strong Buy at Needham.

Big Movers – OCZ Technology Group (OCZ) down 17.35%, Verifone Systems (PAY) down 11.39%, First Solar (FSLR) up 10.35%.

Dow Components – Cisco Systems (CSCO) up 3.60%, Hewlett-Packard (HPQ) up 1.45%, IBM (IBM) up 2.07%, Intel Corp (INTC) up 2.34%, Microsoft (MSFT) up 2.91%.

The Technology Select Sector SPDR (XLK) was trading at $31.095 at 3:30 PM on Thursday, up 2.08% on the day – up 22.18% year-to-date.

Telecommunication Services

MagicJack Vocaltec (CALL) increased its guidance due to lower costs and robust sales of its new MagicJack Plus product. The company expects FY EPS of $1.70-$2 versus a previous estimate of $1.50-$1.80 and consensus of $1.53, and forecasts revenue growth of 35%-45% versus 25%-40% prior. Q3 guidance comes in at EPS $0.55-$0.80 versus forecasts of $0.39 and revenue of $40M-$41M versus $39.5M. NTT DoCoMo (NTT) gets downgraded to Neutral from Buy at Goldman Sachs.

Dow Components – AT&T (T) up 1.06%, Verizon (VZ) down 0.18%.

The NASDAQ Telecommunications Index (IXTC) was trading at $199.52 at 3:30 PM on Thursday, up 2.86% on the day – up 1.32% year-to-date.

Utilities

OGE Energy (OGE) is upgraded to Outperform from Market Perform by BMO Capital. Iberdrola (IBDRY) gets downgraded to Underperform by BNP Paribas. The Big Names – Dominion Resources (D) up 1.85%, Edison International (EIX) up 0.73%, First Energy (FE) up 0.86%, PG&E Corp (PCG) up 0.58%, Southern Company (SO) up 1.30%.

The Utilities Select Sector SPDR (XLU) was trading at $36.68 at 3:30 PM on Thursday, up 0.96% on the day – up 1.95% year-to-date.

STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KFT, KO, PG, WMT, JNJ, MRK, PFE, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, OGZPY, MIND, MTRX, ATW, HEK, HWD, AKS, GOLD, YARIY, CLF, HMY, OI, MPR, NAV, UTIW, LAYN, ABM, FCEL, KYF, NCS, SPA, AVAV, FLS, SWK, IT, NAV, AIR, FCEL, AAPL, TWC, MW, STEI, DLA, HOFT, HRB, PBY, MW, GIS, LNCE, ARNA, CSII, DNDN, GERN, IMUC, JAZZ, OREX, OREX, MRGE, WCRX, MTGE, CSH, CIT, TINY, STI, BCS, RDN, MTG, AAPL, TWC, NOK, GOOG, AMZN, OCZ, SEAC, PAY, VRNT, SIGM, ATVI, WXS, ASML, NOK, OCZ, STX, OCZ, PAY, FSLR, CALL, NTT, OGE, IDBRY

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
DLA Delta Apparel Inc. 20.44 0.14 0.69 6,603
IMUC ImmunoCellular Therapeutics Ltd. 2.59 -0.16 -5.82 52,124
HRB H&R Block Inc. 23.82 0.03 0.13 1,432,150
MW Men's Wearhouse, Inc. (The) n/a n/a n/a 0
NTT Nippon Telegraph and Telephone Corporation 44.02 0.12 0.27 334,763
MMM 3M Company 177.26 -0.13 -0.07 1,557,453
CIT CIT Group Inc (DEL) 41.43 -1.59 -3.70 2,127,479
NCS NCI Building Systems Inc. New 16.10 -0.10 -0.62 359,880
AVAV AeroVironment Inc. 25.37 -0.49 -1.89 109,722
ASML ASML Holding N.V. 115.91 0.61 0.53 1,432,585
PG Procter & Gamble Company (The) 84.54 1.20 1.44 13,145,773
GE General Electric Co 31.27 -0.09 -0.29 28,830,821
CVX Chevron Corporation 116.28 -0.10 -0.09 4,670,837
SO Southern Company (The) 49.69 0.89 1.82 4,896,477
PCG Pacific Gas & Electric Co. 61.78 1.20 1.98 2,520,736
AKS AK Steel Holding Corporation 9.45 -0.26 -2.68 15,235,400
TWC Time Warner Cable Inc n/a n/a n/a 0
ATW Atwood Oceanics Inc. 13.83 -0.02 -0.14 2,802,989
FLS Flowserve Corporation 49.53 -0.23 -0.46 1,108,784
UTIW UTi Worldwide Inc. n/a n/a n/a 0
ABM ABM Industries Incorporated 39.79 -0.68 -1.68 300,337
JNJ Johnson & Johnson 114.87 0.27 0.24 6,288,214
WMT Wal-Mart Stores Inc. 68.42 1.29 1.92 13,209,277
AA Alcoa Inc. 32.64 -0.37 -1.12 1,382,009
INTC Intel Corporation 36.80 0.01 0.03 20,198,397
IBM International Business Machines Corp 167.89 0.55 0.33 3,316,773
D Dominion Resources Inc. 76.20 0.99 1.32 2,111,510
TRV The Travelers Companies Inc. 117.46 0.41 0.35 1,607,915
AAPL Apple Inc. 120.00 0.96 0.81 34,501,486
BCS Barclays PLC 11.34 -0.04 -0.35 6,793,768
EXP Eagle Materials Inc 97.65 -3.16 -3.13 989,665
EIX Edison International 72.51 0.41 0.57 1,674,331
RDN Radian Group Inc. 17.71 -0.22 -1.23 1,828,538
CSH Cash America International Inc. n/a n/a n/a 0
JAZZ Jazz Pharmaceuticals plc 115.57 -1.73 -1.47 919,929
SIGM Sigma Designs Inc. 6.70 -0.05 -0.74 463,879
SPA Sparton Corporation 20.92 -0.99 -4.52 46,170
LNCE Snyder\'s-Lance Inc. 38.45 0.10 0.26 709,490
JPM JP Morgan Chase 83.55 -3.15 -3.63 30,071,969
STX Seagate Technology 37.02 0.12 0.33 3,292,072
AXP American Express Company 76.60 -0.02 -0.03 6,452,034
MTGE American Capital Mortgage Investment Corp. 16.55 -0.15 -0.90 236,716
UTX United Technologies Corporation 109.97 -0.25 -0.23 2,240,147
ARNA Arena Pharmaceuticals Inc. 1.38 -0.04 -2.82 3,156,982
OI Owens-Illinois Inc. 19.30 0.05 0.26 1,297,601
AMZN Amazon.com Inc. 809.72 -7.42 -0.91 3,689,552
SWK Stanley Works 118.30 -1.03 -0.86 935,685
CSCO Cisco Systems Inc. 29.99 -0.08 -0.27 22,044,479
DIS Walt Disney Company (The) 107.97 -0.09 -0.08 7,600,247
PAY Verifone Systems Inc. 18.10 -0.24 -1.31 1,398,150
VZ Verizon Communications Inc. 52.74 0.19 0.36 11,385,958
AIR AAR Corp. 31.49 -0.79 -2.45 346,982
TINY Harris & Harris Group Inc. 1.38 0.02 1.47 46,510
OREX Orexigen Therapeutics Inc. 3.16 -0.17 -5.11 279,330
GERN Geron Corporation 2.04 -0.07 -3.32 1,532,543
BAC Bank of America Corporation 22.05 -0.96 -4.17 153,359,175
NAV Navistar International Corporation 29.23 -0.52 -1.75 562,202
NOK Nokia Corporation Sponsored American Depositary Sh 4.74 -0.01 -0.21 9,383,500
GOOG Alphabet Inc. 804.61 -3.27 -0.40 1,362,596
MCD McDonald\'s Corporation 122.75 1.25 1.03 4,078,073
VRNT Verint Systems Inc. 37.45 -0.70 -1.83 332,924
DD E.I. du Pont de Nemours and Co. 72.97 -0.63 -0.86 2,726,668
CSII Cardiovascular Systems Inc. 25.71 -0.71 -2.67 134,622
ATVI Activision Blizzard Inc 38.95 0.00 0.00 5,458,424
HD Home Depot Inc. (The) 135.93 0.89 0.66 3,977,136
XOM Exxon Mobil Corporation 87.36 1.01 1.17 13,240,805
GIS General Mills Inc. 61.98 0.90 1.47 2,775,419
PFE Pfizer Inc. 32.06 -0.46 -1.41 32,179,343
FSLR First Solar Inc. 35.17 -0.58 -1.62 1,929,334
HPQ HP Inc. 14.58 -0.19 -1.29 11,978,118
BA Boeing Company (The) 157.67 -1.16 -0.73 2,758,839
OGE OGE Energy Corporation 33.78 0.03 0.09 463,667
MRK Merck & Company Inc. (new) 61.48 -0.86 -1.38 10,592,686
PBY Pep Boys-Manny Moe & Jack n/a n/a n/a 0
CLF Cliffs Natural Resources Inc 9.16 -0.07 -0.76 7,926,475
FE FirstEnergy Corporation 31.15 0.54 1.76 4,092,617
SEAC SeaChange International Inc. 2.62 -0.05 -1.87 144,295
CALL magicJack VocalTec Ltd 8.20 0.10 1.23 130,505
MTRX Matrix Service Company 21.90 -0.20 -0.90 87,363
KO Coca-Cola Company (The) 41.22 0.34 0.83 12,469,780
HMY Harmony Gold Mining Company Limited 2.56 0.09 3.64 3,808,078
T AT&T Inc. 41.11 0.15 0.37 22,563,041
CAT Caterpillar Inc. 92.80 -0.91 -0.97 5,042,101
LAYN Layne Christensen Company 10.50 -0.12 -1.13 56,975
FCEL FuelCell Energy Inc. 1.80 -0.10 -5.26 409,835
MTG MGIC Investment Corporation 9.97 -0.13 -1.29 5,532,074
MSFT Microsoft Corporation 62.53 -0.17 -0.27 20,666,650
HOFT Hooker Furniture Corporation 34.20 -0.80 -2.29 63,822
MIND Mitcham Industries Inc. 4.33 0.03 0.70 31,031
IT Gartner Inc. 99.41 -2.53 -2.48 911,264
STI SunTrust Banks Inc. 53.88 -2.09 -3.73 3,412,802

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