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
AA Alcoa Inc. 9.65 -0.03 -0.31 11,470,339
AAPL Apple Inc. 113.09 0.21 0.19 24,618,224
ABM ABM Industries Incorporated 39.40 -0.15 -0.38 379,601
AIR AAR Corp. 29.34 0.31 1.07 296,320
AKS AK Steel Holding Corporation 4.85 -0.22 -4.34 10,815,512
AMZN Amazon.com Inc. 816.11 16.95 2.12 3,827,406
ARNA Arena Pharmaceuticals Inc. 1.81 0.08 4.62 1,731,999
ASML ASML Holding N.V. 109.62 0.85 0.78 594,735
ATVI Activision Blizzard Inc 44.21 0.23 0.52 8,861,965
ATW Atwood Oceanics Inc. 7.20 0.01 0.14 4,620,619
AVAV AeroVironment Inc. 24.49 0.07 0.29 129,362
AXP American Express Company 64.28 0.86 1.36 3,916,263
BA Boeing Company (The) 131.32 0.75 0.57 1,939,020
BAC Bank of America Corporation 15.29 0.20 1.33 81,996,092
BCS Barclays PLC 8.66 -0.02 -0.23 4,706,512
CALL magicJack VocalTec Ltd 6.05 0.11 1.85 80,755
CAT Caterpillar Inc. 82.88 0.51 0.62 4,295,596
CIT CIT Group Inc (DEL) 35.48 0.25 0.71 1,072,876
CLF Cliffs Natural Resources Inc 6.06 0.01 0.17 9,808,268
CSCO Cisco Systems Inc. 31.48 0.41 1.32 18,045,376
CSH Cash America International Inc. n/a n/a n/a 0
CSII Cardiovascular Systems Inc. 23.06 0.06 0.26 445,322
CVX Chevron Corporation 98.98 0.20 0.20 6,476,099
D Dominion Resources Inc. 75.78 -0.82 -1.07 2,936,914
DD E.I. du Pont de Nemours and Co. 67.26 0.74 1.11 1,766,030
DIS Walt Disney Company (The) 91.72 -0.24 -0.26 9,167,398
DLA Delta Apparel Inc. 16.33 0.08 0.49 47,092
EIX Edison International 73.76 -1.31 -1.75 1,769,825
EXP Eagle Materials Inc 76.18 -1.02 -1.32 499,172
FCEL FuelCell Energy Inc. 5.28 0.01 0.19 207,366
FE FirstEnergy Corporation 33.67 -0.91 -2.63 5,301,436
FLS Flowserve Corporation 45.63 0.37 0.82 1,371,131
FSLR First Solar Inc. 39.09 1.84 4.94 4,313,463
GE General Electric Co 29.88 0.34 1.15 25,491,940
GERN Geron Corporation 2.26 0.05 2.26 1,338,059
GIS General Mills Inc. 63.92 0.02 0.03 2,693,107
GOOG Alphabet Inc. 783.01 8.80 1.14 1,158,967
HD Home Depot Inc. (The) 126.82 1.37 1.09 4,433,646
HMY Harmony Gold Mining Company Limited 3.44 -0.01 -0.29 2,546,070
HOFT Hooker Furniture Corporation 26.68 0.28 1.06 43,772
HPQ HP Inc. 15.34 0.32 2.13 9,061,256
HRB H&R Block Inc. 22.75 -0.03 -0.13 1,752,361
IBM International Business Machines Corp 156.77 2.79 1.81 2,987,195
IMUC ImmunoCellular Therapeutics Ltd. 0.12 -0.00 -1.35 856,444
INTC Intel Corporation 37.18 0.53 1.45 22,391,576
JAZZ Jazz Pharmaceuticals plc 125.89 2.10 1.70 552,847
JNJ Johnson & Johnson 119.22 1.44 1.22 5,349,466
JPM JP Morgan Chase 66.36 0.58 0.88 13,711,601
KO Coca-Cola Company (The) 42.59 0.54 1.28 11,920,432
LAYN Layne Christensen Company 8.11 0.14 1.76 75,348
LNCE Snyder\'s-Lance Inc. 33.51 0.02 0.06 354,982
MCD McDonald\'s Corporation 116.88 0.35 0.30 3,745,396
MIND Mitcham Industries Inc. 3.00 -0.20 -6.25 7,305
MMM 3M Company 176.30 0.35 0.20 2,433,570
MRK Merck & Company Inc. (new) 62.57 0.42 0.68 7,340,756
MSFT Microsoft Corporation 57.95 1.05 1.85 28,065,287
MTG MGIC Investment Corporation 7.98 0.06 0.76 4,392,103
MTGE American Capital Mortgage Investment Corp. 17.27 0.13 0.76 269,862
MTRX Matrix Service Company 17.70 -0.20 -1.12 94,683
MW Men's Wearhouse, Inc. (The) n/a n/a n/a 0
NAV Navistar International Corporation 21.37 -0.61 -2.78 1,408,090
NCS NCI Building Systems Inc. New 14.43 -0.09 -0.62 614,782
NOK Nokia Corporation Sponsored American Depositary Sh 5.71 0.09 1.60 6,164,932
NTT Nippon Telegraph and Telephone Corporation 46.75 -0.04 -0.09 275,122
OGE OGE Energy Corporation 32.48 -0.33 -1.01 780,609
OI Owens-Illinois Inc. 17.91 0.21 1.19 1,699,216
OREX Orexigen Therapeutics Inc. 3.24 0.00 0.00 139,024
PAY Verifone Systems Inc. 15.95 -0.15 -0.93 1,703,487
PBY Pep Boys-Manny Moe & Jack n/a n/a n/a 0
PCG Pacific Gas & Electric Co. 62.36 -1.05 -1.66 2,941,282
PFE Pfizer Inc. 33.83 0.19 0.56 15,610,585
PG Procter & Gamble Company (The) 88.36 0.51 0.58 65,150,819
RDN Radian Group Inc. 13.55 0.03 0.22 1,634,291
SEAC SeaChange International Inc. 2.96 0.07 2.42 35,624
SIGM Sigma Designs Inc. 7.83 0.15 1.95 349,475
SO Southern Company (The) 52.84 -0.47 -0.88 5,774,119
SPA Sparton Corporation 25.65 0.38 1.50 85,601
STI SunTrust Banks Inc. 43.33 0.61 1.43 2,895,276
STX Seagate Technology 38.42 1.22 3.28 6,853,033
SWK Stanley Works 122.25 1.35 1.12 934,765
T AT&T Inc. 41.46 0.32 0.78 18,463,450
TINY Harris & Harris Group Inc. 1.37 -0.01 -0.54 80,595
TRV The Travelers Companies Inc. 114.41 0.47 0.41 1,758,557
TWC Time Warner Cable Inc n/a n/a n/a 0
UTIW UTi Worldwide Inc. n/a n/a n/a 0
UTX United Technologies Corporation 102.35 0.12 0.12 4,299,266
VRNT Verint Systems Inc. 37.70 0.30 0.80 327,417
VZ Verizon Communications Inc. 52.49 0.34 0.65 8,259,882
WMT Wal-Mart Stores Inc. 72.33 0.71 0.99 6,344,407
XOM Exxon Mobil Corporation 83.24 0.18 0.22 9,595,020

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