Equities Sector Coverage: Doubt Creeps in on Wall Street

Sector Recap |

Doubt Creeps in on Wall StreetADP reported that the private sector added 209,000 jobs in March. Nonmanufacturing ISM came in slightly below estimates at 56.0 in March as the prices paid component remains elevated at 63.9. The Dow Jones Industrial Average declined to 13,020.86 on continued concerns about monetary policy. A close below the 50-day simple moving average at 12,970 will confirm that the Dow has peaked at its 52-week high at 13,297.11 set on April 2nd. The NASDAQ’s declined to 3052.58 on Wednesday versus the 52-week high at 3134.17 set on March 27th. A close below the 21-day simple moving average at 3059 shifts the daily chart to negative.

Asian stocks were lower on Wednesday. The Nikkei 225 ended their session at 9,820 – down 2.29% on the day. The Hang Seng was closes at 20,791. European stocks continued lower on Wednesday. The FTSE 100 ended their session at 5,704 – down 2.30% on the day. The DAX ended their session at 6,784 – down 2.84% on the day. The CAC 40 ended their session at 3,313 – down 2.74% on the day. The yield on the 10-Year US Treasury declined from 2.306 percent to 2.223 staying above its 200-day simple moving average at 2.173.

Gold declined from $1649.5 the Troy ounce to $1613.0 below the March 22nd low at $1625.0, and well below its 200-day simple moving average at $1687.3. Crude oil declined from $104.12 per barrel to $101.08 below its 50-day simple moving average at $103.77. The euro versus the dollar declined from 1.3238 to 1.3110 below its 50-day simple moving average at 1.3216.

Energy

A Brazilian federal prosecutor has launched a second $10.9 billion lawsuit against Chevron (CVX) and Transocean (RIG) related to an offshore oil field operated by Chevron. NRG Energy (NRG) has been upgraded to Outperform from Neutral at Macquarie. Morning losers again were Baker Hughes (BHI), Chesapeake Energy (CHK), Chevron (CVX) and Exxon Mobil (XOM).

Energy Select Sector SPDR (XLE) was trading at $70.99 at 3:30 PM on Wednesday, down 1.16% on the day – up 2.69% year-to-date.

Materials

International Paper (IP) and Owens-Illinois (OI) were initiated with Overweight ratings at Barclays. Jaguar Mining (JAC) was downgraded to Underperform from Sector Perform at RBC Capital. Morning losers again were Alcoa (AA), DuPont (DD), Freeport McMoRan (FCX) and US Steel (X).

The Materials Select Sector SPDR (XLB) was trading at $36.72 at 3:30 PM on Wednesday, down 1.32% on the day – up 9.61% year-to-date.

Industrials

Moody's lowered its credit rating for General Electric (GE) citing to risks in the company's lending unit. Ball Corp (BLL) was initiated with an Overweight rating at Barclays. DXP Enterprises (DXPE) is initiated with a Buy rating at Capstone Investments. Sealed Air (SEE) is initiated the bubble wrap company with an Overweight rating. CSX Corp (CSX) was upgraded to Overweight from Neutral at Atlantic Equities. Norfolk Southern (NSC) was upgraded to Outperform from Sector Perform at RBC Capital. Genesee & Wyoming (GWR) was downgraded to Sector Perform from Outperform at RBC Capital. Dow components Boeing Co (BA), Caterpillar (CAT), General Electric (GE), 3M Company (MMM) and United Technologies (UTX) were lower on Wednesday.

The Industrial Select Sector SPDR (XLI) was trading at $37.17 at 3:30 PM on Wednesday, down 0.59% on the day – up 10.13% year-to-date.

Consumer Discretionary

US Airways (LCC) has reportedly told American Airlines creditors that a merger of the two airlines could yield $1.5 billion in synergies. Spirit Airlines (SAVE) is initiated with a Buy rating at Citigroup. Gap Inc (GPS) was upgraded to Overweight from Neutral at Piper Jaffray. Southwest Airlines (LUV) has been upgraded to Overweight from Equal Weight by Barclays. United Continental (UAL) has been downgraded to Equal Weight from Overweight at Barclays. Polaris Industries (PII) has been downgraded to Market Perform from Outperform with Wells Fargo. Under Armour (UA) has been downgraded to Hold at Stifel Nicolaus.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $44.71 at 3:30 PM on Wednesday, down 0.91% on the day – up 14.58% year-to-date.

Consumer Staples

Sysco Corp (SYY) is resumed with a Sell rating at Goldman Sachs. Starbucks (SBUX) were upgraded to Buy from Neutral at Goldman, and the stock was added it to the Conviction Buy List. Brown-Forman (BF.B) is upgraded to Buy from Neutral at USB on demand for alcoholic beverages including Jack Daniel’s, Southern Comfort, and Finlandia. Supervalu (SVU) has been upgraded to Neutral from Negative at Susquehanna. McDonald’s (MCD) has been removed from the Conviction Buy List at Goldman. Tim Hortons (THI) the Canadian donut maker has been downgraded to Neutral from Buy at Goldman.

The Consumer Staples Select Sector SPDR (XLP) was trading at $34.10 at 3:30 PM on Wednesday, down 0.18% on the day – up 4.96% year-to-date.

Health Care

Roche (RHHBY.PK) has been appealing directly to Illumina's (ILMN) shareholders defending its $51 a share offer. Celgene (CELG) was initiated with a Buy rating at Cantor Fitzgerald with a $90 price target. Celldex Therapeutics (CLDX) is initiated with a Buy rating at Cantor Fitzgerald. Hologic (HOLX) is initiated with a Buy rating at Bank of America-Merrill Lynch. Biogen Idec (BIIB) has been upgraded to Buy from Neutral at Goldman Sachs. Novo-Nordisk (NVO) has been downgraded to Sell from Hold at Deutsche Bank. Dow Components were mixed on Wednesday; Johnson & Johnson (JNJ) down 0.6%, Merck (MRK) up 0.24% and Pfizer (PFE) down 0.7%.

The Health Care Select Sector SPDR (XLV) was trading at $37.53 at 3:30 PM on Wednesday, down 0.50% on the day – up 8.19% year-to-date.

Financials

The CFTC is expected to file civil charges against JP Morgan (JPM) for actions surrounding the collapse of Lehman Brothers. The Financial Stability Oversight Council yesterday adopted a rule classifies some non-bank financial firms as "systemically important". Possible inclusions are BlackRock (BLK), GE Capital (GE) and Berkshire Hathaway (BRK.A). American International Group (AIG) was upgraded to Outperform from Market Perform by Sanford Bernstein. Blackstone (BX) was added to the Top Picks Live list at Citigroup. Progressive Corp (PGR) is cut to Neutral from Buy at Bank of America-Merrill Lynch to Neutral from Buy while National Interstate (NATL) is now rated Underperform down from Neutral. Assured Guaranty (AGO) has been downgraded to Neutral from Buy at UBS.

The Financial Select Sector SPDR (XLF) was trading at $15.60 at 3:30 PM on Wednesday, down 1.45% on the day – up 20.00% year-to-date (the strongest performing sector).

Information Technology

Yahoo (YHOO) will lay off up to 2,000 employees, which is 14% of its workforce. The cuts will hit hard on product development, local content, marketing, and research divisions. EMC Corp (EMC) was initiated with a Buy rating at Mizuho with a $34 price target. Catalysts include an 80% stake in its spinoff VMware (VMW). TIBCO Software (TIBX) and Informatica (INFA) were initiated with Buy ratings at Jefferies. Progress Software (PRGS) and Teradata (TDC) are new Hold rated stocks at Jeffries. International Business Machines (IBM) has been downgraded to Neutral from Buy at Bank of America-Merrill Lynch. SanDisk (SNDK) were downgraded to Outperform from Top Pick at RBC Capital on an earnings guidance cut. Allot Communications (ALLT) have been downgraded to Hold from Buy at Jefferies.

The Technology Select Sector SPDR (XLK) was trading at $30.06 at 3:30 PM on Wednesday, down 1.31% on the day – up 18.11% year-to-date.

Telecommunication Services

Ciena (CIEN) has been upgraded to Overweight from Neutral at JP Morgan on the prospect of increased capital equipment spending in the second half of 2012. JP Morgan takes Tellabs (TLAB) to Neutral from Underweight. Dow components had mixed performances. AT&T (T) was 0.5% higher Wednesday morning while Verizon (VZ) traded around the flat line.

The NASDAQ Telecommunications Index (IXTC) was trading at $215.51 at 3:30 PM on Wednesday, down 1.86% on the day – up 9.43% year-to-date.

Utilities

Some investment dollars moved into utilities as stocks tumbled on Wednesday. Up fractionally were Dominion Resources (D) up 0.5%, Edison International (EIX) up 0.4%, First Energy (FE) up 0.8%, NGR Energy (NRG) up 0.8%, and PG&E Corp (PCG) up 0.5%.

The Utilities Select Sector SPDR (XLU) was trading at $35.16 at 3:30 PM on Wednesday, down 0.11% on the day – down 2.28% year-to-date (the weakest performing sector/the only negative sector).

STOCKS: BHI, CHK, CVX, XOM, RIG, NRG, AA, DD, FCX, X, IP, OI, JAC, BA, CAT, GE, MMM, UTX, BLL, DXPE, SEE, CSX, NSC, GWR, LCC, GPS, SAVE, UAL, PII, UA, SYY, SBUX, BF.B, SVU, MCD, THI, JNJ, MRK, PFE, RHHBY.PK, CELG, HOLX, CLDX, BIIB, NVO, JPM, BLK, BRK.A, BX, PGR, NATL, AGO, YHOO, EMV, VMW< TIBX, INFA, PRGS, TDC, IBM, SNDK, ALLT, CIEN, TLAB, T, VZ, D, EIX, FE, PCG

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
BX The Blackstone Group L.P. Representing Limited Par 26.20 0.34 1.31 320,095
MMM 3M Company 172.44 0.01 0.01 83,314
UAL United Continental Holdings 69.35 0.08 0.12 276,519
GE General Electric Co 31.38 0.04 0.13 1,389,315
CVX Chevron Corporation 113.50 0.50 0.44 479,417
PCG Pacific Gas & Electric Co. 58.07 -0.21 -0.36 176,322
RIG Transocean Ltd (Switzerland) 13.83 0.48 3.60 1,679,705
IP International Paper Company 51.01 0.55 1.09 257,767
JNJ Johnson & Johnson 111.94 -0.02 -0.02 342,687
AA Alcoa Inc. 29.49 0.45 1.53 589,623
CSX CSX Corporation 36.56 0.08 0.21 606,553
IBM International Business Machines Corp 160.82 0.80 0.50 205,404
D Dominion Resources Inc. 73.18 -0.60 -0.81 84,824
BBLU Blue Earth Inc. n/a n/a n/a n/a
EIX Edison International 68.58 -0.82 -1.18 144,637
PII Polaris Industries Inc. 88.37 0.91 1.04 29,130
NRG NRG Energy Inc. 11.24 -0.01 -0.04 279,513
UA Under Armour Inc. Class A 30.70 0.67 2.23 519,096
ALLT Allot Communications Ltd. 4.75 0.10 2.15 2,196
JPM JP Morgan Chase 83.06 1.46 1.79 1,925,358
SYY Sysco Corporation 53.74 0.15 0.28 136,328
UTX United Technologies Corporation 107.98 -0.24 -0.22 202,529
SNDK SanDisk Corp. n/a n/a n/a 0
HOLX Hologic Inc. 38.12 0.20 0.51 143,679
OI Owens-Illinois Inc. 18.21 0.08 0.44 364,339
PRGS Progress Software Corporation 29.14 0.38 1.32 5,722
BLL Ball Corporation 74.49 0.28 0.38 27,975
SAVE Spirit Airlines Inc. 56.62 0.37 0.66 21,081
VZ Verizon Communications Inc. 50.02 0.21 0.42 898,883
TDC Teradata Corporation 26.66 0.21 0.79 100,566
SVU SuperValu Inc. 4.74 0.07 1.50 156,110
MCD McDonald\'s Corporation 119.64 1.40 1.18 573,491
FCX Freeport-McMoRan Inc. 15.76 0.34 2.20 4,082,365
CIEN Ciena Corporation 21.06 0.61 2.98 163,175
DD E.I. du Pont de Nemours and Co. 73.76 0.63 0.86 81,716
AGO Assured Guaranty Ltd. 36.88 0.33 0.90 44,959
GPS Gap Inc. (The) 24.80 0.50 2.06 340,566
NATL National Interstate Corporation n/a n/a n/a 0
SBUX Starbucks Corporation 57.17 -0.04 -0.07 692,393
BHI Baker Hughes Incorporated 65.80 0.50 0.76 186,563
X United States Steel Corp. 34.37 0.76 2.26 2,208,136
XOM Exxon Mobil Corporation 87.31 0.27 0.31 677,054
PFE Pfizer Inc. 31.63 0.00 0.00 2,092,868
NVO Novo Nordisk A/S 34.38 0.45 1.33 1,486,788
BIIB Biogen Inc. 296.25 -0.94 -0.32 128,405
BA Boeing Company (The) 153.33 1.08 0.71 218,830
GWR Genesee & Wyoming Inc. Class A 76.45 0.81 1.07 12,479
YHOO Yahoo! Inc. 40.20 0.13 0.32 525,812
CELG Celgene Corporation 117.43 -0.20 -0.17 383,890
MRK Merck & Company Inc. (new) 61.34 0.21 0.34 403,117
SEE Sealed Air Corporation 46.38 0.26 0.56 29,366
FE FirstEnergy Corporation 30.24 -0.33 -1.08 510,005
PGR Progressive Corporation (The) 33.51 -0.03 -0.09 116,702
T AT&T Inc. 38.95 0.34 0.87 2,090,463
CAT Caterpillar Inc. 95.90 0.76 0.80 374,548
DXPE DXP Enterprises Inc. 35.09 0.32 0.92 18,810
CHK Chesapeake Energy Corporation 7.51 0.28 3.87 12,507,389
CLDX Celldex Therapeutics Inc. 3.64 0.09 2.39 120,611

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