Equities Sector Coverage: Energy Stocks Lead Dip

Sector Recap |

energy stocks sectorWall Street was stung by economic data today as the stock market mostly traded lower. First quarter 2011 productivity rose by 1.6 percent, which was better than expected. In a huge disappointment, Initial Jobless Claims rose by 43,000 to 474,000 when the consensus called for a decline of 19,000. Claims are now well above the recessionary threshold at 350,000 and at the highest level in eight months. The Dow Jones Industrial Average opened lower on Thursday trading down to 12,599.61 before rebounding to just above 12,700 around mid-day then faded into the close to a new low for the session at 12,521.28. The NASDAQ traded as low as 2812.39 then rebounded into the green just above 2845 in mid-day trading. The NASDAQ closed in the red with a final hour low at 2804.82.

Stocks drifted lower in Asia and Europe with the FTDE 100 down about 1% ahead of the US open on Thursday. The Bank of England and the ECB kept their interest rates unchanged at 0.50% and 1.25%. On Wednesday the Dow Industrial Average fell 84 points to 12,724 with the NASDAQ down 14 points to 2828. The yield on the 10-Year US Treasury is trending lower and touched 3.148 percent Thursday afternoon continuing the flight to quality. Comex gold broke below $1500 the Troy ounce and traded as low as $1462.5 down $114.9 since testing an all time high at $1577.4 on Monday. Nymex crude oil traded as low as $98.25 per barrel down $16.58 from a multi-year high of $114.83 on Monday. The euro stalled above 1.49 on Wednesday and traded down to 1.4513 on Thursday afternoon.

Energy

Petrohawk Energy (HK) beat estimates by a penny and revenue by $16M. Western Refining (WNR) beat estimates by 13 cents and revenue by $180M. Concho Resources (CXO) beat estimates by 2 cents and revenue by $33M. Energy Transfer Partners L.P. (ETP) missed estimates by 31 cents and revenue by $400M. Ion Geophysical (IO) missed estimates by 4 cents, but beat revenue by $31M. Murphy Oil (MUR) beat estimates by 38 cents. Cloud Peak Energy (CLD) beat estimates by 2 cents and revenue by $1M. Williams Companies (WMB) report Q1 EPS of $0.36 (in-line). EV Energy (EVEP) is assigned an Outperform rating and $65 price objective by brokers Robert W. Baird. Atwood Oceanics (ATW) is upgraded to Strong Buy ($60.75 target price) from Reduce at brokerage firm Duncan-Williams. Hess (HES) is lifted to Buy from Hold ($95 target price) at Argus. Talisman Energy (TLM) is lifted to Buy from Hold at TD Newcrest.

The Energy Select Sector SPDR (XLE) was trading at $74.47 at 4:00 PM on Thursday, down 2.08% on the day – up 9.11% year-to-date.

Materials

Huntsman (HUN) beat estimates by 23 cents and revenue by $290M. Goldcorp (GG) beat estimates by 3 cents, but missed revenue by $50M. Dow Chemical (DOW) is lifted to Buy from Hold ($49 target) at Argus. In afternoon trading: Silver stocks continue to decline. COMEX Silver futures are down about 11%. Shares of Endeavour Silver (EXK) are down about 15%. Shares of Silvercorp Metals (SVM) are down about 10.25%. Shares of Jaguar Mining (JAG) are down about 8%. Shares of NovaGold Resources (NG) are down about 8%.

The Materials Select Sector SPDR (XLB) traded at $39.03 at 4:00 PM on Thursday, down 1.19% on the day – up 1.61% year-to-date.

Industrials

Expeditors International of Washington (EXPD) beat estimates by 5 cents with revenue in-line with estimates. MasTec (MTZ) beat estimates by 2 cents and revenue by $47M. In afternoon trading: Shares of Polypore International (PPO) are up about 18%. Shares of Towers Watson (TW) are up about 8.25%. Shares of Delta Air Lines (DAL) are up about 7.75%. Shares of AMR (AMR) are up about 7%. Shares of US Airways (LCC) are up about 6.75%.

The Industrial Select Sector SPDR (XLI) traded at $37.74 at 4:00 PM on Thursday, down 0.47% on the day – up 8.23% year-to-date.

Consumer Discretionary

News Corp's (NWS) FQ3 net profit dropped to $639M from $839M last year, when the blockbuster movie 'Avatar" boosted results. The bottom line was also hit by the settling of an $80M lawsuit at its publishing division, while revenue dropped 6% to $8.26B. News Corp. missed estimates by a penny. Warner Music Group (WMG) could reach an agreement to sell itself today, when its board will meet to make a decision after receiving final-round offers this week. Liberty Global (LBTYA) beat estimates by a penny with revenue in-line with estimates. Tesla Motors (TSLA) missed estimates by 8 cents, but beat revenue by $6M. Lamar Advertising (LAMR) is lifted to Hold from Sell ($30 price objective) at Citigroup. McDonald’s (MCD) is downgraded to Neutral from Overweight at Piper Jaffray. Vivendi (VIVEF) is downgraded to Hold from Buy at Deutsche Bank. Collective Brands (PSS) is lowered to Hold from Buy at Capstone. In afternoon trading: Shares of Timberland (TBL) are down about 26.25% after missing estimates by 24 cents. Shares of Aeropostale (ARO) are down about 15.25% after the company said that sales in the most recent quarter dropped 7% and that EPS would be around $0.20, below a previous outlook range of $0.35 to $0.38. Shares of The Men’s Warehouse (MW) are up about 14% after lifting its profit range to $0.47-$0.50 per share, easily topping the average analyst estimate of only $0.29 per share. Shares of Hot Topic (HOTT) are up about 10.25% after topping analysts' same-store sales estimates.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.26 at 4:00 PM on Thursday, down 0.27% on the day – up 7.62% year-to-date.

Consumer Staples

As Avon Products (AVP) heads into its annual meeting today, a top concern is expected to be an internal investigation into the bribery of foreign officials. Ralcorp (RAH) has rejected an increased $4.9B bid from ConAgra Foods (CAG) and adopted a shareholder rights plan to resist the takeover. CVS Caremark (CVS) beat estimates by 2 cents and revenue by $10M. Whole Foods Market (WFMI) beat estimates by 5 cents with revenue in-line with estimates. Unilever (UN) is lowered to Underperform from Neutral at Credit Suisse. Delhaize Group (DEG) is downgraded to Neutral from Overweight at HSBC Securities. In afternoon trading: Shares of Central Garden & Pet (CENT) are up about 12.5%. Shares of Boston Beer (SAM) are down about 10.5%.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.36 at 4:00 PM on Thursday, down 0.76% on the day – up 6.99% year-to-date.

Healthcare

CIGNA (CI) beat estimates by 28 cents and revenue by $30M. ARIAD Pharmaceuticals (ARIA) missed estimates by 16 cents. Omega Healthcare (OHI) is reduced to Hold from Buy at Jefferies. Team Health (TMH) and Sun Healthcare (SUNH) are both taken to Hold from Buy at Citigroup. In afternoon trading: Shares of Savient Pharmaceuticals (SVNT) are down about 21% after reporting Q1 sales of $1.3 million, well short of the $2.1 million that Wall Street expected. Shares of Zalicus (ZLCS) are down about 10.5%. Shares of Acorda Therapeutics (ACOR) are down about 10.5%.

The Health Care Select Sector SPDR (XLV) traded at $35.25 at 4:00 PM on Thursday, down 0.65% on the day – up 11.90% year-to-date.

Financials

Glencore's $11B IPO in London and Hong Kong was fully covered on the first day, with investors placing orders for all the shares on offer, including a 10% overallotment option. Ace (ACE) beat estimates by 16 cents with revenue in-line with estimates. Biomed Realty Trust (BMR) reported Q1 EPS of $0.30 (in-line) and revenue of $106M (in-line). Kimco Realty (KIM) missed estimates by 2 cents. MetLife (MET) beat estimates by 7 cents. Prudential Financial (PRU) beat estimates by 21 cents and revenue by $1B. Macatawa Bank (MCBC) is moved to Underperform from Market Perform at Keefe Bruyette. In afternoon trading: Shares of Lloyds's (LYG) are down about 8.5% after the company said that it made a £2.44B ($4B) net loss in Q1 2011 after setting aside £3.2B to cover the potential costs of customer payouts over mis-sold payment-protection insurance. Shares of The PMI Group (PMI) are down about 13% after reporting Q1 EPS of -$0.89 (vs. consensus of -$0.38). Shares of Fortress Investment Group LLC (FIG) are down about 10% after reporting Q1 EPS of -$0.58 (vs. consensus of $0.15).

The Financial Select Sector SPDR (XLF) traded at $16.03 at 4:00 PM on Thursday, down 1.29% on the day – up 0.50% year-to-date.

Information Technology

Shares in Chinese social network Renren (RENN) soared 29% on their debut on the NYSE in an IPO that is seen as a prelude to a Facebook listing. Renren, which means everyone in Chinese, raised $743.4M after issuing 53.1M ADSs at $14 each. ON Semiconductor (ONNN) beat estimates by 7 cents and revenue by $40M. Teradata (TDC) beat estimates by 2 cents and revenue by $16M. Atmel (ATML) beat estimates by a penny and revenue by $8M. BMC Software (BMC) beat estimates by a penny and revenue by $23M. Electronic Arts (ERTS) beat estimates by 3 cents and revenue by $71M. JDS Uniphase (JDSU) beat estimates by 2 cents and revenue by $6M. MEMC Electronic Materials (WFR) missed estimates by 4 cents, but beat revenue by $97M. SouFun Holdings (SFUN) is lifted to Buy from Neutral at Goldman Sachs. Smith Micro (SMSI) is now Neutral from Buy at Merriman. In afternoon trading: Shares of Smith Micro are down about 22.25% after missing estimates by a penny within a discouraging Q1 earnings report.

The Technology Select Sector SPDR (XLK) traded at $26.43 at 4:00 PM on Thursday, down 0.53% on the day – up 4.92% year-to-date.

Telecommunications Services

Leap Wireless (LEAP) gets a Buy-from-Hold boost ($22 target) at brokerage Collins Stewart. Leap Wireless International missed estimates by 19 cents, but beat revenue by $41M. In afternoon trading: Shares of Leap are up about 9.5%. Shares of Cbeyond (CBEY) are up about 9%. Shares of PAETEC (PAET) are up about 7%. Shares of Clearwire (CLWR) are down about 6% after missing estimates by 44 cents. Shares of Windstream (WIN) are down about 4% after reporting Q1 EPS of $0.05 (vs. consensus of $0.19).

The NASDAQ Telecommunications Index (IXTC) traded at $224.24 at 4:00 PM on Thursday, up slightly on the day – down 0.50% year-to-date.

Utilities

NRG Energy (NRG) missed estimates by $1.17 and revenue by $320M. PPL Corp. (PPL) beat estimates by 9 cents, but missed revenue by $60M. In afternoon trading: Shares of Ormat Technologies (ORA) are down about 8.7% after announcing their financial results for the first quarter of 2011. Shares of Suburban Propane (SPH) are down about 5.2%. Shares of Dynegy (DYN) are down about 5.1%.

The Utilities Select Sector SPDR (XLU) traded at $33.10 at 4:00 PM on Thursday, down 0.72% on the day – up 5.62% year-to-date.

STOCKS: HK, WNR, CXO, ETP, IO, MUR, CLD, WMB, EVEP, ATW, HES, TLM, HUN, GG, DOW, EXK, SVM, JAG, NG, EXPD, MTZ, PPO, TW, DAL, AMR, LCC, NWS, WMG, LBTYA, TSLA, LAMR, MCD, VIVEF, PSS, TBL, ARO, MW, HOTT, AVP, RAH, CAG, CVS, WFMI, UN, DEG, CENT, SAM, C, ARIA, OHI, TMH, SUNH, SVNT, ZLCS, ACOR, ACE, BMR, KIM, MET, PRU, MCBC, LYG, PMI, FIG, RENN, ONNN, TDC, ATML, BMC, ERTS, JDSU, WFR, SFUN, SMSI, LEAP, CBEY,PAET, CLWR, WIN, NRG, PPL, ORA, SPH, DYN

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