The Fed’s Beige Book for the Jan. 25 FOMC meeting shows a steady slow increase in economic activity even though the real estate sectors were steady at low levels. The Dow Jones Industrial Average traded down to 12,399.01 in the morning then consolidated that move but staying below the down trend that connects the highs of May and July 2011. The day’s high going into the final half hour of trading was above 12,450. The NASDAQ traded up from 2690.73 to above 2710 into the final half hour of trading.
Asian stocks were higher on Wednesday with the Nikkei 225 ending their session at 8,448 – up 0.30% on the day, and the Hang Seng ending their session at 19,152 – up 0.78% on the day. European stocks traded lower on Wednesday. The FTSE 100 ended their session at 5,659 – down 0.66% on the day; the DAX ended their session at 6,139 – down 0.38% on the day; and the CAC 40 ended their session at 3,205 – down 0.19% on the day. The yield on the 10-Year US Treasury note declined from 1.975 percent to 1.897 trading below its 50-day simple moving average at 1.980.
Gold traded between $1630.8 the Troy ounce and $1648.0 with the close above its 200-day simple moving average at $1629.9. Crude oil traded between $100.55 per barrel and $102.46 staying well above its 50-day and 200-day simple moving averages at $98.38 and $95.68. The euro versus the dollar traded down from 1.2788 to 1.2666 setting a new 52-week low.
Energy
Clean Energy Fuels (CLNE) is covered at Underperform by Mizuho with a price target of $10. Southwestern Energy (SWN) is reduced to Neutral from Outperform at Robert Baird with a new lower objective of $39. Shares in solar companies rallied today, regaining some of the ground lost during last year’s steep sell-off, amid signs that prices for the renewable energy systems were stabilizing. In afternoon trading: Shares of Suntech Power (STP) are up about 28.5%. Shares of Trina Solar (TSL) are up about 25.5%. Shares of Yingli Green Energy (YGE) are up about 18.5%. Shares of LDK Solar (LDK) are up about 16%. Shares of Canadian Solar (CSIQ) are up about 12%.
Energy Select Sector SPDR (XLE) was trading at $70.45 at 4:00 PM on Wednesday, down 1.34% on the day – up 1.91% year-to-date. The 2011 change was +1.29%.
Materials
AK Steel (AKS) is increased to Outperform from Neutral at Credit Suisse. In afternoon trading: Shares of Hecla Mining (HL) are down about 23.25%. Shares of China Shen Zhou (SHZ) are down about 9%. Shares of Commercial Metals (CMC) are down about 7%. Shares of Headwaters (HW) are up about 9%. Shares of AK Steel are up about 7.5%. Shares of Golden Minerals (AUMN) are up about 7.5%. Shares of Walter Energy (WLT) are up about 7.25%.
The Materials Select Sector SPDR (XLB) was trading at $35.835 at 4:00 PM on Wednesday, up 0.97% on the day – up 6.97% year-to-date. The 2011 change was -12.78%.
Industrials
Rockwell Automation (ROK) gets a Buy-from-Neutral boost at Goldman, which also adds it to their list of Conviction Buys. 3M Co (MMM) is cut to Sell from Neutral at Goldman. Emerson Electric (EMR) is now Neutral from Buy at Goldman. Philips Electronics (PHG) is slashed to Sell from Neutral at Citigroup. Waste Management (WM) is taken down to Sell from Buy at Société Générale. In afternoon trading: Shares of YRC Worldwide (YRCW) are up about 20%. Shares of Federal Signal (FSS) are up about 10.75%. Shares of USG Corp. (USG) are up about 10.5%.
The Industrial Select Sector SPDR (XLI) was trading at $35.46 at 4:00 PM on Wednesday, up 0.31% on the day – up 5.07% year-to-date. The 2011 change was -3.21%.
Consumer Discretionary
Magna (MGA) forecasts that 2012 revenues will rise to $27.8B-$29.3B from a projected $25.6B-$27.1B last year, boosted by growth opportunities in new markets. Lennar (LEN) missed estimates by a penny, while beating revenue by $38M. Delta Apparel (DLA) it expects FQ2 revenue of $105M (below a $113M consensus). Delta’s EPS is expected to be in the range of -$0.38 to -$0.42 (much worse than a $0.02 consensus). For FY12, Delta now expects revenue of $480M-$500M and EPS of $1.70-$1.80 (below a consensus of $514.6M and $2.05). Coldwater Creek (CWTR) warned it expects FQ4 EPS of -$0.18 to -$0.24, worse than a consensus of -$0.17. General Motors (GM) is upgraded to Overweight from Neutral at Piper Jaffray. DIRECTV (DTV) is lifted to Outperform from Market Perform at Sanford Bernstein. Virgin Media (VMED) is moved to Outperform from Neutral at Macquarie. Grand Canyon Education (LOPE) is lifted to Buy from Neutral at Bank of America-Merrill Lynch, which moves ITT Educational (ESI) to Neutral from Underperform. Marriott International (MAR) is hoisted to Buy from Neutral at Goldman Sachs. Luxottica (LUX) is lifted to Overweight from Equal Weight at Barclays. Urban Outfitters (URBN) is slashed at both Citigroup (Sell from Buy) and Robert W. Baird (Neutral from Outperform). Polo Ralph Lauren (RL) is moved to Market Perform from Outperform with Wells Fargo. Cablevision (CVC) is cut from Citigroup’s Top Picks Live list. Hyatt Hotels (H) gets lowered to Neutral from Buy at Goldman. Summer Infant (SUMR) is now Neutral from Outperform with Wedbush. In afternoon trading: Shares of Eastman Kodak (EK) are up over 40% after the photography icon filed suits against Apple and Taiwan’s HTC, alleging patent infringement. Shares of Crocs (CROX) are up about 17.25%. Shares of Urban Outfitters (URBN) are down about 20%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $40.31 at 4:00 PM on Wednesday, up 0.15% on the day – up 3.31% year-to-date. The 2011 change was +4.30%.
Consumer Staples
UBS downgrades both Coca-Cola (KO) and rival PepsiCo (PEP), both now Neutral from Buy. Unilever (UN) gets an Equal Weight-from-Overweight downgrade at Morgan Stanley. Twinkies and Wonder Bread maker Hostess Brands Inc. filed for bankruptcy protection for the second time in less than three years, after failing to reach an agreement with workers on pension and health benefits. In afternoon trading: Shares of China Biotics (CHBT) are up about 23.5%. Shares of Central European Distribution (CEDC) are up about 8.25%. Shares of Supervalu (SVU) are down about 12.5%. Shares of Synutra International (SYUT) are down about 10.75%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $32.18 at 4:00 PM on Wednesday, down 0.43% on the day – down 0.95% year-to-date. The 2011 change was +10.85%.
Healthcare
An FDA panel recently voted that the benefits of four popular Bayer (BAYRY) birth-control pills outweigh the blood-clotting risk, but the agency failed to disclose that three of the advisors have ties to Bayer as consultants, speakers or researchers. Sanofi (SNY) is planning “bolt-on” acquisitions of up to €2B ($2.6B) this year, CEO Chris Viehbacher has said. “All we want to do is continue to look for opportunities, particularly in emerging markets,” although the company prefers to look beyond China and India where many peers are focused. Stryker (SYK) preannounced Q4 revenue of $2.2B (+11% Y/Y) and 2011 EPS of $1.02-$1.04, largely in-line with a consensus of $2.23B and $1.03. Owens & Minor (OMI) gets a Neutral-from-Sell lift at Goldman. WebMD Health (WBMD) is downgraded this morning by both Morgan Stanley (Underweight from Equal Weight) and Wells Fargo (Market Perform from Outperform). In afternoon trading: Shares of Idenix Pharmaceuticals (IDIX) are up about 17.5%. Shares of Human Genome Sciences (HGSI) are up about 15.5%. Shares of Universal American Corp. (UAM) are down about 16.25%. Shares of Questor Pharmaceuticals (QCOR) are down about 15%.
The Health Care Select Sector SPDR (XLV) was trading at $35.48 at 4:00 PM on Wednesday, up slightly on the day – up 2.28% year-to-date. The 2011 change was +10.32%.
Financials
Deutsche Boerse (DBOEY) and NYSE Euronext (NYX) reportedly plan to lobby EU commissioners and senior European government officials in a bid to save their $9B merger as antitrust regulators look set to recommend that the deal be blocked. Carlyle said late yesterday that it would list on Nasdaq under the symbol (CG) and that nine-month net profit and revenue jumped around 60% to $918.1M and $2.01B respectively. Huntington Bancshares (HBAN) is a new Neutral and $6 price objective at Robert W. Baird. Munich Re (MURGY) is now Outperform from Neutral at Credit Suisse. MasterCard (MA) gets moved to Neutral from Buy at Goldman. Boston Properties (BXP) is reduced to Sector Perform from Outperform at RBC Capital. Lazard (LAZ) is lowered to Neutral from Buy at Citigroup. NYSE Euronext (NYX) gets cut to Market Perform from Outperform at Keefe Bruyette. Franklin Resources (BEN) is now Neutral from Buy at Citigroup. T. Rowe Price (TROW) is taken to Neutral from Buy at Ticonderoga. In afternoon trading: Shares of Ambac Financial Group (ABKFQ) are up about 27.5%.
The Financial Select Sector SPDR (XLF) was trading at $13.865 at 4:00 PM on Wednesday, up 1.13% on the day – up 6.65% year-to-date. The 2011 change was -18.50%; the weakest performing sector for the year.
Information Technology
Intel (INTC) has made important moves in its battle to challenge ARM’s (ARMH) smartphone dominance, forging deals with Motorola (MMI) and Lenovo (LNVGY). Google (GOOG) has won its largest enterprise contract ever when Spain’s BBVA signs on to use Google Apps for its 110,000 employees spread across the globe. Alibaba (ALBCF) intends to take only a $3B loan for its plans to buy back part of the 40% stake held by Yahoo (YHOO), down from an earlier figure of $4B. SemiLEDs (LEDS) beat estimates by 2 cents and revenue by $0.4M. RF Monolithics (RFMI) reported FQ1 EPS of $0.01 and revenue of $8.4M. Synnex (SNX) beat estimates by 23 cents with revenue in-line with estimates. Liquidity Services (LQDT) is a Hold and $41 target at The Benchmark Company. Alcatel-Lucent (ALU) is boosted to Buy from Hold at Deutsche Bank. Accenture (ACN) is upgraded to Outperform from Market Perform by Bernstein. Citrix Systems (CTXS) is named a long Research Tactical Idea at Morgan Stanley. Salesforce.com (CRM) is named a Long Research Tactical Idea at Morgan Stanley. Accenture (ACN) gets downgraded to Neutral from Buy at Goldman. MasterCard (MA) gets moved to Neutral from Buy at Goldman. NCR Corp (NCR) is no longer on Goldman’s list of Conviction Buys. WebMD Health (WBMD) is downgraded this morning by both Morgan Stanley (Underweight from Equal Weight) and Wells Fargo (Market Perform from Outperform). Shares in solar companies rallied today, regaining some of the ground lost during last year’s steep sell-off, amid signs that prices for the renewable energy systems were stabilizing. In afternoon trading: Shares of Hanwha SolarOne (HSOL) are up about 34%. Shares of JinkoSolar (JKS) are up about 34%. Shares of JA Solar (JASO) are up about 30%. Shares of Renesola (SOL) are up about 26%.
The Technology Select Sector SPDR (XLK) was trading at $26.10 at 4:00 PM on Wednesday, up 0.31% on the day – up 2.55% year-to-date. The 2011 change was +1.03%.
Telecommunications Services
In afternoon trading: Shares of TerreStar (TSTRQ) are up about 16.5%. Heavily Traded Stocks: Shares of Sprint Nextel (S) are up about 3.4%, while shares of AT&T (T) are up about a half of a percent and shares of Verizon (VZ) are up about 0.8%. Shares of Frontier Communications (FTR) are down about 1%. Shares of Vodafone (VOD) are down about a half of a percent.
The NASDAQ Telecommunications Index (IXTC) was trading at $205.35 at 4:00 PM on Wednesday, up 1.02% on the day – up 4.28% year-to-date. The 2011 change was -12.62%.
Utilities
American Water (AWK) is taken to Buy from Neutral at Ladenburg Thalmann with a new objective of $37. In afternoon trading: Shares of Genon Energy (GEN) are up about 8.25%. Heavily Traded Stocks: Shares of Exelon (EXC) are down about 1.4%. Shares of Duke Energy (DUK) are down about a half of a percent. Shares of PPL Corp. (PPL) are down about 1.7%.
The Utilities Select Sector SPDR (XLU) was trading at $34.96 at 4:00 PM on Wednesday, down 0.46% on the day – down 2.83% year-to-date. The 2011 change was +14.81%; the strongest performing sector for the year.
STOCKS: CLNE, SWN, STP, TSL, YGE, LDK, CSIQ, AKS, HL, SHZ, CMC, HW, AUMN, WLT, ROK, MMM, EMR, PHG, WM, YRCW, FSS, USG, MGA, LEN, DLA, CWTR, GM, DTV, VMED, LOPE, ESI, MAR, LUX, URBN, RL, CVC, H, SUMR, EK, CROX, KO, PEP, UN, CHBT, CEDC, SVU, SYUT, BAYRY, SNY, SYK, OMI, WBMD, IDIX, HGSI, UAM, QCOR, DBOEY, NYX, CG, HBAN, MURGY, MA, BXP, LAZ, BEN, TROW, ABKFQ, INTC, ARMH, MMI, LNVGY, GOOG, ALBCF, YHOO, LEDS, RFMI, SNX, LQDT, ALU, CAN, CTXS, CRM, ACN, NCR, HSOL, JKS, JASO, SOL, TSTRQ, S, T, VZ, FTR, VOD, AWK, GEN, EXC, DUK, PPL
