Equities Sector Coverage: Financial Stocks Fall 7 Percent In Market Sell-Off

Sector Recap |

Frustrated Stock TraderThe Dow Jones Industrial Average traded down to 10,604.07 then up to 11,244.01 following the FOMC meeting on Tuesday and stayed within this range on Wednesday between 10,771.55 and 11,228.00. Similarly the NASDAQ traded between 2331.65 and 2483.66 post-FOMC on Tuesday and stayed within that range Wednesday. The NASDAQ traded between 2390.60 and 2432.95 on Wednesday.

Asian stocks followed U.S. stocks higher on Wednesday with the Nikkei 225 up 1.05% to 9,039. The Hang Seng gained 2.34% to 19,784. European stocks traded higher at their open despite the unrest in the U.K. and the cut in the growth rate by the Bank of England, but issues among French banks caused a major reversal. The FTSE 100 was down 3.05% to 5,007. The DAX plunged 5.15% to 5613. The CAC 40 slumped 5.45% to 3,003.

The yield on the 10-Year US Treasury note declined to 2.038 percent after the FOMC stated that the 0 to 0.25% funds rate will last at least through mid-2013. Today this yield is above that level trading between 2.326 and 2.090. The US Treasury auctioned $24 billion 10-Year notes at 2.14 percent with a solid 3.22 bid to cover ratio. The Indirect Bid which includes foreign central banks was a reasonable 35.4% of the issue. The Treasury auctions $16 billion in 30-Year bonds on Thursday. Gold traded to yet another all time high at $1801.0 on Wednesday. Crude oil, which traded as low as $75.71 per barrel on Tuesday traded down from $82.90 to $79.53 the consolidated on lower than expected energy inventories. The euro versus the US dollar traded down from 1.4399 to 1.4167.

Energy

The SEC has subpoenaed Quicksilver Resources (KWK) for documents related to its shale gas output forecasts following reports "questioning the projected decline curves and economics of shale-gas wells." Ultra Petroleum (UPL) beat estimates by a penny, but missed revenue by $49M. SunPower's (SPWRA) sees Q3 revenue at $700M-$750M and non-GAAP EPS $0.05-$0.15 (versus $0.21), and sees full-year revenue at $2.8B-$2.95B (versus $2.76B) and non-GAAP EPS of $0.75-$1.25 (versus $0.70). Ur-Energy (URG) is initiated with a Market Outperform and price objective at $2.52 at Rodman & Renshaw. First Solar (FSLR) is upgraded to Buy from Hold at Jefferies with a new target of $132. Frontline (FRO) is cut to Market Perform from Outperform at FBR Capital. In afternoon trading: Shares of Cheniere Energy Partners (CQP) are up about 16.25%. Shares of EV Energy Partners (EVEP) are up about 9.25%. Shares of General Maritime (GMR) are down about 17%. Shares of Uranerz Energy (URZ) are down about 9.5%. Shares of James River Coal (JRCC) are down about 9%.

Energy Select Sector SPDR (XLE) was trading at $63.19 at 4:00 PM on Wednesday, down 3.45% on the day – down 7.41% year-to-date.

Materials

Mosaic (MOS) is moved to Buy from Neutral at Ticonderoga. In afternoon trading: Shares of Golden Star Resources (GSS) are up about 12.75%. Shares of Endeavour Silver (EXK) are up about 8%. Shares of Headwaters (HW) are down about 11.5%. Shares of CRH Public (CRH) are down about 9.5%. Shares of ArcelorMIttal (MT) are down about 8.75%. Shares of Ferro (FOE) are down about 8.75%. Shares of OMNOVA Solutions (OMN) are down about 8.25%.

The Materials Select Sector SPDR (XLB) traded at $32.61 at 4:00 PM on Wednesday, down 3.44% on the day – down 15.10% year-to-date.

Industrials

BAE Systems (BAESY) is raised to Buy from Neutral at UBS. US Airways (LCC) gets taken to Buy from Neutral at Ticonderoga with a $9 target. In afternoon trading: Shares of Quad Graphics (QUAD) are down about 25.5%. Shares of SatCon Technology (SATC) are down about 25%. Shares of KAR Auction Services (KAR) are down about 15.5%. Shares of EnerNOC (ENOC) are down about 12%. Shares of YRC Worldwide (YRCW) are down about 11.25%. Shares of Mistras Group (MG) are up about 10%.

The Industrial Select Sector SPDR (XLI) traded at $29.40 at 4:00 PM on Wednesday, down 5.10% on the day – down 15.69% year-to-date.

Consumer Discretionary

Walt Disney (DIS) beat estimates by 6 cents and revenue of $200M. Disney's FQ3 net profit rose 15% to $0.77 a share as the early booking of revenue at ESPN and growth at its theme parks and consumer products operations overshadowed a disappointing performance at its movie studio and interactive unit. Polo Ralph Lauren (RL) beat estimates by 44 cents and revenue by $70M. Macy's (M) beat estimates by 4 cents and revenue by $70M. PriceSmart (PSTM) is begun with a Buy rating and $70 target price at the Benchmark Company. Fossil (FOSL) is boosted to Buy from Hold at Benchmark. Walt Disney (DIS) is downgraded to Hold from Buy with Wunderlich after earnings with a new target of $39. Jefferies takes Home Depot (HD), Lowe's (LOW), Target (TGT), Costco (COST), Kohl's (KSS), Staples (SPLS), United Stationers (USTR), and PetSmart (PETM) all to Hold from Buy. In afternoon trading: Shares of McCormick & Schmicks Seafood Restaurants (MSSR) are down about 14.5%. Shares of Office Depot (ODP) are down about 13.75%. Shares of Beazer Homes (BZH) are down about 11.5%. Shares of KB Home (KBH) are down about 9.75%. Shares of Standard Pacific (SPF) are down about 9.1%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $34.12 at 4:00 PM on Wednesday, down 4.26% on the day – down 8.79% year-to-date.

Consumer Staples

Nestle's (NSRGY) H1 net profit came in mostly in-line with expectations, but fell 13% to 4.7B Swiss francs ($6.52B) because of rising raw-material prices and the surging franc. Nestle beat estimates by 70M francs, but missed revenues by 60M francs, and sees FY organic growth at top end of 5%-6% range. In afternoon trading: Shares of Inter Parfums (IPAR) are down about 15.5%. Shares of Synutra International (SYUT) are down about 13.25%. Shares of Winn-Dixie (WINN) are down about 10.5%. Shares of Alliance One International (AOI) are down about 8%. Shares of Yuhe International (YUII) are up about 15%.

The Consumer Staples Select Sector SPDR (XLP) traded at $28.35 at 4:00 PM on Wednesday, down 3.83% on the day – down 3.28% year-to-date.

Healthcare

Eli Lilly (LLY) is lifted to Buy from Hold at Argus based on valuation. PerkinElmer (PKI) is upgraded to Outperform from Neutral at Mizuho. Fresenius Medical (FMS) is moved to Add from Neutral at WestLB. Endo Pharmaceuticals (ENDP) is upgraded to Overweight from Neutral at Piper Jaffray. In afternoon trading: Shares of Epocrates (EPOC) are down about 40.25%. Shares of Gentiva Health Services (GTIV) are down about 10.5%. Shares of Arena Pharmaceuticals (ARNA) are down about 10.25%. Shares of Skilled Healthcare (SKH) are down about 10.25%.

The Health Care Select Sector SPDR (XLV) traded at $29.96 at 4:00 PM on Wednesday, down 4.22% on the day – down 4.89% year-to-date.

Financials

As expected, Capital One (COF) is to acquire HSBC's (HBC) U.S. credit-card business for a premium of about $2.6B. The SEC is investigating whether Goldman Sachs (GS) broke bribery laws, looking at the bank's dealings with Libya's sovereign-wealth fund. Goldman also faces several lawsuits over mortgage-backed securities, including from AIG (AIG), Manulife Financial (MFC) and Allstate (ALL). Amid a gyrating stock and mounting mortgage liabilities, Bank of America (BAC) CEO Brian Moynihan is set to face an investor conference call today with Fairholme Capital, which owns around 92M shares in the bank. Wells Fargo (WFC) has reportedly won an auction for Bank of Ireland's (IRE) $1.4B U.S. commercial-real-estate loan portfolio, with Wells paying almost face value. Brookfield Asset Management (BAM) beat estimates by $1.02 and revenue by $300. MBIA (MBI) beat estimates by 62 cents and revenue by $37M. Barclays PLC (BCS) is boosted to Buy from Add at WestLB. FBR Capital upgraded Regency (REG) and Prologis (PLD) to Outperform from Market Perform, and raised Equity Residential (EQR) to Market Perform from Underperform. In afternoon trading: Shares of First Commonwealth Financial (FCF) are down about 11%. Shares of Barclays (BCS) are down about 10.75%. Shares of Deutsche Bank (DB) are down about 10.25%. Shares of Walter Investment Management (WAC) are up about 12.5%. Shares of Xinyuan Real Estate (XIN) are up about 12.25%.

The Financial Select Sector SPDR (XLF) traded at $12.19 at 4:00 PM on Wednesday, down 6.95% on the day – down 23.57% year-to-date.

Information Technology

Avnet (AVT) beat estimates by 7 cents, but missed revenue by $40M. Demand Media (DMD) announced Q2 earnings that largely beat estimates and announced a three-year renewal and expansion of an ongoing advertising partnership with Google (GOOG). Rovi Corp. (ROVI) beat estimates by 3 cents with revenue in-line with estimates, and sees FY11 adj. pro forma revenue at $770M-$810M, raises adj. pro forma EPS guidance at $2.35-$2.60. Nuance Communications (NUAN) beat estimates by a penny, but missed revenue by $10M. SanDisk (SNDK) is initiated with an Outperform at Bernstein, which has a new Market Perform on Micron (MU). Cisco Systems (CSCO) is now Buy from Neutral at Gleacher. OpenTable (OPEN) is lifted to Buy from Hold boost at Citigroup. VMware (VMW) is upgraded to Outperform from Market Perform at FBR Capital. Check Point Software (CHKP) is upgraded to Outperform from Neutral at Macquarie. RF Micro Device (RFMD) and TriQuint Semi (TQNT) are both upgraded to Buy from Hold at Needham. In afternoon trading: Shares of Motricity’s (MOTR) are down about 58% after missing estimates by 5 cents and revenue by $2.4M. The company now expects revenue in the range of $31.5 to $32.5M (far below expectations of $45M). Shares of Computer Sciences (CSC) are down about 12.5%. Shares of THQ (THQI) are down about 10.5%. Shares of Cree (CREE) are up about 17.5%.

The Technology Select Sector SPDR (XLK) traded at $23.07 at 4:00 PM on Wednesday, down 3.92% on the day – down 8.42% year-to-date.

Telecommunications Services

In afternoon trading: Shares of TerreStar (TSTRQ) are down about 19%. Shares of Partner Communications (PTNR) are down about 13.25%. Shares of Premiere Global Services (PGI) are down about 9.5%. Shares of Towerstream (TWER) are down about 9.25%. Shares of General Communications (GNCMA) are down about 7.5%. Shares of Telefonica (TEF) are down about 7.5%. Shares of Leap Wireless (LEAP) are down about 7%. Shares of Turkcell Iletisim Hizmetleri (TKC) are down about 7%.

The NASDAQ Telecommunications Index (IXTC) traded at $173.41 at 4:00 PM on Wednesday, down 4.09% on the day – down 23.06% year-to-date.

Utilities

In afternoon trading: Shares of Tokyo Electric Power (TKECF) are up about 15%. Shares of Tri-Tech Holding (TRIT) are up about 13.5%. Shares of E ON AG (EONGY) are down about 11.75%. Shares of Dynegy (DYN) are down about 10%. Heavily Actives: Shares of Duke Energy (DUK) are down about 2.5%. Shares of AES Corp (AES) are down about 1%. Shares of Genon Energy (GEN) are down about 4%. Shares of Southern (SO) are relatively unchanged.

The Utilities Select Sector SPDR (XLU) traded at $30.60 at 4:00 PM on Wednesday, down 1.89% on the day – down 2.36% year-to-date.

STOCKS: KWK, UPL, SPWRA, URG, FSLR, FRO, CQP, EVEP, GMR, URZ, JRCC, MOS, GSS, EXK, HW, CRH, MT, FOE, OMN, BAESY, LCC, QUAD, SATC, KAR, ENOC, YRCW, MG, DIS, RL, M, PSTM, FOSL, HD, LOW, TGT, COST, KSS, SPLS, USTR, PETM, MSSR, ODP, BZH, KBH, SPF, NSRGY, IPAR, SYUT, WINN, AOI, YUII, LLY, PKI, FMS, ENDP, EPOC, GTIV, ARNA, SKH, COF, HBC, GS, AIG, MFC, ALL, BAC, WFC, IRE, BAM, MBI, BCS, REG, PLD, EQR, FCF, DB, WAC, XIN, AVT, DMD, GOOG, ROVI, NUAN, SNDK, MU, CSCO, OPEN, VMW, CHKP, RFMD, TQNT, MOTR, CSC, THQI, CREE, TSTRQ, PNTR, PGI, TWER, GNCMA, TEF, LEAP, TKC, TKECF, TRIT, EONGY, DYN, DUK, AES, GEN, SO

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
CQP Cheniere Energy Partners LP 29.45 0.00 0.00 110,925
GSS Golden Star Resources Ltd 0.84 0.01 1.20 1,661,209
URG Ur Energy Inc (Canada) 0.44 -0.00 -0.79 575,362
FMS Fresenius Medical Care AG 40.24 0.82 2.08 222,938
CSC Computer Sciences Corporation 59.49 -0.12 -0.20 1,498,878
GEN Genesis Healthcare Inc. 3.63 0.04 1.11 93,349
FNFG First Niagara Financial Group Inc. n/a n/a n/a 0
SO Southern Company (The) 46.93 0.06 0.13 4,573,156
MOS Mosaic Company (The) 29.38 0.21 0.72 5,345,317
ENOC EnerNOC Inc. 5.95 0.10 1.71 104,812
KAR KAR Auction Services Inc 42.69 0.63 1.50 898,364
TEF Telefonica SA 8.44 0.16 1.93 2,466,294
KBH KB Home 16.08 0.65 4.21 2,648,273
FOSL Fossil Group Inc. 33.84 -0.17 -0.50 854,087
MBI MBIA Inc. 10.78 0.11 1.03 1,408,347
AVT Avnet Inc. 46.69 0.86 1.88 1,152,151
HW Headwaters Incorporated 23.60 -0.01 -0.04 1,728,668
GNCMA General Communication Inc. Class A Common Stock 17.97 0.38 2.16 249,597
BCS Barclays PLC 11.59 0.62 5.65 9,954,097
EVEP EV Energy Partners L.P. 2.06 -0.08 -3.74 265,646
FOE Ferro Corporation 14.84 0.03 0.20 464,573
SPLS Staples Inc. 9.89 0.14 1.44 5,619,861
BZH Beazer Homes USA Inc. 14.00 0.60 4.48 1,573,905
SKH Skilled Healthcare Group n/a n/a n/a 0
TKC Turkcell Iletisim Hizmetleri AS 6.63 0.13 2.00 364,881
TGT Target Corporation 76.77 -0.21 -0.27 7,704,230
ARNA Arena Pharmaceuticals Inc. 1.48 0.03 2.07 1,366,185
SNDK SanDisk Corp. n/a n/a n/a 0
LOW Lowe\'s Companies Inc. 72.46 -0.20 -0.28 6,478,549
VMW Vmware Inc. Class A 80.55 0.34 0.42 1,239,426
DB Deutsche Bank AG 18.29 1.63 9.78 20,137,457
CSCO Cisco Systems Inc. 29.33 -0.20 -0.68 27,352,068
AES The AES Corporation 11.33 -0.01 -0.09 4,712,436
DIS Walt Disney Company (The) 100.66 0.70 0.70 8,427,531
EQR Equity Residential of Beneficial Interest 61.79 0.70 1.15 4,399,888
GS The Goldman Sachs Group Inc. 231.38 2.83 1.24 5,260,031
XIN Xinyuan Real Estate Co Ltd American Depositary Sha 5.49 0.03 0.55 139,476
COST Costco Wholesale Corporation 151.01 -0.76 -0.50 2,245,402
PNTR Pointer Telocation 7.65 0.10 1.32 18,561
ODP Office Depot Inc. 4.90 0.01 0.20 13,498,020
M Macys Inc. 42.40 0.49 1.17 6,825,860
YRCW YRC Worldwide Inc. 14.72 0.83 5.98 1,173,985
BAC Bank of America Corporation 22.16 0.32 1.47 120,792,049
COF Capital One Financial Corporation 87.84 1.13 1.30 3,407,480
DMD Demand Media Inc. n/a n/a n/a n/a
GOOG Alphabet Inc. 759.11 -3.41 -0.45 1,690,738
LLY Eli Lilly and Company 67.80 0.54 0.80 4,617,182
BAM Brookfield Asset Management Inc. 32.94 0.34 1.04 833,970
KSS Kohl\'s Corporation 55.00 0.49 0.90 4,477,742
CRH CRH PLC American Depositary Shares 33.81 0.94 2.86 1,362,571
MFC Manulife Financial Corporation 17.61 0.24 1.38 1,704,039
MG Mistras Group Inc 23.88 0.28 1.19 59,979
FRO Frontline Ltd 7.25 0.03 0.42 1,055,048
QUAD Quad Graphics Inc Class A 24.77 0.40 1.64 299,847
ALL Allstate Corporation (The) 70.95 0.59 0.84 2,285,597
HD Home Depot Inc. (The) 128.74 -0.94 -0.72 4,292,631
FSLR First Solar Inc. 32.05 -0.30 -0.93 2,946,374
PGI Premiere Global Services n/a n/a n/a 0
SYUT Synutra International Inc. 5.35 0.10 1.90 288,615
WFC Wells Fargo & Company 55.55 1.20 2.21 30,706,670
AIG American International Group Inc. New 64.20 0.30 0.47 4,942,566
MT ArcelorMittal 8.34 0.18 2.21 28,569,698
ENDP Endo International plc 15.86 -0.01 -0.06 4,304,129
WAC Walter Investment Management Corp. 6.25 -0.10 -1.57 177,630
UPL Ultra Petroleum Corp. n/a n/a n/a 0
FCF First Commonwealth Financial Corporation 13.33 0.32 2.46 272,889
AOI Alliance One International Inc. 15.80 0.95 6.40 19,987
PLD ProLogis Inc. 50.70 0.10 0.20 1,931,886
OMN OMNOVA Solutions Inc. 9.95 -0.10 -1.00 164,584
CHKP Check Point Software Technologies Ltd. 83.85 0.49 0.59 992,544
NUAN Nuance Communications Inc. 15.66 -0.31 -1.94 5,142,668
MU Micron Technology Inc. 19.06 0.45 2.42 22,271,444
EXK Endeavour Silver Corporation (Canada) 3.91 -0.13 -3.22 1,904,121
DUK Duke Energy Corporation (Holding Company) 73.86 0.25 0.34 3,140,033
CREE Cree Inc. 26.07 0.43 1.68 680,987
PKI PerkinElmer Inc. 52.10 0.95 1.86 448,190
IPAR Inter Parfums Inc. 34.15 0.30 0.89 100,619
SPF null n/a n/a n/a 0
RL Ralph Lauren Corporation 107.42 -0.77 -0.71 558,689
TWER Towerstream Corporation 0.27 -0.03 -9.30 598,143
REG Regency Centers Corporation 66.01 -0.01 -0.02 954,055
ROVI Rovi Corporation n/a n/a n/a n/a

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