Equities Sector Coverage: Financials and Energy Lead Gainers

Sector Recap |

Morgan Stanley MSInitial Jobless Claims were reported at 418,000, above 400,000 for the fifteenth consecutive weeks. The Philadelphia Fed Index rose to 3.2 in July versus -7.7 in June. Leading Indicators rose by 0.3% in June versus 0.8% in May. Dow Jones Industrial Average opened higher on Thursday trading to 12,677 in the first half hour of trading, The Dow gained upward momentum after the better than expected Philly Fed and Leading Indicator reports with a day’s high at 12,751.43 versus the May 2nd high at 2,876.00. The NASDAQ rallied from 2808 to 2828 in the opening half hour then gained upward momentum to a day’s high at 2847.41 versus the May 2nd high at 2887.75.

Asian stocks were little changed on Thursday with the Nikkei 225 up fractionally to 10,010. The Hang Seng was down fractionally to 21,987. European stocks were lower early in their sessions but popped into the green as Eurozone leaders reached an agreement on a second bailout for Greece. The FTSE 100 gained 0.9% to 5,904. The DAX bounced 1.0% to 7,290. The CAC 40 surged 1.7% to 3,817. The yield on the 10-Year US Treasury note rose from 2.924 to 3.036 as the flight to quality eased on the Greek news. Gold traded down from $1605.0 the Troy ounce to $1584.9 as equity assets improved. Crude oil rebounded from $97.20 per barrel to $100.16 on the stronger euro. The euro versus the US dollar declined from 1.4292 to 1.4142 on Thursday pre-market, but gapped above its 50-day simple moving average at 1.4298 on the Greek bailout to a day’s high at 1.4415.

Energy

EnCana (ECA) beat estimates by 7 cents. Diamond Offshore Drilling (DO) beat estimates by 2 cents on revenue of $889.5M. Celanese (CE) beat estimates by 23 cents on revenue of $1.75B. Noble (NE) missed estimates by 10 cents on revenue of $628M. Newfield Exploration (NFX) missed estimates by 3 cents on revenue of $621M. Carbo Ceramics (CRR) is covered with a Buy and $215 price objective at Dahlman Rose. RPC Inc. (RES) gets picked up with a Hold at Dahlman Rose. Newpark Resources (NR) is initiated with a Buy and $12 target price at Dahlman Rose. Suburban Propane (SPH) is downgraded to Hold from Buy at Citigroup, which also reduces both Inergy (NRGY) and Ferrellgas Partners (FGP) to Sell from Hold. Core Labs (CLB) is cut to Sector Perform from Outperform at RBC Capital.

Energy Select Sector SPDR (XLE) was trading at $79.33 at 4:00 PM on Thursday, up 1.97% on the day – up 16.23% year-to-date.

Materials

Danaher (DHR) beat estimates by 2 cents on revenue of $3.7B. Nalco (NLC) is now Neutral from Overweight at JP Morgan. Ecolab (ECL) is lowered to Neutral from Outperform at Credit Suisse. In afternoon trading: Shares of Horsehead Holding (ZINC) are down about 9.3% on over 3x average daily volume. Shares of Sherwin Williams (SHW) are down about 4.25%. Shares of Celanese (CE) are up about 5.25%. Shares of LyondellBasell Industries (LYB) are up about 4.5%.

The Materials Select Sector SPDR (XLB) traded at $40.14 at 4:00 PM on Thursday, up 1.21% on the day – up 4.50% year-to-date.

Industrials

Ingersoll-Rand (IR) missed estimates by 5 cents on revenue of $3.9B. Goodrich (GR) beat estimates by 6 cents on revenue of $2B, and raised FY'11 EPS guidance to $5.85-6.00. United Continental (UAL) beat estimates by 7 cents on revenue of $9.8B. Robert Half International (RHI) is now Outperform from Neutral at Robert W. Baird ($35 target). AMR Corp (AMR) is cut to Sell from Neutral at Ticonderoga, which sets a $3 price objective. In afternoon trading: Shares of SFN Group (SFN) are up about 51%. Shares of SmartHeat (HEAT) are up about 38%. Shares of Robert Half are up about 16%. Shares of Niscayah (NSYHF) are up about 11.5%. Shares of Terex (TEX) are down about 10.5%.

The Industrial Select Sector SPDR (XLI) traded at $37.22 at 4:00 PM on Thursday, up 1.50% on the day – up 6.74% year-to-date.

Consumer Discretionary

News Corp. (NWS) is set to face further scrutiny in the U.S. after Senator Frank Lautenberg asked the Justice Department and FBI to examine the details of a case settled between a News Corp. unit and Floorgraphics, an in-store marketing company. Whirlpool (WHR) missed estimates by 19 cents on revenue of $4.7B, and sees FY'11 EPS at $7.25-8.25. V.F. (VFC) beat estimates by 15 cents on revenue of $1.8B, and raised FY'11 EPS guidance to $7.50. Autoliv (ALV) beat estimates by 19 cents on revenue of $2.06B. Williams-Sonoma (WSM) is now Outperform from Neutral at Wedbush Morgan. Toll Brothers (TOL) is lowered to Hold from Buy at Citigroup. In afternoon trading: Shares of Eastman Kodak (EK) are up about 8.75%. Shares of Life Time Fitness (LTM) are up about 8.5%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.93 at 4:00 PM on Thursday, up 1.16% on the day – up 9.41% year-to-date.

Consumer Staples

Pepsico (PEP) beat estimates by a penny on revenue of $16.83B, and sees FY'11 EPS growth of high-single-digit. Additional PepsiCo Q2 results: Net income +18% Y/Y, core EPS +10% Y/Y, and worldwide servings growth +6%. Philip Morris (PM) beat estimates by 12 cents on revenue of $8.3B, and raised FY'11 EPS guidance to $4.70-4.80. Clorox (CLX) is downgraded to Sector Perform from Outperform at RBC Capital. In afternoon trading: Shares of Yuhe International (YUII) are dowm about 30.5% on over 3x average daily volume. Shares of Safeway (SWY) are down about 8.7%. Shares of China-Biotics (CHBT) are up about 9.4%.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.80 at 4:00 PM on Thursday, up 0.82% on the day – up 8.50% year-to-date.

Healthcare

Express Scripts (ESRX) has agreed to buy Medco Health Solutions (MHS) for $29.1B ($71.36 / share – 28% premium) in cash and stock. Eli Lilly (LLY) reported Q2 EPS of $1.18 (in-line) on revenue of $6.23B, and sees FY'11 EPS at $4.25-4.35. Baxter International (BAX) beat estimates by 5 cents on revenue of $3.5B, and raised FY'11 EPS guidance to $4.27-4.32. Alexion Pharmaceuticals (ALXN) beat estimates by 3 cents on revenue of $185.7M, and raised FY'11 revenue guidance to $745-755M and EPS to $1.10-1.15. St. Jude Medical (STJ) is added to JP Morgan’s Focus List. ICON plc (ICLR) is cut to Hold from Buy at Jefferies. PAREXEL (PRXL) is now Underperform from Buy at Jefferies. Allos Therapeutics (ALTH) is lowered to Market Perform from Outperform at JMP Securities. In afternoon trading: Shares of Medco Health Services (MHS) are up about 16.5% on over 3x average daily volume. Shares of Achillion Pharmaceuticals (ACHN) are up about 9.6%. Shares of Alexion Pharmaceuticals (ALXN) are up about 8.8%.

The Health Care Select Sector SPDR (XLV) traded at $35.65 at 4:00 PM on Thursday, down 1.51% on the day – up 13.17% year-to-date.

Financials

Travellers (TRV) missed estimates by 29 cents on revenue of $6.3B. Huntington Bancshares (HBAN) beat estimates by a penny. Fifth Third Bancorp (FITB) beat estimates by 8 cents. Morgan Stanley (MS) beat estimates by 35 cents on revenue of $9.3B. BB&T (BBT) beat estimates by a penny on revenue of $2.2B. SLM Corp (SLM) beat estimates by 5 cents. Cypress Sharpridge Investments (CYS) missed estimates by 5 cents. American Express’s (AXP) Q2 earnings rose 31% as credit card spending increased a record 18% over the quarter, while loan loss provisions fell to $357M from $652M. East West Bancorp's (EWBC) Q2 results: Net income +67% Y/Y, deposits +4% Q/Q, net interest margin 4.03%, up from 3.94%, non-performing assets -4%, and FY'11 EPS of $1.52-$1.54. Bridge Capital (BBNK) is a new Outperform at Raymond James. Bank of America (BAC) is pulled from the U.S. Focus List at Credit Suisse. Spain’s Banco Santander (STD) is now Neutral from Overweight at JPMorgan, which moves Banco Bilbao Vizcaya Argentaria (BBVA) to Underweight from Neutral. In afternoon trading: Shares of Genworth Financial (GNW) are down about 15% after forecasting a Q2 loss and saying it will use the shares of a foreign subsidiary to prop up its U.S. mortgage insurance unit. Genworth expects a net loss of $92M-$112M, or $0.19-$0.23/share. Shares of Morgan Stanley (MS) are up about 11%.

The Financial Select Sector SPDR (XLF) traded at $15.36 at 4:00 PM on Thursday, up 2.40% on the day – down 3.70% year-to-date.

Information Technology

Intel (INTC) slightly lowered its forecast for sector-wide PC sales but gave a bullish outlook for Q3 after Q2 earnings beat forecasts, with net profit rising 2% to $2.95B and revenue up 21% to $13B. Microsoft (MSFT) is expected to report that Q4 net profit rose to $0.57 from $0.51 a year earlier, with revenue climbing to $17.23B from $16B. Nokia (NOK) swung to a Q2 net loss of €0.10 ($0.14) from a profit of €0.06 a year earlier as net sales fell 7% to €9.28B. The company sold 16.7M smartphones in the quarter and 88.5M overall, below forecasts of 95.5M. Nokia’s CEO Stephen Elop says the firm is "making better-than-expected progress toward our strategic goals" and has a clear strategy to address concerns about its product competitiveness. Ericsson (ERIC) missed its Q2 earnings forecast after taking a $1.3B charge related to jobs cuts, and feeling effects from the Japan earthquake. Ericsson's Q2 net profit jumped 66% to 3.12B Swedish kronor ($484.2M) as net sales increased 14% to 54.77B kronor, although earnings missed expectations as restructuring charges and a strong kronor offset higher sales of network equipment. Zillow's (Z) shares soared 79% to $35.77 on its debut yesterday as the appetite for new Internet plays showed no signs of abating. Entegris (ENTG) beat estimates by a penny on revenue of $209.2M, and sees Q3 EPS at $0.18-0.21. Seagate (STX) is guiding for adjusted FQ1 2012 EPS of $0.29-$0.33 during its CC, well below a consensus of $0.43. Revenues are expected to be $2.9B, slightly above the $2.87B consensus. Cree Inc (CREE) is a new Neutral at Credit Suisse. Veeco Instruments (VECO) is covered at Neutral at Credit Suisse. Taomee Holdings (TAOM) is a new Perform at Oppenheimer. eBay (EBAY) is a new Neutral and $35 price objective at Wedbush. Riverbed Technology (RVBD) is raised to Buy at from Hold with a $42 target with Wunderlich. Aixtron (AIXG) is increased to Add from Hold at WestLB. Intel (INTC) is now Reduce from Neutral at Nomura. Saba Software (SABA) gets downgraded to Hold from Buy by Benchmark. In afternoon trading: Shares of F5 Networks (FFIV) are down about 11% in reaction to their Q3 report. The company then set FQ4 revenue and EPS guidance of $307M-$312M and $0.97-$0.99 (in line). Shares of Travelzoo (TZOO) are down about 34% in reaction to the company’s earnings miss. Shares of Saba Software are down about 16.5%. Shares of Seagate are down about 16.25%. Shares of Motorola Mobility (MMI) are up about 16%.

The Technology Select Sector SPDR (XLK) traded at $26.49 at 4:00 PM on Thursday, up 0.46% on the day – up 5.16% year-to-date.

Telecommunications Services

The FCC is extending its appraisal of AT&T's (T) $39B acquisition of T-Mobile USA (DTEGY.PK) after AT&T submitted new economic data to bolster its case. AT&T (T) reported Q2 EPS of $0.60 (in-line) on revenue of $31.5B, saw wireless revenue up 9.5% on 5.6M iPhone activations with 24% new subscribers, and raised outlook for FY'11 capital expenditures to $20B from low-to-mid $19B. Iridium Communications (IRDM) is initiated with an Outperform rating and $12 price target at brokers Morgan Keegan. In afternoon trading: Shares of Sprint Nextel (S) are up about 0.3%, while shares of AT&T (T) are up about 0.75% and shares of Verizon (VZ) are up about 0.5%.

The NASDAQ Telecommunications Index (IXTC) traded at $210.21 at 4:00 PM on Thursday, up 0.63% on the day – down 6.73% year-to-date.

Utilities

Alliant Energy (LNT) is launched at a Market Perform with Wells Fargo. FirstEnergy (FE) gets a Buy-from-Hold boost at Deutsche Bank. Suburban Propane (SPH) is downgraded to Hold from Buy at Citigroup, which also reduces both Inergy (NRGY) and Ferrellgas Partners (FGP) to Sell from Hold. In afternoon trading: Shares of Tokyo Electric Power (TKECF) are up about 18.5% on over 3x average daily volume. Actives: Shares of Duke Energy (DUK) are up about 1.5%. Shares of Exelon (EXC) are up about 1%. Shares of AES Corp (AES) are up about 1%. Shares of Genon Energy (GEN) are up about 0.6%.

The Utilities Select Sector SPDR (XLU) traded at $34.03 at 4:00 PM on Thursday, up 1.49% on the day – up 8.58% year-to-date.

STOCKS: ECA, DO, CE, NE, NFX, CRR, RES, NR, SPH, NRGY, FGP, CLB, DHR, NLC, ECL, ZINC, SHW, CE, LYB, IR, GR, UAL, RHI, AMR, SFN, HEAT, NSYHF, TEX, NWS, WHR, VFC, ALV, WSM, TOL, EK, LTM, PEP, PM, CLX, YUII, SWY, CHBT, ESRX, MHS, LLY, BAX, ALXN, STJ, ICLR, PRXL, ALTH, ACHN, TRV, HBAN, FITB, MS, BBT, SLM, CYS, AXP, EWBC, BBNK, BAC, STD, BBVA, GNW, INTC, MSFT, NOK, ERIC, Z, ENTG, STX, CREE, VECO, TAOM, EBAY, RVBD, AIXG, SABA, FFIV, TZOO, MMI, T, DTEGY, IRDM, S, VZ, LNT, FE, SPH, NRGY, FGP, TKECF, DUK, EXC, AES, GEN

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
ACHN Achillion Pharmaceuticals Inc. 8.34 -0.35 -4.03 2,068,465
AES The AES Corporation 13.12 -0.14 -1.06 2,636,128
AIXG Aixtron SE 6.11 0.00 0.00 9,622
ALV Autoliv Inc. 106.16 -1.16 -1.08 244,618
ALXN Alexion Pharmaceuticals Inc. 124.51 -2.71 -2.13 1,484,700
AXP American Express Company 63.42 -0.43 -0.67 6,946,585
BAC Bank of America Corporation 15.09 -0.43 -2.77 94,972,090
BAX Baxter International Inc. 47.20 -0.29 -0.61 2,418,383
BBT BB&T Corporation 37.03 -0.84 -2.22 5,744,342
BBVA Banco Bilbao Vizcaya Argentaria S.A. 5.96 -0.19 -3.09 1,986,377
CLB Core Laboratories N.V. 104.11 -0.65 -0.62 729,897
CLX Clorox Company (The) 125.69 -0.84 -0.66 773,925
CREE Cree Inc. 24.89 -0.08 -0.32 416,622
CRR Carbo Ceramics Inc. 10.07 -0.20 -1.95 647,123
CYS CYS Investments Inc. 8.79 0.02 0.23 1,219,995
DHR Danaher Corporation 76.60 -0.99 -1.28 3,196,345
DO Diamond Offshore Drilling Inc. 16.06 0.43 2.75 3,120,574
DUK Duke Energy Corporation (Holding Company) 82.15 -0.37 -0.45 2,718,086
EBAY eBay Inc. 31.67 -0.40 -1.25 6,223,692
ECA Encana Corporation 9.26 0.16 1.76 23,124,230
ECL Ecolab Inc. 118.93 -0.11 -0.09 806,028
ENTG Entegris Inc. 16.94 -0.23 -1.34 425,118
ERIC Ericsson 6.90 -0.03 -0.43 2,552,843
ESRX Express Scripts Holding Company 70.63 -0.71 -1.00 3,120,262
EWBC East West Bancorp Inc. 36.07 -0.51 -1.39 1,075,107
EXC Exelon Corporation 34.82 0.02 0.06 3,545,719
FE FirstEnergy Corporation 34.58 0.09 0.26 3,341,708
FFIV F5 Networks Inc. 119.45 -1.04 -0.86 239,953
FGP Ferrellgas Partners L.P. 16.77 -0.06 -0.36 270,777
FITB Fifth Third Bancorp 20.46 -0.46 -2.20 7,876,182
GEN Genesis Healthcare Inc. 2.71 -0.01 -0.37 149,647
GNW Genworth Financial Inc 4.82 -0.07 -1.43 6,510,971
HBAN Huntington Bancshares Incorporated 9.61 -0.29 -2.93 8,010,752
ICLR ICON plc 75.99 -0.49 -0.64 244,369
INTC Intel Corporation 36.65 -0.54 -1.45 25,518,796
IR Ingersoll-Rand plc (Ireland) 65.39 0.74 1.14 2,376,759
IRDM Iridium Communications Inc 7.79 -0.05 -0.64 791,105
LLY Eli Lilly and Company 79.52 -1.64 -2.02 4,332,789
LNT Alliant Energy Corporation 40.26 0.15 0.37 1,468,382
LYB LyondellBasell Industries NV Class A (Netherlands) 76.49 -0.90 -1.16 2,373,307
MMI Marcus & Millichap Inc. 25.20 -0.07 -0.28 76,998
MS Morgan Stanley 31.03 -0.88 -2.76 10,217,675
MSFT Microsoft Corporation 56.90 -0.53 -0.92 21,688,720
NE Noble Corporation (UK) 5.58 0.16 2.95 8,815,046
NFX Newfield Exploration Company 41.09 -0.55 -1.32 2,376,368
NOK Nokia Corporation Sponsored American Depositary Sh 5.62 -0.04 -0.71 5,833,888
NR Newpark Resources Inc. 6.63 -0.18 -2.64 326,536
NWS News Corporation 14.19 -0.28 -1.94 824,465
PEP Pepsico Inc. 107.03 -0.31 -0.29 4,440,402
PM Philip Morris International Inc 99.14 -1.35 -1.34 4,534,206
PRXL PAREXEL International Corporation 69.45 -0.69 -0.98 382,130
RES RPC Inc. 15.70 0.13 0.83 1,168,200
RHI Robert Half International Inc. 37.57 -0.12 -0.32 638,805
S Sprint Corporation 6.65 0.01 0.15 13,903,550
SFN Stifel Financial Corporation 5.375% Senior Notes d n/a n/a n/a 0
SHW Sherwin-Williams Company (The) 280.31 -2.69 -0.95 541,005
SLM SLM Corporation 7.28 -0.15 -2.02 1,271,711
SPH Suburban Propane Partners L.P. 33.95 -0.24 -0.70 151,407
STJ St. Jude Medical Inc. 79.06 -0.58 -0.73 1,866,214
STX Seagate Technology 37.20 0.74 2.03 5,411,656
T AT&T Inc. 41.14 -0.14 -0.34 16,647,231
TAOM Taomee Holdings Ltd ADR (Sponsored) n/a n/a n/a 0
TEX Terex Corporation 23.24 0.20 0.87 1,097,068
TOL Toll Brothers Inc. 29.27 0.08 0.27 2,350,420
TRV The Travelers Companies Inc. 113.94 -1.37 -1.19 1,617,972
TZOO Travelzoo Inc. 13.01 -0.12 -0.91 39,600
UAL United Continental Holdings 49.45 -1.50 -2.94 4,693,626
VECO Veeco Instruments Inc. 19.23 0.06 0.31 159,267
VFC V.F. Corporation 55.82 -1.13 -1.98 2,627,090
VZ Verizon Communications Inc. 52.15 -0.41 -0.78 10,559,019
WHR Whirlpool Corporation 160.61 -1.56 -0.96 569,722
WSM Williams-Sonoma Inc. (DE) 49.78 -0.51 -1.01 1,243,414
Z Zillow Group Inc. 35.10 -0.12 -0.34 488,859
ZINC Horsehead Hldg Corp n/a n/a n/a 0

Comments

Emerging Growth

CMX Gold & Silver Corp.

CMX Gold & Silver Corp is an exploration stage company. The Company is engaged in the acquisition, exploration and development of silver and copper/gold properties in the USA.

Private Markets

Uber

Uber connects riders with safe, reliable, convenient transportation providers at a variety of price-points in cities around the world. Uber makes money from charging their drivers 20% of the fare…

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…