Equities Sector Coverage: Financials, Materials and Consumer Discretionary Lead Market Higher

Sector Recap |

Wall StreetInitial Jobless Claims rose 6,000 in the latest week to 401,000 still well above the 350,000 recessionary threshold. Freddie Mac reported that their 30-Year fixed rate mortgage fell to a record low 3.94% in the latest week. Tomorrow we get the Employment Data for September. The Dow Jones Industrial Average traded down to 10,858.67 in morning trading then rebounded to 11,092.15 Thursday afternoon. The NASDAQ traded down to 2446.72 in morning trading then rebounded to 2498.46 on Thursday afternoon.

Asian stocks surged on Thursday with the Nikkei 225 up 1.66% to 8,522 and the Hang Seng jumping 5.67% to 17,172. European stocks moved higher again on Thursday on Bank of England and ECB action to prop up the banking system. The FTSE 100 rallied 3.71% to 5,291 with the DAX gained 3.15% to 5,645 and the CAC 40 jumped 3.41% to 3,075. The yield on the 10-Year US Treasury rose from 1.863 percent to 1.993 staying well above its September 23rd all time low at 1.671 percent. Gold rose to $1656.8 the Troy ounce, declined to $1633.2 then rose to $1657.0 on Thursday. Crude oil traded up to $81.15 per barrel, slid to $79.08 and then rebounded to $82.90 staying below its 200-week simple moving average at $83.58. The euro versus the dollar traded up to 1.3396 then down to 1.3246 then up to 1.3447.

Energy

Occidental Petroleum (OXY) and Talisman Energy (TLM) are each upgraded to Overweight from Neutral at JP Morgan. JP Morgan cuts Chevron (CVX) and Exxon Mobil (XOM) to Underweight from Neutral. In afternoon trading: Shares of Lucas Energy (LEI) are up about 24.5%. Shares of General Maritime (GMR) are up about 16.75%. Shares of Trina Solar (TSL) are up about 9%. Shares of Superior Energy (SPN) are up about 8%. Shares of Cal Dive International (DVR) are up about 8%.

Energy Select Sector SPDR (XLE) was trading at $61.66 at 4:00 PM on Thursday, up 1.88% on the day – down 9.66% year-to-date.

Materials

Monsanto (MON) is moved to Overweight from Neutral at JP Morgan. Barrick Gold (ABX) is moved to Outperform from Market Perform by BMO Capital. In afternoon trading: Shares of China Shen Zhou (SHZ) are up about 14.5%. Shares of China GengSheng (CHGS) are up about 14.5%. Shares of Rare Element (REE) are up about 13.5%. Shares of Molycorp (MCP) are up about 12.75%. Shares of Kronos Worldwide (KRO) are up about 11.25%. Shares of Kraton (KRA) are up about 11%. Shares of Ivanhoe Mines (IVN) are up about 10.75%.

The Materials Select Sector SPDR (XLB) was trading at $31.60 at 4:00 PM on Thursday, up 2.53% on the day – down 17.73% year-to-date.

Industrials

Corning (GLW) is picked up as an Equal Weight by Morgan Stanley. Arkansas Best (ABFS) is a new Equal Weight at Morgan Stanley. Ryanair Holdings (RYAAY) and easyJet PLC (EJETF) are each boosted to Outperform from Neutral at Credit Suisse. Deutsche Lufthansa AG (DLAKY) is lowered to Neutral from Outperform at Credit Suisse. Fastenal (FAST) is reduced to Neutral from Outperform at Brokerage Robert W. Baird with a new target price of $36. In afternoon trading: Shares of YRC Worldwide (YRCW) are up about 50%. Shares of Vitan Corp (VTNC) are up about 12.75%. Shares of GOL Linhas Aereas (GOL) are up about 9.5%. Shares of USG Corp (USG) are up about 9.5%.

The Industrial Select Sector SPDR (XLI) was trading at $30.41 at 4:00 PM on Thursday, up 2.01% on the day – down 12.79% year-to-date.

Consumer Discretionary

Moody's is considering raising Ford's (F) corporate credit rating of Ba2, which is two notches below investment grade, after the motor company this week reached an agreement on a tentative four-year contract with the UAW. Sony (SNE) has secured funding from Mubadala, Abu Dhabi’s investment fund, to buy EMI in its $3.5B-$4B auction, the FT reports. Citigroup (C), which took control of EMI from P-E firm Terra Firma in February, received second-round offers for the music group ahead of a deadline last night. Polo Ralph Lauren (RL) is upgraded to Buy from Hold at Citigroup. Liberty Media (LINTA) is lifted to Buy from Hold at Citigroup. Costco (COST) was downgraded to Market Perform from Outperform at William Blair. Chipotle Mexican Grill (CMG) is downgraded to Market Perform from Outperform at brokerage William Blair. PF Chang’s (PFCB) is moved to Market Perform from Outperform by William Blair. In afternoon trading: Shares of E-Commerce China Dangdang (DANG) are up about 14.25%. Shares of Melco Crown Entertainment (MPEL) are up about 14.25%. Shares of Eastman Kodak (EK) are up about 14.25%. Shares of Zumez (ZUMZ) are up about 11.75%. Shares of New York Times (NYT) are up about 11.5%. Shares of Wet Seal (WTSLA) are down about 13.5%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $36.38 at 4:00 PM on Thursday, up 2.33% on the day – down 2.75% year-to-date.

Consumer Staples

Nestle (NSRGY) is begun with a Buy at Societe Generale, which assigns an identical rating on Unilever PLC (UL). British American Tobacco (BTI) is also begun with a Buy at Societe Generale. Costco (COST) was downgraded to Market Perform from Outperform at William Blair. Walgreen (WAG) gets cut to Neutral from Buy at Bank of America-Merrill Lynch. In afternoon trading: Shares of AgFeed Industries (FEED) are up about 26.25%. Shares of China-Biotics (CHBT) are up about 13%. Shares of Zhongpin (HOGS) are up about 9.25%. Shares of Constellation Brands (STZ) are up about 7.25%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $29.90 at 4:00 PM on Thursday, up 1.18% on the day – up 2.01% year-to-date.

Healthcare

Over 25 states have banded together to look at Express Scripts' (ESRX) proposed $22B purchase of Medco (MHS). Auxilium Pharmaceuticals (AUXL) is initiated with a Sell at ThinkEquity. Forest Labs (FRX) is begun with a Buy at Think Equity. WebMD Health (WBMD) is boosted to Equal Weight from Underweight at Barclays. Becton Dickinson (BDX) is cut to Hold from Buy at Citigroup. In afternoon trading: Shares of Gentiva Health Services (GTIV) are up about 18%. Shares of Echo Therapeutics (ECTE) are up about 13%. Shares of Sunrise Senior Living (SRZ) are up about 12.5%. Shares of Express Scripts are up about 10.25%.

The Health Care Select Sector SPDR (XLV) was trading at $31.93 at 4:00 PM on Thursday, up 1.20% on the day – up 1.37% year-to-date.

Financials

Sony (SNE) has secured funding from Mubadala, Abu Dhabi’s investment fund, to buy EMI in its $3.5B-$4B auction, the FT reports. Citigroup (C), which took control of EMI from P-E firm Terra Firma in February, received second-round offers for the music group ahead of a deadline last night. The EU has sent Deutsche Boerse (DBOEY) and NYSE Euronext (NYX) a formal "statement of objections" running to more than 130 pages over their proposed $9B merger. The FDIC plans to vote on the long-awaited "Volcker rule," which seeks to prohibit big banks from most speculative trading, and to limit their investments in most hedge funds and private-equity funds. The banks that will be mostly affected include Goldman Sachs (GS), Bank of America (BAC) and JPMorgan (JPM). Credit Suisse (CS) is picked up as an Underweight at Banco Santander. NYSE Euronext (NYX) is now Positive from Neutral at Susquehanna with a price objective of $29. Federated Investors (FII) is lifted to Neutral from Sell at Goldman. Waddell & Reed (WDR) is now Sell from Neutral at Goldman Sachs.  In afternoon trading: Shares of MGIC Investment (MTG) are up about 13%. Shares of The PMI Group (PMI) are up about 12.25%. Shares of Ambac Financial Group (ABKFQ) are down about 13%.

The Financial Select Sector SPDR (XLF) was trading at $12.27 at 4:00 PM on Thursday, up 3.11% on the day – down 23.07% year-to-date.

Information Technology

Apple’s (AAPL) Steve Jobs died yesterday at the age of 56 following a long battle with cancer. Analysts have given a calm reaction to the news, expressing confidence in the company's products, as well as in CEO Tim Cook and the management team that Jobs left behind. Rumor and counter-rumor are swirling about whether Microsoft (MSFT) is interested in buying Yahoo (YHOO), with Reuters reporting that the software giant is considering an offer. Microsoft is set to receive EU approval to buy Skype (EBAY), while its plans to conquer the living room have taken another step forward following a deal with Verizon (VZ) to bring live TV to the Xbox 360. Oracle (ORCL) CEO Larry Ellison has announced plans to enable its customers to access the company's applications, and those that the clients write themselves, via the Internet. Oracle's announcement came as Ellison upped the ante in a spat with Salesforce.com (CRM) CEO Marc Benioff, calling the latter's company "the roach motel of clouds." Autodesk (ADSK) is a new Neutral at Cowen & Company. WebMD Health (WBMD) is boosted to Equal Weight from Underweight at Barclays. In afternoon trading: Shares of Renesola (SOL) are up about 18.25%. Shares of Youku.com (YOKU) are up about 14%. Shares of OCZ Technology Group (OCZ) are up about 13.5%. Shares of Renren (RENN) are up about 10.75%.

The Technology Select Sector SPDR (XLK) was trading at $24.39 at 4:00 PM on Thursday, up 1.50% on the day – down 3.18% year-to-date.

Telecommunications Services

Microsoft (MSFT) is set to receive EU approval to buy Skype (EBAY), while its plans to conquer the living room have taken another step forward following a deal with Verizon (VZ) to bring live TV to the Xbox 360. In afternoon trading: Shares of Towerstream (TWER) are up about 12%. Shares of Level 3 Communications (LVLT) are up about 9.5%. Shares of Telecomunicacoes de Sao Paulo (VIV) are up about 5.8%. Actives: Shares of Sprint Nextel (S) are up about 4.7%, while shares of AT&T (T) are relatively unchanged and shares of Verizon (VZ) are up slightly.

The NASDAQ Telecommunications Index (IXTC) was trading at $188.88 at 4:00 PM on Thursday, up 2.11% on the day – down 16.19% year-to-date.

Utilities

Xcel Energy (XEL) is a new Buy and $28 price target at Ticonderoga. Edison International (EIX) is upgraded to Buy from Hold at Citigroup. PG&E (PCG) is upgraded to Buy from Hold at Citigroup. In afternoon trading: Actives: Shares of Genon Energy (GEN) are up about 2.5%. Shares of Duke Energy (DUK) are up about 0.4%. Shares of Exelon (EXC) are up about 1.3%. Shares of PG&E are up about 4.1%. Shares of AES Corp (AES) are up about 4.1%. Shares of Southern (SO) are up about 1.6%.

The Utilities Select Sector SPDR (XLU) was trading at $33.26 at 4:00 PM on Thursday, up 1.77% on the day – up 6.13% year-to-date.

STOCKS: OXY, TLM, CVX, XOM, LEI, GMR, TSL, SPN, DVR, MON, ABX, SHZ, CHGS, REE, MCP, KRO, KRA, IVN, GLW, ABFS, RYAAY, EJETF, DLAKY, FAST, YRCW, VTNC, GOL, USG, F, SNE, C, RL, LINTA, COST, CMG, PFCB, DANG, MPEL, EK, ZUMZ, NYT, WTSLA, NSRGY, UL, BTI, WAG, FEED, CHBT, HOGS, STZ, ESRX, MHS, AUXL, FRX, WBMD, BDX, GTIV, ECTE, SRZ, DBOEY, NYX, GS, BAC, JPM, CS, FII, WDR, MTG, PMI, ABKFQ, AAPL, MSFT, YHOO, EBAY, VZ, ORCL, CRM, ADSK, SOL, YOKU, OCZ, RENN, TWER, LVLT, VIV, S, T, XEL, EIX, PCG, GEN, DUK, EXC, AES, SO

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