Equities Sector Coverage: Friday Jobs Data Unnerves Market Investors

Sector Recap |

JobsInitial Jobless Claims came in at 409,000 well above the 350,000 recessionary threshold. Nonfarm productivity declined 0.7% in the second quarter, the steepest decline since Q4 2008. Unit labor costs rose by a stronger than expected 3.3%. Construction spending in July declined 1.3% when a rise of 0.2% was expected. The ISM manufacturing index came in at 50.6 in August, which was weaker than in July but was above consensus. This means that the manufacturing sector is barely creating jobs. The Dow Jones Industrial Average traded down to 11,567.29 pre-ISM data then popped to 11,716.84 in reaction to the release. The Dow subsequently declined below 11,500 into the final half hour of trading. The NASDAQ traded down to 2573.30 pre-ISM then rebounded to 2604.50 in reaction to this release then drifted to a new day’s low below 2545 into the final half hour of trading.

Asian stocks traded higher on Thursday again following the gains on Wall Street. The Nikkei 225 rebounded 1.18% to 9,061. The Hang Seng gained just 0.25% to 20,585. In Europe the markets traded back and forth around the flat line and ended mixed. The FTSE 100 was up by 0.45% to 5,419. The DAX slumped 0.94% to 5,731. The CAC 40 edged up by 0.28% to 3,266. The yield on the 10-Year US Treasury traded down from 2.245 percent to 2.171 then rose to 2.278 then declined again to 2.128, still within the post-FOMC range of 2.360 to 1.973. Gold rebounded from $1817.3 the Troy ounce to $1833.6 then dipped to $1815.5 before rebounding again back to the day’s high. Crude oil traded down from $89.25 per barrel to $88.21 then rebounded to $89.90 versus its 50-day and 200-day simple moving averages at $91.57 and $95.24. The euro versus the US dollar declined from 1.4383 to 1.4232.

Energy

Arch Coal (ACI) is boosted to Outperform from Market Perform at BMO Capital. Concho Resources (CXO) is upgraded to Outperform from Perform at brokers Morgan Keegan. Atlas Pipeline (APL) and Enbridge Energy (EEP) are each moved to Outperform from Market Perform with Wells Fargo. In afternoon trading: Shares of Frontline (FRO) are down about 7.8%. Shares of Penn Virginia (PVA) are down about 7.7%. Shares of Trina Solar (TSL) are down about 7%. Shares of Yingli Green Energy (YGE) are down about 6.3%.

Energy Select Sector SPDR (XLE) was trading at $68.12 at 4:00 PM on Thursday, down 0.76% on the day – down 0.19% year-to-date.

Materials

Greif, Inc. (GEF) reported FQ3 EPS of $1.18, which may not be comparable to estimates of $1.33 on revenue of $1.1B, and sees FY11 EPS of $4.15-4.30 (versus estimates of $4.73). RPM International (RPM) is downgraded to Underperform at Oppenheimer. In afternoon trading: Shares of Mercer International (MERC) are down about 9.4%. Shares of Greif are down about 9.3%. Shares of RPM International are down about 6.7%. Actives: Shares of Alcoa (AA) are down about 2.1%. Shares of Vale (VALE) are up about 0.3%. Shares of Cemex (CX) are down about 0.6%. Shares of Freeport McMoran (FCX) are down about 1.2%.

The Materials Select Sector SPDR (XLB) was trading at $34.86 at 4:00 PM on Thursday, down 1.36% on the day – down 9.24% year-to-date.

Industrials

UTI Worldwide (UTIW) beat estimates by 3 cents and revenue by $50M. WESCO International (WCC) is lifted to Outperform from Perform at Oppenheimer. Oppenheimer cuts both Barnes Group (B) and W.W. Grainger (GWW) to Perform from Outperform. Kaman (KAMN) is reduced to Hold from Buy at Jefferies. In afternoon trading: Shares of UTI Worldwide are up about 15.3%. Shares of Swisher Hygiene (SWSH) are up about 10%. Shares of Kforce (KFRC) are down about 7.2%. Shares of Trimas (TRS) are down about 6.8%. Shares of Hill International (HIL) are down about 6.8%.

The Industrial Select Sector SPDR (XLI) was trading at $31.87 at 4:00 PM on Thursday, down 1.64% on the day – down 8.60% year-to-date.

Consumer Discretionary

In advance of contract expiration on September 14, UAW workers in Detroit have voted to give union leaders the option of calling a strike against Ford (F). Zumiez (ZUMZ) beats on a solid Q2, but lowers guidance for Q3 to $0.37 to $0.39 per share (below expectations of $0.44). Universal Technical Institute (UTI), National American University (NAUH), and K12 (LRN) are all begun with Buys at Wunderlich, which has a Hold and $11 objective on Lincoln Educational Services (LINC). Volvo (VOLVY) is lifted to Hold from Sell at Citigroup. Fiat SpA (FIATY) is reduced to Hold from Buy at Citigroup. In afternoon trading: Shares of Coldwater Creek (CWTR) are down about 17.1%. Shares of Stage Stores (SSI) are down about 10.7%. Shares of Bon Ton Stores (BONT) are down about 10.3%. Shares of Corinthian Colleges (COCO) are down about 9.6%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $37.11 at 4:00 PM on Thursday, down 1.22% on the day – down 0.80% year-to-date.



Consumer Staples

Costco (COST) CEO Jim Sinegal plans to step down in January and will be replaced by COO Craig Jelinek. Costco also announced that August same-store sales rose 11% Y/Y (beating forecasts of 9.3%), while total revenue increased 17% to $6.9B and total sales for FY 2011 climbed 14% to $87B. In afternoon trading: Shares of AgFeed Industries (FEED) are down about 10.8%. Shares of Imperial Sugar (IPSU) are down about 9.5%. Shares of NuPathe (PATH) are down about 6.6%. Shares of Central European Distribution (CEDC) are down about 6.4%. Shares of Snyders-Lance (LNCE) are down about 6.3%. Shares of Dole Food (DOLE) are down about 6.3%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.78 at 4:00 PM on Thursday, down 0.36% on the day – up 5.02% year-to-date.

Healthcare

Sanofi (SNY) has reportedly obtained a licence from Pfizer (PFE) to produce a generic version of the latter's cholesterol treatment Lipitor - the world's top-selling pharmaceutical - possibly even before the expiry of the drug's patent in May next year. Cooper Companies (COO) beat estimates by 6 cents and revenue by $20M, and sees FQ4 Revenue at $350M-$365M, GAAP EPS $1.21-$1.26, Non-GAAP $1.19-$1.24 and FCF of $46M-$66M. The company reduces overall guidance for FY11: Revenue 1.28B-$1.30B down from $1.32B-$1.34B, GAAP EPS of $3.90-$4.05, Non-GAAP EPS $4.00-$4.15 and FCF of $190M-$210M. HCA Holdings (HCA) is initiated with a Buy rating and $28 price objective at Auriga. Medtronic (MDT) is upgraded to Hold from Sell at Argus. Healthways (HWAY) is lifted to Overweight from Neutral at Piper Jaffray. In afternoon trading: Shares of Geron (GERN) are up about 10.7%.

The Health Care Select Sector SPDR (XLV) was trading at $33.18 at 4:00 PM on Thursday, down 0.66% on the day – up 5.33% year-to-date.

Financials

Bank of New York Mellon (BK) CEO Robert Kelly has stepped down due to "differences in approach to managing the company," and will be replaced by bank veteran and President Gerald Hassell. Goldman Sachs’ (GS) Loan Servicing unit and Ocwen Financial (OCN) have reportedly reached a deal with New York in which they have pledged, among other things, to end robo-signing, although there's no word of any fines. Barclays PLC (BCS) gets a Buy-from-Neutral increase at UBS. Societe Generale (SCGLY) is now Outperform from Neutral at Exane BNP Paribas. Goldman Sachs (GS) gets downgraded to Hold from Buy at ISI Group. WisdomTree (WETF) is pulled from Citigroup’s Top Picks Live list. In afternoon trading: Shares of RAIT Financial Trust (RAS) are down about 7.6%. Shares of MGIC Investment (MTG) are down about 6.5%. Shares of FelCor Lodging Trust (FCH) are down about 6.4%.

The Financial Select Sector SPDR (XLF) was trading at $13.08 at 4:00 PM on Thursday, down 2.24% on the day – down 17.99% year-to-date.

Information Technology

An Apple employee and his iPhone walk into a bar...In a repeat of an incident last July, Apple's (AAPL) yet-to-be-released iPhone 5 has gone missing after being left in a San Francisco tequila lounge. Ciena (CIEN) beat estimates by 17 cents, but missed revenue by $8M, and sees 4Q revenue of $440M-460M (below consensus of $474.5M). Novellus (NVLS) used its mid-quarter update to positively narrow its FQ3 EPS range to $0.65-$0.75 from a prior $0.60-$0.75, and negatively narrow its revenue range to $300M-$320M from a prior $300M-$400M. SAIC (SAI) missed estimates by 3 cents and revenue by $200M, and expects FY12 Revenue at $10.6B-$11.0B, EPS from continuing operations $1.30-$1.40 and cash flow from continuing operations at or above $600M. NVIDIA (NVDA) is begun with a Buy and $18 target price at Kaufman Brothers. Taiwan Semiconductor (TSM) is a Hold at Jefferies. Trimble Navigation (TRMB) is taken to Overweight from Neutral at Piper Jaffray. Cognizant Tech (CTSH) is now Strong Buy from Buy at Needham.  Qualcomm (QCOM) is added to the Top Picks Live list at Citigroup. Brightpoint (CELL) is lifted to Buy from Hold at Citigroup. Booz Allen Hamilton (BAH) is cut to Hold from Buy at Stifel. In afternoon trading: Shares of Liquidity Services (LQDT) are up about 31.5%. Shares of Ciena are up about 19.3%. Shares of Spreadtrum Communications (SPRD) are up about 10.1%. Shares of SAIC are down about 13.4%.

The Technology Select Sector SPDR (XLK) was trading at $24.17 at 4:00 PM on Thursday, down 1.10% on the day – down 4.05% year-to-date.

Telecommunications Services

The Justice Department is reportedly continuing discussions with AT&T (T) and T-Mobile USA (DTEGY) over their $39B merger after the DOJ yesterday filed a suit to block the deal, saying it would harm competition and lead to higher prices. Portugal Telecom (PT) is a new Neutral at Credit Suisse. In afternoon trading: Actives: Shares of Sprint Nextel (S) are up about a quarter of a percent. Shares of AT&T (T) are down about 0.6%. Shares of Verizon (VZ) are down about 0.8%. Shares of Level 3 Communications (LVLT) are down about 1.7%. Shares of Clearwire (CLWR) are down about 2%.

The NASDAQ Telecommunications Index (IXTC) was trading at $192.68 at 4:00 PM on Thursday, down 0.37% on the day – down 14.51% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are down about a quarter of a percent. Shares of Genon Energy (GEN) are up about 3.3%. Shares of AES Corp (AES) are down about 1.5%. Shares of Centerpoint Energy (CNP) are down about 0.6%. Shares of Southern (SO) are down about 0.4%. Shares of Exelon (EXC) are down slightly. Shares of PSE&G (PEG) are down about 1.8%. Shares of Dominion Resources (D) are down slightly.

The Utilities Select Sector SPDR (XLU) was trading at $33.67 at 4:00 PM on Thursday, down 0.65% on the day – up 7.43% year-to-date.

STOCKS: ACI, CXO, APL, EEP, FRO, PVA, TSL, YGE, GEF, RPM, MERC, AA, VALE, CX, FCX, UTIW, WCC, B, GWW, KAMN, SWSH, KFRC, TRS, HIL, F, ZUMZ, UTI, NAUH, LRN, LINC, VOLVY, FIATY, CWTR, SSI, BONT, COCO, COST, FEED, IPSU, PATH, CEDC, LNCE, DOLE, SNY, PFE, COO, HCA, MDT, HWWA, GERN, BK, GS, OCN, BCS, SCGLY, WETF, RAS, MTG, FCH, AAPL, NVLS, SAI, NVDA, TSM, TRMB, CTSH, QCOM, CELL, BAH, LQDT, SPRD, T, DTEGY, PT, S, VZ, LVLT, CLWR, DUK, GEN, AES, CNP, SO, EXC, PEG, D

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
GEN Genesis Healthcare Inc. 1.45 0.01 0.69 47,099 Trade
FCH FelCor Lodging Trust Incorporated 7.12 -0.02 -0.28 274,532 Trade
PVA Penn Virginia Corp. n/a n/a n/a 0
BPO.PR.H:CA Brookfield Office Properties Inc. Class AAA Prefer n/a n/a n/a 0
SO Southern Company (The) 47.49 -0.39 -0.81 724,575 Trade
VALE VALE S.A. American Depositary Shares Each Represen 9.19 0.17 1.88 5,512,177 Trade
UTIW UTi Worldwide Inc. n/a n/a n/a 0 Trade
AA Alcoa Inc. 36.75 0.13 0.35 379,546 Trade
CNP CenterPoint Energy Inc (Holding Co) 28.09 -0.06 -0.21 340,655 Trade
D Dominion Resources Inc. 76.76 -0.82 -1.05 299,618 Trade
CTSH Cognizant Technology Solutions Corporation 69.90 -0.08 -0.11 248,677 Trade
AAPL Apple Inc. 151.00 0.73 0.49 4,184,970 Trade
BONT The Bon-Ton Stores Inc. 0.72 -0.08 -10.58 646,076 Trade
BCS Barclays PLC 10.71 0.06 0.52 381,492 Trade
S Sprint Corporation 8.60 0.07 0.82 2,109,824 Trade
LNCE Snyder\'s-Lance Inc. 35.45 -0.14 -0.39 28,154 Trade
NVLS Nivalis Therapeutics Inc. 2.35 0.00 0.00 615 Trade
HCA HCA Holdings Inc. 86.14 0.41 0.48 324,677 Trade
NVDA NVIDIA Corporation 167.69 -0.41 -0.24 3,886,569 Trade
TSL Trina Solar Limited Sponsored ADR (Cayman Islands) n/a n/a n/a 0 Trade
LVLT Level 3 Communications Inc. 58.36 -0.30 -0.51 401,277 Trade
AES The AES Corporation 11.36 -0.06 -0.57 313,459 Trade
HIL Hill International Inc. 5.23 -0.03 -0.48 8,308 Trade
GS The Goldman Sachs Group Inc. 218.35 -1.83 -0.83 788,049 Trade
COST Costco Wholesale Corporation 150.49 0.05 0.03 825,423 Trade
TRMB Trimble Navigation Limited 37.90 0.19 0.50 82,157 Trade
VZ Verizon Communications Inc. 44.00 -0.23 -0.52 1,476,677 Trade
GERN Geron Corporation 2.86 0.06 1.96 229,042 Trade
MDT Medtronic plc. 84.77 -0.40 -0.47 504,534 Trade
RPM RPM International Inc. 50.73 -3.94 -7.21 949,147 Trade
RAS RAIT Financial Trust New of Beneficial Interest 2.04 0.02 0.99 150,155 Trade
GEF Greif Inc 55.98 -0.77 -1.36 25,930 Trade
FCX Freeport-McMoRan Inc. 12.97 -0.04 -0.31 2,113,698 Trade
YGE Yingli Green Energy Holding Company Limited ADR 2.35 -0.09 -3.69 15,480 Trade
BK Bank of New York Mellon Corporation (The) 53.49 0.13 0.24 716,984 Trade
UTI Universal Technical Institute Inc 3.70 0.01 0.27 21,114 Trade
WCC WESCO International Inc. 57.25 0.05 0.09 30,923 Trade
OCN Ocwen Financial Corporation NEW 2.75 0.03 0.92 240,345 Trade
KAMN Kaman Corporation 50.70 -0.13 -0.26 6,876 Trade
FRO Frontline Ltd 5.88 -0.02 -0.34 118,165 Trade
F Ford Motor Company 11.40 -0.13 -1.09 9,077,122 Trade
PFE Pfizer Inc. 33.25 -0.24 -0.70 1,990,468 Trade
COO Cooper Companies Inc. (The) 248.05 -0.36 -0.14 31,068 Trade
CXO Concho Resources Inc. 128.26 1.06 0.83 133,015 Trade
BAH Booz Allen Hamilton Holding Corporation 33.71 0.05 0.15 93,741 Trade
SSI Stage Stores Inc. 1.89 -0.10 -4.80 77,163 Trade
WETF WisdomTree Investments Inc. 10.51 -0.03 -0.28 246,875 Trade
EEP Enbridge Energy L.P. Class A 16.04 -0.04 -0.25 83,670 Trade
KFRC Kforce Inc. 19.10 -0.25 -1.29 8,269 Trade
ACI Arch Coal Inc. n/a n/a n/a 0 Trade
LQDT Liquidity Services Inc. 6.38 -0.08 -1.16 5,909 Trade
MERC Mercer International Inc. 12.25 0.20 1.66 29,854 Trade
NAUH National American University Holdings Inc. 2.40 0.04 1.85 377 Trade
SNY Sanofi American Depositary Shares (Each repstg one 47.77 0.06 0.13 197,614 Trade
LINC Lincoln Educational Services Corporation 3.15 0.01 0.32 1,900 Trade
EXC Exelon Corporation 37.18 -0.30 -0.80 581,059 Trade
T AT&T Inc. 36.33 -0.18 -0.49 3,418,150 Trade
TSM Taiwan Semiconductor Manufacturing Company Ltd. 36.09 0.24 0.66 1,269,330 Trade
DUK Duke Energy Corporation (Holding Company) 84.67 -0.53 -0.62 360,916 Trade
GWW W.W. Grainger Inc. 167.62 2.68 1.62 208,283 Trade
CX Cemex S.A.B. de C.V. Sponsored ADR 10.09 -0.09 -0.88 807,114 Trade
QCOM QUALCOMM Incorporated 53.34 -0.50 -0.93 1,735,726 Trade
MTG MGIC Investment Corporation 11.86 -0.05 -0.42 293,385 Trade
LRN K12 Inc 17.76 -0.23 -1.28 31,777 Trade
PEG Public Service Enterprise Group 44.22 -0.50 -1.12 391,074 Trade
SWSH Swisher Hygiene Inc n/a n/a n/a 0
ZUMZ Zumiez Inc. 12.45 -0.20 -1.58 42,534 Trade
TRS TriMas Corporation 22.25 0.10 0.45 38,769 Trade

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