Equities Sector Coverage: Industrials and Materials Stocks Fall

Sector Recap  |

The S&P/Case–Shiller 20-City Home Price Index rose by 1% in May, but showed a year over year decline of 4.5%. The Conference Board’s measure of Consumer Confidence remains weak in July at 59.5 where the neutral zone is 90 to 120. The Present Situation component fell to 35.7 the lowest since February. New Home Sales fell 1.0% in July to a 312,000 annual rate. The supply of new homes is at a record low of 164,000 units. The Dow Jones Industrial Average traded lower on Tuesday to 12,493.39 moving further away from its May 2nd high at 12,876.00. The NASDAQ traded down from 2851.63 to 2832.27 then rebounded with a new day’s high at 2851.72 in afternoon trading. The NASDAQ remains below its May 2nd high at 2887.75.

Asian stocks rose modestly on Tuesday with the Nikkei 225 gaining 0.4% to 10,098. The Hang Seng popped 1.3% to 22,572. European stocks traded back and forth around the flat line and ended their sessions mixed. The FTSE 100 was fractionally higher at 5,929. The DAX was also fractionally higher at 7,349. The CAC 40 slipped 0.7% to 3,789. The yield on the 10-Year U.S. Treasury note declined from 3.037 percent to 2.940 as a minor flight to quality trumps the fear of a U.S. downgrade by the rating agencies. The U.S. Treasury auctioned $35 billion 2-Year notes at 0.417% with a bid to cover at 3.14 times, which was a reasonable investor reception. Gold stayed below Monday’s all time high at $1624.3 the Troy ounce trading as low as $1607.8. Crude oil declined from $99.98 per barrel to $97.76 then rebounded to $100.62 on the weak dollar. The euro versus the US dollar traded between 1.4361 and 1.4524. The U.S. Treasury market must absorb $35 billion 5-Year notes on Wednesday and $29 billion in 7-Year notes on Thursday.

Energy

BP (BP) swung to a $5.62B net profit in Q2 from a $17.2B loss a year earlier - when it took massive charges from the Gulf spill - although the company missed expectations due to an 11% drop in oil and gas production. Valero (VLO) missed estimates by 14 cents on revenue of $31.3B. Occidental Petroleum (OXY) beat estimates by 9 cents on revenue of $6.17B. National-Oilwell (NOV) beat estimates by 12 cents on revenue of $3.51B. Patriot Coal (PCX) missed estimates by 17 cents on revenue of $632.2M. Weatherford International (WFT) beat estimates by 2 cents on revenue of $3.05B. Sunpower Corp (SPWRA) is cut to Sell from Hold at Stifel Nicolaus. In afternoon trading: Shares of Helix Energy (HLX) are up about 15.25%. Shares of Weatherford International are up about 9.5%. Shares of Patriot Coal are down about 12.5%. Shares of InterOil (IOC) are down about 10%.

Energy Select Sector SPDR (XLE) was trading at $79.03 at 4:00 PM on Tuesday, down 0.48% on the day – up 15.79% year-to-date.

Materials

Sigma-Aldrich (SIAL) missed estimates by a penny on revenue of $637M. Tronox (TROX) is initiated with a Buy and $220 target price at Ticonderoga. Morgan Stanley moves Russian mining giant Norilsk Nickel (NILSY) to Underweight from Equalweight. In afternoon trading: Shares of AK Steel (AKS) are down about 17%, while shares of United States Steel (X) are down about 8.75%. Shares of Wausau Paper (WPP) are up about 15%. Shares of Rare Element (REE) are up about 9.75%.

The Materials Select Sector SPDR (XLB) traded at $39.42 at 4:00 PM on Tuesday, down 1.08% on the day – up 2.63% year-to-date.

Industrials

UPS (UPS) posted 2Q EPS of $1.05 (beating estimates by a penny) on revenue of $13.2B. Avery Dennison (AVY) beat estimates by 3 cents on revenue of $1.72B. Illinois Tool Works (ITW) missed estimates by 3 cents on revenue of $4.6B (missing consensus by $65M), guides for Q3 EPS of $0.95-$1.03 (below $1.06 consensus), and guides for 2011 EPS of $3.72-$3.88 (below $3.92 consensus). Lockheed Martin (LMT) beat estimates by 23 cents on revenue of $11.6B (beating consensus by $130M), narrows its 2011 revenue guidance to $46B-$47B (from $45.75B-$47.25B), raises 2011 EPS guidance to $7.35-$7.55 (from $6.95-$7.25) and repurchased $1B in shares in Q2. PACCAR (PCAR) missed estimates by 3 cents on revenue of $3.96B. 3M Company (MMM) beat estimates by a penny on revenue of $7.7B (beating consensus by $80M), guides for 2011 EPS of $6.32-$6.47 (ahead of $6.29 consensus), reaffirms guidance for 6-7.5% 2011 organic sales volume growth. JetBlue Airways (JBLU) missed estimates by a penny on revenue of $1.15B. Cummins (CMI) beat estimates by 41 cents on revenue of $4.64B. Navios Maritime Partners (NMM) is lifted to Buy from Hold at Deutsche Bank. Eagle Bulk Shipping (EGLE) and Genco Shipping (GNK) are both Sell from Hold at Deutsche Bank, which takes Excel Maritime (EXM) to Hold from Buy. In afternoon trading: Shares of GeoEye (GEOY) are up about 16.75%. Shares of PACCAR are down about 11%.

The Industrial Select Sector SPDR (XLI) traded at $36.13 at 4:00 PM on Tuesday, down 1.85% on the day – up 3.61% year-to-date.

Consumer Discretionary

Ford's (F) Q2 net income slipped to $0.65 a share from $0.68 (beating estimates by 5 cents), while revenue rose to $35.5B from $31.3B. Amazon (AMZN) is due to release its Q2 earnings after the close, when it is expected to report net profit fell to $0.34 from $0.45 a year earlier but that revenue surged to $9.37B from $6.57B. RadioShack (RSH) missed estimates by 6 cents (on a 53% drop in sales) on revenue of $941.9M. RadioShack announced it will begin offering Verizon products in September. Under Armour (UA) beat estimates by 4 cents on revenue of $291.3M. Office Depot (ODP) beat estimates by 6 cents on revenue of $2.7B. PetSmart (PETM) is initiated with an Outperform at RBC Capital. TJX Companies (TJX) is begun with a Buy rating and $68 price objective at Bank of America-Merrill Lynch. Meredith Corp (MDP) is picked up as an Overweight at Piper. Lazard lowers both Guess Inc (GES) and Warnaco Group (WRC) to Neutral from Buy. Rent-A-Center (RCII) is reduced to Hold from Buy at Stifel Nicolaus. In afternoon trading: Shares of Netflix (NFLX) are down about 6.5% after the company said that recently announced price hikes could dramatically hit subscriber growth and lead to Q3 earnings missing analyst forecasts. Shares of RadioShack are up about 19.25%. Shares of Office Depot are up about 11%, while shares of OfficeMax (OMX) are up about 8.5%. Shares of Group 1 Automotive (GPI) are up about 15%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.75 at 4:00 PM on Tuesday, down slightly on the day – up 8.93% year-to-date.

Consumer Staples

SuperValu (SVU) beat estimates by 2 cents on revenue of $11.1B. Hershey Foods (HSY) beat estimates by a penny on revenue of $1.33B. Herbalife (HLF) is begun with a Buy at Suntrust. In afternoon trading: Shares of China-Biotics (CHBT) are up about 12%. Shares of Yuhe International (YUII) are up about 11.25%. Shares of SuperValu are up about 7%. Shares of Star Scientific (CIGX) are up about 6.75%. Shares of Inter Parfums (IPAR) are down about 8.25%.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.37 at 4:00 PM on Tuesday, down 0.25% on the day – up 7.03% year-to-date.

Healthcare

Amylin Pharmaceuticals (AMLN) missed estimates by 3 cents on revenue of $158.1M. Biogen Idec (BIIB) reported Q2 EPS of $1.36 (in-line) on revenue of $1.2B. Watson Pharmaceuticals (WPI) beat estimates by 2 cents on revenue of $1.1B. Waters (WAT) missed estimates by 6 cents on revenue of $448M. Kinetic Concepts (KCI) missed estimates by 6 cents on revenue of $519.8M. Covidien (COV) beat estimates by 7 cents on revenue of $2.93B. Anadys Pharmaceuticals (ANDS) is increased to Outperform from Neutral at Wedbush. Computer Programs & Systems (CPSI) is now Neutral from Overweight at Piper Jaffray. HCA Holdings (HCA) gets downgraded to Neutral from Buy at Goldman Sachs. In afternoon trading: Shares of Cardiome (CRME) are up about 25.5%. Shares of Waters are down about 8.25%.

The Health Care Select Sector SPDR (XLV) traded at $34.94 at 4:00 PM on Tuesday, down 0.81% on the day – up 10.90% year-to-date.

Financials

Deutsche Bank (DB) Q2 net profit rose 3.3% to €1.2B ($1.74B) (versus consensus of €1.3B), with lower trading volumes and a €155M write-down of Greek bonds offsetting increased income from consumer banking and asset management. AIG (AIG) has received preliminary approval from a judge to pay $450M to resolve claims it cheated a workers’ compensation program. Royal Bank of Canada (RY) may spend up to C$1B ($1.06B) to buy asset management firms that will strengthen its U.K., Europe and Asia operations. T. Rowe Price Group (TROW) missed estimates by 2 cents on revenue of $713.7M. Simon Property Group (SPG) beat estimates by 7 cents on revenue of $1.04B. Regions Financial (RF) beat estimates by 4 cents. Waddell & Reed Financial (WDR) beat estimates by a penny on revenue of $3.09B. CIT Group (CIT) missed estimates by 11 cents. UBS's (UBS) Q2 net profit halves to 1B Swiss francs ($1.26B) as operating income drops to 7.2B francs from 9.2B francs, with earnings hurt by lower client activity and currency movements. Salient MLP & Energy Infrastructure (SMF) is upgraded to Outperform from Market Perform with a $27 target. Associated Estates (AEC) gets increased to Outperform from Neutral at brokerage Robert W. Baird with a new objective of $21. BB&T Corp (BBT) is rasied to Buy from Hold at Rochdale. In afternoon trading: Shares of Bancorp South (BXS) are up about 12.25%. Shares of MGIC Investment (MTG) are up about 8%. Shares of Lennox International (LII) are down about 9%. Shares of FirstMerit (FMER) are down about 8%.

The Financial Select Sector SPDR (XLF) traded at $15.19 at 4:00 PM on Tuesday, down slightly on the day – down 4.76% year-to-date.

Information Technology

Texas Instruments' (TXN) Q2 net profit fell 13% to $672M but beat expectations as revenue slipped 1.1% to $3.46B, with earnings hurt by the March earthquake in Japan, declining orders from Nokia, and weak demand for PCs and TVs. Western Union (WU) beat estimates by 5 cents on revenue of $1.4B. Lexmark (LXK) beat estimates by 33 cents on revenue of $1.04B. ARM Holdings (ARMH) reported Q2 net profit +21% Y/Y to £26.6M ($43.2M) and revenue +18% to £117.8M, boosted by demand for its microchip designs, which are used smartphones, tablets and TVs. Google (GOOG) gets picked up with a Buy at Credit Agricole. ComScore (SCOR) is a new Neutral at Piper Jaffray. F5 Networks (FFIV) is lifted to Buy from Neutral at Ticonderoga. Finisar (FNSR) is boosted to Buy from Hold at Citigroup. ValueClick (VCLK) is upgraded to Overweight from Underweight at Piper Jaffray. Volterra Semiconductor (VLTR) is now Overweight from Neutral at Piper Jaffray. STEC Inc (STEC) is reduced to Under Review from Buy at Needham Research. NVIDIA (NVDA) is now Sell from Hold at Needham due to secular challenges in core graphics. STMicroelectronics (STM) is moved to Underperform from Neutral at Exane BNP Paribas. In afternoon trading: Shares of Sanmina-SCI (SANM) are up about 21%. Shares of Volterra Semiconductor are up about 17.75%. Shares of Lexmark are up about 17.75%. Shares of Tellabs (TLAB) are up about 11.75%. Shares of Limelight Networks (LLNW) are up about 10.5%. Shares of Broadcom (BRCM) are up about 10.25%. Shares of Unisys (UIS) are down about 11.5%.

The Technology Select Sector SPDR (XLK) traded at $26.77 at 4:00 PM on Tuesday, up 0.45% on the day – up 6.27% year-to-date.

Telecommunications Services

Sprint (S) is raised to Outperform from Sector Perform by RBC Capital. In afternoon trading: Actives: Shares of Sprint are down about a half of a percent. Shares of Level 3 (LVLT) are down about 4%. Shares of AT&T (T) are up about 0.4%. Shares of Verizon (VZ) are also up about 0.4%. Shares of Frontier (FTR) are up about a half of a percent. Shares of Vodafone (VOD) are up about 2.25%.

The NASDAQ Telecommunications Index (IXTC) traded at $209.86 at 4:00 PM on Tuesday, up 0.21% on the day – down 6.88% year-to-date.

Utilities

El Paso Electric (EE) gets cut to Hold from Buy at Argus due to valuation concerns. In afternoon trading: Actives: Shares of Genon Energy (GEN) are down about 1.8%. Shares of Exelon (EXC) are relatively unchanged. Shares of Duke Energy (DUK) are down about a quarter of a percent. Shares of AES Corp (AES) are down about a quarter of a percent. Shares of PPL Corp (PPL) are up about a quarter of a percent. Shares of Southern (SO) are relatively unchanged. Shares of PSE&G (PEG) are up about 0.3%.

The Utilities Select Sector SPDR (XLU) traded at $33.82 at 4:00 PM on Tuesday, down 0.35% on the day – up 7.91% year-to-date.

STOCKS: BP, VLO, OXY, NOV, PCX, WFT, SPWRA, HLX, IOC, SIAL, TROX, NILSY, AKS, X, WPP, REE, UPS, AVY, ITW, LMT, PCAR, MMM, JBLU, CMI, NMM, EGLE, GNK, EXM, GEOY, F, AMZN, RSH, UA, ODP, PETM, TJX, MDP, GES, WRC, RCII, NFLX, OMX, GPI, SVU, HSY, HLF, CHBT, YUII, CIGX, IPAR, AMLN, BIIB, WPI, WAT, KCI, COV, ANDS, CPSI, HCA, CRME, DB, AIG, RY, TROW, SPG, RF, WDR, CIT, UBS, SMF, AEC, BBT, BXS, MTG, LII, FMER, TXN, WU, LXK, ARMH, GOOG, SCOR, FFIV, FNSR, VCLK, VLTR, STEC, NVDA, STM, SANM, TLAB, LLNW, BRCM, UIS, S, LVLT, T, VZ, FTR, VOD, EE, GEN, EXC, DUK, AES, PPL, SO, PEG

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
REE Rare Element Resources n/a n/a n/a n/a
MMM 3M Company 155.85 -5.03 -3.13 4,224,008 Trade
STM STMicroelectronics N.V. 17.12 -0.92 -5.10 4,423,273 Trade
CIT CIT Group Inc (DEL) 41.10 -1.11 -2.63 1,087,095 Trade
WDR Waddell & Reed Financial Inc. 15.41 -0.53 -3.33 573,154 Trade
UPS United Parcel Service Inc. 111.28 -3.94 -3.42 4,375,816 Trade
LII Lennox International Inc. 251.70 -4.88 -1.90 275,698 Trade
GEN Genesis Healthcare Inc. 1.00 -0.00 -0.18 196,621 Trade
FTR Frontier Communications Corporation 0.74 -0.09 -10.85 1,631,474 Trade
NKSH National Bankshares Inc. 32.68 -0.68 -2.04 8,009 Trade
LMT Lockheed Martin Corporation 376.89 -8.99 -2.33 1,393,141 Trade
SO Southern Company (The) 57.68 -0.77 -1.32 4,926,275 Trade
AKS AK Steel Holding Corporation 2.17 -0.14 -6.06 7,694,326 Trade
WPI Watson Pharmaceuticals Inc. n/a n/a n/a 0 Trade
ARMH ARM Holdings plc n/a n/a n/a 0 Trade
HLF Herbalife Nutrition Ltd. 34.94 -0.75 -2.10 1,689,777 Trade
VLO Valero Energy Corporation 74.18 -3.24 -4.19 3,508,173 Trade
NOV National Oilwell Varco Inc. 18.71 -0.61 -3.16 5,497,013 Trade
WAT Waters Corporation 204.96 -5.03 -2.40 657,234 Trade
IOC InterOil Corporation n/a n/a n/a 0 Trade
CPSI Computer Programs and Systems Inc. 21.78 -0.28 -1.27 281,921 Trade
S Sprint Corporation 6.74 -0.13 -1.89 7,355,710 Trade
PPL PPL Corporation 29.45 -0.37 -1.24 3,877,650 Trade
SPG Simon Property Group Inc. 146.03 -2.67 -1.80 1,747,290 Trade
GES Guess? Inc. 14.43 -0.96 -6.24 2,247,447 Trade
UA Under Armour Inc. Class C 16.15 -0.99 -5.78 2,766,646 Trade
FNSR Finisar Corporation 22.33 -0.61 -2.66 1,889,750 Trade
VOD Vodafone Group Plc 18.29 -0.06 -0.33 2,970,229 Trade
HCA HCA Healthcare Inc. 119.78 -2.46 -2.01 1,395,991 Trade
NVDA NVIDIA Corporation 162.44 -9.04 -5.27 14,237,433 Trade
TXN Texas Instruments Incorporated 120.29 -4.92 -3.93 6,518,079 Trade
TROW T. Rowe Price Group Inc. 105.61 -3.57 -3.27 1,199,370 Trade
RY Royal Bank of Canada 73.46 -1.23 -1.65 941,477 Trade
TJX TJX Companies Inc. (The) 53.09 -1.79 -3.26 9,039,346 Trade
EGLE Eagle Bulk Shipping Inc. 4.20 -0.39 -8.50 564,886 Trade
FMER FirstMerit Corporation n/a n/a n/a 0 Trade
SANM Sanmina Corporation 28.51 -1.75 -5.78 351,253 Trade
DB Deutsche Bank AG 6.97 -0.20 -2.79 6,324,776 Trade
AES The AES Corporation 14.79 -0.41 -2.70 3,941,331 Trade
JBLU JetBlue Airways Corporation 17.22 -0.79 -4.39 4,094,724 Trade
VZ Verizon Communications Inc. 55.92 -0.86 -1.51 13,203,639 Trade
RCII Rent-A-Center Inc. 24.69 -0.84 -3.29 779,172 Trade
BBT BB&T Corporation 45.25 -1.43 -3.06 3,881,278 Trade
ODP Office Depot Inc. 1.33 -0.12 -8.28 5,756,729 Trade
CMI Cummins Inc. 142.02 -4.66 -3.18 1,533,186 Trade
PCAR PACCAR Inc. 62.53 -1.91 -2.96 1,749,306 Trade
GNK Genco Shipping & Trading Limited New (Marshall Islands) 8.55 -0.22 -2.51 349,926 Trade
GOOG Alphabet Inc. 1,151.29 -38.24 -3.21 1,688,271 Trade
WFT WFTIF Weatherford International plc (Ireland) n/a n/a n/a 0
HSY The Hershey Company 157.03 -1.35 -0.85 781,974 Trade
RF Regions Financial Corporation 13.79 -0.46 -3.23 12,282,810 Trade
UBS UBS Group AG Registered 10.48 -0.15 -1.41 2,157,046 Trade
CRME CORV Minefinders Corporation Ltd. n/a n/a n/a n/a
LLNW Limelight Networks Inc. 2.31 -0.02 -0.86 614,794 Trade
TROX Tronox Holdings plc (UK) 7.03 -0.60 -7.86 1,626,403 Trade
UIS Unisys Corporation 7.17 -0.54 -7.00 1,950,599 Trade
OXY Occidental Petroleum Corporation 42.37 -2.33 -5.21 12,546,529 Trade
EE El Pasoectric Company 66.05 -0.36 -0.54 321,108 Trade
X United States Steel Corporation 11.18 -0.62 -5.25 13,311,588 Trade
F Ford Motor Company 8.77 -0.27 -2.99 44,987,686 Trade
BIIB Biogen Inc. 225.85 -6.21 -2.68 1,288,061 Trade
AIG American International Group Inc. 52.49 -1.26 -2.34 3,712,184 Trade
NFLX Netflix Inc. 291.44 -5.49 -1.85 6,331,189 Trade
HLX Helix Energy Solutions Group Inc. 6.93 -0.41 -5.59 624,207 Trade
NMM Navios Maritime Partners LP Representing Limited Partner Interests 15.17 -0.98 -6.07 99,241 Trade
AVY Avery Dennison Corporation 110.72 -4.23 -3.68 667,974 Trade
BP BP p.l.c. 36.21 -0.31 -0.85 7,484,871 Trade
ITW Illinois Tool Works Inc. 146.36 -5.45 -3.59 1,449,828 Trade
BRCM Broadcom Corp. n/a n/a n/a 0 Trade
EXC Exelon Corporation 44.88 -0.64 -1.41 6,977,954 Trade
T AT&T Inc. 34.82 -0.57 -1.61 33,864,032 Trade
DUK Duke Energy Corporation (Holding Company) 90.74 -0.58 -0.64 3,153,865 Trade
IPAR Inter Parfums Inc. 63.86 -2.22 -3.36 67,925 Trade
GPI Group 1 Automotive Inc. 72.55 -4.51 -5.85 281,885 Trade
WU Western Union Company (The) 21.38 -0.52 -2.37 3,347,776 Trade
MTG MGIC Investment Corporation 12.31 -0.17 -1.36 3,254,830 Trade
SIAL Sigma-Aldrich Corp. n/a n/a n/a 0 Trade
PEG Public Service Enterprise Group Incorporated 58.44 -0.73 -1.23 2,634,541 Trade
SCOR comScore Inc. 1.80 -0.11 -5.76 1,192,015 Trade
LXK Lexmark International Inc. n/a n/a n/a 0 Trade
FFIV F5 Networks Inc. 124.39 -4.96 -3.83 732,998 Trade
MDP Meredith Corporation 42.46 -1.01 -2.32 501,104 Trade
AMZN Amazon.com Inc. 1,749.62 -55.98 -3.10 5,277,898 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     

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