Equities Sector Coverage: Investors in Search of Safety Unsure Where to Look

Sector Recap  |

Initial Jobless Claims came in at 423,000 well above the recessionary threshold of 350,000. The Dow Jones Industrial Average plunged to a new year to date low at 10,597.14 testing the zone of its 200-week and 120-month simple moving averages at 10,675 and 10,591. The NASDAQ gapped lower to a trading range between 2451.32 and 2491.98. After a rebound to 2494.31 the NASDAQ fell to 2420.23 still above its August 9th low at 2331.65.

Asian stocks were significantly lower on Thursday on FOMC concerns about US economic growth. The Nikkei 225 slumped 2.07% to 8,560. The Hang Seng plunged 4.85% to 17,912. European stocks slumped on economic concerns for both the US and Euroland. The FTSE 100 lost 4.64% to 5,043 with the DAX down 4.96% to 5,164 and the CAC 40 plunging 5.25% to 2,782.

The yield on the 10-Year US Treasury traded down from 1.871 to another new record low of 1.698 in reaction to the Fed’s $400 billion “Operation Twist”, which will last into June 2012. Operation Twist is a program where the Fed sells short maturity Treasuries to buy longer term notes and bonds. Gold plunged from $1789.0 the Troy ounce to $1723.2, which is below its 50-day simple moving average at $1741.6, as the double-top forms on the daily chart. Crude oil tumbled from $85.00 per barrel to $79.66 falling below its 200-week simple moving average at $83.71, which is a clear sign of a global economic slowdown. The euro versus the US dollar slumped from 1.3600 to 1.3389.

Energy

Sunpower (SPWRA) is upgraded to Hold from Sell with a $10 target at Kaufman Brothers. Lukoil (LUKOY) is now Neutral from Outperform at Credit Suisse. Statoil ASA (STO) is removed from Conviction Buy list at Goldman. Magellan Midstream (MMP) is moved to Market Perform from Outperform at Brokerage firm Morgan Keegan. In afternoon trading: Shares of Oasis Petroleum (OAS) are down about 13.8%. Shares of RPC Inc (RES) are down about 13.3%. Shares of Forest Oil (FST) are down about 12.8%. Shares of ATP Oil & Gas (ATPG) are down about 12.5%. Shares of Key Energy Services (KEG) are down about 11.5%. Shares of Precision Drilling (PDS) are down about 11.2%.

Energy Select Sector SPDR (XLE) was trading at $59.34 at 4:00 PM on Thursday, down 5.64% on the day – down 13.05% year-to-date.

Materials

Mosaic (MOS) will replace National Semiconductor (NSM) in the S&P 500 Index at the end of trading on Friday. The acquisition of National Semi by Texas Instruments (TXN) is expected to close by that date. Anglo American (AAUKY) is upgraded to Buy from Hold at Societe Generale. Syngenta (SYT) is downgraded to Hold from Buy at Citigroup. In afternoon trading: Shares of Stillwater Mining (SWC) are down about 14.8%. Shares of Mechel (MTL) are down about 13.3%. Shares of Rockwood Holdings (ROC) are down about 12.4%. Shares of Silver Wheaton (SLW) are down about 12.4%. Shares of Cemex (CX) are down about 12.5%. Shares of Allied Nevada Gold (ANV) are down about 12.4%. Shares of Hecla Mining (HL) are down about 11.8%.

The Materials Select Sector SPDR (XLB) was trading at $30.29 at 4:00 PM on Thursday, down 5.61% on the day – down 21.14% year-to-date.

Industrials

United Technologies (UTX) agreed to buy Goodrich (GR) in an all-cash deal worth $16.4B, or $127.50/share (a 16% premium and 47% higher than last week when the deal started to leak). Allegiant Travel (ALGT) is a new Neutral at Ticonderoga. In afternoon trading: Shares of Goodrich are up about 10%. Shares of Swift Technologies (SWFT) are down about 14.9%. Shares of YRC Worldwide (YRCW) are down about 12.8%. Shares of Foster Wheeler (FWLT) are down about 12.4%. Shares of Titan International (TWI) are down about 12.2%. Shares of Graftech International (GTI) are down about 11.1%.

The Industrial Select Sector SPDR (XLI) was trading at $29.01 at 4:00 PM on Thursday, down 3.75% on the day – down 16.81% year-to-date.

Consumer Discretionary

Lululemon Athletica (LULU) is initiated with a Buy and $68 price objective at Auriga, which also begins Buys on Deckers Outdoor (DECK) - $115 target price, DSW Inc (DSW) - $55 target price and Steven Madden (SHOO) - $42 target price, while having a Hold and $16 objective on Skechers USA (SKX). Tesla Motors (TSLA) is begun with an Outperform and $35 target at brokers Robert W. Baird. Family Dollar (FDO) and Dollar General (DG) each get initiated with Buys at Guggenheim Securities. Netflix (NFLX) is upgraded to Neutral from Sell at UBS with a target of $185. Lennar (LEN) is lifted to Buy from Hold at Citigroup. KB Home (KBH) is now Neutral from Overweight at JPMorgan, which takes Hovnanian Enterprises (HOV) to Underweight from Neutral. Under Armour (UA) is downgraded to Hold from Buy at Needham. In afternoon trading: Shares of Blockbuster (BLOAQ) are up about 20.5% as they attempt to solicit customers from Netflix, which has decided to separate the high-growth streaming business from the cash-cow DVD business. Shares of Deer Consumer Products (DEER) are up about 16.5%. Shares of SodaStream (SODA) are down about 11.9%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $35.20 at 4:00 PM on Thursday, down 3.00% on the day – down 5.91% year-to-date.

Consumer Staples

Walgreens (WAG) and CVS Caremark (CVS) are each initiated with a Hold at Deutsche Bank. HJ Heinz (HNZ) is begun with a Buy at Jefferies, which has Holds on both Hershey Foods (HSY) and ConAgra (CAG). Nestle (NSRGY) is now Overweight from Neutral at JPMorgan. Procter & Gamble (PG) is downgraded to Neutral from Buy at SunTrust. Diamond Foods (DMND) is downgraded to Hold from Buy at Jefferies. In afternoon trading: Shares of China-Biotics (CHBT) are down about 14.3%. Shares of Bunge (BG) are down about 8.7%. Shares of Pilgrim’s Pride (PPC) are down about 8.5%. Shares of Fomento Economico Mexicano (FMX) are dwon about 7.1%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $29.44 at 4:00 PM on Thursday, down 1.90% on the day – up 0.44% year-to-date.

Healthcare

Zimmer Holdings (ZMH) is a new Hold and $57 target at Kaufman Brothers, which also has a Hold on Boston Scientific (BSX), but begins Buys on Hologic (HOLX), St. Jude Medical (STJ), and Varian Medical (VAR). Bristol-Myers (BMY) gets a Buy-from-Neutral boost at Goldman Sachs, which raises rival GlaxoSmithKline (GSK) to Neutral from Sell. Stryker (SYK) is hoisted to Buy from Hold at Citigroup. Johnson & Johnson (JNJ) is now Neutral from Buy at Goldman. Wright Medical (WMGI) is now Neutral from Buy at brokers Duncan Williams.  MAKO Surgical (MAKO) is removed from Conviction Buy list at Goldman. AthenaHealth (ATHN) is downgraded to Underweight from Neutral at JP Morgan. In afternoon trading: Shares of Accretive Health (AH) are down about 10.7%. Shares of StemCells (STEM) are down about 9.2%. Shares of Pacific Biosciences (PACB) are down about 9.1%.

The Health Care Select Sector SPDR (XLV) was trading at $31.47 at 4:00 PM on Thursday, down 2.02% on the day – down 0.10% year-to-date.

Financials

The International Accounting Standards Board (IASB) and its U.S. counterpart, the Financial Accounting Standards Board (FASB) seem unlikely to converge their approaches to offsetting financial assets and liabilities - which could result in bloated balance sheets at U.S. banks compared to global counterparts, while simultaneously limiting their ability to offset liabilities. Moody's downgraded Bank of America (BAC) to Baa1 from A2 and Wells Fargo (WFC) to A2 from A1, on a decrease in the probability the government would support these banks. Moody’s confirmed Citigroup’s (C) long-term rating, but downgraded the holding company's short-term rating to Prime-2 from Prime-1. Camden Property (CPT) is upgraded to Outperform from Perform at FBR Capital. Credit Agricole SA (CRARY) is cut to Underperform from Outperform at Macquarie. Washington Federal (WFSL) is now Neutral from Buy at Macquarie. In afternoon trading: Shares of Franklin Resources (BEN) are down about 11.5%. Shares of Radian Group (RDN) are down about 11.5%. Shares of Ambac Financial (ABKFQ) are down about 10.4%.

The Financial Select Sector SPDR (XLF) was trading at $11.56 at 4:00 PM on Thursday, down 2.86% on the day – down 27.52% year-to-date.

Information Technology

Hewlett-Packard’s (HPQ) board is considering ousting CEO Leo Apotheker (who has been on the job only since November 2010 – with former eBay chief Meg Whitman as a possible replacement), and reconsidering a plan to spin off the company's PC business. Google (GOOG) Executive Chairman Eric Schmidt testified in Congress yesterday, sparring with senators who contended the company is a growth-hungry monopolist that thwarts rivals. Mosaic (MOS) will replace National Semiconductor (NSM) in the S&P 500 Index at the end of trading on Friday. The acquisition of National Semi by Texas Instruments (TXN) is expected to close by that date. Intel (INTC) is upgraded to Buy from Neutral at Bank of America-Merrill Lynch with a new target of $27. Yahoo (YHOO) is upgraded to Buy from Hold at Stifel Nicolaus. Broadcom (BRCM) is upgraded to Market Perform from Underperform at JMP Securities. In afternoon trading: Shares of Energy Conversion Devices (ENER) are up about 9.5%. Shares of Baidu (BIDU) are dowm about 13%. Shares of Youku.com (YOKU) are down about 12.3%. Shares of Powerwave (PWAV) are down about 12%.

The Technology Select Sector SPDR (XLK) was trading at $23.73 at 4:00 PM on Thursday, down 3.10% on the day – down 5.80% year-to-date.

Telecommunications Services

In afternoon trading: Shares of Clearwire (CLWR) are up about 6.5%. Shares of Leap Wireless (LEAP) are down about 9.9%. Shares of Mobile Telesystems (MBT) are down about 9.2%. Shares of NII Holding (NIHD) are down about 9.2%. Shares of Telecomunicacoes de Sao Paulo (VIV) are down about 7.8%. Shares of Level 3 Communications (LVLT) are down about 7.6%. Shares of Sprint Nextel (S) are down about 7.2%. Shares of America Movil SAB (AMX) are down about 6.9%. Shares of VimpelCom (VIP) str foen sbouy 6.2%.

The NASDAQ Telecommunications Index (IXTC) was trading at $179.57 at 4:00 PM on Thursday, down 3.38% on the day – down 20.32% year-to-date.

Utilities

In afternoon trading: Shares of Genon Energy (GEN) are down about 6.8%. Shares of Dynegy (DYN) are down about 6.3%. Shares of Huaneng Power International (HNP) are down about 6.3%. Shares of AES Corp (AES) are down about 5.8%. Shares of Brookfield Infrastructure (BIP) are down about 5.7%. Shares of MDU Resources Group (MDU) are down about 5.4%. Shares of Veolia Environment (VE) are down about 5.3%. Shares of Calpine (CPN) are down about 5%. Shares of Portland General Electric (POR) are down about 4.9%.

The Utilities Select Sector SPDR (XLU) was trading at $33.08 at 4:00 PM on Thursday, down 1.69% on the day – up 5.55% year-to-date.

STOCKS: SPWRA, LUKOY, STO, MMP, OAS, RES, FST, ATPG, KEG, PDS, MOS, NSM, TXN, AAUKY, SYT, SWC, MTL, ROC, SLW, CX, ANV, HL, UTX, GR, ALGT, SWFT, YRCW, FWLT, TWI, GTI, LULU, DECK, DSW, SHOO, SKX, TSLA, FDO, DG, NFLX, LEN, KBH, HOV, UA, BLOAQ, DEER, SODA, WAG, CVS, HNZ, HSY, CAG, NSRGY, PG, DMND, CHBT, BG, PPC, FMX, ZMH, BSX, HOLX, STJ, VAR, BMY, GSK, SYK, JNJ, WMGI, MAKO, ATHN, AH, STEM, PACB, IASB, FASB, BAC, WFC, C, CPT, CRARY, WFSL, BEN, RDN, ABKFQ, HPQ, GOOG, INTC, YHOO, BRCM, ENER, BIDU, YOKU, PWAV, CLWR, LEAP, MBT, NIHD, VIV, LVLT, S, AMX, VIP, GEN, DYN, HNP, AES, BIP, MDU, VE, CPN, POR

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
GSK GlaxoSmithKline PLC 40.34 -0.07 -0.17 3,574,702 Trade
GEN Genesis Healthcare Inc. 1.43 -0.21 -12.80 623,725 Trade
FMX Fomento Economico Mexicano S.A.B. de C.V. 86.34 2.65 3.17 445,691 Trade
TWI Titan International Inc. (DE) 7.01 0.01 0.14 287,294 Trade
DECK Deckers Outdoor Corporation 129.90 2.24 1.75 694,799 Trade
PG Procter & Gamble Company (The) 93.82 -0.01 -0.01 13,013,482 Trade
MOS Mosaic Company (The) 36.67 0.53 1.47 4,224,322 Trade
NWHM The New Home Company Inc. 7.58 0.18 2.43 71,349 Trade
BIDU Baidu Inc. 186.95 -1.46 -0.77 1,624,718 Trade
TSLA Tesla Motors Inc. 354.31 5.87 1.68 7,206,191 Trade
KBH KB Home 18.99 1.38 7.84 5,544,092 Trade
SWC Stillwater Mining Company ($0.01 Par Value) n/a n/a n/a 0 Trade
JNJ Johnson & Johnson 145.99 1.49 1.03 8,494,311 Trade
INTC Intel Corporation 48.83 0.72 1.50 31,670,572 Trade
ATHN athenahealth Inc. 131.41 -0.22 -0.17 2,307,002 Trade
SHOO Steven Madden Ltd. 32.01 -0.12 -0.37 797,743 Trade
POR Portland General Electric Co 48.25 0.48 1.00 598,125 Trade
MDU MDU Resources Group Inc. 26.30 -0.03 -0.11 594,571 Trade
VIP UEX Corporation n/a n/a n/a n/a
C Citigroup Inc. 64.95 0.35 0.54 15,995,341 Trade
S Sprint Corporation 6.31 0.19 3.10 23,944,475 Trade
RDN Radian Group Inc. 19.30 -0.16 -0.82 931,372 Trade
UA Under Armour Inc. Class C 20.21 -0.69 -3.30 3,419,715 Trade
BEN Franklin Resources Inc. 31.93 0.35 1.11 3,329,327 Trade
MMP Magellan Midstream Partners L.P. Limited Partnership 63.16 0.40 0.64 855,938 Trade
UTX United Technologies Corporation 130.13 0.40 0.31 5,184,353 Trade
TXN Texas Instruments Incorporated 97.85 -0.11 -0.11 6,766,952 Trade
HOLX Hologic Inc. 42.11 0.77 1.86 2,347,667 Trade
SWFT KNX Liberty Media Corp (DE) n/a n/a n/a n/a
SODA SodaStream International Ltd. 143.30 0.03 0.02 133,370 Trade
PDS Precision Drilling Corporation 2.47 -0.01 -0.40 1,705,072 Trade
HOV Hovnanian Enterprises Inc. Class A 1.29 0.04 3.20 867,686 Trade
BIP Brookfield Infrastructure Partners LP Limited Partnership Units 40.26 -0.12 -0.30 186,233 Trade
CPT Camden Property Trust 92.28 1.81 2.00 663,414 Trade
MTL Mechel PAO American Depositary Shares (Each rep. 1) 2.94 -0.03 -1.01 29,690 Trade
AES The AES Corporation 15.51 0.09 0.58 6,505,226 Trade
SKX Skechers U.S.A. Inc. 27.29 -0.17 -0.62 2,583,140 Trade
BSX Boston Scientific Corporation 37.21 0.74 2.03 7,537,552 Trade
YRCW YRC Worldwide Inc. 5.82 -0.12 -2.02 674,460 Trade
VAR Varian Medical Systems Inc. 118.76 1.84 1.57 626,301 Trade
BAC Bank of America Corporation 27.75 -0.15 -0.54 52,456,146 Trade
DG Dollar General Corporation 111.42 -0.36 -0.32 2,710,870 Trade
GOOG Alphabet Inc. 1,061.49 -3.22 -0.30 1,658,116 Trade
HL Hecla Mining Company 2.58 0.07 2.79 9,069,233 Trade
HSY The Hershey Company 109.15 0.74 0.68 1,606,915 Trade
RES RPC Inc. 14.01 0.57 4.24 1,693,191 Trade
BMY Bristol-Myers Squibb Company 54.07 0.80 1.50 10,125,941 Trade
OAS Oasis Petroleum Inc. 8.29 -0.20 -2.36 11,556,759 Trade
PPC Pilgrim's Pride Corporation 19.55 0.32 1.66 1,150,771 Trade
STJ St. Jude Medical Inc. n/a n/a n/a 0 Trade
LULU lululemon athletica inc. 134.53 -5.30 -3.79 1,788,059 Trade
DSW DSW Inc. 25.95 0.54 2.13 2,328,623 Trade
LEN Lennar Corporation Class A 41.05 1.52 3.85 5,252,922 Trade
KEG Key Energy Services Inc. 8.29 0.04 0.48 43,899 Trade
WFC Wells Fargo & Company 52.94 0.12 0.23 18,872,541 Trade
STEM StemCells Inc. n/a n/a n/a n/a
HPQ HP Inc. 24.16 -0.01 -0.04 8,672,140 Trade
NFLX Netflix Inc. 286.21 -3.85 -1.33 9,099,485 Trade
YHOO Yahoo! Inc. n/a n/a n/a 0 Trade
PACB Pacific Biosciences of California Inc. 7.54 -0.07 -0.92 6,319,030 Trade
CVS CVS Health Corporation 79.33 -0.51 -0.64 6,568,357 Trade
MBT Mobile TeleSystems PJSC 8.31 -0.14 -1.66 1,775,612 Trade
STO EQNR Statoil ASA n/a n/a n/a 0
BRCM Broadcom Corp. n/a n/a n/a 0 Trade
SLW WPM Silver Wheaton Corp (Canada) n/a n/a n/a n/a
YOKU Youku Tudou Inc ADR (Sponsored) n/a n/a n/a 0 Trade
BG Bunge Limited 58.41 -0.10 -0.17 1,791,726 Trade
CAG ConAgra Brands Inc. 33.07 0.65 2.00 8,504,695 Trade
DMND Diamond Foods Inc n/a n/a n/a 0 Trade
VIV Telefonica Brasil S.A. ADS 12.17 0.25 2.10 922,892 Trade
ALGT Allegiant Travel Company 120.12 -1.31 -1.08 128,775 Trade
SYK Stryker Corporation 172.16 3.44 2.04 1,747,776 Trade
HNP Huaneng Power Intl 24.07 -0.09 -0.37 12,026 Trade
CX Cemex S.A.B. de C.V. Sponsored ADR 5.05 0.06 1.20 8,200,452 Trade
WMGI Wright Medical Group N.V. 29.54 0.90 3.14 1,854,956 Trade
NIHD NII Holdings Inc. 5.48 -0.29 -4.94 2,546,983 Trade

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