Equities Sector Coverage: Rocky Global Economy Has Investors Worried

Sector Recap |

Rocky Global Economy Has Investors WorriedThe Conference Board reported that Leading Indicators rose 0.7% in February. Gold declined from $1656.6 the Troy ounce to $1625.0 staying below its 200-day simple moving averages at $1681.3 for six consecutive days. Crude oil declined from $107.12 per barrel to $104.50. The euro versus the dollar declined from 1.3254 to 1.3138. The Dow Industrial Average traded down to a day’s low at 13,017.42. The NASDAQ’s traded down to a day’s low at 3050.70.

Asian stocks rebounded on Thursday despite a weaker than expected manufacturing report out of China. The Nikkei 225 ended their session at 10,127 – up 0.40% on the day. The Hang Seng ended their session at 20,902 – up 0.22% on the day. European stocks slumped on Thursday on the global economic concerns. The FTSE 100 ended their session at 5,846 – down 0.79% on the day. The DAX ended their session at 6,981 – down 1.27% on the day. The CAC 40 ended their session at 3,472 – down 1.56% on the day.

The yield on the 10-Year US Treasury declined from 2.312 percent to 2.244 staying above its 200-day simple moving average at 2.207. Initial Jobless Claims declined to 348,000, the first reading since the end of 2007 below the recessionary threshold of 350,000. Freddie Mac reported that its 30-Year fixed rate mortgage rose to 4.08% from 3.92% tightening the refinancing window.

Energy

A Brazilian federal prosecutor has formally filed criminal charges against Chevron (CVX), Transocean (RIG) and 17 of the companies' employees for last November's oil spill, raising the stakes in a legal saga that has added to Chevron's woes in Latin America and threatens to slow Brazil's offshore oil boom. BP (BP), Exxon Mobil (XOM) and ConocoPhillips (COP) are discussing a $40B project to export natural gas from Alaska to Asia, sources tell The Financial Times. Gulfmark Offshore (GLF) and Hornbeck Offshore (HOS) are each initiated with Equal Weights at Morgan Stanley, which has an Overweight on Tidewater (TDW). Cimarex (XEC) is an Above Average at Caris & Company. Exxon Mobil (XOM) is now Neutral from Underweight with a $92 target at JPMorgan. Subsea 7 SA (SUBCY) is now Overweight from Neutral at JP Morgan.

Energy Select Sector SPDR (XLE) was trading at $71.48 at 4:00 PM on Thursday, down 2.26% on the day – up 3.40% year-to-date. The February 2012 change was +5.93%. The 2011 change was -1.29%.
Big Movers: (KWK) -9%.

Materials

Gold mines in Mali owned by Randgold Resources Ltd. (GOLD) are operating as normal Thursday, but the company, which relies on Mali for the biggest share of its gold output, is watching the country closely after members of Mali's army toppled the government.
The Materials Select Sector SPDR (XLB) was trading at $36.52 at 4:00 PM on Thursday, down 1.62% on the day – up 9.01% year-to-date. The February 2012 change was -0.56%. The 2011 change was -12.78%.
Big Movers: (GOLD) -11%, (CAGC) +9.5%.
Heavily Traded: (AA) -2.5%, (FCX) -4.25%, (VALE) -2.5%, (X) -5%.

Industrials

FedEx (FDX) beat estimates by 20 cents with revenue in-line with estimates. The company forecasts FQ4 EPS of $1.75-$2.00 and FY12 of $6.35-$6.60 and expects capital spending of $4.2B during fiscal year. Herman Miller (MLHR) missed estimates by a penny and revenue by $9M. United Continental (UAL) is initiated with an Outperform at Raymond James. Taser (TASR) is taken to Neutral from Underweight at JPMorgan with a price objective of $5. Emerson Electric (EMR) is upgraded to Buy from Neutral at Nomura.

The Industrial Select Sector SPDR (XLI) was trading at $37.10 at 4:00 PM on Thursday, down 1.12% on the day – up 9.93% year-to-date. The February 2012 change was +2.79%. The 2011 change was -3.21%.
Big Movers: (FCEL) -13%, (TASR) +9%.

Consumer Discretionary

McDonald's (MCD) CEO Jim Skinner will retire at the end of June after 41 years with the company, with McDonald's President and COO Don Thompson appointed to replace him. Verizon (VZ) and Comcast (CMCSA) executives were yesterday grilled at Congressional hearings over Verizon's spectrum purchase/reseller deals with Comcast and other cable companies. Lululemon Athletica (LULU) beat estimates by 2 cents and revenue by $9.3M. Guidance: FQ1 net revenue $265M-$270M, EPS $0.28-$0.29 (versus consensus of $257.46M and $0.30); FY 2012 net revenue $1.3B-$1.325B and EPS $1.50-$1.57 (versus consensus of $1.31B and $1.61). Perry Ellis International (PERY) beat estimates by a penny with revenue in-line with estimates. Dollar General (DG) beat estimates by 5 cents and revenue by $80M The company expects FY12 total sales to increase 8%-9% and same-store sales 3%-5%, and sees FY12 EPS falling in a range of $1.60-$1.65. Sonic (SONC) beat estimates by a penny with revenue in-line with estimates. Carnival Corp (CCL) is a new Neutral at Longbow. McGraw-Hill (MHP) is a fresh Buy at Jefferies. Pearson Plc (PSO) is a new Hold at Jefferies. Shoe Carnival (SCVL) is upgraded to Buy from Neutral at Sterne Agee with a target of $34. Lions Gate Entertainment (LGF) is lifted to Below Average from Sell at Caris Lions, but is lowered to Equal Weight from Overweight at Evercore. Autoliv (ALV) gets upgraded to Neutral from Sell at Goldman Sachs. Education Management (EDMC) is moved to Equal Weight from Underweight at Morgan Stanley. PVH Corp (PVH) is upgraded to Buy from Hold at Deutsche Bank.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $44.60 at 4:00 PM on Thursday, down 0.25% on the day – up 14.30% year-to-date. The February 2012 change was +10.09%. The 2011 change was +4.30%.
Big Movers: (SCVL) 20%, (SWHC) +13%.

Consumer Staples

ConAgra Foods (CAG) beat estimates by 2 cents with revenue in-line with estimates.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.68 at 4:00 PM on Thursday, up slightly on the day – up 3.66% year-to-date. The February 2012 change was +3.75%. The 2011 change was +10.85%.
Big Movers: (SEED) -9%, (DMND) -6.75%, (CHBT) -6.5%, (RAD) -6.25%.

Health Care

C.R. Bard (BCR) is now Neutral from Sell at Goldman. Novo-Nordisk A/S (NVO) is downgraded to Sell from Hold at Deutsche Bank.
The Health Care Select Sector SPDR (XLV) was trading at $36.51 at 4:00 PM on Thursday, down 0.34% on the day – up 5.25% year-to-date. The February 2012 change was +1.06%. The 2011 change was +10.32%.
Heavily Traded: (PFE) flat, (MRK) +0.3%, (WPI) +4.5%, (JNJ) -0.2%, (AMRN) +1.2%.

Financials

Discover Financial Services (DFS) beat estimates by 22 cents and revenue by $40M. Bank of Ireland (IRE) is started with a Sell at Citigroup, which has a new Neutral on Deutsche Boerse AG (DBOEY). Banco de Chile (BCH) is initiated with an Outperform at Credit Suisse. First Republic Bank (FRC) is taken to Overweight from Equal Weight at Morgan Stanley. Annaly Capital Management (NLY) is now Underperform from Neutral at Sterne Agee. CVB Financial (CVBF) is cut to Hold from Buy with a $12 price target at Wunderlich. Associated Banc-Corp (ASBC) is downgraded to Underweight from Equal Weight at Morgan Stanley, which reduces rival First Horizon (FHN) to Equal Weight from Overweight.
The Financial Select Sector SPDR (XLF) was trading at $15.595 at 4:00 PM on Thursday, down 1.33% on the day – up 19.96% year-to-date (the strongest performing sector). The February 2012 change was +5.02%. The 2011 change was -18.50%; the weakest performing sector for the year.

Information Technology

BrightSource looks to buck dark solar picture in IPO. In spite of the dismal environment for the solar industry and the shares of companies dependent on it, BrightSource Energy, a provider of systems for building solar thermal power plants, plans to sell 6.9M shares for $21-$23 in an IPO under the ticker (BRSE). Research In Motion (RIMM) has lost its position as the top smartphone producer in its home nation of Canada, according to data compiled by IDC and Bloomberg. The company shipped 2.08M Blackberrys last year vs. Apple's (AAPL) 2.85M units. Ciena (CIEN) is begun with a Buy at Nomura. F5 Networks (FFIV) is a new Neutral at Nomura. JA Solar (JASO) is reinstated with a Neutral at Credit Suisse. OpenTable (OPEN) is upgraded to Outperform from Market Perform at Raymond James. Western Digital (WDC) is boosted to Strong Buy from Buy at Needham with a target of $66. Rackspace (RAX) gets reduced to Neutral from Buy at Goldman.
The Technology Select Sector SPDR (XLK) was trading at $29.99 at 4:00 PM on Thursday, down 0.23% on the day – up 17.84% year-to-date. The February 2012 change was +7.08%. The 2011 change was +1.03%.
Big Movers: (TSEM) +13%, (CVG) +9.5%.

Telecommunication Services

Verizon (VZ) and Comcast (CMCSA) executives were yesterday grilled at Congressional hearings over Verizon's spectrum purchase/reseller deals with Comcast and other cable companies.
The NASDAQ Telecommunications Index (IXTC) was trading at $216.27 at 4:00 PM on Thursday, down 0.42% on the day – up 9.82% year-to-date. The February 2012 change was +1.63%. The 2011 change was -12.62%.
Heavily Traded: (S) -1.4%, (T) -0.2%, (CLWR) -2.9%, (VOD) +1.3%, (VZ) -0.3%.

Utilities

American Electric Power (AEP) is increased to Sector Perform from Underperform at RBC Capital.
The Utilities Select Sector SPDR (XLU) was trading at $34.59 at 4:00 PM on Thursday, up 0.23% on the day – down 3.86% year-to-date (the weakest performing sector / the only negative sector). The February 2012 change was +0.61%. The 2011 change was +14.81%; the strongest performing sector for the year.
Heavily Traded: (DUK) -0.2%, (GEN) -3.4%, (CNP) +0.3%, (PPL) -0.8%, (EXC) +0.6%.

STOCKS:  CVX, RIG, BP, XOM, COP, GLF, HOS, TDW, XEC, XOM, SUBCY, GOLD, CAGC, AA, FCX, VALE, X, FDX, MLHR, UAL, TASR, EMR, FCEL, MCD, VZ, CMCSA, LULU, PERY, DG, SONC, CCL, MHP, PSO, SCVL, LGF, ALV, EDMC, PVH, SWHC, CAG, SEE, DMND, CHBT, RAD, BCR, NVO, PFE, MRK, WPI, JNJ, AMRN, DFS, IRE, DBOEY, BCH, FRC, NLY, CVBF, ASBC, FHN, BRSE, RIMM, AAPL, CIEN, FFIV, JASO, OPEN, WDC, RAX, TSEM, CVG, S, T, CLWR, VOD, AEP, DUK, GEN, CNP, PPL, EXC

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
AA Alcoa Inc. 9.68 -0.08 -0.82 10,111,624
AAPL Apple Inc. 112.88 0.17 0.15 29,869,442
AEP American Electric Power Company 66.36 -0.30 -0.45 1,745,753
ALV Autoliv Inc. 106.16 -1.16 -1.08 244,618
AMRN Amarin Corporation plc 3.12 0.18 6.12 10,178,869
BCH Banco De Chile ADS 67.95 -0.52 -0.76 25,671
BCR C.R. Bard Inc. 227.89 -2.02 -0.88 463,951
BP BP p.l.c. 33.68 -0.28 -0.82 4,579,521
CAG ConAgra Foods Inc. 43.04 -0.51 -1.17 3,320,940
CCL Carnival Corporation 46.47 -0.79 -1.67 10,295,593
CGECF Cogeco Inc. 39.56 0.00 0.00 0
CIEN Ciena Corporation 22.03 -0.13 -0.59 1,529,394
CMCSA Comcast Corporation Class A Common Stock 65.81 -1.34 -2.00 7,822,463
CNP CenterPoint Energy Inc (Holding Co) 24.26 0.07 0.29 1,913,201
COP ConocoPhillips 40.02 0.08 0.20 4,985,916
CVBF CVB Financial Corporation 17.20 -0.32 -1.83 377,500
CVG Convergys Corporation 29.57 -0.04 -0.14 468,906
CVX Chevron Corporation 98.78 -0.44 -0.44 5,781,775
DFS Discover Financial Services 56.73 -0.66 -1.15 2,616,220
DG Dollar General Corporation 71.69 -0.40 -0.55 2,461,619
DMND Diamond Foods Inc. n/a n/a n/a 0
DUK Duke Energy Corporation (Holding Company) 82.15 -0.37 -0.45 2,718,086
EMR Emerson Electric Company 51.43 -0.49 -0.94 2,365,689
EXC Exelon Corporation 34.82 0.02 0.06 3,545,719
FCEL FuelCell Energy Inc. 5.27 -0.02 -0.38 300,679
FCX Freeport-McMoRan Inc. 10.51 -0.12 -1.13 24,061,045
FDX FedEx Corporation 175.34 0.95 0.54 2,420,820
FFIV F5 Networks Inc. 119.45 -1.04 -0.86 239,953
FHN First Horizon National Corporation 14.86 -0.38 -2.49 1,774,379
FRC FIRST REPUBLIC BANK 77.03 -0.70 -0.90 808,417
GEN Genesis Healthcare Inc. 2.71 -0.01 -0.37 149,647
GLF GulfMark Offshore Inc. New 1.59 -0.22 -12.15 1,184,583
HOS Hornbeck Offshore Services 4.65 -0.01 -0.21 1,556,361
JASO JA Solar Holdings Co. Ltd. 5.93 -0.09 -1.50 453,611
JNJ Johnson & Johnson 117.78 -1.03 -0.87 5,998,854
LGF Lions Gate Entertainment Corporation 20.11 -0.59 -2.85 2,116,118
LULU lululemon athletica inc. 64.03 -1.16 -1.78 1,574,455
MCD McDonald\'s Corporation 116.53 -0.64 -0.55 3,022,356
MLHR Herman Miller Inc. 29.20 -0.34 -1.15 833,600
MRK Merck & Company Inc. (new) 62.15 -0.81 -1.29 6,983,821
NLY Annaly Capital Management Inc 10.92 0.13 1.20 9,583,470
NVO Novo Nordisk A/S 44.43 -0.45 -1.00 1,940,698
PERY Perry Ellis International Inc. 19.40 -0.63 -3.15 46,441
PFE Pfizer Inc. 33.64 -0.62 -1.81 29,525,632
PPL PPL Corp 35.76 0.06 0.17 4,682,299
PSO Pearson Plc 9.46 -0.39 -3.96 836,009
PVH PVH Corp. 105.80 -2.80 -2.58 602,711
RAD Rite Aid Corporation 8.04 -0.05 -0.62 11,537,983
RAX Rackspace Hosting Inc 31.56 0.00 0.00 1,554,145
RIG Transocean Ltd (Switzerland) 9.52 0.42 4.62 14,761,465
S Sprint Corporation 6.65 0.01 0.15 13,903,550
SCVL Shoe Carnival Inc. 26.44 -0.78 -2.87 57,872
SEE Sealed Air Corporation 46.67 0.09 0.19 1,398,370
SONC Sonic Corp. 27.39 -0.02 -0.07 622,447
SWHC Smith & Wesson Holding Corporation 25.53 -2.03 -7.37 5,491,868
T AT&T Inc. 41.14 -0.14 -0.34 16,647,231
TASR TASER International Inc. 28.30 0.20 0.71 696,104
TDW Tidewater Inc. 2.42 -0.01 -0.41 847,046
TSEM Tower Semiconductor Ltd. 15.02 -0.29 -1.89 395,105
UAL United Continental Holdings 49.45 -1.50 -2.94 4,693,626
VALE VALE S.A. American Depositary Shares Each Represen 5.38 -0.04 -0.74 13,172,066
VOD Vodafone Group Plc 29.07 -0.08 -0.27 5,428,168
VZ Verizon Communications Inc. 52.15 -0.41 -0.78 10,559,019
WDC Western Digital Corporation 57.01 1.08 1.93 5,901,548
WPI Watson Pharmaceuticals Inc. n/a n/a n/a 0
XEC Cimarex Energy Co 124.58 0.78 0.63 1,005,169
XOM Exxon Mobil Corporation 83.06 -0.39 -0.47 10,860,320

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