Equities Sector Coverage: Rocky Global Economy Has Investors Worried

Sector Recap  |

The 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
CCL Carnival Corporation 42.78 0.74 1.75 1,283,515 Trade
GEN Genesis Healthcare Inc. 1.40 0.09 6.87 261,970 Trade
UAL United Airlines Holdings Inc. 88.29 1.32 1.52 1,552,118 Trade
TDW Tidewater Inc. 15.17 -0.07 -0.46 20,745 Trade
CVX Chevron Corporation 117.43 1.25 1.07 1,299,102 Trade
RIG Transocean Ltd (Switzerland) 4.85 0.21 4.53 10,746,403 Trade
SCVL Shoe Carnival Inc. 33.40 0.20 0.59 102,065 Trade
VALE VALE S.A. American Depositary Shares Each Representing one 11.50 -0.08 -0.69 7,076,918 Trade
WPI Watson Pharmaceuticals Inc. n/a n/a n/a 0 Trade
LGF Lions Gate Entertainment Corporation n/a n/a n/a 0 Trade
JNJ Johnson & Johnson 133.38 2.66 2.03 4,999,099 Trade
AA Alcoa Corporation 19.65 0.48 2.49 4,829,176 Trade
CNP CenterPoint Energy Inc (Holding Co) 28.08 0.19 0.68 2,665,110 Trade
RAD Rite Aid Corporation 9.45 0.23 2.49 1,663,557 Trade
CGECF Cogeco Inc. 71.80 0.00 0.00 0
TASR TASER International Inc. n/a n/a n/a n/a
S Sprint Corporation 6.43 0.08 1.18 3,837,037 Trade
PPL PPL Corporation 32.09 -0.06 -0.19 6,203,767 Trade
AMRN Amarin Corporation plc 15.89 0.44 2.85 2,263,213 Trade
PVH PVH Corp. 88.39 1.45 1.67 271,037 Trade
CVBF CVB Financial Corporation 20.69 0.36 1.77 98,403 Trade
VOD Vodafone Group Plc 20.57 0.39 1.95 3,557,819 Trade
XEC Cimarex Energy Co 44.71 0.05 0.11 528,963 Trade
COP ConocoPhillips 56.32 0.19 0.33 2,960,401 Trade
VZ Verizon Communications Inc. 60.05 0.45 0.76 3,535,661 Trade
FHN First Horizon National Corporation 16.12 0.21 1.32 2,179,106 Trade
DG Dollar General Corporation 162.07 0.86 0.53 356,646 Trade
MCD McDonald's Corporation 207.37 -1.01 -0.48 1,332,395 Trade
FCX Freeport-McMoRan Inc. 9.56 0.06 0.58 8,783,811 Trade
PSO Pearson Plc 8.72 0.12 1.40 188,321 Trade
CIEN Ciena Corporation 37.87 0.35 0.92 421,751 Trade
EMR Emerson Electric Company 68.38 1.17 1.74 1,841,982 Trade
MLHR Herman Miller Inc. 44.62 0.03 0.06 80,557 Trade
HOS Hornbeck Offshore Services 0.69 0.01 1.62 72,415 Trade
LULU lululemon athletica inc. 203.06 0.02 0.01 896,445 Trade
X United States Steel Corporation 11.59 0.43 3.81 8,166,289 Trade
PFE Pfizer Inc. 36.66 0.36 0.98 5,358,785 Trade
NVO Novo Nordisk A/S 52.48 0.45 0.86 335,101 Trade
ALV Autoliv Inc. 79.87 1.03 1.31 245,944 Trade
FRC FIRST REPUBLIC BANK 103.45 6.27 6.45 882,049 Trade
SWHC Smith & Wesson Holding Corporation n/a n/a n/a n/a
FDX FedEx Corporation 149.26 2.48 1.69 1,252,475 Trade
MRK Merck & Company Inc. (new) 84.89 0.20 0.24 1,876,333 Trade
DFS Discover Financial Services 79.59 1.84 2.37 479,312 Trade
BCH Banco De Chile ADS 28.68 -0.12 -0.42 35,337 Trade
SEE Sealed Air Corporation 40.55 -0.07 -0.17 156,309 Trade
BP BP p.l.c. 37.60 0.18 0.47 2,858,931 Trade
WDC Western Digital Corporation 60.40 1.12 1.89 1,308,648 Trade
NLY Annaly Capital Management Inc 8.78 0.11 1.27 3,130,004 Trade
T AT&T Inc. 37.92 0.45 1.19 7,973,038 Trade
DUK Duke Energy Corporation (Holding Company) 95.06 -0.07 -0.07 638,526 Trade
CAG ConAgra Brands Inc. 27.16 -0.63 -2.25 3,319,448 Trade
DMND Diamond Foods Inc n/a n/a n/a 0 Trade
FCEL FuelCell Energy Inc. 0.29 -0.01 -3.05 5,942,193 Trade
RAX Rackspace Hosting Inc n/a n/a n/a 0 Trade
AEP American Electric Power Company Inc. 92.11 0.08 0.08 476,320 Trade
CMCSA Comcast Corporation Class A Common Stock 45.42 0.19 0.42 2,972,523 Trade
FFIV F5 Networks Inc. 135.89 0.49 0.36 191,802 Trade
TSEM Tower Semiconductor Ltd. 21.65 0.57 2.70 125,031 Trade
AAPL Apple Inc. 236.00 0.13 0.06 11,043,139 Trade
XOM Exxon Mobil Corporation 69.92 0.74 1.06 2,557,181 Trade

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