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
CCL Carnival Corporation 53.52 0.22 0.41 1,284,071
BCR C.R. Bard Inc. 231.26 -0.20 -0.09 219,566
GEN Genesis Healthcare Inc. 4.23 -0.02 -0.35 95,558
CVG Convergys Corporation 25.26 -0.23 -0.90 105,647
UAL United Continental Holdings 73.10 -2.14 -2.84 1,545,272
TDW Tidewater Inc. 2.10 -0.16 -7.08 1,301,984
CVX Chevron Corporation 115.40 -0.20 -0.17 2,741,901
RIG Transocean Ltd (Switzerland) 14.72 -0.59 -3.85 9,821,235
SCVL Shoe Carnival Inc. 25.14 -0.23 -0.91 51,453
VALE VALE S.A. American Depositary Shares Each Represen 10.46 0.43 4.29 22,575,311
WPI Watson Pharmaceuticals Inc. n/a n/a n/a 0
SONC Sonic Corp. 25.18 -0.22 -0.87 420,986
LGF Lions Gate Entertainment Corporation n/a n/a n/a 0
JNJ Johnson & Johnson 114.15 0.00 0.00 3,781,154
AA Alcoa Inc. 35.85 0.19 0.53 2,979,255
CNP CenterPoint Energy Inc (Holding Co) 25.37 -0.23 -0.90 803,781
RAD Rite Aid Corporation 7.11 -0.36 -4.76 29,011,384
CGECF Cogeco Inc. 39.05 0.00 0.00 0
TASR TASER International Inc. 24.83 -0.02 -0.10 217,620
AAPL Apple Inc. 120.10 0.10 0.08 14,737,563
S Sprint Corporation 9.19 0.26 2.91 14,060,960
PPL PPL Corp 34.35 -0.05 -0.15 1,152,818
PERY Perry Ellis International Inc. 23.83 0.44 1.88 44,920
AMRN Amarin Corporation plc 2.90 -0.06 -1.86 765,532
PVH PVH Corp. 92.09 -0.73 -0.79 310,603
CVBF CVB Financial Corporation 22.59 -0.21 -0.90 190,127
VOD Vodafone Group Plc 25.90 0.11 0.41 2,520,667
XEC Cimarex Energy Co 136.66 -1.32 -0.96 357,432
COP ConocoPhillips 49.97 -0.76 -1.50 3,454,593
VZ Verizon Communications Inc. 52.46 -0.27 -0.50 7,768,033
FHN First Horizon National Corporation 19.34 -0.07 -0.36 1,066,503
DG Dollar General Corporation 70.37 -0.63 -0.89 1,190,872
MCD McDonald\'s Corporation 121.47 -0.79 -0.65 4,737,826
FCX Freeport-McMoRan Inc. 15.65 0.14 0.87 10,923,321
PSO Pearson Plc 7.39 0.16 2.21 1,000,473
CIEN Ciena Corporation 23.92 -0.12 -0.50 896,592
EMR Emerson Electric Company 58.19 -0.64 -1.09 1,865,882
MLHR Herman Miller Inc. 30.55 -0.45 -1.45 85,417
HOS Hornbeck Offshore Services 6.70 -0.35 -4.90 633,652
GLF GulfMark Offshore Inc. New 1.43 0.03 1.79 381,155
JASO JA Solar Holdings Co. Ltd. 4.81 -0.14 -2.73 230,071
LULU lululemon athletica inc. 66.97 -0.35 -0.52 528,076
X United States Steel Corp. 32.92 -0.46 -1.38 9,703,418
XOM Exxon Mobil Corporation 85.06 -0.83 -0.97 6,045,356
PFE Pfizer Inc. 31.48 -0.30 -0.93 14,170,944
NVO Novo Nordisk A/S 35.36 -0.17 -0.49 1,186,916
ALV Autoliv Inc. 112.04 -1.60 -1.41 274,579
FRC FIRST REPUBLIC BANK 92.46 -0.10 -0.11 833,680
SWHC Smith & Wesson Holding Corporation n/a n/a n/a n/a
FDX FedEx Corporation 185.44 -0.29 -0.16 643,456
MRK Merck & Company Inc. (new) 61.93 -0.61 -0.97 6,211,360
DFS Discover Financial Services 69.38 -0.82 -1.17 1,310,309
BCH Banco De Chile ADS 71.96 0.30 0.42 18,496
SEE Sealed Air Corporation 48.22 -0.05 -0.10 530,579
BP BP p.l.c. 36.46 -0.38 -1.03 4,013,832
WDC Western Digital Corporation 72.17 -0.46 -0.63 3,015,562
EXC Exelon Corporation 35.47 -0.33 -0.92 1,735,336
NLY Annaly Capital Management Inc 10.26 0.10 0.98 4,221,840
T AT&T Inc. 41.78 0.33 0.80 10,719,835
DUK Duke Energy Corporation (Holding Company) 77.05 -0.28 -0.36 1,054,680
CAG ConAgra Foods Inc. 38.88 -0.25 -0.64 1,793,894
DMND Diamond Foods Inc. n/a n/a n/a 0
FCEL FuelCell Energy Inc. 1.65 -0.05 -2.94 344,123
RAX Rackspace Hosting Inc n/a n/a n/a 0
AEP American Electric Power Company 62.72 -0.19 -0.30 687,447
CMCSA Comcast Corporation Class A Common Stock 73.25 -0.32 -0.43 4,419,265
FFIV F5 Networks Inc. 141.69 -0.41 -0.29 460,991
TSEM Tower Semiconductor Ltd. 20.22 -0.15 -0.71 386,305

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