Equities Sector Coverage: Santa Claus Rally on the Way to Wall Street?

Sector Recap |

Housing ConstructionHousing Starts data showed a better-than-expected rise of 9.3% in November to an annual rate of 685,000 units. Permits rose by 5.7% to a 681,000 unit rate. The Dow Jones Industrial Average surged back above its 50-day and 200-day simple moving averages at 11,833 and 11,936 with a day’s high at 12,117.13. The NASDAQ rebounded from 2566.87 to 2604.52 lagging its 50-day and 200-day simple moving averages at 2617 and 2663.

Asian stocks were slightly higher on Tuesday with the Nikkei 225 ending the day at 8,336 – up 0.49%, and the Hang Seng ending the day at 18,080 – up 0.06%. European stocks surged as euro zone concerns ebb. The FTSE 100 ending the day at 5,420 – up 1.02%; the DAX ending the day at 5,847 - up 3.11%; and the CAC 40 ending the day at 3,055 – up 2.73%. The flight to quality eased and the yield on the 10-Year US Treasury note rose from 1.816 percent to 1.923.

Gold rebounded from $1594.1 the Troy ounce to $1620.8 versus its 200-day simple moving average at $1617.1. Crude oil rebounded from $94.14 to $97.45 per barrel back above its 50-day and 200-day simple moving averages at $94.88 and $95.79. The euro versus the dollar rebounded from 1.2996 to 1.3131 helping the turnaround for gold, crude oil and US stocks. The euro continues to stay above its January 2011 low at 1.2878.

Energy

In afternoon trading: Shares of Cobalt International Energy (CIE) are up about 38%. Shares of Canadian Solar (CSIQ) are up about 35%. Shares of Yingli Green Energy (YGE) are up about 16%. Shares of Gulf Keystone Petroleum (GUKYF) are up about 12%. Shares of Penn Virginia (PVA) are up about 11%. Shares of Overseas Shipholding Group (OSG) are up about 11%. Shares of Basic Energy Services (BAS) are up about 10.5%. Shares of RPC Inc. (RES) are up about 10.5%.

Energy Select Sector SPDR (XLE) was trading at $67.65 at 4:00 PM on Tuesday, up 4.11% on the day – down 0.88% year-to-date.

Materials

In afternoon trading: Shares of OMNOVA Solutions (OMN) are up about 17%. Shares of Golden Minerals (AUMN) are up about 14.25%. Shares of STR Holdings (STRI) are up about 10.25%. Shares of Ferro Corp. (FOE) are up about 10%. Shares of Mag Silver (MVG) are up about 9.75%. Shares of Haynes International (HAYN) are up about 9%. Shares of US Energy (USEG) are up about 9%.

The Materials Select Sector SPDR (XLB) was trading at $33.21 at 4:00 PM on Tuesday, up 3.94% on the day – down 13.54% year-to-date.

Industrials

As expected, Lockheed Martin (LMT) won a contract to supply 42 stealth F-35 jets to Japan for an initial $5.33B, beating Boeing (BA) and the Eurofighter Typhoon. Navistar International (NAV) beat estimates by 29 cents, while missing revenue by $120M. SeaCube Container Leasing (BOX) is a new Buy at Citigroup. Robert Half International (RHI) and Manpower (MAN) are both reduced to Neutral from Buy at Bank of America-Merrill Lynch. Owens Corning (OC) is reduced to Outperform from Top Pick at RBC Capital. In afternoon trading: Shares of American Semiconductor (AMSC) are up about 12%. Shares of USG Corp. (USG) are up about 11.5%. Shares of II VI Inc. (IIVI) are up about 11.25%. Shares of Acacia Research (ACTG) are up about 10.25%. Shares of KBR Inc. (KBR) are up about 10%.

The Industrial Select Sector SPDR (XLI) was trading at $33.44 at 4:00 PM on Tuesday, up 3.42% on the day – down 4.12% year-to-date.

Consumer Discretionary

Collins Stewart launches new Neutrals on Victoria’s Secret owner Limited Brands (LTD), Urban Outfitters (URBN), Coach (COH), Tiffany & Co (TIF), Dollar Tree (DLTR), Family Dollar (FDO), Home Depot (HD), and Lowe’s (LOW). It begins Buy rated coverage on Ross Stores (ROST), TJX Cos (TJX), Aaron’s Inc (AAN), Bed Bath & Beyond (BBBY), Big Lots (BIG), Lumber Liquidators (LL), Rent-A-Center (RCII), and Williams-Sonoma (WSM). Lastly, Gap Inc (GPS) gets started at a Sell. Chipotle Mexican Grill (CMG) is covered with an Outperform by Sanford Bernstein. In afternoon trading: Home builder stocks are rallying: Shares of Hovnanian Enterprises (HOV) are up about 17.25%. Shares of Beazer Homes (BZH) are up about 14.5%. Shares of PulteGroup (PHM) are up about 10%. Shares of KB Home (KBH) are up about 9.5%. Shares of Meritage Homes (MTH) are up about 9.25%. Shares of Standard Pacific (SPF) are up about 8.5%. Shares of Dangdang Inc. (DANG) are up about 12%. Shares of Skullcandy (SKUL) are up about 10.5%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $38.51 at 4:00 PM on Tuesday, up 2.75% on the day – up 2.94% year-to-date.

Consumer Staples

ConAgra Foods (CAG) beat estimates by 4 cents and revenue by $70M. General Mills (GIS) missed estimates by 3 cents, while beating revenue by $20M. The company sees FY12 double-digit growth in sales and reaffirms FY12 EPS guidance of $2.59-$2.61. Sanderson Farms (SAFM) missed estimates by 24 cents, while beating revenue by $25M. Beam Inc (BEAM) is a new Neutral at JPMorgan. CVS Caremark (CVS) is initiated with an Outperform at Macquarie. Danone (DANOY) is downgraded to Underperform from Neutral at Credit Suisse. Winn-Dixie Stores (WINN) gets cut to Hold from Buy at Jefferies. In afternoon trading: Shares of Prestige Brand Holdings (PBH) are up about 20.5%. Shares of CVS Caremark are up about 8.75%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $32.01 at 4:00 PM on Tuesday, up 2.07% on the day – up 9.21% year-to-date.



Healthcare

AstraZeneca (AZN) will take a Q4 pretax charge of $381.5M after two disappointing drug studies. The company confirmed its prior guidance that full-year core EPS will be in the range of $7.20-7.40, but said it's now likely to be in the lower half of this range. Baxter International (BAX) gets moved to Outperform from Top Pick at RBC Capital. In afternoon trading: Shares of Progenics Pharmaceuticals (PGNX) are up about 33%. Shares of Biostar Pharmaceuticals (BSPM) are up about 22.5%. Shares of GTx Inc. (GTXI) are up about 16.5%. Shares of Metabolix Inc. (MBLX) are up about 11%. Shares of Biosante Pharmaceuticals (BPAX) are up about 10.5%.

The Health Care Select Sector SPDR (XLV) was trading at $34.11 at 4:00 PM on Tuesday, up 2.10% on the day – up 8.29% year-to-date.

Financials

Google (GOOG) and KKR (KKR) announced today a joint investment in a California solar-power project, becoming majority owners of four solar farms and underscoring investor interest in the field even as some government incentives are phased out. Bank of America (BAC) shares dropped to a $4 handle for the first time since the week of March 6, 2009 when American stocks overall put in their epic bear market bottom. Charles Schwab Corp (SCHW) and TD Ameritrade Holding (AMTD) are each new Neutrals at Nomura with respective price objectives of $12 and $17. E*TRADE Financial (ETFC) is begun with a Buy and $10 price target. Douglas Emmett Inc (DEI) is initiated with a Buy and $22 target at KeyBanc Capital. KeyBanc covers Kilroy Realty (KRC) at a Hold as the stock appears fairly valued at current levels. Mid-America Apartment Communities (MAA) is moved to Outperform from Market Perform at Keefe Bruyette. Keefe Bruyette reduces ratings on DCT Industrial Trust (DCT), Hospitality Properties (HPT), and First Potomac Realty (FPO), all now Market Perform from Outperform. Manulife Financial (MFC) is moved to Sector Perform from Outperform at RBC Capital. In afternoon trading: Shares of Jefferies Group (JEF) are up about 24%. Shares of Cedar Realty Trust (CDR) are up about 16%.

The Financial Select Sector SPDR (XLF) was trading at $12.72 at 4:00 PM on Tuesday, up 3.79% on the day – down 20.25% year-to-date.

Information Technology

The U.S. International Trade Commission ruled HTC is violating Apple's (AAPL) patents, and has ordered a U.S. import ban on certain products to go into effect in April. Red Hat (RHT) beat estimates by 2 cents, with revenue in-line with estimates. The company's deferred revenue balance reached $819.6M - up 20% Y/Y but less than 1% Q/Q. The company also guides for FQ4 revenue of $289M-$292M and EPS of $0.26-$0.27 (the latter meshes well with a consensus of $0.26, but the former is below a consensus of $292.5M). Google (GOOG) and KKR (KKR) announced today a joint investment in a California solar-power project, becoming majority owners of four solar farms and underscoring investor interest in the field even as some government incentives are phased out. Apple (AAPL) is buying Israel's Anobit, a maker of flash storage technology, for $500M, and plans to open an R&D center in Israel, its first outside the U.S. Credit Suisse has new Neutrals on Buenos Aires-based MercadoLibre (MELI) and HomeAway Inc (AWAY). It assigns an Outperform on online restaurant reservation outfit OpenTable (OPEN). Zynga (ZNGA) is initiated at an Outperform with Wedbush. F5 Networks (FFIV) gets an Outperform-from-Perform increase at Oppenheimer with a price objective of $125. KLA-Tencor (KLAC) is lifted to Overweight from Neutral at JPMorgan. Novellus (NVLS) is taken to Neutral from Overweight at JPMorgan. In afternoon trading: Shares of Alcatel-Lucent (ALU) are up about 13%. Shares of Ciena (CIEN) are up about 12.5%. Shares of JA Solar Holdings (JASO) are up about 12.25%. Shares of Motricity (MOTR) are DOWN about 11%.

The Technology Select Sector SPDR (XLK) was trading at $25.44 at 4:00 PM on Tuesday, up 2.81% on the day – up 0.97% year-to-date.

Telecommunications Services

AT&T (T) ended its bid to acquire T-Mobile (DTEGY), taking a $4B Q4 charge for "break-up considerations." The two plan to enter a "mutually beneficial roaming agreement." Sprint (S), which would have been relegated to a junior league carrier if the deal went through, called AT&T's move "the right decision for consumers, competition and innovation in the wireless industry." AT&T Inc (T) is now Neutral from Overweight at JP Morgan. In afternoon trading: Shares of TerreStar (TSTRQ) are down about 62.5%. Shares of Towersteam (TWER) are up about 12.25%. Shares of Sprint Nextel (S) are up about 8.75%. Shares of magicJack VocalTec (CALL) are up about 8.25%. Shares of Leap Wireless (LEAP) are up about 7.75%.

The NASDAQ Telecommunications Index (IXTC) was trading at $196.86 at 4:00 PM on Tuesday, up 3.79% on the day – down 12.65% year-to-date.

Utilities

Sempra Energy (SRE) expects to meet or exceed the high end of its 2011 EPS guidance range of $4-$4.30 ($4.21 Street consensus). OGE Energy (OGE) is lifted to Buy from Hold at Jefferies. In afternoon trading: Shares of NRG Energy (NRG) are up about 6%. Heavily Active Stocks: Shares of Duke Energy (DUK) are up about 2%. Shares of AES Corp (AES) are up about 1.8%. Shares of Genon Energy (GEN) are up about 0.4%. Shares of Exelon (EXC) are up about 0.8%.

The Utilities Select Sector SPDR (XLU) was trading at $35.01 at 4:00 PM on Tuesday, up 2.13% on the day – up 11.71% year-to-date.

STOCKS: CIE, CSIQ, YGE, GUKYF, PVA, OSG, BAS, RES, OMN, AUMN, STRI, FOE, MVG, HAYN, USEG, LMT, BA, NAV, BOX, RHI, MAN, OC, AMSC, USG, IIVI, ACTG, KBR, LTD, URBN, COH, TIF, DLTR, FDO, HD, LOW, ROST, TJX, AAN, BBBY, BIG, LL, RCII, WSM, GPS, CMG, HOV, BZH, PHM, KBH, MTH, SPF, DANG, SKUL, CAG, GIS, SAFM, BEAM, CVS, DANOY, WINN, PBH, AZN, BAX, PGNX, BSPM, GTXI, MBLX, BPAX, GOOG, KKR, BAC, SCHW, AMTD, ETFC, DEI, KRC, MAA, DCT, HPT, FPO, MFC, JEF, CDR, AAPL, RHT, AAPL, MELI, AWAY, OPEN, ZNGA, FFIV, KLAC, NVLS, ALU, CIEN, JASO, MOTR, T, DTEGY, S, TSTRQ, TWER, CALL, LEAP, SRE, OGE, NRG, DUK, AES, GEN, 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
AUMN Golden Minerals Company 0.68 0.01 1.58 154,484
MVG MAG Silver Corp. n/a n/a n/a 0
RHT Red Hat Inc. 73.36 0.33 0.45 1,285,659
CMG Chipotle Mexican Grill Inc. 410.75 1.40 0.34 572,714
GEN Genesis Healthcare Inc. 4.36 -0.04 -0.91 88,792
RHI Robert Half International Inc. 49.91 0.54 1.09 614,479
MAN ManpowerGroup 93.28 1.52 1.66 519,069
ACTG Acacia Research Corp. 6.20 0.00 0.00 154,085
LMT Lockheed Martin Corporation 254.53 1.91 0.76 1,162,023
PVA Penn Virginia Corp. n/a n/a n/a 0
SRE Sempra Energy 101.77 -0.07 -0.07 635,987
AMSC American Superconductor Corporation 7.30 0.08 1.11 18,915
ETFC E*TRADE Financial Corporation 36.93 0.21 0.57 1,789,170
BAX Baxter International Inc. 46.45 -0.06 -0.13 1,240,147
KBH KB Home 16.25 -0.40 -2.40 3,664,631
GGA:CA Goldgroup Mining Inc. 0.15 0.01 3.45 154,480
KBR KBR Inc. 16.84 -0.07 -0.41 1,013,032
OC Owens Corning Inc New 53.87 1.62 3.10 2,030,305
MBLX Metabolix Inc. n/a n/a n/a n/a
DEI Douglas Emmett Inc. 36.93 0.01 0.03 447,098
BIG Big Lots Inc. 50.46 -0.04 -0.08 550,093
TIF Tiffany & Co. 81.92 1.37 1.70 2,879,236
AAPL Apple Inc. 119.04 -0.21 -0.18 26,111,948
IIVI II-VI Incorporated 30.30 0.40 1.34 241,027
S Sprint Corporation 8.61 0.15 1.77 11,828,108
SAFM Sanderson Farms Inc. 94.48 1.10 1.18 239,226
FOE Ferro Corporation 14.65 0.16 1.10 140,821
NRG NRG Energy Inc. 14.60 0.22 1.53 6,953,502
BZH Beazer Homes USA Inc. 13.31 0.07 0.53 406,305
MTH Meritage Homes Corporation 35.35 -0.10 -0.28 103,101
AMTD TD Ameritrade Holding Corporation 46.86 0.12 0.26 1,793,600
NVLS Nivalis Therapeutics Inc. 2.22 0.01 0.45 1,335,287
WSM Williams-Sonoma Inc. (DE) 49.45 0.33 0.67 829,425
LOW Lowe\'s Companies Inc. 72.15 0.57 0.80 6,947,951
TJX TJX Companies Inc. (The) 75.93 0.00 0.00 2,616,985
HOV Hovnanian Enterprises Inc. Class A 2.28 -0.17 -6.94 3,793,742
USEG U.S. Energy Corp. 1.23 0.02 1.65 157,475
MELI MercadoLibre Inc. 176.45 3.26 1.88 291,652
AES The AES Corporation 11.72 0.14 1.21 2,741,360
KRC Kilroy Realty Corporation 72.83 0.52 0.72 596,369
COH Coach Inc. 35.08 -0.03 -0.09 1,685,462
BOX Box Inc. Class A 16.92 -0.03 -0.18 1,848,721
RCII Rent-A-Center Inc. 10.39 -0.18 -1.70 763,688
DLTR Dollar Tree Inc. 77.13 -0.40 -0.52 1,746,252
FPO First Potomac Realty Trust of Beneficial Interest 10.88 0.14 1.30 111,810
BAC Bank of America Corporation 23.01 0.09 0.39 161,930,864
DANG E-Commerce China Dangdang Inc. American Depositary n/a n/a n/a 0
ROST Ross Stores Inc. 66.93 0.34 0.51 1,418,126
NAV Navistar International Corporation 29.75 0.04 0.13 426,626
GOOG Alphabet Inc. 807.88 1.52 0.19 1,099,215
GTXI GTx Inc. 5.79 0.31 5.66 42,096
BSPM Biostar Pharmaceuticals Inc. 2.96 -0.34 -10.30 222,220
YGE Yingli Green Energy Holding Company Limited ADR 2.78 0.02 0.72 24,532
CIEN Ciena Corporation 24.53 0.41 1.70 2,412,994
RES RPC Inc. 21.28 -0.08 -0.37 972,031
AAN Aaron\'s Inc. 32.05 -0.36 -1.11 546,914
PGNX Progenics Pharmaceuticals Inc. 8.96 0.04 0.45 540,167
GPS Gap Inc. (The) 23.66 -0.34 -1.42 4,734,048
USG USG Corporation 29.38 0.58 2.01 1,048,112
BBBY Bed Bath & Beyond Inc. 40.92 0.03 0.07 1,601,190
HPT Hospitality Properties Trust 31.63 0.29 0.93 504,699
AWAY HomeAway Inc. n/a n/a n/a 0
MFC Manulife Financial Corporation 18.68 0.06 0.32 2,019,635
URBN Urban Outfitters Inc. 27.05 0.03 0.11 1,210,670
JASO JA Solar Holdings Co. Ltd. 4.90 0.04 0.82 148,441
MAA Mid-America Apartment Communities Inc. 95.12 -0.99 -1.03 404,701
HD Home Depot Inc. (The) 135.04 -0.03 -0.02 3,117,703
GIS General Mills Inc. 61.08 -0.19 -0.31 1,853,784
SKUL Skullcandy Inc. n/a n/a n/a 0
ZNGA Zynga Inc. 2.64 -0.03 -1.12 10,329,720
ALU Alcatel-Lucent ADR (Sponsored) n/a n/a n/a 0
PHM PulteGroup Inc. 19.19 0.18 0.95 3,030,305
CSIQ Canadian Solar Inc. 12.45 0.05 0.40 1,216,522
KLAC KLA-Tencor Corporation 81.44 1.34 1.67 1,148,201
AZN Astrazeneca PLC 28.58 0.34 1.20 5,159,759
PBH Prestige Brand Holdings Inc. 51.90 0.42 0.82 165,439
BA Boeing Company (The) 158.83 0.54 0.34 2,435,391
OGE OGE Energy Corporation 33.75 0.05 0.15 600,883
HAYN Haynes International Inc. 42.17 -0.29 -0.68 32,944
CVS CVS Health Corporation 81.98 -0.62 -0.75 4,809,230
DCT DCT Industrial Trust Inc 47.74 0.11 0.23 459,717
OMN OMNOVA Solutions Inc. 9.75 0.05 0.52 59,046
CALL magicJack VocalTec Ltd 8.10 0.05 0.62 151,363
EXC Exelon Corporation 35.44 0.00 0.00 5,052,922
T AT&T Inc. 40.96 -0.05 -0.12 13,932,163
DUK Duke Energy Corporation (Holding Company) 77.21 -0.33 -0.43 1,954,531
CAG ConAgra Foods Inc. 38.51 0.00 0.00 2,237,059
SCHW Charles Schwab Corporation (The) 41.41 0.15 0.36 7,671,798
LL Lumber Liquidators Holdings Inc 15.72 0.25 1.62 557,806
BAS Basic Energy Services Inc. 35.35 -0.35 -0.98 400,984
SPF null n/a n/a n/a 0
KKR KKR & Co. L.P. Representing Limited Partnership In 17.23 0.00 0.00 2,577,387
TWER Towerstream Corporation 0.19 0.00 0.00 226,257
CIE Cobalt International Energy Inc. COBALT INTERNATIO 1.15 -0.04 -3.36 2,087,004
FFIV F5 Networks Inc. 143.37 0.38 0.27 451,617

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