Equities Sector Coverage: Stocks Advance After Battling Through Choppy Trading

Sector Recap |

Jet EngineDurable Goods Orders rose by a larger than expected 4.0% and up 0.7% excluding transportation. Mortgage applications for home purchases fell 5.7% to the lowest level since December 1996. The Dow Jones Industrial Average opened lower trading as low as 11,113.04 in morning trading, and rebounded solidly into the green into the last hour of trading to 11,321.47. The NASDAQ traded on both sides of the flat line on Wednesday with a low of 2420.48 and a high of 2470.22.

Asian stocks slumped on Wednesday as Moody’s downgrades Japan’s credit rating. The Nikkei 225 lost 1.07% to 8,640 with the Hang Seng plunging 2.06% to 19,467. European stocks continued an upside correction with the FTSE 100 up 1.49% to 5,206; the DAX popping 2.69% to 5,681 and the CAC 40 up 1.79% to 3,140. The yield on the 10-Year US Treasury note rose from 2.113 percent to 2.232 on Wednesday as the flight to quality eases. The US Treasury auctioned of $35 billion in 5-Year notes at 1.029% with a weaker than normal 2.71 bid to cover, and a strong 42.1% indirect bids which includes foreign central banks. The yield on the 10-Year note rose to 2.294 after the auction. Tomorrow the US Treasury auctions $29 billion 7-Year notes will be up for the bidding.

After a new all time high at $1917.9 the Troy ounce, Gold ended Tuesday with a key reversal day. From the record high to Wednesday’s low at $1751.6 gold plunged by $166.3 the Troy ounce. Crude oil declined to $84.55 per barrel then rebounded to $86.59, again staying above its 200-week simple moving average at $83.90. The euro versus the US dollar traded between 1.4384 and 1.4479.

Energy

BHP Billiton's (BHP) FH2 net profit excluding items jumped 62% to a record $10.98B (missing estimates by $720M), boosted mostly by soaring prices for iron ore. BHP raised its dividend by 22% but won't buy back shares, as speculated, because its $12.1B acquisition of Petrohawk Energy (HK) will absorb any extra cash. CNOOC (CEO) reported H1 net profit of 39.34B yuan (beats by 2.9B) on revenue of 125B yuan. Tesoro (TSO) gets lifted 180 degrees to Buy from Sell at The Benchmark Company with a target price of $25. In afternoon trading: Shares of ATP Oil & Gas (ATPG) are up about 12.25%. Shares of Magnum Hunter Resources (MHR) are up about 10.25%. Shares of Tesoro are up about 8%.

Energy Select Sector SPDR (XLE) was trading at $65.95 at 4:00 PM on Wednesday, up 0.59% on the day – down 3.37% year-to-date.

Materials

BHP Billiton's (BHP) FH2 net profit excluding items jumped 62% to a record $10.98B (missing estimates by $720M), boosted mostly by soaring prices for iron ore. BHP raised its dividend by 22% but won't buy back shares, as speculated, because its $12.1B acquisition of Petrohawk Energy (HK) will absorb any extra cash. Newmont Mining (NEM) is upgraded to Sector Perform from Underperform at RBC Capital. Nucor (NUE) is now Overweight from Equal Weight at Morgan Stanley. US Steel (X) and Steel Dynamics (STLD) are both cut by Morgan Stanley to Equal Weight from Overweight. In afternoon trading: Shares of Temple-Inland (TIN) are up about 9%. Shares of Jaguar Mining (JAG) are down about 6.5%.

The Materials Select Sector SPDR (XLB) was trading at $33.60 at 4:00 PM on Wednesday, up 1.42% on the day – down 12.52% year-to-date.

Industrials

Dycom (DY) beat estimates by 14 cents and revenue by $5M. In afternoon trading: Shares of Swift Transportation (SWFT) are up about 16.75%. Shares of Trinity Industries (TRN) are up about 12.75%. Shares of Greenbrier Companies (GBX) are up about 12.5%. Shares of Dycom are up about 11.75%. Shares of SatCon Technologies (SATC) are up about 11.75%. Shares of Capstone Turbine (CPST) are up about 10.75%.

The Industrial Select Sector SPDR (XLI) was trading at $30.88 at 4:00 PM on Wednesday, up 2.02% on the day – down 11.44% year-to-date.

Consumer Discretionary

American Eagle Outfitters (AEO) missed estimates by a penny, but beat revenue by $25M, and sees FY11 EPS of $0.85-0.95. Toll Brothers (TOL) beat estimates by 22 cents, but missed revenue by $10M. WPP (WPPGY) reported H1 net profit of £230.7M on revenue of £4.71B, and trimmed its full-year growth outlook to 5.9% from a previous 6%+. Pacific Sunwear of California (PSUN) beat estimates by 6 cents and revenue by $3M, and sees FQ3 EPS in the range of -$0.16 to -$0.29 (versus consensus of -$0.05). Saks (SKS) is lifted to Neutral from Underperform with an $8 objective at Credit Suisse. Summit Hotel (INN) is upgraded to Buy from Hold at Keybanc. Strayer Education (STRA) is now Neutral from Sell at Sterne Agee. Pacific Sunwear (PSUN) is downgraded to Perform from Outperform at Oppenheimer. In afternoon trading: Shares of E-Commerce China Dangdang (DANG) are up about 12%. Shares of MGM Resorts International (MGM) are up about 11.75%. Shares of American Eagle are down about 9.25%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $36.10 at 4:00 PM on Wednesday, up 1.78% on the day – down 3.50% year-to-date.

Consumer Staples

Heineken’s (HINKY) adjusted profits rose 5.7% to €694M, but the brewer warned full-year profit will be flat amid poor weather and low consumer confidence in Europe and the U.S. In afternoon trading: Shares of AgFeed Industries (FEED) are up about 6.75%. Shares of Chiquita Brands International (CQB) are up about 6.75%. Shares of Dole Food Company (DOLE) are up about 5.25%. Shares of CVS Caremark (CVS) are up about 4.75%. Shares of Heineken are down about 7.5%. Shares of Fomento Economico Mexican (FMX) are down about 5%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.38 at 4:00 PM on Wednesday, up 0.43% on the day – up 3.65% year-to-date.

Healthcare

Universal Health (UHS) is a fresh Buy at Auriga with a target of $45. Edwards Lifesciences (EW) is initiated with a Buy at Wunderlich with a target of $75. Elan (ELN) is raised to Outperform from Neutral at Credit Suisse. AtriCure (ATRC) is moved to Outperform from Market Perform at Morgan Keegan. United Therapeutics (UTHR) is downgraded to Hold from Buy at Deutsche Bank.  In afternoon trading: Shares of United Therapeutics are down about 17.75%. Shares of Adolor Corporation (ADLR) are down about 9.5%. Shares of Cadence Pharmaceuticals (CADX) are down about 7.25%. Shares of Depomed (DEPO) are up about 8.5%. Shares of Affymetrix (AFFY) are up about 8%. Shares of Amylin Pharmaceuticals (AMLN) are up about 7.75%.

The Health Care Select Sector SPDR (XLV) was trading at $32.39 at 4:00 PM on Wednesday, up 1.16% on the day – up 2.83% year-to-date.

Financials

A federal judge has turned down the FDIC's attempt to dismiss a $10B lawsuit filed by a unit of Deutsche Bank (DB) over bad mortgages that were securitized by Washington Mutual before it was seized by regulators and sold to JPMorgan (JPM). NY AG dropped from foreclosure panel. New York AG Eric Schneiderman has been removed from a committee of state AGs negotiating a deal with major banks over inappropriate foreclosure practices. The institutions involved are Bank of America (BAC), JPMorgan (JPM), Wells Fargo (WFC), Citigroup (C) and Ally Financial. Fears about legal liabilities and write-offs again played havoc with Bank of America (BAC) yesterday as five-year CDS spreads hit levels higher than during the peak of the financial crisis. LPL Investment (LPLA) is started with a Sell at Ticonderoga with a target of $22. The Hanover Insurance Group (THG) is a new Buy at Sterne Agee. Nasdaq OMX (NDAQ) is now Buy from Neutral at UBS. U-Store-It (YSI) is upgraded to Outperform from Market Perform at BMO Capital. Public Storage (PSA) gets lowered to Underperform from Market Perform at BMO Capital. In afternoon trading: Shares of MGIC Investment (MTG) are up about 33%. Shares of Radian Group (RDN) are up about 22%. Shares of The PMI Group (PMI) are up about 15.5%. Shares of Bank of America are up about 14%.

The Financial Select Sector SPDR (XLF) was trading at $12.70 at 4:00 PM on Wednesday, up 2.68% on the day – down 20.38% year-to-date.

Information Technology

Two Internet users are suing comScore (SCOR) for secretly installing illegal data-mining software on their computers. AU Optronics (AUO) is being sued by HP (HPQ), one of its largest clients, for allegedly conspiring to fix prices of thin-film transistor LCD panels. Avago Technologies (AVGO) posted FQ3 results that beat Street forecasts by 2 cents and revenue by $8M, and is guiding for FQ4 revenue growth of 2%-5%; the midpoint of that range is above consensus. Perfect World (PWRD) reported Q2 revenue of $120.6M and EPS of $1.01 (beating consensus by $12.8M and $0.44), and expects 15-22% revenue growth in Q3 (above a 14.5% consensus). Google (GOOG) is initiated with a Outperform at Robert W. Baird with a price objective of $650. ValueClick (VCLK) is a new Neutral at Robert W. Baird with a $17 price target. Multi-Fineline (MFLX) is a new Outperform at Rodman & Renshaw. International Rectifier (IRF) is begun with a Buy at The Benchmark Company. Harmonic (HLIT) has a new Hold rating established at ThinkEquity. Perfect World (PWRD) is upgraded to Outperform from Neutral at Credit Suisse. Benchmark Electronics (BHE) is cut to Sector Perform from Outperform, while Sanmina-SCI (SANM) is downgraded to Underperform from Sector Perform at RBC Capital. Fidelity National Information Services (FIS) is moved to Underweight from Neutral at JP Morgan. In afternoon trading: Shares of RealNetworks (RNWK) are down about 28.5%. Shares of Avago Technologies (AVGO) are up about 13.25%.

The Technology Select Sector SPDR (XLK) was trading at $23.68 at 4:00 PM on Wednesday, up 0.89% on the day – down 5.99% year-to-date.

Telecommunications Services

China Unicom (CHU) reported H1 net profit of 2.65B yuan (more than double consensus of 1.28B) on revenue of 101B (beats by 2B). In afternoon trading: Shares of China Unicom are up about 7.25%. Actives: Shares of Sprint Nextel (S) are up about 2.6%. Shares of AT&T (T) are up about 2.1%. Shares of Level 3 Communications (LVLT) are up about 5%. Shares of Verizon (VZ) are up about 2.1%. Shares of Vodafone (VOD) are up about 0.7%.

The NASDAQ Telecommunications Index (IXTC) was trading at $184.79 at 4:00 PM on Wednesday, up 0.35% on the day – down 18.01% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are up about 2%. Shares of Southern Co (SO) are up about 1.4%. Shares of CenterPoint Energy (CNP) are up about 2.2%. Shares of Genon Energy (GEN) are down about 0.7%. Shares of Exelon (EXC) are up about 1.9%. Shares of Calpone (CPN) are up about 5.9%.

The Utilities Select Sector SPDR (XLU) was trading at $33.60 at 4:00 PM on Wednesday, up 2.16% on the day – up 7.21% year-to-date.

STOCKS: BHP, HK, CEO, TSO, ATPG, MHR, NEM, NUE, X, STLD, TIN, JAG, DY, SWFT, TRN, GBX, SATC, CPST, AEO, TOL, WPPGY, PSUN, SKS, INN, STRA, PSUN, DANG, MGM, HINKY, FEED, CQB, DOLE, CVS, FMX, UHS, EW, ELN, ATRC, UTHR, ADLR, CADX, DEPO, AFFY, AMLN, DB, JPM, BAC, WFC, C, LPLA, THG, NDAQ, YSI, PSA, MTG, RDN, PMI, SCOR, AUO, HPQ, AVGO, PWRD, GOOG, VCLK, MFLX, IRF, HLIT, BHE, SANM, FIS, RNWK, AVGO, CHU, S, T, LVLT, VZ, VOD, DUK, SO, CNP, GEN, EXC, CPN

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
AEO American Eagle Outfitters Inc. 18.04 0.23 1.26 795,194
ATRC AtriCure Inc. 15.68 -0.15 -0.92 39,636
AUO AU Optronics Corp American Depositary Shares 3.65 -0.06 -1.49 44,905
AVGO Broadcom Limited 169.75 -0.95 -0.56 863,036
BAC Bank of America Corporation 15.45 0.07 0.47 15,359,816
BHE Benchmark Electronics Inc. 24.72 -0.10 -0.38 42,363
BHP BHP Billiton Limited 34.66 0.56 1.64 1,392,126
C Citigroup Inc. 47.25 0.38 0.81 4,966,121
CEO CNOOC Limited 125.49 2.26 1.83 51,416
CHU China Unicom (Hong Kong) Ltd 12.32 -0.04 -0.32 34,206
CNP CenterPoint Energy Inc (Holding Co) 23.71 -0.41 -1.70 1,166,241
CPN Calpine Corporation 12.99 -0.33 -2.44 1,375,927
CPST Capstone Turbine Corporation 1.36 0.01 0.74 15,420
CVS CVS Health Corporation 89.85 -0.33 -0.36 1,027,357
DANG E-Commerce China Dangdang Inc. American Depositary n/a n/a n/a 0
DB Deutsche Bank AG 12.26 -0.04 -0.33 3,330,099
DEPO Depomed Inc. 24.16 -0.37 -1.51 536,565
DUK Duke Energy Corporation (Holding Company) 80.33 -0.77 -0.95 608,295
DY Dycom Industries Inc. 82.56 -1.17 -1.40 88,126
ELN Elan Corp. PLC ADS n/a n/a n/a 0
EW Edwards Lifesciences Corporation 119.29 -1.17 -0.97 259,401
EXC Exelon Corporation 33.65 -0.37 -1.07 887,179
FIS Fidelity National Information Services Inc. 77.61 0.38 0.49 220,815
FMX Fomento Economico Mexicano S.A.B. de C.V. 92.73 0.16 0.17 143,147
GBX Greenbrier Companies Inc (The) 35.19 0.32 0.92 53,422
GEN Genesis Healthcare Inc. 2.62 -0.09 -3.32 22,821
GOOG Alphabet Inc. 780.20 -1.36 -0.17 444,752
HK Halcon Resources Corporation 9.18 0.41 4.68 404,858
HLIT Harmonic Inc. 5.81 -0.03 -0.43 577,859
HPQ HP Inc. 15.49 0.00 0.00 2,203,043
INN Summit Hotel Properties Inc. 13.30 -0.12 -0.89 33,074
JPM JP Morgan Chase 67.00 0.29 0.43 3,376,050
LPLA LPL Financial Holdings Inc. 29.62 0.53 1.82 53,258
LVLT Level 3 Communications Inc. 47.27 -0.39 -0.82 1,197,864
MFLX Multi-Fineline Electronix Inc. n/a n/a n/a 0
MGM MGM Resorts International 26.13 -0.22 -0.83 2,281,152
MHR Magnum Hunter Resources Corp n/a n/a n/a 0
MTG MGIC Investment Corporation 8.02 0.01 0.06 765,108
NDAQ Nasdaq Inc. 68.36 0.15 0.22 100,289
NEM Newmont Mining Corporation 38.87 -0.34 -0.87 906,459
NOW ServiceNow Inc. 79.22 -0.55 -0.69 193,976
NUE Nucor Corporation 49.67 -0.06 -0.12 471,539
PSA Public Storage 226.00 0.17 0.08 338,964
PSUN Pacific Sunwear of California Inc. n/a n/a n/a n/a
RDN Radian Group Inc. 13.74 -0.01 -0.04 465,427
RNWK RealNetworks Inc. 4.47 0.03 0.68 6,196
S Sprint Corporation 6.79 0.01 0.15 1,736,193
SANM Sanmina Corporation 27.91 -0.23 -0.82 51,829
SCOR comScore Inc. 30.89 -0.08 -0.26 38,596
SO Southern Company (The) 52.33 -0.37 -0.70 1,291,583
STLD Steel Dynamics Inc. 25.40 -0.17 -0.66 703,699
STRA Strayer Education Inc. 46.43 -0.23 -0.49 2,261
SWFT Swift Transportation Company Class A 21.63 0.16 0.75 726,343
T AT&T Inc. 40.96 0.11 0.27 4,083,648
THG Hanover Insurance Group Inc 76.22 0.06 0.08 74,441
TOL Toll Brothers Inc. 29.65 0.24 0.82 685,407
TRN Trinity Industries Inc. 24.27 -0.03 -0.12 250,693
TSO Tesoro Corporation 79.55 -3.31 -3.99 1,196,629
UHS Universal Health Services Inc. 123.03 0.07 0.06 88,786
UTHR United Therapeutics Corporation 118.02 -0.66 -0.55 121,093
VOD Vodafone Group Plc 29.31 -0.18 -0.61 1,498,107
VZ Verizon Communications Inc. 52.31 0.25 0.49 2,697,404
WFC Wells Fargo & Company 45.13 -0.18 -0.40 11,110,014
WPPGY WPP plc American Depositary Shares each representi 118.03 -0.83 -0.70 15,358

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