Equities Sector Coverage: Stocks Close Out Summer on High Note

Sector Recap |

Wall Street Bulls EyeThe Chicago PMI declined slightly to 53.0 in August, below expectations. The University of Michigan Consumer Sentiment reading for August was finalized at 74.3 slightly high than July’s reading, but well below the 90 to 120 neutral zone. Factory Orders rose 2.8% in July, the best gain since July 2011. Fed Chief Ben Bernanke in his Jackson Hole speech indicated that the Fed will provide additional accommodation as needed as it is important to make additional progress on economic growth and job creation. Bernanke stated that QE1 & QE2 raised GDP growth by about 3.0% and lifted employment by two million jobs.

The Dow Industrial Average traded up to 13,122.62 then fell to 13,002.64 before rallying to 13,151.87. The NASDAQ traded up to 3075.64 then fell to 3040.59 before rallying to 3078.52.

Asian stocks were lower on Friday. The Nikkei 225 ended the day at 8,940 – down 1.60%. The Hang Seng ended the day at 19,483 – down 0.36%. European exchanges traded slightly lower in London, but higher in Europe in anticipation of monetary stimulus from the Fed and ECB. The FTSE 100 ended the day at 5,711 – down 0.14%. The DAX ended the day at 6,971 – up 1.09%. The CAC 40 ended the day at 3,413 – up 1.00%. The yield on the 10-Year US Treasury note rose 1.657% then declined to 1.553% after the transcript of Fed Chief Bernanke’s speech was released at 10:00 AM.

Gold rebounded to $1666.0 the Troy ounce pre-Bernanke then fell to $1647.1 and then popped to $1692.0. The low held the 200-day simple moving average at $1645.8. Crude oil rebounded from $94.51 per barrel pre-Bernanke to $96.92 then consolidated, as the day’s close was below the 200-day simple moving average at $96.68. The euro versus the dollar rebounded from 1.2496 to 1.2635 staying above its 50-day simple moving average at 1.2364.

Energy

Energy markets aren't expecting "lasting disruptions" from Hurricane Isaac, Tudor Pickering analysts have said, but they are "looking for confirmation of this" from oil and gas companies. Phillips 66 (PSX) found some flooding at its refinery in Belle Chasse but the markets are mostly reassured: Valero (VLO) and Anadarko (APC) are among firms reporting no damage to their facilities. Spectra Energy (SE) is reduced to Equal Weight from Overweight by Barclays.

Dow components – Chevron (CVX) up 1.11%, Exxon Mobil (XOM) up 0.17%. Energy Select Sector SPDR (XLE) was trading at $71.41 at 3:30 PM on Friday, up 0.83% on the day – up 3.30% year-to-date.

Materials

Thompson Creek Metals (TC): TC is taken to Buy from Hold with a $4 objective at Dahlman Rose. Dow Components – Alcoa (AA) up 0.59%, DuPont (DD) down 0.07%. The Materials Select Sector SPDR (XLB) was trading at $35.625 at 3:30 PM on Friday, up 0.89% on the day – up 6.34% year-to-date.

Industrials

Esterline Technologies (ESL) missed estimates by a penny and revenue by $2M. The company boosts current quarter estimates to between $1.60 and $1.70 a share (estimates are projected at $1.59 a share). Air France-KLM (AFLYY) is cut to Underperform from Neutral at Credit Suisse. Belden (BDC) is downgraded to Hold from Buy at Stifel Nicolaus. Layne Christensen (LAYN) is downgraded to Sell from Neutral at UBS. Dow components – Boeing Co (BA) up 0.66%, Caterpillar (CAT) up 0.82%, General Electric (GE) up 0.05%, 3M Company (MMM) up 0.75%, United Technologies (UTX) up 0.77%.

The Industrial Select Sector SPDR (XLI) was trading at $36.32 at 3:30 PM on Friday, up 0.50% on the day – up 7.61% year-to-date.

Consumer Discretionary

SAIC (SAI) intends to separate into two independent, publicly traded companies, with one focused on government technical services and enterprise IT, and the other on science and technology services. Sharp (SHCAF) hasn't yet started the mass production of screens for Apple's (AAPL) next iPhone. Sharp had hoped to have begun deliveries by now and it is unclear when it will be able to start, although the iPhone's two other screen suppliers, LG Display and Japan Display, have commenced shipments. Zumiez (ZUMZ) missed estimates by 6 cents with revenue in-line with estimates. The company also gave a gloomy Q3 forecast, saying it expects to earn between $0.42 and $0.45 per share, on sales in a range of $181M to $185M (estimates are for the company to earn $0.56 a share on $182.8M in revenue). Gordmans Stores (GMAN) reported Q2 EPS of $0.18 (in-line), while missing revenue by $3M. Garmin (GRMN) is initiated with an Outperform at Wells Fargo, which has a Market Perform on rival Trimble Navigation (TRMB).



Big Movers – Zumiez (ZUMZ) down 10%. Dow Components – Disney (DIS) up 0.04%, Home Depot (HD) down 0.05%, McDonalds (MCD) up 0.87%. The Consumer Discretionary Select Sector SPDR (XLY) was trading at $45.50 at 3:30 PM on Friday, up 0.31% on the day – up 16.61% year-to-date.

Consumer Staples

Dow components – Kraft (KFT) up 0.36%, Coca Cola (KO) up 1.02%, Procter & Gamble (PG) up 0.44%, Wal-Mart (WMT) up 0.57%. The Consumer Staples Select Sector SPDR (XLP) was trading at $35.59 at 3:30 PM on Friday, up 0.39% on the day – up 9.54% year-to-date.

Health Care

Fresenius Medical (FMS) is a new Buy at Société Générale and a new Overweight at HSBC Securities. Merrimack Pharmaceuticals (MACK) is a new Buy at Bank of America-Merrill Lynch. BG Medicine (BGMD) and Fluidigm (FLDM) are each begun with Buys at Mizuho. Big Movers – Sarepta (SRPT) up 10.5%. Dow Components – Johnson & Johnson (JNJ) up 0.22%, Merck (MRK) down 0.27%, Pfizer (PFE) down 0.14%. The Health Care Select Sector SPDR (XLV) was trading at $38.77 at 3:30 PM on Friday, up 0.13% on the day – up 11.76% year-to-date.

Financial

New Barclays (BCS) CEO Antony Jenkins has told the FT that he's cutting the bank's return-on-equity goal to 11%-11.5% from the 13%-15% targeted by predecessor Bob Diamond. Canadian Imperial Bank of Commerce (CM) is upgraded to Outperform at BMO Capital. Credit Suisse (CS): The bank is hoisted to Hold from Sell by fellow European financial firm ING Groep. Royal Bank of Canada (RY) is raised to Outperform from Neutral at Credit Suisse. Toronto-Dominion Bank (TD) is now Neutral from Outperform at Credit Suisse. Dow Components – American Express (AXP) up 1.70%, Bank of America (BAC) up 0.51%, JP Morgan Chase (JPM) up 0.49%, Travelers (TRV) up 0.33%. The Financial Select Sector SPDR (XLF) was trading at $15.118 at 3:30 PM on Friday, up 0.45% on the day – up 16.29% year-to-date.

Information Technology

SAIC (SAI) intends to separate into two independent, publicly traded companies, with one focused on government technical services and enterprise IT, and the other on science and technology services. Sharp (SHCAF) hasn't yet started the mass production of screens for Apple's (AAPL) next iPhone. Sharp had hoped to have begun deliveries by now and it is unclear when it will be able to start, although the iPhone's two other screen suppliers, LG Display and Japan Display, have commenced shipments. Studios VP Bill Mooney and marketing VP Brian Birtwistle have left Zynga (ZNGA). Zynga has also lost its COO, chief creative officer, and a few other important figures over the last month, as a crashing stock price triggers an exodus from a company whose business culture has been frequently criticized. The IFA international conference for consumer electronics and home appliances has officially started in Berlin today, although the unveiling of some major products already took place earlier in the week. There's been a deluge of Windows 8/RT (MSFT) tablets, including from Dell (DELL) and H-P (HPQ), not to mention Samsung (SSNLF) beating Nokia (NOK) to the punch with a Windows 8 smartphone. OmniVision Technologies (OVTI) missed estimates by a penny, while beating revenue by $15M. FQ2 guidance is for revenue of $355M-$390M and EPS of $0.21-$0.37 (versus consensus of $268.6M and $0.33). Splunk (SPLK) beat estimates by 3 cents and revenue by $5M. The company expects FQ3 revenue of $45M-$47M and FY13 (ends Jan. '13) revenue of $183M-$186M (above estimates of $44.7M and $178.3M). Corning (GLW) is upgraded to Outperform from Perform at Oppenheimer. TeleComm Systems (TSYS) is moved to Overweight from Neutral at JPMorgan.
Dow Components – Cisco Systems (CSCO) up 0.87%, Hewlett-Packard (HPQ) up 0.12%, IBM (IBM) up 0.60%, Intel Corp (INTC) up 2.22%, Microsoft (MSFT) up 1.62%. The Technology Select Sector SPDR (XLK) was trading at $30.42 at 3:30 PM on Friday, up 0.56% on the day – up 19.53% year-to-date.

Telecommunication Services

Chunghwa Telecom (CHT) is moved to Underweight from Neutral at HSBC Securities. Dow Components – AT&T (T) up 0.07%, Verizon (VZ) up 0.35%. The NASDAQ Telecommunications Index (IXTC) was trading at $195.17 at 3:30 PM on Friday, up 0.38% on the day – down 0.89% year-to-date.

Utilities

Dominion Resources (D) down 0.19%, Edison International (EIX) down 0.08%, First Energy (FE) down 0.05%, PG&E Corp (PCG) down 0.62%, Southern Company (SO) down 0.31%. The Utilities Select Sector SPDR (XLU) was trading at $36.31 at 3:30 PM on Friday, down 0.22% on the day – up 0.92% year-to-date.

STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KFT, KO, PG, WMT, JNJ, MRK, PFE, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, PSX, VLO, APC, SE, TC, ESL, AFLYY, BDC, LAYN, SAI, SHCAF, AAPL, ZUMZ, GMAN, GRMN, TRMB, FMS, MACK, BGMD, FLDM, SRPT, BCS, CM, CS, RY, TD, ZNGA, MSFT, DELL, HPQ, SSNLF, NOK, OVTI, SPLK, GLW, TSYS, CHT

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
MMM 3M Company 238.00 -0.08 -0.03 4,518,734 Trade
GLW Corning Incorporated 32.05 0.24 0.75 13,376,278 Trade
FMS Fresenius Medical Care AG 51.45 -0.07 -0.14 156,778 Trade
BDC Belden Inc 79.22 -1.49 -1.85 704,773 Trade
PG Procter & Gamble Company (The) 91.89 0.89 0.98 15,924,045 Trade
GE General Electric Co 17.82 0.18 1.02 88,381,861 Trade
CVX Chevron Corporation 119.73 0.20 0.17 11,226,856 Trade
SO Southern Company (The) 51.31 -0.21 -0.41 9,391,314 Trade
TD Toronto-Dominion Bank 55.79 -0.41 -0.73 1,041,089 Trade
PCG Pacific Gas & Electric Co. 53.05 0.33 0.63 5,757,267 Trade
JNJ Johnson & Johnson 142.46 0.81 0.57 12,516,980 Trade
WMT Wal-Mart Stores Inc. 97.11 -0.02 -0.02 16,142,788 Trade
AA Alcoa Inc. 42.61 0.26 0.61 4,536,769 Trade
INTC Intel Corporation 44.56 1.30 3.01 47,476,952 Trade
IBM International Business Machines Corp 152.50 -1.50 -0.97 11,279,854 Trade
VLO Valero Energy Corporation 88.19 0.71 0.81 6,579,312 Trade
D Dominion Resources Inc. 84.91 0.53 0.63 5,872,652 Trade
TRV The Travelers Companies Inc. 134.89 2.31 1.74 3,170,654 Trade
SPLK Splunk Inc. 82.46 1.27 1.56 2,422,945 Trade
ESL Esterline Technologies Corporation 73.85 1.95 2.71 846,288 Trade
AAPL Apple Inc. 173.97 1.75 1.02 40,169,307 Trade
GRMN Garmin Ltd. 58.36 -1.10 -1.85 5,300,609 Trade
BCS Barclays PLC 10.69 -0.13 -1.20 3,002,093 Trade
BNS Bank of Nova Scotia 63.83 -0.82 -1.27 606,740 Trade
EIX Edison International 69.71 0.42 0.61 4,531,667 Trade
SE Spectra Energy Corp 12.00 0.23 1.95 1,469,860 Trade
MACK Merrimack Pharmaceuticals Inc. 10.35 0.17 1.67 467,688 Trade
JPM JP Morgan Chase 106.14 1.48 1.41 29,350,598 Trade
AXP American Express Company 98.52 1.37 1.41 7,891,763 Trade
UTX United Technologies Corporation 126.17 2.41 1.95 6,193,568 Trade
FLDM Fluidigm Corporation 6.04 -0.07 -1.15 932,086 Trade
RY Royal Bank of Canada 79.17 -0.38 -0.48 909,167 Trade
PSX Phillips 66 99.92 0.37 0.37 2,957,293 Trade
SRPT Sarepta Therapeutics Inc. 52.60 -1.05 -1.96 2,403,598 Trade
CSCO Cisco Systems Inc. 38.19 0.29 0.77 47,167,680 Trade
DIS Walt Disney Company (The) 111.27 0.70 0.63 19,978,625 Trade
TRMB Trimble Navigation Limited 40.67 0.43 1.07 2,387,616 Trade
VZ Verizon Communications Inc. 52.67 0.33 0.63 28,935,598 Trade
CM Canadian Imperial Bank of Commerce 92.72 -1.14 -1.21 533,487 Trade
BAC Bank of America Corporation 29.04 0.31 1.08 129,859,355 Trade
NOK Nokia Corporation Sponsored American Depositary Sh 4.61 0.00 0.00 19,009,599 Trade
MCD McDonald\'s Corporation 174.06 0.92 0.53 7,435,241 Trade
OVTI OmniVision Technologies Inc. n/a n/a n/a 0 Trade
APC Anadarko Petroleum Corporation 47.52 -0.37 -0.77 9,229,380 Trade
DD E.I. du Pont de Nemours and Co. 83.93 0.00 0.00 0 Trade
GMAN Gordmans Stores Inc. n/a n/a n/a 0
TC TC n/a n/a n/a 0
HD Home Depot Inc. (The) 182.58 0.45 0.25 8,202,172 Trade
XOM Exxon Mobil Corporation 83.03 0.13 0.16 26,582,332 Trade
PFE Pfizer Inc. 37.20 0.74 2.03 37,779,932 Trade
ZNGA Zynga Inc. 4.04 0.04 1.00 9,550,017 Trade
HPQ HP Inc. 20.92 0.18 0.87 19,023,013 Trade
BA Boeing Company (The) 293.94 0.06 0.02 6,933,490 Trade
MRK Merck & Company Inc. (new) 56.24 0.23 0.41 22,580,659 Trade
FE FirstEnergy Corporation 31.83 -0.29 -0.90 7,756,093 Trade
KO Coca-Cola Company (The) 46.19 0.16 0.35 21,181,606 Trade
T AT&T Inc. 38.24 0.50 1.32 46,808,578 Trade
CHT Chunghwa Telecom Co. Ltd. 35.13 0.08 0.23 229,322 Trade
CAT Caterpillar Inc. 146.69 0.41 0.28 7,931,739 Trade
LAYN Layne Christensen Company 12.29 0.20 1.65 340,672 Trade
MSFT Microsoft Corporation 86.85 2.16 2.55 53,936,687 Trade
ZUMZ Zumiez Inc. 20.10 0.10 0.50 1,011,984 Trade
TSYS TeleCommunication Systems Inc. n/a n/a n/a 0 Trade

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