Equities Sector Coverage: Stocks Drop After Fed's Treasury Plan

Sector Recap |

Existing home sales rose 7.7% in August to a 5.03 million unit rate, topping the 1.4% gain economists had expected. The FOMC says that economic growth remains slow with continued weakness likely in overall labor market conditions, which means that the Unemployment Rate will remain elevated. The Dow Jones Industrial Average traded up to 11,447.86 then dipped to 11,334.03 as traders and investors awaited the Fed Statement. After the statement the Dow traded into the green, but then slumped to 11,117.28 in the final half hour of trading. The NASDAQ traded between 2583.42 and 2613.29 around its 50-day simple moving average at 2594 while waiting for the FOMC. After the Fed Statement the NASDAQ traded as low as 2537.46 in the final half hour of trading.

Asian stocks were mixed on Tuesday. The Nikkei 225 tacked on a modest 0.23% to 8,741. The Hang Seng lost 1.00% to 18,824. European stocks declined as global markets wait and see with regard to the FOMC Statement and status on Greek debt. The FTSE 100 lost 1.40% to 5,288 with the DAX losing 2.47% to 5,434 and the CAC 40 slipping by 1.62% to 2,936. The yield on the 10-Year US Treasury traded down from 1.970 to a new record low of 1.854 percent after the FOMC announced “Operation Twist”, which is a program where the Fed sells short maturity Treasuries to buy longer term notes and bonds. Gold traded down from $1816.7 the Troy ounce to $1786.0 then up to $1819.4, and then back down to $1781.0, as the double-top continues to form on the daily chart. Crude oil traded up from $85.80 per barrel to $87.99 then down to $85.08 continuing to trade between its 200-week simple moving average at $83.71 and its 50- day at $89.77. The euro versus the US dollar traded up from 1.3633 to 1.3789 then down to 1.3607.

Energy

BP (BP) fired back at Halliburton (HAL) over the latter's lawsuit against it, denying claims it withheld information about a potentially dangerous condition in its Macondo oil well. BP is also facing a legal action from Anadarko Petroleum (APC), and from hundreds of other parties claiming economic loss and/or personal injury. Total SA (TOT) gets a Neutral-from-Underperform upgrade at Credit Suisse. In afternoon trading: Shares of Alpha Natural Resources (ANR) are down about 15.6%. Shares of James River Coal (JRCC) are down about 13.3%. Shares of Uranium Resources (URRE) are down about 11.9%. Shares of Basic Energy Services (BAS) are down about 11.5%. Shares of Arch Coal (ACI) are down about 10%. Shares of Patriot Coal (PCX) are down about 10%.

Energy Select Sector SPDR (XLE) was trading at $62.89 at 4:00 PM on Wednesday, down 4.16% on the day – down 7.85% year-to-date.

Materials

In afternoon trading: Shares of Cliffs Natural Resources (CLF) are down about 12.4%. Shares of Walter Energy (WLT) are down about 11.6%. Shares of Ferro (FOE) are down about 11.6%. Shares of Ivanhoe (IVN) are down about 10.1%. Shares of Celanese (CE) are down about 8.7%. Shares of LyondellBasell (LYB) are down about 7.6%. Shares of Rare Element (REE) are down about 6.9%. Shares of Freeport McMoran (FCX) are down about 6.7%.

The Materials Select Sector SPDR (XLB) was trading at $32.09 at 4:00 PM on Wednesday, down 4.52% on the day – down 16.45% year-to-date.

Industrials

Chatter continues to grow that United Technologies (UTX) is in final negotiations for a blockbuster acquisition of aerospace firm Goodrich (GR). Credit Suisse assigns Outperforms on Heico Corp (HEI) - $69 target, Triumph Group (TGI) - $64 target, and Esterline Technologies (ESL) - $79 target. It has new Neutrals on Moog Inc (MOG.A) - $41 target and AAR Corp (AIR) - $23 target. Expeditors International (EXPD) is a new Buy at Lazard. Goodrich (GR) gets reduced to Market Perform from Outperform by Sanford Bernstein. In afternoon trading: Shares of WABCO (WBC) are down about 10.1%. Shares of Meritor (MTOR) are down about 9.4%. Shares of General Cable (BGC) are down about 9.2%.

The Industrial Select Sector SPDR (XLI) was trading at $30.14 at 4:00 PM on Wednesday, down 4.13% on the day – down 13.56% year-to-date.



Consumer Discretionary

Deutsche Bank has new Buys on Penn National Gaming (PENN) - $52 price objective, Las Vegas Sands (LVS) - $61 price objective, Wynn Resorts (WYNN) - $198 price objective, MGM Resorts (MGM) - $17 price objective, Scientific Games (SGMS) - $14 price objective, and WMS Industries (WMS) -$23 price objective. It has Holds on Boyd Gaming (BYD) -$7 price objective, Ameristar Casinos (ASCA) - $20 price objective, International Game Technology (IGT) - $16 price objective, and Pinnacle Entertainment (PNK) - $14 price objective. Deutsche Bank begins Buys on Hyatt Hotels (H), Orient-Express (OEH), Wyndham Worldwide (WYN), and Starwood Hotels (HOT). Dollar General (DG) gets picked up with a Hold at Deutsche Bank. Carnival Corp (CCL) is now Buy from Neutral at Natixis. Cabela’s (CAB) is cut to Underweight from Neutral at JP Morgan. Regal Entertainment (RGC) is reduced to above Average from Buy at Caris & Company.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $36.29 at 4:00 PM on Wednesday, down 3.23% on the day – down 2.99% year-to-date.

Consumer Staples

SABMiller (SBMRF) is buying Australian brewer Foster's (FBRWF) for A$5.10, or A$9.9B ($10.2B), giving SABMiller a leading position in the "stable and profitable" Australian beer industry. Unilever NV (UN) gets a Buy-from-Hold boost at Jefferies. L’Oreal (LRLCY) is lifted to Neutral from Underweight at HSBC Securities. Danone (DANOY) gets downgraded to Hold from Buy at Jefferies. In afternoon trading: Shares of China-Biotics (CHBT) are down about 12.5%. Shares of Farmer Brothers (FARM) are up about 7%. Shares of Foster’s are up about 6.1%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.01 at 4:00 PM on Wednesday, down 2.06% on the day – up 2.39% year-to-date.

Healthcare

Optimer Pharmaceuticals (OPTR) is a new Buy and $20 price target at Brokerage Brean Murray. Pacific Biosciences (PACB) is moved to Underweight from Neutral at JP Morgan. In afternoon trading: Shares of Orexigen Therapeutics (OREX) are up about 50% on news that the FDA reversed their position to give new life to the company’s obesity drug Contrave. Shares of Human Genome Sciences (HGSI) are up about 13%. Shares of Regeneron Pharmaceuticals (REGN) are up about 10%. Shares of Pacific Biosciences are down about 22%. Shares of NuVasive (NUVA) are down about 12%.

The Health Care Select Sector SPDR (XLV) was trading at $32.12 at 4:00 PM on Wednesday, down 2.70% on the day – up 1.97% year-to-date.

Financials

American Equity Investment Life (AEL) is initiated with an Overweight at JP Morgan. Plum Creek (PCL) is begun with a Buy at Citigroup, which has a Hold on Weyerhaeuser (WY). Jefferies Group (JEF) is taken to Neutral from Buy at Ticonderoga. Banco Santander Brasil (BSBR) is reduced to Neutral from Buy at Goldman Sachs. In afternoon trading: Shares of Credit Agricole (CRARF) are down about 17%. Shares of Alpha Bank (ALBKY) are down about 11.5%. Shares of Leucadia National (LUK) are down about 8%. Shares of MPG Office Trust (MPG) are down about 8%.

The Financial Select Sector SPDR (XLF) was trading at $11.90 at 4:00 PM on Wednesday, down 4.95% on the day – down 25.39% year-to-date.

Information Technology

Oracle (ORCL) narrowly beat earnings expectations, reporting FQ1 EPS of $0.48 (versus the $0.47 consensus) and in-line revenue of $8.4B. Looking ahead, the company expects FQ2 revenue of $8.99B-9.34B and EPS of $0.56-0.58 (versus consensus of $9.36B and $0.56). NXP Semiconductors NV (NXPI) is a new Buy and $29 target at Sterne Agee. Autodesk (ADSK) is upgraded to Overweight from Neutral at JP Morgan. Rovi Corp (ROVI) is raised to Overweight from Neutral at JP Morgan. Amdocs (DOX) and VeriSign (VRSN) are each now Neutral from Overweight at JP Morgan. LG Display (LPL) is lowered to Neutral from Buy at Nomura. In afternoon trading: Shares of Energy Conversion Devices (ENER) are up about 19%. Shares of JA Solar (JASO) are up about 14%. Shares of AOL (AOL) are down about 15%.

The Technology Select Sector SPDR (XLK) was trading at $24.49 at 4:00 PM on Wednesday, down 1.49% on the day – down 2.78% year-to-date.

Telecommunications Services

Swisscom AG (SCMWY) is lifted to Buy from Hold at Citigroup. In afternoon trading: Shares of MetroPCS (PCS) are down about 7.2%. Shares of Clearwire (CLWR) are down about 6.1%. Shares of NII Holdings (NIHD) are down about 5.7%. Shares of Frontier Communications (FTR) are down about 5.7%. Actives: Shares of Sprint Nextel (S) are down about 1.5%. Shares of AT&T (T) are down about 1.7%. Shares of Verizon (VZ) are down about 1.2%. Shares of Level 3 Communications (LVLT) are down about 2%. Shares of Vodafone (VOD) are down about 2.5%.

The NASDAQ Telecommunications Index (IXTC) was trading at $185.86 at 4:00 PM on Wednesday, down 3.33% on the day – down 17.53% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are relatively unchanged. Shares of Genon Energy (GEN) are down about 4%. Shares of AES Corp (AES) are down about 2.9%. Shares of Southern (SO) are down about a half of a percent. Shares of Exelon (EXC) are down about 1.1%. Shares of TECO Energy (TE) are down about 4.7%. Shares of NRG Energy (NRG) are down about 2.8%. Shares of PPL Corp (PPL) are down about 0.9%. Shares of American Electric Power (AEP) are down about 2.1%.

The Utilities Select Sector SPDR (XLU) was trading at $33.65 at 4:00 PM on Wednesday, down 1.84% on the day – up 7.37% year-to-date.

STOCKS: BP, HAL, APC, TOT, ANR, JRCC, URRE, BAS, ACI, PCX, CLF, WLT, FOE, IVN, CE, LYB, REE, FCX, UTX, GR, HEI, TGI, ESL, MOG.A, AIR, EXPD, WBC, MTOR, BGC, PENN, LVS, WYNN, MGM, SGMS, WMS, BYD, ASCA, IGT, PNK, H, OEH, WYN, HOT, DG, CCL, CAB, RGC, SBMRF, FBRWF, UN, LRLCY, DANOY, CHBT, FARM, OPTR, PACB, OREX, HGSI, REGN, NUVA, AEL, PCL, WY, JEF, BSBR, CRARF, ALBKY, LUK, MPG, ORCL, NXPI, ADSK, ROVI, DOX, VRSN, LPL, ENER, JASO, AOL, SCMWY, PCS, CLWR, NIHD, FTR, S, T, VZ, LVLT, VOD, DUK, GEN, AES, SO, EXC, TE, NRG, PPL, AEP

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
REE Rare Element Resources n/a n/a n/a n/a
ORCL Oracle Corporation 48.16 0.19 0.40 15,341,907 Trade
CCL Carnival Corporation 64.33 -0.12 -0.19 3,513,512 Trade
GEN Genesis Healthcare Inc. 1.03 -0.01 -0.96 159,753 Trade
FTR Frontier Communications Corporation 11.81 0.12 1.03 951,211 Trade
EXPD Expeditors International of Washington Inc. 58.19 0.44 0.76 774,974 Trade
FARM Farmer Brothers Company 28.95 -0.10 -0.34 62,315 Trade
SO Southern Company (The) 48.82 -0.45 -0.91 4,155,543 Trade
PFK Prudential Financial Inflation-Linked Retail Mediu 25.33 -0.02 -0.08 6,100 Trade
MPG Metaldyne Performance Group Inc. n/a n/a n/a 0 Trade
DOX Amdocs Limited 64.16 0.46 0.72 481,694 Trade
WYN Wyndham Worldwide Corp Common Stock 105.23 2.04 1.98 1,186,359 Trade
CAB Cabela\'s Inc Class A 61.47 0.00 0.00 2,331,706 Trade
BGC General Cable Corporation 18.90 0.10 0.53 374,528 Trade
ADSK Autodesk Inc. 111.78 -0.51 -0.45 1,085,041 Trade
H Hyatt Hotels Corporation Class A 61.29 0.09 0.15 256,603 Trade
RGC Regal Entertainment Group Class A 16.61 0.36 2.22 2,994,337 Trade
URRE Uranium Resources Inc. n/a n/a n/a n/a
ESL Esterline Technologies Corporation 90.95 1.75 1.96 185,137 Trade
HEI Heico Corporation 90.47 1.09 1.22 185,579 Trade
BSBR Banco Santander Brasil SA American Depositary Shar 9.14 0.21 2.35 1,253,896 Trade
BYD Boyd Gaming Corporation 25.04 -0.88 -3.40 3,015,685 Trade
TE TECO Energy Inc. n/a n/a n/a 0 Trade
S Sprint Corporation 8.52 0.49 6.10 26,203,014 Trade
LVS Las Vegas Sands Corp. 63.57 -0.05 -0.08 1,345,170 Trade
PPL PPL Corp 38.47 -0.34 -0.88 2,237,386 Trade
FOE Ferro Corporation 21.55 0.25 1.17 906,366 Trade
NRG NRG Energy Inc. 23.94 -0.25 -1.03 3,382,596 Trade
WMS Advanced Drainage Systems Inc. 20.10 0.25 1.26 165,611 Trade
TOT Total S.A. 54.02 0.11 0.20 1,087,965 Trade
MTOR Meritor Inc. 26.40 0.90 3.53 1,679,913 Trade
UTX United Technologies Corporation 115.01 0.51 0.45 2,833,424 Trade
VOD Vodafone Group Plc 28.64 0.02 0.07 2,090,836 Trade
IVN Ivanhoe Mines Ltd n/a n/a n/a 0 Trade
PNK Pinnacle Entertainment Inc. 20.64 -0.20 -0.96 424,484 Trade
WY Weyerhaeuser Company 33.58 0.16 0.48 2,535,051 Trade
LVLT Level 3 Communications Inc. 52.77 0.05 0.09 1,327,780 Trade
AES The AES Corporation 11.11 -0.02 -0.18 2,554,843 Trade
LYB LyondellBasell Industries NV Class A (Netherlands) 96.87 1.08 1.13 1,531,584 Trade
UN Unilever NV 58.61 -0.38 -0.64 2,364,930 Trade
VZ Verizon Communications Inc. 49.90 0.96 1.96 20,646,413 Trade
AIR AAR Corp. 36.94 -0.62 -1.65 333,536 Trade
OREX Orexigen Therapeutics Inc. 2.12 -0.17 -7.22 193,680 Trade
VRSN VeriSign Inc. 104.58 -1.19 -1.13 833,952 Trade
DG Dollar General Corporation 77.66 0.89 1.16 3,513,435 Trade
FCX Freeport-McMoRan Inc. 14.06 0.08 0.57 12,562,844 Trade
APC Anadarko Petroleum Corporation 48.83 0.34 0.70 7,701,321 Trade
NXPI NXP Semiconductors N.V. 112.64 -0.08 -0.07 733,878 Trade
MGM MGM Resorts International 32.38 -0.68 -2.06 3,936,978 Trade
AEL American Equity Investment Life Holding Company 28.38 0.19 0.67 413,999 Trade
TGI Triumph Group Inc. 28.05 0.20 0.72 866,975 Trade
JASO JA Solar Holdings Co. Ltd. 7.88 0.03 0.38 1,841,962 Trade
ACI Arch Coal Inc. n/a n/a n/a 0 Trade
LUK Leucadia National Corporation 24.54 0.07 0.29 1,686,597 Trade
IGT International Game Technology 23.46 -0.10 -0.42 1,265,980 Trade
PACB Pacific Biosciences of California Inc. 5.12 -0.15 -2.85 777,092 Trade
CLF Cliffs Natural Resources Inc 6.86 -0.10 -1.44 9,936,767 Trade
BP BP p.l.c. 37.82 0.12 0.32 5,581,451 Trade
SGMS Scientific Games Corp 42.95 -0.10 -0.23 367,425 Trade
REGN Regeneron Pharmaceuticals Inc. 432.72 -0.73 -0.17 626,312 Trade
EXC Exelon Corporation 37.12 -0.03 -0.08 3,383,822 Trade
PCL Plum Creek Timber Co. Inc. REIT n/a n/a n/a 0 Trade
T AT&T Inc. 38.59 0.37 0.97 23,212,623 Trade
LPL LG Display Co Ltd AMERICAN DEPOSITORY SHARES 13.74 -0.24 -1.72 1,155,189 Trade
WBC Wabco Holdings Inc. 150.14 0.95 0.64 198,152 Trade
HAL Halliburton Company 44.25 0.77 1.77 9,209,116 Trade
DUK Duke Energy Corporation (Holding Company) 84.25 -0.91 -1.07 1,799,186 Trade
HOT Starwood Hotels & Resorts Worldwide Inc. n/a n/a n/a 0 Trade
PENN Penn National Gaming Inc. 22.50 -0.06 -0.27 1,351,976 Trade
NUVA NuVasive Inc. 54.25 -0.36 -0.66 720,806 Trade
BAS Basic Energy Services Inc. 17.24 -0.34 -1.93 616,198 Trade
AEP American Electric Power Company 70.57 -0.88 -1.23 3,052,203 Trade
ROVI Rovi Corporation n/a n/a n/a n/a
NIHD NII Holdings Inc. 0.51 0.01 1.82 317,774 Trade

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