Equities Sector Coverage: Stocks Edge Lower As Fed Says Economy Needs More Help

Sector Recap |

Ben BernankeThe preliminary reading on U.S. GDP showed that the growth rate slowed to 2.0% from the 2.5% reading from the advanced release. In their minutes from the last FOMC meeting the Federal Reserve sees significant downside risks to the US economy and some members say that additional easing of monetary policy may be needed. On Wednesday we get Durable Goods Orders, Personal Income and Spending and Michigan Consumer Sentiment. The Dow Jones Industrial Average traded between 11,491.30 and 11,555.33 Tuesday morning then declined to 11,433.97 before rebounding to a day’s high at 11,571.75 in afternoon trading. The NASDAQ traded between 2499.19 and 2534.4 on Tuesday.

Asian stocks were mixed on Tuesday with the Nikkei 225 down 0.40% to 8,315 and the Hang Seng up 0.14% to 18,252. European stocks were also mixed on Tuesday, but slipped into the red in their closes. The FTSE 100 declined 0.30% to 5,207, the DAX lost 1.22% to 5,537 and the CAC 40 was down 0.84% to 2,871. The yield on the US Treasury 10-Year note traded between 1.995 percent and 1.933 staying below its 50-day simple moving average at 2.043. Gold traded up from $1667.5 the Troy ounce to $1706.4. Crude oil rebounded from $96.55 per barrel to $98.70 back above its 200-day simple moving average at $95.42. The euro versus the dollar traded between 1.3472 and 1.3567 staying below its 50-day simple moving average at 1.3668.

Energy

LDK Solar (LDK) missed estimates by 44 cents and revenue by $71.9M. Trina Solar (TSL) is moved to Sell from Hold at Auriga. In afternoon trading: Shares of Frontline (FRO) are down about 41% in reaction to a Financial Times article claiming a restructuring is unavoidable. Shares of Ship Finance International (SFL) are down about 17.5%. Shares of Overseas Shipholding (OSG) are down about 15%. Shares of Suntech Power (STP) are up about 16.5%.

Energy Select Sector SPDR (XLE) was trading at $66.30 at 4:00 PM on Tuesday, down 0.94% on the day – down 2.86% year-to-date.

Materials

Sigma-Aldrich (SIAL) is a new Overweight at JPMorgan. In afternoon trading: Shares of LyondellBasell Industries (LYB) are down about 13%. Shares of Texas Industries (TXI) are down about 6%. Shares of Ferro Corp. (FOE) are down about 5.5%. Shares of Valspar (VAL) are up about 7.25%. Shares of Molycorp (MCP) are up about 6%. Shares of Kinross Gold (KGC) are up about 5.75%. Shares of Chemtura (CHMT) are up about 5.75%.

The Materials Select Sector SPDR (XLB) was trading at $32.43 at 4:00 PM on Tuesday, down 10.76% on the day – down 15.57% year-to-date.

Industrials

KKR (KKR) and Itochu (ITOCY) are leading a consortium that has agreed to buy closely held oil and gas group Samson Investment for $7B. Dycom (DY) beat estimates by 8 cents and revenue by $27.9M. Delta Air Lines (DAL) is a new Outperform at Raymond James. Deere (DE) is a new Buy at Credit Agricole. In afternoon trading: Shares of Broadwind Energy (BWEN) are up about 21%. Shares of YRC Worldwide (YRCW) are up about 12.5%. Shares of Capstone Turbine (CPST) are up about 7.75%.

The Industrial Select Sector SPDR (XLI) was trading at $31.95 at 4:00 PM on Tuesday, down 0.65% on the day – down 8.37% year-to-date.

Consumer Discretionary

NYSE Wall StreetNetflix (NFLX) yesterday said it would make a net loss in 2012, having previously forecast it might lose money for the first few quarters of 2012. Signet Group (SIG) beat estimates by 10 cents and revenue by $30M. Chico's FAS (CHS) missed estimates by 2 cents and revenue by $10M. Zale (ZLC) beat estimates by 43 cents and revenue by $12.3M. Jack in the Box (JACK) beat estimates by 9 cents and revenue by $12.5M. Marriot Vacations (VAC) is a new Neutral at Goldman Sachs. Citigroup begins Buys on both True Religion (TRLG) and Iconix Brand (ICON). Tesla Motors (TSLA) is a new Hold and $30 target price at Wunderlich. News Corp (NWSA) is now Positive from Neutral at Susquehanna. AutoNation (AN) gets a Neutral-from-Sell boost at Goldman Sachs. Collective Brands (PSS) is increased to Buy from Hold at Auriga. Wynn Resorts (WYNN) is reduced to Neutral from Buy at Janney Montgomery Scott. Standard Motor (SMP) is downgraded to Sell from Neutral at Goldman. In afternoon trading: Shares of Focus Media (FMCN) are up about 16.5%. Shares of Chico’s are down about 14.25%. Shares of Collective Brands are down about 13.5%. Shares of Groupon (GRPN) are down about 11.5%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $37.27 at 4:00 PM on Tuesday, down slightly on the day – down 0.37% year-to-date.

Consumer Staples

Campbell Soup (CPB) beat estimates by 3 cents and revenue by $50M. Tyson Foods (TSN) reported Q4 EPS of $0.26, (versus expectations of $0.32). Dole Food (DOLE) is lowered to Underperform from Neutral at Bank of America-Merrill Lynch. In afternoon trading: Actives: Shares of Altria Group (MO) are up about 0.4%. Shares of Green Mountain Coffee Roasters (GMCR) are down about 4.25%. Shares of Procter & Gamble (PG) are up slightly. Shares of Campbell Soup (CPB) are down about 5.25%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.59 at 4:00 PM on Tuesday, up slightly on the day – up 4.37% year-to-date.

Healthcare

Medtronic (MDT) beat estimates by 2 cents and revenue by $60M. China Kanghui (KH) is initiated as an Outperform and $20 target at Oppenheimer. Gilead Sciences (GILD) is moved to Outperform from Market Perform at BMO Capital. Amgen (AMGN) gets downgraded to Market Perform from Outperform at BMO Capital. Pharmasset (VRUS) is cut to Neutral from Overweight at JPMorgan. In afternoon trading: Shares of YM BioSciences (YMI) are down about 15.5%. Shares of Peregrine Pharmaceuticals (PPHM) are up about 12.25%. Shares of Complete Genetics (GNOM) are up about 12%.

The Health Care Select Sector SPDR (XLV) was trading at $32.30 at 4:00 PM on Tuesday, up 0.25% on the day – up 2.54% year-to-date.

Financials

Regulators have told Bank of America (BAC) that it could face a public enforcement action unless it makes more progress on strengthening itself, as per an MOU from 2009. KKR (KKR) and Itochu (ITOCY) are leading a consortium that has agreed to buy closely held oil and gas group Samson Investment for $7B. Eaton Vance (EV) beat estimates by a penny, while missing revenue by $11M. Two Harbors Investment (TWO) is a new Neutral at Sterne Agee. AFLAC (AFL) is now Neutral from Buy at Suntrust.

The Financial Select Sector SPDR (XLF) was trading at $12.08 at 4:00 PM on Tuesday, down 0.90% on the day – down 24.26% year-to-date.

Information Technology

Hewlett Packard's (HPQ) FQ4 earnings beat analyst expectations as adjusted EPS came in at $1.17 (beating by 4 cents) and revenue slipped 3% to $32.1B (beating by $250M). The company expects FQ1 EPS of $0.83-$0.86 (below $1.11 consensus) and expects FY12 EPS of "at least $4.00," (compared with $4.56 consensus). Samsung (SSNLF) is in late-stage talks with Google (GOOG) to launch a "smart" television next year using the latter's software. Brocade Communications Systems (BRCD) beat estimates by 6 cents and revenue by $23M. Analog Devices (ADI) missed estimates by 4 cents and revenue by $12M. China Techfaith Wireless (CNTF) reported Q3 revenue of $80.6M and EPS of $0.06. Microsoft (MSFT) is picked up with a Hold at ThinkEquity. Dolby Laboratories (DLB) is initiated with a Market Perform at JMP Securities. Akamai Technologies (AKAM) and Rackspace Hosting (RAX) are each resumed with Outperform ratings at Wells Fargo (with establishes respective price objectives of $36 and $55.50). Intuit (INTU) is begun with a Buy at ThinkEquity. NVIDIA (NVDA) is now Buy from Underperform at Needham, which has an $18 objective. In afternoon trading: Shares of Alcatel-Lucent (ALU) are down about 15%. Shares of Perfect World Company (PWRD) are down about 14%. Shares of Fusion-io Inc. (FID) are down about 10%. Shares of Hanwha SolarOne (HSOL) are up about 15.75%. Shares of Brocade Communications are up about 13.25%.

The Technology Select Sector SPDR (XLK) was trading at $24.73 at 4:00 PM on Tuesday, down slightly on the day – down 1.83% year-to-date.

Telecommunications Services

In afternoon trading: Actives: Shares of Sprint Nextel (S) are up about 0.6%. Shares of AT&T (T) are down about 0.75%. Shares of Frontier Communications (FTR) are up about 1.3%. Shares of Verizon (VZ) are relatively unchanged. Shares of Vodafone (VOD) are down about 0.6%. Shares of Windstream (WIN) are down about 1.5%.

The NASDAQ Telecommunications Index (IXTC) was trading at $194.99 at 4:00 PM on Tuesday, down 0.33% on the day – down 13.48% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are down about 0.3%. Shares of AES Corp. (AES) are down about 1.8%. Shares of PPL Corp. (PPL) are down about 0.4%. Shares of Exelon (EXC) are down about 1.25%. Shares of CMS Energy (CMS) are down about 1.75%.

The Utilities Select Sector SPDR (XLU) was trading at $33.79 at 4:00 PM on Tuesday, down 1.23% on the day – up 7.82% year-to-date.

STOCKS: LDK, TSL, FRO, SFL, OSG, STP, SIAL, LYB, TXI, FOE, VAL, MCP, KGC, CHMT, KKR, ITOCY, DY, DAL, DE, BWEN, YRCW, CPST, NFLX, SIG, CHS, ZLC, JACK, VAC, TRLG, ICON, TSLA, NWSA, AN, PSS, WYNN, SMP, FMCN, GRPN, CPB, TSN, DOLE, MO, GMCR, PG, MDT, KH, GILD, AMGN, VRUS, YMI, PPHM, GNOM, BAC, EV, TWO, AFL, HPQ, SSNFL, GOOG, BRCD, ADI, CNTF, MSFT, DLB, AKAM, RAX, INTU, NVDA, ALU, PWRD, FID, HSOL, S, T, FTR, VZ, VOD, WIN, DUK, AES, PPL, EXC, CMS

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
ADI Analog Devices Inc. 63.23 -0.45 -0.71 3,185,537
AES The AES Corporation 13.26 0.07 0.53 3,955,833
AFL AFLAC Incorporated 72.74 -0.78 -1.06 1,334,120
AKAM Akamai Technologies Inc. 52.25 -0.18 -0.34 1,307,373
ALU Alcatel-Lucent ADR (Sponsored) n/a n/a n/a 0
AMGN Amgen Inc. 174.80 -0.82 -0.47 2,238,657
AN AutoNation Inc. 48.53 0.25 0.52 510,448
BAC Bank of America Corporation 15.52 -0.08 -0.51 51,604,424
BRCD Brocade Communications Systems Inc. 9.14 0.03 0.33 3,760,095
BWEN Broadwind Energy Inc. 4.35 -0.06 -1.36 16,543
CHMT Chemtura Corp. 28.18 0.63 2.29 547,644
CHS Chico\'s FAS Inc. 12.54 0.23 1.87 2,040,936
CMS CMS Energy Corporation 43.87 0.11 0.25 2,414,404
CNTF China TechFaith Wireless Communication Technology 2.65 -0.06 -2.21 29,069
CPB Campbell Soup Company 54.89 -0.50 -0.90 2,563,277
CPST Capstone Turbine Corporation 1.39 0.00 0.00 80,102
DAL Delta Air Lines Inc. 38.78 0.28 0.73 6,841,201
DE Deere & Company 83.34 -0.82 -0.97 2,561,257
DLB Dolby Laboratories 53.79 -0.40 -0.74 346,505
DUK Duke Energy Corporation (Holding Company) 82.52 0.01 0.01 2,348,821
DY Dycom Industries Inc. 81.97 -1.77 -2.11 437,390
EV Eaton Vance Corporation 39.25 -0.33 -0.83 565,400
EXC Exelon Corporation 34.80 -0.42 -1.19 3,946,652
FOE Ferro Corporation 12.80 -0.26 -1.99 529,157
FRO Frontline Ltd 7.11 -0.20 -2.74 823,279
FTR Frontier Communications Corporation 4.33 0.00 0.00 19,247,444
GILD Gilead Sciences Inc. 81.37 -0.15 -0.18 7,534,538
GMCR Keurig Green Mountain Inc n/a n/a n/a 0
GOOG Alphabet Inc. 786.90 -0.31 -0.04 1,411,937
GRPN Groupon Inc. 5.32 -0.11 -2.03 2,873,575
HPQ HP Inc. 15.09 -0.03 -0.20 8,102,240
HSOL HSOL n/a n/a n/a 0
ICON Iconix Brand Group Inc. 8.37 0.06 0.72 372,875
INTU Intuit Inc. 109.90 -0.86 -0.78 1,264,092
JACK Jack In The Box Inc. 102.14 1.42 1.41 438,283
KGC Kinross Gold Corporation 4.30 -0.13 -2.93 13,643,667
KKR KKR & Co. L.P. Representing Limited Partnership In 14.34 -0.14 -0.97 1,061,495
LYB LyondellBasell Industries NV Class A (Netherlands) 77.39 -0.79 -1.01 2,132,428
MDT Medtronic plc. 87.71 -0.11 -0.13 3,509,067
MO Altria Group Inc. 63.87 -0.25 -0.39 4,428,499
MSFT Microsoft Corporation 57.43 -0.39 -0.67 19,955,336
NFLX Netflix Inc. 95.94 0.11 0.11 6,179,471
NVDA NVIDIA Corporation 64.95 -0.07 -0.11 6,903,344
NWSA News Corporation 14.05 -0.09 -0.64 1,358,401
PG Procter & Gamble Company (The) 87.76 -1.23 -1.38 48,281,375
PPHM Peregrine Pharmaceuticals Inc. 0.41 -0.01 -2.31 1,232,260
PPL PPL Corp 35.70 -0.12 -0.34 4,155,500
RAX Rackspace Hosting Inc 31.56 -0.15 -0.47 2,850,375
S Sprint Corporation 6.64 0.02 0.30 8,699,931
SFL Ship Finance International Limited 14.69 -0.23 -1.54 334,905
SIAL Sigma-Aldrich Corp. n/a n/a n/a 0
SIG Signet Jewelers Limited 78.97 1.70 2.20 1,438,322
SMP Standard Motor Products Inc. 46.47 -0.47 -1.00 55,122
T AT&T Inc. 41.28 0.17 0.41 18,867,573
TSL Trina Solar Limited Sponsored ADR (Cayman Islands) 10.32 -0.11 -1.05 1,190,629
TSLA Tesla Motors Inc. 207.45 1.02 0.49 2,905,229
TSN Tyson Foods Inc. 76.26 -0.50 -0.65 2,175,176
TWO Two Harbors Investment Corp 8.91 -0.06 -0.67 1,367,998
VAC Marriot Vacations Worldwide Corporation 75.02 -0.30 -0.40 103,890
VAL Valspar Corporation (The) 106.59 -0.43 -0.40 188,835
VOD Vodafone Group Plc 29.15 -0.48 -1.62 6,594,085
VZ Verizon Communications Inc. 52.56 0.21 0.40 13,014,796
WIN Windstream Holdings Inc. 9.93 0.03 0.30 1,989,561
YRCW YRC Worldwide Inc. 12.35 0.09 0.73 539,689

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