Equities Sector Coverage: Stocks Edge Slightly Higher

Sector Recap |

Stocks Edge Slightly HigherRecent economic data points and the Beige Book favored steady economic growth, but this morning’s data counters this positive information. Initial Jobless Claims rose 27,000 last week to 399,000 well above the 350,000 recessionary threshold. After touting positive holiday retail sales, the data for December was below estimates with an anemic rise of just 0.1%, down 0.2% excluding autos and down 0.1% excluding autos and gasoline. The Dow Jones Industrial Average traded down from 12,474.73 to 12,385.08 then moved back above 12465 into the final half hour of trading, which is below the down trend that connects the highs of May and July 2011 at 12,500. The NASDAQ traded up from 2697.32 to above 2720 into the final half hour of trading.

Asian stocks declined on Thursday with the Nikkei 225 ending their session at 8,386 – down 0.74% on the day, and the Hang Seng ending their session at 19,095 – down 0.30% on the day. European stocks were mixed on Thursday following favorable bond auctions in the Eurozone. The FTSE 100 ended their session at 5,662 – down 0.15% on the day; the DAX ended their session at 6,179 – up 0.44% on the day; and the CAC 40 ended their session at 3,200 – down 0.15% on the day. The yield on the 10-Year US Treasury note traded between 1.890 and 1.942 staying below its 50-day simple moving average at 1.977.

Gold traded up from $1640.9 the Troy ounce and $1662.9 staying above its 200-day simple moving average at $1631.1. Crude oil declined from $102.98 per barrel to $98.50 testing its 50-day simple moving averages at $98.52. The euro versus the dollar traded between 1.2703 and 1.2843 staying above its 52-week low set Wednesday at 1.2666.

Energy

Chevron (CVX) expects its Q4 earnings to be "significantly below" Q3, due to its downstream business operating near breakeven. BP Plc (BP) gets a Buy-from-Hold boost at Jefferies. ConocoPhillips (COP) is cut to Hold from Buy at Jefferies. In afternoon trading: Shares of Gulf Keystone Petroleum (GUKYF) are up about 9.5%. Shares of DHT Holdings (DHT) are up about 9%. Shares of Overseas Shipholding Group (OSG) are up about 8.75%.

Energy Select Sector SPDR (XLE) was trading at $69.79 at 4:00 PM on Thursday, down 0.94% on the day – up 0.95% year-to-date. The 2011 change was +1.29%.

Materials

Commercial Metals (CMC) is initiated at an Underperform with Bank of America-Merrill Lynch. EnCana (ENC) is moved to Underperform from Neutral at Bank of America-Merrill Lynch. Packaging Corporation of America (PKG) is downgraded to Underweight from Overweight at JPMorgan. In afternoon trading: Shares of Headwaters (HW) are up about 11.5%. Shares of China GengSheng Minerals (CHGS) are up about 10.5%. Shares of Golden Minerals (AUMN) are up about 9.25%. Shares of Westlake Chemicals (WLK) are up about 8.25%. Shares of Avalon Rare Elements (AVL) are up about 8%.

The Materials Select Sector SPDR (XLB) was trading at $36.34 at 4:00 PM on Thursday, up 1.41% on the day – up 8.48% year-to-date. The 2011 change was -12.78%.

Industrials

Pall Corp (PLL) is increased to Outperform from Market Perform with William Blair. Ametek Inc (AME) and Wesco International (WCC) are each upgraded to Outperform from Neutral at Robert W. Baird, which sets respective price objectives of $53 and $69 from $47. Canadian National Railway (CNI) is taken to Hold from Buy at TD Newcrest. In afternoon trading: Shares of SmartHeat (HEAT) are up about 17%. Shares of Broadwind Energy (BWEN) are up about 14.5%.

The Industrial Select Sector SPDR (XLI) was trading at $35.77 at 4:00 PM on Thursday, up 0.87% on the day – up 5.99% year-to-date. The 2011 change was -3.21%.

Consumer Discretionary

Sears (SHLD) has taken another hit after CIT Group said it will stop factoring accounts payable for it - cutting off a source of ready cash flow for the embattled retailer. Big 5 Sporting Goods (BGFV) warned it expects Q4 revenue of $226.7M (flat Y/Y) and EPS of $0.02-$0.05 (below Street estimates of $232.2M and $0.20). While PVH Corp. (PVH) expects Q4 EPS of $1.08-$1.10 (above a $1.07 consensus), thanks to the strong performance of its Calvin Klein and Tommy Hilfiger brands, its 2012 EPS guidance of $5.90-$6 is only in-line with a $5.97 consensus. Tractor Supply Company (TSCO) preannounced Q4 revenue of $1.24B and EPS of $0.94-$0.96 (above a consensus of $1.2B and $0.86). Vera Bradley (VRA) reiterated its FQ4 outlook at an investor conference. Crédit Agricole covers Amazon.com (AMZN) and eBay Inc (EBAY) with Buys on both. Urban Outfitters (URBN) is moved to Neutral from Underperform with Wedbush. British Sky Broadcasting (BSYBY) is now Neutral from Buy at Citigroup. Lennar (LEN) is cut to Market Perform from Outperform at Keefe Bruyette. Williams-Sonoma (WSM) is now Neutral from Overweight at Piper Jaffray. In afternoon trading: Shares of Furniture Brands International (FBN) are up about 28.25%. Shares of Eastman Kodak (EK) are down about 19.5%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $40.43 at 4:00 PM on Thursday, up 0.30% on the day – up 3.61% year-to-date. The 2011 change was +4.30%.

Consumer Staples

Coca Cola (KO) has admitted that it was the orange juice maker that reported the presence of fungicide in its orange juice and in a competitor's products. Unilever NV (UN) gets downgraded to Hold from Buy at Deutsche Bank. In afternoon trading: Shares of Tesco (TSCDY) are down about 15.25%. Shares of Synutra International (SYUT) are down about 11.5%. Heavily Traded Stocks: Shares of SUPERVALU (SVU) are down about 0.75%. Shares of Procter & Gamble (PG) are up about 0.2%. Shares of Altria Group (MO) are down about 0.25%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $32.17 at 4:00 PM on Thursday, down slightly on the day – down 0.98% year-to-date. The 2011 change was +10.85%.

Healthcare

Hill-Rom (HRC) warned it expects FQ1 revenue of $381M and EPS of $0.52-$0.53 (below a consensus of $393.1M and $0.56). The company now expects FY12 revenue growth of just 2%-3% and EPS of $2.45-$2.50 (below a consensus of 4.8% growth and $2.52). WellCare Group (WCG) and Molina Healthcare (MOH) are both started at an Equal Weight by Morgan Stanley. Stryker (SYK) is now Neutral from Buy at Citigroup. Covidien (COV) is cut to Neutral from Buy at Goldman. In afternoon trading: Shares of Pacific Biosciences (PACB) are up about 18%. Shares of XOMA Corp. (XOMA) are up about 14.5%. Shares of Alnylam Pharmaceuticals (ALNY) are up about 11%.

The Health Care Select Sector SPDR (XLV) was trading at $35.59 at 4:00 PM on Thursday, up 0.31% on the day – up 2.59% year-to-date. The 2011 change was +10.32%.

Financials

RBS (RBS) plans to cut 3,500 jobs as part of a shake-up of its investment bank. The firm also plans to exit its cash equities, corporate broking, equity capital markets, and M&A businesses. The London Metal Exchange reportedly sent 15 non-disclosure agreements to potential bidders last month, and at least two serious suitors have emerged for a deal that could be worth as much as $1.5B [CME Group (CME), IntercontinentalExchange (ICE) and ICAP (IAPLY)]. ING (ING) has dropped plans to float its insurance and investment management operations in Europe and Asia, citing "the uncertain economic outlook and turbulent financial markets, especially in Europe." UBS has new Neutrals on T. Rowe Price (TROW) and Franklin Resources (BEN) and begins Buys on both BlackRock (BLK) and Invesco (IVZ). Imperial Capital resumes Outperform rated coverage and a $26 price target on Apartment Investment and Management (AIV) and establishes an In-Line on AvalonBay Communities (AVB). IberiaBank (IBKC) is a new Hold at Jefferies. Kimco Realty (KIM) is raised to Neutral from Sell at Goldman Sachs. HSBC Holdings (HBC) is lowered to Underperform from Neutral at Bank of America-Merrill Lynch. Lazard (LAZ) is now Neutral from Buy at Bank of America-Merrill. SL Green Realty (SLG) is lowered to Sell from Neutral at Goldman. In afternoon trading: Shares of Radian Group (RDN) are up about 10.75%.

The Financial Select Sector SPDR (XLF) was trading at $13.92 at 4:00 PM on Thursday, up 0.40% on the day – up 7.08% year-to-date. The 2011 change was -18.50%; the weakest performing sector for the year.

Information Technology

Infosys Technologies (INFY) reported FQ3 EPADS of $0.80 (in-line) and revenue of $1.81B (in-line), and sees Q4 EPADS of $0.81 and revenue of $1.80-1.81B. DragonWave (DRWI) missed estimates by 4 cents and revenue by $1.8M, and sees Q4 revenue of $12-15M. iPhone circuit board supplier Multi-Fineline (MFLX) says it expects FQ1 revenue of $239M (well above a consensus of $215.2M). The company also expects FQ1 sales to rise Y/Y (better than a Street forecasts for a 5.5% decline). Richardson Electronics (RELL) reported FQ2 EPS of $0.09 (in-line), while missing revenue by $3.5M. EXFO Electro-Optical Engineering (EXFO) missed estimates by 3 cents and revenue by $3.4M. Crédit Agricole covers Amazon.com (AMZN) and eBay Inc (EBAY) with Buys on both. Check Point Software (CHKP) is a new Outperform at FBN Securities. EMC Corp (EMC) is lifted to Overweight from Neutral at JPMorgan. SINA Corp (SINA) is upgraded to Overweight from Neutral at JPMorgan, whose target is $79. Cree Inc (CREE) is hoisted to Hold from Sell at Kaufman Brothers, which takes its price target up by $5 to $24. Genpact (G) is now Overweight from Neutral at JPMorgan. Juniper Networks (JNPR) is downgraded to Hold from Buy at Argus. In afternoon trading: Shares of Energy Conversion Devices (ENER) are up about 31%. Shares of Hanwha SolarOne (HSOL) are up about 16.5%.

The Technology Select Sector SPDR (XLK) was trading at $26.23 at 4:00 PM on Thursday, up 0.50% on the day – up 3.06% year-to-date. The 2011 change was +1.03%.

Telecommunications Services

Tele Argentina STET (TEO) is an Overweight at Morgan Stanley. France Telecom (FTE) is move to Underweight from Neutral at JPMorgan. In afternoon trading: Shares of Leap Wireless (LEAP) are up about 7.5%. Shares of Sprint Nextel (S) are up about 2.2%, while shares of AT&T (T) are up about 0.7% and shares of Verizon (VZ) are down slightly. Shares of Frontier Communications (FTR) are down about 0.3%.

The NASDAQ Telecommunications Index (IXTC) was trading at $206.80 at 4:00 PM on Thursday, up 0.71% on the day – up 5.01% year-to-date. The 2011 change was -12.62%.

Utilities

In afternoon trading: Shares of Genon Energy (GEN) are down about 2%. Shares of Exelon (EXC) are down about 0.9%. Shares of Duke Energy (DUK) are down about a half of a percent. Shares of PPL Corp. (PPL) are down about 0.6%. Shares of NiSource (NI) are relatively unchanged.

The Utilities Select Sector SPDR (XLU) was trading at $34.91 at 4:00 PM on Thursday, down 0.14% on the day – down 2.97% year-to-date. The 2011 change was +14.81%; the strongest performing sector for the year.

STOCKS: CVX, BP, COP, GUKYF, DHT, OSG, CMC, ENC, PKG, HW, CHGS, AUMN, WLK, AVL, PLL, AME, WCC, CNI, HEAT, BWEN, SHLD, BGFV, PVH, TSCO, VRA, AMZN, EBAY, URBN, BSYBY, LEN, WSM, FBN, EK, KO, UN, TSCDY, SYUT, SVU, PG, MO, HRC, WCG, MOH, SYK, COV, PACB, XOMA, ALNY, RBS, CME, ICE, IAPLY, ING, TROW, BLK, IVZ, AIV, AVB, IBKC, KIM, HBC, LAZ, SLG, RDN, INFY, DRWI, MFLX, RELL, EXFO, CHKP, EMC, SINA, CREE, G, JNPR, ENER, HSOL, TEO, FTE, LEAP, S, T, VZ, FTR, GEN, EXC, DUK, PPL, NI

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 0.71 -0.08 -9.90 765,949
WLK Westlake Chemical Corporation 57.21 -0.72 -1.24 548,364
GEN Genesis Healthcare Inc. 4.14 0.13 3.24 304,082
FTR Frontier Communications Corporation 3.67 -0.03 -0.81 20,546,897
LAZ Lazard LTD. LTD. Class A 43.01 -0.91 -2.07 687,439
PG Procter & Gamble Company (The) 84.37 0.87 1.04 8,004,453
NI NiSource Inc 21.78 0.07 0.32 3,375,543
CVX Chevron Corporation 115.81 0.64 0.56 5,771,551
ICE Intercontinental Exchange Inc. 59.66 0.20 0.34 2,170,533
PKG Packaging Corporation of America 87.38 0.05 0.06 711,985
DCI Donaldson Company Inc. 44.56 0.07 0.16 674,418
HW Headwaters Incorporated 23.58 0.07 0.30 2,674,744
MO Altria Group Inc. 66.27 0.91 1.39 7,464,496
KIM Kimco Realty Corporation 25.98 -0.36 -1.37 3,947,182
EBAY eBay Inc. 29.97 0.55 1.87 13,548,980
SINA Sina Corporation 72.16 -0.18 -0.25 934,684
ALNY Alnylam Pharmaceuticals Inc. 42.25 1.45 3.54 1,401,075
CMC Commercial Metals Company 23.73 -0.53 -2.18 2,406,893
S Sprint Corporation 8.48 -0.26 -2.97 19,560,796
PPL PPL Corp 33.51 0.40 1.21 4,871,078
RDN Radian Group Inc. 16.87 0.79 4.91 5,794,706
PVH PVH Corp. 106.50 -1.74 -1.61 1,189,191
TROW T. Rowe Price Group Inc. 76.60 -2.01 -2.56 2,921,611
WSM Williams-Sonoma Inc. (DE) 55.99 -0.91 -1.60 1,326,885
AMZN Amazon.com Inc. 768.66 1.33 0.17 2,470,923
IBKC IBERIABANK Corporation 88.75 -1.35 -1.50 967,893
VRA Vera Bradley Inc. 12.95 0.13 1.01 352,032
COP ConocoPhillips 50.77 0.99 1.99 6,126,055
SLG SL Green Realty Corporation 110.58 -0.17 -0.15 533,027
HRC Hill-Rom Holdings In. 55.47 -0.39 -0.70 777,106
BWEN Broadwind Energy Inc. 4.20 0.03 0.72 10,143
UN Unilever NV 40.02 0.74 1.88 2,494,824
VZ Verizon Communications Inc. 51.49 0.36 0.70 10,101,462
BGFV Big 5 Sporting Goods Corporation 18.55 0.15 0.82 639,744
SHLD Sears Holdings Corporation 11.93 -0.83 -6.50 1,739,907
SVU SuperValu Inc. 4.87 -0.08 -1.62 2,800,896
RBS Royal Bank of Scotland Group Plc New (The) ADS 5.49 -0.11 -1.96 1,604,001
JNPR Juniper Networks Inc. 28.46 -0.20 -0.70 3,259,438
DRWI DragonWave Inc 2.80 0.10 3.70 32,270
MFLX Multi-Fineline Electronix Inc. n/a n/a n/a 0
WCC WESCO International Inc. 71.10 -1.05 -1.46 472,974
AIV Apartment Investment and Management Company 42.31 -0.29 -0.68 901,879
TEO Telecom Argentina SA 18.11 -0.14 -0.77 57,964
CNI Canadian National Railway Company 69.52 -0.33 -0.47 1,701,008
URBN Urban Outfitters Inc. 34.19 -1.15 -3.25 3,430,543
RELL Richardson Electronics Ltd. 5.87 0.16 2.80 83,353
LEN Lennar Corporation Class A 44.83 -0.84 -1.84 2,421,801
TSCO Tractor Supply Company 77.44 0.87 1.14 1,345,990
G Genpact Limited 24.01 -0.50 -2.04 868,048
WCG Wellcare Health Plans Inc. 139.85 -1.55 -1.10 393,325
AVB AvalonBay Communities Inc. 169.05 0.28 0.17 533,775
SYUT Synutra International Inc. 5.30 -0.05 -0.93 114,915
HSOL HSOL n/a n/a n/a 0
PACB Pacific Biosciences of California Inc. 6.95 -0.07 -1.00 759,367
DHT DHT Holdings Inc. 4.02 0.08 2.03 3,900,571
ING ING Group N.V. 14.45 -0.14 -0.96 3,979,539
BP BP p.l.c. 36.01 -0.18 -0.50 4,633,089
AME AMETEK Inc. 50.87 -0.18 -0.35 1,586,048
IVZ Invesco Ltd 32.79 -0.37 -1.12 2,636,911
CHKP Check Point Software Technologies Ltd. 85.22 0.63 0.74 844,907
KO Coca-Cola Company (The) 42.00 1.02 2.49 28,125,775
EXC Exelon Corporation 34.90 0.70 2.05 10,118,837
CME CME Group Inc. 122.74 0.45 0.37 1,345,592
INFY Infosys Limited American Depositary Shares 14.74 -0.04 -0.27 5,584,798
T AT&T Inc. 40.38 -0.03 -0.07 17,105,180
DUK Duke Energy Corporation (Holding Company) 75.82 1.09 1.46 3,196,119
CREE Cree Inc. 26.86 0.01 0.04 819,667
SYK Stryker Corporation 116.50 0.99 0.86 1,040,784
MOH Molina Healthcare Inc 54.14 -0.56 -1.02 474,440
EMC EMC Corporation n/a n/a n/a 0
XOMA XOMA Corporation 5.68 -0.01 -0.18 34,115
EXFO EXFO Inc 4.20 -0.25 -5.62 18,247

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