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
AIV Apartment Investment and Management Company 47.16 -0.43 -0.90 953,085
ALNY Alnylam Pharmaceuticals Inc. 78.09 2.09 2.75 367,557
AME AMETEK Inc. 47.57 0.52 1.11 1,165,979
AMZN Amazon.com Inc. 816.11 16.95 2.12 3,819,235
AUMN Golden Minerals Company 0.75 0.00 0.40 193,308
AVB AvalonBay Communities Inc. 181.76 -1.72 -0.94 898,605
BGFV Big 5 Sporting Goods Corporation 14.15 0.01 0.07 139,548
BP BP p.l.c. 33.61 -0.07 -0.21 4,171,938
BWEN Broadwind Energy Inc. 4.16 -0.07 -1.65 43,379
CHKP Check Point Software Technologies Ltd. 76.30 1.34 1.79 807,251
CMC Commercial Metals Company 16.24 0.18 1.12 1,059,448
CME CME Group Inc. 105.71 0.44 0.42 1,506,261
CNI Canadian National Railway Company 64.00 0.28 0.44 920,108
COP ConocoPhillips 39.43 -0.59 -1.47 7,793,312
CREE Cree Inc. 25.36 0.47 1.89 527,185
CVX Chevron Corporation 98.98 0.20 0.20 6,476,099
DCI Donaldson Company Inc. 36.95 0.03 0.08 526,587
DHT DHT Holdings Inc. 4.13 0.05 1.23 1,737,239
DUK Duke Energy Corporation (Holding Company) 81.43 -0.72 -0.88 2,268,288
EBAY eBay Inc. 31.94 0.27 0.85 5,914,060
EMC EMC Corporation n/a n/a n/a 0
EXC Exelon Corporation 34.18 -0.64 -1.84 4,765,713
EXFO EXFO Inc 3.56 0.02 0.56 959
FTR Frontier Communications Corporation 4.34 -0.02 -0.46 13,582,166
G Genpact Limited 23.40 0.06 0.26 1,125,436
GEN Genesis Healthcare Inc. 2.76 0.05 1.85 80,070
HRC Hill-Rom Holdings In. 61.23 0.62 1.02 333,894
HSOL HSOL n/a n/a n/a 0
HW Headwaters Incorporated 16.90 0.15 0.90 323,436
IBKC IBERIABANK Corporation 66.12 0.55 0.84 426,245
ICE Intercontinental Exchange Inc. 273.53 -0.51 -0.19 480,621
INFY Infosys Limited American Depositary Shares 15.91 0.04 0.25 2,801,657
ING ING Group N.V. 12.18 0.04 0.33 2,263,445
IVZ Invesco Ltd 30.71 0.43 1.42 2,341,580
JNPR Juniper Networks Inc. 24.04 0.38 1.61 3,281,033
KIM Kimco Realty Corporation 29.76 -0.37 -1.23 1,818,551
KO Coca-Cola Company (The) 42.59 0.54 1.28 11,920,432
LAZ Lazard LTD. LTD. Class A 36.01 0.03 0.08 498,228
LEN Lennar Corporation Class A 42.72 -0.23 -0.54 1,946,235
MFLX Multi-Fineline Electronix Inc. n/a n/a n/a 0
MO Altria Group Inc. 63.32 0.29 0.46 4,486,983
MOH Molina Healthcare Inc 58.09 0.53 0.92 353,612
NI NiSource Inc 24.69 -0.41 -1.63 2,358,360
PACB Pacific Biosciences of California Inc. 9.06 -0.16 -1.74 1,015,799
PG Procter & Gamble Company (The) 88.36 0.51 0.58 65,150,794
PKG Packaging Corporation of America 80.76 -1.22 -1.49 1,143,196
PPL PPL Corp 35.24 -0.52 -1.45 4,739,105
PVH PVH Corp. 106.37 0.57 0.54 703,390
RBS Royal Bank of Scotland Group Plc New (The) ADS 4.60 -0.01 -0.22 2,202,931
RDN Radian Group Inc. 13.55 0.03 0.22 1,634,291
RELL Richardson Electronics Ltd. 6.80 -0.01 -0.15 10,327
S Sprint Corporation 6.73 0.08 1.20 9,741,591
SHLD Sears Holdings Corporation 11.20 0.21 1.91 387,695
SINA Sina Corporation 77.73 1.98 2.61 1,170,316
SLG SL Green Realty Corporation 110.79 -1.50 -1.34 854,672
SVU SuperValu Inc. 4.57 -0.02 -0.44 2,374,887
SYK Stryker Corporation 117.80 1.59 1.37 1,156,223
SYUT Synutra International Inc. 4.18 0.09 2.20 32,936
T AT&T Inc. 41.46 0.32 0.78 18,440,158
TEO Telecom Argentina SA 18.32 -0.10 -0.54 115,857
TROW T. Rowe Price Group Inc. 65.56 0.36 0.55 1,858,638
TSCO Tractor Supply Company 68.99 0.22 0.32 1,935,331
UN Unilever NV 46.20 0.54 1.18 1,285,472
URBN Urban Outfitters Inc. 35.13 0.12 0.34 1,886,466
VRA Vera Bradley Inc. 15.71 0.11 0.71 170,536
VZ Verizon Communications Inc. 52.49 0.34 0.65 8,259,032
WCC WESCO International Inc. 58.58 0.79 1.37 399,493
WCG Wellcare Health Plans Inc. 116.33 1.39 1.21 327,999
WLK Westlake Chemical Corporation 50.41 0.82 1.65 930,584
WSM Williams-Sonoma Inc. (DE) 50.56 0.78 1.57 2,359,542
XOMA XOMA Corporation 0.48 -0.01 -2.88 649,058

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