Equities Sector Coverage: Stocks End Flat After Failing to Hold Early Gains

Sector Recap |

Wall Street Stock MarketThe Dow Jones Industrial Average rallied to a new year-to-date high of 13,221.27 then declined to 13,168.79 in afternoon trading. The NASDAQ rallied to a new year-to-date high of 3051.23 then declined to 3024.73 in afternoon trading. The Federal Reserve released the results of its stress tests, showing that "despite large hypothetical declines, the post-stress test capital level ... of 15 of the 19 bank holding companies were estimated ... above all 4 of the regulatory minimum levels ... even after considering the proposed capital actions, such as dividend increases or share buybacks."

Asian stocks were mixed on Wednesday. The Nikkei 225 ended their session at 10,050 – up 1.53% on the day. The Hang Seng ended their session at 21,308 – down 0.15% on the day. European stocks were up on Wednesday on a positive reaction to the Federal Reserve Stress Tests on the 19 biggest US banks. The closes were mixed however. The FTSE 100 ended their session at 5,949 – down 0.12% on the day. The DAX ended their session at 7,078 – up 1.18% on the day. The CAC 40 ended their session at 3,565 – up 0.40% on the day. The yield on the 10-Year US Treasury rose from 2.119 percent to 2.290 above its 200-day simple moving average at 2.227. This rise in yields is important as 200-day SMAs tend to be tested during every calendar year. In addition rising bond yields are a drag on equity valuations.

Import Prices rose 0.4% in February versus unchanged in January, and was up 5.5% year over year. Q4 Current Account Deficit came in at $124.11 billion, larger than expected. Gold declined to a day’s low of $1635.1 the Troy ounce, below 50-day and 200-day simple moving averages at $1701.3 and $1677.9. Crude oil declined from $107.02 per barrel to $105.12. The euro versus the dollar declined from 1.3089 to 1.3014 staying below the 50- day simple moving average at 1.3094.

Financials

Now to the actual breakdown: The winners: JPMorgan (JPM) announced a 20% increase in its dividend payout to $0.30/share and a new $15B share repurchase program that includes $12B in buybacks that can be earmarked for 2012. U.S. Bancorp (USB) raised its annual dividend to $0.78 from $0.50 after getting the all-clear from the Fed and received board authorization to repurchase up to 100M shares of stock. BB&T (BBT) boosted its quarterly dividend 25% to $0.20. Morgan Stanley (MS) said it received no objection from the Fed to its 2012 capital plan, which includes the potential acquisition of another 14% of Smith Barney and the ongoing payment of current dividends. American Express (AXP) authorized a $4B stock repurchase program and raised its dividend payout by 11.1% to $0.20/share. Wells Fargo (WFC) hiked its dividend an additional $0.10/share, which together with the $0.12/share dividend declared in January, raises the total dividend 83% to $0.22. Other winners: State Street (STT), Bank of NY Mellon (BK), Fifth Third (FITB), Capital One (COF), PNC Financial (PNC), KeyCorp (KEY), Goldman Sachs (GS), Bank of America (BAC), Regions Financial (RF). A few losers: Citigroup (C), SunTrust (STI), MetLife (MET) and Ally Financial failed to get their capital plans approved in the Fed's stress tests, which mandated a minimum tier 1 capital ratio of 5%. Citi had a projected 4.9% ratio under the tests, SunTrust a 4.8% ratio, and Ally a mere 2.5% ratio. MetLife would have had a minimum tier 1 capital ratio of 5.1% through Q4 2013 and a minimum tier 1 leverage ratio of 3.4%, levels that lead the Fed to object to MetLife's capital distribution plan. MetLife has responded by saying it's "deeply disappointed" with the Fed's conclusions. Citi, also disappointed, will submit a revised capital plan later this year. FXCM (FXCM) beat estimates by 11 cents and revenue by $7M. Penson Worldwide (PNSN) reported Q4 EPS of -$0.93 (versus consensus of -$0.16), while missing revenue by $19M. American Tower (AMT) is moved to Overweight from Neutral at JP Morgan. TCF Financial (TCB) is raised to Buy from Neutral at Sterne Agee, whose target is $13.50, but is lowered to Underperform from Market Perform with a $10 target at FBR Capital. Citigroup (C) is now Neutral from Overweight at JPMorgan. Essex Property (ESS) is reduced to Hold from Buy at Stifel Nicolaus due to valuation concerns. Texas Capital (TCBI) is now Neutral from Buy at Suntrust.

The Select Sector SPDR (XLF) was trading at $15.44 at 4:00 PM on Wednesday, up 0.13% on the day – up 18.77% year-to-date (the strongest performing sector). The February 2012 change was +5.02%. The 2011 change was -18.50%; the weakest performing sector for the year.
Big Mover: (PNSN) -20.5%.

Energy

USEC (USU) reported Q4 EPS of -$4.09 (versus consensus of -$0.03), while missing revenue by $25M. GeoResources (GEOI) beat estimates by 3 cents and revenue by $4M. AAON (AAON) reported Q4 EPS of $0.09 (versus consensus of $0.21), while missing revenue by $12M. Anadarko Petroleum (APC) is upgraded to Buy from Hold with a $100 price objective at Stifel Nicolaus.
Energy Select Sector SPDR (XLE) was trading at $73.95 at 4:00 PM on Wednesday, down 0.96% on the day – up 6.97% year-to-date. The February 2012 change was +5.93%. The 2011 change was -1.29%.

Heavily Traded: (PBR) flat, (HAL) -2.8%.

Materials

The Materials Select Sector SPDR (XLB) was trading at $36.897 at 4:00 PM on Wednesday, down 0.39% on the day – up 10.14% year-to-date. The February 2012 change was -0.56%. The 2011 change was -12.78%.



Heavily Traded: (AA) -0.6%, (KGC) -6.5%, (ABX) -5.2%, (FCX) -2.9%, (VALE) -2.9%, (AKS) +3.1%, (CX) -1.9%, (X) +2.8%, (AUY) -5.5%, (NEM) -1.6%.
Industrials
Metalico (MEA) missed estimates by a penny with revenue in-line with estimates. EnergySolutions (ES) reported Q4 EPS of $1.08 (versus consensus of $0.11), while beating revenue by $43M. Federal Signal (FSS) missed estimates by a penny, while beating revenue by $21M. Sterling Construction (STRL) reported Q4 EPS of -$0.17 (versus consensus of $0.14), while missing revenue by $114M. IHS Inc (IHS) is moved to Equal Weight from Overweight at Morgan Stanley.
The Industrial Select Sector SPDR (XLI) was trading at $37.69 at 4:00 PM on Wednesday, down 0.24% on the day – up 11.67% year-to-date. The February 2012 change was +2.79%. The 2011 change was -3.21%.
Big Movers: (FSS) +22.25%, (EGLE) +11%, (MEA) -12%, (BWEN) -10.5%.

Consumer Discretionary

Marcus (MCS) reported FQ3 EPS of $0.03 (versus consensus of $0.00), while beating revenue by $8M. Lin TV (TVL) reported Q4 EPS of $0.13 (versus consensus of $0.20) with revenue in-line with estimates. Global Sources (GSOL) beat estimates by 9 cents and revenue by $11M. Francesca's Holdings (FRAN) beat estimates by 3 cents and revenue by $4.5M. The company boosts its FY12 guidance, now seeing an EPS of $0.76 - $0.81 on revenue of $268M - $274M (versus estimates of $0.76 on $266M). VisionChina Media (VISN) reported Q4 EPS of $0.02 (versus consensus of $0.05), while beating revenue by $1.5M. Pacific Sunwear of California (PSUN) beat estimates by 3 cents, while missing revenue by $11M. Geeknet (GKNT) gets resumed with a Buy recommendation and $22 price target at The Benchmark Company. American Eagle Outfitters (AEO) is raised to Buy from Above Average at Caris. CBS Corp (CBS) is upgraded to Top Pick from Outperform at RBC Capital.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $44.48 at 4:00 PM on Wednesday, down slightly on the day – up 13.99% year-to-date. The February 2012 change was +10.09%. The 2011 change was +4.30%.

Big Movers: (PSUN) -16.25%, (EKDKQ) -13.75%, (BANM) +12%, (CZR) +11.25%, (FRAN) +10%.

Consumer Staples

Medifast (MED) missed estimates by 13 cents and revenue by $2M.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.74 at 4:00 PM on Wednesday, down 0.30% on the day – up 3.85% year-to-date. The February 2012 change was +3.75%. The 2011 change was +10.85%.

Big Movers: (HOGS) -19.25%, (JVA) -10%, (PATH) +15.25%.
Heavily Traded: (RAD) +4.8%.

Health Care

Roche (RHHBY) said it received a second request for information from the FTC regarding its proposed acquisition of Illumina (ILMN). SciClone Pharmaceuticals (SCLN) posted better-than-expected Q4 results, helped by a widened product portfolio boosted by its NovaMed acquisition and growth in sales of its key drug Zadaxin, and raised its 2012 forecast to EPS of $0.72-$0.78 on revenue of $165M-$170M (versus estimates of $0.43 on revenue of $168M). Sunesis Pharma (SNSS) reported Q4 EPS of -$0.19 (in-line). Anacor Pharmaceuticals (ANAC) missed estimates by 17 cents and revenue by $4M. Cempra (CEMP) is covered with an Outperform with at Cowen & Company. Omeros (OMER) is moved to Buy from Hold at Canaccord Genuity. Coventry Health Care (CVH) is moved to Market Perform from Outperform at BMO Capital.

The Health Care Select Sector SPDR (XLV) was trading at $36.98 at 4:00 PM on Wednesday, relatively unchanged on the day – up 6.60% year-to-date. The February 2012 change was +1.06%. The 2011 change was +10.32%.
Big Movers: (ECYT) +62.5%, (AMRN) +11.25%.

Information Technology

Apple (AAPL) could be subpoenaed by the FTC over its deal to make archrival Google (GOOG) the default search provider for iOS devices (and thereby contribute to Google's mobile search dominance), sources said. IDC is hiking its 2012 tablet shipment forecast to 106.1M units from a prior 87.7M - a level that translates into 54% Y/Y growth. Gartner, it should be noted, is estimating 368M PCs will be shipped this year, which suggests the ratio of PC shipments to tablet shipments may be only a little over 3:1 in 2012. IDC also estimates Amazon (AMZN) sold 4.7M Kindle Fires in Q4, good for 16.8% of the tablet market. FalconStor Software (FALC) beat estimates by 5 cents and revenue by $3M. Guidewire Software (GWRE) beat estimates by 19 cents and revenue by $5M. STR Holdings (STRI) missed estimates by a penny with revenue in-line with estimates. First Solar (FSLR) is hoisted to Hold from Sell at DNB Markets. Alcatel-Lucent (ALU) is upgraded to Outperform from Market Perform by BMO Capital. Altera (ALTR) and NXP Semiconductors (NXPI) are each added to the Conviction Buy List at Goldman Sachs. Micron (MU) is moved to Outperform from Market Perform by Sanford Bernstein. Juniper Networks (JNPR) is moved to Market Perform from Outperform by BMO Capital. Kopin Corp (KOPN) is now Hold from Buy at Needham.
The Technology Select Sector SPDR (XLK) was trading at $29.91 at 4:00 PM on Wednesday, up 0.37% on the day – up 17.52% year-to-date. The February 2012 change was +7.08%. The 2011 change was +1.03%.

Big Movers: (GWRE) +16.5%, (RBCN) +14.5%.

Telecommunication Services

Inteliquent (IQNT) missed estimates by 5 cents, while beating revenue by $1M. Vodafone (VOD) is taken to Underperform from Neutral by BNP Paribas. Crown Castle International (CCI) is downgraded by both JP Morgan (Neutral from Overweight) and Goldman (Neutral from Buy at Goldman and also off its list of Conviction Buys).

The NASDAQ Telecommunications Index (IXTC) was trading at $213.48 at 4:00 PM on Wednesday, down 0.93% on the day – up 8.40% year-to-date. The February 2012 change was +1.63%. The 2011 change was -12.62%.

Heavily Traded: (S) -1.4%, (T) -0.4%, (VOD) -3%, (CLWR) +2.3%, (VZ) flat.

Utilities

Great Plains Energy (GXP) is begun with a Buy at Citigroup.

The Utilities Select Sector SPDR (XLU) was trading at $35.16 at 4:00 PM on Wednesday, down 1.49% on the day – down 2.28% year-to-date (the weakest performing sector). The February 2012 change was +0.61%. The 2011 change was +14.81%; the strongest performing sector for the year.

Heavily Traded: (DUK) -1.4%, (EXC) -1.2%, (AEP) -1.9%, (AES) -1.2%, (CNP) -1.5%

STOCKS: USU, GEOI, AAON, APC, PBR, HAL, AA, KGC, ABX, FCX, VALE, AKS, CX, X, AUY, NEM, MEA, ES, FSS, STRL, HIS, EGLE, BWEN, MCS, TVL, GSOL, FRAN, VISN, PSUN, GKNT, AEO, CBS, EKDKQ, BANM, CZR, MED, HOGS, JVA, PATH, RAD, RHHBY, ILMN, SCLN, SNSS, ANAC, CEMP, OMER, CVH, ECYT, AMRN, JPM, USB, BBT, MS, AXP, WFC, STT, BK, FITB, COF, PNC, KEY, GS, BAC, RF, C, STI, MET, FXCM, PNSN, AMT, TCB, ESS, TCBI, AAPL, GOOG, AMZN, FALC, GWRE, STRI, FSLR, ALU, ALTR, NXPI, MU, JNPR, KOPN, RBCN, IQNT, VOD, CCI, S, T, CLWR, VZ, GXP, DUK, EXC, AEP, AES, CNP

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
CBS CBS Corporation Class B 62.63 -0.86 -1.35 2,727,649
GXP Great Plains Energy Incorporated 27.05 -0.38 -1.39 2,021,303
AKS AK Steel Holding Corporation 9.52 -0.55 -5.46 18,459,899
VALE VALE S.A. American Depositary Shares Each Represen 9.80 -0.14 -1.41 22,856,350
PBR PETROLEO BRASILEIIRO SA PETROBRAS 11.14 -0.03 -0.27 12,034,242
FXCM FXCM Inc 7.60 0.10 1.33 8,537
FALC FalconStor Software Inc. 0.46 -0.01 -1.16 56,940
STRL Sterling Construction Company Inc 8.71 0.06 0.69 67,095
AA Alcoa Inc. 35.42 0.61 1.75 5,050,305
CNP CenterPoint Energy Inc (Holding Co) 25.44 -0.24 -0.93 2,461,033
PNC PNC Financial Services Group Inc. (The) 115.61 -0.71 -0.61 2,589,922
RAD Rite Aid Corporation 8.60 -0.05 -0.58 13,413,971
SMRT Stein Mart Inc. 3.83 -0.07 -1.79 432,476
KEY KeyCorp 17.84 -0.29 -1.60 18,762,949
AAPL Apple Inc. 119.78 -0.21 -0.18 25,609,872
VISN VisionChina Media Inc. 4.01 -0.08 -1.96 4,026
C Citigroup Inc. 56.66 -0.73 -1.27 24,932,449
S Sprint Corporation 8.97 0.24 2.75 23,801,139
FITB Fifth Third Bancorp 25.99 -0.34 -1.29 5,618,710
MET MetLife Inc. 54.02 -0.04 -0.07 4,851,418
MS Morgan Stanley 42.45 -0.41 -0.96 15,040,133
AMRN Amarin Corporation plc 2.88 -0.04 -1.37 1,251,771
SNSS Sunesis Pharmaceuticals Inc. 4.00 0.04 1.01 90,411
JPM JP Morgan Chase 83.30 -0.64 -0.76 16,558,181
ESS Essex Property Trust Inc. 226.67 -1.23 -0.54 455,778
AXP American Express Company 76.69 -0.80 -1.03 8,113,778
ANAC Anacor Pharmaceuticals Inc. n/a n/a n/a 0
KGC Kinross Gold Corporation 3.52 -0.04 -1.12 11,186,418
VOD Vodafone Group Plc 25.84 -0.13 -0.50 5,813,221
FSS Federal Signal Corp. 15.69 -0.17 -1.07 143,149
EGLE Eagle Bulk Shipping Inc. 6.05 0.07 1.17 101,399
AMZN Amazon.com Inc. 809.04 1.56 0.19 2,542,603
AES The AES Corporation 11.73 -0.20 -1.68 3,298,941
MCS Marcus Corporation (The) 30.45 -0.35 -1.14 39,060
GS The Goldman Sachs Group Inc. 231.41 -2.88 -1.23 4,564,142
BWEN Broadwind Energy Inc. 4.11 0.02 0.49 36,685
VZ Verizon Communications Inc. 52.36 0.11 0.21 13,286,142
BBT BB&T Corporation 45.29 -0.91 -1.97 7,012,110
ABX Barrick Gold Corporation 16.92 0.10 0.59 15,575,419
AAON AAON Inc. 32.25 0.05 0.16 112,656
SCLN SciClone Pharmaceuticals Inc. 10.35 -0.05 -0.48 166,666
BAC Bank of America Corporation 22.53 -0.10 -0.44 75,998,512
COF Capital One Financial Corporation 86.72 -0.56 -0.64 1,696,719
USB U.S. Bancorp 50.73 0.17 0.34 7,151,604
OMER Omeros Corporation 9.05 -0.17 -1.84 172,055
GOOG Alphabet Inc. 802.18 -3.90 -0.48 919,517
ILMN Illumina Inc. 160.58 -0.65 -0.40 1,239,691
JNPR Juniper Networks Inc. 27.42 0.08 0.29 2,972,253
FCX Freeport-McMoRan Inc. 15.26 0.02 0.13 13,273,215
BK Bank of New York Mellon Corporation (The) 44.84 -1.39 -3.01 12,816,630
APC Anadarko Petroleum Corporation 70.18 0.29 0.41 3,678,738
AUY Yamana Gold Inc. (Canada) 3.15 -0.01 -0.32 8,104,274
NXPI NXP Semiconductors N.V. 98.06 0.05 0.05 2,464,636
RF Regions Financial Corporation 13.98 -0.05 -0.36 12,778,909
ECYT Endocyte Inc. 2.23 -0.14 -5.91 547,329
RBCN Rubicon Technology Inc. 0.51 -0.01 -1.92 13,016
JVA Coffee Holding Co. Inc. 4.53 -0.07 -1.47 7,221
CZR Caesars Entertainment Corporation 8.95 0.15 1.70 854,562
FRAN Francesca\'s Holdings Corporation 17.88 -0.88 -4.69 754,189
TCBI Texas Capital Bancshares Inc. 77.05 -1.30 -1.66 443,527
X United States Steel Corp. 33.21 -1.72 -4.92 18,666,197
GWRE Guidewire Software Inc. 52.29 -0.78 -1.47 236,472
GSOL Global Sources Ltd. 8.40 -0.05 -0.59 1,505
ALTR Altera Corp. n/a n/a n/a 0
FSLR First Solar Inc. 34.42 0.01 0.03 1,460,336
ALU Alcatel-Lucent ADR (Sponsored) n/a n/a n/a 0
WFC Wells Fargo & Company 54.58 0.31 0.57 20,906,892
ES Eversource Energy (D/B/A) 55.07 -0.45 -0.81 1,232,678
CEMP Cempra Inc. 3.20 -0.05 -1.54 583,909
TCB TCF Financial Corporation 18.45 -0.56 -2.95 5,032,156
AMT American Tower Corporation (REIT) 104.44 -1.23 -1.16 1,747,560
MU Micron Technology Inc. 21.71 -0.61 -2.73 31,259,840
EXC Exelon Corporation 35.74 0.03 0.08 5,024,610
T AT&T Inc. 41.00 0.20 0.49 16,694,926
MED MEDIFAST INC 40.60 -0.73 -1.77 38,196
HAL Halliburton Company 55.34 0.21 0.38 9,144,435
AEO American Eagle Outfitters Inc. 14.88 -0.42 -2.75 3,743,806
NEM Newmont Mining Corporation 34.93 -0.33 -0.94 6,274,218
DUK Duke Energy Corporation (Holding Company) 77.12 -0.38 -0.49 2,575,474
KOPN Kopin Corporation 3.42 -0.12 -3.39 258,403
PSUN Pacific Sunwear of California Inc. n/a n/a n/a n/a
CCI Crown Castle International Corp. (REIT) 85.80 -1.40 -1.61 1,782,009
CX Cemex S.A.B. de C.V. Sponsored ADR 8.30 -0.01 -0.12 9,845,782
IQNT Inteliquent Inc. 22.90 -0.03 -0.13 241,957
AEP American Electric Power Company 62.70 -0.76 -1.20 2,628,320
STI SunTrust Banks Inc. 53.84 -0.52 -0.96 3,232,778

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