Equities Sector Coverage: Stocks Fade as Investors Unable to Hold Onto Gains

Sector Recap |

The Dow Jones Industrial Average rose to 12,650.47 then declined to 12,447.49 going into the final half hour of trading. The NASDAQ rose to 2882.96 then declined to 2815.63 going into the final half hour of trading.

Asian stocks were higher on Monday in reaction to the 100 billion euro bailout of Spain’s banks. The Nikkei 225 ended the day at 8,625 – up 1.96%. The Hang Seng ended the day at 18,954 – up 2.44%. European exchanges opened higher on Monday but drifted to a mixed close. The FTSE 100 ended the day at 5,432 – down 0.05% on Friday. The DAX ended the day at 6,141 – up 0.17%. The CAC 40 ended the day at 3,043 – down 0.29%. The yield on the 10-Year US Treasury rose to 1.728% on the Spain debt deal, but in US trading the yield traded down to 1.583% as the bloom came off the Spain debt rose.

Gold rallied to $1609.3 the Troy ounce overnight then declined to $1582.7 in US trading still below the 50-day and 200-day simple moving averages at $1617.6 and $1682.1. Crude oil rallied to $86.64 per barrel overnight then declined to $82.16 in US trading as concerns return to a weaker US economy. The euro versus the dollar rallied to 1.2667 overnight then declined to 1.2486 during US hours.

Energy

BP (BP) and US authorities are debating over how much the oil giant will pay to resolve all criminal and civil penalties and damages resulting from the Deepwater Horizon oil spill. BP says the amount should be less than $15 billion and the DOJ is asking for $25 billion. A settlement appears likely by September well before a possible a trial in January. Comstock (CRK) has been upgraded to Buy from Hold at Stifel Nicolaus with a $19 price target. Gulfport Energy (GPOR) has been upgraded to Buy from Hold with a $25 target at Stifel Nicolaus, citing a clean balance sheet among other attractions. Dow components – Chevron (CVX) up 0.18%, Exxon Mobil (XOM) up 0.61%.
Energy Select Sector SPDR (XLE) was trading at $63.97 at 3:30 PM on Monday, down 0.82% on the day – down 7.46% year-to-date.

Materials

Commercial Metals (CMC) has been upgraded to Neutral from Sell at Goldman Sachs. Weyerhaeuser (WY) has been added to the Conviction Buy list at Goldman Sachs. AK Steel (AKS) has been downgraded to Sell from Neutral at Goldman and to Hold from Buy at Dahlman Rose. Both saw additional balance sheet risks and cash flow concerns as a result of recent quarterly performance. Dow components – Alcoa (AA) down 0.41%, DuPont (DD) down 0.40%.
The Materials Select Sector SPDR (XLB) was trading at $34.12 at 3:30 PM on Monday, down 1.33% on the day – up 1.85% year-to-date.

Industrials

GE (GE) is considering selling its GE Capital's consumer-finance portfolio according to the Wall Street Journal, which would cut the unit's loan portfolio by 16%. This move acknowledges investor concerns that GE owns one of the country's largest banks. Dow components – Boeing Co (BA) up 0.71%, Caterpillar (CAT) down 0.53%, General Electric (GE) up 0.49%, 3M Company (MMM) down 0.02%, United Technologies (UTX) down 0.08%.
The Industrial Select Sector SPDR (XLI) was trading at $34.52 at 3:30 PM on Monday, down 0.80% on the day – up 2.28% year-to-date.

Consumer Discretionary

McDonald’s (MCD) has been upgraded to Buy from Outperform at CLSA citing attractive valuation despite near-term competitive weakness. The new price target is $105. Skechers USA (SKX) has been upgraded to Buy from Neutral at Sterne Agee. Time Warner (TWX) has been upgraded to Market Perform from Underperform by Sanford Bernstein. Walt Disney (DIS) has been downgraded to Above Average from Buy with a $52 target at Caris & Company. Dow Components – Disney (DIS) up 0.04%, Home Depot down 0.92%, McDonalds (MCD) down 0.73%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $42.91 at 3:30 PM on Monday, down 1.15% on the day – up 9.97% year-to-date.



Consumer Staples

Cott Corp (COT) has been upgraded to Sector Outperform from Sector Perform at CIBC World Markets. Nestlé (NSRGY) has been downgraded to Hold from Buy at Société Générale. Dow components – Kraft (KFT) up 0.39%, Coca Cola (KO) down 0.24%, Procter & Gamble (PG) up 0.22%, Wal-Mart (WMT) up 0.04%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $34.03 at 3:30 PM on Monday, down 0.18% on the day – up 4.74% year-to-date.

Health Care

Johnson & Johnson (JNJ) – according to Bloomberg JNJ may soon announce that it agreed to pay up to $2.2 billion to settle investigations with regard to the marketing its Risperdal antipsychotic treatment and other drugs, and claims that the company paid kickbacks to Omnicare (OCR). UnitedHealth (UNH) has been offering many of the benefits mandated by Obamacare even if the Supreme Court voids some or all of the Act. One reason for this policy is that it's not that expensive, and customers can keep their children on their health plan until age 26. There is still no coverage for children with pre-existing conditions. Forest Labs (FRX) cut its FY 2013 EPS well below consensus citing sharply lower-than-expected sales of its Lexapro treatment following patent expiration in March. Citigroup upgraded to Buy from Hold on HCA Holdings (HCA), Health Management Associates (HMA), Community Health Systems (CYH), Lifepoint Hospitals (LPNT), Universal Health Services (UHS), and Vanguard Health Systems (VHS). Citigroup upgrades Tenet Healthcare (THC) to Buy all the way from Sell. Watson Pharmaceuticals (WPI) has been downgraded to Neutral from Overweight at Piper Jaffray. Dow Components – Johnson & Johnson (JNJ) down 0.60%, Merck (MRK) up 0.70%, Pfizer (PFE) up 0.45%.
The Health Care Select Sector SPDR (XLV) was trading at $36.40 at 3:30 PM on Monday, down 0.52% on the day – up 4.93% year-to-date.

Financial

Moody's is expected to downgrade the large banks this week including the short-term debt of Bank of America (BAC) and Citigroup (C) from Prime-1 to Prime-2. Money-market funds have already been limiting some lending to big banks. Some municipal bond issuers have been switching bankers. Progressive (PGR) has been downgraded to Underweight from Equal Weight at Evercore. Dow Components – American Express (AXP) down 0.32%, Bank of America (BAC) down 2.76%, JP Morgan Chase (JPM) down 1.60%, Travelers (TRV) down 0.60%.
The Financial Select Sector SPDR (XLF) was trading at $13.95 at 3:30 PM on Monday, down 1.09% on the day – up 7.31% year-to-date.

Information Technology

Apple's (AAPL) Worldwide Developer Conference begins today and the company will likely unveil the next generation of the iOS operating system for the iPhone, the iPad and MacBook. Apple’s own mobile mapping software that compete with Google (GOOG) Maps is also anticipated. NVIDIA (NVDA) has been upgraded to Buy from Neutral at UBS. Brocade (BRCD), EMC Corp (EMC), and NetApp (NTAP) have been upgraded to Buy-from-Hold at Cantor Fitzgerald. Marvell Technology (MRVL) has been downgraded to Neutral from Positive at Susquehanna. Dow Components – Cisco Systems (CSCO) down 0.75%, Hewlett-Packard (HPQ) down 2.23%, IBM (IBM) down 0.45%, Intel Corp (INTC) down 0.76%, Microsoft (MSFT) down 1.33%.
The Technology Select Sector SPDR (XLK) was trading at $28.02 at 3:30 PM on Monday, down 1.09% on the day – up 10.10% year-to-date.

Telecommunication Services

Spain's heavily indebted Telefonica (TEF) has agreed to raise about 1.1 billion euros in cash by selling half of its shares in China Unicom (CHU) back to the company. Telefonica in retain a 5% stake in CHU remains committed to the two firms' strategic alliance. Dow components – AT&T (T) up 1.01%, Verizon (VZ) up 0.99%.
The NASDAQ Telecommunications Index (IXTC) was trading at $178.43 at 3:30 PM on Monday, down 1.76% on the day – down 9.39% year-to-date.

Utilities

Duke Energy (DUK) has been upgraded to Outperform from Neutral at Credit Suisse. Southern Company (SO) has been downgraded to Neutral from Outperform at Credit Suisse. Dominion Resources (D) down 0.17%, Edison International (EIX) up 0.65%, First Energy (FE) up 0.50%, PG&E Corp (PCG) up 0.55%, Southern Company (SO) up 0.30%.
The Utilities Select Sector SPDR (XLU) was trading at $36.92 at 3:30 PM on Monday, up 0.27% on the day – up 2.61% year-to-date.

STOCKS: CVX, XOM, BP, CRK, GPOR, AA, DD, CMC, WY, AKS, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, SKX, TWX, KFT, KO, PG, WMT, COT, NSRGY, JNJ, MRK, PFE, OCR, UNH, HCA, CYH, HMA, VHS, LPNT, UHS, THC, WPI, AXP, BAC, JPM, TRV, C, PGR, CSCO, HPQ, IBM, INTC, MSFT, AAPL, GOOG, NVDA, BRCD, EMC, NTAP, MRVL, T, VZ, TEF, CHU, D, EIX, FE, PCG, SO, WTR

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
MMM 3M Company 186.91 -0.50 -0.27 1,393,808
UNH UnitedHealth Group Incorporated (DE) 165.38 2.32 1.42 4,071,804
PG Procter & Gamble Company (The) 90.89 -0.16 -0.18 11,840,268
GE General Electric Co 29.94 -0.25 -0.83 23,571,756
BRCD Brocade Communications Systems Inc. 12.32 -0.01 -0.08 2,953,662
THC Tenet Healthcare Corporation 22.67 0.68 3.09 4,338,975
CVX Chevron Corporation 111.75 1.63 1.48 7,276,445
SO Southern Company (The) 50.27 -0.23 -0.46 4,650,336
PCG Pacific Gas & Electric Co. 66.12 -0.21 -0.32 1,402,926
AKS AK Steel Holding Corporation 8.37 0.35 4.36 18,352,672
GPOR Gulfport Energy Corporation 17.76 -0.36 -1.99 6,257,685
WPI Watson Pharmaceuticals Inc. n/a n/a n/a 0
TEF Telefonica SA 10.14 -0.01 -0.10 820,886
JNJ Johnson & Johnson 122.40 -0.33 -0.27 5,946,157
WMT Wal-Mart Stores Inc. 71.74 -0.65 -0.90 9,254,685
AA Alcoa Inc. 34.78 0.30 0.87 3,898,368
COT Cott Corporation 10.71 -0.21 -1.92 1,384,544
INTC Intel Corporation 36.51 -0.02 -0.05 14,065,236
IBM International Business Machines Corp 179.40 -1.95 -1.08 3,691,327
LPNT LifePoint Health Inc. 64.50 0.40 0.62 482,075
D Dominion Resources Inc. 76.87 -0.13 -0.17 3,344,738
TRV The Travelers Companies Inc. 122.04 -0.23 -0.19 914,370
AAPL Apple Inc. 136.93 0.27 0.20 20,257,426
UFPT UFP Technologies Inc. 24.10 0.25 1.05 8,393
C Citigroup Inc. 60.02 0.46 0.77 15,711,367
CMC Commercial Metals Company 21.19 0.75 3.67 2,744,623
EIX Edison International 79.00 0.13 0.16 1,530,387
TWX Time Warner Inc. New 98.20 0.92 0.95 4,704,540
JPM JP Morgan Chase 90.43 0.10 0.11 12,360,988
AXP American Express Company 80.17 0.41 0.51 2,619,409
UTX United Technologies Corporation 112.81 0.35 0.31 2,731,362
HCA HCA Holdings Inc. 87.78 0.71 0.82 2,605,987
NVDA NVIDIA Corporation 104.41 2.95 2.91 17,885,019
WTR Aqua America Inc. 31.37 0.33 1.06 777,628
CSCO Cisco Systems Inc. 34.26 -0.06 -0.17 15,625,416
WY Weyerhaeuser Company 33.94 0.47 1.40 3,649,246
DIS Walt Disney Company (The) 110.23 -0.09 -0.08 3,547,735
SKX Skechers U.S.A. Inc. 26.48 -0.02 -0.08 1,901,161
VZ Verizon Communications Inc. 49.94 -0.66 -1.30 14,029,458
BAC Bank of America Corporation 24.57 0.34 1.40 69,129,148
MRVL Marvell Technology Group Ltd. 16.02 0.01 0.06 5,707,965
GOOG Alphabet Inc. 829.28 0.64 0.08 1,101,466
MCD McDonald\'s Corporation 126.99 -0.72 -0.56 5,184,016
CYH Community Health Systems Inc. 9.69 0.47 5.10 4,779,780
DD E.I. du Pont de Nemours and Co. 79.23 -0.58 -0.73 2,634,198
CRK Comstock Resources Inc. 9.38 0.34 3.76 558,128
HD Home Depot Inc. (The) 145.30 -0.65 -0.45 4,388,414
XOM Exxon Mobil Corporation 81.54 0.46 0.57 13,465,948
PFE Pfizer Inc. 34.28 0.02 0.06 21,830,284
UHS Universal Health Services Inc. 126.65 0.77 0.61 657,483
HPQ HP Inc. 17.65 0.00 0.00 12,287,497
BA Boeing Company (The) 179.43 1.99 1.12 2,892,626
MRK Merck & Company Inc. (new) 65.85 -0.31 -0.47 7,134,489
BP BP p.l.c. 33.98 0.48 1.43 8,594,123
FE FirstEnergy Corporation 31.81 -0.51 -1.58 4,398,167
PGR Progressive Corporation (The) 38.90 -0.15 -0.38 1,663,410
KO Coca-Cola Company (The) 41.67 -0.11 -0.26 12,186,364
T AT&T Inc. 41.82 -0.54 -1.27 17,338,483
CAT Caterpillar Inc. 97.44 1.96 2.05 5,444,968
NTAP NetApp Inc. 41.27 0.32 0.78 3,203,180
CHU China Unicom (Hong Kong) Ltd 12.20 -0.12 -0.97 105,863
EMC EMC Corporation n/a n/a n/a 0
MSFT Microsoft Corporation 64.23 -0.39 -0.60 15,871,507

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