Equities Sector Coverage: Stocks Fade in Late Trading to End Lower

Sector Recap  |

The S&P/Case-Shiller 20-city composite index of home prices showed a decline of 0.8% in January, a slightly bigger decline than expected. Home prices were down 3.8% year over year. The Conference Board’s reading of Consumer Confidence feel to 70.2 in March and was below expectations. Remember that 90 to 120 is the neutral zone for this data. The Dow Jones Industrial Average traded up to a day’s high at 13,264.98 again staying below its 52-week high at 12,289.08 set on March 16th. The Dow was trading below 13,220 going into the final half hour of trading. The NASDAQ’s traded up to a day’s high at 3134.17 setting another new 52-week high, but was below 3130 going into the final half hour of trading.

Asian stocks surged on Tuesday playing catch-up with gains in the US on Monday. The Nikkei 225 ended their session at 10,255 – up 2.36% on the day. The Hang Seng ended their session at 21,047 – up 1.83% on the day. European stocks opened higher, but closed lower on the day. The FTSE 100 ended their session at 5,870 – down 0.56% on the day. The DAX ended their session at 7,079 – flat on the day. The CAC 40 ended their session at 3,470 – down 0.92% on the day. The yield on the 10-Year US Treasury declined from 2.264 percent to 2.180 just below its 200-day simple moving average at 2.195.

Gold rallied from $1683.8 the Troy ounce to $1696.9 then fell to $1678.6 going into the final half hour of trading and back below its 200-day simple moving average at $1683.4. Crude oil rallied from $106.67 per barrel to $107.73 then fell to $106.52. The euro versus the dollar traded between 1.3323 and 1.3384 then declined to 1.3321.

Energy

Enbridge (ENB) and Enterprise Products Partners (EPD) are planning to build new pipelines that will transport up to 850K barrels of crude oil a day from Canada to refineries along the Gulf Coast by mid-2014. The pipelines will compete with TransCanada's (TRP) troubled Keystone project, if it ever gets approved. Delek US Holdings (DK) is increased to Overweight from Equal Weight by Barclays. Williams Companies (WMB) is raised to Buy from Neutral at UBS.
Energy Select Sector SPDR (XLE) was trading at $72.07 at 4:00 PM on Tuesday, down 1.00% on the day – up 4.25% year-to-date. The February 2012 change was +5.93%. The 2011 change was -1.29%.
Big Movers: (DHT) -9.5%.
Heavily Traded: (TOT) -6.75%, (HAL) -2.1%, (SLB) -2.5%, (WFT) -4.1%.

Materials

Rio Tinto (RIO) is considering selling its diamond assets because the mines may no longer fit its strategy. The unit could be worth nearly $2.6B. Southern Copper (SCCO) is upgraded to Overweight from Equal Weight at Morgan Stanley, which similarly lifts Brazil’s Vale S.A. (VALE).
The Materials Select Sector SPDR (XLB) was trading at $37.31 at 4:00 PM on Tuesday, down 0.21% on the day – up 11.37% year-to-date. The February 2012 change was -0.56%. The 2011 change was -12.78%.
Big Movers: (CAGC) +14.5%, (SHZ) +13.75%, (MCP) +9.25%.
Heavily Traded: (AA) -0.4%, (VALE) +1%, (FCX) +0.7%.

Industrials

The European Commission has opened an in-depth investigation into United Technologies' (UTX) $16.5B acquisition of Goodrich (GR) amid worries that the purchase could hurt competition for engine controls and AC power generators. Deutsche Lufthansa (DLAKY) is upgraded the air carrier to Overweight from Neutral at JP Morgan. Sterling Construction (STRL) is boosted to Outperform from Market Perform by BMO Capital.
The Industrial Select Sector SPDR (XLI) was trading at $37.59 at 4:00 PM on Tuesday, down 0.32% on the day – up 11.38% year-to-date. The February 2012 change was +2.79%. The 2011 change was -3.21%.
Big Movers: (KDN) -26%, (HEAT) -12%
Heavily Traded: (GE) +0.4%, (GLW) -0.6%.

Consumer Discretionary

Michaels Stores, the largest arts-and-crafts retailer in North America, is reportedly intending to carry out an IPO. The listing would come six years after Michaels was taken private for over $6B by a consortium of P-E firms that included Blackstone Group (BX) and Bain. News Corp. (NWS) might have another hacking scandal on its hands: a BBC program alleges that set-top software firm NDS, which is 49%-owned by News Corp. and is due to be acquired by Cisco (CSCO), cracked the smart card codes of ONdigital, a one-time rival to News Corp.-affiliated BSkyB (BSYBY). Incoming Sony (SNE) CEO Kazuo Hirai is to maintain direct charge of the company's ailing TV division, indicating the priority he's placing on turning it around. Lennar (LEN) beat estimates by 3 cents and revenue by $25M. Apollo Group (APOL) beat estimates by 20 cents and revenue by $38M. Overall revenue dipped 7.5% Y/Y, primarily due to lower enrollment at the University of Phoenix, which was partially offset by selective tuition pricing and other fee changes. For the quarter, University of Phoenix degreed enrollment dropped 12.2% to 355,800. Regal Entertainment (RGC) is a new Neutral at Nomura, which begins a Buy on Cinemark (CNK). Steven Madden Ltd (SHOO) is a new Neutral with Wedbush, which starts Skechers USA (SKX) at an Underperform and covers Crocs Inc (CROX) with Outperform. American Eagle Outfitters (AEO) is lifted to Buy from Neutral at Lazard. Dangdang (DANG) gets upgraded to Outperform from Perform with a $9.50 objective at Oppenheimer. Rent-A-Center (RCII) is raised to Buy from Hold with a $48 target at Stifel Nicolaus. Apollo Group (APOL) is now Neutral from Outperform at Credit Suisse. Buffalo Wild Wings (BWLD) gets downgraded to Hold from Buy at Deutsche Bank.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $45.29 at 4:00 PM on Tuesday, down 0.15% on the day – up 16.07% year-to-date. The February 2012 change was +10.09%. The 2011 change was +4.30%.
Big Movers: (DANG) +10.5%, (APOL) -9%, (SKX) -7%.

Consumer Staples

Walgreen (WAG) beat estimates by a penny with revenue in-line with estimates. McCormick & Company (MKC) beat estimates by 2 cents and revenue by $37M. Imperial Tobacco (ITYBY) gets upgraded to Buy from Hold at Société Générale. Schiff Nutrition (WNI) is now Outperform from In-Line at Imperial Capital.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.97 at 4:00 PM on Tuesday, down slightly on the day – up 4.56% year-to-date. The February 2012 change was +3.75%. The 2011 change was +10.85%.
Big Movers: (HOGS) +26%.
Heavily Traded: (WAG) +1.2%, (RAD) +0.6%, (KFT) -0.4%, (MO) flat, (SWY) +0.4%.

Health Care

OncoGenex Pharmaceuticals (OGXI) is initiated with an Outperform and target of $19 at Leerink Swann. Greenway Medical (GWAY) gets picked up with a Neutral at Sterne Agee.
The Health Care Select Sector SPDR (XLV) was trading at $37.33 at 4:00 PM on Tuesday, up 0.19% on the day – up 7.61% year-to-date. The February 2012 change was +1.06%. The 2011 change was +10.32%.
Big Movers: (BSPM) -18.25%, (NBIX) -12.5%, (XOMA) +16%.
Heavily Traded: (ARNA) +5.8%, (PFE) +1.6%, (HTS) -2.4%.

Financials

Michaels Stores, the largest arts-and-crafts retailer in North America, is reportedly intending to carry out an IPO. The listing would come six years after Michaels was taken private for over $6B by a consortium of P-E firms that included Blackstone Group (BX) and Bain. The British government is in negotiations to sell up to a third of its 82% stake in RBS (RBS) to Abu Dhabi, the BBC reports. Based on RBS's market cap of $49.8B, the deal could be worth around $13.5B. The taxpayer could end up making a profit of $5B-$10B once AIG (AIG) repays the estimated $45B it still owes the government for its bailout, CEO Bob Benmosche told Jim Cramer yesterday. First Republic Bank (FRC) is a fresh Outperform at BMO Capital. ProLogis (PLD) is picked up with an Underperform at Imperial Capital. Hatteras Financial (HTS) is moved to Buy from Neutral at Sterne Agee. Bank of America (BAC) is now Neutral from Outperform with a $10 target at Robert W. Baird. First Commonwealth Financial (FCF) is now Neutral from Buy at Sterne Agee. U.S. Bancorp (USB) is downgraded to Hold from Buy at ISI Group.
The Financial Select Sector SPDR (XLF) was trading at $15.83 at 4:00 PM on Tuesday, down 0.92% on the day – up 21.77% 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.

Information Technology

News Corp. (NWS) might have another hacking scandal on its hands: a BBC program alleges that set-top software firm NDS, which is 49%-owned by News Corp. and is due to be acquired by Cisco (CSCO), cracked the smart card codes of ONdigital, a one-time rival to News Corp.-affiliated BSkyB (BSYBY). Symantec (SYMC) is expected to complete the dissolution of its joint venture with Huawei Technologies in the next two weeks. Australia's consumer watchdog says Apple (AAPL) made misleading claims about 4G capability when promoting its new iPad in the country. Activision Blizzard (ATVI) is begun with a Buy recommendation and $16 price objective at Stifel Nicolaus. Electronic Arts (EA) is also resumed with a Buy rating and $21 target, also at Stifel. Micron (MU) is begun initiated with a Buy at Jefferies, which starts SanDisk (SNDK) at a Hold. Comverge (COMV) is cut to Hold from Buy at Needham. STMicroelectronics (STM) is moved to Hold from Buy at Société Générale.
The Technology Select Sector SPDR (XLK) was trading at $30.42 at 4:00 PM on Tuesday, down slightly on the day – up 19.53% year-to-date. The February 2012 change was +7.08%. The 2011 change was +1.03%.
Big Movers: (FFN) +12.5%, (OCLR) -8.5%.

Telecommunication Services

Multiband (MBND) reported Q4 EPS of $0.06 (in-line), while beating revenue. Profit rose to a record $300M, up 13% Y/Y. The company also raises guidance for 2012, now expecting revenue of about $320M, ahead of the Street view of $295M.
The NASDAQ Telecommunications Index (IXTC) was trading at $220.49 at 4:00 PM on Tuesday, up slightly on the day – up 11.96% year-to-date. The February 2012 change was +1.63%. The 2011 change was -12.62%.
Big Movers: (TSTRQ) +25.5%.
Heavily Traded: (S) -1.75%, (T) -0.4%, (FTR) -2.4%, (VZ) 1.25%.

Utilities

The EPA will propose, possibly today, the first ever standards for limiting CO2 emissions from new electricity plants, Reuters reports. The rules are likely to be politically divisive, and could hurt companies that generate most of their power from coal, such as Southern Co (SO) and American Electric Power (AEP). International Power (IPRPY) is downgraded it to Hold from Buy at Deutsche Bank.
The Utilities Select Sector SPDR (XLU) was trading at $35.005 at 4:00 PM on Tuesday, up 0.47% on the day – down 2.71% year-to-date (the weakest performing sector / the only negative sector). The February 2012 change was +0.61%. The 2011 change was +14.81%; the strongest performing sector for the year.
Heavily Traded: (DUK) +0.4%, (GEN) +0.2%, (PPL) +1.8%, (EXC) +0.3%.

STOCKS: ENB, EPD, TRP, DK, WMB, DHT, TOT, HAL, SLB, WFT, RIO, SCCO, VALE, CAGC, SHZ, MCP, AA, FCX, UTX, GR, DLAKY, STRL, KDN, HEAT, GE, GLW, BX, NWS, CSCO, BSYBY, SNE, LEN, APOL, RGC, CNK, SHOO, SKX, CROX, AEO, DANG, RCII, BWLD, WAG, MKC, ITYBY, WNI, HOGS, RAD, KFT, MO, SWY, OGXI, GWAY, BSPM, NBIX, XOMA, ARNA, PFE, HTS, RBS, AIG, FRC, PLD, HTS, BAC, FCF, USB, SYMC, AAPL, ATVI, EA, MU, SNDK, COMV, STM, FFN, OCLR, MBND, TSTRQ, S, T, FTR, VZ, SO, AEP, IPRPY, DUK, GEN, PPL, EXC

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
BX The Blackstone Group L.P. Representing Limited Partnership Interests 33.35 0.15 0.45 4,362,113 Trade
STM STMicroelectronics N.V. 16.54 0.09 0.55 1,967,771 Trade
GLW Corning Incorporated 34.51 0.78 2.31 4,470,613 Trade
GEN Genesis Healthcare Inc. 1.59 0.05 3.25 149,413 Trade
FTR Frontier Communications Corporation 2.65 0.28 11.81 6,832,217 Trade
GE General Electric Company 10.09 0.05 0.50 78,344,511 Trade
RIO Rio Tinto Plc 57.15 0.87 1.55 2,428,301 Trade
SO Southern Company (The) 48.56 -0.04 -0.08 4,647,718 Trade
APOL Apollo Education Group Inc. n/a n/a n/a 0 Trade
VALE VALE S.A. American Depositary Shares Each Representing one 12.33 0.19 1.57 29,025,152 Trade
STRL Sterling Construction Company Inc 13.93 0.37 2.73 177,119 Trade
AA Alcoa Corporation 28.27 0.07 0.25 3,407,760 Trade
SHOO Steven Madden Ltd. 34.41 0.06 0.17 855,950 Trade
EA Electronic Arts Inc. 106.84 1.59 1.51 11,254,941 Trade
RAD Rite Aid Corporation 0.80 0.01 1.66 9,544,506 Trade
NXC:CA PDIV:CA NexC Partners Corp. Class A Shares n/a n/a n/a n/a
MO Altria Group Inc. 48.74 -0.40 -0.81 9,161,705 Trade
S Sprint Corporation 6.30 0.12 1.94 10,302,610 Trade
PPL PPL Corporation 30.46 -0.09 -0.29 9,643,718 Trade
TOT Total S.A. 56.29 0.92 1.66 1,047,068 Trade
UTX United Technologies Corporation 127.76 3.63 2.92 6,828,359 Trade
HTS Hatteras Financial Corp n/a n/a n/a 0 Trade
ARNA Arena Pharmaceuticals Inc. 49.92 1.77 3.68 503,681 Trade
SNDK SanDisk Corp n/a n/a n/a 0 Trade
SCCO Southern Copper Corporation 32.50 1.06 3.37 1,909,686 Trade
SYMC Symantec Corporation 23.15 0.09 0.39 4,663,322 Trade
CSCO Cisco Systems Inc. 49.43 1.03 2.13 30,189,636 Trade
SKX Skechers U.S.A. Inc. 32.99 0.15 0.46 1,937,896 Trade
WMB Williams Companies Inc. (The) 27.27 0.41 1.53 11,116,458 Trade
VZ Verizon Communications Inc. 55.16 1.13 2.09 15,719,416 Trade
ENB Enbridge Inc 35.82 0.12 0.34 4,122,474 Trade
RCII Rent-A-Center Inc. 17.96 0.15 0.84 692,623 Trade
BAC Bank of America Corporation 29.11 0.72 2.54 65,866,974 Trade
DK Delek US Holdings Inc. 34.86 0.48 1.40 1,072,091 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 6.49 0.21 3.34 1,236,277 Trade
DANG E-Commerce China Dangdang Inc. American Depositary Shares each representing five Class A n/a n/a n/a 0 Trade
MKC McCormick & Company Incorporated 128.47 1.07 0.84 1,916,054 Trade
USB U.S. Bancorp 51.31 0.85 1.68 7,757,334 Trade
WFT Weatherford International plc (Ireland) 0.86 0.01 0.73 11,828,822 Trade
FCX Freeport-McMoRan Inc. 12.28 0.12 0.99 16,573,385 Trade
NBIX Neurocrine Biosciences Inc. 84.32 -0.23 -0.27 644,142 Trade
OGXI ACHV Achieve Life Sciences n/a n/a n/a 0
ATVI Activision Blizzard Inc 44.60 -0.83 -1.83 17,152,459 Trade
LEN Lennar Corporation Class A 48.90 0.66 1.37 3,598,135 Trade
PFE Pfizer Inc. 42.40 0.43 1.02 18,186,859 Trade
AIG American International Group Inc. 42.32 2.13 5.30 16,385,436 Trade
FRC FIRST REPUBLIC BANK 101.63 2.09 2.10 1,227,760 Trade
TRP TransCanada Corporation 42.82 0.34 0.80 1,685,307 Trade
FCF First Commonwealth Financial Corporation 14.02 0.33 2.41 357,492 Trade
DHT DHT Holdings Inc. 4.24 0.23 5.74 1,581,288 Trade
CNK Cinemark Holdings Inc Inc. 37.31 0.12 0.32 1,399,731 Trade
EPD Enterprise Products Partners L.P. 28.21 0.01 0.04 3,559,209 Trade
PLD ProLogis Inc. 71.19 0.34 0.48 2,210,138 Trade
MU Micron Technology Inc. 41.99 -0.24 -0.57 28,968,391 Trade
EXC Exelon Corporation 48.26 0.40 0.84 6,128,349 Trade
SNE Sony Corporation 45.79 0.67 1.48 1,445,430 Trade
T AT&T Inc. 30.47 0.68 2.28 37,188,658 Trade
HAL Halliburton Company 31.85 0.25 0.79 8,249,104 Trade
AEO American Eagle Outfitters Inc. 20.07 -0.03 -0.15 3,269,227 Trade
DUK Duke Energy Corporation (Holding Company) 87.51 -0.31 -0.35 4,472,941 Trade
CROX Crocs Inc. 27.86 0.24 0.87 1,574,265 Trade
SLB Schlumberger N.V. 44.95 0.81 1.84 8,174,863 Trade
AEP American Electric Power Company Inc. 79.27 -0.08 -0.10 2,740,371 Trade
NWS News Corporation 12.93 0.24 1.89 564,190 Trade
XOMA XOMA Corporation 14.10 0.10 0.71 35,840 Trade
AAPL Apple Inc. 170.42 -0.38 -0.22 24,626,814 Trade

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