Equities Sector Coverage: Stocks Flat As Earnings Season Starts

Sector Recap |

Wall Street SignThe Dow Jones Industrial Average traded up to 12,401.02 then down to 12,333.85 then consolidated that trading range into the final half hour of trading. The NASDAQ traded up to 2683.78 then down to 2662.96 then consolidated above its 200-day simple moving average at 2660.

Asian stocks were mixed on Monday with the Nikkei 225 closed at 8,390, and the Hang Seng ending their session at 18,866 – up 1.47% on the day. European stocks were also mixed on Monday. The FTSE 100 ended their session at 5,612 – down 0.66% on the day; the DAX ended their session at 6,017 – down 0.67% on the day; and the CAC 40 ended their session at 3,146 – up 0.28% on the day.

The yield on the 10-Year US Treasury note declined from 1.986 percent to 1.918 versus its 50-day simple moving average at 1.983. Gold traded up from $1605.7 the Troy ounce to $1624.6 then consolidated this move, which was below its 200-day simple moving average at $1627.8. Crude oil declined from $102.15 per barrel to $100.10 staying above its 50-day and 200-day simple moving averages at $98.02 and $95.70. The euro versus the dollar traded to another new 52-week low at 1.2670 than rebounded to 1.2785.

Energy

Sunoco (SUN) is now Neutral from Outperform at Macquarie. In afternoon trading: Shares of Gulf Keystone Petroleum (GUKYF) are up about 11.75%. Shares of Overseas Shipholding Group (OSG) are up about 10.25%. Shares of ECA Marcellus Trust (ECT) are down about 10.5%. Shares of Treaty Energy (TECO) are down about 9%.

Energy Select Sector SPDR (XLE) was trading at $70.78 at 4:00 PM on Monday, up 0.48% on the day – up 2.39% year-to-date. The 2011 change was +1.29%.

Materials

Alcoa (AA), which announced major restructuring charges last week, is due to get earnings season underway today, with analysts expecting that Q4 EPS tumbled to $0.01 from $0.24 last year despite an increase in revenue to $5.78B from $5.65B. Antofagasta plc (ANFGY) is cut to Sell from Neutral at Citigroup. Southern Copper (SCCO) is downgraded to Hold from Buy at Deutsche Bank. In afternoon trading: Shares of Rare Element (REE) are up about 14.00%. Shares of China Shen Zhou (SHZ) are up about 13%. Shares of China GengSheng (CHGS) are up about 10%.

The Materials Select Sector SPDR (XLB) was trading at $34.84 at 4:00 PM on Monday, up 0.20% on the day – up 4.00% year-to-date. The 2011 change was -12.78%.

Industrials

In afternoon trading: Shares of SmartHeat (HEAT) are up about 9.75%. Shares of Acuity Brands (AYI) are up about 9%. Heavily Traded Stocks: Shares of General Electric (GE) are up about 0.8%. Shares of Corning (GLW) are up about 1.75%. Shares of JetBlue Airways (JBLU) are up about 1.5%. Shares of CSX Corp. (CSX) are up about 1.5%.

The Industrial Select Sector SPDR (XLI) was trading at $34.845 at 4:00 PM on Monday, up 0.74% on the day – up 3.24% year-to-date. The 2011 change was -3.21%.

Consumer Discretionary

General Motors (GM) and Ford (F) knocked out record auto sales in the fast-growing market of China in 2011 after Japanese rivals were crimped by production issues tied to the flooding in Thailand and the earthquake in March in Japan. Pandora Media (P) is a new Buy and $13 price objective at Needham. Polo Ralph Lauren (RL) is lifted to Buy from Neutral at Goldman and adds it to their Conviction Buy List. Comcast (CMCSA) gets moved to Outperform from Neutral at Macquarie. Intercontinental Hotels Group (IHG) is hoisted to Buy from Hold at Deutsche Bank. Fossil (FOSL) gets a Buy-from-Hold boost at Brean Murray, which establishes a $100 price objective. Abercrombie & Fitch (ANF) gets downgraded to Hold from Buy at Brean Murray. TJX Cos (TJX) is downgraded to Neutral from Buy at Goldman. Tata Motors (TTM) is downgraded to Sell from Buy at Deutsche Bank. In afternoon trading: Shares of Bon Ton Stores (BONT) are up about 25.25%. Shares of Netflix (NFLX) are up about 12.75%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $39.99 at 4:00 PM on Monday, down 0.15% on the day – up 2.49% year-to-date. The 2011 change was +4.30%.

Consumer Staples

Costco (COST) is reduced to Underperform from Market Perform with a new target of $76. In afternoon trading: Shares of Imperial Sugar (IPSU) are down about 11%. Shares of American Oriental Bioengineering (AOB) are up about 9.75%. Shares of China-Biotics (CHBT) are up about 9.25%. Heavily Traded Stocks: Shares of Green Mountain Coffee Roasters (GMCR) are up about 3.9%. Shares of Altria Group (MO) are down about 0.4%. Shares of Procter & Gamble (PG) are up about 0.3%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $32.21 at 4:00 PM on Monday, up 0.16% on the day – down 0.86% year-to-date. The 2011 change was +10.85%.

Healthcare

Bristol-Myers Squibb (BMY) has agreed to buy Inhibitex (INHX) for $2.5B ($26 / share) as it looks to boost its pipeline ahead of the loss of patent protection for its blood thinner Plavix. AstraZeneca (AZN) today said its full-year core EPS will be in the lower half of its range of $7.20-7.40 after two disappointing drug studies led to a Q4 pretax charge of $381.5M. Mindray Medical (MR) is moved to Buy from Neutral. Merck (MRK) is moved to Hold from Buy downgrade at Jefferies with a new price target of $40. Inhibitex (INHX) is reduced to Neutral from Outperform at Robert W. Baird with a new target of $26. Thoratec (THOR) is taken to Market Perform from Outperform with Wells Fargo. In afternoon trading: Shares of Inhibitex are up about 141%. Shares of Idenix Pharmaceuticals (IDIX) are up about 36.25%. Shares of Tengion (TNGN) are up about 38%. Shares of Achillion Pharmaceuticals (ACHN) are up about 21%. Shares of Theravance (THRX) are down about 25%.

The Health Care Select Sector SPDR (XLV) was trading at $35.19 at 4:00 PM on Monday, up 0.17% on the day – up 1.44% year-to-date. The 2011 change was +10.32%.

Financials

Banks will be permitted to go below minimum liquidity levels during financial crises to avoid cash-flow difficulties, although they'll have to hold emergency stocks of easy-to-sell assets, the Basel Committee said today. Trading in the rights to buy into UniCredit's (UNCFF) €7.5B ($9.5B) capital raising, which began today, have been suspended and indicated -37.5%. In contrast to UniCredit's problems, Banco Santander (STD) has raised the necessary €15.3B to meet the 9% core capital requirement set out by the EBA. Travelers Cos (TRV) is added to the Conviction Buy List at Goldman Sachs, which also gives Buy-from-Neutral boosts to both Hartford Financial (HIG) and MetLife (MET). Royal Bank of Scotland Group (RBS) is raised to Neutral from Underweight at JPMorgan. XL Capital (XL), Unum Group (UNM), and Principal Financial (PFG) are all now Neutral from Buy at Goldman. BlackRock (BLK) is pulled form Goldman’s list of Conviction Buys. In afternoon trading: Shares of Ambac Financial Group (ABKFQ) are up about 26%. Shares of Washington Mutual (WAMUQ) are down about 13%.

The Financial Select Sector SPDR (XLF) was trading at $13.465 at 4:00 PM on Monday, up 0.52% on the day – up 3.58% year-to-date. The 2011 change was -18.50%; the weakest performing sector for the year.

Information Technology

It looks as if Google (GOOG) is desperate to make its TV software a success: Neowin reports the search giant is actually paying manufacturers to offer sets featuring Google TV. Fusion-io (FIO) is assigned an Overweight at Piper Jaffray. ARM Holdings (ARMH) is initiated with an Underperform by Sanford Bernstein. Broadcom (BRCM) got a Buy-from-Hold boost at Deutsche Bank. OpenTable (OPEN) is upgraded to Overweight from Equal Weight by Barclays. Akamai Technologies (AKAM) is upgraded to Hold from Underperform at Jefferies with a new objective of $36. Lenovo (LNVGY) is now Overweight from Neutral at HSBC Securities. Oracle (ORCL) is moved to Market Perform from Outperform by BMO Capital. Akamai Technologies (AKAM) is slashed to Sell from Neutral at Citigroup. VeriSign (VRSN) gets lowered to Underperform from Neutral at Bank of America-Merrill Lynch. In afternoon trading: Shares of Perfect World Co (PWRD) are down about 25%.

The Technology Select Sector SPDR (XLK) was trading at $25.93 at 4:00 PM on Monday, down 0.15% on the day – up 1.89% year-to-date. The 2011 change was +1.03%.

Telecommunications Services

Vodafone (VOD) has outlined plans to expand into Asia and South America via new partnerships. The company wants to tap the fast-growing markets by securing agreements with local operators rather than embarking on expensive direct investments. In afternoon trading: Heavily Traded Stocks: Shares of Sprint Nextel (S) are down about a half of a percent, while shares of AT&T (T) are down slightly and shares of Verizon (VZ) are up slightly.  Shares of Frontier Communications (FTR) are down about 1%.

The NASDAQ Telecommunications Index (IXTC) was trading at $202.83 at 4:00 PM on Monday, up 0.76% on the day – up 3.00% year-to-date. The 2011 change was -12.62%.

Utilities

El Paso Electric (EE) is juiced to Hold from Underperform at Jefferies, which takes its target up by $6.50 to $34.50. In afternoon trading: Heavily Traded Stocks: Shares of Duke Energy (DUK) are down slightly. Shares of Genon Energy (GEN) are down about 4%. Shares of Exelon (EXC) are up about 0.9%. Shares of AES Corp (AES) are up about 1.6%. Shares of PPL Corp (PPL) are up about 0.7%.

The Utilities Select Sector SPDR (XLU) was trading at $35.07 at 4:00 PM on Monday, up 0.14% on the day – down 2.53% year-to-date. The 2011 change was +14.81%; the strongest performing sector for the year.

STOCKS: SUN, GUKYF, OSG, ECT, TECO, AA, ANFGY, SCCO, REE, SHZ, CHGS, HEAT, AYI, GE, GLW, JBLU, CSX, GM, F, P, RL, CMCSA, IHG, FOSL, ANF, TJX, TTM, BONT, NFLX, COST, IPSU, AOB, CHBT, GMCR, MO, PG, BMY, INHX, AZN, MR, MRK, THOR, IDIX, TNGN, ACHN, THRX, UNCFF, STD, TRV, HIG, MET, RBS, XL, UNM, PFG, BLK, ABKFQ, WAMUQ, GOOG, FIO, BRCM, OPEN, AKAM, LNVGY, ORCL, VRSN, PWRD, VOD, S, T, VZ, FTR, EE, DUK, GEN, EXC, AES, PPL

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