Equities Sector Coverage: Stocks Get Clobbered As Market Fears Gain Traction

Sector Recap |

Stock Trader Wall StreetInitial Jobless Claims came in higher than expected at 408,000 well above the recessionary threshold of 350,000. Consumer Prices rose by a more than 0.5% in July and by 3.6% year over year. The Philly Fed Index plunged from +3.2 in July to -30.7 in August. Existing Home Sales fell 3.5% to an annual rate of 4.67 million. The Dow Jones Industrial Average was down more than 300 points in the first five minutes of trading and the morning low was down more than 500 points at 10,881.60 versus the 200-week simple moving average at 10,730. The NASDAQ was down more than 90 points in the first five minutes to 2408.65, and the afternoon low was down more than 135 points with a 2369.02. The August 9th low was 2331.65.

Asian stocks declined on Thursday on fears of a global economic slowdown. The Nikkei 225 traded down by 1.25% to 8,944 with the Hang Seng lower by 1.34% to 20,016. European stocks opened lower with declines between 1.00% and 1.50%, which cascaded to even lower levels on negative economic data from the States. The FTSE 100 slumped 4.49% to 5,092, the DAX plunged 5.82% to 5,603 and the CAC 40 was crushed by 5.48% to 3,076. The yield on the 10-Year US Treasury note continued to decline on Thursday to a record low yield at 1.973 as the flight to quality intensifies. Gold rallied to another new record high at $1832.0 the Troy ounce in late trading. Crude oil traded down from $87.53 per barrel to $81.15 on fears of an economic slowdown. Oil is now below its 200-week simple moving average at $83.94. The euro versus the US dollar traded down from 1.4450 to 1.4275.

Energy

Exxon (XOM) has sued the government to retain leases to one of its biggest oil discoveries ever, the Julia field in the Gulf of Mexico, which contains an estimated 1B barrels of recoverable oil. Canadian Solar (CSIQ) is lifted to Neutral from Underweight at Piper Jaffray. In afternoon trading: Shares of Parker Drilling (PKD) are down about 13.5%. Shares of Complete Production Services (CPX) are down about 13.25%. Shares of Key Energy Services (KEG) are down about 13.25%. Shares of Patriot Coal (PCX) are down about 13%. Shares of Magnum Hunter Resources (MHR) are down about 12%. Shares of ATP Oil & Gas (ATPG) are down about 12%.

Energy Select Sector SPDR (XLE) was trading at $64.38 at 4:00 PM on Thursday, down 5.79% on the day – down 5.67% year-to-date.

Materials

In afternoon trading: Shares of Noranda Aluminum Holding (NOR) are down about 11.75%. Shares of Ferro Corp (FOE) are down about 11.75%. Shares of Alumina (AWC) are down about 11.5%. Shares of AK Steel (AKS) are down about 11.5%. Shares of Graphic Packaging Holding (GPK) are down about 10.5%. Shares of Albemarle Corp (ALB) are down about 10%. Shares of Walter Energy (WLT) are down about 9.75%. Shares of Dow Chemical (DOW) are down about 9.5%. Shares of United States Steel (X) are down about 9.25%. Shares of Freeport McMoran (FCX) are down about 8.5%.

The Materials Select Sector SPDR (XLB) was trading at $32.52 at 4:00 PM on Thursday, down 5.82% on the day – down 15.33% year-to-date.

Industrials

Danaher (DHR) gets initiated with an Outperform at Macquarie. United Rentals (URI) is now Neutral from Outperform at Macquarie. Bernstein moves both Ingersoll-Rand (IR) and Honeywell (HON) to Market Perform from Outperform. In afternoon trading: Shares of United Rentals are down about 17.25%. Shares of Meritor Inc (MTOR) are down about 14.25%. Shares of Swift Transportation (SWFT) are down about 13.75%. Shares of Kansas City Southern (KSU) are down about 13.25%. Shares of BE Aerospace (BEAV) are down about 11.5%.

The Industrial Select Sector SPDR (XLI) was trading at $29.59 at 4:00 PM on Thursday, down 5.54% on the day – down 15.16% year-to-date.

Consumer Discretionary

Sears' (SHLD) Q2 losses widened by far more than forecast as weak sales and large discounts harmed margins. Adjusted EPS came in at a loss of $1.13 vs. $0.19 a year earlier and Street predictions of $0.64. Revenue slipped 1% to $10.33B but was above estimates. News Corp.'s (NWS) problems in the U.S. may have become exacerbated following the arrest of former News of the World show-business reporter James Desborough over phone-hacking. Dollar Tree Stores (DLTR) beat estimates by 2 cents, but missed revenue by $10M, and sees FY11 revenue of $6.53-6.62B, EPS of $3.82-3.95. Buckle (BKE) reported Q2 EPS of $0.50 (in-line), while beating revenue by $3.3M. SpectraSite (SSI) reported Q2 EPS of $0.29 (in-line), while missing revenue by $1.5M. Limited Brands (LTD) beat estimates by 2 cents with revenue in-line with estimates, issues Q3 EPS guidance of $0.17-$0.22 (versus consensus of $0.18), and sets FY11 EPS guidance to $2.35-$2.50 (versus consensus of $2.26). Harley-Davidson (HOG) is a new Buy at Keybanc. Oppenheimer upgrades McDonald’s (MCD) - $100 target, Panera Bread (PNRA) - $135 target, Domino’s Pizza (DPZ) - $32 target, and BJ’s Restaurants (BJRI) - $54 price target all to Outperform from Perform. Oppenheimer downgrades Starbucks (SBUX), Texas Roadhouse (TXRH), Einstein Noah (BAGL), and Sonic Corp (SONC) to Perform from Outperform. Abercrombie & Fitch (ANF) is raised to Outperform from Neutral with a $90 target price at brokers Robert W. Baird. Six Flags (SIX) is lifted to Buy from Neutral at Merriman. Borg Warner (BWA) is lifted to Neutral from Sell at Goldman Sachs. Goodyear Tire (GT) gets taken to Sell from Neutral at Goldman Sachs. In afternoon trading: Shares of Eastman Kodak (EK) are UP about 15% as investors are focused on the value of the photography pioneer's digital-imaging patents. Shares of Hovnanian Enterprises (HOV) are down about 16%. Shares of MGM Resorts (MGM) are down about 14%. Shares of Beazer Homes (BZH) are down about 13.25%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $34.55 at 4:00 PM on Thursday, down 4.95% on the day – down 7.65% year-to-date.



Consumer Staples

Coca-Cola (KO) intends to invest $4B in China over the next three years, adding to the $3B it has spent since 2009, as it looks to build on "double-digit" growth in its third-largest market. Foster's (FBRWY) has rejected for a second time SABMiller's (SBMRY) A$9.51B ($9.97B) takeover offer as being too low after the U.K. brewer yesterday took its bid directly to shareholders. J.M. Smucker Company (SJM) beat estimates by 4 cents, but missed revenue by $60M. PriceSmart (PSMT) is picked up with a Buy at Janney Montgomery Scott. In afternoon trading: Shares of Star Scientific (CIGX) are down about 13%. Shares of Green Mountain Coffee (GMCR) are down about 10.5%. Shares of Supervalu (SVU) are down about 8%. Shares of J.M. Smucker are down about 7.5%. Shares of Whole Foods (WFM) are down about 7.25%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $29.69 at 4:00 PM on Thursday, down 1.79% on the day – up 1.30% year-to-date.

Healthcare

Par Pharmaceutical (PRX) is picked up at an Outperform by Leerink Swann. Biogen Idec (BIIB) is increased to Outperform from Perform with a $109 objective at Oppenheimer. In afternoon trading: Shares of Amarin Corp (AMRN) are down about 11.5%. Shares of Five Star Quality Care (FVE) are down about 11%. Shares of XOMA (XOMA) are down about 10.75%. Shares of Sunrise Senior Living (SRZ) are down about 10.5%. Shares of Agilent Technologies (A) are down about 10.5%. Shares of Zalicus (ZLCS) are down about 10.25%. Shares of Dendreon (DNDN) are down about 10.25%. Shares of MAKO Surgical (MAKO) are down about 10.25%.

The Health Care Select Sector SPDR (XLV) was trading at $31.11 at 4:00 PM on Thursday, down 3.29% on the day – down 1.24% year-to-date.

Financials

The Justice Department is reportedly investigating whether S&P improperly rated dozens of mortgage securities in the lead-up to the financial crisis. The SEC is also investigating S&P for any wrongdoing, and possibly Moody's (MCO) and Fitch (FMLCF) as well. The NY Fed is reportedly demanding more information from big European banks about whether their U.S. units have the ability to fund themselves. In an indication of the recovery of the market for esoteric financial instruments, a bankruptcy court authorized an agreement to securitise loans from a $5.3B Lehman Brothers (LEHMQ) portfolio. Sterne Agee rolls out Buys on Visa (V) - $110 price target, MasterCard (MA) - $390 price target and Western Union (WU) - $21 price target. HCP, Inc (HCP) is now Neutral from Outperform with a $36 objective at Robert W. Baird. Invesco Mortgage Capital (IVR) is reduced to Hold from Buy with a new lower target of $19 at Wunderlich. In afternoon trading: Shares of The PMI Group (PMI) are down about 15%. Shares of MGIC Investment (MTG) are down about 13.25%. Shares of Ashford Hospitality (AHT) are down about 12.75%. Shares of Radian Group (RDN) are down about 12.5%. Shares of Barclays Bank (BCS) are down about 11.75%. Shares of Moody’s are down about 11.5%. Shares of The Royal Bank of Scotland (RBS) are down about 11.25%. Shares of Invesco Mortgage are down about 10.5%.

The Financial Select Sector SPDR (XLF) was trading at $12.38 at 4:00 PM on Thursday, down 4.84% on the day – down 22.38% year-to-date.

Information Technology

NetApp (NTAP) said it saw a "fairly dramatic slowdown" in the final three weeks of July and gave FQ2 revenue guidance below analyst expectations. China Mobile (CHL) has met Steve Jobs several times about introducing an iPhone based on the carrier's own network standard, which Apple (AAPL) doesn't support. International Rectifier (IRF) reported FQ4 revenue of $317.2M and EPS of $0.55 (beating consensus by $1.8M and $0.04), but FQ1 2012 revenue guidance of $290M-$310M (below Street forecast of $321.4M). Sina (SINA) reported Q2 EPS of $0.20 (versus consensus of $0.23), while beating revenue by $4M, and issues non-GAAP Q3 revenue guidance of $123M-$126M, advertising revenue at $100M-$102M and non-Advertising revenue at $23M-$24M. iSoftStone (ISS) reported Q2 revenue of $67M and EPS of $0.13 (beating consensus by $5.2M and $0.01), and raised its 2011 revenue guidance to $284M from $277M and EPS guidance to $0.57 from $0.55. CACI International (CACI) beat estimates by 27 cents and revenue by $5M, and expects FY12 revenue of $3.75B to $3.95B and EPS of $4.70 to $4.90 (versus estimates of $3.84B and $4.67). JDS Uniphase's (JDSU) expects FQ1 2012 revenue of $400M-$425M (below consensus of $470.3M). Synopsys (SNPS) sees FQ4 revenue at $386M-$392M and EPS at $0.44-$0.46 and full-year revenue at $1.531B-$1.537B and EPS at $1.79-$1.81. Akamai Tech (AKAM) is initiated with an Underperform and $18 price target at Jefferies. Red Hat (RHT) is picked up with a Buy and $45 target at Citigroup. Arris (ARRS) is initiated with a Buy and $12 price target at Kaufman Bros. Kaufman has less bullish Holds on Harmonic (HLIT) and SeaChange (SEAC) with respective price objectives $6.50 and $9. SolarWinds (SWI) is begun with a Buy at Jefferies. Nokia (NOK) is now Hold from Underperform at Jefferies. NetApp (NTAP) is now Market Perform from Outperform with William Blair. In afternoon trading: Shares of Acme Packet (APKT) are down about 19.5%. Shares of Aruba Networks (ARUN) are down about 18.25%. Shares of Riverbed Technology (RVBD) are down about 15.75%. Shares of NetApp are down about 15.5%. Shares of TIBCO Software (TIBX) are down about 13.25%. Shares of JDS Uniphase are down about 13.25%. Shares of Cognizant Technology (CTSH) are down about 13%. Shares of Teradata (TDC) are down about 13%.

The Technology Select Sector SPDR (XLK) was trading at $23.08 at 4:00 PM on Thursday, down 4.86% on the day – down 8.38% year-to-date.

Telecommunications Services

China Mobile (CHL) has met Steve Jobs several times about introducing an iPhone based on the carrier's own network standard, which Apple (AAPL) doesn't support. China Mobile (CHL) beat estimates by $0.82B yuan and revenue by 3.44B yuan. France Telecom (FTE) is taken to Neutral from Underperform at Credit Suisse. In afternoon trading: Shares of Global Crossing (GLBC) are down about 10.5%. Shares of Level 3 Communications (LVLT) are down about 9.75%. Shares of Leap Wireless (LEAP) are down about 9.5%. Shares of MetroPCS (PCS) are down about 6.5%. Shares of Sprint Nextel (S) are down about 6.25%.

The NASDAQ Telecommunications Index (IXTC) was trading at $180.02 at 4:00 PM on Thursday, down 5.89% on the day – down 20.12% year-to-date.

Utilities

Veolia Environnement (VE) is cut to Neutral from Buy at UBS. In afternoon trading: Shares of Veolia Environment is down about 9.25%. Shares of RWE AG (RWEOY) are down about 7.75%. Shares of Dynegy (DYN) are down about 7.25%. Actives: Shares of Genon Energy (GEN) are down about 6.75%. Shares of Duke Energy (DUK) are down about a half of a percent. Shares of AES Corp (AES) are down about 4.5%. Shares of PPL Corp (PPL) are down about 0.3%. Shares of Southern Co (SO) are down about 1.1%.

The Utilities Select Sector SPDR (XLU) was trading at $32.59 at 4:00 PM on Thursday, down 1.18% on the day – up 3.99% year-to-date.

STOCKS: XOM, CSIQ, PKD, CPX, KEG, PCX, MHR, ATPG, NOR, FOE, AWC, AKS, GPK, ALB, WLT, DOW, X, FCX, DHR, URI, IR, HON, MTOR, SWFT, KSU, BEAV, SHLD, NWS, DLTR, BKE, SSI, LTD, HOG, MCD, PNRA, DPZ, BJRI, SBUX, TXRH, BAGL, SONC, ANF, SIX, BWA, GT, EK, HOV, MGM, BZH, KO, FBRWY, SBMRY, SJM, PSMT, CIGX, GMCR, SVU, WFM, PRX, BIIB, AMRN, FVE, XOMA, SRZ, A, ZLCS, DNDN, MAKO, MCO, FMLCF, LEHMQ, V, MA, WU, HCP, IVR, PMI, MTG, AHT, RDN, BCS, RBS, NTAP, CHL, AAPL, IRF, SINA, ISS, CACI, JDSU, SNPS, AKAM, RHT, ARRS, HLIT, SEAC, SWI, NOK, NTAP, APKT, ARUN, RVBD, TIBX, CTSH, TDC, FTE, GLBC, LVLT, LEAP, PCS, S, VE, RWEOY, DYN, GEN, DUK, AES, PPL, SO

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
RHT Red Hat Inc. 125.95 -0.68 -0.54 1,376,315 Trade
AHT Ashford Hospitality Trust Inc 6.44 0.09 1.42 278,962 Trade
A Agilent Technologies Inc. 68.79 0.05 0.07 1,823,122 Trade
GEN Genesis Healthcare Inc. 0.90 0.00 0.18 361,571 Trade
BEAV B/E Aerospace Inc. n/a n/a n/a 0 Trade
WMK Weis Markets Inc. 36.88 0.61 1.68 115,707 Trade
HOG Harley-Davidson Inc. 47.25 -0.85 -1.77 3,495,476 Trade
SO Southern Company (The) 50.97 -0.39 -0.76 5,389,150 Trade
AKS AK Steel Holding Corporation 4.51 0.12 2.73 11,928,397 Trade
GT The Goodyear Tire & Rubber Company 29.94 0.63 2.15 4,275,583 Trade
SONC Sonic Corp. 24.76 0.19 0.77 481,737 Trade
HCP HCP Inc. 26.80 -0.04 -0.15 2,769,715 Trade
FVE Five Star Quality Care Inc. 1.75 0.00 0.00 28,878 Trade
BWA BorgWarner Inc. 51.94 -0.10 -0.19 1,875,900 Trade
NOR Noranda Aluminum Holding n/a n/a n/a 0
CTSH Cognizant Technology Solutions Corporation 72.91 -2.32 -3.08 4,754,892 Trade
BKE Buckle Inc. (The) 20.75 0.85 4.27 1,663,037 Trade
AAPL Apple Inc. 170.15 -0.95 -0.56 21,899,544 Trade
SINA Sina Corporation 106.40 -1.11 -1.03 1,024,324 Trade
PSMT PriceSmart Inc. 81.75 0.50 0.62 109,201 Trade
IVR INVESCO MORTGAGE CAPITAL INC 17.36 0.07 0.40 982,038 Trade
BCS Barclays PLC 9.76 0.05 0.51 2,294,575 Trade
S Sprint Corporation 6.23 -0.02 -0.32 8,537,971 Trade
PPL PPL Corp 36.26 0.04 0.11 4,348,092 Trade
AKAM Akamai Technologies Inc. 55.44 0.18 0.33 3,895,119 Trade
DPZ Domino\'s Pizza Inc 178.65 1.18 0.66 1,133,930 Trade
FOE Ferro Corporation 23.91 -0.05 -0.21 434,056 Trade
RDN Radian Group Inc. 20.87 0.09 0.43 991,541 Trade
IR Ingersoll-Rand plc (Ireland) 85.12 -0.14 -0.16 1,329,537 Trade
BZH Beazer Homes USA Inc. 20.50 0.04 0.20 682,092 Trade
AMRN Amarin Corporation plc 3.24 -0.18 -5.26 2,110,505 Trade
HON Honeywell International Inc. 146.49 -0.39 -0.27 1,637,380 Trade
MTOR Meritor Inc. 23.87 0.16 0.67 2,419,144 Trade
URI United Rentals Inc. 150.09 1.73 1.17 1,607,283 Trade
ALB Albemarle Corporation 136.21 0.88 0.65 1,441,710 Trade
SWFT Swift Transportation Company Class A n/a n/a n/a n/a
V Visa Inc. 109.82 -1.20 -1.08 8,812,373 Trade
HOV Hovnanian Enterprises Inc. Class A 2.49 0.12 5.06 3,388,782 Trade
PKD Parker Drilling Company 1.10 0.02 1.85 564,415 Trade
JDSU Viavi Solutions Inc n/a n/a n/a 0 Trade
LVLT Level 3 Communications Inc. n/a n/a n/a 0 Trade
AES The AES Corporation 10.61 -0.16 -1.49 7,574,971 Trade
PNRA Panera Bread Company n/a n/a n/a 0 Trade
TDC Teradata Corporation 35.83 -0.02 -0.06 627,179 Trade
GMCR Keurig Green Mountain Inc n/a n/a n/a 0 Trade
SHLD Sears Holdings Corporation 4.23 -0.34 -7.44 1,475,104 Trade
DLTR Dollar Tree Inc. 94.61 -0.02 -0.02 1,945,081 Trade
SVU SuperValu Inc. 16.32 0.92 5.97 1,401,527 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 7.35 0.05 0.68 483,992 Trade
NOK Nokia Corporation Sponsored American Depositary Sh 4.94 0.02 0.41 8,117,695 Trade
MCD McDonald\'s Corporation 166.72 -1.37 -0.82 2,221,422 Trade
SIX Six Flags Entertainment Corporation New 65.49 0.53 0.82 927,675 Trade
CACI CACI International Inc. Class A 125.20 -0.50 -0.40 128,030 Trade
FCX Freeport-McMoRan Inc. 13.86 0.24 1.76 15,334,576 Trade
BJRI BJ\'s Restaurants Inc. 34.20 0.45 1.33 604,770 Trade
GPK Graphic Packaging Holding Company 15.42 -0.05 -0.32 4,255,826 Trade
MGM MGM Resorts International 33.00 0.00 0.00 4,532,212 Trade
SBUX Starbucks Corporation 56.93 -0.31 -0.54 6,311,519 Trade
SNPS Synopsys Inc. 88.36 -0.68 -0.76 884,550 Trade
DHR Danaher Corporation 93.30 -0.28 -0.30 1,510,518 Trade
ARRS ARRIS International plc 28.67 0.96 3.46 920,481 Trade
X United States Steel Corp. 27.28 0.15 0.55 7,308,945 Trade
XOM Exxon Mobil Corporation 80.24 -0.32 -0.40 9,536,383 Trade
KSU Kansas City Southern 102.67 -0.85 -0.82 451,427 Trade
KEG Key Energy Services Inc. 10.14 1.35 15.36 175,375 Trade
BIIB Biogen Inc. 313.97 -0.01 -0.00 907,441 Trade
SSI Stage Stores Inc. 1.77 -0.04 -2.21 281,003 Trade
CSIQ Canadian Solar Inc. 17.79 0.24 1.37 1,115,758 Trade
ANF Abercrombie & Fitch Company 15.55 3.00 23.90 18,463,724 Trade
SWI SolarWinds n/a n/a n/a 0 Trade
HLIT Harmonic Inc. 3.90 0.10 2.63 225,199 Trade
MCO Moody\'s Corporation 146.79 2.70 1.87 942,370 Trade
SJM J.M. Smucker Company (The) New 114.19 -2.46 -2.11 1,418,187 Trade
SEAC SeaChange International Inc. 2.68 0.01 0.37 39,465 Trade
WFM Whole Foods Market Inc. n/a n/a n/a 0 Trade
KO Coca-Cola Company (The) 45.71 -0.84 -1.80 19,720,707 Trade
MHR Magnum Hunter Resources Corp n/a n/a n/a 0
DUK Duke Energy Corporation (Holding Company) 88.52 -0.69 -0.77 2,652,701 Trade
CHL China Mobile Limited 50.16 -0.25 -0.50 444,184 Trade
NTAP NetApp Inc. 52.95 -0.16 -0.30 5,664,483 Trade
WU Western Union Company (The) 19.68 -0.09 -0.46 2,463,777 Trade
MTG MGIC Investment Corporation 14.39 0.06 0.42 2,372,398 Trade
NWS News Corporation 16.20 0.20 1.25 1,217,845 Trade
TXRH Texas Roadhouse Inc. 49.86 -0.12 -0.24 411,042 Trade
XOMA XOMA Corporation 22.90 -3.35 -12.76 323,566 Trade

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