Equities Sector Coverage: Stocks Get Hammered After New Debt Limit Deal

Sector Recap |

RecessionThe stream of weaker than expected economic data continued on Tuesday as Personal Income inched higher in June by just 0.1%. Personal Spending fell by an unexpected 0.2%, the first decline since September 2009. The Dow Jones Industrial Average opened lower on weak personal spending to a morning low at 12,015.86. After the Senate passed the Debt Ceiling Bill and president Obama’s comments, the Dow declined to 11,921.68 into the final half hour of trading. The Dow had been above its 200-day simple moving average since early September 2010, but today’s close was below the 200-day at 11,988. The NASDAQ traded as low as 2718 in morning trading then dipped to 2684.90 into the final half hour of trading below its 200-day at 2708.

Asian stocks slumped on Monday reversing Monday’s gains. The Nikkei 225 fell by 1.2% to 9,845. The Hang Seng lost 1.1% to 22,421. European stocks followed Asia lower on US economic concerns. The FTSE 100 declined 0.7% to 5,732. The DAX plunged 2.3% to 6,797. The CAC 40 eroded by 1.8% to 3,523. The yield on the 10-Year U.S. Treasury note continued to decline and reached a new year-to-date low yield at 2.603 percent. Gold rose from $1617.6 to another new all time high at $1655.6 into the last half hour of trading. Crude oil declined from $95.45 to $93.17 below its 200-day simple moving average at $95.02. The euro versus the US dollar declined from 1.4280 to 1.4154 then consolidated that range.

Energy

Oil States International (OIS) reported Q2 revenue and EPS of $820.3M and $1.34 (beating consensus of $793.8M and $1.19). Teekay Tankers (TNK) and Navios Maritime Acquisition (NNA) are both now Hold from Buy at Deutsche Bank. In afternoon trading: Shares of SM Energy (SM) are up about 11.5%. Shares of Willbros Group (WG) are down about 11.5%. Shares of Overseas Shipholding (OSG) are down about 11.5%. Shares of Frontline (FRO) are down about 8.75%. Shares of BPZ Resources (BPZ) are down about 8.5%.

Energy Select Sector SPDR (XLE) was trading at $74.22 at 4:00 PM on Tuesday, down 2.78% on the day – up 8.74% year-to-date.

Materials

Xstrata (XSRAY) reported H1 EPS of $1.00 (in-line) on revenue of $16.8B. FMC Corp. (FMC) reported Q2 revenue and non-GAAP EPS of $812.2M and $1.52 (slightly beating a consensus), with 2011 EPS guidance of $5.60-$5.80 (in-line) and Q3 guidance of $1.25-$1.40 (below consensus). In afternoon trading: Share of Ferro (FOE) are down over 20% after missing estimates by 7 cents. Shares of Westlake Chemical (WLK) are down about 9.5%. Shares of Molycorp (MCP) are down about 9%. Shares of Headwaters (HW) are up about 8.25%. Shares of Golden Star Resources (GSS) are up about 7.5%. Shares of Harmony Gold (HMY) are up about 7.25%. Shares of Calgon Carbon (CCC) are up about 7%.

The Materials Select Sector SPDR (XLB) traded at $36.71 at 4:00 PM on Tuesday, down 3.09% on the day – down 4.43% year-to-date.

Industrials

Parker-Hannifin (PH) missed estimates by a penny, but beat revenue by $70M. General Cable (BGC) missed estimates by 6 cents and revenue by $70M, and issued mixed guidance for Q3, saying earnings will be below estimates on slightly better revenue. Armstrong World Industries (AWI) reported that Q2 earnings jumped 41% on improved sales and margins, but most of the gains came on cost cutting rather than increased order volume. Copa Holdings (CPA) is a new Neutral at Goldman Sachs. Siemens (SI) is removed from the Goldman Sachs list of Conviction Buys. In afternoon trading: Shares of General Cable are down about 16.25%. Shares of SatCon Technology (SATC) are down about 14%. Shares of YRC Worldwide (YRCW) are down about 11.75%.

The Industrial Select Sector SPDR (XLI) traded at $33.26 at 4:00 PM on Tuesday, down 3.48% on the day – down 4.62% year-to-date.

Consumer Discretionary

Toyota's (TM) FQ1 net profit dropped 99% to ¥1.16B ($15M) as revenue fell 29% to ¥3.44T but surprised analysts who had been expecting a loss. The car maker also increased its FY net profit guidance by nearly 40% to ¥390B. Investment firm Jana Partners and the Ontario Teachers' Pension Plan have increased their stakes in McGraw-Hill (MHP) to a combined 5.2% as they look to unlock shareholder value with a sale of assets, a merger or some other reorganization. Sony (SNE) is preparing a reorganization of its ailing TV business to reduce costs and better compete against the likes of Samsung (SSNLF). As part of a prospective sale of 1,100 patents, Kodak (EK) is considering selling its technology for previewing photographs, which is one of its most important pieces of IP and is the subject of lawsuits against Apple (AAPL) and RIM (RIMM). Ford (F) is recalling 1.22M older pickup trucks in the U.S. and Canada to replace straps that hold fuel tanks in place and which could corrode and break. Sirius XM Radio (SIRI) beat estimates by 2 cents, but missed revenue by $8.5M, raised full-year guidance to a projected 1.6 million net subscriber additions and expects free cash flow will approach $400M, up from $350M, and maintained full-year revenue projection of $3B. Coach (COH) beat estimates by 3 cents and revenue by $20M. Warnaco Group (WRC) beat estimates by 8 cents and revenue by $10M, and raised its FY11 EPS and revenue guidance. Texas Roadhouse (TXRH) missed estimates after reporting a $0.22 EPS (versus consensus $0.21 on Q2 profit of $16M, and lowered guidance for 2011 EPS growth to 5% from a range of 5%-10%. Drew Industries (DW) missed Q2 estimates due to slower-than-anticipated economic growth and higher material costs, but reaffirmed FY11 guidance. Loews Corp (L) missed estimates by 22 cents on revenue of $3.55B. Honda Motor (HMC) beat estimates by ¥24.2B on revenue of ¥1,714.5B, and raised FY profit guidance to ¥230B from ¥195B. TravelCenters of America (TA) is begun with a Buy at Citigroup. In afternoon trading: Shares of Dineequity (DIN) are up about 17%. Shares of Ctrip.com International (CTRP) are down about 11.5%. Shares of Bridgepoint Education (BPI) are down about 11%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $37.95 at 4:00 PM on Tuesday, down 3.78% on the day – up 1.44% year-to-date.

Consumer Staples

Archer Daniels Midland (ADM) missed estimates by 25 cents, but beat revenue by $2.45B. Molson (TAP) missed estimates by 6 cents and revenue by $20M. Herbalife (HLF) beat estimates by 13 cents and revenue by $51M, and raised FY11 guidance to $2.97- $3.07. Wal-Mart (WMT) is cut to Hold from Buy at Jefferies with a new price objective of $56. Sara Lee (SLE) is lowered to Market Perform from Outperform by Sanford Bernstein. In afternoon trading: Shares of China Biotics (CHBT) are up about 11.5%. Shares of Nu Skin (NUS) are up about 9%. Shares of Herbalife are up about 7.75%. Shares of Winn-Dixie (WINN) are down about 10.5%. Shares of Central European Distribution (CEDC) are down about 7.75%.

The Consumer Staples Select Sector SPDR (XLP) traded at $30.32 at 4:00 PM on Tuesday, down 1.30% on the day – up 3.45% year-to-date.

Healthcare

Pfizer's (PFE) Q2 EPS fell by a cent to $0.60 but beat expectations, while revenue slipped 1% to $16.98B and was in line. The company reaffirmed its full-year guidance for 2011 and its targets for 2012. Pfizer (PFE) beat estimates by a penny with revenue in-line with estimates, and sees FY'11 EPS of $2.16-2.26 and revenue of $65.2-67.2B (versus consensus of $2.25 and $66.6B). ARIAD Pharmaceuticals (ARIA) missed estimates by 14 cents and revenue by $870K. Germany's Fresenius Medical Care (FMS), the world's largest dialysis company, has agreed to buy privately held Liberty Dialysis Holdings for $1.7B including assumed debt. FMC is acquiring American Access Care Holdings for $385M as well. Tenet Healthcare (THC) beat estimates by a penny, but missed revenue by $30M, and raised FY'11 EPS outlook to $0.41-0.54 from $0.41-0.51. Vivus (VVUS) missed estimates by 7 cents. Hologic (HOLX) reported FQ3 EPS of $0.32 (in-line) on revenue of $451M. Haemonetics (HAE) reported that FQ1 earnings miss the mark due to a product recall, and reduced FY guidance. Humana (HUM) beat estimates by 45 cents, but missed revenue by $9.28B, and sees FY'11 EPS of $7.50-7.60, up from previous guidance of $6.70-6.90. Vanguard Health Systems (VHS) is begun with a Buy at Citigroup. Shire Plc (SHPGY) is lowered to Neutral from Overweight at JP Morgan. eResearchTech (ERT) is downgraded to Hold from Buy at The Benchmark Company. Teva Pharma (TEVA) is taken to Perform from Outperform at Oppenheimer. In afternoon trading: Shares of Depomed (DEPO) are down about 15%. Shares of ARIAD are down about 9.5%. Shares of Akorn (AKRX) are up about 9.5%. Shares of Sun Healthcare Group (SUNH) are up about 9.25%.

The Health Care Select Sector SPDR (XLV) traded at $32.82 at 4:00 PM on Tuesday, down 2.15% on the day – up 4.19% year-to-date.

Financials

Barclays (BCS) H1 pretax profit beat expectations but slumped 33% to £2.64B as a decline in bond trading at its investment bank and a £1B charge for mis-sold insurance overshadowed a fall in bad-debt charges. HCP Inc. (HCP) beat estimates by a penny and revenue by $30M. Lexington Realty Trust (LXP) beat estimates by 2 cents and revenue by $1M. Boston Properties (BXP) beat estimates by 4 cents and revenue by $28M, and expects Q3 FFO of $1.23-1.25 (versus $1.17), and full-year FFO of $4.78-4.83 (versus $4.68). Vornado (VNO) beat estimates by 7 cents and revenue by $47M. Principal Financial Group (PFG) beat estimates by a penny and revenue by $80M. Old National Bancorp (ONB) posted an 11.9% gain after reporting Q2 revenue and EPS of $108.8M and $0.18 (beating a consensus of $103.7M and $0.16). Mercury General (MCY) reported Q2 revenue and EPS of $706.5M and $1.04 (beating consensus of $677.1M and $0.63). UDR Inc. (UDR) reported Q2 EPS of $0.32 (in-line), while beating revenue by $4.2M. CNA Financial (CNA) missed estimates by 2 cents. Allstate (ALL) beat estimates by 36 cents on revenue of $8.1B. Camden Property Trust (CPT) is taken to Market Perform from Underperform Bat FBR Capital. Eaton Vance (EV) is hoisted to Hold from Sell at Citigroup. HSBC (HBC) is lowered to Hold from Buy at The Royal Bank of Scotland. Banco Santander (STD) is moved to Neutral from Outperform at Mediobanca. In afternoon trading: Shares of Radian Group (RDN) are up about 16.25%. Shares of FelCor Lodging Trust (FCH) are down about 9.25%.

The Financial Select Sector SPDR (XLF) traded at $14.35 at 4:00 PM on Tuesday, down 2.72% on the day – down 10.04% year-to-date.

Information Technology

Sony (SNE) is preparing a reorganization of its ailing TV business to reduce costs and better compete against the likes of Samsung (SSNLF). Samsung has agreed not to sell the latest version of its tablet computer, the Galaxy Tab 10.1, in Australia until a patent lawsuit filed in the country by Apple (AAPL) is resolved. As part of a prospective sale of 1,100 patents, Kodak (EK) is considering selling its technology for previewing photographs, which is one of its most important pieces of IP and is the subject of lawsuits against Apple and RIM (RIMM). Synchronoss Technologies (SNCR) reported Q2 non-GAAP revenue and EPS of $55.4M and $0.21 (beating a consensus of $54.6M and $0.20). Vishay Intertechnology (VSH) missed estimates by a penny and revenue by $5M, and sees Q3 revenues of $675-715M (versus consensus of $703.9M). S1 (SONE) reported Q2 EPS of $0.04 (in-line), while beating revenue by $4M, and raised FY11 revenue guidance to $240M-$250M. Plantronics (PLT) reported FQ1 revenue and non-GAAP EPS of $175.6M and $0.62 (beating consensus), and expects FQ2 revenue of $172M-$177M and non-GAAP EPS of $0.58-$0.63 (versus consensus of $173.1M and $0.60). Openwave Systems (OPWV) missed EPS estimates by a wide shot on higher expenditures and poor product mix. Integrated Device Technology (IDTI) reported FQ1 EPS of $0.12 (in-line), while missing revenue by $2M. Convergys (CVG) beat estimates by 2 cents and revenue by $17M. Heartland Payment Systems (HPY) reported Q2 revenue and adjusted EPS of $122.2M and $0.31 (versus consensus of $126.3M and $0.29), and raised 2011 EPS forecast to $1.00-$1.04 (above consensus). Orbotech (ORBK) reported Q2 revenue and non-GAAP EPS of $153.4M and $0.56 (versus consensus of $155.2M and $0.44), and raised 2011 non-GAAP EPS guidance to $1.80-$1.85, up from $1.70-$1.78. Changyou (CYOU) beat Q2 estimates across-the-board, but gave mixed guidance for Q3. Sohu.com (SOHU) beat estimates by 9 cents and revenue by $8.2M, and guides for Q3 revenue and non-GAAP EPS of $225M-$230M and $1.20-$1.25 (beating consensus of $206.4M and $1.19). Allot Communications (ALLT) reported Q2 revenue and non-GAAP EPS of $18.5M and $0.10 (beating consensus of $17.6M and $0.09). Sohu.com (SOHU) is boosted to Outperform from Neutral at Credit Suisse. TriQuint Semiconductor (TQNT) is taken to Buy from Hold at Kaufman Brothers. In afternoon trading: Shares of Synchronoss Technologies are up about 21.5%. Shares of Openwave Systems are down about 22.25%.

The Technology Select Sector SPDR (XLK) traded at $25.25 at 4:00 PM on Tuesday, down 2.09% on the day – up 0.25% year-to-date.

Telecommunications Services

American Tower (AMT) beat estimates by 6 cents and revenue by $13M. SBA Communications (SBAC) missed estimates by 47 cents with revenue in-line with estimates. Radcom (RDCM) reported Q2 revenues of $5.9M on a record level of bookings, while non-GAAP net income for the quarter reached $315K or $0.05/share, down from $487K or $0.09/share. Vodafone (VOD) is moved to Overweight from Equalweight at Barclays Capital. In afternoon trading: Shares of MetroPCS (PCS) are down about 33% after missing estimates by 6 cents. Shares of TerreStar (TSTRQ) are down about 30%. Shares of Leap Wireless (LEAP) are down about 18.5%.

The NASDAQ Telecommunications Index (IXTC) traded at $196.56 at 4:00 PM on Tuesday, down 2.43% on the day – down 12.78% year-to-date.

Utilities

Duke Energy (DUK) beat estimates by 2 cents and revenue by $220M. Entergy (ETR) beat estimates by a penny, but missed revenue by $130M. NV Energy (NVE) missed estimates by 11 cents and revenue by $86M. Constellation Energy Group Inc (CEG) is begun with a Market Perform at Wells Fargo. Southern Company (SO) is now Buy from Neutral with a $43 target at Hilliard Lyons. Veolia Environnement (VE) is lowered to Neutral from Buy at HSBC Securities. In afternoon trading: Actives: Shares of Duke Energy are down about 0.4%. Shares of AES Corp (AES) are down about 3%. Shares of Genon Energy (GEN) are down about 2.4%. Shares of Exelon (EXC) are down about 1.1%.

The Utilities Select Sector SPDR (XLU) traded at $32.70 at 4:00 PM on Tuesday, down 1.71% on the day – up 4.34% year-to-date.

STOCKS: OIS, TNK, NNA, SM, WG, OSG, FRO, BPZ, XSRAY, FMC, FOE, WLK, MCP, HW, GSS, HMY, CCC, PH, BGC, AWI, CPA, SI, SATC, YRCW, TM, MHP, SNE, SSNLF, EK, AAPL, RIMM, F, SIRI, COH, WRC, TXRH, DW, L, HMC, TA, DIN, CTRP, BPI, ADM, TAP, HLF, WMT, SLE, CHBT, NUS, WINN, CEDC, PFE, ARIA, FMS, THC, VVUS, HOLX, HAE, HUM, VHS, SHPGY, ERT, TEVA, DEPO, AKRX, BCS, HCP, LXP, BXP, VNO, PFG, ONB, MCY, UDR, CAN, ALL, CPT, CPT, EV, HBC, STD, RDN, FCH, SNE, SSNLF, SNCR, VSH, SONE, PLT, OPWV, IDTI, CVG, HPY, ORBK, CYOU, SOHU, ALLT, TQNT, AMT, SBAC, RDCM, VOD, PCS, TSTRQ, LEAP, DUK, ETR, NVE, CEG, SO, VE, AES, GEN, EXC

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