The University of Michigan Consumer Sentiment Survey came in slightly stronger than expected at 75.3. New Home Sales declined 0.9% to an annual rate of 321,000 in January. The price of a new home declined 9.6% year over year to $217,100. The inventory of new homes fell to a new record low of 151,000, which is a 5.6 months supply, lowest since January 2006 as the housing bubble was inflating.
The Dow Jones Industrial Average declined to 12,977.2 than rebounded to 13,013.82 in morning trading then declined to 12,950.59 in afternoon trading. The NASDAQ traded up from 2958.82 to 2970.88 in morning trading then declined back towards the low in afternoon trading. The S&P 500, Dow Transports and Russell 2000 continue to lag their 2011 highs at 1370.58, 5627.85 and 868.57 respectively.
Asian stocks were higher on Friday with the Nikkei 225 ending their session 9,647 – up 0.54% on the day. The Hang Seng ended their session at 21,407 – down 0.12% on the day. European stocks were mixed on Friday. The FTSE 100 ended their session at 5,935 – down 0.05% on the day, the DAX ended their session at 6,864 up 0.81% on the day, and the CAC 40 ended their session at 3,467 – up 0.57% on the day. The yield on the 10-Year US Treasury traded down from 2.012 percent to 1.969.
Gold traded down from $1784.4 the Troy ounce to $1771.3. Crude oil traded up from $108.03 per barrel to $108.99 then declined to $107.95 then up to $109.95. The euro versus the dollar traded up from 1.3360 to 1.3484.
Energy
Eagle Rock Energy (EROC) is lowered to Market Perform with Wells Fargo. Forest Oil (FST) gets cut to Hold from Buy at Canaccord Genuity. Newfield Exploration (NFX) is lowered to Equal Weight from Overweight at Barclays. Trina Solar (TSL) is taken to Market Perform from Outperform with Wells Fargo.
Energy Select Sector SPDR (XLE) was trading at $76.245 at 3:00 PM on Friday, up 0.41% on the day – up 10.28% year-to-date. The January change was +2.26%. The 2011 change was -1.29%
Big Movers: (INT) -10.5%, (TSL) -9.25%, (TESO) +10.5%, (WTI) +10.25%, (GMXR) +10%, (LEI) +9%.
Materials
Century Aluminum (CENX) reported Q4 EPS of -$0.35 (versus consensus of -$0.32) with revenue in-line with estimates. Molycorp (MCP) beat estimates by a penny, while missing revenue by $3M. Anglo American (AAUKY) is cut Neutral from Overweight at JPMorgan.
The Materials Select Sector SPDR (XLB) was trading at $37.58 at 3:00 PM on Friday, relatively unchanged on the day – up 12.18% year-to-date. The January change was +10.99%. The 2011 change was -12.78%.
Big Movers: (SNMX) +12.25%, (IAG) -8.25%, (MCP) -7.25%, (CX) -7.25%.
Heavily Traded: (CX) -7.25%, (AA) FLAT.
Industrials
Gibraltar Industries (ROCK) beat estimates by 2 cents, while missing revenue by $6M. easyJet (ESYJY) is now Neutral from Buy at UBS.
The Industrial Select Sector SPDR (XLI) was trading at $37.465 at 3:00 PM on Friday, relatively unchanged on the day – up 11.02% year-to-date. The January change was +7.32%. The 2011 change was -3.21%.
Big Movers: (JOBS) +10.5%, (ANW) +9%, (NDSN) +7.75%.
Heavily Traded: (GE) -0.6%. (JBLU) -3.4%, (DAL) -1%.
Consumer Discretionary
Deckers Outdoor (DECK) beat estimates by 5 cents and revenue by $38M. The company is guiding for Q1 revenue growth of just 19% Y/Y, and an EPS decline of 50% (versus estimates of 28.5% revenue growth and 29% EPS growth. Deckers expects 2012 revenue growth of 15%, and EPS to be roughly flat with 2011 levels (versus expects of 19% revenue growth and 14% EPS growth). Mohawk Industries (MHK) reported Q4 EPS of $0.72 (in-line), while beating revenue by $50M. Nike (NKE) is a new Equal Weight at Morgan Stanley. Gannett (GCI) is a new Equal Weight at Barclays. Target (TGT) is taken to Buy from Hold at Jefferies. Marriott International (MAR) is added to Goldman Sachs’ Conviction Buy List. Under Armour (UA) is moved to Overweight from Equal Weight at Morgan Stanley. Gap Inc (GPS) gets cut to Underperform from Market Perform at Raymond James. Ballard Power (BLDP) gets downgraded to Hold from Accumulate at Ardour Capital. Deckers Outdoor (DECK) is now Neutral from Outperform at Credit Suisse. Warnaco Group (WRC) is moved to Hold from Buy by Benchmark Company.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $42.85 at 3:00 PM on Friday, down slightly on the day – up 9.82% year-to-date. The January change was +5.89%. The 2011 change was +4.30%.
Big Movers: (KCP) +19%, (OEH) +13.5%, (OWW) +11.25%, (DECK) -12.75%.
Consumer Staples
Mead Johnson (MJN) and Danone (DANOY) landed permission to jointly bid for Pfizer’s (PFE) $10B infant nutritionals business. Procter & Gamble (PG) plans to cut 5.7K jobs in 2013 and reduce its costs by $10B by 2016, according to CEO Bob McDonald. Kroger (KR) is lifted to Buy from Neutral at Citigroup, which adds it to their list of Top Picks Live. Delhaize Group (DEG) is lowered to Sell from Buy at Citigroup.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.01 at 3:00 PM on Friday, up slightly on the day – up 1.57% year-to-date. The January change was -1.42%. The 2011 change was +10.85%.
Heavily Traded: (PG) +0.5%, (SWY) FLAT, (WMT) +0.2%, (GIS) -1.2%, (MO) +0.8%, (KR) +2.1%.
Health Care
Endo Pharmaceuticals (ENDP) beat estimates by 8 cents with revenue in-line with estimates. Protein Design Labs (PDLI) missed estimates by 4 cents with revenue in-line with estimates. Kindred Healthcare (KND) missed estimates by 9 cents and revenue by $80M. ISTA Pharmaceuticals (ISTA) beat estimates by 4 cents, while missing revenue by $1.5M. Baxter International (BAX) is moved to Neutral from Sell at Citigroup. WebMD Health (WBMD) is reduced to Market Perform from Outperform at Raymond James.
The Health Care Select Sector SPDR (XLV) was trading at $36.19 at 3:00 PM on Friday, up 0.50% on the day – up 4.32% year-to-date. The January change was +3.20%. The 2011 change was +10.32%.
Big Movers: (VVUS) +17%, (KND) -14.5%, (CLDX) -10.75%.
Financials
Lloyds (LYG) reported a £3.5B pre-tax loss this morning, better than the £4B loss expected. The figure includes a £3.2B one-off provision for repaying mis-sold payment protection insurance. Income -10% to £21.1B, and expected to fall again in 2012. AIG (AIG) reported Q4 EPS of $0.82, beating expectations by $0.21. Its net income of $19.8B included tax benefits of $17.7B for Q4 related to the reversal of write-downs it had taken to lower the value of its deferred-tax assets. Apollo Global Management (APO) is leading a group that is close to buying El Paso’s (EP) oil-exploration business for around $7B, with a deal announcement possible as soon as today. Kinder Morgan (KMI), which has a $38B deal in place to buy El Paso, wants to sell the exploration and production business to help pay for its El Paso acquisition. Citigroup (C) exited its investment in Housing Development Finance Corp., India’s largest mortgage lender, for $1.9B. Public Storage (PSA) missed estimates by 8 cents and revenue by $18M. Ares Capital (ARCC) is assigned an Underweight at Barclays, which establishes Equal Weights on Fifth Street Finance (FSC) and Apollo Investment (AINV). Cantor Fitzgerald covers EastGroup (EGP) at Sell, has a Hold on STAG Industrial (STAG), and begins Buys on ProLogis (PLD) and First Potomac Realty (FPO). Campus Crest Communities (CCG) gets a Buy-from-Neutral boost at Janney Montgomery Scott. Deutsche Bank (DB) is lifted to Buy from Neutral from Bank of America-Merrill Lynch. Natixis (NTXFY) is now Neutral from Sell at Goldman. AvalonBay (AVB) is raised 180 degrees to Outperform from Underperform at Credit Suisse. Camden Property (CPT), Colonial Properties (CLP) and Post Properties (PPS) are all upgraded to Buy from Neutral at UBS. Commerzbank (CRZBY) is cut to Underperform from Market Perform at BNP Paribas. Crédit Agricole (CRARY) is slashed to Sell from Hold at Société Générale. CubeSmart (CUBE) is reduced to Neutral from Outperform at Robert W. Baird. PacWest Bancorp (PACW) is now Hold from Buy with a $24 target at Wunderlich.
The Financial Select Sector SPDR (XLF) was trading at $14.65 at 3:00 PM on Friday, down 0.48% on the day – up 12.77% year-to-date. The January change was +8.12%. The 2011 change was -18.50%; the weakest performing sector for the year.
Information Technology
At its shareholder meeting yesterday, Apple (AAPL) announced it will require directors to be elected via a majority shareholder vote, meeting the demand of a non-binding resolution passed last year. Salesforce.com (CRM) reported Q4 EPS of $0.43, beating expectations by $0.03, and revenue of $631.9M, beating expectations by $7.9M. The company expects FQ1 revenue of $673M-$678M and 2012 revenue of $2.92B-$2.95B (above estimates of $663.1M and $2.91B). TiVo (TIVO): Q4 beats estimates across the board, swinging to a profit off cost reductions and settlement proceeds from its AT&T settlement. The company issued a downbeat forecast for the current quarter, however, now expecting a loss of $18M – $20M with service-and-technology revenue of $53M – $55M (versus estimates for a loss of $13M on comparable revenue of $57M). Rubicon Technology’s (RBCN) Q4 profit dropped 94% as weak demand continues to hurt the company’s sales. The company also projects a loss for the current-quarter, now expecting an EPS loss of $0.10 – $0.14 per share on revenue between $8M – $12M (versus estimates of a profit of $0.11 on revenue of $23M). OmniVision Technologies (OVTI) reported FQ3 EPS of $0.13 (in-line), while beating revenue by $6.3M. The company expects FQ4 revenue of $195M-$215M and EPS of $0.15-$0.28 (above a consensus of $170.7M and $0.10). Monster Worldwide (MNST) missed estimates by 2 cents with revenue in-line with estimates. ARM Holdings (ARMH) is picked up with an Overweight at Piper Jaffray. Wipro (WIT) is initiated with a Perform at Oppenheimer. Cirrus Logic (CRUS) is lifted to Outperform from Perform at Oppenheimer with a price objective of $28. Trina Solar (TSL) is taken to Market Perform from Outperform with Wells Fargo. WebMD Health (WBMD) is reduced to Market Perform from Outperform at Raymond James.
The Technology Select Sector SPDR (XLK) was trading at $28.80 at 3:00 PM on Friday, up 0.52% on the day – up 13.16% year-to-date. The January change was +6.21%. The 2011 change was +1.03%.
Big Movers: (CYDE) -26%, (RBCN) -19%, (TSL) -9.5%, (AXT) +11.25%, (OPWV) +10%.
Telecommunication Services
The NASDAQ Telecommunications Index (IXTC) was trading at $217.38 at 3:00 PM on Friday, down 0.27% on the day – up 10.39% year-to-date. The January change was +6.67%. The 2011 change was -12.62%.
Heavily Traded: (S) -3.2%, (CLWR) -7.25%, (FTR) +1.6%, (T) -0.5%, (PCS) +2.7%, (NIHD) -5.2%, (VOD) -0.4%, (VZ) -0.4%.
Utilities
Potomac Electric Power Company (POM) missed estimates by 3 cents and revenue by $520M.
The Utilities Select Sector SPDR (XLU) was trading at $35.07 at 3:00 PM on Friday, up 0.40% on the day – down 2.53% year-to-date. The January change was -3.61%. The 2011 change was +14.81%; the strongest performing sector for the year.
Heavily Traded: (DUK) +0.9%, (GEN) +0.4%, (AEP) -0.4%, (AES) FLAT, (EXC) -0.2%, (SO) +0.3%, (CMS) +0.8%, (NU) +0.2%, (PPL) +0.6%.
STOCKS: EROC, FST, NFX, TSL, INT, TSL, TESO, WTI, GMXR, LEI, CENX, MCP, AAUKY, SNMX, IAG, CZ, AA, ROCK, ESYJY, JOBS, ANW, NDSN, GE, JBLU, DAL, DECK, MHK, NKE, GCI, TGT, MAR, UA, GPS, BLDP, WRC, KCP, OEH, OWW, MJN, DANOY, PFE, PG, KR, DEG, SWY, WMT, GIS, MO, ENDP, PDLI, KND, ISTA, BAX, WBMD, VVUS, CLDX, LYG, AIG, APO, EP, KMI, C, PSA, ARCC, FSC, ARCC, AINV, EGP, STAG, PLD, FPO, CCG, DB, NTXFY, AVB, CPT, CLP, PPS, CRZBY, CRARY, CUBE, PACW, AAPL, CRM, TIVO, RBCN, OVTI, MNST, ARHM, WIT, CRUS, CYDE, AXT, OPWV, S, CLWR, FTR, T, PCS, NIHD, VOD, VZ, POM, DUK, GEN, AEP, AES, EXC, SO, CMS, NU, PPL,
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