Housing Starts fell more than expected down 5.0% in August to an annual pace of 571,000 units and now stand at 50% below what economists would call a healthy housing market. Tomorrow we get Existing Home Sales for August. The FOMC meeting ends Wednesday afternoon with expectations of Operation Twist where the Fed sells short maturity U.S. Treasuries and buys long maturity notes and bonds. The Dow Jones Industrial Average traded up to 11,459.82 then dipped to 11,373.92 just in the first half hour of trading. The afternoon rebound reached 11,550.22 well below its 50-day simple moving average at 11,636. The Dow faded well below 11,500 in the final half hour of trading. The NASDAQ traded between 2607.54 and 2643.37 in morning trading staying above its 50-day simple moving average at 2599. Then in the final half hour the NASDAQ slipped below 2600 trading around its 50-day into the close.
Asian stocks were mixed on Tuesday. The Nikkei 225 which was closed on Monday fell 1.61% to 8,721. The Hang Seng gained 0.51% to 19,015. European stocks were higher on hopes of a deal on Greek debt and despite a downgrade of Italian debt. The FTSE 100 gained 1.98% to 5,364 with the DAX surging 2.88% to 5,572 and the CAC 40 up by 1.50% to 2,984. The yield on the 10-Year US Treasury traded between 1.990 and 1.932 as a flight to quality continues. Gold traded up from $1772.0 the Troy ounce to $1814.3 as the double-top continues to form on the daily chart. Crude oil traded up from $85.11 and $87.46 per barrel continuing to trade between its 200-week simple moving average at $83.71 and its 50- day at $89.95. The euro versus the US dollar traded between 1.3597 and 1.3742.
Energy
Deutsche Bank initiates the following with Buy: Apache (APA) – $126 target price, Anadarko Petroleum (APC) – $91 target price, Noble Energy (NBL) – $120 target price, Newfield Exploration (NFX) – $72 target price, Pioneer Natural Resources (PXD) – $97 target price, Cimarex Energy (XEC) – $96 target price, Oasis Petroleum (OAS) – $38 target price, Concho Resources (CXO) – $115 target price, and SM Energy (SM) – $105 target price. It assigns Holds on: Chesapeake Energy (CHK), Encana (ECA), and EOG Resources (EOG). SandRidge Permanian Trust (PER) is picked up with an Outperform rating and $22 target by brokers Robert W. Baird. Linn Energy (LINE) is a new Neutral at Credit Suisse. In afternoon trading: Shares of Suntech Power (STP) are down about 14.3%. Shares of Trina Solar (TSL) are down about 12%. Shares of LDK Solar (LDK) are down about 11.6%. Shares of General Maritime (GMR) are down about 11.3%. Shares of Magnum Hunter Resources (MHR) are UP about 11%.
Energy Select Sector SPDR (XLE) was trading at $65.62 at 4:00 PM on Tuesday, down 0.62% on the day – down 3.85% year-to-date.
Materials
Molycorp (MCP) is moved to Neutral from Overweight at JP Morgan. In afternoon trading: Shares of Molycorp are down about 20.6%. Shares of Avalon Rare Metals (AVL) are down about 11.3%. Shares of Rare Element Resources (REE) are down about 10.2%. Shares of Stillwater Mining (SWC) are down about 8.8%. Shares of CF Industries (CF) are down about 5.7%. Shares of Golden Star Resources (GSS) are up about 6.7%. Shares of AuRico Gold (AUQ) are up about 6.2%. Shares of Yamana Gold (AUY) are up about 5.8%. Shares of Northgate Minerals (NXG) are up about 5.7%. Shares of Newmont Mining (NEM) are up about 5.6%.
The Materials Select Sector SPDR (XLB) was trading at $33.61 at 4:00 PM on Tuesday, down 1.18% on the day – down 12.50% year-to-date.
Industrials
In afternoon trading: Shares of Pinnacle Airlines (PNCL) are down about 8.9%. Shares of The Manitowoc Company (MTW) are down about 6.5%. Shares of Deutsche Lufthansa (DLAKY) are down about 6.2%. Shares of A123 Systems (AONE) are down about 5.7%. Shares of Terex (TEX) are down about 5.2%. Shares of Air France (AFLYY) are down about 5%. Actives: Shares of YRC Worldwide (YRCW) are up about 2%. Shares of General Electric (GE) are down about 0.6%. Shares of Corning (GLW) are up about 0.7%. Shares of AMR (AMR) are up about 4.2%.
The Industrial Select Sector SPDR (XLI) was trading at $31.44 at 4:00 PM on Tuesday, down 0.73% on the day – down 9.84% year-to-date.
Consumer Discretionary
Tempur-Pedic (TPX) is a new Neutral at Goldman Sachs. Visteon (VC) is a new Buy at Bank of America-Merrill Lynch. MGM Resorts (MGM) is moved to Overweight from Equal Weight at Morgan Stanley. Polo Ralph Lauren (RL) is raised to Outperform from Neutral at Cowen & Company. Pulte Group (PHM) is boosted to Buy from Neutral at UBS. Express (EXPR) is resumed with an Outperform by brokers Raymond James. In afternoon trading: Shares of Cumulus Media (CMLS) are up about 20%. Shares of Coldwater Creek (CWTR) are up about 14.6%. Shares of Wonder Auto Tech (WATG) are up about 11.6%. Shares of Interpublic Group of Companies (IPG) are up about 9.7%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $37.50 at 4:00 PM on Tuesday, down 0.53% on the day – up 0.24% year-to-date.
Consumer Staples
ConAgra (CAG) formally withdrew its $5.2B all-cash offer for Ralcorp (RAH) after repeated rejections. The $94/share offer is a higher price than Ralcorp has ever traded, but the company decided the bid would generate less value than current plans to spin off Post Foods. In afternoon trading: Shares of AgFeed Industries (FEED) are down about 9%. Shares of Diamond Foods (DMND) are up about 6.1%. Actives: Shares of ConAgra Foods are down about 1.2%. Shares of CVS Caremark (CVS) are up about 0.9%. Shares of Altria Group (MO) are up about 0.7%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $30.64 at 4:00 PM on Tuesday, up 0.20% on the day – up 4.54% year-to-date.
Healthcare
Jazz Pharmaceuticals (JAZZ) announced it will merge with Ireland’s Azur Pharma in an all-stock deal. The combined company will have $475M+ in revenue and $200M+ in cash flow in its first 12 months. Jefferies begins Buys on Abbott Labs (ABT) – $60 price objective, Medivation (MDVN) – $24 price objective, Onyx Pharmaceuticals (ONXX) – $44 price objective, and Questcor (QCOR) – $36 price objective. It has Holds on Exelixis (EXEL) – $6 price objective and Regeneron Pharmaceuticals (REGN) – $66 price objective. Momenta Pharmaceuticals (MNTA) is moved to Neutral from Underperform by Bank of America-Merrill Lynch. In afternoon trading: Shares of HealthSouth (HLS) are down about 12.9%. Shares of Jazz Pharmaceuticals are up about 9.2%.
The Health Care Select Sector SPDR (XLV) was trading at $33.01 at 4:00 PM on Tuesday, up 0.92% on the day – up 4.79% year-to-date.
Financials
Reinsurer Transatlantic Holdings (TRH) is reportedly exploring a “limited standstill” agreement with Validus Holdings (VR), after rejecting a reinstated $3.25B all-cash offer from Buffett’s National Indemnity (BRK.A) and calling off a planned merger with Allied World Assurance (AWH). Following UBS’s (UBS) $2.3B loss from rogue trading, some Swiss legislators are pushing for a ban on risky investment banking and increased capital requirements. JPMorgan Chase (JPM) is a new Overweight at Evercore Partners. The Travelers (TRV) is upgraded 180 degrees, to Buy from Sell at Goldman Sachs with a new target of $63. Moody’s (MCO) is downgraded to Hold from Buy at The Benchmark Company with a new target of $29. Transatlantic Holdings (TRH) is taken to Hold from Buy at Deutsche Bank. In afternoon trading: Shares of BNP Paribus (BNPQY) are down about 9%.
The Financial Select Sector SPDR (XLF) was trading at $12.52 at 4:00 PM on Tuesday, down 0.32% on the day – down 21.50% year-to-date.
Information Technology
Carbonite (CARB) is covered with an Outperform and $17 target price at Oppenheimer. VMware (VMW) is a new Buy at Merriman. ARM Holdings (ARMH) is upgraded to Buy from Hold at The Benchmark Company. SAP AG (SAP) gets upgraded to Outperform from Market Perform at Wells Fargo. Apple Inc (AAPL) is added to the Best Ideas List at Wedbush with a new target of $530. Aixtron (AIXG) is now Neutral from Buy at UBS. Plexus (PLXS) is now Sell from Neutral at Ticonderoga. Logitech Intl SA (LOGI) is lowered to Sell from Neutral at Goldman sachs. Marvell (MRVL) is moved to Market Perform from Outpeform at JMP Securities. In afternoon trading: Shares of Sina (SINA) are down about 15%. Shares of Travelzoo (TZOO) are down about 9.5%. Shares of Carbonite are up about 9.8%.
The Technology Select Sector SPDR (XLK) was trading at $24.86 at 4:00 PM on Tuesday, down 0.24% on the day – down 1.31% year-to-date.
Telecommunications Services
In afternoon trading: Actives: Shares of Frontier Communications (FTR) are down about 2.6%. Shares of Sprint Nextel (S) are down about a half of a percent. Shares of AT&T (T) are up about 1.6%. Shares of Level 3 Communications (LVLT) are up about 1.3%. Shares of Verizon (VZ) are up about 0.9%. Shares of Telefonica (TEF) are up about 0.8%. Shares of Windstream (WIN) are up about a half of a percent. Shares of Vodafone (VOD) are up about 1.2%.
The NASDAQ Telecommunications Index (IXTC) was trading at $192.26 at 4:00 PM on Tuesday, down 0.88% on the day – down 14.69% year-to-date.
Utilities
In afternoon trading: Actives: Shares of Duke Energy (DUK) are up about 1.5%. Shares of Southern (SO) are up about 1.2%. Shares of Exelon (EXC) are up about 2.3%. Shares of AES Corp (AES) are down about 1.5%. Shares of Genon Energy (GEN) are down about 2.9%. Shares of Xcel Energy (XEL) are up about 0.6%. Shares of PPL Corp (PPL) are up about 2.7%. Shares of Dominion Resources (D) are up about 2.2%.
The Utilities Select Sector SPDR (XLU) was trading at $34.28 at 4:00 PM on Tuesday, up 1.45% on the day – up 9.38% year-to-date.
STOCKS: APA, APC, NBL, NFX, PXD, XEC, OAS, CXO, SM, CHK, ECA, EOG, PER, LINE, STP, TSL, LDK, GMR, MHR, MCP, AVL, REE, SWC, CF, GSS, AUQ, AUY, NXG, NEM, PNCL, MTW, DLAKY, AONE, TEX, AFLYY, YRCW, GE, GLW, AMR, TPX, VC, MGM, RL, PHM, EXPR, CMLS, CWTR, WATG, IPG, CAG, RAH, FEED, DMND, CVS, MO, JAZZ, ABT, MDVN, ONXX, QCOR, EXEL, REGN, MNTA, HLS, TRH, VR, BRK.A, AWH, UBS, JPM, TRV, MCO, TRH, BNPQY, CARB, VMW, ARMH, SAP, AAPL, AIXG, PLXS, LOGI, MRVL, SINA, TZOO, FTR, S, T, LVLT, VZ, TEF, WIN, VOD, DUK, SO, EXC, AES, GEN, XEL, PPL, D
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