Equities Sector Coverage: Stocks Overcome Weaker Earnings with Data Boost

Sector Recap |

Stocks Overcome Weaker Earnings with Data BoostHousing Starts surged 15.0% in September to an annual rate of 872,000 with permits up to 894,000. Single Family starts rose 11.0% to 603,000 to the highest pace since August 2008. The Dow Jones Industrial Average traded down to 13,468.90 in early trading then rebounded to 13,560.21 going into the final half hour of trading versus the October 5 high at 13,661.87. The NASDAQ traded down to 3088.05 at the open then rebounded to 3112.45 versus its 50-day simple moving average at 3093.56.

Asian stocks were higher on Wednesday. The Nikkei 225 closed at 8,807 – up 1.21%. The Hang Seng closed at 21,417 – up 0.99%. European exchanges had a mixed open on Wednesday but closed higher. The FTSE 100 ended the day at 5,911 – up 0.69%. The DAX ended the day at 7,395 – up 0.25%. The CAC 40 ended the day at 3,528 – up 0.76%. The yield on the 10-Year US Treasury rose from 1.719% to 1.813% between the 50-day and 200-day simple moving averages at 1.698% and 1.802%.

Comex gold rebounded from $1746.5 the Troy ounce to $1755.0 then declined to $1744.0 staying above its 50-day simple moving average at $1715.8 and well below the 2012 high at $1798.1 set on October 5. Nymex crude oil rebounded from $91.96 per barrel to $92.85 then declined to $91.55 staying below its 50-day and 200-day simple moving averages at $93.93 and $95.81. The euro versus the dollar moved up 1.3055 to 1.3137 versus its September 17 high at 1.3170.

Energy

British Petroleum (BP) is reportedly moving closer to a sale of its 50% stake in TNK-BP, a joint venture with Russian billionaires represented by the Alfa-Access-Renova consortium. Rosneft, an oil company majority-owned by the Russian government, has reportedly agreed to buy BP’s stake for $25 billion. Halliburton (HAL) reported Q3 EPS of $0.67 (in-line) and revenue of $7.1B (in-line). Comstock Resources (CRK) is a Hold at Brean Capital. Murphy Oil (MUR) is moved to Buy from Hold at Brean Capital. Big Movers – Suntech Power (STP) is up about 11%. Overseas Shipholding Group (OSG) is down about 10%. Dow components – Chevron (CVX) is up about 0.9%. Exxon Mobil (XOM) is up about 0.9%. Energy Select Sector SPDR (XLE) was trading at $75.03 at 3:30 PM on Wednesday, up 1.27% on the day – up 8.53% year-to-date.

Materials

Airgas (ARG) is a new Neutral at Susquehanna. Sherwin-Williams (SHW) is a new Equal Weight at Morgan Stanley. Yara International (YARIY) is now Buy from Reduce at Nomura. Packaging Corp. of America (PKG) gets downgraded to Market Perform from Outperform at BMO Capital. Dow Components – Alcoa (AA) is up about 1.75%. DuPont (DD) is relatively unchanged. The Materials Select Sector SPDR (XLB) was trading at $37.83 at 3:30 PM on Wednesday, up 0.72% on the day – up 12.93% year-to-date.

Industrials

Satcon Technology (SATC) filed for Chapter 11 bankruptcy protection following years of financial struggles and a severe downturn in the solar power industry. Textron (TXT) missed estimates by 3 cents with revenue in-line with estimates. A. O. Smith (AOS) beat estimates by 11 cents, while missing revenue by $10M. Stanley Works (SWK) missed estimates by 5 cents with revenue in-line with estimates. CSX (CSX) beat estimates by a penny, while missing revenue by $40M. ADT Corp. (ADT) is initiated with an Outperform at Credit Suisse. Nielsen Holdings (NLSN) is a fresh Outperform at RBC Capital. Xylem (XYL) is a new Neutral at DA Davidson. Resources Connection (RECN) is now Neutral from Outperform at Macquarie. The broker would instead put fresh money into Robert Half (RHI). Big Movers – SatCon Technology (SATC) is down about 75%. Badger Meter (BMI) is up about 14.5%. Dow components – Boeing Co (BA) is up about 0.5%. Caterpillar (CAT) is up about 1.9%. General Electric (GE) is up about 0.9% 3M Company (MMM) is up 0.7%. United Technologies (UTX) is up about 1.3%. The Industrial Select Sector SPDR (XLI) was trading at $37.315 at 3:30 PM on Wednesday, up 0.61% on the day – up 10.56% year-to-date.

Consumer Discretionary

Apollo Group (APOL) beat estimates by 3 cents, while missing revenue by $50M. Apollo Group (APOL) gets lowered to Neutral from Buy at Bank of America-Merrill Lynch. Raymond James reduces Ryland (RYL) to Market Perform from Outperform and takes Toll Brothers (TOL) to Outperform from Strong Buy. Imax Corp. (IMAX) is now Neutral from Positive at Susquehanna. Big Mover – Apollo Group (APOL) is down about 20.5%. Dow Components – Disney (DIS) is up about 1.8%. Home Depot (HD) is up about 0.7%. McDonalds (MCD) is down about 0.5%. The Consumer Discretionary Select Sector SPDR (XLY) was trading at $47.415 at 3:30 PM on Wednesday, up 0.60% on the day – up 21.51% year-to-date.

Consumer Staples

Dean Foods (DF) announced spinoff details of their WhiteWave Foods Company (WWAV). Diageo (DGE) rides growth in emerging markets to a roughly in-line 5% increase in sales for FQ1. Pepsico (PEP) beat estimates by 4 cents, while missing revenue by $350M. Big Mover – Dean Foods (DF) is up about 13.5%. Dow components – Coca Cola (KO) is down slightly. Procter & Gamble (PG) is up about 0.5%. Wal-Mart (WMT) is down about 0.4%. The Consumer Staples Select Sector SPDR (XLP) was trading at $36.35 at 3:30 PM on Wednesday, up 0.47% on the day – up 11.88% year-to-date.

Health Care

St. Jude Medical (STJ) beat estimates by 2 cents with revenue in-line with estimates. Outlook: Q4 EPS of $0.86-$0.88 vs. consensus of $0.89; FY EPS of $3.42-$3.44 vs. consensus of $3.43 and prior guidance of $3.40-$3.45. Abbott Laboratories (ABT) beat estimates by 2 cents, while missing revenue by $160M. Quest Diagnostics (DGX) reported Q3 EPS of $1.18 (in-line), while missing revenue by $60M. Intuitive Surgical (ISRG) reported Q3 EPS of $4.46 (may not be compare to $3.50 estimates), while beating revenue by $3M. StemCells (STEM) is a new Buy at Ascendiant Capital. Big Movers – Peregrine Pharmaceuticals (PPHM) is up about 22%. Zalicus (ZLCS) is up about 11.5%. Centene (CNC) is up about 11%. Dow Components – Johnson & Johnson (JNJ) is up about 1.9%. Merck (MRK) is up about 0.5%. Pfizer (PFE) is up slightly. United Health Group (UNH) is down about 1.7%. The Health Care Select Sector SPDR (XLV) was trading at $41.35 at 3:30 PM on Wednesday, up 0.05% on the day – up 19.20% year-to-date.

Financials

Bank of America's (BAC) net profit plunged to $340M from $6.2B a year earlier, and while EPS of zero beat forecasts, revenue fell to $20.4B from $28.5B and missed expectations. Visa (V) could name a new CEO this month to replace 66-year-old Joseph Saunders, who's expected to retire when his contract ends in March. The leading candidate is former Visa board member Charles Scharf, who managed JPMorgan's (JPM) retail-banking operations for seven years. As expected, RBS (RBS) will leave the U.K. government's Asset Protection Scheme tomorrow. The APS is an insurance program covering the bank's "toxic assets" - many of which have been sold or written off - and has cost it £2.5B in premiums since it joined in 2009; RBS's departure will save it £800M a year and is seen as a first step towards its re-privatization. M&T Bank (MTB) beat estimates by 39 cents. Taylor Capital Group (TAYC) beat estimates by 14 cents and revenue by $48M. U.S. Bancorp (USB) reported Q3 EPS of $0.74 (in-line) while beating revenue by $40M. Northern Trust (NTRS) missed estimates by a penny and revenue by $16M. Bank of New York Mellon (BK) beat estimates by 7 cents. BancFirst (BANF) is boosted to Outperform from Market Perform at Raymond James. Brown & Brown (BRO) is boosted to Outperform from Market Perform at Keefe Bruyette. Citigroup (C) is lifted to Outperform from Underperform at Crédit Agricole. Essex Property Trust (ESS) is increased to Strong Buy from Outperform at Raymond James. Raymond James raises Essex Property (ESS) and Mid-America Apartment (MAA) to Strong Buy from Outperform and moves Equity Residential (EQR) to Outperform from Market Perform. American Tower (AMT) is downgraded to Equal Weight from Overweight by Barclays. PNC Financial (PNC) is cut to Hold from Buy at Stifel Nicolaus. Big Movers – MGIC Investment (MTG) is up about 18%. MF Global (MFGLQ) is up about 15.5%. Cathay General Bancorp (CATY) is up about 11%. Dow Components – American Express (AXP) is up about 1.1% Bank of America (BAC) is down about 0.6%. JP Morgan Chase (JPM) is up about 1%. The Travelers Companies (TRV) is up about 0.6%. The Financial Select Sector SPDR (XLF) was trading at $16.30 at 3:30 PM on Wednesday, up 1.31% on the day – up 25.38% year-to-date.

Information Technology

IBM's (IBM) Q3 revenue dropped 5% to $24.75B and missed expectations, although EPS of $3.62 was in line and net profit was flat at $3.8B. Intel's (INTC) Q3 net profit fell 14% to $2.97B but EPS of $0.60 beat forecasts, as did revenue of $13.46B despite being flat. Intel forecast Q4 sales of $13.1B-$14.1B vs. consensus of $13.8B. Chip-equipment maker ASML (ASML) has agreed to acquire Cymer (CYMI) for €1.95B ($2.5B) in cash and stock. Meanwhile, ASML's Q3 net profit fell to €274.7M from 355.2M a year earlier and was below consensus of €278M. Revenues fell to €1.23B from €1.46B but were in line. Visa (V) could name a new CEO this month to replace 66-year-old Joseph Saunders, who's expected to retire when his contract ends in March. The leading candidate is former Visa board member Charles Scharf, who managed JPMorgan's (JPM) retail-banking operations for seven years. Check Point Software (CHKP) beat estimates by a penny with revenue in-line with estimates. Mellanox Technologies (MLNX) is a new Market Perform at JMP Securities. Universal Display (PANL) is a new Outperform at JMP Securities. Adtran (ADTN) is lifted to Neutral from Sell at Goldman Sachs. Fortinet (FTNT) is upgraded to Buy from Hold with Wunderlich. Cisco Systems (CSCO) gets cut to Hold from Buy at Cantor Fitzgerald. Diebold (DBD) is now Neutral from Buy at Compass Point. ExlService (EXLS) is reduced to Neutral from Outperform at Robert W. Baird. International Business Machines (IBM) is moved to Neutral from Buy at Janney Capital. Texas Instruments (TXN) is lowered to Underperform from Neutral at Longbow. Big Movers – Cymer (CYMI) is up about 48.5%. Suntech Power (STP) is up about 11%. Cree (CREE) is up about 11%. Fortinet (FTNT) is down about 20%. Check Point Software Technology (CHKP) is down about 12.5%. Sourcefire (FIRE) is down about 12.25%. Dow Components – Cisco Systems (CSCO) is down about 1.2%. Hewlett-Packard (HPQ) is up about 0.6%. IBM (IBM) is down about 5.5%. Intel Corp (INTC) is down about 3%. Microsoft (MSFT) is up slightly. The Technology Select Sector SPDR (XLK) was trading at $30.33 at 3:30 PM on Wednesday, down 0.49% the day – up 19.17% year-to-date.

Telecommunication Services

Sprint Nextel (S) is upgraded to Buy from Hold at Argus given the likelihood the Softbank (SFTBY) deal is approved. Dow Components – AT&T (T) is up about 1%. Verizon (VZ) is down about 1.1%. The NASDAQ Telecommunications Index (IXTC) was trading at $195.91 at 3:30 PM on Wednesday, down 0.47% on the day – down 0.52% year-to-date.

Utilities

The Big Names – Dominion Resources (D) is up about 1.2%. Edison International (EIX) is up about 1.1%. First Energy (FE) is up about 0.8%. PG&E Corp (PCG) is up about 1.5%. Southern Company (SO) is up about 1.7%. The Utilities Select Sector SPDR (XLU) was trading at $37.26 at 3:30 PM on Wednesday, up 1.28% on the day – up 3.56% year-to-date.

STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KFT, KO, PG, WMT, JNJ, MRK, PFE, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, BP, HAL, CRK, MUR, STP, OSG, ARG, SHW, YARIY, PKG, SATC, TXT, AOS, SWK, CSX, ADT, NLSN, XYL, RECN, RHI, BMI, APOL, RYL, TOL, IMAX, DF, WWAV, DGE, PEP, STJ, ABT, DGX, ISRG, STEM, PPHM, ZLCS, CNC, BAC, V, JPM, RBS, MTB, TAYC, USB, NTRS, BK, BANF, BRO, C, ESS, MAA, EQR, AMT, PNC, MTG, MFGLQ, CATY, IBM, INTC, ASML, CYMI, CHKP, MLNX, PANL, ADTN, FTNT, CSCO, DBD, EXLS, TXN, CREE, FIRE, S, SFTBY

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
MMM 3M Company 178.49 2.61 1.48 2,650,644
CNC Centene Corporation 56.80 -0.14 -0.25 1,552,604
RHI Robert Half International Inc. 48.47 -0.39 -0.80 1,064,529
BANF BancFirst Corporation 91.00 0.00 0.00 88,660
ASML ASML Holding N.V. 102.66 -0.45 -0.44 362,496
MLNX Mellanox Technologies Ltd. 40.75 0.25 0.62 656,633
ADTN ADTRAN Inc. 22.40 0.05 0.22 303,536
SHW Sherwin-Williams Company (The) 270.92 -0.44 -0.16 701,471
PG Procter & Gamble Company (The) 84.37 0.87 1.04 8,004,453
GE General Electric Co 31.78 0.25 0.79 31,227,376
CVX Chevron Corporation 115.81 0.64 0.56 5,771,551
ABT Abbott Laboratories 39.20 0.52 1.34 7,802,493
SO Southern Company (The) 47.94 0.53 1.12 5,025,251
PCG Pacific Gas & Electric Co. 59.33 0.14 0.24 3,849,639
APOL Apollo Education Group Inc. 9.59 0.24 2.57 3,362,683
PKG Packaging Corporation of America 87.38 0.05 0.06 711,985
JNJ Johnson & Johnson 112.26 1.27 1.14 7,672,088
WMT Wal-Mart Stores Inc. 70.08 -0.26 -0.37 10,756,653
AA Alcoa Inc. 32.05 0.74 2.36 4,344,295
CSX CSX Corporation 37.27 0.05 0.13 5,703,936
INTC Intel Corporation 35.76 0.06 0.17 16,326,925
IBM International Business Machines Corp 166.52 1.16 0.70 3,146,930
PEP Pepsico Inc. 103.57 1.42 1.39 5,040,175
ADT ADT Corp n/a n/a n/a 0
D Dominion Resources Inc. 74.53 1.03 1.40 2,224,948
TRV The Travelers Companies Inc. 119.19 0.81 0.68 2,138,835
PNC PNC Financial Services Group Inc. (The) 115.02 0.20 0.17 2,565,802
XYL Xylem Inc. New 51.48 -0.41 -0.79 814,093
DF Dean Foods Company 20.90 0.80 3.98 1,254,876
C Citigroup Inc. 60.04 -0.11 -0.18 22,804,941
S Sprint Corporation 8.48 -0.26 -2.97 19,560,796
NLSN Nielsen N.V. 42.72 0.73 1.74 3,558,841
CVCY Central Valley Community Bancorp 19.61 1.44 7.93 46,513
EIX Edison International 69.97 0.53 0.76 3,307,626
RECN Resources Connection Inc. 18.15 0.40 2.25 184,386
JPM JP Morgan Chase 85.49 0.37 0.43 14,567,202
ESS Essex Property Trust Inc. 218.75 -0.47 -0.21 295,432
AXP American Express Company 74.77 -0.14 -0.19 2,566,883
UTX United Technologies Corporation 109.79 1.36 1.25 3,429,005
TOL Toll Brothers Inc. 32.17 -0.81 -2.46 3,320,091
TXN Texas Instruments Incorporated 71.99 -0.14 -0.19 6,101,234
MUR Murphy Oil Corporation 32.98 -0.18 -0.54 1,480,574
V Visa Inc. 79.14 -0.14 -0.18 10,728,310
CATY Cathay General Bancorp 38.08 -0.01 -0.03 426,280
SWK Stanley Works 120.50 -0.45 -0.37 609,041
CSCO Cisco Systems Inc. 30.06 0.11 0.37 21,361,984
DIS Walt Disney Company (The) 104.86 1.48 1.43 12,173,909
EQR Equity Residential of Beneficial Interest 62.87 -0.03 -0.05 2,807,326
WWAV Whitewave Foods Company (The) 55.25 -0.08 -0.14 1,883,032
VZ Verizon Communications Inc. 51.49 0.36 0.70 10,101,462
BMI Badger Meter Inc. 38.50 0.25 0.65 150,313
BAC Bank of America Corporation 23.09 0.14 0.61 130,590,406
RBS Royal Bank of Scotland Group Plc New (The) ADS 5.49 -0.11 -1.96 1,604,001
DBD Diebold Incorporated 24.80 0.20 0.81 1,202,614
USB U.S. Bancorp 52.04 0.14 0.27 8,612,883
MCD McDonald\'s Corporation 121.26 0.81 0.67 2,623,713
BK Bank of New York Mellon Corporation (The) 48.62 -0.55 -1.12 6,458,336
FTNT Fortinet Inc. 30.69 0.13 0.43 1,359,798
DD E.I. du Pont de Nemours and Co. 74.85 0.17 0.23 2,358,921
DGX Quest Diagnostics Incorporated 91.14 1.46 1.63 872,381
STJ St. Jude Medical Inc. 80.30 0.40 0.50 1,859,684
MAA Mid-America Apartment Communities Inc. 93.23 1.10 1.19 1,371,179
PPHM Peregrine Pharmaceuticals Inc. 0.40 0.08 23.94 11,157,314
CRK Comstock Resources Inc. 11.05 0.01 0.09 476,880
HD Home Depot Inc. (The) 133.39 0.86 0.65 5,174,577
XOM Exxon Mobil Corporation 89.00 0.68 0.77 8,021,683
PFE Pfizer Inc. 31.70 0.76 2.46 29,350,843
STEM StemCells Inc. n/a n/a n/a n/a
HPQ HP Inc. 15.78 -0.38 -2.35 9,865,108
BA Boeing Company (The) 156.49 1.10 0.71 2,707,872
EXLS ExlService Holdings Inc. 49.77 -0.09 -0.18 244,536
MRK Merck & Company Inc. (new) 61.23 1.11 1.85 10,516,352
NTRS Northern Trust Corporation 89.37 -0.40 -0.45 1,834,004
AOS A.O. Smith Corporation 50.87 0.15 0.30 811,266
BRO Brown & Inc. 44.42 0.24 0.54 793,532
AMT American Tower Corporation (REIT) 102.91 0.52 0.51 3,303,978
BP BP p.l.c. 36.01 -0.18 -0.50 4,633,089
FE FirstEnergy Corporation 30.73 0.20 0.66 3,913,199
CHKP Check Point Software Technologies Ltd. 85.22 0.63 0.74 844,907
KO Coca-Cola Company (The) 42.00 1.02 2.49 28,125,775
T AT&T Inc. 40.38 -0.03 -0.07 17,105,180
CAT Caterpillar Inc. 95.53 -0.74 -0.77 6,550,220
HAL Halliburton Company 54.20 -0.23 -0.42 6,003,054
MTB M&T Bank Corporation 154.17 0.67 0.44 1,079,912
CREE Cree Inc. 26.86 0.01 0.04 819,667
ISRG Intuitive Surgical Inc. 625.21 5.75 0.93 289,802
ARG Airgas Inc. n/a n/a n/a 0
MTG MGIC Investment Corporation 10.17 0.38 3.88 12,648,021
MSFT Microsoft Corporation 61.97 0.96 1.57 27,349,356
PANL Pangaea Logistics Solutions Ltd. 3.16 -0.03 -0.94 518
TXT Textron Inc. 48.39 0.47 0.98 1,682,306

Comments

Emerging Growth

AfterMaster Inc

Studio One Media Inc is a diversified media and technology company. It is engaged in the development and commercialization of proprietary, edge audio and video technologies for professional and consumer…

Private Markets

BioSculpture Technology, Inc.

BioSculpture Technology, Inc. (“BST”) is a commercial-stage medical device manufacturer of liposuction surgical instruments for surgeons. It offers the FDA-cleared Twin Cannula Assisted Liposuction ("TCAL") Airbrush Liposculptor II® controllers, Airbrush®…

Ozobot by Evollve Inc

Ozobot is a world leader in compact super intelligent robots that entertain and educate through fun interactive gaming.