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.


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.


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.


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.


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.


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.


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


Symbol Name Price Change % Volume
MMM 3M Company 221.32 2.08 0.95 1,647,816 Trade
CNC Centene Corporation 96.50 1.80 1.90 1,470,823 Trade
RHI Robert Half International Inc. 51.65 0.73 1.43 1,338,806 Trade
BANF BancFirst Corporation 56.40 -2.95 -4.97 72,109 Trade
ASML ASML Holding N.V. 175.22 -0.80 -0.45 1,091,296 Trade
MLNX Mellanox Technologies Ltd. 43.65 0.35 0.81 347,254 Trade
ADTN ADTRAN Inc. 21.95 0.10 0.46 661,801 Trade
SHW Sherwin-Williams Company (The) 389.70 2.13 0.55 529,215 Trade
PG Procter & Gamble Company (The) 88.25 -3.34 -3.65 19,997,800 Trade
GE General Electric Co 23.83 0.25 1.06 192,404,370 Trade
CVX Chevron Corporation 118.64 0.44 0.37 4,924,257 Trade
ABT Abbott Laboratories 56.32 0.32 0.57 5,528,681 Trade
SO Southern Company (The) 52.21 0.21 0.40 4,122,806 Trade
PCG Pacific Gas & Electric Co. 57.86 0.86 1.51 7,758,334 Trade
APOL Apollo Education Group Inc. n/a n/a n/a 0 Trade
PKG Packaging Corporation of America 118.36 1.76 1.51 596,410 Trade
JNJ Johnson & Johnson 142.40 0.36 0.25 5,634,523 Trade
WMT Wal-Mart Stores Inc. 87.44 1.04 1.20 7,617,753 Trade
AA Alcoa Inc. 47.93 1.39 2.99 4,209,075 Trade
CSX CSX Corporation 54.52 0.46 0.85 6,114,424 Trade
INTC Intel Corporation 40.43 0.34 0.85 18,335,672 Trade
IBM International Business Machines Corp 162.07 1.17 0.73 7,868,803 Trade
PEP Pepsico Inc. 111.61 -1.06 -0.94 3,772,276 Trade
ADT ADT Corp n/a n/a n/a 0 Trade
D Dominion Resources Inc. 80.00 0.05 0.06 2,198,168 Trade
TRV The Travelers Companies Inc. 133.32 0.15 0.11 1,838,805 Trade
PNC PNC Financial Services Group Inc. (The) 136.95 1.65 1.22 2,081,042 Trade
XYL Xylem Inc. New 64.23 0.34 0.53 815,460 Trade
DF Dean Foods Company 10.45 0.07 0.67 1,002,805 Trade
C Citigroup Inc. 73.53 0.65 0.89 15,634,587 Trade
S Sprint Corporation 6.93 -0.14 -1.98 15,423,862 Trade
NLSN Nielsen N.V. 41.76 0.45 1.09 3,359,289 Trade
CVCY Central Valley Community Bancorp 21.26 -0.02 -0.09 31,542 Trade
EIX Edison International 79.60 0.13 0.16 1,795,688 Trade
RECN Resources Connection Inc. 15.25 0.25 1.67 129,607 Trade
JPM JP Morgan Chase 99.51 1.40 1.43 15,326,608 Trade
ESS Essex Property Trust Inc. 259.34 -0.60 -0.23 206,776 Trade
AXP American Express Company 92.09 0.19 0.21 4,442,193 Trade
UTX United Technologies Corporation 120.93 1.44 1.21 2,514,652 Trade
TOL Toll Brothers Inc. 44.21 0.25 0.57 1,345,427 Trade
TXN Texas Instruments Incorporated 95.18 1.73 1.85 5,272,369 Trade
MUR Murphy Oil Corporation 25.73 -0.03 -0.12 1,637,840 Trade
V Visa Inc. 107.55 0.53 0.50 7,848,922 Trade
CATY Cathay General Bancorp 41.05 0.30 0.74 391,246 Trade
SWK Stanley Works 160.12 2.96 1.88 1,071,286 Trade
CSCO Cisco Systems Inc. 34.25 0.50 1.48 24,361,352 Trade
DIS Walt Disney Company (The) 99.40 0.39 0.39 5,938,716 Trade
EQR Equity Residential of Beneficial Interest 66.14 0.08 0.12 1,067,661 Trade
WWAV Whitewave Foods Company (The) n/a n/a n/a 0 Trade
VZ Verizon Communications Inc. 49.53 0.32 0.65 16,259,580 Trade
BMI Badger Meter Inc. 43.80 0.80 1.86 163,405 Trade
BAC Bank of America Corporation 27.17 0.59 2.22 83,764,655 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 7.50 0.05 0.67 1,170,686 Trade
DBD Diebold Incorporated 21.30 -0.75 -3.40 2,354,154 Trade
USB U.S. Bancorp 54.09 0.50 0.93 7,021,552 Trade
MCD McDonald\'s Corporation 166.30 -0.20 -0.12 5,577,713 Trade
BK Bank of New York Mellon Corporation (The) 53.12 0.27 0.51 6,977,814 Trade
FTNT Fortinet Inc. 40.32 0.10 0.25 1,146,948 Trade
DD E.I. du Pont de Nemours and Co. 83.93 0.00 0.00 0 Trade
DGX Quest Diagnostics Incorporated 95.08 1.85 1.98 1,807,088 Trade
STJ St. Jude Medical Inc. n/a n/a n/a 0 Trade
MAA Mid-America Apartment Communities Inc. 104.81 -0.28 -0.27 749,938 Trade
PPHM Peregrine Pharmaceuticals Inc. 4.08 -0.05 -1.21 108,722 Trade
CRK Comstock Resources Inc. 4.38 -0.02 -0.45 167,989 Trade
HD Home Depot Inc. (The) 163.43 0.19 0.12 4,166,481 Trade
XOM Exxon Mobil Corporation 83.11 0.37 0.45 9,574,086 Trade
PFE Pfizer Inc. 36.42 0.18 0.50 17,502,245 Trade
STEM StemCells Inc. n/a n/a n/a n/a
HPQ HP Inc. 22.02 0.06 0.27 8,621,009 Trade
BA Boeing Company (The) 264.75 5.71 2.20 3,955,922 Trade
EXLS ExlService Holdings Inc. 61.20 0.30 0.49 156,799 Trade
MRK Merck & Company Inc. (new) 63.88 0.13 0.20 10,304,201 Trade
NTRS Northern Trust Corporation 95.27 0.29 0.31 1,579,078 Trade
AOS A.O. Smith Corporation 61.59 0.79 1.30 674,247 Trade
BRO Brown & Inc. 49.32 0.32 0.65 758,260 Trade
AMT American Tower Corporation (REIT) 139.07 0.68 0.49 1,861,514 Trade
BP BP p.l.c. 38.75 0.00 0.00 4,166,344 Trade
FE FirstEnergy Corporation 32.13 -0.17 -0.53 3,054,639 Trade
CHKP Check Point Software Technologies Ltd. 118.50 0.60 0.51 773,246 Trade
KO Coca-Cola Company (The) 46.38 -0.21 -0.45 9,646,790 Trade
T AT&T Inc. 35.54 -0.15 -0.42 37,835,452 Trade
CAT Caterpillar Inc. 131.36 0.59 0.45 3,086,775 Trade
HAL Halliburton Company 43.33 -0.09 -0.21 10,522,555 Trade
MTB M&T Bank Corporation 165.20 2.94 1.81 994,624 Trade
CREE Cree Inc. 33.85 -0.33 -0.97 2,701,670 Trade
ISRG Intuitive Surgical Inc. 369.58 12.12 3.39 2,021,021 Trade
ARG Airgas Inc. n/a n/a n/a 0 Trade
MTG MGIC Investment Corporation 13.77 -0.05 -0.36 2,203,966 Trade
MSFT Microsoft Corporation 78.81 0.90 1.16 22,866,426 Trade
PANL Pangaea Logistics Solutions Ltd. 2.35 0.00 0.00 11,496 Trade
TXT Textron Inc. 53.74 0.64 1.21 3,015,183 Trade


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