Equities Sector Coverage: Stocks Pare Losses with Late Rally

Sector Recap |

Wall StreetFinal Real GDP came in at 3.0% for the 4th quarter if 2011. There were benchmark revisions to Initial Jobless Claims with the recent reading at 359,000 the lowest since April 2008. What this means is that claims have not been below the 350,000 recessionary threshold since the economic crisis began. The Dow Jones Industrial Average traded down to 13,032.67 then rallied to 13127.61 going into the final half hour of trading, but still well below its 52-week high set at 13,289.08 on March 16th. The NASDAQ’s traded down from 3098.29 to 3069.81 then rebounded back towards the day’s high going into the final half hour of trading. The NASDAQ stayed below its 52-week high at 3134.17 set on Tuesday.

Asian stocks declined again on Thursday. The Nikkei 225 ended their session at 10,115 – down 0.67% on the day. The Hang Seng ended their session at 20,609 – down 1.32% on the day. European stocks were also lower on Thursday. The FTSE 100 ended their session at 5,742 – down 1.15% on the day. The DAX ended their session at 6,875 – down 1.77% on the day. The CAC 40 ended their session at 3,381 – down 1.43% on the day. The yield on the 10-Year US Treasury declined from 2.214 percent to 2.148 versus its 200-day simple moving average at 2.188.

Gold traded between $1654.1 the Troy ounce and $1664.5 early, then declined to $1644.3, staying below its 200-day simple moving average at $1684.8. Crude oil declined from $105.70 per barrel to $102.13, below the 50-day simple moving average at $103.46. The euro versus the dollar traded down from 1.3344 to 1.3255 staying above the 50-day simple moving average at 1.3198.

Energy

HollyFrontier (HFC) is cut to Neutral from Buy at Credit Suisse.
Energy Select Sector SPDR (XLE) was trading at $71.17 at 4:00 PM on Thursday, unchanged on the day – up 2.95% year-to-date. The February 2012 change was +5.93%. The 2011 change was -1.29%.
Big Movers: (TECO) +11.5%.
Heavily Traded: (WFT) -1.6%, (ANR) +2%, (CHK) -0.7%.

Materials

Texas Industries (TXI) missed estimates by 6 cents, while beating revenue by $2M. Mosaic (MOS) reported FQ3 EPS of $0.64 (versus $0.75 estimate), while missing revenue by $354M. Potash (POT) is picked up with an Outperform rating and $60 price target at Raymond James. ArcelorMittal (MT) is raised to Neutral from Underperform by BNP Paribas. ThyssenKrupp (TYEKF) is lowered to Underperform from Neutral at BNP Paribas. Buckeye Technologies (BKI) is taken to Sector Perform from Outperform at RBC Capital. Mechel Steel (MTL) is moved to Neutral from Buy at UBS.

The Materials Select Sector SPDR (XLB) was trading at $36.84 at 4:00 PM on Thursday, up 0.14% on the day – up 9.97% year-to-date. The February 2012 change was -0.56%. The 2011 change was -12.78%.

Industrials

Shaw Group (SHAW) reported FQ2 EPS of $0.78 (versus consensus of $0.46), while beating revenue by $50M. UniFirst’s (UNF) FQ2 results beat estimates across the board this morning. The company again raised its full-year earnings estimate, now expecting to earn $4.10 - $4.12 per share on revenue of $1.24B - $1.25B. Stanley Black & Decker (SWK) is initiated with a Market Perform at Wells Fargo. Pentair (PNR) is boosted to Outperform from Market Perform at William Blair. Tyco International (TYC) is taken to Overweight from Equal Weight by Barclays. Nexxus Lighting (NEXS) is now Neutral from Outperform with Wedbush. Wesco Aircraft (WAIR) is lowered to Sector Perform from Outperform at RBC Capital.

The Industrial Select Sector SPDR (XLI) was trading at $37.25 at 4:00 PM on Thursday, up slightly on the day – up 10.37% year-to-date. The February 2012 change was +2.79%. The 2011 change was -3.21%.
Big Movers: (SWSH) -12%.

Consumer Discretionary

Fossil (FOSL), a provider of fashion accessories, will be added to the S&P 500 to replace Medco Health (MHS) after it's acquired by Express Scripts (ESRX), provided regulators don't get in the way. Movado (MOV) reported adjusted FQ4 EPS of $0.24 (versus $0.10 estimates) and a $1.25 loss in the year-ago period, with revenues +21% Y/Y to $122.4M. The company expects in-line FY 2013 EPS of $1.10 a share. Best Buy (BBY) beat estimates by 31 cents, while missing revenue by $620M. Deer Consumer Products (DEER) beat estimates by 3 cents and revenue by $1.7M. The company also reaffirmed its guidance for FY12. ThinkEquity begins Buys on Amazon.com (AMZN), eBay Inc (EBAY), Google (GOOG), and Zillow (Z). It has a Hold on Yahoo (YHOO). Ross Stores (ROST) is resumed at Outperform at Brokerage William Blair. Ford Motor (F) is added to the Top Picks Live list at Citigroup, which also boosts Delphi Automotive (DLPH) to Buy from Neutral. Nordstrom (JWN) gets upgraded to Buy from Neutral at Goldman Sachs. True Religion (TRLG) is lifted to Buy from Neutral at Lazard. Magna International (MGA) gets slashed to Sell from Neutral at Citigroup.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $44.89 at 4:00 PM on Thursday, up slightly on the day – up 15.04% year-to-date. The February 2012 change was +10.09%. The 2011 change was +4.30%.
Big Movers: (DEER) +44%, (MOV) +9%.

Consumer Staples

Shares in organic foods maker Annie's (BNNY) soared 89% on their debut yesterday, showing that frenzied enthusiasm for IPOs exists outside the Internet sector. Delhaize Group (DEG) is raised to Neutral from Sell at Citigroup. Whole Foods (WFM) is lowered to Neutral from Buy at Goldman with a new target of $88.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.875 at 4:00 PM on Thursday, down slightly on the day – up 4.26% year-to-date. The February 2012 change was +3.75%. The 2011 change was +10.85%.
Heavily Traded: (KO) +1.1%, (WAG) -2.5%, (GMCR) -2.1%.

Health Care

Roche (RHHBY) has increased its hostile offer for Illumina (ILMN) by 15% to $51 a share, or to around $6.7B, hoping to close a deal more quickly with shareholders that have thus far been unimpressed by Roche's first offer. Fossil (FOSL), a provider of fashion accessories, will be added to the S&P 500 to replace Medco Health (MHS) after it's acquired by Express Scripts (ESRX), provided regulators don't get in the way. Allscripts-Misys Healthcare (MDRX) is moved to Hold from Buy at Auriga.
The Health Care Select Sector SPDR (XLV) was trading at $37.33 at 4:00 PM on Thursday, up 0.21% on the day – up 7.61% year-to-date. The February 2012 change was +1.06%. The 2011 change was +10.32%.
Big Movers: (AH) -17.5%, (VVUS) +15.5%.

Financials

MF Global (MFGLQ) executives yesterday frustrated Congressmen in a hearing about the firm's collapse, with key figure Edith O'Brien pleading the fifth, as expected, and then three others pleading ignorance. Hawker Beechcraft, the aircraft manufacturer bought by Goldman Sachs' (GS) P-E arm and Onex Corp (ONEXF) for $3.3B in 2007, is preparing to file for bankruptcy protection in the next several weeks, Reuters reports. Apollo Investment (AINV) gets moved to Outperform from Market Perform with Wells Fargo. Wells Fargo (WFC) is boosted to Buy from Neutral at Nomura. American Express (AXP) is moved to Market Perform from Outperform with Wells Fargo with a new objective of $60-$64. U.S. Bancorp (USB) and PNC Financial (PNC) are each now Neutral from Buy at Nomura. Janus Capital (JNS) gets downgraded to Hold from Buy at Jefferies. Deutsche Boerse (DBOEY) is downgraded to Reduce from Neutral at WestLB.
The Financial Select Sector SPDR (XLF) was trading at $15.71 at 4:00 PM on Thursday, down 1.01% on the day – up 20.85% year-to-date (the strongest performing sector). The February 2012 change was +5.02%. The 2011 change was -18.50%; the weakest performing sector for the year.

Information Technology

Facebook (FB) intends to hold its IPO in May, The Wall Street Journal reports, with the company planning to release another amended S-1 filing prior to its offering after filing one on Tuesday. Research In Motion (RIMM) is due today to report its first quarterly earnings results since the appointment of Thorsten Heins as CEO two months ago, with analysts forecasting that EPS slumped 55% to $0.81 and that revenue dropped 19.1% to $4.53B. Red Hat (RHT) beat estimates by 2 cents and revenue by $6M. The company guides for FQ1 revenue of $307M-$311M and EPS of $0.25-$0.27 (compared with a consensus of $306.2M and $0.27). The company is also guiding for FY13 revenue of $1.34B-$1.36B and EPS of $1.16-$1.20 (above a consensus of $1.3B and $1.15). Paychex (PAYX) reported FQ3 EPS of $0.37 (in-line) and revenue of $570M (in-line). ThinkEquity begins Buys on Amazon.com (AMZN), eBay Inc (EBAY), Google (GOOG), and Zillow (Z). It has a Hold on Yahoo (YHOO). F5 Networks (FFIV) is a Hold at Capstone Investments. LogMeIn (LOGM) is a new Buy and $48 price objective at Needham. Informatica (INFA) is a new Neutral and $48 target price at Mizuho. Alliance Data Systems (ADS) is upgraded to Outperform from Market Perform at Keefe Bruyette. Higher One (ONE) is now Neutral from Buy at Goldman.
The Technology Select Sector SPDR (XLK) was trading at $30.25 at 4:00 PM on Thursday, down 0.20% on the day – up 18.86% year-to-date. The February 2012 change was +7.08%. The 2011 change was +1.03%.
Big Movers: (SABA) -19.25%, (RHT) +18.5%, (STRI) +12.25%, (KITD) +11.25%.

Telecommunication Services

AT&T Inc (T) and Verizon (VZ) are each now Neutral from Outperform at Robert W. Baird. Vivendi (VIVEF) is taken to Neutral from Overweight at HSBC Securities.
The NASDAQ Telecommunications Index (IXTC) was trading at $220.30 at 4:00 PM on Thursday, up 0.14% on the day – up 11.87% year-to-date. The February 2012 change was +1.63%. The 2011 change was -12.62%.
Heavily Traded: (S) +3.9%, (T) -0.7%, (FTR) +1.7%, (VZ) -0.7%, (CLWR) -3%.

Utilities

TEPCO (TKECF) faces bankruptcy unless the government approves a ¥1T ($12.2B) injection. Suez Environnement (SZEVY) is now Outperform from Neutral at Credit Suisse.

The Utilities Select Sector SPDR (XLU) was trading at $34.855 at 3:30 PM on Thursday, up 0.39% on the day – down 3.13% year-to-date (the weakest performing sector / the only negative sector). The February 2012 change was +0.61%. The 2011 change was +14.81%; the strongest performing sector for the year.
Big Movers: (DYN) -17%.
Heavily Traded: (GEN) -2.6%, (DUK) -0.3%, (EXC) +0.6%, (AES) +0.3%.

STOCKS: HFC, TECO, WFT, ANR, CHK, TXI, MOS, POT, MT, TYEKF, BKI, MTL, SHAW, UNF, SWK, PNR, TYC, NEXS, WAIR, SWSH, FOSL, MHS, ESRX, MOV, BBY, DEER, AMZN, EBAY, GOOG, Z, YHOO, ROST, F, DLPH, JWN, TRLG, MGA, BNNY, DEG, WFM, KO, WAG, GMCR, RHHBY, ILMN, FOSL, MHS, ESRX, MDRX, AH, VVUS, MFGLQ, GS, ONEXF, AINV, WFC, AXP, USB, PNC, JNS, DBOEY, FB, RIMM, RHT, PAYX, FFIV, LOGM, INFA, ADS, ONE, SABA, STRI, KITD, T, VZ, VIVEF, S, FTR, CLWR, TKECF, SZEVY, DYN, GEN, DUK, EXC, AES

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
RHT Red Hat Inc. 76.08 0.89 1.18 2,033,210
GEN Genesis Healthcare Inc. 3.56 0.00 0.00 76,462
FTR Frontier Communications Corporation 3.48 -0.03 -0.85 14,273,991
MOS Mosaic Company (The) 28.82 -0.27 -0.93 3,778,594
MOV Movado Group Inc. 28.25 -0.45 -1.57 79,633
FB Facebook Inc. 115.40 0.30 0.26 25,070,364
FOSL Fossil Group Inc. 32.69 -0.41 -1.24 697,471
DEG Delhaize Group n/a n/a n/a 0
PNC PNC Financial Services Group Inc. (The) 111.08 -1.52 -1.35 2,449,353
CPHR Cipher Pharmaceuticals Inc. 2.84 -0.14 -4.70 3,100
MDRX Allscripts Healthcare Solutions Inc. 10.47 -0.26 -2.42 2,966,370
EBAY eBay Inc. 28.42 1.03 3.76 14,437,530
LOGM LogMein Inc. 96.95 0.10 0.10 373,526
JWN Nordstrom Inc. 56.54 0.50 0.89 2,088,123
S Sprint Corporation 7.98 0.04 0.50 8,775,180
POT Potash Corporation of Saskatchewan Inc. 18.07 -0.13 -0.71 4,040,665
AXP American Express Company 71.86 -0.67 -0.92 2,959,077
AMZN Amazon.com Inc. 740.34 -3.31 -0.45 3,561,307
SWK Stanley Works 118.23 -0.59 -0.50 888,643
ESRX Express Scripts Holding Company 75.66 -0.17 -0.22 2,718,891
ONE Higher One Holdings Inc. n/a n/a n/a 0
MTL Mechel PAO American Depositary Shares (Each rep. 1 5.40 -0.27 -4.76 492,386
AES The AES Corporation 11.18 0.15 1.36 5,521,035
PNR Pentair plc. 58.78 -0.03 -0.05 1,346,613
GS The Goldman Sachs Group Inc. 223.36 -3.27 -1.44 5,297,420
VZ Verizon Communications Inc. 49.81 -0.06 -0.12 10,650,716
UNF Unifirst Corporation 141.50 0.05 0.04 86,629
GMCR Keurig Green Mountain Inc n/a n/a n/a 0
DLPH Delphi Automotive plc 63.72 -1.91 -2.91 2,333,075
ROST Ross Stores Inc. 67.36 -0.02 -0.03 2,248,663
USB U.S. Bancorp 50.00 -0.39 -0.77 5,864,800
HFC HollyFrontier Corporation 29.23 0.13 0.45 2,660,845
GOOG Alphabet Inc. 750.50 2.58 0.34 1,452,484
ILMN Illumina Inc. 127.90 0.18 0.14 1,594,707
WFT Weatherford International plc (Ireland) 5.11 0.01 0.20 18,904,931
VVUS VIVUS Inc. 1.40 -0.01 -0.71 650,844
JNS Janus Capital Group Inc 13.54 -0.25 -1.81 974,538
MGA Magna International Inc. 42.08 -0.28 -0.66 1,661,054
AINV Apollo Investment Corporation 5.97 -0.07 -1.16 1,688,899
BBY Best Buy Co. Inc. 45.67 0.22 0.48 3,815,484
TYC Tyco International plc (Ireland) n/a n/a n/a n/a
WAIR Wesco Aircraft Holdings Inc. 14.95 -0.05 -0.33 187,074
F Ford Motor Company 12.24 -0.19 -1.53 38,689,842
WFC Wells Fargo & Company 53.58 -0.76 -1.40 21,894,686
MT ArcelorMittal 7.82 0.15 1.96 18,061,802
YHOO Yahoo! Inc. 40.07 0.44 1.11 8,588,544
Z Zillow Group Inc. 33.87 0.02 0.06 774,759
WFM Whole Foods Market Inc. 30.76 -0.15 -0.49 3,067,914
KO Coca-Cola Company (The) 40.36 0.19 0.47 11,176,301
EXC Exelon Corporation 33.01 0.84 2.61 7,811,789
T AT&T Inc. 38.61 -0.27 -0.69 16,102,161
DUK Duke Energy Corporation (Holding Company) 73.42 0.67 0.92 3,754,148
ADS Alliance Data Systems Corporation 218.71 -9.47 -4.15 957,391
CHK Chesapeake Energy Corporation 7.23 0.18 2.55 51,162,112
FFIV F5 Networks Inc. 138.99 -0.37 -0.27 595,363
PAYX Paychex Inc. 58.34 -0.34 -0.58 1,944,740
SWSH Swisher Hygiene Inc n/a n/a n/a 0

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