Equities Sector Coverage: Stocks Rally After Extended Losing Streak

Sector Recap |

Wall Street Bulls EyeThe Dow Jones Industrial Average traded down to 12,367.72 then approached 12,500 going into the final half hour of trading. The NASDAQ traded down to 2774.76 then approached 2850 going into the final half hour of trading. Facebook (FB) shares dropped to $33 per share, 13.15% below the $38 IPO price then rebounded above $34.

Asian stocks were mixed on Monday. The Nikkei 225 ended their session at 8,634 – up 0.26% on the day. The Hang Seng ended their session at 18,922 – down 0.16% on the day. European exchanges traded higher on Monday. The FTSE 100 ended their session at 5,304 – up 0.70% on the day. The DAX ended their session at 6,311 – up 0.95% on the day. The CAC 40 ended their session at 3,027 – up 0.64% on the day. The yield on the 10-Year US Treasury traded up from 1.721 percent to 1.771, well below its 50-day and 200-day simple moving averages at 2.031 and 2.018. The daily chart shows that the decline in yields is overdone.

Gold traded up to $1599.0 the Troy ounce as a short term oversold condition on its daily chart is alleviated. The “Death Cross” 50-day and 200-day simple moving averages are at $1639.3 and $1696.3. The May 16th year to date low is $1526.7. Crude oil traded down to $90.84 per barrel then up to $92.78 as oil is oversold on its daily chart. Oil remains below its 200-day simple moving average at $96.26. The euro versus the dollar traded between 1.2752 and 1.2811 with an oversold daily chart well below its 50-day simple moving average at 1.3110.

Energy

The Seaway pipeline started to transport crude oil from Cushing Oklahoma to refineries in Huston following the completion of a reversal project. The new direction of the pipeline is owned by Enterprise (DPD) and Enbridge (ENB) should ease the glut of crude at Cushing and hence reduce the spread between WTI and Brent prices. Fitch downgraded Chesapeake Energy (CHK) debt rating to BB- from B, outlook is negative. Chesapeake has been plagued by liquidity issues in recent weeks. El Paso (EP) has filed for an export license to export liquefied natural gas overseas, for its existing Elba Island import terminal in Georgia. Alpha Natural Resources (ANR) has been upgraded to Buy from Hold at Brean Murray. Dow components – Chevron (CVX) up 0.55%, Exxon Mobil (XOM) up 0.37%.

Energy Select Sector SPDR (XLE) was trading at $65.39 at 3:30 PM on Monday, up 2.27% on the day – down 5.41% year-to-date.

Materials

New Energy Corp (DQ) missed Q1 EPS estimates by twelve cents with a beat on the revenue line. Gold shares rebounded with Barrick Gold (ABX) up 1.91% and Newmont Mining (NEM) up 3.49%. Dow components – Alcoa (AA) up 1.30%, DuPont (DD) up 1.10%.

The Materials Select Sector SPDR (XLB) was trading at $33.73 at 3:30 PM on Monday, up 2.93% on the day – up 0.69% year-to-date.

Industrials

Lockheed Martin (LMT) has reached an agreement with the IBEW and OPEIU unions, which represent 500 workers at its Fort Worth plant. The strike by the larger IAM union, which represents 3,300 continues in its 5th week. Lockheed says that it continues to deliver aircraft. Boeing (BA) has been upgraded to Buy from Hold with an $85 price target at Argus.Dow components – Boeing Co (BA) up 3.09%, Caterpillar (CAT) up 3.03%, General Electric (GE) up 0.23%, 3M Company (MMM) down 0.87%, United Technologies (UTX) up 0.54%.

The Industrial Select Sector SPDR (XLI) was trading at $34.90 at 3:30 PM on Monday, up 2.29%% on the day – up 3.41% year-to-date.

Consumer Discretionary

American Eagle Outfitters (AEO) will exit its 77kids children’s apparel segment after posting a $24 million fiscal year loss. AEO will also be considering the sale of other assets. American Eagle Outfitters (AEO) has been upgraded to Buy from Hold at Brean Murray. Costco (COST) is in a partnership with Aetna providing health insurance services to its customers. The retailer expects increased revenue as the sale of health plans expands across the country with major medical benefits and dental coverage. Lowe's (LOW) beat FQ1 estimates as net profit rose 14%, and despite plans to open 10 stores in FY 2012, the firm cut its EPS guidance for the year and indicated a cautious view of the housing market and the economy. Dow Components – Disney (DIS) up 0.27%, Home Depot up 0.87%, McDonalds (MCD) up 0.85%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $42.74 at 3:30 PM on Monday, up 1.74% on the day – up 9.53% year-to-date.

Consumer Staples

American Eagle Outfitters (AEO) will exit its 77kids children’s apparel segment after posting a $24 million fiscal year loss. AEO will also be considering the sale of other assets. American Eagle Outfitters (AEO) has been upgraded to Buy from Hold at Brean Murray. Costco (COST) is in a partnership with Aetna providing health insurance services to its customers. The retailer expects increased revenue as the sale of health plans expands across the country with major medical benefits and dental coverage. Krispy Kreme Doughnuts (KKD) reported that Q1 same-store sales rose +2.1% year over year. Increased customer traffic and price increases contributed to higher revenue, which was partially offset by promotional pricing which reduced the average guest check. Campbell Soup (CPB) beat FQ3 EPS estimates with in-line revenue. Safeway (SWY) has been upgraded to Buy from Neutral at Citigroup. Avon Products (AVP) has been downgraded to Sell from Neutral at UBS. Best Buy (BBY) has been downgraded to Hold from Buy at BB&T Capital. Dow components – Kraft (KFT) down 0.18%, Coca Cola (KO) up 0.42%, Procter & Gamble (PG) down 0.58%, Wal-Mart (WMT) up 0.66%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $33.63 at 3:30 PM on Monday, up 0.33% on the day – up 3.51% year-to-date.

Health Care

Costco (COST) is in a partnership with Aetna (AET) providing health insurance services to its customers. The retailer expects increased revenue as the sale of health plans expands across the country with major medical benefits and dental coverage. Pfizer (PFE) has recalled more than 650,000 bottles of Advil pain relief medicine because the pills could emit a strong odor. Perrigo (PRGO) received FDA final approval for its new drug application for Lansoprazole capsules - the treatment of frequent heartburn. DaVita (DVA) will expand its focus beyond offering just kidney care after agreeing to acquire HealthCare Partners, the country's largest provider of medical groups and physician networks, for $4.42 billion in cash and stock. Myriad Genetics (MYGN) has been upgraded to Outperform from Market Perform at Leerink Swann. Dow Components – Johnson & Johnson (JNJ) up 0.20%, Merck (MRK) down 0.40%, Pfizer (PFE) down 0.11%.

The Health Care Select Sector SPDR (XLV) was trading at $36.41 at 3:30 PM on Monday, up 0.94% on the day – up 4.96% year-to-date.

Financial

The Wall Street Journal reports that JPMorgan's (JPM) loss from its derivative trades in London could reach $5 billion if not higher. It is difficult to unwind positions given the increased worries about Greece and the EU economy. JP Morgan is the biggest buyer of European mortgage-backed bonds, and investors are worried that the bank is planning a pull-back following its CIO disaster. JP Morgan Chase (JPM) was added to Top Picks Live list at Citigroup. Costco (COST) is in a partnership with Aetna (AET) providing health insurance services to its customers. The retailer expects increased revenue as the sale of health plans expands across the country with major medical benefits and dental coverage. Barclays (BCS) will sell its $6.1 billion stake in BlackRock (BLK) through an offering and a related buyback by the US asset manager of up to $1 billion in shares. United Bankshares (UBSI): The stock is now Buy from Neutral at Janney Montgomery Scott. JMP Securities cuts Goldman Sachs (GS) and Morgan Stanley (MS) to Underperform from Outperform, and takes Bank of America (BAC), JP Morgan (JPM), and Citigroup (C) to Underperform from Market Perform. Dow Components – American Express (AXP) up 1.52%, Bank of America (BAC) down 1.00%, JP Morgan Chase (JPM) down 2.18%, Travelers (TRV) up 0.60%.

The Financial Select Sector SPDR (XLF) was trading at $13.91 at 3:30 PM on Monday, up 1.02% on the day – up 7.00% year-to-date.

Information Technology

Optical networking equipment revenue fell 23% sequentially Q1 according to Infonetics, which is a sharp decline after accounting for seasonality. The patent dispute between Samsung (SSNLF.PK) and Apple (AAPL) continues with one option being cross-licensing. Google (GOOG) has received clearance in China to purchase Motorola Mobility (MMI) for $12 billion, and the deal will close early next week. Facebook (FB) will face a $15 billion class action lawsuit on the complaint that the company improperly tracked Internet usage by its members even when they were logged out. This suit combines 21 separate cases file across the county over the past year. After months of on-off negotiations, Alibaba (ALBCF>PK) will repurchase half of Yahoo's (YHOO) 40% stake in the Chinese Internet search company for around $7.1 billion. Dow Components – Cisco Systems (CSCO) up 0.67%, Hewlett-Packard (HPQ) up 1.96%, IBM (IBM) up 0.69%, Intel Corp (INTC) down 0.61%, Microsoft (MSFT) up 0.85%.

The Technology Select Sector SPDR (XLK) was trading at $28.11 at 3:30 PM on Monday, up 2.33% on the day – up 10.45% year-to-date.

Telecommunication Services

The patent dispute between Samsung (SSNLF.PK) and Apple (AAPL) continues with one option being cross-licensing. Google (GOOG) has received clearance in China to purchase Motorola Mobility (MMI) for $12 billion, and the deal will close early next week. Dow components – AT&T (T) flat, Verizon (VZ) down 0.55%.

The NASDAQ Telecommunications Index (IXTC) was trading at $182.51 at 3:30 PM on Monday, up 1.97% on the day – down 7.32% year-to-date.

Utilities

Dominion Resources (D) down 0.55%, Edison International (EIX) up 0.55%, First Energy (FE) down 0.33%, PG&E Corp (PCG) flat, Southern Company (SO) down 0.29%.

The Utilities Select Sector SPDR (XLU) was trading at $35.50 at 3:30 PM on Monday, up 0.23% on the day – down 1.33% year-to-date.

STOCKS: CVX, XOM, DPD, ENB, CHK, EP, ANR, AA, DD, DQ, ABX, NEM, BA, CAT, GE, MMM, UTX, LMT, DIS, HD, MCD, AEO, COST, LOW, KFT, KO, PG, WMT, KKD, CPB, SWY, BBY, JNJ, MRK, PFE, AET, PRGO, DVA, MYGN, AXP, BAC, JPM, TRV, BCS, UBSI, GS, MS, C, CSCO, HPQ, IBM, INTC, MSFT, SSNLF.PK, AAPL, GOOG, FB, MMI, ALBCF.PK, YHOO, T, VZ, SSNLF.PK, D, EIX, FE, PCG, SO

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
AA Alcoa Inc. 9.54 -0.14 -1.45 4,422,943
AAPL Apple Inc. 112.58 -0.30 -0.27 9,967,079
ABX Barrick Gold Corporation 17.46 -0.46 -2.57 4,401,695
AEO American Eagle Outfitters Inc. 17.97 0.11 0.64 481,100
AET Aetna Inc. 115.01 0.08 0.07 270,328
AXP American Express Company 63.97 0.55 0.87 1,305,479
BA Boeing Company (The) 131.09 0.52 0.40 534,351
BAC Bank of America Corporation 15.16 0.07 0.46 28,811,997
BBY Best Buy Co. Inc. 38.15 0.64 1.71 1,007,034
BCS Barclays PLC 8.58 -0.10 -1.15 2,635,675
C Citigroup Inc. 46.01 0.12 0.26 5,851,078
CAT Caterpillar Inc. 82.24 -0.13 -0.16 1,506,395
CHK Chesapeake Energy Corporation 6.05 -0.57 -8.60 24,797,584
COST Costco Wholesale Corporation 150.34 -0.85 -0.56 803,870
CPB Campbell Soup Company 54.48 -0.10 -0.18 406,626
CSCO Cisco Systems Inc. 31.30 0.23 0.72 5,234,360
CVX Chevron Corporation 98.62 -0.16 -0.16 2,364,522
D Dominion Resources Inc. 76.37 -0.23 -0.30 490,735
DD E.I. du Pont de Nemours and Co. 66.74 0.22 0.32 405,491
DIS Walt Disney Company (The) 91.55 -0.41 -0.45 2,468,512
DQ DAQO New Energy Corp. American Depositary Shares e 21.28 0.34 1.62 11,800
DVA DaVita HealthCare Partners Inc. 66.08 -0.07 -0.11 686,609
EIX Edison International 75.04 -0.51 -0.68 399,603
ENB Enbridge Inc 42.94 -0.28 -0.65 656,990
FB Facebook Inc. 128.08 0.77 0.60 6,053,012
FE FirstEnergy Corporation 34.24 -0.34 -0.98 1,177,869
GE General Electric Co 29.78 0.24 0.81 7,745,922
GOOG Alphabet Inc. 781.91 7.70 0.99 437,752
GS The Goldman Sachs Group Inc. 162.03 0.55 0.34 785,766
HD Home Depot Inc. (The) 126.43 0.98 0.78 1,533,500
HPQ HP Inc. 15.22 0.20 1.33 2,604,562
IBM International Business Machines Corp 155.42 1.44 0.93 917,219
INTC Intel Corporation 36.86 0.21 0.57 5,478,115
JNJ Johnson & Johnson 118.38 0.60 0.51 1,462,863
JPM JP Morgan Chase 66.06 0.28 0.42 4,744,104
KKD Krispy Kreme Doughnuts Inc. n/a n/a n/a 0
KO Coca-Cola Company (The) 42.30 0.25 0.59 3,134,138
LMT Lockheed Martin Corporation 246.28 0.75 0.31 163,572
LOW Lowe\'s Companies Inc. 71.21 0.40 0.56 1,427,495
MCD McDonald\'s Corporation 116.61 0.08 0.07 955,414
MMI Marcus & Millichap Inc. 25.41 0.21 0.83 15,225
MMM 3M Company 176.02 0.07 0.04 560,967
MRK Merck & Company Inc. (new) 62.31 0.16 0.26 1,628,518
MS Morgan Stanley 31.27 0.24 0.77 3,372,393
MSFT Microsoft Corporation 57.29 0.39 0.69 7,091,115
MYGN Myriad Genetics Inc. 21.70 0.13 0.60 206,399
NEM Newmont Mining Corporation 38.33 -0.93 -2.37 2,000,920
PCG Pacific Gas & Electric Co. 63.66 -0.24 -0.38 856,338
PFE Pfizer Inc. 33.68 0.04 0.10 4,928,114
PG Procter & Gamble Company (The) 88.17 0.32 0.36 22,863,331
PODD Insulet Corporation 42.95 -0.31 -0.72 70,039
PRGO Perrigo Company plc 95.65 -0.08 -0.08 383,352
SO Southern Company (The) 53.22 -0.10 -0.18 1,408,233
T AT&T Inc. 41.30 0.16 0.38 5,967,179
TRV The Travelers Companies Inc. 113.94 0.00 0.00 342,683
UBSI United Bankshares Inc. 36.92 0.16 0.44 56,621
UTX United Technologies Corporation 102.20 -0.03 -0.03 1,303,303
VZ Verizon Communications Inc. 52.10 -0.05 -0.10 2,459,223
WMT Wal-Mart Stores Inc. 72.01 0.39 0.54 1,854,844
XOM Exxon Mobil Corporation 82.72 -0.34 -0.41 3,138,841
YHOO Yahoo! Inc. 43.07 0.78 1.83 2,743,925

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