Equities Sector Coverage: Stocks Rally to Pare Most Losses, But Still Closes Lower

Sector Recap |

NYSE Wall StreetNon-manufacturing ISM Index came in at 53.3 in August, barely creating jobs with a employment reading of 51.6. The Dow Jones Industrial Average traded down to 10,932.53 staying well above its 200-week and 120-month simple moving averages at 10,695 and 10,593. The NASDAQ declined from 2442.21 to 2414.31 then consolidated and remains above its August 9th low at 2331.96.

Asian stocks traded lower over the weekend on concerns about the global economy. The Nikkei 225 plunged 4.03% to 8,591. The Hang Seng fell by 2.48% to 19,711. In Europe the markets declined big time on Monday with the FTSE 100 down 3.58% to 5,103, the DAX crushed by 5.28% to 5,246, and the CAC 40 sliding 4.73% to 3,000. On Tuesday the FTSE 100 picked up 1.06% to 5,157. The DAX lost another 1.00% to 5,194. The CAC 40 slid another 1.13% to 2,966. The yield on the 10-Year US Treasury declined to an all time low at 1.907 percent as a flight to quality returned over the weekend. Gold exploded to another all time high at $1923.7 over the weekend then consolidated to $1861.8 before rebounding again. Crude oil traded down to $83.20 below its 200-week simple moving average at $83.79 then rebounded to $86.50 followed by a consolidation. The euro versus the US dollar declined to 1.4042 testing its 200-week simple moving average then rebounded to 1.4246 before sliding to 1.3977.

Energy

Jefferies rolls out Buys on Alcoa (AA) - $16 target, Freeport-McMoRan Copper & Gold (FCX) - $65 target, Alpha Natural Resources (ANR) - $45 target, Arch Coal (ACI) - $30 target, CONSOL Energy (CNX) - $62 target, Peabody Energy (BTU) -$65 target, and Barrick Gold (ABX) - $65 target. It has Holds on Goldcorp (GG) - $52 target, Kinross (KGC) - $17 target, and Newmont Mining (NEM) - $64target. Abroad, it has new Buys on Anglo American, BHP Billiton (BHP), Rio Tinto (RIO), and Xstrata. Sunoco (SUN) is started at Underperform by Bank of America-Merrill Lynch. LDK Solar (LDK) is lowered to Sell from Hold at Argus. In afternoon trading: Shares of Cal Dive International (DVR) are down about 12.75%. Shares of Yingli Green Energy (YGE) are down about 7.75%. Shares of Sunoco are up about 6.5%.

Energy Select Sector SPDR (XLE) was trading at $65.50 at 4:00 PM on Tuesday, down 1.09% on the day – down 4.03% year-to-date.

Materials

Jefferies rolls out Buys on Alcoa (AA) - $16 target, Freeport-McMoRan Copper & Gold (FCX) - $65 target, Alpha Natural Resources (ANR) - $45 target, Arch Coal (ACI) - $30 target, CONSOL Energy (CNX) - $62 target, Peabody Energy (BTU) -$65 target, and Barrick Gold (ABX) - $65 target. It has Holds on Goldcorp (GG) - $52 target, Kinross (KGC) - $17 target, and Newmont Mining (NEM) - $64target. Abroad, it has new Buys on Anglo American, BHP Billiton (BHP), Rio Tinto (RIO), and Xstrata. U.S. Steel (X) is raised to Buy from Hold at Citigroup. In afternoon trading: Shares of Temple-Inland (TIN) are up about 25% as International Paper (IP) reached $3.48B ($32 / share) deal for the company. Shares of Vulcan Materials (VMC) are up about 8%. Shares of International Paper are up about 7.5%.

The Materials Select Sector SPDR (XLB) was trading at $33.78 at 4:00 PM on Tuesday, down 0.56% on the day – down 12.05% year-to-date.

Industrials

Toshiba (TOSBF) is reportedly in discussions to buy Shaw Group's (SHAW) 20% stake in Westinghouse Electric, five years after the two firms and another Japanese company bought the nuclear power plant business from British Nuclear Fuels for $5.4B. Wesco Aircraft (WAIR) is a new Neutral at Robert W. Baird, an Overweight with Morgan Stanley, and a Buy at Citigroup. Owens Corning (OC) is boosted to Buy from Neutral at Goldman. Ingersoll-Rand (IR) is increased to Buy from Neutral at UBS. Siemens AG (SI) gets cut to Equal-Weight from Overweight at Morgan Stanley. Philips Electronics NV (PHG) is now Underweight from Equal-Weight at Morgan Stanley. In afternoon trading: Shares of YRC Worldwide (YRCW) are down about 12%. Shares of ABB Ltd. (ABB) are down about 7.5%. Shares of Elbit Systems (ESLT) are down about 7.25%. Shares of Shaw Group are up about 6.75%.

The Industrial Select Sector SPDR (XLI) was trading at $30.53 at 4:00 PM on Tuesday, down 1.04% on the day – down 12.45% year-to-date.

Consumer Discretionary

Dunkin' Brands (DNKN) is initiated at Outperform and price objective of $33 by brokers Robert W. Baird. Teavana (TEA) is a new Neutral at Bank of America-Merrill Lynch. Sodastream (SODA) is upgraded to Overweight from Neutral at JP Morgan. Nike (NKE) is now Neutral from Overweight at HSBC Securities with a new target of $96. Harley-Davidson (HOG) is pulled from UBS’ Short-Term Buy list. Whirlpool (WHR) is now Neutral from Buy at Goldman. Pulte Group (PHM) is pulled from Goldman’s list of Conviction Buys. Best Buy (BBY) is reduced to Neutral from Overweight at Piper Jaffray. In afternoon trading: Shares of Deer Consumer Products (DEER) are down about 19%. Shares of Coldwater Creek (CWTR) are up about 12.5%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $35.95 at 4:00 PM on Tuesday, down 0.31% on the day – down 3.90% year-to-date.

Consumer Staples

Chefs’ Warehouse (CHEF) is a new Buy and $17.50 target at Jefferies. PepsiCo (PEP) is downgraded to Equal Weight from Overweight at Morgan Stanley. In afternoon trading: Shares of Central European Distribution (CEDC) are down about 7.5%. Shares of Nestle SA Spons (NSRGY) are down about 6.6%. Shares of China-Biotics (CHBT) are down about 6.1%. Shares of Seneca Foods (SENEA) are down about 5.25%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.22 at 4:00 PM on Tuesday, down 0.40% on the day – up 3.10% year-to-date.

Healthcare

Stryker (SYK) is boosted to Buy from Hold at Deutsche Bank. In afternoon trading: Shares of Bayer AG (BAYRY) are down about 11.25%. Shares of Pluristem Therapeutics (PSTI) are down about 6.2%. Shares of Roche Holding (RHHBY) are down about 5.8%. Shares of Orexigen Therapeutics (OREX) are down about 5.3%. Shares of Pharmasset (VRUS) are up about 8.2%. Shares of Regeneron Pharmaceuticals (REGN) are up about 6%. Shares of Vivus (VVUS) are up about 5.6%.

The Health Care Select Sector SPDR (XLV) was trading at $32.53 at 4:00 PM on Tuesday, up 0.25% on the day – up 3.27% year-to-date.

Financials

State prosecutors have offered large U.S. banks a deal over inappropriate foreclosure practices that could effectively release them from legal liability for any misconduct relating to mortgage bonds in return for a multibillion dollar payment. The banks involved are Bank of America (BAC), JPMorgan (JPM), Wells Fargo (WFC), Citigroup (C) and Ally Financial. Allianz (AZSEY) has separated PIMCO from its other asset management operations, although the move isn't a precursor to a sale of any unit. The German insurer has created a new division called Allianz Asset Management, which consists of Allianz Global Investors as well as PIMCO, and holds around €1.4T ($2T) in assets. Deutsche Bank AG (DB) is now Overweight from Neutral at JP Morgan. BB&T Corp (BBT) is boosted to Neutral from Underperform at Credit Suisse. Wells Fargo (WFC) is cut to Market Perform from Outperform at Keefe Bruyette. In afternoon trading: Shares of The Royal Bank of Scotland (RBS) are down about 13%. Shares of Credit Suisse (CS) are down about 13%. Shares of UBS AG (UBS) are down about 10.75%. Shares of ING (ING) are down about 10.25%.

The Financial Select Sector SPDR (XLF) was trading at $12.32 at 4:00 PM on Tuesday, down 1.75% on the day – down 22.76% year-to-date.

Information Technology

Toshiba (TOSBF) is reportedly in discussions to buy Shaw Group's (SHAW) 20% stake in Westinghouse Electric, five years after the two firms and another Japanese company bought the nuclear power plant business from British Nuclear Fuels for $5.4B. Activision Blizzard (ATVI) is begun with a Buy at Citigroup, which has a Hold on Electronic Arts (ERTS). KLA-Tencor (KLAC) is reduced to Underperform from Sector Perform at RBC Capital. In afternoon trading: Shares of Alcatel-Lucent (ALU) are down about 8%. Shares of Logitech International (LOGI) are down about 8%. Shares of STMicroelectronics (STM) are down about 8%.

The Technology Select Sector SPDR (XLK) was trading at $23.51 at 4:00 PM on Tuesday, down 0.47% on the day – down 6.67% year-to-date.

Telecommunications Services

As it struggles to compete with cheaper rivals in its home market, Telefonica (TEF) plans to fold its domestic unit into its European division and reshuffle senior management. The carrier also intends to group its online businesses into a new unit called Telefonica Digital. In afternoon trading: Shares of Mobile Telesystems (MBT) are down about 7.6%. Shares of Telecom Italia (TI) are down about 6.5%. Shares of Deutsche Telekom (DTEGY) are down about 6.1%. Shares of France Telecom (FTE) are down about 5.7%. Shares of Telefonica are down about 5.5%.

The NASDAQ Telecommunications Index (IXTC) was trading at $185.78 at 4:00 PM on Tuesday, down 0.80% on the day – down 17.57% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are down about 1.1%. Shares of AES Corp (AES) are up slightly. Shares of Southern (SO) are down slightly. Shares of Genon Energy (GEN) are down about 1.3%. Shares of PPL Corp (PPL) are down about 0.6%. Shares of American Electric Power (AEP) are down about 0.8%. Shares of Exelon (EXC) are down about 1.2%. Shares of CenterPoint Energy (CNP) are down about 1.7%. Shares of Dynegy (DYN) are up about 7.7%.

The Utilities Select Sector SPDR (XLU) was trading at $33.13 at 4:00 PM on Tuesday, down 0.48% on the day – up 5.71% year-to-date.

STOCKS: AA, FCX, ANR, ACI, CNX, BTU, ABX, GG, KGC, NEM, BHP, RIO, SUN, LDK, DVR, YGE, X, TIN, IP, VMC, TOSBF, SHAW, WAIR, OC, IR, SI, PHG, YRCW, ABB, ESLT, DNKN, TEA, SODA, NKE, HOG, WHR, PHM, BBY, DEER, CWTR, CHEF, PEP, CEDC, NSRGY, CHBT, SENEA, SYK, BAYRY, PSTI, RHHBY, OREX, VRUS, REGN, VVUS, BAC, JPM, WFC, C, AZSEY, DB, BBT, RBS, CS, UBS, ING, ATVI, ERTS, KLAC, ALU, LOGI, STM, TEF, MBT, TI, DTEGY, FTE, DUK, AES, SO, GEN, PPL, AEP, EXC, CNP, DYN

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