Equities Sector Coverage: Stocks Recover As Earnings Remain Mixed

Sector Recap  |

The Producer Price Index rose 0.8% in September much stronger than expected. The National Association of Home Builders Housing Market Index bounced four points to 18, the highest reading since May 2010. Keep in mind however that a reading of 50 is neutral for the NAHB HMI. The Dow Jones Industrial Average traded down from 11,401.09 to 11,296.12 testing its five-week modified moving average at 11,301 then rebounded strongly to a high of 11,652.74 into the final hour of trading. The NASDAQ traded down from 2618.56 to 2586.31 then rebounded to 2667.57 into the final hour of trading. Stocks reacted to a story that Europe was considering a larger than expected bailout plan to resolve their massive debt crisis.

Asian stocks slumped on Tuesday as China’s economy grows at its slowest pace in two years. The Nikkei 225 lost 1.55% to 8,742 with the Hang Seng crushed by 4.23% to 18,076. European stocks were mixed on Tuesday. The FTSE 100 lost 0.48% to 5,410 with the DAX up 0.31% to 5,877 and the CAC 40 down 0.79% to 3,141. The US Treasury 10-Year yield declined from 2.182 percent to 2.077 on Tuesday then rose to 2.210 into the final hour of trading. Gold traded down from $1678.2 the Troy ounce to $1628.2 on Tuesday then consolidated the sell-off. Crude oil traded up from $85.55 per barrel to $89.03 on Tuesday staying well above its 50-day simple moving average at $84.95. The euro versus the dollar traded up from 1.3656 to 1.3816 on Tuesday.

Energy

Chevron (CVX) plans to start its first offshore southern China drill before year-end, following in the path of Husky (HUSKF) and BG Group (BRGYY) who have found gas reserves there recently. Chesapeake Energy (CHK) is now Neutral from Overweight at JP Morgan. El Paso Pipeline Partners (EPB) is downgraded to Perform from Outperform at Morgan Keegan with a target of $36. Brigham Exploration (BEXP) is cut to Sector Perform from Outperform at RBC Capita. In afternoon trading: Shares of GeoMet (GMET) are up about 30%. Shares of Uranium Resources (URRE) are up about 18.75%. Shares of Kodiak Oil & Gas (KOG) are up about 10%.

Energy Select Sector SPDR (XLE) was trading at $67.49 at 4:00 PM on Tuesday, up 3.21% on the day – down 1.11% year-to-date.

Materials

Alcoa (AA) is begun with a Buy and $13 price objective at Stifel Nicolaus. Celanese (CE) is started with a Buy and $52 price objective at Ticonderoga. Thompson Creek Metals (TC) is initiated with an Underperform at Bank of America-Merrill Lynch. AK Steel (AKS) is now Neutral from Sell at Goldman Sachs. U.S. Steel (X) is downgraded to Sell from Neutral at Goldman. In afternoon trading: Shares of STR Holdings (STRI) are down about 11.5%. Shares of Koppers Holdings (KOP) are down about 6%. Shares of Aluminum of China (ACH) are down about 5.5%. Shares of AK Steel are up about 9%. Shares of Senomyx (SNMX) are up about 6.75%. Shares of Cemex (CX) are up about 5.5%.

The Materials Select Sector SPDR (XLB) was trading at $33.17 at 4:00 PM on Tuesday, up 2.57% on the day – down 13.64% year-to-date.

Industrials

One day after China Eastern scrapped 24 Dreamliner orders, Boeing (BA) warns of more cancellations. Also, China Southern Airlines (ZNH) said the delivery of its first Dreamliner will likely be delayed by at least another seven months. RailAmerica (RA) is resumed with a Sector Perform at RBC Capital, which has Outperforms on KC Southern (KSU) and Genesee & Wyoming (GWR). A123 Systems (AONE) gets downgraded to Sell from Neutral at Goldman Sachs. Badger Meter (BMI) is taken to Neutral from Buy at Janney Montgomery Scott. In afternoon trading: Shares of Badger Meter are down about 15.5%. Shares of A123 Systems are down about 9%. Shares of Swift Transportation (SWFT) are up about 8%.

The Industrial Select Sector SPDR (XLI) was trading at $32.17 at 4:00 PM on Tuesday, up 2.88% on the day – down 7.74% year-to-date.

Consumer Discretionary

Shares of Apple (AAPL) dropped as much as 6 percent after the company missed its Q4 results. Green Mountain Coffee (GMCR) closed down 10.4% yesterday after David Einhorn said he's bearish on the single-serve coffee kingpin. Einhorn is critical of Green Mountain's accounting work, considers its K-Cups to be too expensive, and thinks the company's deal with Starbucks (SBUX) will prove less lucrative than some expect. Coach (COH) is initiated with a Hold at Deutsche Bank. FBR Capital covers the following at Outperform: Urban Outfitters (URBN), ANN Inc (ANN), Chico’s FAS (CHS), and Abercrombie & Fitch (ANF). Its Market Performs include Fossil (FOSL), Aeropostale (ARO), and American Eagle Outfitters (AEO). Children’s Place Retail Stores (PLCE) is an Underperform amid macro uncertainty and input cost inflation. Cheesecake Factory (CAKE) is upgraded to Overweight from Neutral at Piper Jaffray. Michelin (MGDDY) is moved to Overweight from Neutral at JP Morgan. Hasbro (HAS) is taken to Neutral from Buy at Goldman. Ctrip.com (CTRP) gets cut to Neutral from Overweight at Piper Jaffray. PF Chang’s (PFCB) is downgraded to Underweight from Neutral at Piper Jaffray. Whirlpool (WHR) gets downgraded to Sell from Neutral at Goldman. In afternoon trading: Shares of Crocs (CROX) are down about 38.5% after warning about a possible 25% decrease in its earnings for the quarter. Shares of American Public Education (APEI) are down about 21.5%. Shares of New Oriental Education (EDU) are down about 11%. U.S. homebuilders rose the most in two years after an index of developer sentiment unexpectedly increased to its highest level since May 2010, spurring optimism that demand for new houses may be improving. Shares of Beazer Homes (BZH) are up about 12.5%. Shares of Meritage Homes (MTH) are up about 11.25%. Shares of Toll Brothers (TOL) are up about 11%. Shares of PulteGroup (PHM) are up about 9.5%. Shares of DR Horton (DHI) are up about 9.5%. Shares of Ryland Group (RYL) are up about 9.5%. Shares of Standard Pacific (SPF) are up about 8.5%. Shares of Lennar (LEN) are up about 8.25%. Shares of KB Home (KBH) are up about 8%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $38.65 at 4:00 PM on Tuesday, up 2.03% on the day – up 3.31% year-to-date.

Consumer Staples

Green Mountain Coffee (GMCR) closed down 10.4% yesterday after David Einhorn said he's bearish on the single-serve coffee kingpin. Einhorn is critical of Green Mountain's accounting work, considers its K-Cups to be too expensive, and thinks the company's deal with Starbucks (SBUX) will prove less lucrative than some expect. PepsiCo (PEP) is upgraded to Buy from Hold at Argus with a $72 price target. Walgreen (WAG) is lowered to Hold from Buy at Jefferies. In afternoon trading: Shares of Pilgrim’s Pride (PPC) are up about 8.5%. Shares of WD-40 (WDFC) are up about 6%. Shares of Star Scientific (CIGX) are up about 5.25%. Shares of Central European Distribution (CEDC) are up about 5.25%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.89 at 4:00 PM on Tuesday, up 0.75% on the day – up 5.39% year-to-date.

Healthcare

GlaxoSmithKline (GSK) may bid $25 / share for Human Genome Sciences (HGSI), according to media reports citing their partnership in developing the FDA-approved lupus drug Benlysta. Merck (MRK) and Biogen (BIIB) are also interested. Johnson & Johnson (JNJ) reported earnings of $1.24 / share (versus estimates of $1.21 / share). Medtronic (MDT) is a fresh Outperform at Cowen & Company, which has new Neutrals on both Boston Scientific (BSX) and St. Jude Medical (STJ). Sequenom (SQNM) is now Neutral from Overweight at Piper Jaffray. In afternoon trading: Shares of Hospira (HSP) are down about 21.5%. Shares of Sequenom are down about 10.25%. Shares of Halozyme Therapeutics (HALO) are up about 17.5%. Shares of GTx Inc. (GTXI) are up about 14.5%. Shares of Human Genome Sciences are up about 8.25%.

The Health Care Select Sector SPDR (XLV) was trading at $32.55 at 4:00 PM on Tuesday, up 0.74% on the day – up 3.33% year-to-date.

Financials

Bank of America (BAC) swung to a Q3 profit of $6.2B - $0.56 / share (topping estimates of $0.28 / share). Revenue rose 6.4% to $28.45B, $2.5B ahead of consensus. Goldman Sachs (GS) reported Q3 earnings of $0.84 / share with net revenues of $3.59B. Bank of America (BAC) reported a profit per diluted share of 56 Cents on revenue of $28.7B (versus estimates of $25.94B). Brokerage William Blair begins American Express (AXP), Mastercard (MA), Visa (V), Western Union (WU), Dollar Financial (DLLR), Moneygram (MGI), Cardtronics (CATM), and Financial Engines (FNGN) with Outperforms. It assigns Market Performs on Alliance Data Systems (ADS), Capital One Financial (COF), and credit card company Discover Financial Services (DFS). Green Dot (GDOT) gets picked up at Outperform by William Blair. ProAssurance (PRA) is downgraded to Neutral from Buy at Suntrust. Progressive (PGR) is downgraded to Hold from Buy at Argus. In afternoon trading: Shares of The PMI Group (PMI) are up about 24.5%. Shares of Brown & Brown (BRO) are up about 9.25%. Shares of MGIC Investment (MTG) are up about 9.25%. Shares of MBIA Inc. (MBI) are up about 9%.

The Financial Select Sector SPDR (XLF) was trading at $12.79 at 4:00 PM on Tuesday, up 4.75% on the day – down 19.81% year-to-date.

Information Technology

Shares of Apple (AAPL) dropped as much as 6 percent after the company missed its Q4 results. IBM (IBM) beat earnings expectations and raised its full-year EPS outlook for the third quarter in a row. Broadcom (BRCM) is begun with a Buy at Societe Generale, which has a Hold on Qualcomm (QCOM). Wright Express (WXS) is assigned an Outperform at William Blair. TE Connectivity (TEL) is taken to Overweight from Underweight at JP Morgan. International Business Machines (IBM) is downgraded by both BMO Capital (Market Perform from Outperform) and FBN Securities (Sector Perform from Outperform). Molex (MOLX) is moved to Neutral from Overweight at JP Morgan. VMware (VMW) is reduced to Hold from Buy at Jefferies. In afternoon trading: Shares of Changyou.com (CYOU) are down about 9.75%. Shares of Ingram Micro (IM) are down about 7.75%. Shares of VMware are up about 6.25%.

The Technology Select Sector SPDR (XLK) was trading at $25.82 at 4:00 PM on Tuesday, up 0.90% on the day – up 2.50% year-to-date.

Telecommunications Services

In afternoon trading: Actives: Shares of Sprint Nextel (S) are up slightly. Shares of Level 3 Communications (LVLT) are up about 1.25%. Shares of AT&T (T) are up slightly. Shares of Frontier Communications (FTR) are down about 0.75%. Shares of Verizon (VZ) are up about a quarter of a percent. Shares of Vodafone (VOD) are down slightly. Shares of Windstream (WIN) are up about 0.4%. Shares of Mobile Telesystems (MBT) are down about 0.7%.

The NASDAQ Telecommunications Index (IXTC) was trading at $198.26 at 4:00 PM on Tuesday, up 1.90% on the day – down 12.03% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are down about a quarter of a percent. Shares of AES Corp. (AES) are up about 2.9%. Shares of Genon Energy (GEN) are up about 2.4%. Shares of NiSource (NI) are up about 1.6%. Shares of Exelon (EXC) are down about 0.3%. Shares of Calpine (CPN) are up about 2%. Shares of CenterPoint Energy (CNP) are up about 0.7%. Shares of NV Energy (NVE) are up about 1.3%. Shares of Southern Co. (SO) are down slightly.

The Utilities Select Sector SPDR (XLU) was trading at $34.08 at 4:00 PM on Tuesday, up 0.71% on the day – up 8.74% year-to-date.

STOCKS: CVX, HUSKF, BRGYY, CHK, EPB, BEXP, GMET, URRE, KOG, AA, CE, TC, AKS, X, STRI, KOP, ACH, SNMX, CX, BA, ZNH, RA, KSU, GWR, AONE, BMI, SWFT, GMCR, SBUX, COH, URBN, ANN, CHS, ANF, FOSL, ARO, AEO, PLCE, CAKE, MGDDY, HAS, CTRP, PFCB, WHR, CROX, APEI, EDU, BZH, MTH, TOL, PHM, DHI, RYL, SPF, LEN, KBH, PEP, WAG, PPC, WDFC, CIGX, CEDC, GSK, HGSI, MRK, BIIB, JNJ, MDT, BSX, STJ, SQNM, HSP, HALO, GTXI, BAC, GS, BAC, AXP, MA, V, WU, DLLR, MGI, CATM, FNGN, ADS, COF, DFS, GDOT, PRA, PGR, PMI, BRO, MTG, MBI, IBM, BRCM, QCOM, WXS, TEL, MOLX, VMW, CYOU, IM, S, LVLT, T, FTR, VZ, VOD, WIN, MBT, DUK, AES, GEN, NI, EXC, CPN, CNP, NVE, 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
GSK GlaxoSmithKline PLC 40.34 -0.07 -0.17 3,574,702 Trade
GEN Genesis Healthcare Inc. 1.43 -0.21 -12.80 623,725 Trade
FTR Frontier Communications Corporation 3.92 0.17 4.53 2,908,259 Trade
ARO Manulife Financial Corporation n/a n/a n/a n/a
ACH Aluminum Corporation of China Limited American Depositary Shares 9.81 0.13 1.34 20,238 Trade
NI NiSource Inc 25.69 0.38 1.50 10,117,210 Trade
CVX Chevron Corporation 119.06 2.11 1.80 6,706,879 Trade
SO Southern Company (The) 46.89 0.31 0.67 7,551,984 Trade
AKS AK Steel Holding Corporation 3.75 0.00 0.00 5,677,385 Trade
CIFC CIFC LLC n/a n/a n/a 0 Trade
PRA ProAssurance Corporation 43.88 0.09 0.21 273,618 Trade
KBH KB Home 18.99 1.38 7.84 5,544,092 Trade
JNJ Johnson & Johnson 145.99 1.49 1.03 8,494,311 Trade
FOSL Fossil Group Inc. 18.94 -0.21 -1.10 1,382,860 Trade
AA Alcoa Corporation 35.95 0.01 0.03 3,092,050 Trade
IBM International Business Machines Corporation 121.57 0.13 0.11 4,076,315 Trade
CNP CenterPoint Energy Inc (Holding Co) 27.73 0.18 0.65 5,674,146 Trade
MBI MBIA Inc. 9.22 0.08 0.88 608,001 Trade
CYOU Changyou.com Limited 18.71 0.02 0.11 160,527 Trade
URRE WWR B2Gold Corp. n/a n/a n/a n/a
CHS Chico's FAS Inc. 7.22 -0.49 -6.36 4,529,484 Trade
HALO Halozyme Therapeutics Inc. 16.13 -0.07 -0.43 693,372 Trade
S Sprint Corporation 6.31 0.19 3.10 23,944,475 Trade
EDU New Oriental Education & Technology Group Inc. Sponsored ADR representing 1 (Cayman Islands) 55.68 -3.14 -5.34 1,467,737 Trade
BZH Beazer Homes USA Inc. 10.24 0.42 4.28 809,469 Trade
MTH Meritage Homes Corporation 37.15 0.97 2.68 475,439 Trade
AXP American Express Company 109.46 -0.14 -0.13 3,486,223 Trade
VOD Vodafone Group Plc 19.60 -0.27 -1.36 6,532,378 Trade
TOL Toll Brothers Inc. 30.39 0.45 1.50 3,375,785 Trade
SWFT KNX Liberty Media Corp (DE) n/a n/a n/a n/a
V Visa Inc. 140.18 -1.66 -1.17 8,628,027 Trade
VMW Vmware Inc. Class A 157.01 -0.72 -0.46 1,374,175 Trade
MGI Moneygram International Inc. 2.22 0.02 0.91 592,307 Trade
AES The AES Corporation 15.51 0.09 0.58 6,505,226 Trade
SQNM Sequenom Inc. n/a n/a n/a 0 Trade
GS Goldman Sachs Group Inc. (The) 202.12 -1.62 -0.80 2,829,572 Trade
COH T.P Coach Inc. n/a n/a n/a 0
BSX Boston Scientific Corporation 37.21 0.74 2.03 7,537,552 Trade
VZ Verizon Communications Inc. 60.21 1.13 1.91 19,470,986 Trade
BMI Badger Meter Inc. 53.45 0.87 1.65 162,996 Trade
GDOT Green Dot Corporation Class A $0.001 par value 84.81 1.81 2.18 1,055,744 Trade
GMCR Keurig Green Mountain Inc n/a n/a n/a 0 Trade
WHR Whirlpool Corporation 117.10 3.83 3.38 1,120,695 Trade
MDT Medtronic plc. 93.70 0.93 1.00 7,922,006 Trade
BAC Bank of America Corporation 27.75 -0.15 -0.54 52,456,146 Trade
KOP Koppers Holdings Inc. 20.21 -1.27 -5.91 301,265 Trade
COF Capital One Financial Corporation 87.64 -1.52 -1.70 3,519,700 Trade
DHI D.R. Horton Inc. 34.78 1.20 3.57 4,968,396 Trade
GTXI GTx Inc. 1.51 0.03 2.03 737,390 Trade
SBUX Starbucks Corporation 68.16 0.54 0.80 9,287,882 Trade
TC TC n/a n/a n/a 0
PPC Pilgrim's Pride Corporation 19.55 0.32 1.66 1,150,771 Trade
URBN Urban Outfitters Inc. 37.04 -0.94 -2.48 3,878,802 Trade
STJ St. Jude Medical Inc. n/a n/a n/a 0 Trade
WIN Windstream Holdings Inc. 3.99 -0.08 -1.97 892,094 Trade
LEN Lennar Corporation Class A 41.05 1.52 3.85 5,252,922 Trade
WDFC WD-40 Company 168.79 0.49 0.29 104,946 Trade
X United States Steel Corporation 27.72 0.17 0.62 4,561,526 Trade
KSU Kansas City Southern 100.84 0.33 0.33 784,739 Trade
BIIB Biogen Inc. 324.05 2.33 0.72 1,542,063 Trade
PLCE Children's Place Inc. (The) 130.71 -3.81 -2.83 473,124 Trade
PHM PulteGroup Inc. 24.97 0.86 3.57 7,503,594 Trade
CAKE The Cheesecake Factory Incorporated 47.91 -2.39 -4.75 1,218,887 Trade
BA The Boeing Company 335.95 -5.62 -1.65 4,425,161 Trade
GWR Genesee & Wyoming Inc. Class A 80.79 0.32 0.40 388,748 Trade
MRK Merck & Company Inc. (new) 76.06 1.22 1.63 13,725,173 Trade
DFS Discover Financial Services 70.72 0.00 0.00 2,370,165 Trade
ANF Abercrombie & Fitch Company 16.75 -0.78 -4.45 2,685,736 Trade
BRO Brown & Brown Inc. 28.87 0.05 0.17 635,199 Trade
IM Ingram Micro Inc. n/a n/a n/a 0 Trade
APEI American Public Education Inc. 32.45 -0.03 -0.09 170,476 Trade
MBT Mobile TeleSystems PJSC 8.31 -0.14 -1.66 1,775,612 Trade
BRCM Broadcom Corp. n/a n/a n/a 0 Trade
HAS Hasbro Inc. 97.71 0.15 0.15 1,201,082 Trade
PGR Progressive Corporation (The) 66.34 0.04 0.06 3,799,068 Trade
EXC Exelon Corporation 45.88 0.33 0.72 7,807,510 Trade
T AT&T Inc. 30.29 0.17 0.56 28,929,502 Trade
AEO American Eagle Outfitters Inc. 20.25 -0.68 -3.25 5,666,503 Trade
DUK Duke Energy Corporation (Holding Company) 86.68 0.54 0.63 3,351,154 Trade
TEL TE Connectivity Ltd. New Switzerland Registered Shares 77.65 0.82 1.07 3,995,088 Trade
CROX Crocs Inc. 27.32 0.45 1.67 1,740,360 Trade
ADS Alliance Data Systems Corporation 198.04 0.14 0.07 364,078 Trade
CX Cemex S.A.B. de C.V. Sponsored ADR 5.05 0.06 1.20 8,200,452 Trade
QCOM QUALCOMM Incorporated 55.88 0.49 0.88 57,303,280 Trade
CTRP Ctrip.com International Ltd. 26.40 0.08 0.30 4,091,830 Trade
WU Western Union Company (The) 18.89 0.13 0.69 6,784,297 Trade
MTG MGIC Investment Corporation 12.05 -0.10 -0.82 3,276,413 Trade
SPF null n/a n/a n/a 0 Trade
CHK Chesapeake Energy Corporation 3.58 -0.15 -4.02 33,107,222 Trade
ZNH China Southern Airlines Company Limited 33.83 -0.15 -0.44 57,408 Trade
CATM Cardtronics plc 34.28 0.35 1.03 316,335 Trade

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