Equities Sector Coverage: Stocks Recover From Earlier Losses

Sector Recap  |

July Construction Spending declined 0.9% in July the biggest drop in a year. The national Manufacturing ISM came in a weaker than expected 49.6 in August. The Dow Jones Industrial Average traded down from 13,092.39 to 12,977.09 in morning trading then consolidated in the afternoon. The NASDAQ traded down from 3068.41 to 3040.24 in morning trading then rebounded to 3082.26 in the afternoon.

Asian stocks were mixed on Monday. The Nikkei 225 ended the day at 8,784 – down 0.63%. The Hang Seng ended the day at 19,559 – up 0.39%. On Tuesday Asian stocks were lower. The Nikkei 225 ended the day at 8,776 – down 0.10%. The Hang Seng ended the day at 19,430 – down 0.66%. European exchanges were higher on Monday. The FTSE 100 ended the day at 5,758 – up 0.82%. The DAX ended the day at 7,015 – up 0.63%. The CAC 40 ended the day at 3,454 – up 1.19%. European exchanges were lower on Tuesday. The FTSE 100 ended the day at 5,672 – down 1.50%. The DAX ended the day at 6,933 – down 1.17%. The CAC 40 ended the day at 3,399 – down 1.58%.

US Treasuries were closed on Monday, and today the yield on the 10-Year US Treasury rose from 1.542% to 1.596% versus its 50-day simple moving average at 1.590%. Comex gold traded up from $1687.6 the Troy ounce to $1698.4 on Monday well above the 200-day simple moving average at $1645.8. The rally continued on Tuesday to $1701.6. Crude oil rebounded from $96.01 per barrel to $97.37 on Monday above the 200-day simple moving average at $96.66. On Tuesday crude oil declined to $94.97. The euro versus the dollar rebounded from 1.2563 to 1.2608 on Monday staying between its 50-day and 200-day simple moving averages at 1.2368 and 1.2850. On Tuesday the euro dipped to 1.2559. US equity markets were closed on Monday.

Energy

Northern Tier Energy (NTI) is initiated with a Buy at Goldman Sachs and Bank of America-Merrill, while Credit Suisse is equally bullish at Outperform. Dahlman Rose downgrades Alpha Natural Resources (ANR), Peabody Energy (BTU), and Walter Energy (WLT), all to Hold from Buy.

Big Movers – Heckmann (HEK) up 28.62%.
Dow components – Chevron (CVX) down 0.96%, Exxon Mobil (XOM) down 0.56%.

Energy Select Sector SPDR (XLE) was trading at $70.96 at 3:30 PM on Tuesday, down 0.80% on the day – up 2.65% year-to-date.

Materials

ArcelorMittal (MT) is a new Buy at Jefferies. Dow Components – Alcoa (AA) down 1.69%, DuPont (DD) down 1.87%. The Materials Select Sector SPDR (XLB) was trading at $35.22 at 3:30 PM on Tuesday, down 1.21% on the day – up 5.13% year-to-date.

Industrials

Ingersoll-Rand (IR) is lowered to Neutral from Buy at Bank of America-Merrill Lynch. CSX Corp (CSX) and Norfolk Southern (NSC) are each cut to Hold from Buy at Dahlman Rose. Dow components – Boeing Co (BA) down 0.95%, Caterpillar (CAT) down 3.35%, General Electric (GE) down 0.99%, 3M Company (MMM) down 1.10%, United Technologies (UTX) down 2.02%.

The Industrial Select Sector SPDR (XLI) was trading at $36.067 at 3:30 PM on Tuesday, down 0.81% on the day – up 6.87% year-to-date.

Consumer Discretionary

It may sound like a contradiction in terms, but McDonald's (MCD) will open its first ever vegetarian restaurants at two locations near Indian pilgrimage centers later this year. Data for August auto sales are due out today, with those of new light vehicles in the U.S. expected to rise 17.2% on year to 1.255M units. Margins should improve as incentive spending per unit falls 6%. Japanese automakers should lead the charge again, boosted by earthquake-affected comparisons from last year, while Volkswagen (VLKAY) and Ford (F) are also tipped for a strong month. Manchester United (MANU) is initiated with a Buy at Jefferies, a Buy at Deutsche Bank, an Overweight at JPMorgan, and an Outperform at Credit Suisse. Nomura, with a Neutral and $13 target, advises greater caution. Big 5 Sporting Goods (BGFV) is boosted to Overweight from Neutral at Piper Jaffray. GameStop (GME) gets upgraded to Buy from Neutral at Goldman Sachs. News Corp. (NWSA) is boosted to Overweight from Equal Weight at Barclays. AutoZone (AZO) is removed from the Conviction Buy list at Goldman.

Dow Components – Disney (DIS) up 0.02%, Home Depot (HD) down 0.07%, McDonalds (MCD) down 0.50%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $45.49 at 3:30 PM on Tuesday, down 0.13% on the day – up 16.58% year-to-date.

Consumer Staples

Campbell Soup (CPB) beat estimates by 3 cents with revenue in-line with estimates. For FY13, the company sees growing sales between 10%-12% and EPS by 3%-5% to $2.51-$2.57. Smithfield Foods (SFD) missed estimates by 4 cents and revenue by $60M. Annie’s Inc. (BNNY) is initiated with a Buy at SunTrust. ConAgra Foods (CAG) is moved to Overweight from Neutral at JPMorgan.

Dow components – Kraft (KFT) up 0.58%, Coca Cola (KO) down 0.11%, Procter & Gamble (PG) up 0.22%, Wal-Mart (WMT) up 1.29%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $35.691 at 3:30 PM on Tuesday, up 0.65% on the day – up 9.85% year-to-date.

Health Care

Valeant Pharmaceuticals (VRX) has agreed to acquire Medicis Pharmaceuticals (MRX), a provider of dermatological and aesthetic pharmaceutical products, for $2.6B ($44 a share - a 39% premium). Humana (HUM) is lifted to Outperform from Market Perform at Leerink. Medicis Pharmaceutical (MRX) is now Neutral from Underperform at Credit Suisse.

Big Movers – Medicis Pharmaceutical (MRX) up 38.12%, Valeant Pharmaceuticals (VRX) up 15.04%.
Dow Components – Johnson & Johnson (JNJ) down 0.24%, Merck (MRK) up 0.33%, Pfizer (PFE) down 0.31%.

The Health Care Select Sector SPDR (XLV) was trading at $38.96 at 3:30 PM on Tuesday, up 0.31% on the day – up 12.31% year-to-date.

Financial

The New York AG has reportedly subpoenaed at least a dozen P-E companies as part of an investigation into the legality of a widespread tax strategy that has saved the firms hundreds of millions of dollars. The companies include KKR, Apollo Global Management (APO) and Bain. Ellington Financial (EFC) is assigned an Outperform at JMP Securities. Performant Financial (PFMT) is a new Outperform with Wells Fargo. Goldman Sachs (GS) downgraded elsewhere this morning, is upgraded by Crédit Agricole to Buy from Outperform. Morgan Stanley (MS) is upgraded to Overweight from Neutral at JPMorgan. Nomura (NMR) is now Neutral from Underperform at Macquarie. NYSE Euronext (NYX) is upgraded to Outperform from Market Perform at Keefe Bruyette. Banco Santander (SAN) is downgraded to Hold from Buy at ING Groep. Fifth Third Bancorp (FITB) is downgraded to Equal Weight from Overweight at Evercore. Amid expectations investment banking capital requirements could be larger than expected, Barclays (BCS) is downgraded to Neutral from Overweight at JPMorgan, which gives an identical ratings reduction to Goldman Sachs (GS). Royal Bank of Scotland (RBS) is lowered to Hold from Buy at Investec.

Dow Components – American Express (AXP) up 0.07%, Bank of America (BAC) down 0.50%, JP Morgan Chase (JPM) down 0.75%, Travelers (TRV) down 0.45%.

The Financial Select Sector SPDR (XLF) was trading at $15.16 at 3:30 PM on Tuesday, unchanged on the day – up 16.62% year-to-date.

Information Technology

An international research team that includes university scientists, Nokia (NOK) and Toshiba (TOSBF) is introducing a breakthrough quantum chip at the British Science Festival. The chip will provide greatly enhanced security that's "guaranteed by the laws of physics" for smartphones and computers, as well as making them much faster: working on light, 100 photons could theoretically solve trillions of equations simultaneously. EZchip Semiconductor (EZCH) is a new Buy at Deutsche Bank. Peregrine Semiconductor (PSMI) is picked up with an Overweight at JPMorgan. Informatica (INFA) is upgraded to Outperform from Neutral at Robert W. Baird. International Business Machines (IBM) is boosted to Overweight from Equal Weight by Barclays. Marvell Technology (MRVL) gets moved to Neutral from Reduce at Nomura. TiVo Inc. (TIVO) is upgraded to Overweight from Neutral at JPMorgan. Advanced Micro Devices (AMD) is downgraded to Underweight at Evercore. ARM Holdings (ARMH) is cut to Sell from Hold at Deutsche Bank. Fiserv (FISV) is downgraded to Neutral from Buy at Goldman Sachs. Monolithic Power (MPWR) is downgraded to Neutral from Overweight at Piper Jaffray. Nvidia (NVDA) is now Neutral from Positive at Susquehanna. Skyworks (SWKS) is cut to Equal Weight from Overweight at Barclays.

Dow Components – Cisco Systems (CSCO) down 0.73%, Hewlett-Packard (HPQ) down 0.06%, IBM (IBM) down 0.55%, Intel Corp (INTC) down 1.97%, Microsoft (MSFT) down 1.88%.

The Technology Select Sector SPDR (XLK) was trading at $30.50 at 3:30 PM on Tuesday, up 0.03% on the day – up 19.84% year-to-date.

Telecommunication Services

Vodafone (VOD) is downgraded to Market Perform from Outperform by Sanford Bernstein. Dow Components – AT&T (T) up 0.44%, Verizon (VZ) up 1.61%. The NASDAQ Telecommunications Index (IXTC) was trading at $194.78 at 3:30 PM on Tuesday, down 0.27% on the day – down 1.09% year-to-date.

Utilities

American States Water (AWR) is reduced to Neutral from Outperform at Robert W. Baird. Dominion Resources (D) down 0.11%, Edison International (EIX) up 0.26%, First Energy (FE) down 0.26%, PG&E Corp (PCG) down 0.16%, Southern Company (SO) up 0.22%. The Utilities Select Sector SPDR (XLU) was trading at $36.50 at 3:30 PM on Tuesday, up 0.41% on the day – up 1.45% year-to-date.

STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KFT, KO, PG, WMT, JNJ, MRK, PFE, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, NTI, ANR, BTU, WLT, MT, IR, CSX, NSC, VLKAY, F, MANU, BGFV, GME, NWSA, AZO, CPB, SFD, BNNY, CAG, VRX, MRX, HUM, MRX, APO, EFC, PFMT, GS, MS, NMR, NYX, SAN, FITB, BCS, RBS, NOK, TOSBF, EZCH, PSMI, INFA, IBM, MRVL, TIVO, AMD, ARMH, FISV, MPWR, NVDA, SWKS, VOD, AWR

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
MMM 3M Company 192.82 -3.28 -1.67 2,547,974 Trade
AWR American States Water Company 67.16 -2.03 -2.93 273,162 Trade
PG Procter & Gamble Company (The) 92.77 -3.87 -4.00 12,427,743 Trade
GE General Electric Company 7.15 0.05 0.70 129,875,611 Trade
CVX Chevron Corporation 112.45 -1.38 -1.21 7,132,880 Trade
SO Southern Company (The) 46.00 -1.33 -2.81 6,726,351 Trade
PCG Pacific Gas & Electric Co. 24.44 -1.57 -6.04 15,783,479 Trade
SAN Banco Santander S.A. Sponsored ADR (Spain) 4.50 -0.04 -0.88 14,027,803 Trade
AZO AutoZone Inc. 854.18 -17.06 -1.96 463,001 Trade
FISV Fiserv Inc. 74.43 -1.85 -2.43 2,198,181 Trade
ARMH ARM Holdings plc n/a n/a n/a 0 Trade
JNJ Johnson & Johnson 129.14 -3.86 -2.90 36,982,760 Trade
AA Alcoa Corporation 28.11 -0.50 -1.75 2,186,695 Trade
CSX CSX Corporation 64.68 -1.15 -1.75 8,842,401 Trade
INTC Intel Corporation 47.08 -0.78 -1.63 26,602,517 Trade
VRX BHC Valeant Pharmaceuticals International Inc. n/a n/a n/a 0
D Dominion Energy Inc. 74.00 -2.92 -3.80 8,620,005 Trade
TRV The Travelers Companies Inc. 119.93 -0.62 -0.51 1,829,374 Trade
BCS Barclays PLC 7.58 -0.27 -3.44 6,415,345 Trade
PATK Patrick Industries Inc. 29.08 -1.20 -3.96 790,706 Trade
MANU Manchester United Ltd. Class A 17.30 -0.19 -1.09 51,333 Trade
FITB Fifth Third Bancorp 23.74 0.06 0.25 9,568,014 Trade
EIX Edison International 58.19 -1.45 -2.43 3,860,247 Trade
IR Ingersoll-Rand plc (Ireland) 93.70 -2.27 -2.37 1,996,090 Trade
MS Morgan Stanley 39.60 -0.04 -0.10 15,795,924 Trade
AXP American Express Company 101.18 -4.52 -4.28 7,345,570 Trade
UTX United Technologies Corporation 115.31 -3.49 -2.94 5,074,522 Trade
VOD Vodafone Group Plc 20.01 -0.11 -0.55 10,007,302 Trade
NVDA NVIDIA Corporation 143.58 -2.87 -1.96 16,596,492 Trade
AMD Advanced Micro Devices Inc. 18.83 -1.07 -5.38 115,824,547 Trade
HUM Humana Inc. 303.22 3.29 1.10 1,897,314 Trade
CPB Campbell Soup Company 38.83 -0.33 -0.84 2,821,440 Trade
CSCO Cisco Systems Inc. 44.20 -1.62 -3.54 36,622,919 Trade
EFC Ellington Financial LLC representing Limitied Liability Company Interests no par valu 15.03 -0.26 -1.70 214,256 Trade
GS Goldman Sachs Group Inc. (The) 168.01 -4.76 -2.76 8,403,595 Trade
BTU Peabody Energy Corporation 31.25 0.77 2.53 1,507,364 Trade
VZ Verizon Communications Inc. 55.95 -1.13 -1.98 18,903,922 Trade
BGFV Big 5 Sporting Goods Corporation 3.00 0.14 4.90 624,143 Trade
NWSA News Corporation 12.07 -0.18 -1.47 3,732,518 Trade
BAC Bank of America Corporation 24.47 -0.01 -0.04 98,660,504 Trade
APO Apollo Global Management LLC Class A Representing Class A Limitied Liability Company Interests 24.01 -0.27 -1.11 1,770,336 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 5.21 -0.11 -2.07 1,701,763 Trade
NTI Northern Tier Energy LP representing Limited Partner Interests n/a n/a n/a 0 Trade
MRVL Marvell Technology Group Ltd. 15.25 -0.13 -0.85 8,722,790 Trade
NOK Nokia Corporation Sponsored American Depositary Shares 5.87 -0.07 -1.18 26,639,939 Trade
MCD McDonald's Corporation 180.79 -2.50 -1.36 4,567,070 Trade
MPWR Monolithic Power Systems Inc. 113.75 -4.87 -4.11 577,178 Trade
GME Gamestop Corporation 12.65 -0.11 -0.86 2,255,789 Trade
F Ford Motor Company 8.50 -0.02 -0.23 44,475,707 Trade
PFE Pfizer Inc. 43.11 -0.69 -1.58 36,672,781 Trade
PFMT Performant Financial Corporation 1.53 0.08 5.52 21,786 Trade
MT Arcelor Mittal NY Registry Shares NEW 21.47 -0.18 -0.83 2,247,434 Trade
HPQ HP Inc. 21.42 -0.59 -2.68 11,680,821 Trade
SWKS Skyworks Solutions Inc. 68.43 -0.26 -0.38 1,792,155 Trade
MRK Merck & Company Inc. (new) 75.23 -1.25 -1.63 15,106,718 Trade
EZCH EZchip Semiconductor Ltd n/a n/a n/a 0 Trade
FE FirstEnergy Corp. 37.72 -1.40 -3.58 5,668,026 Trade
KO Coca-Cola Company (The) 48.33 -1.01 -2.05 18,484,683 Trade
T AT&T Inc. 29.86 -0.36 -1.19 44,040,328 Trade
CAT Caterpillar Inc. 124.47 -2.30 -1.81 5,664,741 Trade
CAG ConAgra Brands Inc. 29.01 -0.88 -2.94 6,555,485 Trade
NMR Nomura Holdings Inc ADR American Depositary Shares 3.94 -0.07 -1.75 587,405 Trade
MSFT Microsoft Corporation 102.89 -3.14 -2.96 57,013,885 Trade
WMT Walmart Inc. 90.77 -1.08 -1.18 9,006,796 Trade
IBM International Business Machines Corporation 116.10 -3.80 -3.17 7,376,803 Trade
JPM JP Morgan Chase & Co. 99.01 -1.28 -1.28 25,119,733 Trade
DIS The Walt Disney Company 110.62 -1.58 -1.41 7,732,535 Trade
HD Home Depot Inc. (The) 167.97 -4.32 -2.51 5,632,074 Trade
XOM Exxon Mobil Corporation 74.04 -1.54 -2.04 15,467,107 Trade
BA The Boeing Company 316.13 -2.62 -0.82 4,983,787 Trade

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Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
XOM

     

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