Equities Sector Coverage: Stocks Recover From Earlier Losses

Sector Recap |

Wall Street EarningsJuly 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
AA Alcoa Inc. 9.78 0.02 0.25 412,545
AMD Advanced Micro Devices Inc. 6.49 -0.06 -0.94 2,064,020
APO Apollo Global Management LLC Class A Representing 17.70 -0.23 -1.28 8,924
ARMH ARM Holdings plc n/a n/a n/a 0
AWR American States Water Company 40.50 -0.13 -0.32 1,479
AXP American Express Company 62.98 -0.87 -1.36 243,755
AZO AutoZone Inc. 742.39 -2.46 -0.33 2,481
BA Boeing Company (The) 130.55 -1.23 -0.94 103,289
BAC Bank of America Corporation 15.36 -0.16 -1.03 6,732,337
BCS Barclays PLC 8.66 -0.17 -1.93 671,173
BGFV Big 5 Sporting Goods Corporation 14.28 -0.08 -0.53 3,898
BTU Peabody Energy Corp n/a n/a n/a 0
CAG ConAgra Foods Inc. 43.14 -0.41 -0.94 67,600
CAT Caterpillar Inc. 82.14 -0.30 -0.36 176,200
CPB Campbell Soup Company 54.55 -0.34 -0.62 64,249
CSCO Cisco Systems Inc. 30.92 -0.42 -1.34 1,761,979
CSX CSX Corporation 29.49 -0.15 -0.51 300,560
CVX Chevron Corporation 99.51 0.29 0.29 249,547
D Dominion Resources Inc. 77.09 0.08 0.10 50,066
DD E.I. du Pont de Nemours and Co. 66.47 -0.30 -0.45 52,364
DIS Walt Disney Company (The) 92.24 -1.03 -1.10 411,349
EFC Ellington Financial LLC representing Limitied Liab 16.98 -0.06 -0.35 4,851
EIX Edison International 75.65 0.03 0.04 52,436
EZCH EZchip Semiconductor Ltd n/a n/a n/a 0
F Ford Motor Company 12.04 -0.13 -1.11 1,600,164
FE FirstEnergy Corporation 34.67 0.18 0.53 141,571
FISV Fiserv Inc. 100.37 -0.82 -0.81 23,245
FITB Fifth Third Bancorp 20.68 -0.24 -1.15 193,933
GE General Electric Co 29.63 -0.26 -0.87 1,507,836
GME Gamestop Corporation 27.97 -0.22 -0.78 56,753
GS The Goldman Sachs Group Inc. 162.87 -2.27 -1.37 206,583
HD Home Depot Inc. (The) 126.67 -1.12 -0.88 164,163
HPQ HP Inc. 14.95 -0.14 -0.93 356,674
HUM Humana Inc. 175.55 0.00 0.00 32,360
IBM International Business Machines Corp 153.72 -1.26 -0.81 106,356
INTC Intel Corporation 36.72 -0.47 -1.26 1,683,883
IR Ingersoll-Rand plc (Ireland) 64.47 -0.18 -0.28 24,053
JNJ Johnson & Johnson 118.08 -0.73 -0.62 221,506
JPM JP Morgan Chase 66.50 -0.75 -1.12 1,138,830
KO Coca-Cola Company (The) 42.53 -0.21 -0.49 380,659
MANU Manchester United Ltd. Class A 17.13 -0.09 -0.52 2,331
MCD McDonald\'s Corporation 116.35 -0.82 -0.70 149,431
MMM 3M Company 175.96 -1.43 -0.81 60,607
MPWR Monolithic Power Systems Inc. 75.80 -0.73 -0.95 7,452
MRK Merck & Company Inc. (new) 62.34 -0.62 -0.98 264,050
MRVL Marvell Technology Group Ltd. 12.94 -0.01 -0.08 714,390
MS Morgan Stanley 31.30 -0.61 -1.91 621,600
MSFT Microsoft Corporation 56.89 -0.54 -0.94 1,419,215
MT ArcelorMittal 6.02 -0.04 -0.66 1,075,999
NMR Nomura Holdings Inc ADR American Depositary Shares 4.50 -0.09 -1.96 349
NOK Nokia Corporation Sponsored American Depositary Sh 5.62 -0.04 -0.71 1,391,922
NTI Northern Tier Energy LP n/a n/a n/a 0
NVDA NVIDIA Corporation 63.82 -1.13 -1.74 647,218
NWSA News Corporation 13.89 -0.16 -1.14 45,520
PATK Patrick Industries Inc. 61.40 -0.27 -0.44 433
PCG Pacific Gas & Electric Co. 64.18 -0.02 -0.03 33,214
PFE Pfizer Inc. 33.79 -0.47 -1.37 1,876,558
PFMT Performant Financial Corporation 2.58 -0.02 -0.77 8,314
PG Procter & Gamble Company (The) 87.00 -0.76 -0.87 730,894
RBS Royal Bank of Scotland Group Plc New (The) ADS 4.62 -0.13 -2.74 307,941
SAN Banco Santander SA ADR 4.34 -0.09 -2.03 799,820
SO Southern Company (The) 53.55 0.02 0.04 279,112
SWKS Skyworks Solutions Inc. 73.44 -1.33 -1.78 230,602
T AT&T Inc. 41.21 -0.07 -0.17 722,642
TRV The Travelers Companies Inc. 114.38 -0.94 -0.81 43,438
UTX United Technologies Corporation 101.85 -0.72 -0.70 116,176
VOD Vodafone Group Plc 28.88 -0.27 -0.93 728,510
VRX Valeant Pharmaceuticals International Inc. 27.26 -0.46 -1.66 592,896
VZ Verizon Communications Inc. 52.45 -0.11 -0.21 385,722
WMT Wal-Mart Stores Inc. 72.06 -0.29 -0.40 297,718
XOM Exxon Mobil Corporation 83.46 0.01 0.01 379,138

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