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
MMM 3M Company 203.53 -1.82 -0.89 1,838,640 Trade
AWR American States Water Company 48.88 0.44 0.91 194,935 Trade
PG Procter & Gamble Company (The) 92.47 0.40 0.43 6,815,008 Trade
GE General Electric Co 24.55 -0.20 -0.81 34,284,628 Trade
CVX Chevron Corporation 106.48 0.56 0.53 5,467,469 Trade
SO Southern Company (The) 48.30 0.38 0.79 4,853,025 Trade
PCG Pacific Gas & Electric Co. 69.14 0.16 0.23 2,069,248 Trade
SAN Banco Santander SA ADR 6.46 0.08 1.25 4,265,849 Trade
AZO AutoZone Inc. 510.19 -5.37 -1.04 870,425 Trade
FISV Fiserv Inc. 120.36 -0.73 -0.60 929,030 Trade
ARMH ARM Holdings plc n/a n/a n/a 0 Trade
JNJ Johnson & Johnson 132.63 -0.41 -0.31 4,792,761 Trade
WMT Wal-Mart Stores Inc. 79.31 -0.39 -0.49 9,753,307 Trade
AA Alcoa Inc. 37.76 -0.04 -0.11 2,118,768 Trade
CSX CSX Corporation 48.78 -0.10 -0.20 6,911,756 Trade
INTC Intel Corporation 35.01 -0.16 -0.45 16,232,069 Trade
IBM International Business Machines Corp 139.70 -1.00 -0.71 4,152,726 Trade
VRX Valeant Pharmaceuticals International Inc. 14.39 0.05 0.35 10,472,002 Trade
D Dominion Resources Inc. 78.69 0.57 0.73 2,303,023 Trade
TRV The Travelers Companies Inc. 127.89 -0.30 -0.23 1,246,905 Trade
BCS Barclays PLC 10.05 0.03 0.30 1,945,035 Trade
PATK Patrick Industries Inc. 68.70 -0.50 -0.72 80,254 Trade
MANU Manchester United Ltd. Class A 16.35 -0.20 -1.21 26,758 Trade
FITB Fifth Third Bancorp 26.33 0.07 0.27 8,551,131 Trade
EIX Edison International 78.94 -0.07 -0.09 3,203,846 Trade
IR Ingersoll-Rand plc (Ireland) 85.18 -0.28 -0.33 1,333,890 Trade
MS Morgan Stanley 45.39 0.30 0.67 7,284,026 Trade
JPM JP Morgan Chase 90.74 0.09 0.10 13,040,738 Trade
AXP American Express Company 85.38 -0.71 -0.82 4,271,206 Trade
UTX United Technologies Corporation 115.48 -0.62 -0.53 2,760,448 Trade
VOD Vodafone Group Plc 28.55 -0.01 -0.04 3,243,559 Trade
NVDA NVIDIA Corporation 161.50 0.03 0.02 15,032,610 Trade
AMD Advanced Micro Devices Inc. 12.37 0.03 0.24 37,530,429 Trade
HUM Humana Inc. 247.28 -0.38 -0.15 754,398 Trade
CPB Campbell Soup Company 53.69 -0.27 -0.50 1,523,034 Trade
CSCO Cisco Systems Inc. 30.37 -0.67 -2.16 34,802,753 Trade
DIS Walt Disney Company (The) 100.70 -0.68 -0.67 6,894,302 Trade
EFC Ellington Financial LLC representing Limitied Liab 16.02 -0.02 -0.12 44,714 Trade
GS The Goldman Sachs Group Inc. 222.15 0.73 0.33 3,149,585 Trade
BTU Peabody Energy Corp 27.21 -0.73 -2.61 4,177,195 Trade
VZ Verizon Communications Inc. 47.69 -0.20 -0.42 16,919,130 Trade
BGFV Big 5 Sporting Goods Corporation 7.50 -0.15 -1.96 1,221,340 Trade
NWSA News Corporation 13.27 0.04 0.30 2,004,745 Trade
BAC Bank of America Corporation 23.62 -0.02 -0.08 60,461,205 Trade
APO Apollo Global Management LLC Class A Representing 29.28 0.87 3.06 1,337,659 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 6.69 0.04 0.60 858,963 Trade
NTI Northern Tier Energy LP n/a n/a n/a 0 Trade
MRVL Marvell Technology Group Ltd. 15.65 0.10 0.64 4,615,587 Trade
NOK Nokia Corporation Sponsored American Depositary Sh 6.19 -0.06 -0.96 10,105,887 Trade
MCD McDonald\'s Corporation 157.76 -0.13 -0.08 2,595,741 Trade
MPWR Monolithic Power Systems Inc. 97.61 0.03 0.03 181,907 Trade
DD E.I. du Pont de Nemours and Co. 81.18 0.32 0.40 1,952,437 Trade
GME Gamestop Corporation 21.22 0.12 0.57 2,124,458 Trade
HD Home Depot Inc. (The) 147.49 -2.18 -1.46 6,989,547 Trade
F Ford Motor Company 10.56 -0.08 -0.75 43,999,004 Trade
XOM Exxon Mobil Corporation 76.64 0.38 0.50 14,324,690 Trade
PFE Pfizer Inc. 32.67 -0.28 -0.85 15,490,931 Trade
PFMT Performant Financial Corporation 1.81 0.01 0.56 22,768 Trade
MT ArcelorMittal 25.97 0.53 2.08 4,120,672 Trade
HPQ HP Inc. 18.51 -0.13 -0.70 11,687,271 Trade
BA Boeing Company (The) 235.77 0.18 0.08 2,939,514 Trade
SWKS Skyworks Solutions Inc. 102.21 0.00 0.00 1,139,501 Trade
MRK Merck & Company Inc. (new) 61.49 -0.35 -0.57 8,421,689 Trade
EZCH EZchip Semiconductor Ltd n/a n/a n/a 0 Trade
FE FirstEnergy Corporation 32.83 0.18 0.55 3,306,015 Trade
KO Coca-Cola Company (The) 45.67 -0.19 -0.41 10,879,809 Trade
T AT&T Inc. 37.37 -0.23 -0.61 23,018,115 Trade
CAT Caterpillar Inc. 113.92 0.78 0.69 3,875,693 Trade
CAG ConAgra Foods Inc. 34.46 -0.26 -0.75 2,605,718 Trade
NMR Nomura Holdings Inc ADR American Depositary Shares 5.76 -0.01 -0.17 173,788 Trade
MSFT Microsoft Corporation 72.49 0.09 0.12 18,761,821 Trade

Comments

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