Equities Sector Coverage: Stocks Recover From Early Losses to Close Flat

Sector Recap  |

The National Association of Realtors reported that contracts for pending sales of previously-owned homes jumped 2% in January, the highest level since April 2010. Keep in mind that this housing data is never revised for cancellations, which have been huge during the Housing Depression. The Dow Jones Industrial Average declined to 12,882.59 at Monday’s open then rallied to 13,027.52 going into the final hour of trading. The NASDAQ declined from 2946.30 to 2933.30 at Monday’s open then rallied to 2976.08 going into the final hour of trading. The S&P 500 made a marginal high above its 2011 high at 1370.58. Dow Transports and Russell 2000 continue to lag their 2011 all time highs at 5627.85 and 868.57 respectively.

Asian stocks erased early gains to close lower on Monday with the Nikkei 225 ending their session 9,634 – down 0.14% on the day. The Hang Seng ended their session at 21,218 – down 0.88% on the day. European stocks were lower on Monday but recovered towards the end of the day. The FTSE 100 ended their session at 5,916 – down 0.33% on the day, the DAX ended their session at 6,850 down 0.22% on the day, and the CAC 40 ended their session at 3,441 – down 0.74% on the day.

The yield on the 10-Year US Treasury declined from 1.979 percent to 1.911. Gold traded down from $1779.8 the Troy ounce to $1762.6 then rebounded to $1781.0. Crude oil traded down from $109.77 per barrel to $107.34. The euro versus the dollar traded down from 1.3470 to 1.3369.

Energy

BP (BP) is reportedly considering a $14B settlement with plaintiffs over the Deepwater Horizon oil spill, and would finance the settlement using the remaining balance from its $20B claims fund. Transocean (RIG) reported a wider Q4 net loss of $6.12B (-$18.62/share) on revenue of $2.42B. Analysts had expected profit of $0.24/share on revenue of $2.34B. Blackstone (BX) is expected to announce today a $2B investment in Cheniere Energy Partners (CQP) that will allow the company to build a gas-liquefaction plant in Sabine Pass, La., the first of its kind in the continental U.S. Quicksilver Resources (KWK) missed estimates by 2 cents with revenue in-line with estimates. Tesco (TESO) is taken to Buy from Neutral at Pritchard. Continental Resources (CLR) is downgraded to Neutral from Buy with an objective of $100 at Robert W. Baird. Baker Hughes (BHI) is downgraded to Market Perform at Raymond James, which reduces rival Halliburton (HAL) to Outperform from Strong Buy. Whiting Petroleum (WLL) is lowered to Outperform from Buy at Crédit Agricole.
Energy Select Sector SPDR (XLE) was trading at $75.99 at 4:00 PM on Monday, down 0.31% on the day – up 9.92% year-to-date. The January change was +2.26%. The 2011 change was -1.29%

Big Movers: (ATPG) +23.5%, (CQP) +15%.

Materials

Molycorp (MCP) warned of higher production costs in the current quarter and says it can't provide a specific forecast. Westlake Chemical (WLK) is added to the Conviction Buy List at Goldman. IAMGOLD (IAG) gets cut to Neutral from Outperform at Macquarie.
The Materials Select Sector SPDR (XLB) was trading at $37.56 at 4:00 PM on Monday, relatively unchanged on the day – up 12.12% year-to-date. The January change was +10.99%. The 2011 change was -12.78%.

Heavily Traded: (CX) +5.25%, (AA) -0.9%, (FCX) -1.3%, (VALE) -1.1%.

Industrials

Boeing (BA) has replaced Scott Fancher, the head of its 787 Dreamliner program, with Larry Loftis, who until now was in charge of Boeing's successful 777 program. United Rentals (URI) is a new Buy at Citigroup. Verisk Analytics (VRSK) is assigned an Overweight at Evercore. Tyco International (TYC) is now Outperform from Neutral at Credit Suisse.
The Industrial Select Sector SPDR (XLI) was trading at $37.51 at 4:00 PM on Monday, relatively unchanged on the day – up 11.14% year-to-date. The January change was +7.32%. The 2011 change was -3.21%.

Heavily Traded: (GE) -0.6%. (GLW) -1.75%, (DRYS) -2.2%, (DAL) +0.8%, (CPST) +5.6%, (CSX) +1.2%.

Consumer Discretionary

Chinese automakers surged this morning after the government excluded foreign brands from a preliminary list of vehicles approved for purchase by state agencies. The move will help local brands gain in the 80B yuan ($12.7B) market at the expense of foreign automakers like GM (GM) and Toyota (TM). In the past, overseas brands accounted for 80% of the official pool. Cooper Tire & Rubber (CTB) beat estimates by 12 cents and revenue by $30M. Goldman Sachs upgrades Walt Disney (DIS) to a Conviction Buy rating and increases its price target on shares to $51 from $44 on the strength of the potential for sports channel ESPN and theme parks to lift earnings higher. The firm also raises its estimates for FY12 and FY13 by 1% and 4%, respectively. Visteon (VC) reported Q4 EPS of -$0.51 (versus consensus of $0.94) on revenue of $1.86B (in-line). Lowe's (LOW) beat estimates by 6 cents and revenue by $260M. The company expects total sales to increase by 1%-2% in FY12, with comparable stores sales up 1%-3%. Dunkin Brands (DNKN) is begun with a Buy at Citigroup. Walt Disney (DIS) gets added to the Conviction Buy List at Goldman Sachs. News Corp (NWSA) is upgraded to Buy from Neutral at Goldman. Discovery Communications (DISCA) is now Neutral from Sell at Goldman. Interpublic (IPG) gets upgraded to Buy from Hold at Deutsche Bank. International Game Technology (IGT) is named a LONG Research Tactical Idea at Morgan Stanley. Netflix (NFLX) is downgraded to Underperform from Market Perform at Raymond James. Viacom (VIAB) is downgraded to Neutral from Buy at Goldman. Morgans Hotel Group (MHGC) is cut to Market Perform at JMP Securities.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $43.11 at 4:00 PM on Monday, up 0.58% on the day – up 10.48% year-to-date. The January change was +5.89%. The 2011 change was +4.30%.

Big Mover: (CTB) +11.5%.

Consumer Staples

Procter & Gamble (PG) is upgraded to Outperform from Market Perform by BMO Capital.
The Consumer Staples Select Sector SPDR (XLP) was trading at $33.06 at 4:00 PM on Monday, unchanged on the day – up 1.75% year-to-date. The January change was -1.42%. The 2011 change was +10.85%.

Heavily Traded: (PG) +0.25%, (WMT) -0.5%, (MO) FLAT, (GIS) -0.25%, (SWY) +2.1%, (KR) +1.6%.

Health Care

Roche (RHHBY) extended its $44.50/share offer for Illumina (ILMN) until March 23. Illumina, which previously rejected the bid, responded the extension was expected given the low number of shares that have been tendered, a fact which reflects the degree to which Roche's bid undervalues the company. Savient Pharmaceuticals (SVNT) missed estimates by 4 cents with revenue in-line with estimates. Watson Pharmaceutical (WPI) confirms that it received a complete response letter from the FDA spelling out concerns over its progesterone vaginal gel designed to reduce the risk of preterm births. Endo Pharmaceuticals (ENDP) is upgraded to Outperform from Neutral at Cowen & Company.
The Health Care Select Sector SPDR (XLV) was trading at $36.26 at 4:00 PM on Monday, up 0.19% on the day – up 4.53% year-to-date. The January change was +3.20%. The 2011 change was +10.32%.

Big Movers: (BPAX) +31.75%, (OREX) +10.5%, (VVUS) +9.5%, (DNDN) -18.5%.

Financials

Lloyds (LYG) and RBS (RBS) may tap the ECB's three-year low-interest loan facility this week, with both banks saying the 1% interest rate makes the LTRO attractive. HSBC's (HBC) annual profit reached £13.8B, up 15% in a year of "major progress." Its commercial banking unit had a record year with pretax profit +31% to nearly £5B. Berkshire Hathaway (BRK.A), (BRK.B) announced it had decided on an eventual successor for 81-year-old Warren Buffett, but refused to disclose his or her identity. Blackstone (BX) is expected to announce today a $2B investment in Cheniere Energy Partners (CQP) that will allow the company to build a gas-liquefaction plant in Sabine Pass, La., the first of its kind in the continental U.S. Wells Fargo (WFC) plans to grow its wealth management and insurance divisions through acquisitions and through the purchase of more assets from downsizing European banks, says CEO John Stumpf, noting the bank has 10% of U.S. retail deposits but very little of its wealth. Excel Trust (EXL) is a new Equal Weight at Morgan Stanley. American Campus Communities (ACC) is upgraded to Buy from Hold with a $46 target at Argus. Extra Space Storage (EXR) is hoisted to Buy from Hold at Jefferies. LaSalle Hotel Properties (LHO) is increased to Outperform from Market Perform with Wells Fargo. Digital Realty Trust (DLR) is downgraded to Sector Perform from Outperform at RBC Capital. Ventas (VTR) is now Neutral from Buy at UBS.
The Financial Select Sector SPDR (XLF) was trading at $14.78 at 4:00 PM on Monday, up 0.75% on the day – up 13.69% year-to-date. The January change was +8.12%. The 2011 change was -18.50%; the weakest performing sector for the year.

Information Technology

Motorola Solutions (MSI) is buying back $1.2B of its common stock from Carl Icahn as part of its $3B share buyback program. Intel (INTC) pushes back the launch of Ivy Bridge, its next-gen microprocessor, by 8-10 weeks, likely to June. The longer Apple (AAPL) sits on its cash, the more tempted it may be to do something stupid with it, Mark Hulbert writes, weighing in on whether it should pay a dividend. Broadcom (BRCM) disclosed it has been notified by the SEC of an investigation into its "accounting practices related to litigation reserves." In a talk with GigaOm, Cisco's (CSCO) John Chambers vehemently denies that his company is looking to sell its set-top box business, echoing the remarks of a co-worker. Is Facebook (FB) fading as a game platform? And if so, are Zynga's (ZNGA) best days already over? Ariba (ARBA) is added to Goldman’s list of Conviction Buys. NetScout Systems (NTCT) is now Buy from Hold with at Wunderlich with a target of $27.
The Technology Select Sector SPDR (XLK) was trading at $28.87 at 4:00 PM on Monday, up 0.17% on the day – up 13.44% year-to-date. The January change was +6.21%. The 2011 change was +1.03%.

Big Movers: (CYDE) -21%, (PWAV) +13%.

Telecommunication Services

Telecom Italia (TI) is upgraded to Outperform at Exane BNP Paribas. MetroPCS (PCS) is moved to Neutral from Outperform at Credit Suisse. NII Holdings (NIHD) is now Underweight from Overweight at Barclays.

The NASDAQ Telecommunications Index (IXTC) was trading at $217.14 at 4:00 PM on Monday, relatively unchanged on the day – up 10.26% year-to-date. The January change was +6.67%. The 2011 change was -12.62%.

Heavily Traded: (S) +2.8%, (CLWR) +1%, (T) +0.2%, (PCS) -0.5%.

Utilities

AES (AES) beat estimates by a penny and revenue by $800M. Northeast Utilities (NU) is resumed with a Buy recommendation and $45 price objective at Brean Murray. American Electric (AEP) is boosted to Buy from Hold at Jefferies. Iberdrola SA (IBDRY) is taken to Reduce from Neutral at Nomura.
The Utilities Select Sector SPDR (XLU) was trading at $35.07 at 4:00 PM on Monday, relatively unchanged on the day – down 2.53% year-to-date. The January change was -3.61%. The 2011 change was +14.81%; the strongest performing sector for the year.

Heavily Traded: (DUK) FLAT, (AEP) +0.7%, (AES) -1.5%.

STOCKS: BP, RIG, BX, CQP, KWK, TESO, CLR, BHI, HAL, WLL, ATPG, MCP, WLK, IAG, CX, AA, FCX, VALE, BA, URI, VRSK, TYC, GE, GLW, DRYS, DAL, CPST, CSX, GM, TM, CTB, DIS, VC, LOW, DNKN, NWSA, DISCA, IPG, IGT, NFLX, VIAB, MHGC, PG, WMT, MO, GIS, SWY, KR, RHHBY, ILMN, SVNT, WPI, ENDP, BPAX, OREX, VVUS, DNDN, LYG, RBS, HBC, BRK.A, BRK.B, WFC, EXL, ACC, EXR, LHO, DLR, VTR, MSI, INTC, AAPL, BRCM, CSCO, FB, ZNGA, ARBA, NTCT, CYDE, PWAV, TI, PCS, NIHD, S, CLWR, T, AES, NU, AEP, IBDRY, DUK, AEP, AES

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
CQP Cheniere Energy Partners LP 43.25 0.20 0.46 189,038
BX The Blackstone Group L.P. Representing Limited Partnership Interests 33.35 0.15 0.45 4,362,113 Trade
WLK Westlake Chemical Corporation 80.88 3.08 3.96 1,673,231 Trade
GLW Corning Incorporated 34.51 0.78 2.31 4,470,613 Trade
KR Kroger Company (The) 29.50 0.54 1.86 5,059,036 Trade
TM Toyota Motor Corporation 121.15 1.90 1.59 164,940 Trade
PG Procter & Gamble Company (The) 98.48 0.02 0.02 12,069,080 Trade
GE General Electric Company 10.09 0.05 0.50 78,344,511 Trade
ACC American Campus Communities Inc 45.63 0.33 0.73 1,437,449 Trade
TI Telecom Italia S.P.A. New 5.75 0.37 6.88 194,646 Trade
RIG Transocean Ltd (Switzerland) 8.93 0.39 4.57 16,070,790 Trade
VALE VALE S.A. American Depositary Shares Each Representing one 12.33 0.19 1.57 29,025,152 Trade
WPI Watson Pharmaceuticals Inc. n/a n/a n/a 0 Trade
FB Facebook Inc. 162.50 -1.45 -0.88 15,504,415 Trade
DRYS DryShips Inc. 5.13 -0.15 -2.84 260,796 Trade
AA Alcoa Corporation 28.27 0.07 0.25 3,407,760 Trade
CSX CSX Corporation 72.54 0.91 1.27 5,807,162 Trade
INTC Intel Corporation 51.66 0.85 1.67 22,520,361 Trade
VRSK Verisk Analytics Inc. 125.38 1.54 1.24 662,056 Trade
MET:CA Metalore Resources Limited 1.82 0.00 0.00 0
MO Altria Group Inc. 48.74 -0.40 -0.81 9,161,705 Trade
DLR Digital Realty Trust Inc. 115.03 1.22 1.07 1,288,991 Trade
IAG Iamgold Corporation 3.62 0.15 4.32 4,314,954 Trade
WLL Whiting Petroleum Corporation 29.36 0.72 2.51 3,812,771 Trade
S Sprint Corporation 6.30 0.12 1.94 10,302,610 Trade
VTR Ventas Inc. 65.21 0.47 0.73 1,925,856 Trade
DAL Delta Air Lines Inc. 51.08 0.60 1.19 6,492,019 Trade
URI United Rentals Inc. 134.86 3.16 2.40 1,630,488 Trade
LOW Lowe's Companies Inc. 104.24 2.73 2.69 4,666,066 Trade
CSCO Cisco Systems Inc. 49.43 1.03 2.13 30,189,636 Trade
AES The AES Corporation 16.92 -0.14 -0.82 7,201,070 Trade
NWSA News Corporation 12.75 0.25 2.00 2,198,571 Trade
OREX Orexigen Therapeutics Inc. n/a n/a n/a n/a
NTCT NetScout Systems Inc. 27.73 0.42 1.54 299,509 Trade
GM General Motors Company 39.09 0.20 0.51 8,582,316 Trade
DNKN Dunkin' Brands Group Inc. 69.76 -0.11 -0.16 862,257 Trade
VIAB Viacom Inc. 29.15 0.60 2.10 3,676,249 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 6.49 0.21 3.34 1,236,277 Trade
ILMN Illumina Inc. 299.82 7.35 2.51 773,565 Trade
CTB Cooper Tire & Rubber Company 34.06 0.67 2.01 811,758 Trade
FCX Freeport-McMoRan Inc. 12.28 0.12 0.99 16,573,385 Trade
LYG Lloyds Banking Group Plc American Depositary Shares 2.96 0.06 2.07 18,270,570 Trade
VVUS VIVUS Inc. 5.10 -0.10 -1.92 82,985 Trade
CPST Capstone Turbine Corporation 0.81 0.01 1.58 322,297 Trade
CLR Continental Resources Inc. 46.93 1.77 3.92 2,658,651 Trade
TYC Tyco International plc (Ireland) n/a n/a n/a 0
IPG Interpublic Group of Companies Inc. (The) 23.38 0.35 1.52 4,453,767 Trade
GIS General Mills Inc. 45.04 0.51 1.15 4,188,319 Trade
ZNGA Zynga Inc. 5.03 0.05 1.00 25,940,400 Trade
WFC Wells Fargo & Company 49.22 0.70 1.44 19,346,194 Trade
NFLX Netflix Inc. 356.87 -2.20 -0.61 9,229,980 Trade
ENDP Endo International plc 10.57 0.05 0.48 1,247,641 Trade
EXR Extra Space Storage Inc 99.72 0.74 0.75 802,914 Trade
IGT International Game Technology 16.65 0.18 1.09 2,403,241 Trade
BP BP p.l.c. 42.29 0.42 1.00 3,463,356 Trade
BRCM Broadcom Corp. n/a n/a n/a 0 Trade
T AT&T Inc. 30.47 0.68 2.28 37,188,658 Trade
HAL Halliburton Company 31.85 0.25 0.79 8,249,104 Trade
DUK Duke Energy Corporation (Holding Company) 87.51 -0.31 -0.35 4,472,941 Trade
CX Cemex S.A.B. de C.V. Sponsored ADR 4.92 0.02 0.41 8,137,440 Trade
MHGC Morgans Hotel Group Co. n/a n/a n/a 0 Trade
AEP American Electric Power Company Inc. 79.27 -0.08 -0.10 2,740,371 Trade
NIHD NII Holdings Inc. 4.47 0.16 3.71 620,334 Trade
WMT Walmart Inc. 99.99 1.47 1.49 9,480,983 Trade
AAPL Apple Inc. 170.42 -0.38 -0.22 24,626,814 Trade
DIS The Walt Disney Company 112.59 1.93 1.74 8,197,250 Trade
BA The Boeing Company 417.97 8.15 1.99 4,017,338 Trade

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Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
XOM

     

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