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

Sector Recap |

Stocks Recover From Early Losses to Close FlatThe 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
AA Alcoa Inc. 9.76 -0.02 -0.20 12,146,577
AAPL Apple Inc. 112.71 -1.91 -1.67 52,481,151
ACC American Campus Communities Inc 51.09 -0.32 -0.62 951,630
AEP American Electric Power Company 66.66 0.06 0.09 2,031,124
AES The AES Corporation 13.26 0.07 0.53 3,955,833
BA Boeing Company (The) 131.78 -0.09 -0.07 2,330,720
BHI Baker Hughes Incorporated 49.24 -0.91 -1.81 3,602,859
BP BP p.l.c. 33.96 -0.30 -0.88 5,138,003
BRCM Broadcom Corp. n/a n/a n/a 0
BX The Blackstone Group L.P. Representing Limited Par 25.83 -0.22 -0.84 3,470,024
CLR Continental Resources Inc. 46.13 -1.67 -3.49 2,082,848
CPST Capstone Turbine Corporation 1.39 0.00 0.00 80,102
CQP Cheniere Energy Partners LP 29.37 -0.21 -0.71 113,573
CSCO Cisco Systems Inc. 31.34 -0.32 -1.01 20,442,199
CSX CSX Corporation 29.64 0.07 0.24 4,995,726
CTB Cooper Tire & Rubber Company 37.20 0.25 0.68 639,151
CX Cemex S.A.B. de C.V. Sponsored ADR 7.73 -0.07 -0.90 7,114,543
DAL Delta Air Lines Inc. 38.78 0.28 0.73 6,841,201
DIS Walt Disney Company (The) 93.27 -0.14 -0.15 4,407,725
DLR Digital Realty Trust Inc. 97.95 -0.14 -0.14 2,209,675
DNKN Dunkin\' Brands Group Inc. 50.11 0.71 1.44 1,029,661
DRYS DryShips Inc. 0.48 0.00 0.50 1,360,400
DUK Duke Energy Corporation (Holding Company) 82.52 0.01 0.01 2,348,821
ENDP Endo International plc 23.39 3.13 15.45 21,089,683
EXR Extra Space Storage Inc 80.02 0.59 0.74 1,017,796
FB Facebook Inc. 127.96 -2.12 -1.63 28,326,266
FCX Freeport-McMoRan Inc. 10.63 -0.35 -3.19 22,336,624
GE General Electric Co 29.89 -0.15 -0.50 22,821,677
GIS General Mills Inc. 64.65 -0.41 -0.63 3,252,646
GLW Corning Incorporated 23.14 0.03 0.13 10,115,486
GM General Motors Company 32.12 -0.27 -0.83 9,812,127
HAL Halliburton Company 41.84 -0.81 -1.90 7,191,650
IAG Iamgold Corporation 4.12 -0.19 -4.41 7,342,082
IGT International Game Technology 24.75 0.11 0.45 748,361
ILMN Illumina Inc. 179.33 -0.01 -0.01 791,939
INTC Intel Corporation 37.19 -0.36 -0.96 18,062,474
IPG Interpublic Group of Companies Inc. (The) 22.18 -0.32 -1.42 5,626,095
KR Kroger Company (The) 30.45 -0.30 -0.98 8,599,347
LHO LaSalle Hotel Properties 25.06 0.04 0.16 1,377,419
LOW Lowe\'s Companies Inc. 72.35 0.27 0.37 6,052,994
LYG Lloyds Banking Group Plc American Depositary Share 2.95 -0.08 -2.64 2,873,179
MHGC Morgans Hotel Group Co. 2.18 0.02 0.93 183,274
MO Altria Group Inc. 63.87 -0.25 -0.39 4,428,499
NFLX Netflix Inc. 95.94 0.11 0.11 6,179,471
NIHD NII Holdings Inc. 3.32 0.01 0.30 517,104
NTCT NetScout Systems Inc. 29.12 -0.30 -1.02 461,711
NWSA News Corporation 14.05 -0.09 -0.64 1,358,401
OREX Orexigen Therapeutics Inc. 3.46 0.01 0.29 286,924
PG Procter & Gamble Company (The) 87.76 -1.23 -1.38 48,281,375
RBS Royal Bank of Scotland Group Plc New (The) ADS 4.75 -0.12 -2.46 1,784,362
RIG Transocean Ltd (Switzerland) 9.10 -0.55 -5.70 21,742,529
S Sprint Corporation 6.64 0.02 0.30 8,699,931
T AT&T Inc. 41.28 0.17 0.41 18,867,573
TESO Tesco Corporation 7.71 -0.36 -4.46 372,407
TI Telecom Italia S.P.A. New 8.48 -0.02 -0.24 33,255
TM Toyota Motor Corporation 117.66 -3.14 -2.60 402,204
TYC Tyco International plc (Ireland) n/a n/a n/a 0
URI United Rentals Inc. 75.55 0.16 0.21 2,158,085
VALE VALE S.A. American Depositary Shares Each Represen 5.42 0.00 0.00 15,016,506
VC Visteon Corporation 72.20 -0.41 -0.56 279,386
VIAB Viacom Inc. 35.50 -0.32 -0.89 3,662,279
VRSK Verisk Analytics Inc. 81.32 0.27 0.33 1,638,351
VTR Ventas Inc. 72.22 0.78 1.09 2,726,567
VVUS VIVUS Inc. 1.13 0.05 4.63 457,486
WFC Wells Fargo & Company 45.74 0.02 0.04 28,710,524
WLK Westlake Chemical Corporation 50.30 -0.37 -0.73 1,821,589
WLL Whiting Petroleum Corporation 7.49 -0.42 -5.31 31,250,972
WMT Wal-Mart Stores Inc. 72.35 0.08 0.11 7,696,449
WPI Watson Pharmaceuticals Inc. n/a n/a n/a 0
ZNGA Zynga Inc. 2.84 0.00 0.00 6,456,245

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