Equities Sector Coverage: Stocks Start May in the Red

Sector Recap |

Bear MarketStocks around the globe rallied on Monday on the news that Osama bin Laden had been killed following a nearly 10-year manhunt. U.S. stocks enter May on the heels of a strong week last week where the Dow Jones Industrial Average gained 305 points to 12,811 and with the NASDAQ up 54 points to 2874. The NASDAQ, Dow Transports and Russell 2000 traded above their 2007 / 2008 highs last week. Construction Spending increased 1.4% in March, down 6.8% year over year with nonresidential building construction down 21.7% year over year. The ISM manufacturing index came in a stronger than expected 60.4 in April, but prices paid is extremely elevated at 85.5. Both the Dow Industrial Average and NASDAQ traded to a new 2001 highs at 12,876.00 and 2887.75, but both traded into the red in the last half hour of trading.

The Nikkei 225 rose by 1.6% to 10,004. The yield on the U.S. 10-year note declined to 3.26 continuing a modest flight to quality. Comex gold set another all time record high at $1577.4 the Troy ounce then gave up about $20 on profit-taking. Nymex crude oil traded to a new multi-year high at $114.83 after trading as low as $110.82 per barrel Monday morning. The euro versus the U.S. dollar briefly dipped below 1.48 then traded just above 1.49 in the late morning and then drifted lower in the final hour of trading.

Energy

Sunpower (SPWRA) is cut to Hold from Buy at Societe Generale. In afternoon trading: Shares of International Coal Group (ICO) are up about 31% after Arch Coal (ACI) agreed to acquire the company for $3.4 billion in a deal it said would make it the second-largest U.S. producer of the coal used in steel production. Shares of Clayton Williams Energy (CWEI) are down about 5.4%. Shares of Helmerich & Payne (HP) are down about 5%.

The Energy Select Sector SPDR (XLE) was trading at $79.41 at 4:00 PM on Monday, down 1.33% on the day – up 16.35% year-to-date.

Materials

This morning, the price of spot silver experienced one of its most dramatic falls ever, collapsing 12% in 11 minutes of early trading in Asia. Danisco (DNSCY.PK) today urged shareholders to approve a 'best and final offer' of $6.64B from DuPont (DD) after the latter raised its bid for the Danish food ingredients and enzymes maker by 5%. Mercer International (MERC) gets begun with a Buy at Canaccord Genuity. Omnova Solutions (OMN) is boosted to Buy from Hold at Jefferies with a new price objective of $11. Lubrizol (LZ) is lowered to Hold from Buy at Jefferies. In afternoon trading: Shares of OMNOVA Solutions are up about 10%. Shares of Boise (BZ) are down about 7.5%. Shares of Silvercorp Metals (SVM) are down about 7.25%. Shares of Endeavour Silver (EXK) are down about 7.25%. Shares of Silver Wheaton (SLW) are down about 5.5%.

The Materials Select Sector SPDR (XLB) traded at $40.58 at 4:00 PM on Monday, down 0.71% on the day – up 5.65% year-to-date.

Industrials

U.S. crane maker Terex (TEX) is launching a public tender offer of €884M ($1.31B) for Germany's Demag Cranes (DMGCF.PK) after the latter's management turned its back on talks. However, the company may have to raise its offer, with a potential counterbid from Finland-based Konecranes (KNCRF.PK). Alcoa (AA) is boosted to Buy from Neutral at Goldman. In afternoon trading: Shares of YRC Worldwide (YRCW) are down about 22.25%. Shares of SmartHeat (HEAT) are up about 7.5%.

The Industrial Select Sector SPDR (XLI) traded at $38.64 at 4:00 PM on Monday, down slightly on the day – up 10.81% year-to-date.

Consumer Discretionary

Third and final bids for Warner Music Group (WMG) are due today and the company could be sold by the end of the week in a deal valued at over $3B. Loews Corp (L) beat estimates by a penny and revenue by $50M. HSN, Inc. (HSNI) gets picked up with an Overweight at Piper Jaffray. Netflix (NFLX) is now Buy from Hold at Citigroup with a new target of $300. Shoe Carnival (SCVL) is cut to Hold from Buy at Soleil Securities. Host Hotels (HST) is now Neutral from Buy at UBS. In afternoon trading: Shares of DISH Network (DISH) are up about 17.25% after beating by 54 cents. Shares of Focus Media (FMCN) are up about 6.25%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.69 at 4:00 PM on Monday, up 0.35% on the day – up 8.77% year-to-date.

Consumer Staples

Danisco (DNSCY.PK) today urged shareholders to approve a 'best and final offer' of $6.64B from DuPont (DD) after the latter raised its bid for the Danish food ingredients and enzymes maker by 5%. Whole Foods (WFMI) is downgraded to Hold from Buy with a $24 target at Jefferies. In afternoon trading: Shares of Ralcorp Holding (RAH) are up about 6%. Shares of Smart Balance (SMBL) are up about 4.75%. Shares of Whole Foods are down about 5%.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.56 at 4:00 PM on Monday, up slightly on the day – up 7.68% year-to-date.

Healthcare

Teva (TEVA) has agreed to acquire the outstanding shares of Cephalon (CEPH) for $81.50 a share in cash, giving the latter a total enterprise value of approximately $6.8B.This development is a blow to Valeant (VRX), which had been pursuing Cephalon. Humana (HUM) reported Q1 EPS of $1.86 (in-line) and beat revenue by $9.19B. Dendreon (DNDN) is picked up at Underperform by Credit Suisse. Exelixis (EXEL) is initiated with a Neutral at Goldman Sachs. Roche Holding (RHHBY) is now a Buy from Neutral at Natixis. Lifepoint Hospitals (LPNT) is lifted to Strong Buy from Market Perform at Raymond James. ZOLL Medical (ZOLL) is lowered to Neutral from Buy at Lazard. In afternoon trading: Shares of GTx Inc (GTXI) are up about 13.5%. Shares of Pacific Biosciences of California (PACB) are down about 10%.

The Health Care Select Sector SPDR (XLV) traded at $35.60 at 4:00 PM on Monday, up 1.02% on the day – up 13.02% year-to-date.

Financials

Berkshire Hathaway (BRK.A) estimates its Q1 net profit plunged to $1.5B from $3.6B a year earlier due to $1.7B in pretax insurance losses following major disasters in Japan. In afternoon trading: Shares of RAIT Financial Trust (RAS) are down about 6.5%. Shares of Lehman Brothers (LEHMQ) are down about 5.75%. Actives: Shares of Citigroup (C) are down about 1.5%. Shares of Bank of America (BAC) are up about 0.5%. Shares of Wells Fargo (WFC) are flat. Shares of JPMorgan Chase (JPM) are down about 1%.

The Financial Select Sector SPDR (XLF) traded at $16.31 at 4:00 PM on Monday, down 0.43% on the day – up 2.26% year-to-date.

Information Technology

JDS Uniphase (JDSU) is resumed with an Outperform at Pacific Crest. Sanmina-SCI (SANM) is boosted to Buy from Hold with a $15 target at Argus. JA Solar (JASO) is now Hold from Buy at Needham. Applied Materials (AMAT) is moved to Neutral from Overweight at JP Morgan. Electronic Arts (ERTS) gets cut to Hold from Buy with a $20 target price at Kaufman Brothers. In afternoon trading: Shares of Brightpoint (CELL) are down about 8.25%. Shares of Ancestry.com (ACOM) are down about 7.5%. Shares of Microvision (MVIS) are up about 7%.

The Technology Select Sector SPDR (XLK) traded at $26.64 at 4:00 PM on Monday, down 0.37% on the day – up 5.76% year-to-date.

Telecommunications Services

In afternoon trading: Shares of Level 3 Communications (LVLT) are up about 5%. Shares of Clearwire (CLWR) are up about 4.75%. Shares of Global Crossing (GLBC) are up about 4.25%. Shares of Shenandoah Telecommun (SHEN) are down about 5%. Shares of VocalTec Communications (CALL) are down about 4.75%. Shares of Cincinnati Bell (CBB) are down about 4%.

The NASDAQ Telecommunications Index (IXTC) traded at $227.65 at 4:00 PM on Monday, down 0.32% on the day – up 1.01% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are up about 0.8%. Shares of Exelon (EXC) are down about 1.1%. Shares of PPL (PPL) are up about a quarter of a percent. Shares of Constellation Energy Group (CEG) are down about 0.9%. Shares of FirstEnergy (FE) are down about 0.8%. Shares of American Electric Power (AEP) are up slightly.

The Utilities Select Sector SPDR (XLU) traded at $33.17 at 4:00 PM on Monday, up slightly on the day – up 5.84% year-to-date.

STOCKS: SPWRA, ICO, ACI, CWEI, HP, DNSCY, DD, MERC, OMN, LZ, BZ, SVM, EXK, SLW, TEX, DMGCF, KNCRF, AA, YRCW, HEAT, WMG, L, HSNI, NFLX, SCVL, HST, DISH, FMCN, WFMI, RAH, SMBL, TEVA, CEPH, VRX, HUM, DNDN, EXEL, RHHBY, LPNT, ZOLL, GTXI, PACB, BRK.A, RAS, LEHMQ, C, BAC, WFC, JPM, JDSU, SANM, JASO, AMAT, ERTS, CELL, ACOM, MVIS, LVLT, CLWR, GLBC, SHEN, CALL, CBB, DUK, EXC, PPL, CEG, FE, AEP

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
BWLA Bowl America Inc n/a n/a n/a 0

Comments

Emerging Growth

Gold Reach Resources Ltd.

Gold Reach Resources Ltd is engaged in the acquisition, exploration and development of mineral properties in British Columbia.

Private Markets

Cloudera

Cloudera offers enterprises a new data platform built on the Apache Hadoop open-source software package. Hadoop is a data-management platform that can consolidate data in a single repository for comprehensive…

Ozobot by Evollve Inc

Ozobot is a world leader in compact super intelligent robots that entertain and educate through fun interactive gaming.