Equities Sector Coverage: Stocks Stay Flat Ahead of Election

Sector Recap |

Selective Opportunities - Don't Get CarelessNon-manufacturing ISM came in at 54.2 in October below estimates. The Dow Jones Industrial Average traded down to 13,038.71 then rebounded into the green to 13,106.14, still between its 200-day simple moving average at 12,991.52 and its 50-day SMA at 13,339.35. The Nasdaq traded up to 2986.68 helped by a rebound in Apple Inc (AAPL) then fell to 2975.85 before rebounding to 2996.93 versus its 200-day SMA at 2982.46 and its 50-day SMA at 3083.48.

Asian stocks were lower on Monday. The Nikkei 225 closed at 9,007 – down 0.48%. The Hang Seng closed at 22,006 – down 0.47%. European exchanges were also lower on Monday. The FTSE 100 ended the day at 5,839 – down 0.50%. The DAX ended the day at 7,326 – down 0.51%. The CAC 40 ended the day at 3,449 – down 1.26%. The yield on the 10-Year US Treasury declined from 1.724% to 1.672% versus the 50-day and 200-day simple moving averages at 1.704% and 1.790%.

Comex gold rebounded from $1672.5 the Troy ounce to $1686.2 still between the 200-day and 50-day simple moving averages at $1666.0 and $1737.3. Nymex crude oil rallied to $85.38 per barrel then fell to $84.34 before rebounding to $85.88, still well below its 50-day and 200-day simple moving averages at $91.83 and $94.92 with the 200-week SMA at $82.85. The euro versus the dollar declined from 1.2841 to 1.2770 dipping below its 200-day simple moving average at 1.2828.

Energy

Seadrill (SDRL) has signed a memorandum of understanding to sell rigs to Malaysian oil and gas service provider SapuraKencana Petroleum for $2.9B as part of a deal to merge the companies' rig operations. Cheniere Energy Partners (CQP) beat estimates by 6 cents, while missing revenue by $1M. Transocean (RIG) beat estimates by 53 cents, while missing revenue by $90M. El Paso Pipeline Partners (EPB) is upgraded to Buy from Hold at Goldman Sachs. Hess (HES) is upgraded to Buy from Neutral at Global Hunter. Penn West Petroleum (PWE) is downgraded to Hold from Buy at Canaccord. Big Mover – Overseas Shipholding Group (OSG) is up about 11.5%. Dow components – Chevron (CVX) is up about 0.5%. Exxon Mobil (XOM) is up about 0.25%. Energy Select Sector SPDR (XLE) was trading at $71.665 at 3:30 PM on Monday, up 0.85% on the day – up 3.67% year-to-date.

Materials

Silver Wheaton (SLW) missed estimates by 6 cents and revenue by $34M. Metals USA (MUSA) is an Outperform at Wells Fargo. DuPont (DD) is now Neutral from Overweight at Piper Jaffray. Dow Components – Alcoa (AA) is down about 0.25%. DuPont (DD) is up about 0.3%. The Materials Select Sector SPDR (XLB) was trading at $36.33 at 3:30 PM on Monday, up 0.72% on the day – up 8.45% year-to-date.

Industrials

Rockwell Automation (ROK) beat estimates by 6 cents and revenue by $40M. Manitowoc (MTW) missed estimates by 12 cents and revenue by $50M. ADT Corp. (ADT) is initiated with a Buy at Citigroup. Dow components – Boeing Co (BA) is up about 0.2%. Caterpillar (CAT) is up about 0.6%. General Electric (GE) is up about 0.2%. 3M Company (MMM) is up about 0.6%. United Technologies (UTX) is down slightly. The Industrial Select Sector SPDR (XLI) was trading at $36.96 at 3:30 PM on Monday, up 0.35% on the day – up 9.51% year-to-date.

Consumer Discretionary

Starbucks (SBUX) hasn't paid any U.K. taxes for three years, while Amazon (AMZN), Facebook (FB) and Google (GOOG) have paid under £30M combined despite sales of £3.1B. Apple (AAPL) avoided taxes of over $550M in 2011. Toyota's (TM) FQ2 net profit beat expectations and surged to ¥257.92B ($3.2B) from ¥80.42B last year. Revenue rose 18% to ¥5.41T. Advertising agency Interpublic (IPG) is considering replacing the CEOs of its McCann and DraftFCB units amid falling revenues and the loss of major accounts. An Australian judge has ruled that S&P (MHP) was "misleading and deceptive" in assigning AAA ratings to two ABN Amro (RBS) structured debt issues in 2006, which plummeted in value during the financial crisis and caused losses of over 90% to 12 municipal investors that brought a lawsuit against the firm. Hhgregg (HGG) beat estimates by 2 cents, while missing revenue by $50.4M. Time Warner Cable's (TWC) Q3 net profit more than doubled to $808M as revenue climbed 9.2% to $5.36B, as expected. However, adjusted EPS of $1.41 missed consensus by $0.02. Tesla Motors' (TSLA) net losses widened to $110.8M in Q3 from $65.08M last year, with adjusted losses per share $0.92 missing consensus by 2 cents. However, a 127% surge in revenue to $50.1M beat forecasts by $2M. The company maintains full-year revenue guidance of $400M-$440M. Some low-wage restaurants, hotels and retailers have begun or are planning to limit the schedules of staff to below 30 hours a week to avoid having to provide them with health insurance or face a penalty of at least $2,000 per worker, as prescribed under the Healthcare Act. Darden Restaurants (DRI) is among those modifying its policies, although Marriott (MAR) and Costco (COST) have no plans to change employee hours. True Religion Apparel (TRLG) beat estimates by 4 cents and revenue by $5M. Time Warner Cable (TWC) missed estimates by 2 cents with revenue in-line with estimates. Charter Communications (CHTR) is an Underweight at Barclays. Shutterstock (SSTK) is a Hold at Deutsche Bank. Aeropostale (ARO) is upgraded to Outperform from Market Perform by FBR Capital. Amazon (AMZN) is added to the Buy list at Evercore. CBS Corp. (CBS) is upgraded to Overweight from Equal Weight at Evercore. Target (TGT) is taken to Overweight from Equal Weight at JPMorgan. Walt Disney (DIS) is now Buy from Hold at Argus. Zumiez (ZUMZ) is now Neutral from Buy at JPMorgan. Big Mover – hhgregg (HGG) is up about 11.5%. Dow Components – Disney (DIS) is up about 0.7%. Home Depot (HD) is up about 0.6%. McDonalds (MCD) is up about 0.7%. The Consumer Discretionary Select Sector SPDR (XLY) was trading at $46.66 at 3:30 PM on Monday, up 0.19% on the day – up 19.58% year-to-date.



Consumer Staples

Some low-wage restaurants, hotels and retailers have begun or are planning to limit the schedules of staff to below 30 hours a week to avoid having to provide them with health insurance or face a penalty of at least $2,000 per worker, as prescribed under the Healthcare Act. Darden Restaurants (DRI) is among those modifying its policies, although Marriott (MAR) and Costco (COST) have no plans to change employee hours. Amira Nature Foods (ANFI) is initiated with a Buy at Jefferies. Costco (COST) is covered with an Outperform at BMO Capital. Dow components – Coca Cola (KO) is down about 0.5%. Procter & Gamble (PG) is down about 1%. Wal-Mart (WMT) is up about 0.25%. The Consumer Staples Select Sector SPDR (XLP) was trading at $35.139 at 3:30 PM on Monday, down 0.17% on the day – up 8.15% year-to-date.

Health Care

BioMarin Pharmaceutical (BMRN) will seek regulatory approval early next year of a drug to treat a crippling, inherited disease, after a late-stage clinical trial showed that it hit its goal of helping patients walk farther. India's government has revoked the patent on Roche's (RHHBY) expensive Pegasys drug for hepatitis C, part of a series of such actions on the treatments of multinational drug companies in the country. Endo Pharmaceuticals (ENDP) beat estimates by 2 cents, while missing revenue by $38M. Bruker Corporation (BRKR) beat estimates by 7 cents and revenue by $9M. Humana (HUM) beat estimates by 57 cents, while missing revenue by $200M. National Health Investors (NHI) beat estimates by a penny and revenue by $3M. Valeant Pharmaceuticals (VRX) reported Q3 result that beat bottom line estimates on a 47% increase in quarterly revenue. Looking forward, the company narrows Q4 earnings projections to $1.30 to $1.35 (The Street is at $1.30). For FY12, the company guides its EPS to around $4.60 to $4.65 (in-line with expectations of $4.63). Dendreon (DNDN) reported a less-than-expected $0.33 a share net loss for the quarter. Revenues climbed 21.3% Y/Y to $78M on strength in its urology and oncology units, but the numbers still slightly missed estimates by $2.7M. Kythera Biopharmaceuticals (KYTH) is a new Neutral at Goldman Sachs. UnitedHealth (UNH) is reinstated with an Outperform at Credit Suisse. Mannkind (MNKD) is upgraded to Buy from Neutral at Bank of America-Merrill Lynch. Big Movers – BioMarin Pharmaceuticals (BMRN) are up about 31.5%. InterMune (ITMN) is up about 14.5%. Health Net (HNT) is up about 14%. Pharmacyclics (PCYC) is down about 10.5%. Dow Components – Johnson & Johnson (JNJ) is down about 0.2%. Merck (MRK) is down about 1.1%. Pfizer (PFE) is up about 0.2%. United Health Group (UNH) is down about 1%. The Health Care Select Sector SPDR (XLV) was trading at $40.145 at 3:30 PM on Monday, up 0.01% on the day – up 15.72% year-to-date.

Financials

HSBC's (HBC) Q3 pretax profit jumped 125% to $5B but missed estimates of $5.6B, while underlying revenue rose 20% to $16.13B. An Australian judge has ruled that S&P (MHP) was "misleading and deceptive" in assigning AAA ratings to two ABN Amro (RBS) structured debt issues in 2006, which plummeted in value during the financial crisis and caused losses of over 90% to 12 municipal investors that brought a lawsuit against the firm. Lloyds (LYG) is reportedly thinking about selling its 60% holding in U.K. wealth manager St James's Place, which has a market cap of £1.99B, and could try to place the shares in the market by the end of the year. Berkshire Hathaway (BRK.A) reported Q3 operating earnings/share of $2,057 and net earnings/share of $2,373 (versus $2,309 and $1,380 in year-ago period). Ellington Financial (EFC) is initiated with a Buy at Maxim Group. Grupo Financiero Santander Mexico (BSMX) is initiated with a Buy at Citigroup. Brookfield Properties (BPO) is upgraded to Outperform from Sector Perform at RBC Capital. Equity One (EQY) is upgraded to Outperform from Perform at Raymond James. Flagstar Bancorp (FBC) is upgraded to Outperform from Perform at FBR Capital. Genworth Financial (GNW) gets upgraded to Outperform from Neutral at Macquarie. Redwood Trust (RWT) is upgraded to Outperform from Perform with Wells Fargo. Northern Trust (NTRS) is upgraded to Equal Weight from Underweight at Evercore, which increases State Street (STT) to Overweight from Equal Weight. Strategic Hotels & Resorts (BEE) is moved to Outperform from Market Perform at JMP Securities. Big Mover – Strategic Hotels & Resorts (BEE) is up about 13%. Dow Components – American Express (AXP) is down about 0.9%. Bank of America (BAC) is down about 1.3%. JP Morgan Chase (JPM) is down about 0.7%. The Travelers Companies (TRV) is down about 0.75%. The Financial Select Sector SPDR (XLF) was trading at $15.96 at 3:30 PM on Monday, down 0.25% on the day – up 22.77% year-to-date.

Information Technology

The U.K. parliament's Treasury Select Committee could launch an investigation into tax avoidance by major U.S. companies and look at how to recalibrate the law to end or at least reduce such avoidance. Starbucks (SBUX) hasn't paid any U.K. taxes for three years, while Amazon (AMZN), Facebook (FB) and Google (GOOG) have paid under £30M combined despite sales of £3.1B. Apple (AAPL) avoided taxes of over $550M in 2011. Sohu.com (SOHU) reported Q3 EPS of $0.26 (in-line), while beating revenue by $10M. AudioCodes (AUDC) beat estimates by 2 cents and revenue by $0.6M. Ambarella (AMBA) is begun with a Buy at Deutsche Bank. Workday (WDAY) is a Buy at Canaccord Genuity. Cardtronics (CATM) is now Buy from Neutral at Compass Point. Foxconn International (FXCNY) is upgraded to Buy from Hold at Citigroup. Qualcomm (QCOM) is upgraded to Buy from Neutral at Nomura. Alcatel-Lucent (ALU) is downgraded to Underperform from Market Perform by Sanford Bernstein. Dolby Laboratories (DLB) is downgraded to Underperform from Market Perform at JMP Securities. Juniper Networks (JNPR) is downgraded to Sector Perform from Outperform at Pacific Crest. Big Mover – Ebix (EBIX) is down about 11.5%. Dow Components – Cisco Systems (CSCO) is up slightly. Hewlett-Packard (HPQ) is up about 1.3%. IBM (IBM) is up about 0.25%. Intel Corp (INTC) is down slightly. Microsoft (MSFT) is up slightly. The Technology Select Sector SPDR (XLK) was trading at $29.08 at 3:30 PM on Monday, up 0.41% the day – up 14.26% year-to-date.

Telecommunication Services

NTT DoCoMo (DCM) is now Neutral from Overweight at JPMorgan. Dow Components – AT&T (T) is down about 0.6%. Verizon (VZ) is down about 1%. The NASDAQ Telecommunications Index (IXTC) was trading at $185.59 at 3:30 PM on Monday, up 0.28% on the day – down 5.76% year-to-date.

Utilities

Southern Company (SO) missed estimates by 2 cents and revenue by $920M. Entergy (ETR) missed estimates by 5 cents and revenue by $460M. Exelon (EXC) is downgraded to Hold from Buy at Argus. The Big Names – Dominion Resources (D) is down about 1.7%. Edison International (EIX) is down about 1.25%. First Energy (FE) is down about 4.1%. PG&E Corp (PCG) is down about 1.2%. Southern Company (SO) is down about 2.3%. The Utilities Select Sector SPDR (XLU) was trading at $35.662 at 3:30 PM on Monday, down 1.65% on the day – down 0.88% year-to-date.

STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KO, PG, WMT, JNJ, MRK, PFE, UNH, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, BP, GD, ABT, HES, XEC, CHK, SPWR, KOG, FSLR, OIS, BRY, PXD, SFY, HUN, MTX, NGD, NEM, CENX, EGO, MT, ABX, ITT, SEE, MWA, SBUX, COST, GMCR, PCLN, MHK, DECK, EBAY, MHP, CHEF, BEBE, SAM, VRX, VRTX, DXCM, VRTX, ONXX, SCBFF, RBS, C, DB, HBC, BCS, GS, AIG, AAPL, WIT, STML, LNKD, ACTV, PBI, OPEN, SWKS, ALU, ALSK, UNTD, USM, MCE, NRG, UNS, SWN, EXC

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
NGD New Gold Inc. 3.17 0.15 4.97 4,536,599
MMM 3M Company 199.03 -0.36 -0.18 2,922,007 Trade
UNH UnitedHealth Group Incorporated (DE) 190.75 0.35 0.18 2,683,397 Trade
MTX Minerals Technologies Inc. 72.05 -1.95 -2.64 104,710 Trade
SAM Boston Beer Co. Cl A 133.95 -0.55 -0.41 89,105 Trade
HES Hess Corporation 43.47 -1.90 -4.19 7,443,657 Trade
DECK Deckers Outdoor Corporation 63.75 -1.74 -2.66 447,851 Trade
PG Procter & Gamble Company (The) 89.30 0.16 0.18 6,985,223 Trade
GE General Electric Co 25.59 0.15 0.59 40,731,984 Trade
CVX Chevron Corporation 105.12 0.73 0.70 5,880,758 Trade
ABT Abbott Laboratories 50.40 -0.43 -0.85 6,057,053 Trade
SO Southern Company (The) 47.40 0.62 1.33 4,152,880 Trade
PCG Pacific Gas & Electric Co. 67.90 0.39 0.58 2,055,972 Trade
WIT Wipro Limited 6.16 0.04 0.65 1,670,575 Trade
MHK Mohawk Industries Inc. 240.13 -1.14 -0.47 637,542 Trade
JNJ Johnson & Johnson 130.95 -0.93 -0.71 5,382,162 Trade
WMT Wal-Mart Stores Inc. 78.90 0.38 0.48 6,715,912 Trade
AA Alcoa Inc. 36.63 -0.67 -1.80 3,450,979 Trade
INTC Intel Corporation 34.75 0.08 0.23 15,495,649 Trade
IBM International Business Machines Corp 145.36 -0.83 -0.57 3,932,290 Trade
GD General Dynamics Corp. 194.66 -8.90 -4.37 4,079,626 Trade
VRX Valeant Pharmaceuticals International Inc. 17.77 0.06 0.34 9,289,159 Trade
D Dominion Resources Inc. 77.05 0.26 0.34 1,395,443 Trade
TRV The Travelers Companies Inc. 126.00 -1.46 -1.15 1,288,911 Trade
USM United States Cellular Corporation 38.10 -0.65 -1.68 67,967 Trade
STML Stemline Therapeutics Inc. 10.05 0.20 2.03 80,194 Trade
EBAY eBay Inc. 37.04 0.72 1.98 11,304,720 Trade
AAPL Apple Inc. 153.46 0.72 0.47 15,761,241 Trade
ALSK Alaska Communications Systems Group Inc. 2.23 -0.13 -5.51 110,563 Trade
BCS Barclays PLC 11.04 0.13 1.19 3,589,409 Trade
C Citigroup Inc. 67.98 -0.05 -0.07 19,224,750 Trade
EIX Edison International 78.91 0.52 0.66 1,276,167 Trade
IVRPRB Invesco Mortgage Capital Inc n/a n/a n/a 0 Trade
NRG NRG Energy Inc. 24.67 -0.34 -1.36 8,625,085 Trade
PCLN The Priceline Group Inc. 2,033.21 16.30 0.81 311,748 Trade
JPM JP Morgan Chase 91.93 -0.87 -0.94 11,814,522 Trade
AXP American Express Company 85.30 -0.11 -0.13 3,038,102 Trade
OIS Oil States International Inc. 27.20 0.00 0.00 472,600 Trade
ITT ITT Inc. 41.53 -0.63 -1.49 506,739 Trade
UTX United Technologies Corporation 119.54 -0.88 -0.73 2,993,911 Trade
SWN Southwestern Energy Company 5.91 -0.01 -0.17 21,110,680 Trade
PBI Pitney Bowes Inc. 15.84 -0.12 -0.75 1,078,228 Trade
XEC Cimarex Energy Co 96.75 -0.69 -0.71 747,462 Trade
CENX Century Aluminum Company 18.30 -0.09 -0.49 1,909,075 Trade
DB Deutsche Bank AG 19.06 0.02 0.11 5,085,995 Trade
CSCO Cisco Systems Inc. 31.66 -0.46 -1.43 21,938,843 Trade
SFY Swift Energy Co. n/a n/a n/a n/a
DIS Walt Disney Company (The) 106.94 0.52 0.49 4,148,557 Trade
GS The Goldman Sachs Group Inc. 222.25 0.67 0.30 2,792,257 Trade
CHEF The Chefs\' Warehouse Inc. 14.45 0.45 3.21 130,486 Trade
COST Costco Wholesale Corporation 152.09 -1.08 -0.71 3,015,906 Trade
VZ Verizon Communications Inc. 44.40 0.42 0.95 19,038,968 Trade
GMCR Keurig Green Mountain Inc n/a n/a n/a 0 Trade
ABX Barrick Gold Corporation 16.24 0.20 1.25 18,429,562 Trade
BAC Bank of America Corporation 24.21 -0.27 -1.10 65,638,406 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 6.70 0.07 1.06 621,235 Trade
LNKD LinkedIn Corporation Class A n/a n/a n/a 0 Trade
MCD McDonald\'s Corporation 156.51 -2.56 -1.61 4,677,663 Trade
EGO Eldorado Gold Corporation 2.47 0.05 2.07 7,626,871 Trade
SPWR SunPower Corporation 11.01 0.02 0.18 3,146,158 Trade
BEBE bebe stores inc. 5.82 0.01 0.17 2,825 Trade
DD E.I. du Pont de Nemours and Co. 84.81 -0.68 -0.80 1,494,247 Trade
SBUX Starbucks Corporation 57.94 -0.61 -1.04 8,774,331 Trade
HUN Huntsman Corporation 27.42 -0.15 -0.54 3,321,660 Trade
HD Home Depot Inc. (The) 146.69 -0.28 -0.19 2,835,960 Trade
XOM Exxon Mobil Corporation 80.37 0.10 0.12 10,465,020 Trade
PFE Pfizer Inc. 32.89 -0.21 -0.63 15,723,574 Trade
FSLR First Solar Inc. 45.44 -0.02 -0.04 1,687,533 Trade
DXCM DexCom Inc. 68.75 -1.25 -1.79 851,623 Trade
ALU Alcatel-Lucent ADR (Sponsored) n/a n/a n/a 0 Trade
AIG American International Group Inc. New 65.19 -0.10 -0.15 4,458,889 Trade
UNTD United Online Inc n/a n/a n/a 0 Trade
MT ArcelorMittal 25.71 -0.39 -1.49 9,550,156 Trade
HPQ HP Inc. 19.26 -0.15 -0.77 8,027,772 Trade
BA Boeing Company (The) 233.45 20.99 9.88 14,134,993 Trade
SWKS Skyworks Solutions Inc. 107.33 0.94 0.88 1,319,176 Trade
MRK Merck & Company Inc. (new) 61.80 -0.56 -0.90 9,366,722 Trade
SEE Sealed Air Corporation 45.06 -0.14 -0.31 1,057,172 Trade
BP BP p.l.c. 34.84 -0.06 -0.17 3,045,297 Trade
FE FirstEnergy Corporation 31.10 0.23 0.75 5,624,345 Trade
KO Coca-Cola Company (The) 45.74 0.50 1.11 13,606,678 Trade
EXC Exelon Corporation 37.68 0.66 1.78 4,667,900 Trade
PXD Pioneer Natural Resources Company 162.60 0.00 0.00 1,082,955 Trade
T AT&T Inc. 38.03 1.81 5.00 72,419,911 Trade
MWA MUELLER WATER PRODUCTS 11.41 -0.05 -0.44 665,687 Trade
CAT Caterpillar Inc. 113.52 -1.02 -0.89 5,741,249 Trade
NEM Newmont Mining Corporation 36.96 0.72 1.99 7,670,920 Trade
VRTX Vertex Pharmaceuticals Incorporated 163.42 1.45 0.90 2,085,566 Trade
MSFT Microsoft Corporation 74.05 -0.14 -0.19 16,240,995 Trade
CHK Chesapeake Energy Corporation 4.84 -0.01 -0.21 27,466,593 Trade

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