Equities Sector Coverage: Tech Leads Stocks

Sector Recap |

Skype Microsoft 8.5 billionImport Prices rose by a stronger than expected 2.2% in April and up 11.1% year over year, yet the Federal Reserve tells us that inflation pressures are temporary. On Tuesday the Dow Industrial Average continued Monday’s strength and traded above 12,775 in the final hour of trading with the NASDAQ trading above 2870.

Stocks were higher in Asia, but the Nikkei 225 lagged with a rise of just 0.25% to 9,819. European indices were higher by 1.25% to 1.50% before the US open. On Monday the Dow Industrial Average tacked on 46 points to 12,685 ending the session up 9.6% year to date. The NASDAQ rose by 15 points to 2843 up 7.2% year to date. The yield on the 10-Year US Treasury note rose to 3.20 percent after the $32 billion auction of 3-Year notes, which came at 1.0% with a bid to cover at 3.29 times. Comex gold continued to rebound from last week’s drubbing with a high of $1520.0 the Troy ounce on Tuesday. Nymex crude oil also continued Monday’s strength with a test of $103.95 per barrel on Tuesday. The euro stayed above Monday’s low at 1.4258, and traded above 1.4400 in the final hour of trading.

Energy

ATP Oil & Gas (ATPG) missed estimates by 57 cents, but beat revenue by $10.1M. Enterprises Products Partners L.P (EPD) beat estimates by 5 cents and revenue by $150M. Clean Energy Fuels (CLNE) beat estimates by 4 cents and revenue by $2M. Rosetta Resources (ROSE) gets raised to Buy from Hold with Wunderlich. In afternoon trading: Shares of Uranerz Energy (URZ) are up about 9.1%. Shares of Treaty Energy (TECO) are down about 8.7%. Shares of James River Coal Company (JRCC) are down about 6.3% after missing estimates by 55 cents and revenue by $10.5M. Shares of GMX Resources (GMXR) are down about 6.1%.

The Energy Select Sector SPDR (XLE) was trading at $76.47 at 4:00 PM on Tuesday, up 0.47% on the day – up 12.04% year-to-date.

Materials

The Royal Bank of Scotland rolls out Buys on mining giants Anglo American (AAUKY), BHP Billiton (BHP), and Rio Tinto PLC (RIO). Graphic Packaging (GPK) is a new Neutral at JP Morgan. Louisiana-Pacific (LPX) is lifted to Hold from Reduce at TD Newcrest. BASF AG (BASFY) gets cut to Hold from Buy at ING Group. In afternoon trading: Shares of ADA-ES (ADES) are down about 12.5%. Shares of Molycorp (MCP) are down about 7.1%. Shares of Yongye International (YONG) are up about 6.3%.

The Materials Select Sector SPDR (XLB) traded at $40.26 at 4:00 PM on Tuesday, up 0.85% on the day – up 4.82% year-to-date.

Industrials

A123 System (AONE) missed estimates by 5 cents with revenue in-line with estimates. Eagle Bulk Shipping (EGLE) beat estimates by a penny and revenue by $26M. Tal International (TAL) is assigned an Outperform at Wells Fargo. Philips Electronics (PHG) is now Neutal from Overweight at JP Morgan. In afternoon trading: Shares of SmartHeat (HEAT) are down about 24.5% after the Chinese company reported a surprise loss for the first quarter due to higher raw materials costs and falling sales. Shares of Greenbrier Companies (GBX) are up about 8.75%.

The Industrial Select Sector SPDR (XLI) traded at $38.58 at 4:00 PM on Tuesday, up 0.92% on the day – up 10.64% year-to-date.

Consumer Discretionary

H&R Block (HRB) sank 7.6% in yesterday's trading following news that a group of mortgage bond investors are trying to force Block's defunct subprime lending unit to repurchase billions in bad loans. Carmike Cinemas (CKEC) missed estimates by 95 cents and revenue by $7.3M. Warner Music Group (WMG) beat estimates by 3 cents and revenue by $84M. Bob Evans (BOBE) is a new Hold ($35 target price) at Miller Tabak. Saks (SKS) is lifted to Neutral from Sell at Goldman Sachs with a new target of $12. Viacom (VIA) gets a Buy-from-Hold boost at Argus with a $65 price objective. American Eagle (AEO) is now Neutral from Buy at Janney Scott. The Jones Group (JNY) gets downgraded to Sell from Neutral at Goldman. Sotheby's (BID) gets cut to Accumulate from Buy at brokerage firm Craig Hallum. Talbots (TLB) is reduced to Neutral from Buy at Lazard. In afternoon trading: Shares of Fossil (FOSL) are up about 13% after reporting that first-quarter earnings surged 55% on 37% revenue growth led by its performance in Asia. Shares of Sotheby’s are down about 8.5%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.86 at 4:00 PM on Tuesday, up 1.29% on the day – up 9.22% year-to-date.

Consumer Staples

Boston Beer (SAM) is boosted to Neutral from Underweight at HSBC. Ralcorp Holdings (RAH) is reduced to Market Perform from Outperform by brokers William Blair. Tyson Foods (TSN) gets taken down to Underperform from Buy at Bank of America-Merrill Lynch. In afternoon trading: Shares of Medifast (MED) are up about 17.75% after the weight-loss program operator's first-quarter results beat Wall Street expectations. Shares of The Pantry (PTRY) are up about 13.6%. Shares of Dean Foods (DF) are up about 11.8% after beating estimates by 8 cents, but missed revenue by $20M. Shares of USANA Health Sciences (USNA) are down about 13.4% after announcing that Fred Cooper, its COO and president and Jeffrey Yates, its CFO, are resigning to pursue other business endeavors.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.74 at 4:00 PM on Tuesday, up 0.60% on the day – up 8.29% year-to-date.

Healthcare

Yesterday evening, Community Health Systems (CYH) withdrew its revised offer to acquire Tenet Healthcare (THC), after Tenet rejected the $7.25/share offer earlier in the day. Amarin (AMRN) beat estimates by 2 cents with revenue in-line with estimates. Avanir Pharmaceuticals (AVNR) beat estimates by 2 cents. Medivation (MDVN) is begun as a Buy and $35 price objective at Citigroup. Valeant Pharmaceuticals (VRX) and Cephalon (CEPH) are each new Neutrals at Goldman with respective price objectives of $50 and $75. Mindray Medical (MR) is moved to Outperform from Perform with a $32 target at Oppenheimer. Alkermes (ALKS) is lifted to Outperform from Market Perform at Leerink Swann. In afternoon trading: Shares of Zalicus (ZLCS) are up about 17.4%. Shares of Medivation are up about 11%. Shares of GTx Inc (GTXI) are up about 10.5%. Shares of MannKind (MNKD) are down about 13.9% after missing estimates by 5 cents.

The Health Care Select Sector SPDR (XLV) traded at $35.92 at 4:00 PM on Tuesday, up 0.62% on the day – up 14.03% year-to-date.

Financials

Bank of America (BAC) plans to cut its $850B portfolio of troubled home loans in half over the next three years as it tries to move past the financial crisis and its ill-timed purchase of Countrywide Financial. Invesco Mortgage Capital (IVR) beat estimates by a penny, but missed revenue by $0.5M. Assured Guaranty (AGO) beat estimates by 47 cents. One Liberty Properties (OLP) gets launched at a Buy and $17 price target at Compass Point. In afternoon trading: Shares of Lehman Brothers (LEHMQ) are down about 10.5%. Shares of Green Dot (GDOT) are up about 6%.

The Financial Select Sector SPDR (XLF) traded at $16.22 at 4:00 PM on Tuesday, up 0.93% on the day – up 1.69% year-to-date.

Information Technology

Microsoft (MSFT) has acquired Internet phone company Skype for $8.5B, which is Microsoft's largest acquisition to date and will help Microsoft with its effort to gain more traction in the consumer market, particularly in the area of mobile phones. Google (GOOG) is preparing to unveil a new online music service, using a 'passive' locker system in which users will be able to stream songs they have uploaded to the service but won't be able to download files. Activision (ATVI) beat estimates by 5 cents and revenue by $87M. Blackboard (BBBB) beat estimates by a penny with revenue in-line with estimates. Integrated Device Technology (IDTI) beat estimates by 2 cents and revenue by $2M. Rackspace Hosting (RAX) reported Q1 EPS of $0.10 (vs. consensus of $0.12), while beating revenue by $4M. Cisco Systems (CSCO) is begun with a Buy at BGC Financial. In afternoon trading: Shares of DealerTrack Holdings (TRAK) are up about 19.75% after its quarterly results and full-year outlook breezed past Wall Street estimates. Shares of Blackbaud (BLKB) are up about 10% after reporting better than expected earnings. Shares of Universal Display (PANL) are down about 17.75% after missing estimates by 28 cents. Shares of Energy Conversion Devices (ENER) are down about 12% after reporting revenues for its fiscal third quarter of $21.5 million, versus the Street consensus at $35.2 million. Shares of Diodes (DIOD) are down about 10% after being downgraded to Market Perform from Outperform at BMO Capital.

The Technology Select Sector SPDR (XLK) traded at $26.83 at 4:00 PM on Tuesday, up 0.90% on the day – up 6.51% year-to-date.

Telecommunications Services

In afternoon trading: Shares of Global Crossing (GLBC) are up about 6.75%; reaching a new 52- week high of $26.84. Shares of Level 3 Communications (LVLT) are up about 5.6%. Shares of Mobile Telesystems (MBT) are up about 5.1%. Shares of SureWest Communications (SURW) are up about 5%. Shares of MetroPCS (PCS) are up about 3.6%. Shares of Deutsche Telekom (DTEGY) are down about 5.5%. Shares of Clearwire (CLWR) are down about 3.25%.

The NASDAQ Telecommunications Index (IXTC) traded at $228.29 at 4:00 PM on Tuesday, up 1.00% on the day – up 1.30% year-to-date.

Utilities

NRG Energy (NRG) is a new Buy at Dahlman Rose. Calpine (CPN) is boosted to Buy from Hold at Dahlman Rose. FirstEnergy (FE) is upgraded to Outperform from Market Perform at Wells Fargo. GenOn Energy (GEN) gets downgraded to Hold from Buy at Dahlman Rose. Veolia Environnement (VE) is now Add from Buy at West LB. In afternoon trading: Actives: Shares of Exelon (EXC) are up about 2.6%. Shares of FirstEnergy are up about 3.5%. Shares of AES (AES) are relatively unchanged. Shares of PPL (PPL) are up about 1.9%.

The Utilities Select Sector SPDR (XLU) traded at $33.84 at 4:00 PM on Tuesday, up 1.44% on the day – up 7.98% year-to-date.

STOCKS: ATPG, EPD, CLNE, ROSE, URZ, TECO, JRCC, GMXR, AAUKY, BHP, RIO, GPK, LPX, BASFY, ADES, MCP, YONG, AONE, EGLE, TAL, PHG, HEAT, GBX, HRB, CKEC, WMG, SKS, VIA, AEO, JNY, BID, TLB, FOSL, SAM, RAH, TSN, MED, PTRY, DF, USNA, CYH, THC, AMRN, AVNR, MDVN, VRX, CEPH, MR, ALKS, ZLCS, GTXI, MNKD, BAC, IVR, AGO, OLP, LEHMQ, GDOT, MSFT, GOOG, ATVI, BBBB, IDTI, RAX, CSCO, TRAK, BLKB, PANL, ENER, DIOD, GLBC, LVLT, MBT, SURW, PCS, DTEGY, CLWR, NRG, CPN, FE, GEN, VE, EXC, AES, PPL

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
CMRE.P.C Costamare Inc. Perpetual Preferred Series C (Marsh 22.13 0.38 1.74 23,241

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