Existing Home Sales for November had little impact as sales came in below estimates at an annual rate of 4.42 million. Distressed sales are running at 29%. In a separate report US home foreclosures jumped 21.1% in the third quarter 2011. The Dow Jones Industrial Average opened lower trading down to 11999.44, staying above its 50-day and 200-day simple moving averages at 11,848 and 11,936. The NASDAQ traded between 2544.66 and 2590.61 Wednesday morning continuing to lag its 50-day and 200-day simple moving averages at 2617 and 2662.
Asian stocks followed US stocks higher on Wednesday with the Nikkei 225 ending the day at 8,460 – up 1.48%, and the Hang Seng ending the day at 18,416 – up 1.86%. European stocks began their sessions higher but dipped into the red. The FTSE 100 ending the day at 5,381 – down 0.72%; the DAX ending the day at 5,777 - down 1.20%; and the CAC 40 ending the day at 3,030 – down 0.82%. The yield on the 10-Year US Treasury note declined from 1.962 percent to 1.915 Wednesday morning.
Gold traded back above its 200-day simple moving average at $1618.1 the Troy ounce with a pre-market high at $1643.7, then dipped to $1609.2. The close was just above the 200-day simple moving average. Crude oil stayed above its 50-day and 200-day simple moving averages at $95.14 and $95.76, after a dip from $98.50 a barrel to $96.80 was followed by a rebound to $99.25 on positive inventories data. The euro versus the dollar rebounded to 1.3196 then dipped to 1.3029 staying above its January 2011 low at 1.2878.
Although pump prices have been falling, consumers have spent more money than ever on gasoline this year. Based on recent demand trends, consumers will have spent $481B on gas in 2011 vs. $389B last year. Pacific Drilling (PACD) is a new Overweight at Morgan Stanley. LRR Energy L.P. (LRE) is launched as an Outperform and $24 price target at Oppenheimer. Cobalt International Energy (CIE) is moved to Buy from Neutral at Goldman. Ultra Petroleum (UPL) gets a Buy-from-Hold hoist at Canaccord. In afternoon trading: Shares of Cobalt International Energy is up about 10.5%.
Energy Select Sector SPDR (XLE) was trading at $68.40 at 4:00 PM on Wednesday, up 1.11% on the day – up 0.22% year-to-date.
Chesapeake Granite Wash Trust C (CHKR) is initiated with Market Perform with Wells Fargo and a new Neutral at Goldman Sachs. In afternoon trading: Shares of Zagg Inc. (ZAGG) are down about 10.5%. Shares of Jaguar Mining (JAG) are up about 7.5%. Heavily Active Stocks: Shares of Alcoa (AA) are up about a quarter of a percent. Shares of Vale SA (VALE) are down about 0.9%. Shares of Freeport McMoran (FCX) are down about a half of a percent.
The Materials Select Sector SPDR (XLB) was trading at $33.26 at 4:00 PM on Wednesday, up slightly on the day – down 13.41% year-to-date.
Embraer SA (ERJ) is initiated with an Outperform at Cowen & Company. In afternoon trading: Shares of China Ming Yang Wind Power (MY) are up about 20.75%. Shares of TBS International (TBSI) are up about 18.25%. Shares of The Shaw Group (SHAW) are up about 16.25%. Shares of Cintas (CTAS) are up about 10%.
The Industrial Select Sector SPDR (XLI) was trading at $33.45 at 4:00 PM on Wednesday, up slightly on the day – down 4.07% year-to-date.
Ford Motor (F) and General Motors (GM) are both begun with Buys at Sterne Agee. Sterne Agee has new Neutrals on Delphi Automotive (DLPH), Johnson Controls (JCI), and Lear (LEA), and assigns Buys on both Borg Warner (BWA) and TRW Automotive (TRW). Pep Boys (PBY) is picked up with a Buy rating and $14 price objective at The Benchmark Company.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $38.64 at 4:00 PM on Wednesday, up 0.34% on the day – up 3.29% year-to-date.
Beam Inc (BEAM) is launched as a Buy at Bank of America-Merrill Lynch. Coca-Cola (KO) is reinstated with a Buy at Bank of America-Merrill Lynch, which launches Neutral rated research on rival Dr Pepper Snapple (DPS). Hershey Foods (HSY) gets lifted to Buy from Neutral at Bank of America-Merrill Lynch. Coca-Cola Enterprises (CCE) is increased to Buy from Hold at Argus. Ralcorp Holdings (RAH) is moved to Neutral from Buy by UBS. TreeHouse Foods (THS) is now Underperform from Neutral at Bank of America-Merrill Lynch.
The Consumer Staples Select Sector SPDR (XLP) was trading at $32.35 at 4:00 PM on Wednesday, up 1.06% on the day – up 10.37% year-to-date.
Cantor Fitzgerald begins Buys on Coventry Health Care (CVH) - $38 objective, Centene (CNC) - $47.50 objective, and Molina Healthcare (MOH) - $27.50 objective. It has Holds on Amerigroup (AGP) - $60 objective and WellCare (WCG) - $55 objective. NewLink Genetics (NLNK) is established at Outperform and $10 target at Robert W. Baird. Health Net (HNT) and Coventry Health Care (CVH) are each cut to Sell from Hold by Deutsche Bank. In afternoon trading: Shares of Biosante Pharmaceuticals (BPAX) are up about 16.5%.
The Health Care Select Sector SPDR (XLV) was trading at $34.33 at 4:00 PM on Wednesday, up 0.64% on the day – up 8.98% year-to-date.
Tokio Marine Holdings (TKOMY) is to acquire Delphi Financial Group (DFG) for $2.7B, including a special dividend. HSBC (HBC) is pulling out of private banking in Japan as it continues to streamline its operations, and is selling its business in the country to Credit Suisse (CS) for an undisclosed sum. Lloyds (LYG) is lifted by 180 degrees, to Outperform from Underperform, at BNP Paribas. EZCORP, Inc (EZPW) is now Neutral from Underperform at Sterne Agee. JPMorgan Chase (JPM) is moved to Neutral from Buy at Sterne Agee. Jefferies Group (JEF) gets downgraded to Market Perform from Outperform at Keefe Bruyette, which cuts Cullen/Frost Bankers (CFR) to Underperform from Market Perform.
The Financial Select Sector SPDR (XLF) was trading at $12.79 at 4:00 PM on Wednesday, up 0.55% on the day – down 19.81% year-to-date.
Oracle (ORCL) reported results that missed forecasts for the first time in a decade. Adjusted EPS rose 6% to $0.54 and revenue edged up 2% to $8.8B, with the company suffering weakness in EMEA and the Americas, and in hardware and new software licenses. Research In Motion (RIMM) is the subject of acquisition overtures from Amazon (AMZN), and was eyed by Nokia (NOK) and Microsoft (MSFT) for a possible joint bid. Veeco Instruments (VECO) and Aixtron (AIXG) are each new Holds at Needham. It assigns a more bullish Buy on Cree, Inc (CREE). Research In Motion (RIMM) gets a Buy-from-Hold boost at ThinkEquity. Amphenol (APH) is taken to Top Pick from Outperform at RBC Capital. Fusion-io (FIO) is increased to Neutral from Underperform at Sterne agee. Polycom (PLCM) is raised to Buy from Neutral at Citigroup. Oracle (ORCL) is cut by both Canaccord (Hold from Buy) and Crédit Agricole (Underperform from Buy). Teradata (TDC) is taken to Perform from Outperform at Oppenheimer. In afternoon trading: Shares of CommVault Systems (CVLT) are down about 17.5%. Shares of Oracle are down about 12.5%. Shares of Informatica (INFA) are down about 11.5%. Shares of TIBCO (TIBX) are down about 11.25%. Shares of VMWare (VMW) are down about 11%.
The Technology Select Sector SPDR (XLK) was trading at $25.02 at 4:00 PM on Wednesday, down 1.63% on the day – down 0.67% year-to-date.
Deutsche Telekom (DTEGY) is reinstated with an Underperform rating and €8.5 target price at Credit Suisse after the abandonment of AT&T‘s (T) proposal to buy its T-Mobile unit. AT&T (T) is itself taken to Hold from Buy at Argus. In afternoon trading: Heavily Active Stocks: Shares of TerreStar (TSTRQ) are down about 3.3%. Shares of AT&T are up about 0.3%, while shares of Sprint Nextel (S) are down about 0.4% and shares of Verizon (VZ) are relatively unchanged. Shares of Clearwire (CLWR) are up about 5.25%.
The NASDAQ Telecommunications Index (IXTC) was trading at $194.19 at 4:00 PM on Wednesday, down 1.36% on the day – down 13.84% year-to-date.
LRR Energy L.P. (LRE) is launched as an Outperform and $24 price target at Oppenheimer. In afternoon trading: Heavily Active Stocks: Shares of Exelon (EXC) are up about 2.2%. Shares of Constellation Energy Group (CEG) are up about 2.5%. Shares of Duke Energy (DUK) are up about 1.4%. Shares of Southern Company (SO) are up about 1.1%. Shares of AES Corp. (AES) are down about 1.1%.
The Utilities Select Sector SPDR (XLU) was trading at $35.53 at 4:00 PM on Wednesday, up 1.49% on the day – up 13.37% year-to-date.
STOCKS: PACD, LRE, CIE, UPL, CHKR, ZAGG, JAG, AA, VALE, FCX, ERJ, MY, TBSI, SHAW, CTAS, F, GM, DLPH, JCI, LEA, BWA, TRW, PBY, BEAM, KO, DPS, HSY, CCE, RAH, THS, CVH, CNC, MOH, AGP, WCG, NLNK, HNT, CVH, BPAX, TKOMY, DFG, HBC, CS, LYG, EZPW, JPM, JEF, CFR, ORCL, RIMM, AMZN, NOK, MSFT, VECO, AIXG, CREE, APH, FIO, PLCM, TDC, CVLT, INFA, TIBX, VMW, DTEGY, T, TSTRQ, S, VZ, CLWR, LRE, EXC, CEG, DUK, SO, AES
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