Equities Sector Coverage: Technology and Telecom Stocks Get Biggest Boost in Market Rebound

Sector Recap |

AppleHousing Starts rose by a better than expected 14.6% in June to 629,000 units annualized with Building Permits up 2.5% to 624,000. The Dow Jones Industrial Average opened higher on Tuesday after holding its 50-day simple moving average at 12,343 at Monday’s close. Tuesday’s high for the Dow was 12,607.56. The NASDAQ also opened higher after holding its 50-day simple moving average at 2756 on Monday. Tuesday’s high for the NASDAQ was 2828.65.

Asian stocks were mixed on Tuesday with the Nikkei 225 down 0.9% to 9,890. The Hang Seng was up 0.5% to 21,902. European stocks regained part of Monday’s losses on better than expected earnings in the US. The FTSE 100 gained 0.6% to 5,790. The DAX recouped 1.1% to 7,187. The CAC 40 rebounded 1.2% to 3,695. The yield on the 10-Year US Treasury note rose from 2.904 percent to 2.968 on Tuesday, before rallying to a close of 2.880. Gold traded to another new all time high on Tuesday at $1610.7 the Troy ounce then dipped to a low of $1582.7.

Crude oil began Tuesday below its 50-day simple moving average at $97.53 then popped above as equities opened strongly. Oil traded as high as $98.65 per barrel. The euro versus the US dollar is trading between its 200-day simple moving average at 1.3911 and its 50-day at 1.4299.

Energy

Enerplus (ERF) is cut to Hold from Buy at Canaccord Genuity. In afternoon trading: Shares of Longwei Petroleum (LPH) are up about 10.5%. Shares of GeoMet (GMET) are up about 7.5%. Shares of Goodrich Petroleum (GDP) are up about 6.25%. Shares of Woodside Petroleum (WOPEY) are up about 5.8%. Shares of Treaty Energy (TECO) are down about 8.5%. Actives: Shares of Petrohawk Energy (HK) are relatively unchanged. Shares of Sandridge Energy (SD) are up about 2.3%. Shares of Kodiak Oil (KOG) are up about 4%. Shares of Halliburton (HAL) are up about 4%. Shares of Exxon Mobil (XOM) are up about 1.3%.

Energy Select Sector SPDR (XLE) was trading at $78.00 at 4:00 PM on Tuesday, up 1.82% on the day – up 14.28% year-to-date.

Basic Materials

Mosaic Company (MOS) beat estimates by 5 cents on revenue of $2.86B. Packaging of America (PKG) beat estimates by 4 cents on revenue of $665.5M. Steel Dynamics (STLD) beat estimates by 4 cents on revenue of $2.1B. Scotts Miracle-Gro (SMG) is lowered to Market Perform from Outperform at BMO Capital with a lower target price of $50. BASF (BASFY) gets reduced to Hold from Buy at the Royal Bank of Scotland. In afternoon trading: Shares of China Shen Zhou Mining (SHZ) are up about 7.75%. Shares of China GengSheng Minerals (CHGS) are up about 6.5%.

The Materials Select Sector SPDR (XLB) traded at $39.69 at 4:00 PM on Tuesday, up 1.51% on the day – up 3.33% year-to-date.

Industrials

American Airlines (AMR) is leaning towards buying Airbus' (EADSF) A320 jets rather than Boeing's (BA) 737s in a deal for over 200 planes that could be worth $20B at list prices. Stanley Works (SWK) beat estimates by 20 cents on revenue of $2.6B. Brokerage William Blair has new Outperforms on Titan International (TWI) - $32 price objective and Caterpillar (CAT) - $135 price objective. It has Market Performs on Deere & Company (DE) - $86 target price and Joy Global (JOYG) - $99 target price. Carlisle Cos. (CSL) is moved to Market Perform from Underperform at FBR Capital with a new target of $45. In afternoon trading: Shares of Fushi Copperweld (FSIN) are down about 8.75%. Shares of YRC Worldwide (YRCW) are down about 7.5%. Shares of Titan International are up about 6.5%. Shares of Smith AO (AOS) are up about 6.5%.

The Industrial Select Sector SPDR (XLI) traded at $36.60 at 4:00 PM on Tuesday, up 1.30% on the day – up 4.96% year-to-date.

Consumer Discretionary

News Corp. (NWS) is considering replacing Rupert Murdoch as CEO with COO Chase Carey, with any move dependent on Murdoch's performance today in front of a U.K. parliamentary committee. After failing to find a white knight Borders (BGPIQ) will seek approval to liquidate, leading to the loss of nearly 11,000 jobs. Harley-Davidson (HOG) beat estimates by 10 cents on revenue of $1.34B, and raised motorcycles shipment FY'11 guidance to 228K-235K. Omnicom Group (OMC) beat estimates by 5 cents on revenue of $3.49B. Wynn Resorts (WYNN) beat estimates by 57 cents on revenue of $1.4B. Hennes & Mauritz (HMRZF) is a new Sell at ING Group. Valeo SA (VLEEY) is a new Buy at Citigroup. Isle of Capri (ISLE) gets picked up at a Buy at Janney. Talbots (TLB) is lifted to Neutral from Sell at Janney. AutoNation (AN) is now Underperform from Market Perform at Wells Fargo. In afternoon trading: Shares of Asia Entertainment (AERL) are up about 8%. Shares of Quiksilver (ZQL) are up about 7%. Shares of Eastman Kodak (EK) are down about 8.5%.

The Consumer Discretionary Select Sector SPDR (XLY) traded at $40.67 at 4:00 PM on Tuesday, up 1.93% on the day – up 8.71% year-to-date.

Consumer Staples

Clorox (CLX) has turned down Carl Icahn's $10.2B offer, calling it "neither credible nor adequate," and adopted a "poison pill" shareholder rights plan to make an unwanted takeover more expensive. Coca-Cola (KO) reported EPS of $1.17 (topping estimates) on revenue of $12.74B. Hershey Foods (HSY) and Kellogg (K) are both new Neutrals at Ticonderoga. Bristol-Myers (BMY) and Church & Dwight (CHD) are both initiated with Outperforms at Credit Agricole. Reynolds American (RAI) is raised to Buy from Neutral at Davenport. In afternoon trading: Shares of Zhongpin (HOGS) are down about 8%. Shares of Smart Balance (SMBL) are up about 5.75%. Shares of Green Mountain Coffee (GMCR) are up about 5.5%.

The Consumer Staples Select Sector SPDR (XLP) traded at $31.59 at 4:00 PM on Tuesday, up 1.38% on the day – up 7.78% year-to-date.

Healthcare

Novartis (NVS) beat consensus as Q2 net profit climbed 12% to $2.7B and sales jumped 27% to $14.9B, boosted by the recent acquisition of eye-care specialist Alcon, the rapid growth of recently launched drugs, and cost cutting. UnitedHealth (UNH) beat estimates by 18 cents on revenue of $25.2B and sees FY'11 EPS of $4.15-4.25 and revenue of $101B. Johnson & Johnson (JNJ) reported EPS of $1.28 (topping estimates) on revenue of $7.45B. Lincare (LNCR) missed estimates by 6 cents on revenue of $449M. Thoratec (THOR) is an Outperform and $43 target at Credit Suisse. Bristol-Myers (BMY) and Church & Dwight (CHD) are both initiated with Outperforms at Credit Agricole. VCA Antech Inc (WOOF) is boosted all the way to Buy from Underperform at Bank of America-Merrill Lynch. HCA Holdings (HCA) is hoisted to Buy from Hold at Jefferies. Almost Family (AFAM) is reduced to Hold from Buy at Jefferies. Quest Diagnostics (DGX) gets downgraded to Hold from Buy By Jefferies. In afternoon trading: Shares of Lincare are down about 9%. Shares of ICU Medical (ICUI) are down about 6.25%. Shares of Accretive Health (AH) are up about 7.5%.

The Health Care Select Sector SPDR (XLV) traded at $35.24 at 4:00 PM on Tuesday, up 0.89% on the day – up 11.87% year-to-date.

Financials

Despite major banks facing billions of dollars in penalties for faulty foreclosures, AP and Reuters have found that problematic practices continue. Bank of America (BAC) swung to a Q2 net loss of $8.8B from a net profit of $3.1B a year earlier, although excluding the mortgage-related charges it has announced, net income was $3.7B. Bank of America beat estimates by 3 cents on revenue of $13.48B. AIG (AIG) is considering an IPO for its airplane-leasing business, and could raise $1.5B-$2B with a sale of 25% if market conditions are favorable. Bank of New York Mellon (BK) beat estimates by 3 cents on revenue of $3.85B. Comerica (CMA) reported Q2 EPS of $0.53 (in-line). KeyCorp (KEY) beat estimates by 6 cents on revenue of $1.02B. Goldman Sachs (GS) reported EPS of $1.85 (versus estimates of $2.27). Zions Bancorp (ZION) reported Q2 EPS of $0.16 (versus consensus of $0.01). National Health Investors (NHI) is initiated with an Outperform and $50 target at Morgan Keegan. Annaly Capital Management (NLY) is a new Market Perform with Wells Fargo. Allstate (ALL) is now Neutral from Outperform at Macquarie. In afternoon trading: Shares of Wells Fargo (WFC) are up about 6%. Shares of ING Group (ING) are up about 5.25%.

The Financial Select Sector SPDR (XLF) traded at $14.83 at 4:00 PM on Tuesday, up 1.24% on the day – down 7.02% year-to-date.

Information Technology

IBM's (IBM) Q2 earnings topped forecasts by 7 cents as net profit rose 8% to $3.66B and revenue climbed 12% to $26.7B, while the company also raised its 2011 guidance. Apple's (AAPL) shares rose to close at a record high of $373.80 ahead of the company's FQ3 earnings today, when it is forecast to report that EPS surged 66% to $5.85 and revenue 59% to $24.99B. Cisco (CSCO) is cutting 6,500 employees (9% of its full-time workforce) as it looks to return to profit growth. Jefferies has new Neutrals are Intel (INTC), Advanced Micro Devices (AMD), Xilinx (XLNX), and Nvidia (NVDA), and has new Buys on Broadcom (BRCM), Marvell (MRVL), Texas Instruments (TXN), and PMC-Sierra (PMCS). Applied Micro Circuits (AMCC) is begun with a Buy and $12 target at Sterne Agee. Fusion-io (FIO) is a fresh Neutral at JP Morgan. Nokia (NOK) is now Neutral from Sell at WestLB. Aixtron (AIXG) is upgraded to Buy from Hold at Kaufman Brothers. WebMD Health (WBMD) is cut to Hold from Buy at Citigroup. In afternoon trading: Shares of InterDigital (IDCC) are up about 26% after the designer of mobile-phone technology said it hired bankers as it considers a sale amid increasing demand for wireless patents. Shares of WebMD are up about 11%. Shares of SemiLEDS (LEDS) are up about 10%. Shares of Evergreen Solar (ESLR) are down about 16%.

The Technology Select Sector SPDR (XLK) traded at $26.45 at 4:00 PM on Tuesday, up 2.40% on the day – up 5.00% year-to-date.

Telecommunications Services

France Telecom SA (FTE) is now Neutral from Sell at UBS. In afternoon trading: Shares of TerreStar (TSTRQ) are down about 15.25%. Actives: Shares of Sprint Nextel (S) are up about 1.5%. Shares of Level 3 (LVLT) are up about 4.4%. Shares of AT&T (T) are up about 0.7%. Shares of Verizon (VZ) are up about 0.3%. Shares of Frontier (FTR) are up about 2.1%. Shares of Centurylink (CTL) are up slightly. Shares of Vodafone (VOD) are up about 1.6%.

The NASDAQ Telecommunications Index (IXTC) traded at $210.14 at 4:00 PM on Tuesday, up 2.48% on the day – down 6.76% year-to-date.

Utilities

In afternoon trading: Actives: Shares of Duke Energy (DUK) are up about 0.8%. Shares of AES Corp (AES) are up about 1.6%. Shares of Genon Energy (GEN) are up about 1%. Shares of NiSource (NI) are up about 2%. Shares of CenterPoint Energy (CNP) are up about 1.7%. Shares of PPL Corp (PPL) are up about 0.3%. Shares of American Electric Power (AEP) are up about 0.7%. Shares of Exelon (EXC) are up about 0.8%.

The Utilities Select Sector SPDR (XLU) traded at $33.33 at 4:00 PM on Tuesday, up 0.88% on the day – up 6.35% year-to-date.

STOCKS: ERF, LPH, GMET, GDP, WOPEY, TECO, HK, SD, KOG, HAL, XOM, MOS, PKG, STLD, SMG, BASFY, SHZ, CHGS, AMR, EADSF, BA, SWK, TWI, CAT, DE, JOYG, CSL, FSIN, YRCW, AOS, NWS, BGPIQ, HOG, OMC, WYNN, HMRZF, VLEEY, ISLE, TLB, AN, AERL, ZQL, EK, CLX, KO, HSY, K, BMY, CHD, RAI, HOGS, SMBL, GMCR, NVS, UNH, JNJ, LNCR, THOR, BMY, CHD, WOOF, HCA, AFAM, DGX, ICUI, AH, BAC, AIG, BK, CMA, KEY, GS, ZION, NHI, NLY, ALL, WFC, ING, IBM, AAPL, CSCO, INTC, AMD, XLNX, NVDA, BRCM, MRVL, TXN, PMCS, AMCC, FIO, NOK, AIXG, WBMD, IDCC, LEDS, ESLR, FTE, TSTRQ, S, LVLT, T, VZ, FTR, CTL, VOD, DUK, AES, GEN, NI, CNP, PPL, AEP, EXC

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