The Dow Jones Industrial Average broke below its 200-day simple moving average at 11,942 to a day’s low of 11,786.47 versus its 50-day simple moving average at 11,775. The NASDAQ, which is well below its 200-day at 2668 also stayed below its 50-day at 2613 with a day’s low at 2525.88.
Asian stocks were down on Wednesday with the Nikkei 225 ending the day at 8,519 – down 0.39%, and the Hang Seng ending the day at 18,354 – down 0.50%. European stocks followed Asia lower with the FTSE 100 ending the day at 5,367 – down 1.12%; the DAX ending the day at 5,675 – down 1.72%; and the CAC 40 ending the day at 2,976 – down 3.33%. The flight to quality pushed the yield on the 10-Year US Treasury note down to 1.894 percent from 1.989. There was no reaction to the news that Import Prices rose by 0.7% in November, slightly less than expected.
Gold broke below its 200-day simple moving average at $1613.7 the Troy ounce to day’s low at $1565.7 after trading as high as $1645.8 overnight. Crude oil traded below its 200-day simple moving average at $95.99 per barrel to a day’s low of $94.21 after failing to stay above the $100 threshold again. The euro versus the dollar weakened down to a day’s low at 1.2950 versus the January 2011 low at 1.2878.
Energy
OPEC ministers have edged closer to an agreement to keep oil production steady at 30M barrels a day, although members are unlikely to formally specify the figure, nor are they likely to agree on what to do when Libya gets back to full production. TNK-BP – 50% owned by BP (BP) – plans to invest $10B in Arctic oilfield development along with a pipeline to link the supply to the world. It’s another move by Russia to mine the regions of the Arctic and East Siberia as the country’s West Siberian fields are mostly depleted. First Solar (FSLR) cuts its FY11 outlook and guides down for FY12. The firm expects 2011 EPS of $5.75-$6 on sales of $2.8-$2.9B, down from $6.50-$7.50 on sales $3.0-$3.3B. For 2012, the firm sees EPS of $3.75-$4.25 on sales of $3.7B-$4B vs. consensus of $7.42 and $4.09B. Penn West Energy (PWE) is a new Buy and $27 target price at Dahlman Rose. CGGVeritas (CGV) is moved to Neutral from Overweight at JPMorgan. In afternoon trading: Shares of First Solar are down about 20.75%. Shares of Trina Solar (TSL) are down about 9%. Shares of InterOil (IOC) are down about 8%.
Energy Select Sector SPDR (XLE) was trading at $66.15 at 3:30 PM on Wednesday, down 2.59% on the day – down 3.08% year-to-date.
Materials
Rentech Nitrogen Partners (RNF) is resumed with a Buy and $21 target at Dahlman Rose. In afternoon trading: Heavily Active Stocks: Shares of Alcoa (AA) are up about 0.6%. Shares of Freeport McMoran (FCX) are down slightly. Shares of Potash (POT) are down about 2%. Shares of Yamana Gold (AUY) are down about 3.8%. Shares of Vale SA (VALE) are up about 0.25%.
The Materials Select Sector SPDR (XLB) was trading at $32.45 at 3:30 PM on Wednesday, down 0.86% on the day – down 15.52% year-to-date.
Industrials
Airline stocks soar after Delta (DAL) says it expects to earn a larger-than-expected 2011 adjusted profit of $1.1B, vs. $977M consensus. Joy Global (JOY) beat estimates by 4 cents and revenue by $40M. Pentair (PNR) expects EPS to fall in a range of $2.60-$2.75 and revenue to come in at $3.7B-$3.8B. ABM Industries (ABM) beat estimates by a penny with revenue in-line with estimates. Cintas (CTAS) is begun with a Buy rating at KeyBanc Capital with a price objective of $36. American Woodmark (AMWD) is boosted to Outperform from Neutral at Robert W. Baird with a new target of $16. In afternoon trading: Shares of Polypore International (PPO) are down about 8.25%. Shares of Pinnacle Airlines (PNCL) are up about 13.5%. Shares of AMR Corp. (AMR) are up about 10%. Shares of US Airways (LCC) are up about 7.25%.
The Industrial Select Sector SPDR (XLI) was trading at $32.60 at 3:30 PM on Wednesday, down 0.94% on the day – down 6.51% year-to-date.
Consumer Discretionary
PayPal (EBAY) is taking on Groupon (GRPN) and LivingSocial with plans to enter the market for online daily-deals, which could potentially more than double in size by 2015 to $4.2B. Groupon (GRPN) is begun with a Buy at both Goldman Sachs and Bank of America-Merrill Lynch, an Overweight at Barclays, an Outperform with Wells Fargo, new Neutrals at Citigroup, JPMorgan, and Janney Montgomery Scott, and a Sector Perform at RBC Capital. eBay Inc (EBAY) is resumed with a Buy at Goldman Sachs, which also adds it to their Conviction Buy List. Goldman rolls out Buy rated coverage on Priceline.com (PCLN) and has a Sell and $14 target on Yahoo (YHOO). Six Flags Entertainment (SIX) is a new Hold at Keybanc. Vitamin Shoppe (VSI) is a new Neutral at Goldman. American Public Education (APEI) and Grand Canyon Education (LOPE) are each assigned an Overweight at JPMorgan. Best Buy (BBY) is upgraded to Buy from Above Average at Caris. Best Buy (BBY) is moved to Sector Perform from Top Pick at RBC Capital. In afternoon trading: Shares of China MediaExpress (CCME) are up about 83%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $38.11 at 3:30 PM on Wednesday, down 0.91% on the day – up 1.87% year-to-date.
Consumer Staples
Avon Products (AVP) gained 6.3% in post-market trading after announcing it will split its Chairman and CEO roles. Andrea Jung, who holds both titles, will be named Executive Chairman and the company will “undertake an external search” to find a new CEO. Avon Products (AVP) is increased to Outperform from Market Perform by BMO Capital. Ahold (AHONY) gets a Buy-from-Hold boost at ING Group. Altria (MO) is taken to Hold from Buy at Stifel Nicolaus due to valuation concerns. ING Group slashes ratings on France’s Carrefour SA (CRRFY) and Britain’s Tesco (TSCDY), both taken to Sell from Buy. In afternoon trading: Shares of Green Mountain Coffee Roasters (GMCR) are down about 8.75%. Shares of Avon are up about 6.25%.
The Consumer Staples Select Sector SPDR (XLP) was trading at $31.55 at 3:30 PM on Wednesday, down 0.32% on the day – up 7.64% year-to-date.
Healthcare
Express Scripts (ESRX) is locked in a contract dispute with WellPoint (WLP), which accounted for nearly 30% of its revenue for the first nine months of the year, and the companies may go to court and fight it out. New York Governor Andrew Cuomo signed legislation limiting the ability of Express Scripts and peers like Medco Health (MHS) to guide prescriptions to mail-order pharmacies. Scandal-stricken Olympus (OCPNY) has submitted its long-delayed H1 2011 results – it made a net loss of ¥32.33B ($414M) – in order to meet a deadline to keep its shares listed, for now. Synovis’ (SYNO) FQ4 earnings rose a better-than-expected 83%, continuing the medical device company’s streak of double-digit sales growth. Complete Genomics (GNOM) is assigned a Buy and $7 price target at MLV & Co. Solta Medical (SLTM) is a new Market Perform at Morgan Keegan. CareFusion (CFN) is a new Market Perform and a $28 price target at Morgan Keegan.
The Health Care Select Sector SPDR (XLV) was trading at $33.38 at 3:30 PM on Wednesday, up slightly on the day – up 5.97% year-to-date.
Financials
Testifying in front of the Senate Agriculture Committee, CME chief Terrence Duffy apparently contradicted Jon Corzine’s oft-repeated testimony, saying he has information the former MF Global (MFGLQ) CEO knew about the missing customer money and was aware of improper transfers. Morgan Stanley (MS) has reportedly had to return around $700M to investors in its flagship global real-estate fund, and has been forced to cut the fund’s fees following lackluster performance. SunTrust Banks (STI) is taken to Outperform from Market Perform by Sanford Bernstein. Digital Realty Trust (DLR) is reduced to Neutral from Buy at Goldman. Fifth Third (FITB) is reduced to Market Perform from Outperform. Invesco Mortgage Capital (IVR) is cut to Market Perform from Outperform at Keefe Bruyette. In afternoon trading: Shares of Wamu (WAMUQ) are down about 19.25%.
The Financial Select Sector SPDR (XLF) was trading at $12.60 at 3:30 PM on Wednesday, down slightly on the day – down 21.00% year-to-date.
Information Technology
PayPal (EBAY) is taking on Groupon (GRPN) and LivingSocial with plans to enter the market for online daily-deals, which could potentially more than double in size by 2015 to $4.2B. EU competition regulators have accepted IBM’s (IBM) concessions to end an antitrust investigation and avert a possible fine that could have reached a maximum of 10% of the company’s global turnover. Sequans Communications (SQNS) lowered Q4 guidance well below consensus, as a result of its largest customer’s request to take delivery of ~40% of the chips previously scheduled for delivery in December and to cancel the remainder of the scheduled shipment. Broadcom (BRCM) is guiding for its Q4 revenue to be at the high end of a prior guidance range of $1.7B-$1.8B, ahead of today’s Analyst Day. FormFactor (FORM) it expects Q4 revenue of $28M-$31M, below prior guidance of $30M-$34M, and much lower than the $43.9M reported in the year-ago period. First Solar (FSLR) cuts its FY11 outlook and guides down for FY12. The firm expects 2011 EPS of $5.75-$6 on sales of $2.8-$2.9B, down from $6.50-$7.50 on sales $3.0-$3.3B. For 2012, the firm sees EPS of $3.75-$4.25 on sales of $3.7B-$4B vs. consensus of $7.42 and $4.09B. Groupon (GRPN) is begun with a Buy at both Goldman Sachs and Bank of America-Merrill Lynch, an Overweight at Barclays, an Outperform with Wells Fargo, new Neutrals at Citigroup, JPMorgan, and Janney Montgomery Scott, and a Sector Perform at RBC Capital. eBay Inc (EBAY) is resumed with a Buy at Goldman Sachs, which also adds it to their Conviction Buy List. Goldman rolls out Buy rated coverage on Priceline.com (PCLN) and has a Sell and $14 target on Yahoo (YHOO). Acme Packet (APKT) is upgraded to Outperform from Perform with a $45 objective at Morgan Keegan. FleetCor (FLT) is now Overweight from Neutral at JP Morgan. Ancestry.com (ACOM) is downgraded to Equal Weight from Overweight at Morgan Stanley. ADTRAN (ADTN) is cut to Hold from Buy at Jefferies. Volterra Semiconductor (VLTR) is taken to Buy from Strong Buy with a new lower $28 target at Needham. In afternoon trading: Shares of are down about 20.75%. Shares of Silicon Graphics (SGI) are down about 14.25%.
The Technology Select Sector SPDR (XLK) was trading at $25.12 at 3:30 PM on Wednesday, down 1.37% on the day – down 0.28% year-to-date.
Telecommunications Services
In afternoon trading: Heavily Active Stocks: Shares of Sprint Nextel (S) are down about 3.4%. Shares of Frontier Communications (FTR) are down about 2%. Shares of AT&T (T) are down about 0.6%. Shares of Clearwire (CLWR) are down about 3.25%. Shares of Verizon (VZ) are down about 0.25%. Shares of Telefonica (TEF) are down about 3.1%.
The NASDAQ Telecommunications Index (IXTC) was trading at $193.34 at 3:30 PM on Wednesday, down 2.29% on the day – down 14.21% year-to-date.
Utilities
In afternoon trading: Heavily Active Stocks: Shares of Genon Energy (GEN) are flat. Shares of Duke Energy (DUK) are flat. Shares of American Electric Power (AEP) are down about 1.9%. Shares of AES Corp. (AES) are down about 0.8%. Shares of CenterPoint Energy (CNP) are down about 2.1%. Shares of PG&E (PCG) are up about 0.8%. Shares of Ameren (AEE) are down about 1%. Shares of Calpine (CPN) are up about 0.25%.
The Utilities Select Sector SPDR (XLU) was trading at $34.68 at 3:30 PM on Wednesday, down 0.43% on the day – up 10.66% year-to-date.
STOCKS: BP, FSLR, PWE, CGV, TSL, IOC, RNF, AA, FCX, POT, AUY, VALE, DAL, JOY, PNR, ABM, CTAS, AMWD, PPO, PNCL, AMR, LCC, EBAY, GRPN, PCLN, YHOO, SIX, VSI, APEI, LOPE, BBY, CCME, AVP, AHONY, MO, CRRFY, TSCDY, GMCR, ESRX, WLP, MHS, OCPNY, SYNO, GNOM, SLTM, CFN, MFGLQ, MS, STI, DLR, FITB, IVR, WAMUQ, IBM, SQNS, BRCM, FORM, APKT, FLT, ACOM, ADTN, VLTR, SGI, S, FTR, T, CLWR, VZ, TEF, GEN, DUK, AEP, AES, CNP, PCG, AEE, CPN
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