Equities Sector Coverage: Wall Street Climbs Higher Despite Fed Showing Soft Economy

Sector Recap |

Germany Chancellor Angela MerkelThe Mortgage Bankers Association's seasonally adjusted mortgage applications index dropped 4.9% in the week ending Sept.2, despite mortgage rates at or near record lows. Redbook's same-store year-on-year rate in the week rose 0.9% to plus 4.9%. The latest Fed’s Beige Book shows that the U.S. economy is expanding at a “modest pace.” Stocks rallied on Wednesday, reversing three days of losses, after Germany's top court smoothed the way for Berlin's participation in bailout packages that could ease Europe's debt crisis. The Dow Jones Industrial Average rallied to a high of 11414.86, before ending the day up 2.47%. The NASDAQ traded to a high of 2548.94, before ending the day up 3.04%.

Asian stocks recovered some weekend losses on Wednesday with the Nikkei 225 up 2.01% to 8,763. The Hang Seng added 1.71% to 20,048. In Europe, the markets also recouped some of the significant losses from recent sessions on Wednesday. The FTSE 100 was up 3.14% to 5,319, the DAX was up 4.07% to 5,406, and the CAC 40 was up 3.63% to 3,073. The yield on the 10-Year US Treasury rose from Tuesday’s all time low at 1.907 percent to 2.060, before ending the day around 2.04. Gold declined from Tuesday’s all time high at $1923.7 to $1793.8, before ending the day around $1816.5. Crude oil rebounded from Tuesday’s low at $83.20 to $89.74, before ending the day around $89.25. The euro versus the US dollar rebounded from 1.3996 to 1.4147, before ending the day around 1.4085.

Energy

C&J Energy (CJES) is assigned an Outperform with Wells Fargo. Lufkin Industries (LUFK) is picked up as a Buy Citigroup. Chevron (CVX) is boosted to Buy from Outperform at Credit Agricole. Sunpower (SPWRA) gets a Buy-from-Hold boost ($16 target) at Wunderlich. Sunoco (SUN) is upgraded to Hold from Sell by Benchmark. Copano Energy (CPNO) is cut to Equal Weight from Overweight at Morgan Stanley. In afternoon trading: Shares of Patriot Coal (PETD) are up about 13%. Shares of Clean Energy Fuels (CLNE) are up about 12.75%. Shares of Cal Dive International (DVR) are up about 11.25%. Shares of Alpha Natural Resources (ANR) are up about 10%. Shares of Forest Oil (FST) are up about 10%.

Energy Select Sector SPDR (XLE) was trading at $67.90 at 4:00 PM on Wednesday, up 3.66% on the day – down 0.51% year-to-date.

Materials

Temple-Inland (TIN) is now Neutral from Buy at Longbow. In afternoon trading: Shares of Walter Energy (WLT) are up about 22%. Shares of Boise (BZ) are up about 12.75%. Shares of United States Steel (X) are up about 9%. Shares of AK Steel (AKS) are up about 9%. Shares of Cliffs Natural Resources (CLF) are up about 7.25%. Shares of Allegheny Technologies (ATI) are up about 6.75%.

The Materials Select Sector SPDR (XLB) was trading at $34.76 at 4:00 PM on Wednesday, up 2.87% on the day – down 9.50% year-to-date.

Industrials

Navistar International (NAV) missed estimates by 47 cents, while beating revenue by $10M, and maintains full-year EPS guidance of $5-$6. Lockheed Martin (LMT) is launched at a Neutral at Lazard. Dover (DOV) is downgraded to Underweight from Neutral at JP Morgan. In afternoon trading: Shares of United Rentals (URI) are up about 11.5%. Shares of A123 Systems (AONE) are up about 11%. Shares of Cooper Industries (CBE) are up about 7.25%.

The Industrial Select Sector SPDR (XLI) was trading at $31.48 at 4:00 PM on Wednesday, up 3.11% on the day – down 9.72% year-to-date.

Consumer Discretionary

Talbots (TLB) missed estimates by 6 cents, while beating revenue by $8M, and expects high levels of promotional and markdown activity to continue throughout Q3, resulting in an increase in cost of sales. Office Depot's (ODP) FQ3 same-store sales declined 2%, while gross margins rose 1%, with both trends partly due to the retailer no longer selling entry-level laptops. The Pep Boys (PBY) Q2 beats on EPS but misses on revenue estimates, while overall sales were 32% higher Y/Y, due to stable demand for maintenance and repair services, but same-store sales dipped 2%. Darden Restaurants (DRI) says its preliminary FQ1 estimates will be short of analyst expectations due to the adverse impact of Hurricane Irene. It now expects to earn $0.78 per share (below consensus estimates of $0.88). Francesca's Holdings (FRAN) FQ2 profit dips 6.4% as a debt-related charge and higher costs due to new boutique openings overshadowed growth in same-store sales. Dick’s Sporting Goods (DKS) is initiated with a Buy at Canaccord Genuity. ChinaCast Education (CAST) is initiated with a Buy and $12 target at Wunderlich. Nike (NKE) is a new Hold at Canaccord Genuity, which begins Foot Locker (FL) and Finish Line (FINL) with Buys on both. Las Vegas Sands (LVS) is lifted to Buy from Neutral at Goldman. Time Warner (TWX) is taken to Overweight from Equal Weight by Barclays. Williams-Sonoma (WSM) is upgraded to Outperform from Neutral at Cowen. DR Horton (DHI) is hoisted to Buy from Hold at Citigroup. Magna (MGA) and Penske Automotive (PAG) are both moved up 180 degrees to Overweight from Underweight at Morgan Stanley. Goodyear Tire (GT) gets taken down 180 degrees to Underweight from Overweight at Morgan Stanley. Host Hotels (HST) is removed from the Conviction Buy List at Goldman. Scripps Networks Interactive (SNI) is now Equal Weight from Overweight at Barclays. Sonic Corp (SONC) gets downgraded to Market Perform from Outperform by brokers William Blair. Darden Restaurants (DRI) is reduced to Outperform from Strong Buy at Raymond James. In afternoon trading: Shares of Talbots are up about 14%. Shares of Office Depot are up about 13.5%. Shares of Beazer Homes (BZH) are up about 9.5%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $36.88 at 4:00 PM on Wednesday, up 2.59% on the day – down 1.42% year-to-date.

Consumer Staples

Chefs’ Warehouse (CHEF) is begun with a Buy at Canaccord Genuity. Corn Products (CPO) is upgraded to Buy from Hold at Jefferies. Anheuser-Busch (BUD) is reduced to Neutral from Buy, while Heineken is reduced to Sell from Neutral at Goldman. In afternoon trading: Shares of Medifast (MED) are up about 9.25%. Shares of Chiquita Brands International (CQB) are up about 7.5%. Shares of Rite Aid (RAD) are up about 7%. Shares of Revlon (REV) are up about 6%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.76 at 4:00 PM on Wednesday, up 1.79% on the day – up 4.95% year-to-date.

Healthcare

In afternoon trading: Shares of Amedisys (AMED) are up about 17.75%. Shares of Gentiva Health Services (GTIV) are up about 12.5%. Shares of Kindred Healthcare (KND) are up about 11.5%. Shares of Corcept Therapeutics (CORT) are up about 9.5%. Shares of Auxilium Pharmaceuticals (AUXL) are up about 9.5%. Shares of Brookdale Senior Living (BKD) are up about 9.25%.

The Health Care Select Sector SPDR (XLV) was trading at $33.31 at 4:00 PM on Wednesday, up 2.40% on the day – up 5.75% year-to-date.

Financials

Bank of America (BAC) CEO Brian Moynihan has reorganized his senior management as he looks to assert more control over the struggling bank. The changes essentially split the bank into two main arms, one focused on consumers and the other on businesses and institutions. New York prosecutors investigating Goldman Sachs (GS) over its mortgage bonds have reportedly subpoenaed Morgan Stanley (MS), hedge funds and other parties that invested in the securities. Capital One (COF) is upgraded to Outperform at Oppenheimer with an objective of $55. Nasdaq OMX (NDAQ) is now Buy from Hold at Deutsche Bank. UBS AG (UBS) gets raised to Buy from Hold at brokerage Collins Stewart. Goldman Sachs (GS) is cut to Perform from Outperform at Oppenheimer. Oppenheimer cuts Blackstone Group (BX) and Kohlberg Kravis Roberts & Co. (KKR) to Perform from Outperform. In afternoon trading: Shares of MGIC Investment (MTG) are up about 26%. Shares of Radian Group (RDN) are up about 14.25%. Shares of Regions Financial (RF) are up about 12.25%. Shares of CB Richard Ellis (CBG) are up about 10.25%. Shares of Synovus Financial (SNV) are up about 9.25%. Shares of AIG (AIG) are up about 9.25%.

The Financial Select Sector SPDR (XLF) was trading at $12.91 at 4:00 PM on Wednesday, up 4.79% on the day – down 19.06% year-to-date.

Information Technology

Yahoo (YHOO) has replaced CEO Carol Bartz (with CFO Tim Morse) after tenure of almost three years in which she was unable to turn around the stagnating Web portal. NVIDIA (NVDA) established FY13 (year begins on 1/30/12) revenue guidance of $4.7B-$5B (above a $4.45B consensus), along with gross margin guidance of 51-53%. VeriFone (PAY) beat estimates by 3 cents and revenue by $18M, and expects Q4 net revenue of $395M-$400M and EPS in a range of $0.49-$0.50 (in-line with analyst estimates). Altera (ALTR) warned Q3 sales growth will be in a range of -3% to +1% (compared with prior guidance for +2% to +6%). JDS Uniphase (JDSU) is initiated with a Hold and $14.50 price objective at Kaufman Brothers. TriQuint Semiconductor (TQNT) and RF Micro Device (RFMD) are each reinstated with an Underperform at Bank of America-Merrill Lynch. United Online (UNTD) is begun Buy rating and $7 price objective at The Benchmark Company. Sapient (SAPE) is boosted to Outperform from Market Perform at BMO Capital. In afternoon trading: Shares of Brocade Communications Systems (BRCD) are up about 11%. Shares of NVIDIA are up about 9.75%. Shares of Openwave Systems (OPWV) are up about 9.75%. Shares of VeriSign (VRSN) are up about 9.25%. Shares of NXP Semiconductors (NXPI) are up about 9.25%.

The Technology Select Sector SPDR (XLK) was trading at $24.12 at 4:00 PM on Wednesday, up 2.59% on the day – down 4.25% year-to-date.

Telecommunications Services

The cost for AT&T (T) of buying T-Mobile USA could reportedly drop from the $39B agreed if regulators require asset sales exceeding 20% of the deal's value - or $7.8B - in order to approve the transaction. In afternoon trading: Shares of Level 3 Communications (LVLT) are up about 7.5%> Shares of Global Crossing (GLBC) are up about 7.1%. Shares of MetroPCS (PCS) are up about 5.6%. Shares of USA Mobility (USMO) are up about 5.5%. Actives: Shares of Sprint Nextel (S) are up about 2.7%. Shares of AT&T are up about 0.9%. Shares of Verizon (VZ) are up about 0.6%.

The NASDAQ Telecommunications Index (IXTC) was trading at $193.08 at 4:00 PM on Wednesday, up 3.93% on the day – down 14.33% year-to-date.

Utilities

In afternoon trading: Actives: Shares of AES Corp (AES) are up about 3.1%. Shares of Duke Energy (DUK) are up about a half of a percent. Shares of Genon Energy (GEN) are up about 0.3%. Shares of PPL Corp (PPL) are down about a full percent. Shares of Southern (SO) are down slightly. Shares of American Electric Power (AEP) are up about a full percent. Shares of CenterPoint Energy (CNP) are up about 1.6%.

The Utilities Select Sector SPDR (XLU) was trading at $33.50 at 4:00 PM on Wednesday, up 1.12% on the day – up 6.891% year-to-date.

STOCKS: CJES, LUFK, CVX, SPWRA, SUN, CPNO, PETD, CLNE, DVR, ANR, FST, TIN, WLT, BZ, X, AKS, CLF, ATI, NAV, LMT, DOV, URI, AONE, CBE, TLB, ODP, PBY, DRI, FRAN, DKS, CAST, NKE, FL, FINL, LVS, TWX, WSM, DHI, MGA, PAG, GT, HST, SNI, SONC, BZH, CHEF, CPO, BUD, MED, CQB, RAD, REV, AMED, GTIV, KND, CORT, AUXL, BKD, BAC, GS, MS, COF, NDAQ, UBS, BX, KKR, MTG, RDN, RF, CBG, SNV, AIG, YHOO, NVDA, PAY, ALTR, JDSU, TQNT, RFMD, UNTD, SAPE, BRCD, OPWV, VRSN, NXPI, T, LVLT, GLBC, PCS, USMO, S, VZ, AES, DUK, GEN, PPL, SO, AEP, CNP

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
AEP American Electric Power Company 64.50 -0.86 -1.32 3,630,583
AES The AES Corporation 12.90 -0.25 -1.90 6,081,524
AIG American International Group Inc. New 58.40 -1.10 -1.85 7,254,810
AKS AK Steel Holding Corporation 4.94 -0.16 -3.14 13,710,884
ALTR Altera Corp. n/a n/a n/a 0
AMED Amedisys Inc 47.31 -1.14 -2.35 163,336
ATI Allegheny Technologies Incorporated 17.84 -0.23 -1.27 1,875,557
ATLSW Atlas Energy Group LLC n/a n/a n/a 0
BAC Bank of America Corporation 15.16 -0.22 -1.43 78,614,499
BKD Brookdale Senior Living Inc. 17.24 -0.38 -2.16 2,015,312
BRCD Brocade Communications Systems Inc. 9.15 -0.03 -0.33 3,233,986
BUD Anheuser-Busch Inbev SA Sponsored ADR (Belgium) 131.16 -2.28 -1.71 3,476,520
BX The Blackstone Group L.P. Representing Limited Par 25.06 -0.06 -0.24 4,169,847
BZH Beazer Homes USA Inc. 11.56 -0.36 -3.02 767,358
CBG CBRE Group Inc Class A 27.64 -0.75 -2.64 2,165,942
CHEF The Chefs\' Warehouse Inc. 10.80 -0.20 -1.82 121,895
CJES C&J Energy Services Ltd. n/a n/a n/a n/a
CLF Cliffs Natural Resources Inc 5.86 -0.44 -6.98 13,388,665
CLNE Clean Energy Fuels Corp. 4.42 -0.10 -2.21 2,345,569
CNP CenterPoint Energy Inc (Holding Co) 23.58 -0.54 -2.24 3,568,648
COF Capital One Financial Corporation 70.36 -1.39 -1.94 3,164,523
CORT Corcept Therapeutics Incorporated 6.30 -0.20 -3.08 296,231
CVX Chevron Corporation 101.27 -0.88 -0.86 8,135,879
DHI D.R. Horton Inc. 30.14 -0.18 -0.59 4,628,103
DKS Dick\'s Sporting Goods Inc 56.57 -2.56 -4.33 4,356,225
DOV Dover Corporation 71.87 0.40 0.56 1,345,338
DRI Darden Restaurants Inc. 60.63 -0.51 -0.83 1,124,642
DUK Duke Energy Corporation (Holding Company) 80.31 -0.79 -0.97 2,897,670
FINL The Finish Line Inc. 23.12 -0.16 -0.69 649,709
FL Foot Locker Inc. 66.83 -1.02 -1.50 1,709,782
FRAN Francesca\'s Holdings Corporation 15.28 -0.14 -0.91 995,916
GEN Genesis Healthcare Inc. 2.62 -0.09 -3.32 82,535
GS The Goldman Sachs Group Inc. 158.95 -4.50 -2.75 3,731,220
GT The Goodyear Tire & Rubber Company 31.73 -1.09 -3.32 4,319,669
HST Host Hotels & Resorts Inc. 15.65 0.05 0.32 11,936,213
JDSU Viavi Solutions Inc n/a n/a n/a 0
KKR KKR & Co. L.P. Representing Limited Partnership In 14.05 -0.09 -0.64 1,364,512
KND Kindred Healthcare Inc. 9.97 -0.41 -3.95 939,717
LMT Lockheed Martin Corporation 242.34 -3.41 -1.39 1,134,098
LVLT Level 3 Communications Inc. 46.43 -1.23 -2.58 3,152,427
LVS Las Vegas Sands Corp. 56.93 -0.55 -0.96 3,191,833
MED MEDIFAST INC 37.09 -0.59 -1.57 66,289
MGA Magna International Inc. 41.83 0.00 0.00 1,548,940
MS Morgan Stanley 31.04 -0.73 -2.30 12,453,651
MTG MGIC Investment Corporation 7.92 -0.09 -1.12 4,176,958
NAV Navistar International Corporation 22.25 -0.05 -0.22 901,411
NDAQ Nasdaq Inc. 67.48 -0.73 -1.07 888,835
NKE Nike Inc. 52.16 -1.09 -2.05 16,990,669
NVDA NVIDIA Corporation 67.40 0.62 0.93 8,413,625
NXPI NXP Semiconductors N.V. 96.12 13.88 16.88 24,427,640
ODP Office Depot Inc. 3.52 -0.04 -1.12 7,991,593
PAG Penske Automotive Group Inc. 47.18 -0.40 -0.84 1,185,903
PAY Verifone Systems Inc. 15.77 -0.22 -1.38 1,419,129
PBY Pep Boys-Manny Moe & Jack n/a n/a n/a 0
PPL PPL Corp 34.82 -0.29 -0.83 4,645,281
RAD Rite Aid Corporation 7.57 -0.15 -1.94 23,549,966
RDN Radian Group Inc. 13.53 -0.21 -1.53 2,118,416
REV Revlon Inc. New 36.15 -0.99 -2.67 46,434
RF Regions Financial Corporation 9.67 -0.16 -1.63 17,501,977
S Sprint Corporation 6.66 -0.12 -1.77 11,163,486
SNI Scripps Networks Interactive Inc 63.94 1.31 2.09 1,616,825
SNV Synovus Financial Corp. 31.98 -0.36 -1.11 1,266,313
SO Southern Company (The) 52.05 -0.65 -1.23 5,877,596
SONC Sonic Corp. 25.46 0.02 0.08 1,768,082
SUN Sunoco LP representing limited partner interests 29.18 -0.51 -1.72 601,041
T AT&T Inc. 40.73 -0.12 -0.29 17,044,972
TWX Time Warner Inc. New 78.61 0.05 0.06 3,919,010
UBS UBS Group AG Registered 13.06 -0.51 -3.76 4,728,900
UNTD United Online Inc n/a n/a n/a 0
URI United Rentals Inc. 76.34 1.20 1.60 2,521,802
VRSN VeriSign Inc. 78.21 -1.21 -1.52 1,007,702
VZ Verizon Communications Inc. 52.12 0.06 0.12 10,790,620
WSM Williams-Sonoma Inc. (DE) 50.42 0.02 0.04 1,523,507
YHOO Yahoo! Inc. 42.57 -1.12 -2.56 13,720,734

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