Equities Sector Coverage: Wall Street Inches Higher as QE3 May Be Coming

Sector Recap |

Wall Street Inches Higher as QE3 May Be ComingGermany’s Constitutional Court ruled that Germany can ratify the new European Stability Mechanism (ESM). The court rejected the challenge to the ESM but attached conditions to Germany’s participation. The German government must consult both houses of parliament, and that Germany’s liability to the ESM cannot exceed 190 billion Euros without the approval of the lower house. The Dow Jones Industrial Average traded up to a day’s high at 13,373.62 then declined to 13,317.52. The NASDAQ traded up to 3120.12 then down to 3098.82.

Asian stocks rebounded on Wednesday. The Nikkei 225 ended the day at 8,960 – up 1.73%. The Hang Seng ended the day at 20,075 – up 1.10%. European exchanges had mixed sessions on Wednesday. The FTSE 100 ended the day at 5,782 – down 0.17%. The DAX ended the day at 7,344 – up 0.46%. The CAC 40 ended the day at 3,544 – up 0.18%.

The yield on the 10-Year US Treasury rose from 1.690% to 1.773% staying between its 50-day and 200-day simple moving averages at 1.597% and 1.833%. Remember that rising yields is a drag on equity valuations. Comex gold traded up to $1749.5 the Troy ounce then declined to $1727.3 staying well above the 50-day and 200-day simple moving averages at $1629.3 and $1646.6. Nymex crude oil rallied to $98.06 per barrel then declined to $96.31 versus the 200-day simple moving average at $96.62, and the August 23rd high at $98.29. The euro versus the dollar traded up from 1.2830 to 1.2935 well above the 200-day simple moving average at 1.2830.

Energy

Phillips 66 (PSX) is moved to Overweight from Equal-Weight at Morgan Stanley. Dow components – Chevron (CVX) up 0.46%, Exxon Mobil (XOM) down 0.02%. Energy Select Sector SPDR (XLE) was trading at $74.30 at 3:30 PM on Wednesday, up 0.53% on the day – up 7.48% year-to-date.

Materials

Steel Dynamics (STLD) issues downbeat Q3 guidance; now expecting to earn between $0.09 - $0.14 per share, versus estimates of $0.19 per share. Agrium (AGU) is upgraded to Buy from Neutral at Citigroup, which also adds the company to the Top Picks Live. Packaging Corp. of America (PKG) is downgraded to Market Perform from Outperform at BMO Capital. Potash Corp. (POT) is now Neutral from Buy at Citigroup. Dow Components – Alcoa (AA) up 0.64%, DuPont (DD) down 0.93%.

The Materials Select Sector SPDR (XLB) was trading at $36.92 at 3:30 PM on Wednesday, down 0.27% on the day – up 10.21% year-to-date.

Industrials

TRC Companies (TRR) beat estimates by 77 cents on revenue of $109.7M. PMFG (PMFG) missed estimates by 9 cents and revenue by $5M. JB Hunt Trans (JBHT) is moved to Buy from Neutral by Bank of America-Merrill. Paccar (PCAR) is moved to Underperform from Market Perform at Wells Fargo. Dow components – Boeing Co (BA) down 0.37%, Caterpillar (CAT) up 0.84%, General Electric (GE) up 1.11%, 3M Company (MMM) down 0.26%, United Technologies (UTX) up 0.11%.
The Industrial Select Sector SPDR (XLI) was trading at $37.09 at 3:30 PM on Wednesday, up 0.35% on the day – up 9.90% year-to-date.

Consumer Discretionary

The directors of Ford (F) are due to meet tomorrow, when they're expected to discuss one of the most pressing issues facing the automaker: the retirement of CEO Alan Mulally. President of the Americas, Mark Fields, is poised to be promoted to COO, anointing him as a probable successor to Mulally. Standard Motor (SMP) is launched with a Buy at Bank of America-Merrill Lynch. Group 1 Automotive (GPI) gets upgraded to Overweight from Underweight at Morgan Stanley. Kohl’s Corp. (KSS) is upgraded to Buy from Hold at Deutsche Bank. Finish Line (FINL) is downgraded to Underperform from Neutral at Sterne Agee as it continues to lose shares to Foot Locker (FL). Standard Pacific (SPF) is slashed to Neutral from Buy at UBS.
Big Movers – Office Depot (ODP) up 20.63%, American Apparel (APP) up 10.85%.

Dow Components – Disney (DIS) up 0.37%, Home Depot (HD) up 0.32%, McDonalds (MCD) down 0.32%.
The Consumer Discretionary Select Sector SPDR (XLY) was trading at $46.83 at 3:30 PM on Wednesday, up 0.30% on the day – up 20.02% year-to-date.

Consumer Staples

Big Movers – Coffee Holding (JVA) up 17.71%, Dole Food (DOLE) up 11.32%. Dow components – Kraft (KFT) down 0.18%, Coca Cola (KO) down 0.30%, Procter & Gamble (PG) down 0.10%, Wal-Mart (WMT) up 0.11%. The Consumer Staples Select Sector SPDR (XLP) was trading at $35.43 at 3:30 PM on Wednesday, down 0.51% on the day – up 9.05% year-to-date.



Health Care

Aetna (AET) reaffirms its FY12 EPS guidance of $5 - $5.10, in line with consensus estimates of $5.08. ArQule (ARQL) is an Outperform at Burrill Institutional Research. Nobel Biocare (NBHGY) is a new Neutral at HSBC Securities. Amgen (AMGN) is now Neutral from Outperform at Robert W. Baird.
Big Movers – Zalicus (ZLCS) up 10.37%, Peregrine (PPHM) up 10.05%. Dow Components – Johnson & Johnson (JNJ) down 0.04%, Merck (MRK) up 0.27%, Pfizer (PFE) down 0.10%. The Health Care Select Sector SPDR (XLV) was trading at $39.41 at 3:30 PM on Wednesday, unchanged on the day – up 13.61% year-to-date.

Financial

Unsealed court documents show how Blackstone (BX), Goldman Sachs' P-E arm (GS), Bain and other firms appear to have colluded on bids for companies they were buying in order keep prices down. In Bain's $32.1B purchase of hospital giant HCA in 2006, rival suitors agreed to "stand down" as part of an understanding to divide up the acquisition of other firms. Apollo Commercial Real Estatee (ARI) is initiated with a Market Perform at JMP Securities. MasterCard (MA) and Visa (V) are each initiated with Outperforms at Pacific Crest. Banco Santander (SAN) is moved by Morgan Stanley to Overweight from Equal-Weight. Crédit Agricole (CRARY) is now Neutral from Underperform at Credit Suisse. Federated Investors (FII) is lifted to Neutral from Sell at Goldman. Banco Popolare (BPSAY) is now Neutral from Outperform at by BNP Paribas. Cohen & Steers (CNS) gets cut Sell from Neutral at Goldman Sachs.

Dow Components – American Express (AXP) up 0.13%, Bank of America (BAC) down 1.33%, JP Morgan Chase (JPM) up 0.96%, Travelers (TRV) up 0.90%. The Financial Select Sector SPDR (XLF) was trading at $15.74 at 3:30 PM on Wednesday, up 0.38% on the day – up 21.08% year-to-date.

Information Technology

Mark Zuckerberg yesterday attempted to soothe concerns about Facebook's (FB) mobile monetization, predicting that the social network will eventually make more money off mobile than from PCs. Apple (AAPL) frenzy should go into overdrive today with the expected unveiling of the iPhone 5, which will reportedly offer 4G cellular technology, have a bigger screen, and run on the new iOS 6. Microsoft (MSFT) isn't finished developing Windows Phone 8, The Verge reports, and is "working overtime" with Nokia (NOK) to make sure that the OS meets its October 29 launch date. Any major delay would be a huge problem for Nokia, whose Lumia 920 and 820 WP8 phones already appear fated to begin selling weeks after sales of the next iPhone commence. Xyratex (XRTX) warned it expects FQ3 revenue of $271M-$276M, well below a guidance range of $313M-$373M and a consensus of $344.6M. Texas Instruments (TXN) has narrowed its Q3 revenue guidance range to $3.27B-$3.41B from a prior $3.21B-$3.47B, and is now forecasting EPS of $0.38-$0.42, at the high end of a prior guidance range of $0.34-$0.42. Consensus is $3.34B and $0.38). Globecomm Systems (GCOM) missed estimates by 7 cents, while beating revenue by $5M. FY13 guidance is for revenue of $340M-$360M and EPS of $0.66-$0.76 (versus consensus of $404.9M and $1.11). MasterCard (MA) and Visa (V) are each initiated with Outperforms at Pacific Crest. Demandware (DWRE) is begun with a Buy at Janney Capital. Fortnet (FTNT) is a fresh Outperform at Northland Securities. Glu Mobile (GLUU) gets initiated with a Buy at B. Riley. LivePerson (LPSN) is a new Buy at Benchmark. Sohu.com (SOHU) is a new Buy at Citigroup. Automatic Data Processing and Paychex (PAYX) are each taken to Underperform from Hold at Jefferies. Synaptics (SYNA) is now Hold from Buy at Needham.
Big Movers – Powerwave Technology (PWAV) up 67.48%, Globecomm Systems (GCOM) down 17.14%, Liquidity Services (LQDT) down 10.46%.

Dow Components – Cisco Systems (CSCO) up 0.84%, Hewlett-Packard (HPQ) up 0.06%, IBM (IBM) up 0.53%, Intel Corp (INTC) down 0.27%, Microsoft (MSFT) up 0.42%.

The Technology Select Sector SPDR (XLK) was trading at $30.91 at 3:30 PM on Wednesday, up 0.23% on the day – up 21.45% year-to-date.

Telecommunication Services

Vodafone (VOD) is now Neutral from Buy at Nomura. Dow Components – AT&T (T) up 0.54%, Verizon (VZ) up 0.74%. The NASDAQ Telecommunications Index (IXTC) was trading at $197.98 at 3:30 PM on Wednesday, up 0.37% on the day – up 0.53% year-to-date.
Utilities
Black Hills Corp. (BKH) gets boosted to Overweight from Neutral at JPMorgan. Great Plains Energy (GXP) gets upgraded to Overweight from Neutral at JPMorgan. Exelon (EXC) is now Sell from Neutral at UBS. The Big Names – Dominion Resources (D) down 0.36%, Edison International (EIX) down 0.07%, First Energy (FE) down 0.33%, PG&E Corp (PCG) down 0.32%, Southern Company (SO) down 0.10%. The Utilities Select Sector SPDR (XLU) was trading at $36.29 at 3:30 PM on Wednesday, down 0.55% on the day – up 0.86% year-to-date.

STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KFT, KO, PG, WMT, JNJ, MRK, PFE, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, PSX, STLD, AGU, PKG, POT, TRR, PMFG, PCAR, F, SMP, GPI, KSS, FINL, FL, SPF, ODP, APP, JVA, DOLE, AET, ARQL, NBHGY, AMGN, ZLCS, PPHM, BX, GS, ARI, MA, V, SAN, CRARY, FII, BPSAY, CNS, FB, AAPL, MSFT, NOK, XRTX, TXN, GCOM, MA, V, DWRE, FTNT, GLUU, LPSN, SOHU, PAYX, SYNA, PWAV, GCOM, LQDT, VOD, BKH, GXP, EXC

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
BX The Blackstone Group L.P. Representing Limited Par 30.22 -0.18 -0.59 3,917,470
MMM 3M Company 182.95 -0.46 -0.25 1,961,456
GXP Great Plains Energy Incorporated 28.13 0.16 0.57 1,715,607
ARI Apollo Commercial Real Estate Finance Inc 17.80 -0.12 -0.67 1,230,138
FII Federated Investors Inc. 26.89 0.02 0.07 438,040
PG Procter & Gamble Company (The) 91.09 0.30 0.33 12,152,428
GE General Electric Co 30.37 -0.08 -0.26 21,849,428
CVX Chevron Corporation 110.33 -0.35 -0.32 8,111,023
SO Southern Company (The) 47.80 -0.44 -0.91 7,118,347
PCG Pacific Gas & Electric Co. 63.92 0.53 0.84 2,501,732
FINL The Finish Line Inc. 17.31 0.00 0.00 970,198
GLUU Glu Mobile Inc. 2.06 -0.03 -1.44 1,620,797
AGU Agrium Inc. 103.65 -0.44 -0.42 529,745
SAN Banco Santander SA ADR 5.46 -0.06 -1.09 4,767,052
FB Facebook Inc. 133.53 -0.31 -0.23 12,276,490
PKG Packaging Corporation of America 95.26 -1.36 -1.41 786,351
JNJ Johnson & Johnson 118.86 0.78 0.66 8,691,397
WMT Wal-Mart Stores Inc. 69.37 0.50 0.73 12,837,447
AA Alcoa Inc. 36.21 -0.25 -0.69 4,516,838
INTC Intel Corporation 36.48 0.07 0.19 18,909,888
IBM International Business Machines Corp 180.67 -0.76 -0.42 3,552,495
D Dominion Resources Inc. 73.77 0.49 0.67 3,426,440
TRV The Travelers Companies Inc. 121.95 0.16 0.13 1,334,680
SMP Standard Motor Products Inc. 48.57 -1.11 -2.23 168,171
FL Foot Locker Inc. 71.00 0.50 0.71 1,358,174
AAPL Apple Inc. 135.72 0.38 0.28 22,198,197
VSN.PR.C:CA Veresen Inc. cumulative redeemable preferred share 22.39 -0.32 -1.41 2,541
POT Potash Corporation of Saskatchewan Inc. 18.72 0.02 0.11 4,236,235
EIX Edison International 76.34 0.55 0.73 1,985,051
JPM JP Morgan Chase 90.23 -0.30 -0.33 15,776,589
AXP American Express Company 79.71 0.20 0.25 2,690,300
UTX United Technologies Corporation 112.15 0.08 0.07 2,531,804
VOD Vodafone Group Plc 25.11 -0.11 -0.44 4,414,961
TXN Texas Instruments Incorporated 76.44 0.19 0.25 3,955,507
V Visa Inc. 87.46 0.05 0.06 5,887,160
PSX Phillips 66 78.66 0.16 0.20 2,219,168
CSCO Cisco Systems Inc. 33.74 0.14 0.42 31,841,239
DIS Walt Disney Company (The) 110.06 -0.65 -0.59 6,349,161
GS The Goldman Sachs Group Inc. 250.38 0.94 0.38 3,262,325
LPSN LivePerson Inc. 7.05 0.00 0.00 168,218
VZ Verizon Communications Inc. 49.19 0.73 1.51 23,190,659
ODP Office Depot Inc. 4.54 0.07 1.57 4,368,679
DWRE DEMANDWARE INC. n/a n/a n/a 0
PCAR PACCAR Inc 68.85 0.13 0.19 1,455,370
BAC Bank of America Corporation 24.52 -0.06 -0.24 85,789,239
SYNA Synaptics Incorporated 58.87 1.02 1.76 473,117
AET Aetna Inc. 125.27 -4.22 -3.26 4,214,129
NOK Nokia Corporation Sponsored American Depositary Sh 5.05 -0.02 -0.39 7,214,647
MCD McDonald\'s Corporation 127.80 1.10 0.87 3,677,392
BKH Black Hills Corporation 62.64 0.42 0.68 257,312
FTNT Fortinet Inc. 37.46 0.22 0.58 1,249,866
TRR TRC Companies Inc. 11.25 -0.15 -1.32 33,702
DD E.I. du Pont de Nemours and Co. 77.49 -0.30 -0.39 1,716,674
KSS Kohl\'s Corporation 41.97 0.44 1.06 3,499,183
SOHU Sohu.com Inc. 39.35 0.10 0.25 386,599
JVA Coffee Holding Co. Inc. 4.46 -0.11 -2.41 12,350
AMGN Amgen Inc. 173.29 1.18 0.69 4,154,875
PPHM Peregrine Pharmaceuticals Inc. 0.55 0.11 24.07 27,005,991
HD Home Depot Inc. (The) 143.00 1.46 1.03 5,108,352
F Ford Motor Company 12.58 0.04 0.32 26,407,405
XOM Exxon Mobil Corporation 81.76 -0.54 -0.66 15,645,973
PFE Pfizer Inc. 33.62 0.00 0.00 34,992,707
HPQ HP Inc. 15.95 0.03 0.19 17,366,721
ARQL ArQule Inc. 1.20 -0.27 -18.37 2,450,163
BA Boeing Company (The) 172.71 1.90 1.11 4,982,894
MRK Merck & Company Inc. (new) 65.39 0.13 0.20 9,048,256
LQDT Liquidity Services Inc. 8.50 0.00 0.00 97,588
FE FirstEnergy Corporation 31.01 0.39 1.27 4,410,407
KO Coca-Cola Company (The) 41.23 0.03 0.07 15,065,148
EXC Exelon Corporation 35.58 0.16 0.45 4,962,991
T AT&T Inc. 41.48 0.23 0.56 24,156,415
CAT Caterpillar Inc. 98.85 0.59 0.60 3,631,547
GPI Group 1 Automotive Inc. 80.31 0.75 0.94 188,306
SPF null n/a n/a n/a 0
MSFT Microsoft Corporation 64.62 0.10 0.15 21,248,818
PAYX Paychex Inc. 59.13 -0.36 -0.61 1,708,140
STLD Steel Dynamics Inc. 37.16 -0.22 -0.59 1,994,684

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