Retail sales fell 0.2% in May for the first decline since June 2010. U.S. stocks had an oversold bounce on Tuesday with the Dow Jones Industrial Average trading as high as 12,120 into the final half hour of trading, with the NASDAQ up to 2685.The Dow Industrial Average bounced a point to 11,953 on Monday up just 3.2% year to date and down 7.2% since its May 2nd high at 12,876. The NASDAQ lost just four points on Monday to 2640 down 0.3% year to date and down 8.6% since its May 2nd high at 2887.75. The PPI rose 0.2% in May and up 7.3% year over year.
Asian stocks were mixed again on Tuesday for the fifth consecutive day with the Nikkei 225 up 1.1% to 9,548 with the Hang Seng virtually flat. European stocks surged with the FTSE up 0.5%, the DAX up 1.7% and the CAC 40 up 1.5%. The yield on the 10-Year US Treasury note rose from 2.978 percent to back above 3% on Tuesday morning to 3.105 in afternoon trading nearly testing its 200-day simple moving average in the final hour of trading. Comex gold traded up to $1524.9 the Troy ounce, then down to $1512.8, then rallied to $1526.7 in the final hour. Nymex crude oil traded down to $96.51 then up to $99.44 per barrel in the final hour on Tuesday. The euro traded up from 1.4382 to 1.4496 on Tuesday afternoon.
Energy
Continental Resources (CLR) is initiated as an Outperform by Robert W. Baird and the stock was trading 4.7% higher in mid-afternoon trading. PDC Energy (PETD) has been upgraded to Buy from Hold at Canaccord Genuity and the stock was trading 6.0% higher. Sunpower (SPWRA) has been downgraded to Sell from Neutral at Goldman and shares were 1.2% lower. Market movers included; Arch Coal (ACI) which gained 4.5% in afternoon trading. Peabody Energy (BTU) which popped 4.2% in afternoon trading. Canadian Solar (CSIQ) rebounded 8.3% in afternoon trading. Marathon Oil (MRO) was up 4.8% Tuesday afernoon. Western Refining (WNR) was up 5.4%. Dow components Chevron (CVX) and Exxon Mobil (XOM) were up 2.0% and 1.8% respectively mid-morning on Tuesday.
Energy Select Sector SPDR (XLE) was trading at $73.70 at 4:00 PM on Tuesday, up 2.15% on the day – up 7.99% year-to-date.
Materials
Methanex (MEOH) has been upgraded to Buy from Neutral at UBS and shares rallied 5.2% into afternoon trading on Tuesday. Market movers included; AK Steel (AKS) which gained 3.3% in mid-afternoon trading. Century Aluminum (CENX) tacked on 3.8% in mid-afternoon trading. Freeport McMoRan (FCX) gained 3.2% in mid-afternoon trading. Patriot Coal (PCX) gained 4.3%. Dow components Alcoa (AA) and Dupont (DD) gained 2.2% and 1.8% respectively.
The Materials Select Sector SPDR (XLB) traded at $38.12 at 4:00 PM on Tuesday, up 2.01% on the day – down 0.76% year-to-date.
Industrials
According to the Transportation Department, the money airlines receive baggage fees and changing reservations rose 10% in 2010 to $5.7 billion, which helped carriers to offset higher fuel costs. Delta (DAL) made the most in both categories, while American Airlines (AMR) was second. Airline shares rebounded with AMR up 1.0% and DAL up 2.7% at mid-afternoon. A conflict between Boeing (BA) and labor unions concerning moving the airplane maker to a new non-union plant in South Carolina will likely go before a judge today unless both sides come to a last-minute agreement. Masco (MAS) is upgraded to Neutral from Sell at Ticonderoga saying that the worst of companies 2011 results are likely behind it. DryShips (DRYS) was upgraded to Outperform from Market Perform with Wells Fargo and shares were up 3.5% mid-afternoon. Dow components – Boeing Co (BA) was up 2.6%. Caterpillar (CAT) was up 2.7%. General Electric (GE) was up 1.7%. United Technologies (UTX) was up 1.7%.
The Industrial Select Sector SPDR (XLI) traded at $35.92 at 4:00 PM on Tuesday, up 1.99% on the day – up 3.01% year-to-date.
Consumer Discretionary
Honda (HMC) has guided its fiscal year net profit down by 63% to $2.4 billion well below analysts’ estimates. This is a larger drop than Toyota (TM). HMC shares were down just 0.3% mid-afternoon. Casino stocks Ameristar Casinos (ASCA) and Pinnacle (PNK) have been resumed by Raymond James with Strong Buy recommendations. ASCA gained 6.0% and PNK was up 7.2%. Wendy’s / Arby’s Group (WEN) has been upgraded to Buy from Neutral at UBS and the stock gained 6.4% mid-afternoon. Leisure Stocks MGM Resorts (MGM) and Wynn Resorts (WYNN) are now rated Add from Neutral at Citadel. MGM was up 2.6% with WYNN up 2.4%. Advance Auto Parts (AAP) has been downgraded to Reduce from Neutral at Nomura and shares slipped 1.3% in mid-afternoon trading. Best Buy (BBY) reported better than expected earnings and shares were up 5.3% mid-afternoon. Brunswick Corp (BC) was up 8.1%. JC Penny (JCP) was up 17.3% mid-afternoon.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $38.48 at 4:00 PM on Tuesday, up 1.77% on the day – up 2.86% year-to-date.
Consumer Staples
Avis Budget (CAR) will acquire Avis Europe for about $1 billion in a deal that comes as Avis Budget looks to buy Dollar Thrifty (DTG) for $1.7 billion. CAR rose 5.3% in afternoon trading. DTG fell by 9.0%. The acquisition will give Avis Budget increased presence in international markets such as India and China. Fresh Market (TFM) has been upgraded to Market Perform from Underperform at BMO Capital and shares rose 5.1%. Dow components – Coca Cola (KO) traded up 1.0% in mid-afternoon trading. Kraft Foods (KFT) moved higher by 0.9%. Proctor & Gamble (PG) was up 0.4%. Wal-Mart (WMT) was up 0.7% Tuesday afternoon.
The Consumer Staples Select Sector SPDR (XLP) traded at $31.40 at 4:00 PM on Tuesday, up 1.13% on the day – up 7.13% year-to-date.
Healthcare
The FTC has asked for more information on Teva’s (TEVA) planned $6.8 billion acquisition of Cephalon (CEPH). TEVA was up 1.3% mid-afternoon with CEPH up 0.3%. TEVA still says that they expect the deal to move forward in the third quarter. MAKO Surgical (MAKO) is initiated as a Hold by Canaccord Genuity and shares slumped 1.7%. Accretive Health (AH) has been upgraded to Outperform from Neutral at Robert W. Baird and shares were up 7.4% mid-afternoon. Dow components – Johnson & Johnson (JNJ) was up 0.9%, Merck (MRK) was up 1.4%. Pfizer (PFE) was up 0.9% in afternoon trading.
The Health Care Select Sector SPDR (XLV) traded at $35.40 at 4:00 PM on Tuesday, up 1.20% on the day – up 12.38% year-to-date.
Financials
Regulators have given the leading mortgage servicers another thirty days to submit plans for revamping their business practices, particularly on loan modifications and foreclosures. The banks, which include Bank of America (BAC), Wells Fargo (WFC), JP Morgan (JPM) and Citigroup (C), also need to compensate borrowers who have suffered financial harm due to improper repossessions. Goldman Sachs (GS) and Morgan Stanley (MS) were initiated with Underperform ratings at RBC Capital Markets. GS was flat, while MS was down 2.0%. E*TRADE (ETFC) was initiated with a Market Perform at Wells Fargo and shares were up 3.8%. Signature Bank (SBNY) was initiated as a Market Perform at Morgan Keegan with a price target at $56. Valley National (VLY) was also initiated as a new Market Perform at Morgan Keegan with a price target at $13.50. Zions Bancorp (ZION) has been upgraded to Outperform from Market Perform at Keefe Bruyette and shares were up 1.8% in afternoon trading. Tanger Factory (SKT) is upgraded to Buy from Neutral at UBS. Westamerica Bancorp (WABC) has been upgraded to Market Perform from Underperform by BMO Capital Markets. Dow Components – American Express (AXP) was flat. Bank of America (BAC) was down 0.7%. JP Morgan (JPM) was up 0.5%. Travelers (TRV) traded flat in afternoon trading.
The Financial Select Sector SPDR (XLF) traded at $14.98 at 4:00 PM on Tuesday, up 0.67% on the day – down 5.45% year-to-date.
Information Technology
Nokia (NOK) has reached a deal with Apple (AAPL) settling a two-year patent dispute. The agreement that will boost Nokia’s recently cut second-quarter outlook. Nokia shares rebounded 3.4%. Diode (DIOD) has been upgraded to Buy from Hold at The Benchmark Company and rallied by 1.4%. MEMC Electronics (WFR) is upgraded to Neutral from Sell at Goldman and shares popped 5.3%. Cisco Systems (CSCO) has been downgraded to Underperform from Outperform at RBC Capital, taking their target price down to $14 from $22. Juniper Networks (JNPR) has been downgraded to Sector Perform from Outperform at RBC Capital, which lowers its price target to $37 from $46 amid slowing demand and a back end loaded quarter. Dow components – Cisco Systems (CSCO) gained 0.2%. Hewlett Packard (HPQ) bounced fractionally. IBM (IBM) traded 0.8% higher. Intel Corp (INTC) rallied by 2.1%. Microsoft (MSFT) rallied by 1.1%.
The Technology Select Sector SPDR (XLK) traded at $25.10 at 4:00 PM on Tuesday, up 1.31% on the day – down 0.36% year-to-date.
Telecommunications Services
Some of the market movers include; BT Group (BT) up 3.0% in afternoon trading. France Telecom (FTE) gained 1.6%. Metro PCS (PCS) was up 1.7%. Vodafone (VOD) rebounded 0.7%. Dow components – AT&T (T) traded 1.0% higher Tuesday afternoon. Verizon (VX) traded around the flat line.
The NASDAQ Telecommunications Index (IXTC) traded at $208.96 at 4:00 PM on Tuesday, up 1.31% on the day – down 7.28% year-to-date.
Utilities
FirstEnergy (FE) has been upgraded to Outperform from Market Perform at FBR Capital with a price target up to $48.50 from $39. The stock rallied 2.4% into Tuesday afternoon Entergy (ETR) is a Top Pick at Robert Baird with a price target raised to $82 from $79. Shares moved 0.9% higher. PG&E Corp (PCG) has been removed from the TOP Picks list at FBR Capital, but shares stayed flat on the day. Duke Energy (DUK) was 0.4% higher Tuesday afternoon. Dynegy (DYN) slumped by 2.7% early but came back to the flat line. Progress Energy (PGN) traded up 0.3% on Tuesday.
The Utilities Select Sector SPDR (XLU) traded at $33.22 at 4:00 PM on Tuesday, up 0.30% on the day – up 6.00% year-to-date.
STOCKS: CLR, PETD, SPWRA, ACI, BTU, CSIQ, MRO, WNR, CVX, XOM, MEOH, AKS, CENX, FCX, PCX, AA, DD, DAL, AMR, BA, MAS, DRYS, CAT, GE, UTX, HMC, TM, ASCA, PNK, WEN, MGM, WYNN, AAP, BBY, BC, JCP, CAR, DTG, TFM, KO, KFT, PG, WMT, TEVA, CEPH, MAKO, AH, JNJ. MRK, PFE, BAC, WFC, JPM, C, GS, MS, ETFC, SBNY, VLY, ZION, SKT, WABC, AXP, TRV, NOK, AAPL, DIOD, WFR, CSCO, JNPR, HPQ, IBM, INTC, MSFT, BT, FTE, PCS, VOD, T, VZ, FE, ETR, PCG, DUK, DYN, PGN
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