Equities Sector Coverage: Wall Street Shrugs Off Bad Data, Early Losses to Extend Run

Sector Recap |

fomcAccording to S&P Case Shiller home prices rose 3.6% in the second quarter, but were down 5.9% year over year. According to the Conference Board Consumer Confidence plunged to 44.5 in August from 59.5 in July the lowest reading since April 2009. This is an extremely depressed reading as the neutral zone is 90 to 120. The Dow Jones Industrial Average opened slightly lower, but fell by more than 100 points following the weak consumer confidence data to a low of 11,429.39. By mid-day the Dow moved above the flat line to a day’s high in the final hour of trading above 11,600. The Dow is thus up more than up 1,000 points from its August 9th low. The NASDAQ declined from 2561.55 to 2534.68 in reaction to consumer confidence. The NASDAQ moved into the green late morning and traded above 2585 into the final hour of trading.

Asian stocks traded higher on Tuesday following the gains in the U.S. from Monday. The Nikkei 225 rose by 1.16% to 8,954, and the Hang Seng gained 1.71% to 20,204. In Europe, the markets were concerned about economic growth and the credit crisis. The FTSE 100, which was closed on Monday, rebounded by 2.70% to 5,227. The DAX lost 0.46% to 5,644. The CAC 40 was slightly higher by 0.18% to 3,160. The yield on the 10-Year US Treasury declined from 2.273 percent to 2.156 still within the post-FOMC range of 2.360 to 1.973. Gold rebounded from $1786.2 the Troy ounce to $1840.0 on Tuesday. Crude oil traded up from $86.46 per barrel to $89.21 staying well above its 200-week simple moving average at $83.85. The euro versus the US dollar traded down from 1.4532 to 1.4388.

Energy

Peabody Energy (BTU) and ArcelorMittal (MT) have finally received the backing of Macarthur Coal (MACDF) for a takeover of the world's biggest producer of pulverized coking coal after increasing their combined bid from A$15.50 a share to A$16.00, or A$4.8B ($5.11B). Shell (RDS.A) looks poised to be the big winner in a deal to develop Iraq's huge southern gas and oil fields, with Reuters reporting that BP (BP), Exxon (XOM), China's CNPC and Italy's Eni (E) may have to surrender most of the gas from the fields to a Shell-led processing and export project. Universal Display (PANL) announced a licensing deal and material supply agreement with a joint venture owned by Panasonic (PC) and Idemitsu Kosan (IDKOY). LDK Solar (LDK) reported Q2 revenue of $499.4M and EPS of -$0.62 (missing consensus by $20M and $0.29). The company expects 2011 revenue of $2.5B-$2.7B (above a $2.4B consensus). Alpha Natural Resources (ANR) is a new Neutral at JP Morgan. Alliance Resource (ARLP) is an Overweight and $82 price objective at JP Morgan. Ensco (ESV) and Rowan Companies (RDC) are each upgraded to Outperform from Neutral at Macquarie. Atwood Oceanics (ATW) is upgraded to Outperform from Neutral at Macquarie. LDK Solar (LDK) is lowered by Wells Fargo (Underperform from Market Perform) and Needham (Hold from Buy). Transocean (RIG) is downgraded to Neutral from Outperform at Macquarie, which also downgrades Diamond Offshore (DO) to Underperform from Neutral. In afternoon trading: Shares of Frontline (FRO) are up about 14%. Shares of GMX Resources (GMXR) are up about 9.5%.

Energy Select Sector SPDR (XLE) was trading at $68.13 at 4:00 PM on Tuesday, up 0.59% on the day – down 0.18% year-to-date.

Materials

Peabody Energy (BTU) and ArcelorMittal (MT) have finally received the backing of Macarthur Coal (MACDF) for a takeover of the world's biggest producer of pulverized coking coal after increasing their combined bid from A$15.50 a share to A$16.00, or A$4.8B ($5.11B). Aluminum Corporation of China (ACH) reported a 22% drop in H1 net profit. Martin Marietta (MLM) is reinstated with a Hold at KeyBanc Capital. The broker also has Holds on Vulcan Materials (VMC), Texas Industries (TXI), and small cap stock U.S. Concrete (USCR). SunCoke Energy (SXC) is picked up as an Outperform at Credit Suisse. Aurico Gold (AUG) gets increased to Outperform from Sector Perform at CIBC World Markets. Eagle Materials (EXP) gets upgraded to Buy from Hold at Jefferies. In afternoon trading: Shares of China GengSheng Minerals (CHGS) are up about 13%. Shares of Silvercorp Metals (SVM) are up about 10%.

The Materials Select Sector SPDR (XLB) was trading at $35.25 at 4:00 PM on Tuesday, up 0.84% on the day – down 8.23% year-to-date.

Industrials

Donaldson Company (DCI) beat EPS estimates by 5 cents on revenue of $625M, sees sales growth at 7%-15% for FY12, and sets EPS guidance at $3.15-$4.15. CB&I (CBI) is picked up as a Buy and $41 price target at UBS. Boeing (BA) is a Neutral-from-Reduce upgrade at Nomura. Emerson (EMR) is downgraded to Hold at Argus. In afternoon trading: Shares of SatCon Technology (SATC) are up about 14%. Shares of Excel Maritime Carriers (EXM) are up about 10.5%. Shares of Genco Shipping & Trading (GNK) are up about 9.5%.

The Industrial Select Sector SPDR (XLI) was trading at $32.18 at 4:00 PM on Tuesday, up 0.85% on the day – down 7.71% year-to-date.

Consumer Discretionary

Dollar General's (DG) FQ2 earnings beat expectations as EPS increased 25% to $0.52 (beating estimates by 4 cents) and revenue rose 11.2% to $3.58B (beating estimates by $40M). The company ups the low-end of its FY earnings guidance range to reflect same-store sales growth of 4%-6%; the company now expects total sales to rise 12%-14% and adjusted EPS of $2.22-$2.30. Universal Display (PANL) announced a licensing deal and material supply agreement with a joint venture owned by Panasonic (PC) and Idemitsu Kosan (IDKOY). DSW (DSW) beat estimates by 12 cents and revenue by $17.3M, and sees FY11 EPS of $2.70-2.85. Culp (CFI) reported FQ1 EPS of $0.14 and revenue of $60.3M (beating estimates by $2.9M). AnnTaylor (ANN) and Dick’s Sporting Goods (DKS) are each added to the Top Picks Live list at Citigroup. KB Home (KBH) is now Neutral from Negative at Susquehanna, which takes Toll Brothers (TLB) to Positive from Neutral. PulteGroup (PHM) is now Buy from Neutral with a $6.50 target at Ticonderoga. American Eagle (AEO) is downgraded to Hold from Buy at Citigroup. Sony (SNE) is now Neutral from Outperform at Macquarie. Bob Evans Farms (BOBE) and Cracker Barrel (CBRL) are both now Neutral from Buy at Suntrust. In afternoon trading: Shares of Corinthian Colleges (COCO) are up about 20.25%. Shares of Barnes & Noble (BKS) are up about 14%. Shares of Eastman Kodak (EK) are up about 11.5%.

The Consumer Discretionary Select Sector SPDR (XLY) was trading at $37.34 at 4:00 PM on Tuesday, up 0.46% on the day – down 0.19% year-to-date.

Consumer Staples

Nestle (NSRGY) is cut by Bernstein to Market Perform from Outperform. In afternoon trading: Shares of Imperial Sugar (IPSU) are up about 14.25%. Shares of Nu Skin Enterprises (NUS) are up about 6.5%. Shares of Darling International (DAR) are up about 5%. Shares of China-Biotics (CHBT) are down about 11%. Shares of Central European Distribution (CEDC) are down about 9.5%. Shares of Star Scientific (CIGX) are down about 7.75%. Shares of Spartan Stores (SPTN) are down about 5%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $30.79 at 4:00 PM on Tuesday, up 0.26% on the day – up 5.05% year-to-date.

Healthcare

Smith & Nephew (SNN) is begun with a Buy at Deutsche Bank. Peregrine Pharmaceuticals (PPHM) is a new Outperform at JMP Securities. In afternoon trading: Shares of AEterna Zentaris (AEZS) are up about 9.5%. Shares of Sun Heatlhcare Group (SUNH) are up about 9.5%. Shares of Echo Therapeutics (ECTE) are up about 6.5%. Shares of Optimer Pharmaceuticals (OPTR) are up about 6.5%. Shares of Alkermes (ALKS) are up about 6.25%. Shares of Pacira Pharmaceuticals (PCRX) are down about 7.75%.

The Health Care Select Sector SPDR (XLV) was trading at $33.17 at 4:00 PM on Tuesday, up 0.33% on the day – up 5.30% year-to-date.

Financials

China Construction Bank (CICHY) will sign a five-year strategic cooperation agreement with Bank of America (BAC) within the next few days despite BofA yesterday saying it is selling half its 10% stake in the company for over $8B. Lehman (LEHMQ) will today ask a bankruptcy judge to allow creditors to vote on its $65B payout plan, which would provide an average of $0.20 on the dollar and up to nearly $0.28 for some groups. KKR Financial (KFN) is covered with a Hold at Jefferies. Royal Bank of Scotland (RBS) is boosted to Buy from Hold at Deutsche Bank. BB&T Corp (BBT) is boosted to Neutral from Underperform at Macquarie. In afternoon trading: Shares of FelCor Lodging Trust (FCH) are up about 12%.

The Financial Select Sector SPDR (XLF) was trading at $13.21 at 4:00 PM on Tuesday, down 0.68% on the day – down 17.18% year-to-date.

Information Technology

Universal Display (PANL) announced a licensing deal and material supply agreement with a joint venture owned by Panasonic (PC) and Idemitsu Kosan (IDKOY). Data aggregator CoreLogic (CLGX) is forming an independent committee to explore its strategic options, including a possible spinoff, merger or sale. MIPS Tech (MIPS) is upgraded to Buy from Hold at Capstone. In afternoon trading: Shares of CoreLogic are up about 27.5%. Shares of Monster Worldwide (MWW) are up about 17%. Shares of Sequans Communications (SQNS) are up about 14%. Shares of JDS Uniphase (JDSU) are up about 8.5%. Shares of Oclaro (OCLR) are up about 8.25%.

The Technology Select Sector SPDR (XLK) was trading at $24.50 at 4:00 PM on Tuesday, up 0.41% on the day – down 2.74% year-to-date.

Telecommunications Services

In afternoon trading: Shares of Sprint Nextel (S) are up about 3.2%. Shares of Level 3 Communications (LVLT) are down about 1.6%. Shares of AT&T (T) are up about 1.4%. Shares of Verizon (VZ) are up about 0.6%. Shares of Vodafone (VOD) are down about 0.6%. Shares of Frontier Communications (FTR) are up about 1.2%. Shares of Windstream (WIN) are up about 1.2%.

The NASDAQ Telecommunications Index (IXTC) was trading at $192.97 at 4:00 PM on Tuesday, up 0.51% on the day – down 14.38% year-to-date.

Utilities

In afternoon trading: Shares of Duke Energy (DUK) are up about a quarter of a percent. Shares of Southern (SO) are up about 0.3%. Shares of AES Corp (AES) are down about 2.2%. Shares of CenterPoint Energy (CNP) are up about 0.4%. Shares of Exelon (EXC) are down about 0.3%. Shares of Genon Energy (GEN) are up about 0.8%. Shares of Pepco Holdings (POM) are up about 0.3%.

The Utilities Select Sector SPDR (XLU) was trading at $33.67 at 4:00 PM on Tuesday, up slightly on the day – up 7.43% year-to-date.

STOCKS: BTU, MT, MACDF, RDS.A, BP, XOM, E, PANL, PC, IDKOY, LDK, ANR, ARLP, ESV, RDC, ATW, RIG, DO, FRO, GMXR, ACH, MLM, VMC, TXI, USCR, SXC, AUG, EXP, CHGS, SVM, DCI, CBI, BA, EMR, SATC, EXM, GNK, DG, DSW, CFI, ANN, DKS, KBH, TLB, PHM, AEO, SNE, BOBE, CBRL, COCO, BKS, EK, NSRGY, IPSU, NUS, DAR, CHBT, CEDC, CIGX, SPTN, SNN, PPHM, AEZS, SUNH, ECTE, OPTR, ALKS, PCRX, CICHY, BAC, LEHMQ, KFN, RBS, BBT, FCH, CLGX, MIPS, MWW, SQNS, JDSU, OCLR, S, LVLT, T, VZ, VOD, FTR, WIN, DUK, SO, AES, CNP, EXC, GEN, POM

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
ACH Aluminum Corporation of China Limited American Dep 9.20 0.04 0.44 7,158
AEO American Eagle Outfitters Inc. 17.86 0.14 0.79 5,396,106
AES The AES Corporation 12.85 -0.05 -0.39 5,867,949
AEZS AEterna Zentaris Inc. 3.44 0.02 0.58 45,039
ALKS Alkermes plc 47.03 0.32 0.69 701,140
ARLP Alliance Resource Partners L.P. 22.18 0.15 0.68 219,169
ATW Atwood Oceanics Inc. 8.69 0.12 1.40 4,770,229
BA Boeing Company (The) 131.74 0.71 0.54 3,118,877
BAC Bank of America Corporation 15.65 0.49 3.23 119,428,684
BBT BB&T Corporation 37.72 0.44 1.18 4,264,479
BKS Barnes & Noble Inc. 11.30 0.31 2.82 853,499
BOBE Bob Evans Farms Inc. 38.30 0.33 0.87 173,201
BP BP p.l.c. 35.16 0.10 0.29 6,133,653
BTU Peabody Energy Corp n/a n/a n/a 0
CBI Chicago Bridge & Iron Company N.V. 28.03 0.30 1.08 1,702,588
CBRL Cracker Barrel Old Country Store Inc. 132.22 0.93 0.71 613,536
CFI Culp Inc. 29.77 0.08 0.27 35,343
CLGX CoreLogic Inc. 39.22 -0.27 -0.68 583,867
CNP CenterPoint Energy Inc (Holding Co) 23.23 -0.35 -1.48 5,115,785
DAR Darling Ingredients Inc. 13.51 0.21 1.58 1,141,415
DCI Donaldson Company Inc. 37.33 0.47 1.28 765,896
DG Dollar General Corporation 69.99 0.67 0.97 4,880,755
DKS Dick\'s Sporting Goods Inc 56.72 0.15 0.27 3,048,665
DO Diamond Offshore Drilling Inc. 17.61 -0.21 -1.18 26,040,633
DSW DSW Inc. 20.48 0.19 0.94 1,779,098
DUK Duke Energy Corporation (Holding Company) 80.04 -0.27 -0.34 3,883,040
ECTE Echo Therapeutics Inc. 0.38 -0.02 -5.00 25,166
EMR Emerson Electric Company 54.51 1.49 2.81 7,460,094
ESV Ensco plc Class A 8.50 0.12 1.43 9,204,084
EXC Exelon Corporation 33.29 0.00 0.00 5,529,887
EXP Eagle Materials Inc 77.30 -1.02 -1.30 736,029
FCH FelCor Lodging Trust Incorporated 6.43 0.00 0.00 649,493
FRO Frontline Ltd 7.17 0.14 1.99 710,995
FTR Frontier Communications Corporation 4.16 -0.09 -2.12 20,358,312
GEN Genesis Healthcare Inc. 2.67 0.05 1.91 172,362
GNK Genco Shipping & Trading Limited New (Marshall Isl 4.58 0.08 1.78 84,887
JDSU Viavi Solutions Inc n/a n/a n/a 0
KBH KB Home 16.12 0.03 0.19 1,882,273
LVLT Level 3 Communications Inc. 46.38 -0.05 -0.11 6,158,283
MLM Martin Marietta Materials Inc. 179.11 -3.39 -1.86 1,117,760
MT ArcelorMittal 6.04 0.00 0.00 13,829,653
MWW Monster Worldwide Inc. 3.61 0.06 1.69 933,113
NUS Nu Skin Enterprises Inc. 64.78 1.48 2.34 786,267
OCLR Oclaro Inc. 8.55 -0.07 -0.81 6,061,792
PANL Pangaea Logistics Solutions Ltd. 2.50 -0.13 -4.76 8,524
PCRX Pacira Pharmaceuticals Inc. 34.22 0.20 0.59 1,132,983
PHM PulteGroup Inc. 20.04 0.23 1.16 3,621,785
POM Pepco Holdings Inc. n/a n/a n/a 0
PPHM Peregrine Pharmaceuticals Inc. 0.43 0.00 0.84 1,152,553
RBS Royal Bank of Scotland Group Plc New (The) ADS 4.66 0.16 3.56 2,555,005
RDC Rowan Companies plc Class A 15.16 0.00 0.00 4,541,871
RIG Transocean Ltd (Switzerland) 10.66 0.03 0.28 15,526,408
S Sprint Corporation 6.63 -0.03 -0.45 14,655,332
SNE Sony Corporation 33.21 -0.03 -0.09 1,401,216
SNN Smith & Nephew SNATS Inc. 32.78 0.41 1.27 1,410,416
SO Southern Company (The) 51.30 -0.75 -1.44 7,048,679
SPTN SpartanNash Company 28.92 0.31 1.08 224,723
SQNS Sequans Communications S.A. American Depositary Sh 1.77 0.08 4.73 376,543
SXC SunCoke Energy Inc. 8.02 0.42 5.53 470,846
T AT&T Inc. 40.61 -0.12 -0.29 19,381,624
USCR U S Concrete Inc. 46.07 -0.21 -0.44 563,557
VMC Vulcan Materials Company (Holding Company) 113.73 -1.16 -1.01 1,647,083
VOD Vodafone Group Plc 29.15 0.03 0.10 4,732,148
VZ Verizon Communications Inc. 51.98 -0.14 -0.27 13,077,552
WIN Windstream Holdings Inc. 10.05 -0.27 -2.62 1,665,552
XOM Exxon Mobil Corporation 87.28 0.82 0.95 15,961,506

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