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
NUS Nu Skin Enterprises Inc. 59.23 0.42 0.71 825,508 Trade
RDC Rowan Companies plc Class A 9.40 0.27 2.96 2,671,459 Trade
GEN Genesis Healthcare Inc. 1.00 0.01 1.01 515,324 Trade
FCH FelCor Lodging Trust Incorporated 7.06 -0.09 -1.26 2,362,640 Trade
FTR Frontier Communications Corporation 12.34 0.30 2.49 2,676,860 Trade
CFI Culp Inc. n/a n/a n/a n/a
NRF.UN:CA North American REIT Income Fund n/a n/a n/a 0
ACH Aluminum Corporation of China Limited American Dep 17.35 -0.21 -1.20 46,117 Trade
SO Southern Company (The) 48.04 0.09 0.19 3,224,177 Trade
RIG Transocean Ltd (Switzerland) 7.63 0.11 1.46 9,626,624 Trade
ATW Atwood Oceanics Inc. 6.59 0.19 2.97 5,163,886 Trade
KBH KB Home 22.08 -0.24 -1.08 1,765,278 Trade
DCI Donaldson Company Inc. 46.87 -0.28 -0.59 172,984 Trade
CNP CenterPoint Energy Inc (Holding Co) 29.73 0.22 0.75 1,606,076 Trade
ALKS Alkermes plc 50.21 0.16 0.32 457,484 Trade
SQNS Sequans Communications S.A. American Depositary Sh 3.52 0.76 27.54 2,482,654 Trade
EXP Eagle Materials Inc 88.65 -0.62 -0.69 229,582 Trade
S Sprint Corporation 8.29 0.07 0.85 7,398,052 Trade
OCLR Oclaro Inc. 8.74 0.46 5.56 9,468,832 Trade
BOBE Bob Evans Farms Inc. 66.29 -0.61 -0.91 363,490 Trade
DAR Darling Ingredients Inc. 16.97 0.79 4.88 2,249,162 Trade
VOD Vodafone Group Plc 28.63 -0.18 -0.62 2,354,782 Trade
BKS Barnes & Noble Inc. 7.55 0.10 1.34 691,100 Trade
MLM Martin Marietta Materials Inc. 203.40 2.58 1.28 824,022 Trade
JDSU Viavi Solutions Inc n/a n/a n/a 0 Trade
LVLT Level 3 Communications Inc. 54.51 0.63 1.17 2,464,170 Trade
AES The AES Corporation 11.35 0.00 0.00 2,914,410 Trade
CLGX CoreLogic Inc. 46.19 0.10 0.22 297,984 Trade
BTU Peabody Energy Corp 27.99 0.51 1.86 1,058,425 Trade
VZ Verizon Communications Inc. 48.28 -0.07 -0.14 8,909,187 Trade
BBT BB&T Corporation 46.15 0.02 0.04 3,294,738 Trade
MWW Monster Worldwide Inc. n/a n/a n/a 0 Trade
BAC Bank of America Corporation 23.76 -0.07 -0.29 39,825,518 Trade
DG Dollar General Corporation 76.33 -0.13 -0.17 2,031,660 Trade
GNK Genco Shipping & Trading Limited New (Marshall Isl 12.74 0.23 1.84 102,078 Trade
RBS Royal Bank of Scotland Group Plc New (The) ADS 6.64 0.05 0.76 632,452 Trade
SXC SunCoke Energy Inc. 9.13 0.21 2.35 281,357 Trade
EMR Emerson Electric Company 58.43 -0.39 -0.66 1,946,428 Trade
SNN Smith & Nephew SNATS Inc. 35.64 -0.25 -0.70 400,486 Trade
ECTE Echo Therapeutics Inc. 0.04 0.00 0.00 563
USCR U S Concrete Inc. 75.70 -0.75 -0.98 153,893 Trade
DO Diamond Offshore Drilling Inc. 10.89 0.33 3.13 3,414,522 Trade
VMC Vulcan Materials Company (Holding Company) 114.63 -0.53 -0.46 1,265,450 Trade
WIN Windstream Holdings Inc. 2.00 0.11 5.82 4,073,675 Trade
DSW DSW Inc. 18.99 0.56 3.04 4,758,510 Trade
FRO Frontline Ltd 5.43 0.23 4.42 810,793 Trade
ESV Ensco plc Class A 4.44 0.08 1.83 12,691,528 Trade
PPHM Peregrine Pharmaceuticals Inc. 3.11 -0.13 -4.01 160,756 Trade
AEZS AEterna Zentaris Inc. 1.86 -0.05 -2.62 131,639 Trade
XOM Exxon Mobil Corporation 76.61 -0.13 -0.17 7,054,254 Trade
POM Pepco Holdings Inc. n/a n/a n/a 0 Trade
PHM PulteGroup Inc. 24.94 -0.33 -1.31 4,775,149 Trade
MT ArcelorMittal 26.34 0.21 0.80 2,605,108 Trade
DKS Dick\'s Sporting Goods Inc 26.53 0.26 0.99 2,865,551 Trade
BA Boeing Company (The) 238.09 -1.66 -0.69 2,518,274 Trade
SPTN SpartanNash Company 24.84 0.06 0.24 121,702 Trade
BP BP p.l.c. 34.24 0.09 0.26 3,810,190 Trade
CBI Chicago Bridge & Iron Company N.V. 11.02 0.46 4.36 5,149,365 Trade
CBRL Cracker Barrel Old Country Store Inc. 148.93 -1.89 -1.25 211,684 Trade
EXC Exelon Corporation 38.32 0.09 0.24 2,752,448 Trade
SNE Sony Corporation 38.81 0.10 0.26 313,449 Trade
T AT&T Inc. 37.92 -0.06 -0.16 19,934,880 Trade
AEO American Eagle Outfitters Inc. 12.08 0.87 7.76 18,395,130 Trade
DUK Duke Energy Corporation (Holding Company) 86.88 0.33 0.38 1,931,889 Trade
PANL Pangaea Logistics Solutions Ltd. 2.49 0.00 0.00 5 Trade
ARLP Alliance Resource Partners L.P. 18.05 -0.05 -0.28 194,297 Trade
PCRX Pacira Pharmaceuticals Inc. 36.00 0.15 0.42 762,554 Trade

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