Equities Sector Coverage: Wall Street Turning Bearish?

Sector Recap |

Wall Street Turning Bearish?The Dow Jones Industrial Average declined to a day’s low at 12,845.58 below its 50-day simple moving average at 13,012. The NASDAQ’s declined to a day’s low at 2946.04 below its 50-day simple moving average at 3013. Asian stocks were lower on Monday. The Nikkei 225 ended their session at 9,542 – down 0.20% on the day. The Hang Seng ended their session at 20,624 – up 1.84% on the day. European stocks moved higher on Friday. European exchanges began the week with heavy losses in reaction to potentially perilous political developments in the Netherlands and France. There were also several disappointing economic reports from across the world. The FTSE 100 ended their session at 5,666 – down 1.85% on the day. The DAX ended their session at 6,523 – down 3.36% on the day. The CAC 40 ended their session at 3,098 – down 2.83% on the day.

The yield on the 10-Year US Treasury declined from 1.966 percent to 1.909 below its 50-day and 200-day simple moving averages at 2.080 and 2.107. Gold declined from $1644.2 the Troy ounce to $1623.6 below the “death cross” defined by the 50-day simple moving average at $1685.1 being below the 200-day simple moving average at $1695.7. Crude oil declined from $103.90 per barrel to $101.82, staying below its 50-day simple moving average at $104.80. The euro versus the dollar declined from 1.3209 to 1.3108 back below its 50-day simple moving average at 1.3202.

Energy

SandRidge's (SD) shares are down 44% in the past year, but the company expected to double its ail output over the next three years. Helix Energy Solutions Group (HLX) beat Q1 EPS estimates by seventeen cents with a beat on the revenue line. Suncor Energy (SU) has been upgraded to Outperform from Market Perform at BMO Capital. Exxon Mobil (XOM) has been upgraded to Outperform from Market Perform at Raymond James. First Solar (FSLR) have been downgraded to Sell from Hold with a $9 price target at Maxim Group. Dow components - Chevron (CVX) was down 1.2% in morning trading with Exxon Mobil (XOM) slipping 0.4%.

Energy Select Sector SPDR (XLE) was trading at $68.93 at 3:30 PM on Monday, down 0.04% on the day – down 0.29% year-to-date.

Materials

Given the “death cross” in gold futures the major gold mining stocks are down about 4.0% in morning trading. This weakness includes Barrick Gold (ABX) and Newmont Mining (NEM). Potlatch (PCH) beat Q1 EPS estimates by six cents with better than expected revenue. Dow components - Alcoa (AA) is down 2.2% in morning trading around $9.50 per share as the $10 threshold provides resistance. DuPont (DD) declined 2.0%.

The Materials Select Sector SPDR (XLB) was trading at $35.93 at 3:30 PM on Monday, down 1.51% on the day – up 7.25% year-to-date.

Industrials

Eaton (ETN) beat Q1 EPS estimates by two cents with in-line revenue. D.R. Horton (DHI) beat FQ2 EPS of $0.13 estimates by nine cents with a beat on the revenue line. BE Aerospace (BEAV) beat Q1 EPS estimates by a nickel with better than expected revenue. Westport Innovations (WPRT) has been upgraded to Sector Perform from Underperform at CIBC World Markets. Forward Air (FWRD) has been downgraded to Neutral from Outperform at Robert W. Baird, whose price target is $40. Lennar (LEN) has been downgraded to Fair Value from Buy at CRT Capital. Dow components - Boeing Co (BA) lost 1.4% in morning trading, with Caterpillar (CAT) down 1.9%, General Electric (GE) losing 2.0%, 3M Company (MMM) down 1.4%, and United Technologies (UTX) slumping 1.5%.

The Industrial Select Sector SPDR (XLI) was trading at $36.33 at 3:30 PM on Monday, down 1.20% on the day – up 7.64% year-to-date.

Consumer Discretionary

Philips Electronics' (PHG) reported that their Q1 net profit jumped over 80%. Despite this favorable report the company plans to shed 4,500 jobs by 2014. Netflix (NFLX) is scheduled to release its Q1 results after the close today, and is expected to report a loss per share of 27 cents down from a profit of 1.11. A key to improved revenue will be the growth in online customers in the US. Hasbro (HAS) missed Q1 EPS estimates by eight cents with a miss on the revenue line. Wolverine World Wide (WWW) reported Q1 EPS of 64 cents with a miss on the revenue line. Lions Gate Entertainment (LGF) has been upgraded to Above Average from Average by Caris & Company following an 18.1% decline in the share price. Dow Components - Disney (DIS) lost 1.1% in morning trading with McDonalds (MCD) down 0.7%.



The Consumer Discretionary Select Sector SPDR (XLY) was trading at $44.16 at 3:30 PM on Monday, down 1.08% on the day – up 13.17% year-to-date.

Consumer Staples

Nestle (NSRGY.PK) is paying $11.85 billion in cash to acquire Pfizer's (PFE) baby food business, which allows Nestle to expand its infant-formula business into emerging markets, particularly in China. Facing evidence of widespread corruption in Mexico, Wal-Mart (WMT) shut down an internal investigation and failed to notify officials with regard to the retailers allegations of widespread corruption in Mexico. Groupon (GRPN) has been upgraded to Overweight from Equal Weight at Evercore. Dow components - Home Depot (HD) slipped 1.1% in morning trading with Kraft (KFT) down 1.3%, Coca Cola (KO) lower by 0.6%, Procter & Gamble (PG) down 1.2%, and Wal-Mart (WMT) crushed by nearly 5.0%.

The Consumer Staples Select Sector SPDR (XLP) was trading at $33.81 at 3:30 PM on Monday, down 1.46% on the day – up 4.06% year-to-date.

Health Care

AstraZeneca (AZN) will acquire Ardea Biosciences (RDEA) for $1.26 billion giving the company access to a new drug for treating gout patients. AstraZeneca (AZN) has been upgraded to Equal Weight from Underweight by Barclays. HeartWare (HTWR) has been upgraded to Overweight from Equal Weight at Barclays. Novo-Nordisk A/S (NVO) has been downgraded to Underweight from Equal Weight at Barclays. Dow Components - Johnson & Johnson (JNJ) slipped 0.3%, Merck (MRK) lost 0.7%, and Pfizer (PFE) was down 0.6%.

The Health Care Select Sector SPDR (XLV) was trading at $36.99 at 3:30 PM on Monday, down 0.80% on the day – up 6.63% year-to-date.

Financials

MGIC Investment (MTG) beat Q1 EPS estimates by 27 cents with better than expected revenue. Bank of Hawaii (BPH) beat Q1 EPS estimates by thirteen cents. SunTrust Banks (STI) beat Q1 EPS estimates by twelve cents with in-line revenue. Royal Bank of Canada (RY) has been upgraded to Buy from Neutral at Bank of America-Merrill Lynch. Progressive Corp (PGR) has been downgraded to Neutral from Buy at Citigroup. Dow Components - American Express (AXP) lost 1.4%, Bank of America (BAC) slumped 3.6%, JP Morgan (JPM) fell 0.9%, and Travelers (TRV) lost 1.0%.

The Financial Select Sector SPDR (XLF) was trading at $15.07 at 3:30 PM on Monday, down 0.72% on the day – up 15.92% year-to-date.

Information Technology

Texas Instruments (TXN) is expected to report that earnings fell for the fourth quarter in a row, with EPS dropping to 29 cents from 55 cents with revenue at $3.06 billion. TI is a supplier to Apple (AAPL) and Nokia (NOK). Xerox (XRX) beat Q1 EPS estimates by a penny with in-line revenue. Check Point Software (CHKP) beat Q1 EPS estimates by two cents with in-line revenue. Research In Motion (RIMM) has been initiated with a Hold rating at TD Securities. F5 Networks (FFIV) has been initiated with an Overweight rating by Morgan Stanley. ARM Holdings (ARMH) the maker of chips for Apple’s iPad and iPhone has been upgraded to Neutral from Underweight at JPMorgan. BMC Software (BMC) has been upgraded to Positive from Neutral at Susquehanna. Rambus (RMBS) has been downgraded to Hold from Buy at BWS Financial. Dow Components - Cisco Systems (CSCO) was down 1.3% in morning trading, Hewlett-Packard (HPQ) lost 1.3%, IBM (IBM) declined 1.2%, Intel Corp (INTC) clipped 0.2%, and Microsoft (MSFT) lost 0.8%.

The Technology Select Sector SPDR (XLK) was trading at $29.07 at 3:30 PM on Monday, down 0.72% on the day – up 14.22% year-to-date.

Telecommunication Services

Vodafone (VOD) agreed to acquire Cable & Wireless Worldwide for $1.7 billion in cash, which allows Vodafone to offload surging Internet traffic in the UK to a fixed network with more capacity. Research In Motion (RIMM) has been initiated with a Hold rating at TD Securities. France Telecom (FTE) has been upgraded to Buy from Reduce at Nomura. Dow components - AT&T (T) was down 0.6% in morning trading with Verizon (VZ) down 0.5%.

The NASDAQ Telecommunications Index (IXTC) was trading at $207.07 at 3:30 PM on Monday, down 1.11% on the day – up 5.15% year-to-date.

Utilities

Abovenet (ABVT) has been downgraded to Sector Perform from Outperform at RBC Capital. Dominion Resources (D) was down 0.5% in morning trading, Edison International (EIX) lost 1.4%, First Energy (FE) was down 0.5%, and PG&E Corp (PCG) lost 0.5%.
The Utilities Select Sector SPDR (XLU) was trading at $34.82 at 3:30 PM on Monday, down 0.57% on the day – down 3.22% year-to-date.

STOCKS: CVX, XOM, SD, HLX, SU, FSLR, AA, DD, ABX, NEM PCH, BA, CAT, GE, MMM, UTX, ETN, BEAV, FWRD, LEN, WPRT, DIS, MCD, PHG, NFLX, HAS, WWW, LGF, HD, KFT, KO, PG, WMT, NSRGY.PK, GRPN, JNJ, MRK, PFE, RDEA, AZN, HTWR, NVO, AXP, BAC, JPM, TRV, MTG, BPH, STI, RY, PGR, CSCO, HPQ, IBM, INTC, MSFT, TXN, AAPL, NOK, CHKP, FFIV, RIMM, ARMH, BMC, RMBS, T, VZ, VOD, FTE, D, EIX, FE, PCG, ABVT

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
MMM 3M Company 177.22 -0.17 -0.10 775,169
BEAV B/E Aerospace Inc. 61.26 0.10 0.16 687,609
PG Procter & Gamble Company (The) 85.50 1.49 1.77 7,781,433
GE General Electric Co 31.30 -0.06 -0.20 15,071,572
CVX Chevron Corporation 116.60 0.22 0.19 2,581,327
PCG Pacific Gas & Electric Co. 61.51 0.93 1.53 1,242,225
RMBS Rambus Inc. 13.77 -0.17 -1.22 188,533
ARMH ARM Holdings plc n/a n/a n/a 0
LGF Lions Gate Entertainment Corporation n/a n/a n/a 0
JNJ Johnson & Johnson 114.95 0.35 0.31 3,602,715
WMT Wal-Mart Stores Inc. 68.54 1.41 2.10 7,900,271
AA Alcoa Inc. 32.72 -0.29 -0.89 784,612
WWW Wolverine World Wide Inc. 23.43 0.73 3.22 659,145
INTC Intel Corporation 36.78 -0.01 -0.03 10,990,558
IBM International Business Machines Corp 167.46 0.12 0.07 1,888,848
D Dominion Resources Inc. 76.01 0.80 1.07 1,116,367
TRV The Travelers Companies Inc. 117.69 0.64 0.55 787,990
LOB Live Oak Bancshares Inc. 18.35 -0.70 -3.67 98,118
AAPL Apple Inc. 120.01 0.97 0.81 23,348,344
EIX Edison International 72.59 0.49 0.68 474,739
JPM JP Morgan Chase 84.05 -2.65 -3.05 19,445,360
AXP American Express Company 76.87 0.25 0.32 4,192,496
UTX United Technologies Corporation 110.11 -0.11 -0.10 1,075,484
VOD Vodafone Group Plc 26.21 -0.32 -1.21 7,643,180
HTWR Heartware International Inc. n/a n/a n/a 0
TXN Texas Instruments Incorporated 74.58 -0.42 -0.56 2,410,683
RY Royal Bank of Canada 71.66 -0.30 -0.42 539,359
CSCO Cisco Systems Inc. 29.97 -0.11 -0.35 11,078,450
DIS Walt Disney Company (The) 108.02 -0.04 -0.04 4,734,052
VZ Verizon Communications Inc. 52.77 0.22 0.42 6,516,936
PHG Koninklijke Philips N.V. NY Registry Shares 30.28 -0.46 -1.50 1,926,097
ABX Barrick Gold Corporation 17.34 0.47 2.79 12,580,366
BAC Bank of America Corporation 22.31 -0.70 -3.04 95,993,966
ETN Eaton Corporation PLC 67.66 -1.00 -1.46 844,131
NOK Nokia Corporation Sponsored American Depositary Sh 4.74 -0.01 -0.21 7,202,954
MCD McDonald\'s Corporation 122.16 0.66 0.54 1,871,214
DD E.I. du Pont de Nemours and Co. 72.79 -0.81 -1.10 1,561,365
LEN Lennar Corporation Class A 44.40 -0.07 -0.15 863,017
HD Home Depot Inc. (The) 136.03 0.99 0.73 2,434,470
XOM Exxon Mobil Corporation 87.18 0.83 0.96 6,931,302
PFE Pfizer Inc. 31.99 -0.53 -1.63 20,297,057
NVO Novo Nordisk A/S 36.20 0.47 1.32 1,730,056
FSLR First Solar Inc. 35.26 -0.49 -1.37 918,150
WPRT Westport Fuel Systems Inc 1.24 0.02 1.64 149,382
HPQ HP Inc. 14.66 -0.11 -0.74 7,690,585
AZN Astrazeneca PLC 28.62 0.04 0.13 5,543,028
NFLX Netflix Inc. 133.45 -0.25 -0.19 8,669,906
BA Boeing Company (The) 157.85 -0.98 -0.62 1,431,626
MRK Merck & Company Inc. (new) 61.43 -0.91 -1.46 6,161,234
HLX Helix Energy Solutions Group Inc. 8.58 0.10 1.18 1,366,216
FWRD Forward Air Corporation 48.46 -0.94 -1.90 110,059
GRPN Groupon Inc. 3.53 -0.06 -1.54 7,034,745
SD SandRidge Energy 21.60 -0.46 -2.09 14,172
FE FirstEnergy Corporation 31.06 0.45 1.46 2,596,614
HAS Hasbro Inc. 84.98 1.12 1.34 913,120
PGR Progressive Corporation (The) 36.05 -0.20 -0.55 1,268,821
CHKP Check Point Software Technologies Ltd. 90.12 -0.59 -0.65 861,025
KO Coca-Cola Company (The) 41.24 0.36 0.88 7,535,017
T AT&T Inc. 40.91 -0.05 -0.12 12,977,280
CAT Caterpillar Inc. 93.63 -0.85 -0.90 3,074,565
MTG MGIC Investment Corporation 10.10 -0.01 -0.05 2,231,753
MSFT Microsoft Corporation 62.50 -0.20 -0.32 11,071,710
FFIV F5 Networks Inc. 142.06 -1.32 -0.92 308,683
STI SunTrust Banks Inc. 54.30 -1.67 -2.99 1,882,900
SU Suncor Energy Inc. 33.12 0.67 2.06 1,763,166

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