The Dow Jones Industrial Average rebounded to 13,306.57 then consolidated staying above its 50-day and 200-day simple moving average at 13,137.50 and 13,000.99. The Nasdaq rallied from 3003.82 from 3033.14 then consolidated staying above its 50-day and 200-day simple moving averages at 3001.91 and 2988.65.
Asian stocks were mixed on Tuesday. The Nikkei 225 closed at 9525 – down 0.09%. The Hang Seng closed at 22,324 – up 0.21%. European exchanges were higher on Tuesday. The FTSE 100 ended the day at 5,925 – up 0.06%. The DAX ended the day at 7,590 – up 0.78%. The CAC 40 ended the day at 3,646 – up 0.94%. The yield on the 10-Year US Treasury rose from 1.608% to 1.658% staying below the 50-day and 200-day simple moving averages at 1.677% and 1.749%.
Comex gold rebounded from $1708.2 the Troy ounce to $1715.8 then fell to $1706.0 staying between the 200-day simple moving average at $1663.5 and the 50-day simple moving average at $1729.6. Nymex crude oil rebounded from $85.37 per barrel to $86.37 then fell to $85.21 staying below the 50-day and 200-day simple moving averages at $87.96 and $93.12. The euro versus the dollar traded up from 1.2931 to 1.3013 staying above its 200-day simple moving average at 1.2783 with the 50-day at 1.2918.
Energy
Spectra Energy (SEP) plans to buy the Express-Platte System pipeline for $1.49B to give it an edge in transporting crude oil across North America. The transaction should add $0.03-0.05 to full-year earnings. Kinder Morgan (KMP), one of the owners of the pipeline, will receive almost $380M in the deal. Atlas Resource Partners (ARP) is a new Neutral at Bank of America-Merrill Lynch. Dahlman Rose has a Hold on Hess (HES) and begins Buy rated research on Occidental Petroleum (OXY). Big Movers – Solazyme (SZYM) is up about 15%. Teekay Tankers (TNK) is up about 11.5%. Dow components – Chevron (CVX) is up about 0.6%. Exxon Mobil (XOM) is up about 0.5%. Energy Select Sector SPDR (XLE) was trading at $71.81 at 3:30 PM on Tuesday, up 0.48% on the day – up 3.89% year-to-date.
Materials
CEMEX S.A. (CX) is moved to Equal-Weight from Underweight at Morgan Stanley. Big Movers – China Shen Zhou Mining (SHZ) is up about 11%. Tronox (TROX) is up about 10%. Golden Minerals (AUMN) is up about 9%. Dow Components – Alcoa (AA) is up about 0.9%. DuPont (DD) is up about 1%. The Materials Select Sector SPDR (XLB) was trading at $36.52 at 3:30 PM on Tuesday, up 0.63% on the day – up 9.01% year-to-date.
Industrials
SPX (SPW) has reportedly entered negotiations to acquire industrial-pumps maker Gardner Denver (GDI), which has a market cap of $3.47B after closing at $68.32 yesterday. Foster Wheeler (FWLT) is lowered to Neutral from Buy at Lazard. Big Mover – SPX (SPW) is down about 9.5%. Dow components – Boeing Co (BA) is up about 0.4%. Caterpillar (CAT) is down slightly. General Electric (GE) is up about 0.7%. 3M Company (MMM) is up about 1.7%. United Technologies (UTX) is up slightly. The Industrial Select Sector SPDR (XLI) was trading at $37.72 at 3:30 PM on Tuesday, up 0.11% on the day – up 11.76% year-to-date.
Consumer Discretionary
Authorities have reportedly expanded their probe into possible insider trading by corporate executives, which was prompted by a WSJ expose last month. Additional companies included are Mohawk Industries (MHK) and VeriFone Systems (PAY). Nike (NKE) will reportedly expand its operations in Oregon significantly in a move that could add as many as 12,000 jobs directly and indirectly – if the state government promises not to change the tax code. Dollar General (DG) beat estimates by 2 cents with revenue in-line with estimates. The company sees Q4 comparable sales increasing in a range of 3% to 4% and forecasts full year EPS of $2.82-$2.85 (versus $2.85 consensus). Digital Cinema (DCIN) is a fresh Neutral at B. Riley. lululemon athletica (LULU) is assigned an Underperform at Crédit Agricole. Michael Kors (KORS) and Tumi Holdings (TUMI) each get added to the Conviction Buy List at Goldman. The bank begins buys on both Gap Inc. (GPS) and Tilly’s (TLYS). It has new Neutrals on Abercrombie & Fitch (ANF), Aéropostale (ARO), American Eagle Outfitters (AEO), Francesca’s (FRAN), and Urban Outfitters (URBN). Coach, Inc. (COH) is started at a Sell. Lottomatica (LTTOY) is lifted to Outperform from Neutral at Credit Suisse. Big Movers – Eastman Kodak (EKDKQ) is down about 10%. Family Dollar (FDO) is down about 9.5%. Dollar General (DG) is down about 7.5%. TripAdvisor (TRIP) is up about 8%. Dow Components – Disney (DIS) is up about 0.5%. Home Depot (HD) is down about 0.3%. McDonalds (MCD) is down about 0.2%. The Consumer Discretionary Select Sector SPDR (XLY) was trading at $47.215 at 3:30 PM on Tuesday, up 0.14% on the day – up 21.00% year-to-date.
Consumer Staples
Diageo (DEO) has ended long-running negotiations to acquire Jose Cuervo from Mexico’s Beckmann family and will terminate its distribution agreement for the world’s top tequila brand at the end of June 2013. The milk industry is facing a crisis. Per-capita consumption has dropped almost 30% since 1975, with the average amount drunk slipping 3.3% last year to 20.2 gallons per person. Companies affected include Dean Foods (DF). Colgate-Palmolive (CL) is covered at an Overweight at HSBC Securities. Monster Beverage (MNST) is moved to Buy from Hold at Stifel Nicolaus. Big Mover – Caseys General Stores (CASY) is up about 7.5%. Dow components – Coca Cola (KO) is up about 0.3%. Procter & Gamble (PG) is up about 0.5%. Wal-Mart (WMT) is down about 1.1%. The Consumer Staples Select Sector SPDR (XLP) was trading at $36.18 at 3:30 PM on Tuesday, up 0.11% on the day – up 11.36% year-to-date.
Health Care
Pernix Therapeutics Holdings Inc. (PTX) plans to acquire Somaxon Pharmaceuticals Inc. (SOMX) for $25 million in Pernix common stock. BG Medicine (BGMD) announced that it has obtained a CE Mark enabling the commercial sale of the CardioSCORE test in the EU and other countries that recognize the CE Mark. Abbott Laboratories’ (ABT) AbbVie spin-off is worth more than Abbott ahead of the official split of the company in January. “When issued” trading in the two entities began yesterday in the secondary market, with the new Abbott valued at $47.9B and AbbVie $55.3B. Peregrine Pharmaceuticals (PPHM) beat estimates by a penny and revenue by $2.1M. Align Technology (ALGN) is a new Neutral at Goldman Sachs. Healthways (HWAY) is a new Sell at Citigroup. Stryker (SYK) is moved to Buy from Neutral at Goldman Sachs. Hospira (HSP) is moved to Sell from Neutral at Goldman Sachs. Big Movers – BG Medicine (BGMD) is up about 144%. Somaxon Pharmaceuticals (SOMX) is up about 78%. Cardiome Pharma (CRME) is up about 39%. Acura Pharmaceuticals (ACUR) is up about 36%. Dow Components – Johnson & Johnson (JNJ) is up about 0.6%. Merck (MRK) is up about 1.4%. Pfizer (PFE) is up about 0.9%. United Health Group (UNH) is up about 1%. The Health Care Select Sector SPDR (XLV) was trading at $41.05 at 3:30 PM on Tuesday, up 0.98% on the day – up 18.33% year-to-date.
Financials
The Treasury has sold its remaining 234.2M shares in AIG (AIG) at $32.50 each, giving it proceeds of $7.6B. The combined gain to the Fed and Treasury has risen to $22.7B – $5B for the Treasury and $17.7B for the Fed. HSBC (HBC) has agreed to pay $1.92B to U.S. authorities to settle allegations over “inadequate compliance with anti-money laundering and sanctions laws.” Morgan Stanley (MS) could reportedly ask the Fed’s permission to repurchase shares for the first time in four years. Ameris Bancorp (ABCB) gets upgraded to Buy from Neutral at Sterne Agee. CBL & Associates Properties (CBL) gets downgraded to Neutral from Buy at Goldman Sachs. Big Mover – Ambac Financial Group (ABKFQ) is down about 16%. Dow Components – American Express (AXP) is up about 0.5%. Bank of America (BAC) is down about 0.5%. JP Morgan Chase (JPM) is up about 0.7%. The Travelers Companies (TRV) is up slightly. The Financial Select Sector SPDR (XLF) was trading at $16.045 at 3:30 PM on Tuesday, up 0.34% on the day – up 23.42% year-to-date.
Information Technology
A group led by private equity firm Siris Capital Group is buying data communications company TNS Inc. (TNS) for $516.6 million ($21 / share – a 44% premium). Authorities have reportedly expanded their probe into possible insider trading by corporate executives, which was prompted by a WSJ expose last month. Additional companies included are Mohawk Industries (MHK) and VeriFone Systems (PAY). Texas Instruments (TXN) guides for Q4 revenue of $2.89B-$3.01B and EPS of $0.32-$0.36 (versus prior guidance of $2.83B-$3.07B and $0.29-$0.37 and a consensus of $2.96B and $0.33). Aruba Networks (ARUN) is initiated with an Outperform at Oppenheimer. Maximus (MMS) gets begun with a Buy at Citigroup. Ruckus Wireless (RKUS) is an Overweight at Morgan Stanley. Splunk (SPLK) is a new Neutral at Mizuho. Arrow Electronics (ARW) is cut to Underperform from Outperform at Crédit Agricole. LG Display (LPL) is moved to Sell from Hold at Topeka. Big Mover – TNS Inc. (TNS) is up about 42.5%. Dow Components – Cisco Systems (CSCO) is down about 0.2%. Hewlett-Packard (HPQ) is up about 0.3%. IBM (IBM) is up about 0.7%. Intel Corp (INTC) is up about 2.3%. Microsoft (MSFT) is up about 1%. The Technology Select Sector SPDR (XLK) was trading at $29.20 at 3:30 PM on Tuesday, up 1.25% the day – up 14.73% year-to-date.
Telecommunication Services
Sprint Nextel Corporation (S) and Clearwire Corporation (CLWR) are reportedly closer to an agreement through which Sprint would purchase the approximate 49% of the firm it doesn’t already own. Ruckus Wireless (RKUS) is an Overweight at Morgan Stanley.
Big Mover – Clearwire (CLWR) is up about 14.25%. Dow Components – AT&T (T) is up about 1.1%. Verizon (VZ) is up about 0.7%. The NASDAQ Telecommunications Index (IXTC) was trading at $200.87 at 3:30 PM on Tuesday, up 0.38% on the day – up 2.00% year-to-date.
Utilities
Suez Environnement (SZEVY) is moved to Outperform from Neutral at BNP Paribas. The Big Names – Dominion Resources (D) is down about 0.2%. Edison International (EIX) is down slightly. First Energy (FE) is down about 0.6%. PG&E Corp (PCG) is relatively unchanged. Southern Company (SO) is down about 0.4%. The Utilities Select Sector SPDR (XLU) was trading at $35.48 at 3:30 PM on Tuesday, up 0.03% on the day – down 1.39% year-to-date.
STOCKS: CVX, XOM, AA, DD, BA, CAT, GE, MMM, UTX, DIS, HD, MCD, KO, PG, WMT, JNJ, MRK, PFE, UNH, AXP, BAC, JPM, TRV, CSCO, HPQ, IBM, INTC, MSFT, T, VZ, D, EIX, FE, PCG, SO, SEP, KMP, ARP, HES, OXY, SZYM, TNK, CX, SHZ, TROX, AUMN, SPW, GDI, FWLT, MHK, PAY, NKE, DG, DCIN, LULU, KORS, TUMI, GPS, TLYS, ANF, ARO, AEO, FRAN, URBN, COH, LTTOY, EKDKQ, FDO, TRIP, DEO, DF, CL, MNST, CASY, PTX, BGMD, ABT, PPHM, ALGN, HWAY, SYK, HSP, SOMX, CRME, ACUR, AIG, HBC, MS, ABCB, CBL, TNS, TXN, ARUN, MMS, RKUS, SPLK, ARW, LPL, S, CLWR, SZEVY
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