Sector Investing

[ReturntoSender]

From Briefing.com: Weekly Recap - Week ending 06-Feb-15 - The major averages capped a strong week with a defensive finish. The S&P 500 lost 0.3%, to narrow its weekly gain to 3.0% while the Nasdaq (-0.4%) underperformed, but managed to end the week higher by 2.4%.

Equities climbed at the open in reaction to the release of a better than expected Nonfarm Payrolls report for January. According to the Bureau of Labor Statistics, January payrolls increased by 257,000 (Briefing.com consensus 235,000) while the December reading saw a large upward revision to 329,000 from 252,000. Hourly earnings (+0.5%; consensus +0.3%) surpassed estimates, which bolstered the report.

The gain in hourly earnings shaped a consensus view that the employment report showcased strong labor market conditions, but that analysis may not be completely correct. According to the National Conference of State Legislators, the minimum wage in 20 states increased on January 1, 2015. The change in state policies resulted in a 0.3% increase in the average minimum wage, with all of the states equally weighted. When weighted by state payrolls, the average minimum wage increased by a slightly less but still hefty 0.2%, which is not a trivial gain. Since the Bureau of Labor Statistics reports wages based on averages and not medians, the increase in the bottom of the wage spectrum caused an overall increase in average wages. Just about 0.2 percentage points of the 0.5 percentage point gain in hourly earnings came from the three lowest paid sectors -- retail trade, leisure and hospitality, and other services. Those three sectors are also the most likely to employ minimum wage workers.

That being said, the report caused participants to reassess their expectations for the timing of the first fed funds rate hike. On that note, The Wall Street Journal's Jon Hilsenrath said today's jobs report increased the chance that the Fed will alter the language that indicates plans to remain 'patient' before hiking rates. In addition, this year's FOMC voting member and Atlanta Fed President Dennis Lockhart said liftoff should begin "around mid-year, or a little later."

Accordingly, the Treasury complex responded with a slide led by the 5-yr note. The 5-yr yield surged 17 basis points to 1.48% while the benchmark 10-yr yield climbed 12 basis points to 1.94%, representing a 27-basis point rally since last Friday.

Equities held modest gains through the first half of the session, but market breadth never turned positive, which hinted at a potential reversal. That reversal materialized after Standard & Poor's downgraded Greece to 'B-' and said another downgrade could be in the cards. Later in the day, Eurogroup Chief Jeroen Dijsselbloem said Greece must apply for a bailout extension by February 16 in order to maintain financial backing from the eurozone.

The downgrade and subsequent comments from Mr. Dijsselbloem sparked some profit taking after a strong run earlier this week; however, it is worth mentioning that the market was probing a resistance level and its failure to clear that area could signal more downside in the near term. Despite the afternoon slip, nine sectors posted weekly gains between 0.7% (health care) and 7.0% (telecom services), while the rate-sensitive utilities sector lost 4.1% today to end the week lower by 3.7%.

Outside of utilities, the health care sector (-0.8%) was the only group that lost more than 0.6%. Biotechnology contributed to the relative weakness with the iShares Nasdaq Biotechnology ETF (IBB 315.59, -4.32) falling 1.4% to end the week lower by 1.9%.

On the upside, telecom services (+1.9%) and financials (+0.7%) held gains throughout the session. The telecom sector was underpinned by Verizon (VZ 49.33, +1.47), which surged 3.1% after confirming a sale of its wireless assets in three states to Frontier Communications (FTR 7.93, +0.23) for $10.54 billion, leasing the rights to over 11,300 wireless towers to American Tower (AMT 95.73, -3.86) for about $5 billion, and entering into an accelerated $5 billion share repurchase program.

Meanwhile, financials benefited from the rise in short-term interest rates with the sector adding 4.8% for the week. Elsewhere among cyclical groups, the energy sector lost 0.3%, but jumped 5.4% for the week as crude oil rallied 2.4% to $51.67/bbl. The energy component spiked more than 9.0% since last Friday.

Also of note, the top-weighted technology sector (-0.6%) settled a bit behind the broader market. Earnings were in focus today with LinkedIn (LNKD 263.40, +25.43) and Twitter (TWTR 48.01, +6.75) soaring 10.7% and 16.4%, respectively, after beating estimates. On the flip side, GoPro (GPRO 47.12, -7.25) and Yelp (YELP 45.11, -12.36) stumbled. GoPro slid 13.3% in reaction to cautious guidance while Yelp tumbled 21.5% after its report revealed a slowdown in user growth.

Today's participation was ahead of average with more than 900 million shares changing hands at the NYSE floor.

Economic data was limited to Nonfarm Payrolls and Consumer Credit:

Nonfarm payrolls added 257,000 new jobs in January after adding an upwardly revised 329,000 (from 252,000) in December while the Briefing.com consensus expected a reading of 235,000
Private payrolls increased by 267,000 in January, down from an upwardly revised 320,000 (from 240,000) in December while the consensus an increase of 225,000
The decline in the average hourly wage in December (-0.2%) was more than offset by a surge in wage growth (0.5%) in January, which easily topped the consensus forecast of a 0.3% gain. However, the sustainability of this growth remains in question considering 20 states raised their minimum wage in January
The unemployment rate ticked up to 5.7% in January from 5.6% in December as a result of an uptick in the labor force participation rate
Consumer credit increased by $14.80 billion in December, up from a downwardly revised $13.50 billion in November while the Briefing.com consensus expected an increase of $15.00 billion

Monday's session will be free of economic data.

Week in Review: Stocks Recover January Losses


The stock market began February on a higher note. The S&P 500 spiked 1.3% while the Nasdaq (+0.9%) and Russell 2000 (+0.9%) underperformed. Overall, the Monday session was fairly quiet with the market spending some time on each side of its unchanged level. The S&P 500 began with a slim gain, but relative weakness among high-beta biotechnology and chipmaker names kept heavily-weighted health care (+0.6%) and technology (+1.0%) sectors on the defensive. The S&P 500 tried to overcome that weakness, but was rebuffed by its 100-day moving average in the 2,010 area. However, a second effort in the late afternoon sent the S&P 500 well above the 100-day average to end the day. All ten sectors finished in the green with energy (+3.0%) spending the entire session in the lead. The sector benefitted from a 2.8% advance in crude oil ($49.59/bbl) while also drawing strength from ExxonMobil (XOM), which reported better than expected earnings thanks to a $1 billion non-cash windfall resulting from deferred tax items and a favorable ruling for expropriated Venezuela assets.

The market registered its second consecutive advance on Tuesday with the S&P 500 climbing 1.4% to retake its 50-day moving average (2,044). The price-weighted Dow (+1.8%) fared a bit better while the Nasdaq Composite (+1.1%) underperformed. Equities displayed strength from the get-go after markets in Europe responded positively to a Financial Times report suggesting Greece will soften its negotiating stance; however, Finance Minister Yanis Varoufakis said there has been no 'U-turn' in Greece's position while German Chancellor Angela Merkel set expectations for a drawn out process, saying the ongoing talks will 'drag on for months.' Despite a rocky road ahead, the market happily continued retracing its losses from January. The S&P 500 narrowed its quarter-to-date decline to 0.4% with all ten sectors ending in the green.

The major averages finished the Wednesday session on a lower note. The S&P 500 lost 0.4% after tumbling from its high to a new low during the final 30 minutes of action after it was reported that the European Central Bank has lifted its waiver that allowed for the acceptance of Greek government debt as collateral. The announcement came with a caveat that the counterparty status of Greek banks remains unchanged and they may satisfy their liquidity needs through Emergency Liquidity Assistance. However, the news showed that the negotiations are likely to be tumultuous, which contrasted with the rosy picture painted in previous days. Despite the closing slide, a handful of influential sectors like consumer discretionary (+0.7%), technology (+0.1%), and consumer staples (+0.1%) were able to finish in the green.

Equities zoomed higher on Thursday, allowing the S&P 500 (+1.0%) to reclaim its loss from Wednesday and then some. The benchmark index erased the remainder of its decline from January while the Dow (+1.2%) and Russell 2000 (+1.3%) outperformed. The key indices made the bulk of their advance during the opening hour and spent the rest of the day in narrow ranges near their highs. The opening spike took place after investors realized that Wednesday's ECB decision to lift a waiver that allowed for the acceptance of Greek government bonds as collateral was political at its core. Germany's Die Welt reported that the ECB has granted up to EUR60 billion in funding to the Bank of Greece through ELA channels. That being said, the negotiations are unlikely to unfold without a hitch, evidenced by the press conference after Greece's Finance Minister Yanis Varoufakis met with his German counterpart Wolfgang Schaeuble. Mr. Schaeuble said he was advised to say the two "Agreed to disagree," but Mr. Varoufakis countered, saying "We didn't even agree to disagree."
Index Started Week Ended Week Change % Change YTD %
DJIA 17164.95 17824.29 659.34 3.8 0.0
Nasdaq 4635.24 4744.40 109.16 2.4 0.2
S&P 500 1994.99 2055.47 60.48 3.0 -0.2
Russell 2000 1165.39 1205.46 40.07 3.4 0.1

US equities closed relatively unchanged, edging slightly lower (-0.3%) on Friday, as better than expected nonfarm payroll numbers left investors questioning the timing of the first fed funds rate hike. Despite Friday's dip, the S&P 500 closed +3% on the week.

The S&P Information Technology Index underperformed, falling 0.6% on the day.

Top-performing constituents in the S&P Tech Index included: Harris Corp (HRS 76.18, +6.69, +9.6%) and Verisign (VRSN 59.97, +3.02, +5.3%)

Notable headlines from the technology space included:

Harris Corp (HRS 76.18 +6.69, +9.6%): Reported Q2 (Dec) earnings of $1.32 per share, $0.14 better than the $1.18 consensus. Revenues fell 1.4% year/year to $1.21 billion, also better than consensus, which was $1.18 billion. HRS issued guidance for FY15, raising EPS of $4.95-5.05 from $4.75-5.00, it also reaffirmed FY15 revs of -1-3% to ~$4.862-4.962 billion. Additionally, HRS announced it has reached a definitive agreement to acquire Exelis (XLS 24.13, +6.42, +36.3%) in a cash and stock transaction valued at $23.75 per share, or an ~$4.75 billion enterprise value. The transaction is expected to be slightly accretive to Harris in the first full year and a significant contributor thereafter.

Intuit (INTU 87.83, -3.88, -4.2%): Announced that during this tax season, it and some states have seen an increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds. In order to combat this issue, it is working with state agencies to address the growing concern. After working with third-party security expert, Intuit believes that these instances of fraud did not result from a security breach of its systems and that the information used to file fraudulent returns was obtained from other sources outside the tax preparation process.

Alcatel-Lucent (ALU 3.65 -0.02, -0.5%): Reported Q4 (Dec) earnings of 0.08 per share, 0.02 better than consensus estimates. Revenues fell 2.2% year/year to 3.68 billion vs the 3.67 billion consensus.

FLIR Systems (FLIR 33.97 +2.17, +6.8%): Reported Q4 (Dec) earnings of $0.51 per share, $0.03 better than consensus estimates. Revenues rose 8.5% year/year to $434.4 million vs the $416.42 million consensus. FLIR's backlog of firm orders for delivery within the next twelve months was approximately $547 million as of December 31, 2014, a decrease of $32 million, or 6%, during the quarter and an increase of $57 million, or 12%, compared to the end of 2013. The company also issued in-line guidance for FY15

Harris Corp (HRS 76.18 +6.69, +9.6%): Reported Q2 (Dec) earnings of $1.32 per share, $0.14 better than the $1.18 consensus. Revenues fell 1.4% year/year to $1.21 billion, also better than consensus, which was $1.18 billion. HRS issued guidance for FY15, raising EPS of $4.95-5.05 from $4.75-5.00, it also reaffirmed FY15 revs of -1-3% to ~$4.862-4.962 billion. Additionally, HRS announced it has reached a definitive agreement to acquire Exelis (XLS 24.13, +6.42, +36.3%) in a cash and stock transaction valued at $23.75 per share, or an ~$4.75 billion enterprise value. The transaction is expected to be slightly accretive to Harris in the first full year and a significant contributor thereafter.

FY15Analyst Action:

LinkedIn (LNKD 263.40, +25.43, +10.69): upgraded to Neutral from Buy at Bank of America/Merrill... price target raised to $260 from $200 at Barclays; Equal Weight...price target raised to $295 from $275 at UBS; Buy... price target raised to $300 from $253 at JP Morgan; Overweight... price target raised to $285 from $240 at Canaccord Genuity; Buy... price target raised to $211 from $180 at FBR Capital; Market Perform... price target raised to $331 from $285 at Credit Suisse; Outperform... price target raised to $200 from $160 at Stifel; Buy.

Twitter (TWTR 48.01, +6.75, +16.4%): price target raised to $65 from $60 at Deutsche Bank; Buy... price target raised to $58 from $55 at UBS; Buy... price target raised to $48 from $45 at Nomura; Neutral...price target raised to $67 from $64 at JP Morgan; Overweight... price target raised to $46 from $36 at Oppenheimer; Perform... price target raised to $55 from $47 at RBC Capital Markets; Sector Perform

GrubHub (GRUB 40.57, +0.81, +2.04%): upgraded to Buy from Hold at Brean Capital... price target raised to $50 from $42 at Oppenheimer; Outperform

Yelp (YELP 45.11 -12.36, -21.5%): upgraded to Market Perform from Outperform at Northland Capital... price target lowered to $51 from $58 at UBS; Neutral... price target lowered to $70 from $90 at Piper Jaffray; Overweight...price target lowered to $70 from $85 at Sterne Agee; Buy... price target lowered to $73 from $83 at Oppenheimer; Outperform... price target lowered to $82 from $86 at RBC Capital Markets; Outperform

Teradata (TDC 41.63, -0.56, -1.3%): downgraded to Underperform from Neutral at Credit SuisseFiserv (FISV 76.98, -0.14, -0.2%): price target raised to $87 from $77 at Argus; Buy

NXP Semiconductor (NXPI 82.26, +4.02, +5.1%): price target raised to $95 from $83 at Susquehanna... price target raised to $97 from $95 at Canaccord Genuity; Buy

Arista Networks (ANET 56.71, -3.79, -6.3%): price target lowered to $80 from $105 at MKM Partners; Buy

Mettler - Toledo (MTD 308.91, -2.36, -0.8%): target raised to $328 from $286 at Cantor Fitzgerald; Buy

GoPro (GPRO 47.12, -7.25, -13.3%): target lowered to $35 from $45 at Oppenheimer; Underperform

3:33 pm Earnings Preview for the week of February 9 - 13 (:SUMRX) : Of the companies reporting earnings for the week of February 9 - 13 some of the bigger names include:

Monday:
Pre Market - MAS, CNA, HAS, MCY, DO, TE, SOHU, EXXI, GOLD, BWP, L
After Hours - CSC, MOH, CCK, AMKR, KS, NTES, WCN, ALSN, DNB, CMP, TDW, AGII, HMN, OTTR, COUP

Tuesday:
Pre Market - CVS, KO, OUBS, ACM, OMC, PCG, HNT, CDW, DF, RAI, SEE, HOT, TLM, WYN, TAP, MLM, REGN, ALR, NSP, HCP, SAVE, GWR, KKR, MWW, SALE
After Hours - GNW, FTI, NCR, ANDE, WU, PXD, WSH, CERN, ACGL, KGC, SCI, TMH, TRMB, AKAM, VSAT, CRL, SGEN

Wednesday:
Pre Market - PEP, MDLZ, TWX, PAG, WCG, TRI, HSIC, MOS, VOYA, OC, LO, ZTS, WEC, AFSI, FSRV, AOL, CG, BGCP, LPX, WOOF, AGCO
After Hours - MET, CSCO, TSO, WFM, CTL, SLF, AMAT, BIDU, PPC, NU, NTAP, NSIT, NVDA, OII, PNRA, CPA, HNI, EFX, AUY, CAKE, ITRI, FET, CTLT, AEM, ZU, TRIP, SWM, FEYE,

Thursday:
Pre Market - BG, MFC, CS, K, PBF, APA, TU, CVE, JAH, AVP, AAP, BWA, CCE, NLSN, SHPG, DPS, SPW, SON, MHFI, LPNT, CAB, FAF, MPEL, HSP, Q, ANR, THS, TIME, WWAV, FLO, WSO, DBD, HE, AB, SKYW
After Hours - INT, AIG, LBTYA, KRFT, CBS, DVA, AIZ, RSG, GRPN, RGC, COLM, BYD, KING, AEL, SFLY, DLR, MGI, ZNGA

Friday:
Pre Market - MT, EXC, BAM, TRW, VFC, DTE, NGLS, IPG, CPN, SJM, VTR, WBC, ITT, POR, RRGB

Large Cap Gainers

TWTR (48.27 +16.99%): Beat Q4 consensus EPS estimates by $0.06, beat on revs; guided Q1 revs in-line; guided FY15 revs above consensus; Price target increased at RBC Capital, JPMorgan, Cowen, others.
LNKD (269.76 +13.36%): Beat Q4 consensus EPS estimates by $0.08, beat on revs; guided Q1 EPS below consensus, revs below consensus; guided FY15 EPS above consensus, revs in-line; Price target raised at Piper Jaffray, Sun Trust Rbsn Humphrey, RBC Capital Mkts, others.
NXPI (83.11 +6.18%): Price target raised to $97 from $95 at Canaccord Genuity; maintain Buy following strong quarter.

Large Cap Losers

EXPE (78.57 -10.72%): Reported Q4 (Dec) adj earnings of $0.86 per share, $0.15 worse than the Capital IQ Consensus Estimate of $1.01; revenues rose 17.7% year/year to $1.36 bln vs the $1.36 bln consensus; Downgraded at Oppenheimer, Atlantic Equities, others.
DLR (70.16 -5.42%): Weakness in REITs today as Treasury yields jump following the strong jobs report (HCN, O, KIM also lower).
AR (39.8 -1.51%): Initiated with a Underperform at Jefferies.

Mid Cap Gainers

XLS (23.93 +35.13%): To be acquired by Harris Corp (HRS) for $23.75 per share, or ~$4.75 bln total enterprise value.
UBNT (30.2 +15.14%): Beat Q2 consensus EPS estimates by $0.05, beat on revs; guided Q3
EPS in-line, revs in-line.
ONNN (11.54 +12.37%): Beat Q4 consensus EPS estimates by $0.01, reported revs in-line; guided Q1 rev midpoint above consensus.

Mid Cap Losers

YELP (45.13 -21.47%): Reported Q4 earnings with upside rev; guided Q1 revs in-line; guided FY15 revs above consensus; Company provided disappointing EBITDA guidance and reported slowing user growth; Downgraded at B. Riley & Co, Pacific Crest, others.
P (15.36 -16.55%): Reported Q4 EPS in-line, missed consensus estimates on revs; guided Q1 revs below consensus; guided FY15 revs below consensus; Downgraded at Raymond James and Maxim Group.
DV (36.74 -16.97%): Reported Q2 (Dec) earnings of $0.75 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.76; revenues fell 1.3% year/year to $484.9 mln vs the $486.42 mln consensus; Price target lowered at Compass Point.

11:59 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (222) outpacing new lows (44) (:SCANX) : Stocks that traded to 52 week highs: ABCD, ABM, ABMD, ACGL, ACLS, ADP, ADVS, AHH, AKRX, AMPH, APD, ARMK, ASH, ASX, AWH, BA, BANR, BDC, BIIB, BKMU, BOOT, BPY, BR, BURL, BWLD, BYM, CBM, CCI, CDK, CERN, CHFN, CHH, CHRS, CME, COL, COTY, CPB, CPF, CPRT, CSGS, CSL, CSWC, CTB, CTCT, CTRX, CUBI, CXE, CYNO, DD, DHI, DIS, DLPH, DOX, DRIV, DST, DXCM, DY, EA, EBSB, EGL, EL, EMAN, ENH, ENV, ESPR, ESRT, ESSA, ETFC, EWBC, EXLS, EXPO, FAF, FBP, FBR, FDS, FFG, FFNW, FHN, FII, FISV, FNRG, FRC, FRME, FSFG, FSL, FSS, FTR, G, GEO, GFF, GIB, GNVC, GPN, HAE, HAR, HCC, HCSG, HD, HII, HLT, HNI, HOFT, HRB, HRTG, HTLF, HXL, HZO, IBCA, IBKR, ICCC, ICE, IDTI, IMH, INFY, INT, IPGP, IPHS, IRM, ISBC, ISSI, ITG, ITW, JACK, KCG, KFRC, KIRK, KR, KSS, LB, LEA, LM, LNKD, LOW, MANT, MATX, MCK, MCY, MD, MENT, MHFI, MHLD, MIK, MKL, MKTX, MMI, MMS, MMSI, MOFG, MPC, MRCY, MRGE, MSCC, MSCI, MSG, MTD, MTSN, NAVG, NICE, NJR, NNI, NOC, NVAX, NXPI, ODP, OMI, ONNN, OPK, PAG, PCRX, PFBC, PFPT, PLUS, PNFP, PRE, PSCH, PSO, PTP, PVTB, QLYS, RE, RHP, ROP, RTEC, SAFT, SBH, SCHL, SEIC, SHW, SIGI, SIMO, SIRI, SIX, SNA, SNV, SON, SPR, SQBK, SXT, SYF, TARO, TDG, TNAV, TREX, TTGT, TW, TYL, UHAL, UTX, V, VIAS, VMC, VRSN, VSEC, VTWG, WAL, WBS, WETF, WOOD, WSFS, WTBA, XLS, ZLTQ

Stocks that traded to 52 week lows: AES, ARCW, ARLP, ATNM, BRDR, BRS, CASM, CBLI, CIG, CMO, COCO, DBVT, ECOM, EGAN, ENZY, EVI, FNJN, GAME, GEOS, GOL, HTS, IMI, INPH, KERX, KLXI, MXWL, NKA, NOV, ONTY, P, PERF, PHT, PRXI, PTBI, RCMT, RDEN, RELL, SIEB, SVVC, SYMX, VPCO, WAIR, YELP, ZHNE
ETFs that traded to 52 week highs: IHI, ITA, IWF, MDY, PPA, RTH, XLY

ETFs that traded to 52 week lows: FXS