Sector Investing

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From Briefing.com: 4:30 pm : Early buying spurred strong, broad-based gains among stocks, but action quickly steadied so that the broader market spent the session moving sideways in a narrow range. Though that didn't make for much excitement, the advance was interesting in that it held firm despite a strong bounce by the U.S. dollar.

Moderate weakness in the greenback drove the Dollar Index to an early loss of 0.3%, which helped win support for stocks and keep all 10 major sectors in positive territory for the entire session.

The greenback gradually turned its loss into a 0.4% gain, though. That marked the fifth straight advance for the Dollar Index. The move undercut commodities considerably, sending the CRB Commodity Index from a 0.6% gain to a 0.5% loss, but it didn't disrupt the gains made by stocks.

Even with commodity prices pressured, materials stocks still booked a gain of 1.2%. Diversified metals and mining players (+2.0%) were a primary source of strength amid an upgrade of Alcoa (AA 15.73, +1.15) by analysts at Morgan Stanley.

Financials concluded the session as the best performing sector. They advanced 1.5% as diversified banks booked a 2.3% gain after Barron's published an article that portrayed major U.S. banks in positive light.

Meanwhile, continued support for large-cap tech drove the Nasdaq Composite to a fresh 52-week high. Intel (INTC 20.09, +0.46) was a primary leader in that move; it also hit its own 52-week high, thanks partly to an upgrade from analysts at Barclays.

Health care had been one of the better performing sectors in the early going, but scaled back its advance a bit. It still finished 1.1% for the better as participants responded favorably to news that Senate Democrats have come closer to moving past Republican objections to health care reform.

Global pharmaceutical Sanofi-Aventis (SNY 39.07, -0.04) made news this morning with the announcement that it will pay $93.50 in cash for each outstanding share of Chattem (CHTT 93.14, +23.16).

Chattem, which makes over-the-counter personal care products, won some support for smaller consumer staples plays as participants speculated over which companies could also become takeover candidates, but larger consumer staples stocks weighed on the sector. Consumer staples stocks, as a group, still settled with a 0.8% gain.

Walgreens (WAG 36.61, -0.03) was a primary laggard among consumer staples stocks. Though the company announced this morning better-than-expected adjusted earnings of $0.52 per share for the latest quarter, it wasn't enough to please its investors.

ConAgra (CAG 22.03, -0.13) had a similar struggle. It also brought in better-than-expected adjusted earnings of $0.52 per share for the latest quarter, but even went on to increase its expected earnings for fiscal 2010 to $1.73 per share, up from $1.70 per share. That still wasn't enough to win it favor, though.

Despite the relative weakness of a few consumer staples stocks, the broader market booked a solid gain. Nearly 90% of its components were able to stage an advance. Such support for stocks drove Treasuries sharply out of favor. In turn, the benchmark 10-year Note dropped more than one point to send its yield to a four-month high. It settled with its yield near 3.68%.

Advancing Sectors: Financials (+1.5%), Consumer Discretionary (+1.3%), Materials (+1.2%), Energy (+1.1%), Tech (+1.1%), Health Care (+1.1%), Telecom (+0.9%), Consumer Staples (+0.8%), Industrials (+0.7%), Utilities (+0.4%)
Declining Sectors: (None)DJ30 +85.25 NASDAQ +25.97 NQ100 +1.2% R2K +1.3% SP400 +1.4% SP500 +11.58 NASDAQ Adv/Vol/Dec 1814/1.84 bln/914 NYSE Adv/Vol/Dec 2193/1.01 bln/844

4:03PM Jabil Circuit beats by $0.03, reports revs in-line; guides Q2 EPS above consensus, revs above consensus (JBL) 15.02 +0.22 : Reports Q1 (Nov) earnings of $0.32 per share, excluding non-recurring items, $0.03 better than the First Call consensus of $0.29; revenues fell 8.7% year/year to $3.09 bln vs the $3.11 bln consensus. Co issues upside guidance for Q2, sees EPS of $0.20-0.32, excluding non-recurring items, vs. $0.19 consensus; sees Q2 revs of $2.90-3.10 bln vs. $2.88 bln consensus. "We believe that we have a good pipeline of new business, a stable to improving end-market environment and a keen focus on cost, quality and delivery for our valuable customers. We also think that we have established positive momentum toward a much improved fiscal 2010 and we expect to provide further evidence of this in our second fiscal quarter."

8:34AM Vishay raises Q4 rev guidance driven by higher than anticipated demand for both discrete semiconductors and passive components (VSH) 7.54 : Co issues upside guidance for Q4 (Dec), sees Q4 (Dec) revs of $580-600 mln vs. $557.87 mln First Call consensus, up from $530-570 mln previously. The strong revenue recovery in the current quarter was driven by higher than anticipated demand for both discrete semiconductors and passive components. Vishay is still capacity constrained, especially in some of its semiconductor lines.

8:09AM On The Wires : UTStarcom (UTSI) announces the signing of of a definitive agreement to sell its facility in Hangzhou, China for RMB 950 mln to the Zhongnan Group of Companies. The transaction is subject to customary closing conditions and is expected to close before the end of first quarter of 2010. Net of taxes, the payment to UTStarcom will be RMB 900 mln. UTStarcom expects to record an impairment charge in its fourth quarter 2009 financial statements as a result of the agreement to sell the asset...

MEMC Electronic Materials (WFR) announces that it has taken an ownership interest in Eversol Corporation, a solar wafer manufacturer in Taiwan...

7:25AM On The Wires : Intel (INTC) announced new Intel Atom processors today that feature integrated graphics built directly into the CPU, enabling improved performance and smaller, more energy-efficient designs in a new generation of netbooks and Atom-based entry level desktop PCs...

7:24AM Nokia: Fitch downgrades Nokia to 'A-'; outlook stable (NOK) 12.45 : Fitch Ratings has today downgraded Nokia's Long-term Issuer Default Rating (IDR) and senior unsecured rating to 'A-' from 'A' respectively. The Short-term IDR has been downgraded to 'F2' from 'F1'. The Outlook on the Long-term IDR is Stable. The downgrade follows the update to the company's strategy and revised financial guidance provided at Nokia's Capital Markets Day ('CMD') on 2 December, which continue to signal margins in the core Devices & Services division are unlikely to quickly regain the levels formerly reported by the company's handsets business. Coupled with what is potentially now a rebasing of the devices business, to lower albeit good levels of profitability, the company's network infrastructure JV with Seimens, 'NSN,' continues to face significant challenges. The JV lost market share in 2009 and is now expected to generate considerably weaker earnings than projected at the time of the merger in 2007. With a non-IFRS operating profit target of between breakeven and 2% in 2010, and with earnings in this business currently still negative,, NSN is taking longer to integrate and generate the scale synergies that were expected at the time it was formed. (Margin guidance at the 2007 CMD, was for the operating margin to grow to 10% by the end of 2009).

7:16AM Palm upgraded to Hold at Morgan Joseph based on valuation (PALM) 10.17 : Morgan Joseph upgrades PALM to Hold from Sell based on valuation. The firm continue to believe that management's guidance of $1.6-1.8bn is overly optimistic, however, since management offered this guidance, the stock has dropped more than 33%. With shares having penetrated their former $10 price target intraday on Friday, to as low as $9.60, the firm believes that the Street is more than discounting management's ability to meet that guidance. The firm also anticipates that the Street is once again questioning whether or not Palm is a viable company given the expectations for $80 mln in expected cash burn for F3Q10 even with the additional $360 mln in net proceeds raised back in September, as high marketing spend may keep cash burn at high levels. Even though Pre numbers were disappointing in F2Q10, Palm shares are currently trading at 1.5x the firm's estimates, which are low on the Street, compared to RIM's 2.2x CY2010 EV/Sales. The firm nows feel that Palm is fairly valued and that the risk reward is no longer on the side of the shorts.

7:01AM First Solar and EDF Energies Nouvelles in exclusive talks with Blanquefort (FSLR) 135.67 : First Solar and EDF Energies Nouvelles announce that they are in the final stages of exclusive negotiations with the town of Blanquefort, near the city of Bordeaux, to locate a new solar panel manufacturing plant. The plant, co-financed by First Solar and EDF Energies Nouvelles, will be operated by First Solar and sell its entire production of innovative, thin-film photovoltaic panels to EDF EN for its first 10 years of operation. Construction is expected to begin in the second half of 2010 and a full production capacity of more than 100 megawatts a year is to be reached in early 2012. The plant is expected to create up to 400 jobs in the region of Aquitaine and represent a total investment of approximately EUR100 million. The decision to focus on Blanquefort for the manufacturing plant follows an extensive review of potential sites throughout the country. First Solar and EDF EN expect to finalize all remaining agreements in the coming weeks. First Solar and EDF EN believe that France will become a major market for solar electricity in Europe thanks in large part to forward-looking French solar policies.