Sector Investing

[ReturntoSender]

From Briefing.com: Weekly Recap - Week ending 01-Jul-11The stock market rallied the most in two years ahead of the holiday shortened week. The major indices advanced ahead of and after the Greek parliament successfully voted on austerity measures that are needed in order to get a bailout and avoid default. As stocks rallied, the dollar fell, commodities gained and yields on Treasuries bounced higher.

Buying interest was broad-based - only seven stocks within the S&P 500 posted a loss. The 10 sectors gained at least 2.9%. Tech led the way, rallying 6.9%, followed by a 6.4% gain in industrials. Defensive sectors underperformed on a relative basis with Consumer staples up 2.9% and utilities gaining 3.4%.

The rally this week leaves only financials in the red for the year (-2.0%). The healthcare sector is still the top gainer (+14.1%) despite underperforming this week.

In corporate items, news that Bank of America (BAC) agreed to an $8.5 bln mortgage settlement with a bevy of influential investors. Shares rose 5.4%.

Credit/debit card companies rallied the most this week after the interchange fee cap was lowered by a lower-than-expected amount. MasterCard (MA) gained 15.4% and Visa (V) climbed 19.8%.

The market had a relatively limited reaction to economic data this week, though an upside surprise on ISM helped extend gains Friday.

Initial claims have levitated above 400,000 for many weeks now without any special factors to account for the uptick. The latest report didn't show anything different, as claims for the week ending June 25 were 428,000 (Briefing.com consensus 420,000), down a mere 1,000 from the week before. The 4-week moving average rose slightly to 426,750.

Although this initial claims report will not factor into the upcoming employment report for June, the persistent levitation above 400,000 will keep expectations for strong, nonfarm payroll growth in check. Payroll gains in excess of 100,000 are needed to support normal labor force growth and a stable unemployment rate.

As a reminder, the stock market is closed Monday in observance of the Fourth of July holiday.

 
 Index	  Started Week	Ended Week  Change  % Change  YTD % 
 DJIA	    11934.58	12582.70    648.12     5.4    8.7 
 Nasdaq	     2652.89	 2816.03    163.14     6.1    6.2 
 S&P 500	     1268.44	 1339.6      71.23     5.6    6.5 
 Russell 2000  797.79	  840.04     42.25     5.3    7.2

7:59AM MEMC Elec announces termination of Suntech Power (STP) Wafer supply agreement (WFR) 8.53 : Co announces that its unit and and Suntech Power (STP) have agreed to terminate their long-term solar wafer supply agreement. Under the terms of the supply agreement, which was originally signed in July 2006, WFR was to supply solar wafers to Suntech over a 10-year period, with pre-determined pricing, on a take or pay basis beginning in January 2007. As part of the original supply agreement, STP advanced funds to WFR in the form of a loan/security deposit and WFR received a warrant to purchase up to a 4.99% equity stake in STP. Issues with respect to Suntech's price and volume purchase obligations under the supply agreement have created challenges to finding a mutually beneficial arrangement between the parties. After two formal contract amendments, in order to resolve these ongoing challenges, the co's have now agreed to terminate the supply agreement. In exchange for WFR's agreement to terminate the supply agreement, STP has agreed to pay WFR $120 mln, through the retention by WFR of $53 mln of cash deposited previously by Suntech under the supply agreement and currently held by WFR, and a $67 mln irrevocable letter of credit established by STP for the benefit of WFR, to be drawn upon in four equal installments on July 8, 2011, October 1, 2011, January 1, 2012 and April 1, 2012. WFR is assessing the financial impact on its second quarter and full year 2011 earnings of the Suntech termination, related contract termination charges, and other restructuring actions.

7:00AM JA Solar to acquire wafer producer Solar Silicon Valley (JASO) 5.55 : Co announced that it has entered into a definitive agreement to acquire 100% ownership interest in Silver Age Holdings Limited, a British Virgin Islands company that owns 100% of Solar Silicon Valley Electronic Science and Technology, in a transaction that values Solar Silicon Valley at ~$180 mln. At the time of closing JA Solar will issue 30.901 million ordinary shares as consideration at a price of $5.825 per share. Each ADS of JA Solar represents one ordinary share. The consideration for the acquisition represents ~2.6 times the audited net income of Solar Silicon Valley for 2010. Upon completion of the transaction, JA Solar's internal wafer capacity will be increased to approximately 785MW, ensuring a stable supply of low-cost wafers. The acquisition is subject to customary closing conditions and Chinese regulatory approvals, and is expected to close in the third quarter of 2011.