Sector Investing

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From Briefing.com: 4:30 pm : A flat start gave way to a steady descent that had the stock market positioned for its poorest performance in three weeks, but some late buying helped stocks halve their losses.

Without any leadership or positive catalysts to help stocks extend their multi-year highs, many participants opted to pare risk and pocket profits. The effort gained momentum and had the S&P 500 down about 1% before the decline steadied.

Natural resource plays were hit the hardest. Their drop came in close connection with lower commodity prices. At their session lows both the Energy sector and the Materials sector were flirting with losses of 2%. The stock market's effort to trim losses late in the day helped them limit their losses to 1.2% and 1.5%, respectively.

Oil was under sharp pressure all session, such that the energy component settled with a 1.9% loss at $105.40 per barrel. A bigger-than-expected build in weekly oil inventory numbers reflected renewed concerns about softer demand. The rest of the commodity complex was weak, too, such that the CRB Index fell 1.3% for its worst single-session slide in three weeks.

Financials were integral in the stock market's late upturn; no other sector was able to fully overcome selling pressure and settle in positive territory. Collectively, Financials scored a 0.4% gain.

Bank stocks were source of strength. Their resilience in the face of broad market weakness resulted in a 0.9% gain for the KBW Bank Index. Investment banking and brokerage outfit Goldman Sachs (GS 126.36, +0.03) was able to work its way to the flat line after wrestling with a sizable loss that came despite the firm's decision to restructure its Board. The move is widely regarded as a bow to investors amid negative publicity pertaining to the firm's culture.

Only a handful of earnings announcements were made ahead of the open, but none of them had any significant influence over market sentiment. Although the line-up for tomorrow will be limited, the latest numbers from Best Buy (BBY 26.62, -0.31) will be posted ahead of the open.

The dollar attracted only modest buying interest today, but even that faded so that the Dollar Index was up about 0.1% by day's end. The Japanese yen seemed to benefit more from those who wanted safety; as of the closing bell the dollar-yen exchange rate was down nearly 0.5% to 82.77 yen per dollar. Also in the mix was a weakened sterling pound, which fell to a 0.4% loss against the greenback after it had set a fractionally improved multi-month high in the prior session. Its move lower followed news that the United Kingdom revised data downward to show that its economy contracted by 0.3% during the fourth quarter. On a related note, the final reading on U.S. fourth quarter GDP will be released tomorrow morning at 8:30 AM ET.

The only dose of domestic data released today was the latest in durable goods orders. Overall orders increased by 2.2% during February, but that is actually a slower pace than the 2.8% increase that had been expected, on average, among economists polled by Briefing.com. Prior month orders data were revised slightly higher to reflect a 3.6% decline. Excluding transportation items, durable goods orders were up 1.6% in February. That is a stronger clip than the 1.0% increase that had been generally expected among economists polled by Briefing.com, but still relatively underwhelming when compared to loftier estimates that were widely issued. Nonetheless, the latest figure marks an improvement from the prior month decline of 3.0%.

Advancing Sectors: Financials +0.4%
Declining Sectors: Tech -0.2%, Consumer Staples -0.2%, Health Care -0.3%, Utilities -0.8%, Consumer Discretionary -0.9%, Telecom -1.0%, Industrials -1.0%, Energy -1.2%, Materials -1.5%DJ30 -71.52 NASDAQ -15.39 NQ100 -0.4% R2K -0.7% SP400 -0.6% SP500 -6.98 NASDAQ Adv/Vol/Dec 887/1.75 bln/1636 NYSE Adv/Vol/Dec 1122/817 mln/1901

O2Micro International (OIIM) was issued 20 claims under U.S. patent for its Battery Management System.

EMCORE (EMKR) announced that it had entered into a definitive agreement, subject to closing conditions, to sell certain assets and transfer certain obligations of its Vertical Cavity Surface Emitting Lasers-based product lines to Sumitomo Electric Device Innovations USA. The consideration for this sale will be $17 mln in cash, subject to closing adjustments.

8:05AM Emcore announces $17 mln sale of assets for its VCSEL-based product lines (EMKR) 4.85 : Co announced today that it had entered into a definitive agreement to sell certain assets and transfer certain obligations of its Vertical Cavity Surface Emitting Lasers (VCSEL)-based product lines to Sumitomo Electric Device Innovations USA, Inc. (SEDU). The consideration for this sale will be $17 million in cash, subject to closing adjustments. In fiscal year 2011, the VCSEL-based product lines contributed approximately 5% of EMCORE's overall revenue.

8:03AM Cisco Systems Announces Intent to Acquire ClearAccess, a company that provides TR-069-based software to service providers for the provisioning and management of residential and mobile devices; financial terms not disclosed (CSCO) 20.85 : Specific financial terms of the transaction are undisclosed. The acquisition of ClearAccess is subject to various standard closing conditions and is expected to be complete in the fourth quarter of Cisco's fiscal year 2012.

EXFO (EXFO $6.90 -0.38) reported second quarter earnings of $0.02 per share, $0.06 worse than the Consensus of $0.08, while revenues fell 7.1% year/year to $66.9 million versus the $68.61 million consensus. Bookings reached $60.6 million in the second quarter of fiscal 2012 compared to $57.6 million in the same period last year and US$71.4 million in the first quarter of 2012. The company's book-to-bill ratio was 0.91 in the second quarter of 2012 and 0.99 at the mid-way mark of fiscal 2012. Gross margin amounted to 64.7% of sales in the second quarter of fiscal 2012 compared to 61.4% in the second quarter of 2011 and 64.8% in the first quarter of 2012. Co issues mixed guidance for Q3, sees EPS of $0.05-0.09, excluding non-recurring items, vs. $0.10 Capital IQ Consensus Estimate; sees Q3 revs of $68-73 million versus the $72.26 million consensus.

1:22 pm Information Technology Sector trading lower today along with market

The tech sector is trading just higher today, ahead of losses in the broader market. Semiconductors are showing relative weakness in the tech space with the Philly Semi Index trading 1.4% lower. WFR (-6.8%) is a notable laggard in the chip index. Among other major indices, the SPY is trading 0.8% lower, while the QQQ is 0.7% lower and the NASDAQ is trading 0.8% lower on the session. Among tech bellwethers, GOOG (+1.2%) is showing notable strength today, while VZ (-1.1%) is under pressure.

In earnings, SNX (-13.4%) posted a mixed Q1 and issued downside guidance. This morning, PRGS (-3.1%) reported a Q1 beat.

Among notable analyst upgrades this morning, DTV (+1.5%) was upgraded to Buy at Citi and NVDA (+1.9%) upgraded to Market Perform at JMP Securities. Among downgrades, VZ (-1.1%) was downgraded to Sector Perform at RBC, SNX (-12.8%) was downgraded to Neutral at Citigroup, FFIV (-0.6%) was downgraded to Sector Perform at FBN Securities, and Oppenheimer downgraded AUDC (-7.1%) to Perform. RHT (-0.8%) is a notable name in tech scheduled to report results today after the close.