Thursday, March 18, 2010

Overview-Industrials/Materials/Energy-Media/Leisure $FDX $CHK $HOV

·         Commodities: Commodities were mostly lower, as many came off their lows this afternoon. Oil came off its afternoon lows to finish around $82.05, down ~1.05%. Natural Gas traded flat after hitting its lows, ending close to $4.09, down 5%. Copper rallied into the bell to finish down 0.6%. Gold held on to its early afternoon gains to finish up 0.2%.

·         FX: USD (DXY) the dollar traded flat into the bell after coming off its morning highs, up 0.7%. The dollar also traded flat vs. the Euro after a morning rally – ending the day near its highs up ~0.9%. The dollar fluctuated vs. the pound throughout the day, finishing up ~0.55% nad near its hihghs. The dollar came off its highs to finish flat against the Yen. The Euro sold off vs. the Yen, finishing near its lows, down ~0.9%.

·         Corp. Credit: Corp. Credit was in line with the tape as IG spreads were flat and HY fell 1/16 of a pt.

·         Treasuries: Both the 2s and the 10s sold off today amid speculation of an increase in the discount rate. [Bloomberg] The 2s finished yielding 95bps, while the 10s moved lower to yield 3.67%. The 2 -10 spread flattened to 271bps


·         Industrials: Industrials outperformed the tape today amid light volumes. Multi industry names were mixed with the leaders being the mega caps (MMM, HON, GE, and TYC). Machinery names were mixed as the group came off their highs, led by NAV, BUCY, and ITW. Aero/def names were mostly higher, as BA leads the group higher despite weakness in BEAV and GR. Building product names were weaker today after yesterday’s outpeformance. Education and business services names continued to outperform, helped in part by positive comments from UBS.

·         Transports: Transports were all stronger today, outperforming the market. Rails are outperforming, with most names up 1-2%. Freight acted very well given the early weakness this morning on FDX’s earnings. Truckers were mixed today as TLs lagged a bit. Airlines were mixed as many names came off their highs to move into negative territory.

·         Homebuilders: Homebuilders were mixed today as they came off their highs in the late morning following rumors the discount rate might be hiked tonight (Dow Jones). The next big catalyst for the space is Tuesday, when KBH reports earnings.

·         Materials: Materials were one of the weaker spaces in the market today as a stronger dollar weighed on commodity prices. Metals were almost all down with their respective commodities. Chemicals were mixed with DD outperforming following comments it made at a Nomura conference. Fertilizers were weak following negative comments from OTR. Paper and packaging stocks were lower today following yesterday’s sharp rally.

·         Energy: Energy shares were the worst space in the market today, down 1.25% on average as oil falls 80c to $82.10 and natural gas plunges below $4.10. Integrateds are off just under 1%, down with crude weakness. Servicers and drillers were down 2-5% today after UBS cut price targets on a lot of names in the space (HP, WFT, RIG, HAWK, SLB, RDC, PDE, PTEN, NBR, HAL, and DO). Refiners finished at their lows as crack spreads came in a bit. E&Ps and coals were one of the weakest areas within energy and a sharp fall in natural gas takes both groups down around 3-6%. Shipping/tanker stocks were weaker today as the Baltic Dry Index moves lower. Solar stocks lagged again today despite positive earnings out of STRI last night.


Industrials/Materials/Energy Outliers

·         NAV was up around 2.5% (well off highs) after receiving EPA emissions certifications for 2010 for its trucks and engines, however the move is mostly attributed to short covering after two weeks of underperformance.

·         HOV was up around 2%, outperforming homebuilders.

·         MMM (+1.75%), HON (+1.15%), and GE (+0.75%) all outperformed multi-industry stocks.

·         FDX was up over 3% after being down over 3% pre-market on earnings. UPS was up nearly 2.5% in accord.

·         VMC was off around 2.5% after outperforming yesterday.

·         DD was up 1.5% after speaking at a Nomura conference.

·         Fertilizers were all off 2-4% on negative comments from OTR.

·         CHK (-5%), XCO (-5.5%), and COG (-5%) led E&Ps lower as natural gas falls over 4% following the storage release.

·         NBR (-5%) and HP (-5.5%) led drillers lower after UBS reduced their price targets on a group of names in the drilling and services area.

·         STRI was up close 5% on earnings yesterday, although it was up 10% at one point.

·         TSL was off nearly 10%, leading solar stocks lower.



·         With the tape pretty much unchanged from the afternoon, volumes remained as the theme of profit taking continued. With VIA/B asking a federal court to rule that GOOG’s YouTube violated their copyrights [Bloomberg]-- VIA/B rallied in the afternoon, finishing near its highs.

·         There was some selling media and buying telecom, which was mostly geared who wireless. S (Sprint) has kept his momentum leading the wireless stocks as the blue chips traded in line with the prepaids; the towers underperformed and the local telcos were flat.

·         ERTS/ATVI held on to their morning gains, as GME’s positive earnings have been one of the few catalysts recently to fuel some buying.

·         MCO traded sideways after the morning gains, and finished up ~3.3%

·         In gaming, both the Macau centric stocks and the regional casinos pulled back further in the afternoon, despite few shorts. BYD was the only stock to post a gain due to some short covering.

·         Hotels finished the day mixed with MAR ticking higher and H (Hyatt) picking up some momentum in the afternoon. There was some rotation into cruise lines, favoring CCL (bucking the recent trend) as RCL finished down ~1.3%

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