Stocks erase all Gains, End Flat (AAPL, BAC, BIG, BSX, DIS, HD, JPM, LULU, MS, RIMM, THC, WDC)

Published on Friday, 02 December 2011 18:37 Written by Christopher Lynn

New York, December 2^nd (TradersHuddle.com) – Stocks lost all of their earlier gains, finishing flat for the session but up sharply for the week, with the S&P 500 posting its best weekly gain since March 2009. Participants turned cautious ahead of the weekend despite an encouraging jobs report, amid rumors circulating the trading desks of a possible Spain credit rating downgrade during the weekend.

The Dow Jones Industrial Average lost less than 1 point, or 0.01%. The S&P 500 index slid less than 1 point or 0.02%, while the NASDAQ climbed less than 1 point, or 0.03%.

The market started with sharp gains, adding to the weekly advance after an encouraging employment report. According to the Labor Department, the World’s largest economy added 120,000 jobs for the month of November, largely inline with estimates, while the unemployment rate fell to 8.6% from 9%, as discourage workers continued to leave the workforce. Additionally, the report showed that private employers added 140,000 jobs for the month, also largely inline with expectations.

In Europe, markets jumped to its biggest weekly gain since 2008 following the jobs report in the U.S. and optimism ahead of a new EU summit scheduled for December 9^th. Participants’ hopes increased after French President Nicholas Sarkozy and German Chancellor Angela Merkel will meet on Monday to outline their positions and arrive to the EU summit with a joint proposal to address the region’s debt crisis.

Stocks however cut their gains, as they moved from session highs, with downward momentum accelerating ahead of the close, practically erasing the earlier advance. All of the benchmark indices ended flat, as a rumor of a possible Spain downgrade coupled with Friday afternoon blues weighed on sentiment.

Most of the S&P 500 Select Sectors ended in negative territory, with healthcare, utilities, and materials posting the biggest declines, while financials and consumer discretionary, boosted by the jobs report, were the only sector posting gains.

Big banks saw outsized gains, lifting the financial sector higher. JPMorgan (NYSE:JPM), the second largest U.S. lender, surged 6.14% to $32.33, closing above calculated resistance at $31 and posting the biggest percentage gain in the Dow Jones Industrial Average. JPMorgan was also one of the top performers in the S&P 500.

Rival Bank of America (NYSE:BAC) climbed 1.99% to $5.64 after trading as high as $5.88. BofA was also among the top performers in the blue chip index. The Charlotte, NC based bank rebounded 12% from its multiyear low of $5.03 posted earlier in the week. Bank of America CEO Brian Moynihan will face next week investors upset with the low stock price, as he will speak at the Goldman Sachs U.S. Financial Services Conference on December 6^th. Morgan Stanley (NYSE:MS), the operator of a global securities business, was the best performer in the sector, as shares jumped 6.96% to $15.52 after trading as high as $15.90. Morgan Stanley surged 17% for the week.

Consumer discretionary stocks gained as a group. Walt Disney (NYSE:DIS), the world’s largest media company, jumped 1.7% to $36.61, posting one of the biggest gains in the blue chip index. Another consumer discretionary related Dow component, Home Depot (NYSE:HD), the largest home improvement retailer, gained 1.53% to $39.94; rival Lowe’s (NYSE:LOW) gained 1.84% to $24.31 after the jobs data and after it was upgraded to a Buy from Neutral at Goldman Sachs.

Retailers were also in focus amid earnings results in the space. On the positive side, lululemon athletica (NASDAQ:LULU) rallied 5.34% to $49.69. Thedesigner and retailer of athletic apparel, rebounded from a 9% tumble in the prior session after it was upgraded to Overweight from Equal Weight at Barclays and to a Buy from Underweight at KeyBanc Capital Markets. Yesterday, the company reported quarterly results that beat on the bottom line but missed on the revenue side.

However, Big Lots (NYSE:BIG) plunged 8.68% to $36.28, posting one of the biggest declines in the broad market index. The closeout retailer posted results that missed on both the earnings and revenue fronts, while issuing inline guidance for both the current quarter and fiscal 2012.

In the tech space, Western Digital (NYSE:WDC) surged to the top of the S&P 500. The maker of hard drives for computers and entertainment systems rallied 7.49% to $31.44. Western Digital moved higher after it lifted its second quarter earnings outlook, with the company resuming production in Thailand ahead of schedule this week. Analysts at ThnkEquity upgraded the stock to a Buy from Hold, saying Western Digital could recover market share lost to rival Seagate Technology (NASDAQ:STX) quickly. Seagate tumbled 7.07% to $16.17 on the news.

Also in the space, Research In Motion (NASDAQ:RIMM) was among the most active stocks. Shares slumped 9.74% to $16.77 after the company announced a charge to write down the value of its inventory of the poorly received PlayBook tablet, which was its attempt to go after the dominant share of the Apple iPad. The company added to its woes, warning that it will not be able to meet its forecast for full-year adjusted diluted earnings of $5.25 to $6.00 per share.

Apple (NASDAQ:AAPL), the maker of iPads and iPhones, gained 0.46% to $389.70 after it was unable to close above its 50day moving average at $391.76. An Australian court extended a ban on sales of Samsung's Galaxy 10.1 tablet in the country by a week. The ban over a patent dispute was set to expire on Friday but has been extended until December 9^th, so the high court can hear an appeal by Apple against an earlier court decision to overturn a temporary ban. In the U.S., Apple is also looking to block the sale of the Samsung tablet, as an Apple lawsuit is being heard on a Federal Court in Northern California. Yesterday, JPMorgan bumped its estimates for the current quarter above consensus on the back of an increased iPhone shipment forecast. The firm said that it expects 28 million units to ship during the quarter, upped from a prior estimate of 25.3 million units. JPMorgan cited strong uptake in the iPhone 4S, but also strong demand for the cheaper models iPhone 4 and iPhone 3GS. The firm expects EPS of $9.87 on revenues of $38.69 billion, above consensus of $9.78 per share on revenues of $38.02 billion. For the week, Apple has climbed 7.2%.

Meanwhile, healthcare also suffered some sizeable losses. Tenet Healthcare (NYSE:THC), the hospital operator, tumbled to the bottom of the S&P 500. The stock plunged 10.68% to $4.18 after trading as high as $4.78, with the bulk of the losses coming towards the end of the session. Earlier in the day BMO Capital initiated its coverage with a Market Perform.

And also in the sector, Boston Scientific (NYSE:BSX), the heart stent maker, tumbled 6.78% to $5.50, posting one of the biggest declines. A study published in JACC Cardiovascular Interventions earlier in the week stated that Boston Scientific Omega stent fares poorly, as its vulnerable to deformation with significant less force.