Stocks Log Second Weekly Gain after EU Summit (AAPL, BAC, C, COST, DD, F, JPM, FSLR, GE, HAL, MCD, TOL)

Published on Saturday, 10 December 2011 08:41 Written by TradersHuddle Staff

Weston, December 10^th (Tradershuddle.com) – Stocks gained for the second consecutive week, after volatile trade following news developments out of Europe. Improved economic data in the U.S., with better than expected weekly jobless claims and consumer confidence data helped boost performance, amid an apparent relief from the investment community that the deal reached by 26 of the 27 nations in the European Union Summit will be able to provide a framework to tackle the debt crisis, leaders agreed towards stricter budget discipline and more fiscal integration.

For the week, the blue chip index gained 1.55%; the S&P 500 Index climbed 0.88% and the NASDAQ added 0.76%.

At the start of the week, stocks closed off their best levels, following a report that all of euro zone countries were told their credit ratings will be put on a negative credit watch, as the debt crisis continued to impact their financial standing. Markets had rallied earlier after Germany and France’s leaders agreed on a framework for a EU treaty rewrite that will sanction over spenders.

In Europe, markets jumped to a 5-week high after France and Germany leaders agreed on a range of measures that they would propose in the EU summit, particularly agreeing on a framework of a new EU treaty that imposes stricter fiscal rules and automatic sanctions for over spenders. Italy also helped by proposing a new austerity plan, which helped bring bond yields in both Italy and Spain.

Stocks gains faltered after the Financial Times reported of the possible downgrade watch for all of nations using the euro, which weighed on sentiment and push for participants towards profit taking amid the sharp gains in the prior sessions.

Financials, materials, and energy posted the biggest gains, while consumer staples and healthcare lagged. Financials saw a strong rally, with the Select Financial SPDR (NYSE:XLF) jumping more than 2%; however the sector closed off its highs, as it jumped above 3% earlier in the session.

Bank of America (NYSE:BAC), the largest U.S. lender, jumped close to 3%, posting one of the biggest percentage gains in the Dow Jones Industrial Average. The growing hopes for a solution to the euro zone debt crisis helped the financial sector, which was also helped by improved economic sentiment in the U.S. The sector and the stock came off the highs of the session at $5.95 after the report of the S&P warning. Rival JPMorgan (NYSE:JPM) rallied 3.7% to $33.51 after trading as high as $34.10, placing the stock at the top of the blue chip index.

Citigroup (NYSE:C), the third largest U.S. lender, also received a strong bid. The stock jumped more than 3%, as it flirted with the $30 level, trading as high as $30.14. Citi broke above its calculated resistance at $27.50 last week. And Morgan Stanley (NYSE:MS), the operator of a global securities business, was the best performer in the sector, with shares jumping close to 7%.

The technology space recieved bid on the risk on day and after SAP (NYSE:SAP), the provider of business management software, announced that it will buy SuccessFactors (NYSE:SFSF) for about $3.4 billion or $40 per share. Shares of SAP fell 1.95% to $58.38 on concern over the multiple paid.

Salesforce.com (NYSE:CRM), the provider of Internet based customer relationship management software, rallied more than 4% on the SuccessFactors news, as the deal sparked a rally in business software. And International Business Machines (NYSE:IBM), the IT solutions and consulting services provider, gained 0.62% to $190.84 after it posted a new all-time high of $193.61 on above average trading volume, with 5.7 million shares exchanging hands.

Meanwhile, Apple (NASDAQ:AAPL), the maker of iPads and iPhones, climbed 0.90%, underperforming in the sector, but with the stock closing above its 50day moving average at $391.52. A Northern California U.S. District Court denied the request from Apple for a preliminary injunction against Samsung. The Korean company will be able to continue the sale of its galaxy line of tablets and smartphones in the U.S., while it fights Apple’s patent lawsuit. Last week, commScore reported that Apple strengthened its position to number 4 in U.S. Mobile Subscriber Market, with a 10.8% share, while 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.

Elsewhere, FedEx (NYSE:FDX), the worldwide express package Delivery Company, gained after the company announced a price increase to FedEx Ground and to FedEx Home Delivery Services by an average of 4.9% effective Jan 2012. And McDonald’s (NYSE:MCD), the world’s largest restaurant chain, fell 0.4% to $95.35 after trading as high as $96.59, a new all-time high for the stock.

On Tuesday, the market started near the unchanged line, as futures recovered from their overnight lows following weakness in Asia and Europe, as the S&P warned 15 euro zone nations that it has placed them in Credit Watch Negative. The credit rating agency said that systemic stress in the euro zone has risen in recent weeks to the extent that they now put downward pressure on the credit standing of the euro zone as a whole.

In the S&P 500, it was a mixed bag, with materials, healthcare, and utilities posting the biggest gains. Meanwhile, consumer discretionary and technology logged the biggest declines. The Materials sector was the clear leader, with a 0.9% gain for the session. CF Industries (NYSE:CF), the North American manufacturer and distributor of agricultural fertilizers, jumped the most in the sector, with shares gaining 4%. Last week, Ticonderoga said that CF was a buying opportunity amid seasonal weakness and economic uncertainty.

Healthcare also saw an increased bid, with Pfizer (NYSE:PFE), the world’s second largest pharmaceutical company, posting the second biggest percentage advance in the Dow Jones Industrial Average, as shares gained 2% with above average trading volume. Also helping lead the gains in the blue chip index and the industrial sector was General Electric (NYSE:GE). The diversified manufacturer of power turbines and medical devices jumped 2.4% after the stock was upgraded to Outperform from Market Perform at Bernstein. The firm also bumped its target price to $21 from $19

In the energy sector, Halliburton (NYSE:HAL) tumbled close to 4% after BP accused the company before a Federal Judge of destroying evidence related with the inadequate cement work Halliburton perform according to BP on the Gulf of Mexico Macondo oil well that suffered an explosion in 2010, causing the biggest oil spill in U.S. history.

Tesoro (NYSE:TSO), the crude oil refiner based in San Antonio, TX, also weighed on the sector, as shares tumbled 6.12% to $23.31 after the stock was named a short Research Tactical Idea at Morgan Stanley. Tesoro was also downgraded to a Neutral from Outperform at Credit Suisse.

On the financial sector, regional banks weighed on performance. SunTrust (NYSE:STI) posted the biggest decline after it said that its fourth-quarter mortgage repurchase costs would be "well above" those of previous periods. Shares of SunTrust dropped more than 6%.

Bank of America (NYSE:BAC) was able to shake-off weakness, as shares ended with a modest loss. The concern over sovereign debt in the euro zone and mortgage exposure following the SunTrust news were offset by optimism over additional measures to be announce in the region to tackle the crisis, including a second bailout fund. And Lincoln National (NYSE:LNC) gained 1.81% to $20.79 after Bank of America Merrill named the stock into its favorite stocks for 2012. The firm has a target price of $38.

Technology ended with a narrow loss for the session. Apple (NASDAQ:AAPL) was not able to hold its breakout above its 50day moving average at the $391 level, as the stock modestly lower. Apple was included in Bank of America Merrill 2012 favorite stocks list, with the firm giving the stock a target price of $515 per share. The firm said that the valuation is compelling, particularly with the upside potential in revenues and earnings growth in the Mac and iPhone segments, which will likely outweigh a slowdown in the iPod units and consumer exposure. Additionally, Oppenheimer said that its wireless checks point to strong demand for the iPhone 4S and this demand will likely drive muted March seasonality and possible upside for the stock, which is its top pick in the space.

Also weighing in the sector, First Solar (NASDAQ:FSLR), the largest maker of thin film solar modules in the world, was the worst performer. Shares of First Solar fell more than 3%. On the flip side, TE Connectivity (NYSE:TEL), the maker of relays, circuit breakers, fiber optic components, touch screens, and wireless products, jumped 2% to $32.71 after the company reaffirmed its fiscal first quarter and fiscal 2012 EPS and revenue guidance. TE Connectivity was upgraded to a Buy from Neutral at Goldman Sachs.

Consumer discretionary stocks were under pressure, as Darden Restaurants (NYSE:DRI), the owner and operator of the Red Lobster and Olive Garden restaurant chains, plunged to the bottom of the S&P 500 after the company cut its fiscal 2012 earnings and sales guidance below consensus. Darden tumbled more than 12% in the session.

On the earnings front, Toll Brothers (NYSE:TOL), the luxury homebuilder, jumped 2% after posting better than expected quarterly results, as the cancellation rate dropped to pre-crisis levels. The company said it earned $0.09 per share, $0.03 better than consensus. And AutoZone (NYSE:AZO), the auto parts supplier, fell 0.4% after logging a new yearly high of $343.9. The company also reported earnings results that topped expectations.

Mid week, stocks closed higher after a late bid hit the market following a report that the G20 was considering a $600 billion IMF loan program facility for Europe, which will increase EU leaders options to tackle the debt crisis in the region. The IMF denied the report, but still shares were able to close in positive territory. Participants traded cautiously ahead of the EU summit and ECB meeting.

Retail was in focus after struggling retailer Talbots (NYSE:TLB) surged 80% after the company received an unsolicited letter from Sycamore Partners proposing to acquire all outstanding common stock for $3.00 per share. And Martha Stewart Living (NYSE: MSO) shares gapped up 25% on news the company has reached a strategic alliance venture with J.C. Penney (NYSE:JCP), where both the company will work together to innovate a unique and comprehensive retail experience featuring Martha Stewart products, know-how and advice, within J.C. Penny stores.

Once again reports during the late trading session helped the market spike up, enough to push the Dow and the S&P 500 to green territory, while the NASDAQ moved towards the unchanged line. According with a news report from Nikkei, the G20 is considering a $600 billion IMF loan program to Europe, which will help boost the firepower to contain the debt crisis in the region. Participants focused on the IMF lending possibility and shrugged off news that S&P placed its triple-A credit rating on the EU and some of the largest rated European banks on credit watch negative.

JPMorgan (NYSE:JPM) turned higher, closing with a 2.3% gain after the company’s CEO Jamie Dimon said at the Goldman Sachs Financial Services Conference that the bank expects a modest dividend increase next year and it is financially strong to buy back another $1 billion in shares despite expecting fourth-quarter investment bank revenue to be flat. Rival Bank of America (NYSE:BAC) gained close to 2% after trading as high as $5.92. Optimism over Europe finding a way to tackle the debt crisis also helped the space. BofA’s CEO Brian Moynihan also said in the same conference yesterday that the company’s investment banking results have improved from the third quarter, in which trading revenue dropped to $1.07 billion.

Citigroup (NYSE:C) edged higher after trading as low as $28.72, following news it will be cutting 4,500 jobs of its global workforce of about 267,000 employees. The lender said at the Goldman Sachs Financial Services Conference that it would take a $400 million charge this quarter to account severance and other expenses related to the layoffs.

On the flip side, the energy sector fell weighed down by bearish crude oil weekly inventory data. Halliburton (NYSE:HAL) tumbled another 6%, as the company responded to BP’s accusations that it had destroyed documents related to the test results of the cement work it perform at the Deep Horizon rig in the Macondo well.

Peabody Energy (NYSE:BTU), the coal producer with worldwide operations, was also under pressure in the session. The stock tumbled 3.4% after it was downgraded to a Neutral from Buy at Goldman Sachs and after it announced that it acquired 5.1% equity interest in Winsway Coking Coal Holdings.

Consumer discretionary also saw a bid, with Netflix (NASDAQ:NFLX), the video rental subscription service, rebounding sharply from the prior session. Netflix rallied 5.6%, as the company unveiled a new Xbox 360 experience, expanding Xbox support to Latin America. Also in the space, Amazon (NASDAQ:AMZN), the largest online retailer, jumped 1.7%, as Cannacord Genuity initiated its coverage on the stock with a Hold and a target price of $225 per share.

In the tech space, First Solar (NASDAQ:FSLR) rallied 4% after a unit of Warren Buffett’s Berkshire Hathaway, Mid American Energy Holdings, announced that it had agreed to buy First Solar’s $2 billion Topaz solar farm project in California, one of the biggest solar projects in the world.

Apple (NASDAQ:AAPL) slid 0.48% to $389.09, closing below its 50day moving average. The company fell despite Cannnacord Genuity bumping its iPhone shipment estimates to 30.5 million units, as its checks indicate strong global iPhone sales with Apple gaining share against Android in both the U.S. and Western Europe. The firm however cut its view of the iPad, saying it expects 13 million units to be sold in the holiday quarter, down from 14 million it previously expected.  The firm said that the lower numbers come as inventory is being drained on expectations of a new iPad in March and increased competition in the low-end side from Amazon’s Kindle Fire.

On Thursday, the market started in negative territory after a volatile morning, with futures moving on an encouraging weekly jobless claims report and after the ECB cut its interest rates by 25 basis points and the Bank of England left interest rates unchanged as expected. And after the ECB announced expanded liquidity measures for the region’s banks, with the Central Bank providing a lending facility of up to 3-years. However comments from ECB President Mario Draghi weighed on market sentiment, as it dismissed speculation of increase sovereign bond buying.

In Europe, stocks fell to a one-week low after participants were disappointed that the ECB didn’t provided an indication that it will step up and increase aggressively its bond buying program.

The decline accelerated in the final minutes of trading after reports that Germany had rejected some of the EU summit measures including giving a proposed permanent bailout fund a banking license and issuing common euro zone bonds.

All of the key S&P 500 sectors closed in negative territory. Big banks were under pressure following the European developments, with the Financial Select Sector SPDR (NYSE:XLF) slumping close to 4%.

JPMorgan (NYSE:JPM) tumbled 5%, breaking below its $33 level and posting the biggest decline in the Dow Jones Industrial Average. The company confirmed in a regulatory filing that it had increased its approved repurchases under its current $15.0 billion multi-year share and warrant repurchase program by $950 million.

Rival Bank of America (NYSE:BAC) was also at the bottom of the blue chip index. The stock lost 5% to $5.59 after trading as high as $5.88. Morgan Stanley (NYSE:MS), the operator of a global securities business, plunged to the bottom of the sector and the S&P 500, as shares tumbled 8.4%. Morgan had been under pressure in the last months on concern over its exposure to Europe and particularly French banks.

Energy was weaker as crude oil tumbled 2% to close pit trade at $98.1 per barrel. Halliburton (NYSE:HAL) was among the best performers in the sector, falling only 0.81% after Morgan Stanley named the stock a long Research Tactical Idea.

Meanwhile also in the blue chip index, McDonald’s (NYSE:MCD), the world’s largest restaurant chain, was the only component closing in positive territory. The stock traded as high as $98.92, a new all time high, after the company reported a jump of 7.4% in global comparable sales in November. McDonald’s said that the U.S. and Europe regions posted an increase of 6.5%, while Asia/Pacific, Middle East and Africa jumped 8.1%. Shares ended with a gain of 0.5% at $96.92.

Consumer discretionary stocks were also in focus following Costco (NASDAQ:COST) earnings results. The owner and operator of wholesale membership warehouses fell 2% after the company missed earnings expectations on revenues that were inline with consensus.

Also in the sector, Ford (NYSE:F), the Dearborn, MI based automaker, fell 3% to $10.75 on concern over its business exposure to Europe. The stock traded as low as $9.84 but was able to recover after the company for the first time in five years reinstated a dividend of 5 cents per share.

Technology fell 1.5%, but was able to outperform, as shares of Apple (NASDAQ:AAPL) shook off weakness and closed higher after Fortune Magazine name it as one of its favorite stocks for 2012 and after UBS bumped its estimates on the back of an increased iPhone shipment forecast The firm that has a target price of $510 in the stock said that it was increasing estimates through 2013 following comments from AT&T regarding record smartphone sales in the quarter, driven primarily by strong demand for Apple’s iPhone 4S.

At the end of the week, stocks rallied, closing near session highs and jumping for the second straight week. A better than expected consumer confidence report provided a boost to performance, amid apparent relief in the investment community over the plan that emerged from the EU summit aiming to tackle the debt crisis in the region.

In Europe, equity markets ended higher on hopes that the framework agreed on the Summit by 26 of the 27 nations in the European Union would be able to tackle the debt crisis. Leaders agreed towards stricter budget discipline and more fiscal integration, but doubts remain, as it was rejected by the U.K. and lacked immediate additional measures to contain the crisis.

Stocks were able to hold to gains and steadily advance through the session, closing near session highs, with all of the key S&P 500 sectors closing in positive territory. Industrials, energy, and financials logged the biggest gains, while consumer staples and utilities lagged.

Industrials garnered support, jumping to the top of the Dow Jones Industrial Average. Caterpillar (NYSE:CAT), the world’s largest earthmoving equipment maker, rallied 3.2% to $95.97; helping pared the weekly decline to 0.33%. Caterpillar added amid sector strength, Dollar weakness, and prospects of increased growth, as concern over the debt crisis in Europe eased.

General Electric (NYSE:GE), the diversified conglomerate maker of power turbines, was also a top performer in the Dow, with shares jumping 3.3% to $16.84. GE raised its quarterly dividend by 13.3% to $0.17 per share. The company has increased its dividend for the forth time in the last 2-years amid accelerating financial performance.

Banks saw outsized gains, lifting the financial sector higher. Regionals were of particular interest as Fifth Third Bancorp (NASDAQ:FITB) posted the biggest gain in the sector, as shares jumped 4.5% to $12.51. Fitch revised its outlook to Positive, while reaffirming the lender’s long and short term Issuer Default ratings.

Citigroup (NYSE:C) was one of the top performers in the sector, with shares rallying 3.68% to $28.77. Citi turned positive for the week, posting a gain of 2.1%. The company announced that it would cut 4,500 jobs earlier in the week. Rival Bank of America (NYSE:BAC) rebounded from its sharp loss in the prior session. The stock posted one of the biggest gains in the blue chip index.

In the material sector, DuPont (NYSE:DD), the U.S. third largest chemical maker, tumbled to the bottom of both the S&P 500 and the blue chip index, after the company cut its full-year earnings outlook, citing slower growth in several of its business amid global economic uncertainty.

Technology was also in focus after chipmakers Texas Instruments (NYSE:TXN) and Altera Corp. (NASDAQ:ALTR) cut their outlooks amid a slowdown in the majority of their businesses.

Texas Instruments, the maker of digital signal processing (DSP) and microcontroller (MCU) semiconductors, added 0.07% to $29.94 after trading as low as $28.50. The company lowered its fourth quarter guidance below consensus based on lower demand across a wide range of its markets, customers, and products, with the exception of its wireless products. Meanwhile Altera climbed 1.16% to $35.89 after trading as low as $33.84. The maker of programmable logic devices cut its revenue outlook for the quarter. Altera expects revenues in the quarter to drop 13 to 16% versus consensus for a drop of 9%.

And Apple (NASDAQ:AAPL) gained 0.76% to $393.62, trading above its 50day moving average, but underperforming both the S&P 500 and the technology sector. The company was in the news after it open its massive new retail store in Grand Central Station in New York and after the company appealed a Northern California judge's decision not to block Samsung Electronics from selling Galaxy smartphones and tablets in the U.S. market. Yesterday, Apple outperformed amid a selloff, as several brokerage houses bumped their iPhone shipment estimates following comments from AT&T that it expects record quarterly.