Stocks Had Difficult Week Amid EU Jitters (AAPL, AMZN, BAC, BBY, FDX, FSLR, NEM, JOY, RIMM, SBUX, ZNGA)

Published on Saturday, 17 December 2011 09:05 Written by TradersHuddle Staff

Weston, December 17^th (Tradershuddle.com) – Stocks struggled in the week after speculation over possible downgrades of triple AAA countries in the euro zone, spurred a sharp decline of the euro through key technical levels and as weak Chinese data sparked renewed fears over global growth. Economic data in the U.S. was mixed, with retail sales coming short of expectations, while weekly jobless claims slid to a three and half year low and manufacturing survey data points came well above expectations. Commodities saw sharp corrections, with both Gold and Crude oil breaking below their 200day moving averages.

For the week, the blue chip index slumped 2.61%; the S&P 500 Index lost 2.83% and the NASDAQ tumbled 3.46%.

At the start of the week, stocks closed off their lows thanks to a late bid, but still finished with sizeable losses after weak Chinese exports data spurred global growth concerns, amid increased doubts over the EU deal which was reached last week.

Stocks were able to close off the lows of the session, thanks to a late bid, but still the market booked a sizeable loss and a broad based decline, with all of the key S&P 500 sectors components closing in negative territory.

Material stocks felt the impact of lower metal prices as the Dollar strengthened on concerns about the euro zone and poor Chinese data. Gold closed lower by 2.8%; while silver tumbled more than 3%

Steelmakers, with their high beta, were under assault on concern over global demand. AK Steel (NYSE:AKS) was the worst performer in the space. AK Steel tumbled more than 5% to $8.15. Alcoa (NYSE:AA), the aluminum producer, lost 3% to $9.35, closing below its calculated support at $9.42 and posting one of the biggest declines in the Dow Jones Industrial Average.

Freeport McMoRan (NYSE:FCX), the world’s largest publicly traded copper producer, tumbled 3% on lower copper prices, spurred on concern over global demand. Chinese trade data showed that imports for copper in particular jumped close to 18%, the most since March 2010; however exports from the world’s second largest economy fell to their lowest level since March 2009. And Newmont Mining (NYSE:NEM), the largest gold producer, fell 2.5%, as gold prices broke below the key support level of $1680 per ounce.

M&A in the space limited some of the declines in the sector, as Vulcan Materials (NYSE:VMC), the construction aggregates maker, surged to the top of the S&P 500 Index after rival Martin Marietta (NYSE:MLM) proposed a takeover of the company in a stock for stock exchange. Shares of Vulcan Materials surged 15.4%, while Martin Marietta gained just under 2%.

Financials were also hit amid European jitters, with banking shares posting sizeable losses. Bank of America (NYSE:BAC), the largest U.S. lender, tumbled 4.7% to $5.45, posting the biggest decline in the blue chip index and closing below calculated support at $5.53, last week’s low. Rival Citigroup (NYSE:C) plunged 5.4% to $27.22, closing below calculated support at $27.41, and posting one of the biggest declines in the sector and the banking sector.

Technology was also under pressure following the lower guidance from Intel (NASDAQ:INTC). Shares of the world’s largest chipmaker tumbled 4%, posting one of the biggest declines in the blue chip index.

Apple (NASDAQ:AAPL), the maker of iPads and iPhones, fell 0.45% to $391.84, closing above its 50day moving average and outperforming the broad market index. The stock received a boost by Ticonderoga saying that Apple had its best November on record, according to its internal sales barometer. The firm said sales in November jumped 17% month over month, well above the average increase of 2% month over month. Last week, Citigroup reiterated its Outperform rating and $500 target price on Apple, as new production plan for the iPhone 4S is now well above the low 30 million unit figure, leading the firm to believe that Apple will have a significant upside surprise in iPhone shipments.

Also likely providing some support to Apple were some negative reports on the Amazon’s Kindle Fire, which has been seen as the iPad’s main rival due to its cheaper price point and ecosystem offering.

Amazon (NASDAQ:AMZN), the largest online retailer, fell 1.8% to $189.52, closing just above its calculated support at $189.12 after trading as low as $187.63. commScore reported that U.S. online holiday spending is up so far 15% year over year, approaching $25 billion. However the stock under performance didn’t weigh down much on the consumer discretionary sector, which was the best performance sector in the session.

Meanwhile, Netflix (NASDAQ:NFLX), the online video subscription service, surged over 6% to $75.26, bouncing back from its recent lows amid speculation the company could be a takeover target from the likes of a communication company like Verizon or even Amazon.

On Tuesday, the market started with modest gains, following European trade, after a good showing for Spanish bonds. Participants were mildly disappointed after weaker than expected U.S. retail sales for the month of November, where the record sales over the Thanksgiving weekend were not able help move the monthly figures above expectations.

The upside momentum ahead of the Fed took stocks to sizeable gains, with the broad market index trading near its resistance level, which in conjunction with the euro breaking below the $1.31 level spurred a pullback that accelerated after the FOMC statement failed to spur excitement amid the investment community. Participants had speculated that the Fed might provide additional hints of a consideration to further quantitative easing.

Most of the S&P 500 sectors closed in negative territory, with only the utilities sector ending in positive territory.  Consumer discretionary, materials, and financials posted the biggest declines, while energy had a big swing from gaining more than 1% at the highs of the session to end with nearly a 1% loss.

Discretionary stocks were the weakest, with retailers getting hit particularly hard after the weaker than expected retail sales data in the U.S. suggested that the record sales over the Thanksgiving weekend were likely short lived. The sector was under heavy pressure following the earnings miss from Best Buy (NYSE:BBY). The electronics retailer tumbled to the bottom of the S&P 500 after it missed earnings expectations by $0.05 per share on revenues that were inline with expectations, as margins suffered amid deep discounting, as the retailer fends off fierce competitions from online giant Amazon.com.

Shares of Amazon (NASDAQ:AMZN) also suffered, falling 4.75% to $180.51, as Goldman Sachs resumed its coverage on the stock with a Neutral rating. But not all was weakness in the retail space, as Urban Outfitters (NASDAQ:URBN) surged to the top of the S&P 500 Index. The owner and operator of Urban Outfitters and Anthropologie retail chains jumped more than 5% after on a regulatory filing, the company disclosed comparable retail sales were tracking better than expected.

Also in the discretionary space, both McDonald’s (NYSE:MCD) and Starbucks (NASDAQ:SBUX) slumped after posting new all time highs. McDonald’s fell 0.5% after trading as high as $98.95, while Starbucks lost 0.9% after trading as high as $45.

In the energy sector, crude oil settled higher by 2.4% at $100.14 per barrel after a surge on news that the Iranian military shut the Strait of Hormuz for exercises. Marathon Oil (NYSE:MRO) posted the biggest gains in the sector, jumping 1.2% to $27,64 after it was upgraded to a Buy at Deutsche Bank.

In the technology space, Apple (NASDAQ:AAPL) fell 0.77% to $388.81, closing below its 50day moving average. The stock fell amid speculation that it was considering making a bid for Israel's Anobit, a maker of flash storage technology, for as much as $500 million. Anobit’s technology is already on Apple’s devices, but the tech giant is interested in the technology to increase and enhance the memory volume and performance of its devices, as it may as much as double the memory volume in the new iPads and MacBooks. Bernstein reiterated Apple as its Top Pick with a target price of $575, saying the market has been overly pessimistic on the stock in the recent weeks.

Elsewhere, Pfizer (NYSE:PFE), the world’s largest pharmaceutical company, gained 1.8% to $20.76, logging the best gain in the blue chip index, as shares continued to rect to the announcement of a new 10 billion share repurchase program and a dividend increase.

Also in the Dow, DuPont (NYSE:DD) fell 0.96% to $43.49 after trading as high as $45 after the company reaffirmed its 2012 outlook for 7 to 12% earnings and revenue growth. DuPont just last week had lowered its fourth quarter and full year 2011 revenue guidance, citing economic uncertainty.

Mid week, stocks tumbled amid worries over the European debt crisis, which spurred a drop in the euro and a sell off in the commodities space, with both crude oil and metal prices getting hit hard. Speculation over a possible downgrade to France’s AAA credit rating coupled with the lacked of news flow from the U.S. weighed on trade, sending shares lower for the third straight session.

In Europe, equity markets closed at 2-week lows after losses accelerated through the session amid speculation of the possible downgrade to France’s AAA credit rating and as the euro continued to weaken below key levels on concern the euro zone debt crisis will impact growth in the region and globally.

All of the S&P 500 select sectors closed in negative territory, with energy, technology, and materials underperforming the broad market index, while healthcare and financials posted the smallest declines The Energy Sector SPDR ETF (NYSE:XLE) slumped 2.8% amid a plunge in crude oil.

Chevron (NYSE:CVX), the second largest U.S. energy producer, tumbled 3% to $100.53, while it posted the second biggest percentage decline in the Dow Jones Industrial average. Chevron declined after crude oil was pressured by a slumping euro and by news that OPEC set a production target inline with current production, without clear mechanism to defend pricing levels. The fuel tumbled more than 5%, breaking below key technical levels and settling pit trade at $94.95 per barrel. A weak weekly inventory reading also weighed on the prices.

Materials were also weaker on Dollar strength. Metal prices were crumbled, with precious metals also seeing outsize losses. Gold futures tumbled more than 4%, closing below its 200day moving average for the first time since 2009, while silver plunged 7.6% to $28.86 per ounce. Copper was also dropped close to 5%. In the miner space, Newmont Mining (NYSE:NEM) lost 2.4% to $61.62 after trading as low as $60.84 on the lower prices for the bullion.

In the AG space, Agrium (NYSE:AGU) fell 1% slightly better than the broad market decline. The board of Directors approved quadrupling its semiannual cash divided to $0.225 per share. The company’s Board also approved a substantial Potash expansion to increase annual production capacity by approximately 50%, bringing total annual nameplate capacity to three million tons. Rival Mosaic (NYSE:MOS) was the worst performer in the sector, tumbled 4% on the news.

Technology weighed on the NASDAQ and the broad market due to its weighing. First Solar (NASDAQ:FSLR), the largest maker of thin film solar modules in the world, plunged to the bottom of the S&P 500 after it lowered its sales guidance for 2011 and issued 2012 guidance below consensus. The stock tumbled 21.42% to $33.45 after trading as low as $33.08, a new multiyear low. The company said that continued delays of certain projects in First Solar’s systems business due to weather and other factors was impacting its 2011 results.

Apple (NASDAQ:AAPL) fell 2.22% to $380.19, closing below its 20day moving average at $386.76 and logging a new low for the month at $377.68. Concern over retail sales not being as strong as expected, coupled with worries over global growth weighed on sentiment in the stock that has calculated support at $363.32 and resistance at $396.41.

On the flip side in the sector, Broadcom (NASDAQ:BRCM) gained 0.92% to $28.45, after trading as high as $30.17. The stock traded as low as $28.19, near its 52-week low of $28.05. The company said that it sees fourth quarter revenue at the high end of the prior guidance, which would be above consensus.

In the industrial sector, Joy Global (NYSE:JOY), the underground and surface mining equipment maker, plunged more than 10% posting one of the biggest declines in the broad market index. Joy disappointed with its quarterly results of EPS of $1.82 and inline revenues, while issuing cautious 2012 guidance that was inline with consensus.

Financials were not able to hold to its advance after the sector attempted to post gains in the session, but ended 0.4% lower. JPMorgan (NYSE:JPM) turned higher, climbing 0.70% to $31.51, posting one of the biggest percentage gainers in the Dow. Meanwhile, Bank of America (NYSE:BAC) fell 1.7% to $5.23 after trading as low as $5.20, a new December low.

On Thursday, the market started with strong gains following improved economic data in the U.S., as U.S. jobless claims dropped to a three and half year low and the New York Fed's Empire State manufacturing survey hit its highest level since May.

Also the Philadelphia Fed’s Business Outlook for December surprised sharply to the upside well above expectations. A decline in industrial production and a surprising rise in November PPI tempered some the improved sentiment.

In Europe, equity markets snapped their losing streak, closing higher after better than expected economic data in the U.S. helped shift the focus away from the region’s debt crisis woes. Banks saw some pressure, particularly French banks, after Fitch ratings downgraded the credit rating of 5 major European financial institutions, including Credit Agricole, which fell more than 4% after its rating was cut to A-plus from AA-minus.

Stocks were able to hold to gains after the rally lost some steam in afternoon trading, logging their first positive day of the week. At session highs the market was as high as 1%. Most of the S&P 500 sectors closed with gains, with utilities, consumer staples, and healthcare posting the biggest gains, while energy and technology fell.

Energy stocks were once again under pressure, as crude oil continued its slide, closing below $94 per barrel. Natural gas settled lower by 0.4% at $3.13, prices Futures gapped up following this morning’s inventory data, which came in more or less in-line with expectations.

Industrials saw support in the session after FedEx (NYSE:FDX), the worldwide express package delivery Company, surged 8% after the company posted better than expected earnings results on largely inline revenues. FedEx also reaffirmed its fiscal 2012 EPS guidance, while providing inline guidance for the current quarter. The stock closed below FedEx has calculated resistance at $84.66.

Earnings from FedEx, which were boosted by strong growth in online shopping, helped boost retailers and consumer stocks. Amazon.com (NASDAQ:AMZN) gained 0.6% after saying that it sold 1 million of its readers and tablets in each of the past three weeks. The Kindle Fire tablet has been the top product on Amazon.com since its introduction 11 weeks ago. Morgan Keegan initiated coverage in the stock with Outperform and a target price of $210.

Also in the space, Michael Kors Holdings (NASDAQ:KORS), the designer and marketer of high fashion apparel and accessories, made its debut on the NASDAQ after it priced its IPO at $20 per share, above the expected range of $17 to $19. The company raised $950 million on the sale of 47.2 million shares, valuing the company at about $3.8 billion. Shares of Michael Kors soared 21% to $24 after trading as high as $25.23.

Participants embraced defensive sectors like consumer staples and healthcare, with Aetna (NYSE:AET), the diversified health care benefits company, jumping close to 2% to $40.05 after it provided a bullish outlook. The company bumped its estimate for 2011 and 2012 operating earnings per share. Aetna also said it re-purchase 40 million shares through last week.

Technology stocks fell despite the M&A in the semiconductor space. Novellus (NASDAQ:NVLS), the equipment maker used for chips manufacturing, surged to the top of the S&P 500 after it agreed to be acquired by Lam Research (NASDAQ:LRCX), the maker of semiconductor processing equipment, in an all-stock transaction valued at $3.3 billion, or about $44.42 per share. Shares of Lam Research tumbled 8%, as investors failed to show much enthusiasm in the deal. Novellus rallied 16.3% to $40.37 after trading as high as $42.50.

First Solar (NASDAQ:FSLR) continued its slump, with shares tumbling another 6%, posting the biggest decline in the sector. First Solar logged a new multi-year low of $30 after it was downgraded to a Neutral from Outperform at Robert W. Baird, while slashing its target price to $35 from $80.

Apple (NASDAQ:AAPL) lost 0.33% to $378.94, under performing in the session after trading as high as $383.74. According to reports in Israeli media, Apple will open an R&D center in Israel that will focus on semiconductors.

At the end of the week, stocks closed on mixed trade in a session in which earlier gains faded into afternoon trading ahead of a quadruple expiration of options and futures contracts. Fitch warning on European countries weighed somewhat on sentiment, capping any upside move.

In Europe, equity markets turned negative and closed lower, logging their worst weekly performance since November. The speculation over possible credit rating downgrades over the weekend weighed on sentiment.

Most S&P 500 sectors ended in higher ground, with energy, materials, and industrials posting the biggest gains, while defensive sectors like healthcare and consumer staples lagged, closing in negative territory. The Energy SPDR ETF (NYSE:XLE) jumped more than 1% after crude oil stabilized, with prices ticking higher just above $94 per barrel.

The sector also received a boost from shares of Cameron International (NYSE:CAM). The oil and gas pressure equipment maker rallied 6%, posting one of the biggest gains in the S&P 500 Index. The company agreed to pay BP $250 million as part of an agreement in which BP will indemnify for current and future compensatory claims associated with the Deepwater Horizon accident that caused the oil spill in the Gulf of Mexico.

Chevron (NYSE:CVX), the second largest U.S. energy producer, was another notable mover in the space, with shares climbing 1.2% to $100.86. Chevron posted one of the biggest gains in the Dow Jones Industrial Average for the session. Chevron ended the week down 3.25%.

Material stocks received a boost from higher metal prices. High beta steelmakers were at the front of the pack. AKS Steel (NYSE:AKS) jumped 2.59% to $7.52, posting the biggest gain in the sector. AK Steel was upgraded to Outperform from Market Perform at Wells Fargo. Meanwhile, U.S. Steel (NYSE:X) gained 2.21% to $25.87 after trading as high as $26.20. U.S. Steel ended the week with a 5.9% decline.

Consumer discretionary stocks closed flat. Home Depot (NYSE:HD) provided upside momentum to the sector and the Dow Jones Industrial average. Shares of Home Depot jumped 2.5% to $40.42, posting the biggest percentage gain in the blue chip index on trading volume that was well above average, with 20.19 million shares exchanging hands. Home Depot closed the week 0.5% higher.

But Cablevision (NYSE:CVC), the telecommunications, media and entertainment company owner of the AMC cable programming network, plunged to the bottom of the S&P 500 after the stock was downgraded to Underperform from Neutral at Robert W. Baird. The company also announced that its COO would resign. Shares of Cablevision tumbled 8.5% to $12.75 after logging a new yearly low at $11.57.

In the technology space, IBM Corp. (NYSE:IBM) saw weakness, which weighed heavily in the blue chip index, due to its weight in the Dow. IBM fell 2.1% to 183.57, closing below its 50day moving average at $185.50. IBM posted an all-time high of $194.90 last week.

Also in the space, Research In Motion (NASDAQ:RIMM) plunged 11% after logging a new multiyear low of $13.12. The company disappointed investors further after it posted a 27% drop in quarterly profit on declining revenue. RIM provided a dismal outlook, forecasting shipments of 11 to 12 million Blackberrys in the quarter, while delaying the arrival of its new smartphone until late in 2012.

Rival Apple (NASDAQ:AAPL) climbed 0.55% to $381.02, still closing below its key 20day and 50day moving averages. The tech giant will likely reclaim the title of the world’s largest maker of smartphones, as analysts expect that thanks to the strong demand of the iPhone 4S, the company could sell north of 30 million units this holiday quarter. The delay on the new smartphone at RIM will surely benefit Apple, as the company will be able to solidify its entry into the business arena. Apple closed the week with a loss of 3.2%.

On the flip side, Adobe (NASDAQ:ADBE), the document and media software publisher surged more than 6% to $28.20, posting the biggest gain in the S&P 500 and closing very close to calculated resistance at $28.18. Adobe said that for its fiscal fourth quarter earnings were better than expected on revenues that climbed 14.4% year over year to $1.15 billion. Adobe also issued inline guidance for the current quarter, while for fiscal 2012 the company said it expects earnings in line with consensus on revenues that are above expectations.

Elsewhere, Zynga, Inc. (NASDAQ:ZNGA), the social game developer of popular games like Farmville and Mafia Wars, made its debut in the NASDAQ, flopping. The stock tumbled 5% to $9.50 after its IPO priced at $10 per share, at the high end of the expected range of $8.50 to $10 per share. The 100 million shares IPO raised $1 billion for the company. Sterne Agee actually initiated coverage ahead of the IPO with an Underperform rating and a target price of $7. Zynga traded as high as $11.50 and as low as $9.