Stocks Jump for the Week on Economic Data (AAPL, BAC, FSLR, IBM, MU, ORCL, PHM, S, TRIP, VMW, XLF)

Published on Saturday, 24 December 2011 06:32 Written by TradersHuddle Staff

Weston, December 24^th (Tradershuddle.com) – Stocks jumped in the week after shaking off weakness at the start of the week amid concern over banks capital ratios and the ongoing euro zone debt crisis. Solid housing starts and better than expected German Business Confidence helped spark the rally after Monday’s sharp loss. The market received an additional boost from mostly better than expected economic data later in the week, which also help participants shift focus away from the EU debt crisis.

For the week, the blue chip index rallied 3.6%; the S&P 500 Index jumped 3.74% and the NASDAQ gained 2.5%.

At the start of the week, stocks closed with a sharp loss, as banking stocks got hammered once again, dragging the overall marker lower. Concern over capital requirements in Basel III amid a speech from the ECB President Mario Draghi, which failed to provide much support to address the debt crisis weighed on the sector and broad market sentiment. Jitters over uncertainty in North Korea following the death of their troubled leader also weighed.

Stocks traded with modest losses up to the start of the afternoon, however the downward pressure in financials and the lack of conviction from buyers, led for losses to accelerate. Most S&P 500 key select sectors and most of the Dow components closed in negative territory. Financials, materials, and energy posted the biggest declines, under performing the broad market index. Meanwhile, healthcare closed unchanged, while consumer staples ended with a modest loss.

The Financial Sector SPDR (NYSE:XLF) tumbled more than 2%, as big banks were hit hard amid the jitters from Europe, Basel III capital requirements worries, and mortgage woes. Bank of America (NYSE:BAC), the largest U.S. lender, tumbled 4.13% to $4.98, after posting a new multiyear of $4.92. The stock broke below the 5-handle; the level in which some funds might have limitations owning the stock. Concern over Europe coupled with ongoing worries over stage of the housing market in the U.S. spurred traders to move against the troubled sector and the bank.

Nomura trimmed its target price on Bank of America to $7, while it also cut its target price on Morgan Stanley (NYSE:MS) by 10% to $18. Shares of the operator of a global securities business tumbled 5.47% to $14.16, posting one of the biggest declines in the S&P 500, after trading as low as $14.03.

News of investors scrutinizing their holdings of JPMorgan mortgages also spurred the selloff in the sector, as participants were concern that JPMorgan will soon join Bank of America in the courts with a large putback mortgage liability. Shares of JPMorgan (NYSE:JPM) tumbled 3.73% to $30.70, breaking below calculated support at $30.83 and after trading as low as 30.42.

Both energy and materials fell despite some modest gains in crude oil and gold ending flat for the day. In the energy complex, natural gas resumed its downward trend, falling another 1%. The high beta name, Alpha Natural Resources (NYSE:ANR) led the declines in the sector. The stock was tumbled 7.24% to $18.20, breaking below calculated support at $19.17 and posting one of the biggest declines in the S&P 500.

Another notable mover in the energy sector was Diamond Offshore (NYSE:DO), the deep-water oil and natural gas driller, was falling 0.88% to $53.81 after it was downgraded to Underweight from Equal Weight at Barclays.

Technology also closed lower, largely inline with the broad market. Apple (NASDAQ:AAPL) was among the gainers in the sector amid on going analyst chatter regarding the need for Apple to start paying a dividend to spark momentum to the stock, which will attract value oriented investors. Shares added 0.31% to $382.21 as analysts have been making the case that Apple could easily afford to pay a 4 to 5% dividend yield without compromising cash flow to direct to R&D and other acquisitions. The cash balance is seen getting to a whopping $100 billion some time in the first of second quarter next year, with some speculating that it might be perhaps the milestone that could give management also some cover to announce the dividend. Last week the stock fell 3.2% despite more brokerage houses issuing bullish reports, like Morgan Stanley naming the stock a Long Research Tactical Idea and Ticonderoga saying that Apple had its best November on record, according to its internal sales barometer.

Semiconductors were under pressure after Xilinx (NASDAQ:XLNX), the advanced integrated circuits maker, lowered its third quarter revenue guidance below consensus. Shares lost 1.92% to $30.61 despite the company raising its gross margin guidance.

Advanced Micro Devices (NYSE:AMD), the world’s second largest chipmaker, tumbled 5.3% to $4.86 after trading as low as $4.82. AMD broke below calculated support at $5.01. And First Solar (NASDAQ:FSLR), the largest maker of thin film solar modules in the world, was under pressure in the session once again, tumbling 4.42% to $30.50 after posting a new multiyear low of $29.87. The company announced that it would focus on large-scale utility projects, as it named a new head for European sales.

On Tuesday, the market started with solid gains following positive news out of Europe and better than expected housing data. An upside surprise in German IFO figure and solid demand at a Spanish short-term bond auction helped sentiment early on, while a jump in both housing starts and building permits in November was able to help boost futures, with participants cheering the positive data out of housing.

In Europe, equity markets closed higher following the Commerce Department data in housing starts and building permits, which jumped 9.3% to the their highest level in one and a half years and above expectations. A decline in Spanish bond yields following solid demand at an auction helped improved confidence, which was already at an improved level following better than expected German business confidence.

Stocks were able to hold to gains and close near the session highs, with all of the 30 Dow components finishing higher and all of the S&P 500 key sectors ending with sharp gains. Energy was the leader, with the Energy Sector SPDR (NYSE:XLE) rallying 4.1% on the back of a jump in crude oil on hopes for higher global demand amid an improved economic picture and as the Dollar weakened on increased risk appetite. Crude oil surged as more than 3%, closing above $97 per barrel. Nabors Industries (NYSE:NBR), the land driller contractor, rallied 8.6%, posting the biggest gain in the sector. Nabors has calculated support at $16.04 and resistance at $19.01.

Financials staged a rebound after data pointed to a recovery in the housing sector and euro zone debt jitters eased. Regional banks had the biggest gains, trading at the top of the sector. SunTrust (NYSE:STI), the super regional banking holding company with operations in the Mid-Atlantic and the Southeast, rallied 6.8%, posting one of the biggest gains in the sector. Last week, UBS initiated its coverage on SunTrust with a Buy and a target price of $22, citing its higher-beta nature. The firm believes the upside potential significantly outweighs the downside risk.

JPMorgan (NYSE:JPM) also was able to benefit in the day, with shares jumping 4.9% to $32.21, posting one of the biggest percentage gains in the Dow Jones Industrial Average. Bank of America (NYSE:BAC), the largest U.S. lender with the biggest exposure in the mortgage area, also rebounded, as shares jumped 3.7% to $5.17 after trading as low as $5.04 and as high as $5.22.

Technology also traded higher after falling in 6 consecutive sessions. Apple (NASDAQ:AAPL) provided a boost to the space, as shares rallied 3.6%, breaking above its 50day moving average in the $391 area after the International Trade Commission ruled that some HTC smartphones that use the Google’s Android software infringe an Apple patent. Moreover, the U.S. trade agency banned the importation of the devices from the Taiwanese company into the U.S. The ruling could be a landmark that could help Apple in other cases against other Android bases smartphone makers. Apple is much more interested in halting sales of the products that infringe patents, especially into the U.S. market, rather than reaching a financial settlement. The heart of the disputes in this case were the technology that lets you tap your finger once on the touch screen to call a phone number that is written inside an e-mail or text message, and schedule a calendar appointment. A small but convenient feature for a smartphone, with the ruling actually having the potential to take this functionality out of Android based devices. Separately, according to Oppenheimer Verizon checks, the firm believes the company will sell 4.5 million iPhones in the quarter.

Also in the sector, Sprint Nextel (NYSE:S), the third largest U.S. wireless carrier, jumped more than 9%, following news that AT&T dropped its bid to buy T-Mobile, bowing to U.S. regulators that gave fierce opposition to the deal. Sprint posted one of the biggest gains in the S&P 500.

First Solar (NASDAQ:FSLR) rebounded sharply; rival Canadian Solar surged more than 33% after the company and TransCanada announced a sales agreement for 86MW Solar PV Project portfolio in Ontario, Canada. Just a week ago, analysts at UBS issued positive notes on the sector, stating that demand in Europe to remain fairly solid: from 21GW in 2011 to a 25GW in 2012.

Consumer discretionary stocks were also positive helping both the Dow and the S&P 500, following the improved housing start figures, which is a positive for the consumer. Homebuilders jumped on the data, with Pulte Group (NYSE:PHM) rallying 10.38% to $6.14, posting the biggest gain in the S&P 500. Home Depot (NYSE:HD), the largest home improvement retailer, received an outsized bid, with shares jumping 4.4%. Home Depot posted one of the biggest gains in the blue chip index, despite Collins Stewart initiating its coverage with a Neutral rating.

Mid week, stocks were able to pared most of their earlier losses to end mixed for the session. Weakness on technology shares following a earnings miss from tech bellwether Oracle, weighed on the market.

Most S&P 500 sectors closed in positive ground, with utilities, energy, consumer staples posting the biggest gains, while technology was the worst and only sector finishing in the red, losing more than 1%. The Utilities SPDR ETF (NYSE:XLU) jumped 1.5% to $35.53, closing at a fresh 3-year high and extending its gain to 14% so far this year.

The Southern Company (NYSE:SO), in which the ETF has the biggest allocation, climbed 0.97% to $45.86 after hitting an all-time high of $45.93 earlier in the session.

The energy sector was also an outperformer, as crude oil jumped above $99 per barrel following bullish inventory data. The fuel was able to move higher amid a climb on the Dollar, as the Energy Department reported a sharp drop in stockpiles.

Chevron (NYSE:CVX), the second largest U.S. energy producer, gained 1.7% to $105.43, as crude oil gained. The stock posted one of the biggest gains in the Dow Jones Industrial Average. Elsewhere in the space, BP plc (NYSE:BP) fell 0.36% to $41.74, despite higher oil prices, after the company announced its plan to close its solar power unit and quit the business entirely after 40 years, as the unit is unprofitable.

But the big story was technology and its underperformance in the day on concern over a potential global tech spending slowdown, as Oracle (NASDAQ:ORCL) disappointed investors with an earnings miss, citing lackluster software sales and declining hardware sales. The company also cited macro headwinds and that customers were canceling orders in an effort to cut costs. Shares of Oracle plunged to the bottom of the S&P 500, as shares tumbled 11.7% to $25.77, breaking below calculated support at $28.50 and trading very close to its yearly low.

The Oracle news pressured other software and enterprise technology companies. IBM (NYSE:IBM) tumbled 3.1% to $181.47, posting the biggest decline in the blue chip index. IBM had logged an all-time high of $194.90 earlier in the month, but shares were under pressure as Oracle was just the latest sign of a corporate tech spending slowdown.

F5 Networks (NASDAQ:FFIV), the application delivery networking Company, tumbled 6.64% to $102.13 on the Oracle news, breaking below its 50day moving average in the $103 area. The stock was upgraded to Outperform at Oppenheimer, while the firm set its target price at $125.

Apple (NASDAQ:AAPL) outperformed in the space, edging 0.13% higher. The stock closed at $396.45, just above it calculated resistance at $396.41. The stock was able to consolidate the prior session gains, in which Robert W. Baird also reiterated its Outperform rating and target price of $540.

In the financial sector, Bank of America (NYSE:BAC) also outperformed, with shares climbing 1.16% to $5.23. BofA had been trading near the unchanged line after the ECB loan auction improved the prospects for the European banking system, but was able to build on some gains on news that it settled a Department of Justice probe on its Countrywide unit. The Charlotte, NC based bank agreed to pay $335 million to resolve allegations that the unit engaged in discriminatory lending practices before it was purchase by Bank of America. The DOJ says it's the largest settlement in history over residential fair lending practices.

On Thursday, the market started in positive ground following mixed overseas performance and economic data, which included better than expected weekly jobless claims and worse than expected GDP revision.

Initial claims were 364,000 versus consensus of 380,000; while third quarter GDP was revised down to 1% from 2%. In Europe, equity markets gained after participants cheered mostly upbeat U.S. economic data, with banks moving higher a day after the ECB allotted 489 billion euros on cheap 3-year financing to the banking sector.

Most of the S&P 500 sectors gained, with financials, energy, and technology posting the biggest gains, while consumer staples fell. Big banks received a sharp bid, helping the Financial Select Sector SPDR (NYSE:XLF) to gain more than 2%.

Bank of America (NYSE:BAC) jumped 4.6% to $5.47, posting the biggest percentage gain in the Dow Jones Industrial Average. Rival JPMorgan (NYSE:JPM) gained 3.5% to $33.45, posting the second biggest gain in the blue chip company. And Morgan Stanley (NYSE:MS) also received a strong bid, posting the biggest gains in the sector. Morgan jumped 6.51% to $15.88, turning positive for the week.

In the technology sector, Akamai Technologies (NASDAQ:AKAM), the provider of delivery services for streaming media, surged to the top of the S&P 500 after the company announced it would acquire Contendo for $268 million.

Micron Technology (NASDAQ:MU), the dynamic random access memory chips maker, rallied more than 15%, as participants embraced the stock despite the company reporting a larger loss than expected on revenues that were short of expectations.

Apple (NASDAQ:AAPL) gained 0.53% to $398.55 after trading as high as $399.13 and closing above its calculated resistance at $396.41. A report from research firm Kantar Worldpanel ComTech showed that the device is actually feeling the impact from the struggles of the European economy, with market share slipping in both Germany and France. The report however confirmed strong sales of the iPhone 4S in Britain and the U.S., ahead of the holidays. According to the report, Apple's market share in the 12 weeks to end-November jumped to 36% in the United States from 25% a year earlier and in Britain to 31% from 21%. Also a German court rejected Apple’s claims that Samsung’s reworked Galaxy tablet still was a copycat from its iPad device. Samsung had to rework its Galaxy tablet after previously a court in Germany issued a sale ban on the device ruling in favor of Apple. Both Apple and Samsung are involved in a patent war worldwide, with about 30 legal cases in 10 different countries.

Also in the sector, Juniper Networks (NYSE:JNPR), the provider of Internet infrastructure solutions, rallied 6.68% to $20.75 after it was upgraded to Outperform from Market Perform at BMO Capital. And VMware (NYSE:VMW), the provider of virtualization software solutions, gained 5.61% to $81.16 after it was upgraded to a Buy from Hold at Wunderlich. The firm set its target price at $95 and said that yesterday’s 10% pullback on sympathy to Oracle’s disappointing results and outlook created a compelling entry opportunity for long-term investors. Meanwhile, Ticonderoga initiated its coverage on the stock with a Neutral rating, given its current valuation and concerns over 2012’s economic backdrop.

Elsewhere, Bed Bath & Beyond (NASDAQ:BBBY), the home furnishings retailer, tumbled 6.27% to $52.58, closing below calculated support at $61.15 despite the company posting better than expected earnings on revenues that were inline with consensus.

At the end of the week, Stocks gained, with the S&P 500 closing higher for the 4^th consecutive session and turning positive for the year. Better than expected economic data in the U.S. helped once again to shift focus away from the euro zone debt crisis woes.

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.

The market started with gains despite futures pulling back from their earlier highs following mixed U.S. economic data. While November Durable Goods Orders were better than expected, excluding aircraft orders, the durable orders were not as strong as the headline figures that were reported and as personal spending was weaker than expected.

The Consumer Discretionary SPDR ETF (NYSE:XLY) jumped more than 1% to $39.18, as the sector received a lift from TripAdvisor (NASDAQ:TRIP). Shares of TripAdvisor, the travel reference site and recent spinoff from Expedia (NASDAQ:EXPE) surged to the top of the S&P 500. Shares of TripAdvisor jumped 6% to $26.02, while shares of Expedia rallied 3% to $30.04. UBS initiated its coverage on TripAdvisor with a Neutral rating.

Technology was also an outperformer, with VMware (NYSE:VMW), the provider of virtualization software solutions, rallying 3%, extending its rebound from the recent selloff on the back of the disappointment from Oracle’s results. The ISI Group defended VMWare amid the recent pullback.

Apple (NASDAQ:AAPL) gained 1.20% to $403.33, as the stock reclaimed the $400 level. Susquehanna bumped its iPhone shipment estimates to 30.3 million from 27.1 million. The firm cited strong iPhone 4S demand. Susquehanna reiterated its Positive rating for Apple, saying that strong holiday sales of the company's iPad tablets as well as new product launches such as the iPhone 5 and iPad 3 will be significant positive catalysts to the stock. Apple gained 5.86% for the week.

Elsewhere in the session, Bank of America (NYSE:BAC) jumped 2.4%, extending its sharp rebound from the multiyear low of $4.92. BofA jumped 2.4% to $5.60, posting the biggest percentage gain in the Dow Jones Industrial Average. The stock jumped 7.7% for the week.

And United Continental (NYSE:UAL), the owner of the world’s largest airline, fell 2% to $19.85 after trading as low as $18.40. Ticonderoga slashed its fourth quarter estimates to below consensus following fourth quarter guidance. The firm cut EPS estimates to $0.16 from $0.43 versus consensus of $0.49. Ticonderoga maintained its Buy rating, as it like’s the long-term story; however it cut its target price to $32 from $33.