Stocks Cap Volatile Year with a Weekly Loss (AAPL, AMZN, BAC, GOOG, MCD, MJN, NFLX, SHLD, XLF, XLU)

Published on Saturday, 31 December 2011 07:26 Written by TradersHuddle Staff

Weston, December 31^st (Tradershuddle.com) – Stocks fell for the week amid thin trading volume and anemic news flow, which included some encouraging economic reports in the U.S. and decent Italian bond auctions that helped eased jitters in Europe surrounding Italy’s funding needs over the next few months. The week also brought weaker than expected Chinese PMI, which highlighted the slowdown in the Chinese economy. The week capped a volatile year, which was dominated by news of the European debt crisis, natural disasters, sovereign credit rating downgrades, including the first ever U.S. downgrade that resulted after the lack of leadership and political brinkmanship in Washington, preventing politicians to come up with a sensible plan to address the U.S. ballooning debt problem.

For the week, the blue chip index fell 0.62%; the S&P 500 Index slid 0.61% and the NASDAQ lost 0.52%.

And for the year, the Dow closed with a 5.5% gain, while the NASDAQ lost 1.8% and the S&P 500 ended near the unchanged line.

At the start of the shortened holiday week, stocks ended narrowly mixed in a thinly traded lackluster session. The broad market and the blue chip indexes closed near the flat line. The U.S. economic data was mixed, while European jitters continued ahead of a year-end debt auction in Italy.

In the S&P 500 Select Sectors, utilities, consumer discretionary, and energy posted the biggest gains, while financials, industrials, and materials fell. The Utilities Sector SPDR (NYSE:XLU) gained 0.8%, as participants embraced the defensive sector on a day with housing prices falling more than expected, while consumer confidence figures were better than expected. Xcel Energy (NYSE:XEL) was the best performer in the sector, with shares climbing 1.54% to $27.62, after logging a new 52-week high at $27.70.

Consumer discretionary stocks were also amid the outperformers for the session, particularly helped by the upside move on gaming related stocks. International Game Technology (NYSE:IGT), the maker of casino gaming computerized systems, jumped to the top of the sector, with a 4.95% gain to $17.37. The Department of Justice reversed on previous policy that included civil and criminal charges against operators of some of the most popular online poker sites. The decision, which was made public last Friday clears the way for individual states to legalize online Poker and other online betting that can help them generate billions in tax revenue and spur web-based gambling. Wynn Resorts (NASDAQ:WYNN), the luxury casino operator, also benefited in the session, with shares jumping 3.21% to $113.53.

Also to the upside in the sector were shares of The Gap (NYSE:GPS). The owner and operator of specialty retailers like Banana Republic and Old Navy, climbed 2.42% to $19.06 on the back of the consumer confidence figures and an Barron’s article over the weekend, stating the potential for a rebound in the company’s business.

On the flip side, Sears Holdings (NASDAQ:SHLD) plunged to the bottom of the S&P 500 and the NASDAQ-100 following a negative update on same store sales and the announcement that it will close 100 to 120 Sears and Kmart stores. The stock got hammered; tumbling 27.2% to $33.38, posting a new multiyear low at $33.26 after the company said that said that quarterly comparable stores sales fell 5.2%, while yearly comparable store sales declined 2.6%. According to the data, Sears Domestic saw the sharpest declines, as the company was seeing a difficult economic environment for big-ticket items.

Energy received a lift from higher crude oil prices, which closed above $100 per barrel for the first time in 2 weeks, as the fuel received a bump from an Iranian threat to block the flow of crude through the straight of Hormuz and on a weaker greenback. Tesoro (NYSE:TSO), the crude oil refiner based in San Antonio Texas, gained 2.16% to $24.09, posting the biggest gain in the sector, while Chevron (NYSE:CVX) gained 0.4%, posting one of the top advances in the Dow Jones Industrial Average.

Financials were under pressure; following euro zone jitters ahead of a key Italian bond auction late in the week. Bank of America (NYSE:BAC), the largest U.S. lender, tumbled more than 2% to $5.48, giving back some of its sharp gains from last week. A Reuters report speculating that the Charlotte, NC based lender was contemplating selling more assets to shore up capital weighed on the sector.

And after trading as high as $409.09, Apple (NASDAQ:AAPL) helped the tech sector, as shares climbed 0.8% to $406.53. Last week 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, while Barclays said that a potential dividend, the release of the iPad 3, the iPhone 5, and a possible Apple TV could be the key catalysts for the stock in 2012.

Elsewhere, Mead Johnson (NYSE:MJN), the maker of nutritional products for infants, children, and expectant and nursing mothers, rallied 5.8% to $69.08, following an appearance from a company representative on CNBC announcing that its products are safe, even as health officials continue their investigation following the death of an infant. The maker of Enfamil baby formula logged the biggest gain in the S&P 500, rebounding from its sharp loss last week.

Mid week, the market started with modest gains amid light pre-market trading and mixed overseas performances. A successful Italian bond auction that halved the short term bond yields helped sentiment and bode well for tomorrow’s key auction of long-term debt. 

In Europe, equity markets closed mixed in another low trading volume session, as the boost received from a successful Italian short-term debt auction faded. The sharp drop in short-term bond yields in Italy eased some jitters ahead of a long-term bond sale the country is holding tomorrow.

The light news flow coupled with low trading volume and a drop in the euro below $1.30, pushed stocks to sell off sharply into the afternoon, and with the broad market index falling into negative territory for the year and closing near the session lows. All of the S&P 500 sectors closed in negative territory, with materials, energy, and financials posting the biggest declines, while utilities and consumer staples closed with modest losses. The Materials SPDR ETF (NYSE:XLB) slumped 2.4%, as stocks in the sector were impacted by lower prices in the underlying commodities, as the euro fell on debt crisis jitters.

Cliffs Natural Resources (NYSE:CLF), the diversified mining and natural resources Company, tumbled 4.6%, as it posted the biggest percentage decline in the sector. Closely following the declines in the sector, Freeport McMoRan (NYSE:FCX) fell 4.1% to $36.31. The world’s largest publicly traded copper producer tumbled as copper reversed earlier gains and fell more than 1.4% in the session, as impact from the euro along with jitters on future demand took a toll.

In the energy sector, performance was also impacted by the weak euro and the drop in crude oil prices, which closed below the $100 per barrel, as the Iranian threat of stopping oil flows through the straight of Hormuz had less weight on trading, as Saudi Arabia said that it stands ready to deliver more oil in case of disruptions.

Tesoro (NYSE:TSO), the crude oil refiner based in San Antonio Texas, tumbled 4.2% to $23.07, reversing from the prior session gain of 2% and posting the biggest decline in the sector and one of the biggest drops in the S&P 500. Earlier in the month, Morgan Stanley named the stock a Short Research Tactical Idea, while Credit Suisse downgraded the stock to a Neutral from Outperform.

Chesapeake Energy Corporation (NYSE:CHK), the onshore natural gas and oil producer, lost 3.66% to $22.66 despite Robert W. Baird reiterating its Outperform rating, citing a compelling risk/reward profile.

Financials were also under pressure amid the euro zone jitters. Bank of America (NYSE:BAC), the largest U.S. lender, tumbled 3.56% to $5.28, closing near session lows of $5.27. Concern over figures showing that bank deposits at the ECB were at record highs, along with concern over the Italian bond auction tomorrow weighed on the sector. Bank of America posted the biggest decline in the blue chip index.

The top decliner in the financial sector was American International Group (NYSE:AIG). The insurance company fell 3.6% to $22.97 after a federal judge approved the company’s $450 million workers comp settlement. Rival insurers had accused AIG of underreporting premiums on workers compensation policies, allowing the company to make lower contributions to state insurance pools, which some states require in order for the company to sell workers com insurance policies.

In tech land, Google (NASDAQ:GOOG) outperformed, ending near the neutral line at $639.70 after the stock posted a new 52-week high of $645 in the session. A report on Google’s social network venture, Google+ stated that it now has about 64 million users and grew 24% month over month. Google’s social network pares in comparison to Facebook more than 800 million users. Yesterday, Goldman Sachs bumped its target price to $685, citing accelerating global query growth.

Apple (NASDAQ:AAPL) fell 0.96% to $402.64 after trading as high as $408.25. Tuesday on the Fast Money program at CNBC, Mark McKechnie, an analyst with Think Equity, said the two main drivers in 2012 for Apple will be the iPhone5, which comes out in mid-year, and the iTV, which he said could greatly increase the company's earnings power. Some speculate that the iTV launch would be sometime in the summer, however Fast Money trader Scaramucci doesn't think the iTV will have the same revolutionary impact of Apple's prior big hits, predicting a shaky year for the stock amid more competition from rivals.

And also in the sector, Sprint (NYSE:S), the owner of the third largest wireless carrier, fell 1.72% to $2.28 after trading as high as $2.34. Last week, JPMorgan said that it believes that the company’s postpaid adds in the fourth quarter will be weaker than consensus due to heavy competition and higher than expected involuntary churn. For the year, the stock has tumbled 46% on concern over margins after the iPhone deal with Apple and the amount of debt the carrier has piled, as it continue to spend on building out new 4G LTE infrastructure.

On Thursday, stocks gained, ending near session highs and with the S&P 500 turning once again positive for the year. The market climbed steadily following a decent Italian bond auction and encouraging U.S. economic reports, which helped the euro pared earlier losses that took it to trade near 1-year lows versus the Dollar.

In Europe, equity markets closed higher amid anemic trading volume after better than expected pending home sales data, which showed November sales hit a 19-month high and as weekly jobless claims remained below the key 400,000 level. Italian bond yields slipped following a decent long-term sovereign debt auction, which helped eased jitters despite the euro dropping below the $1.29 level against the Dollar.

Stocks were able to hold to gains and actually move steadily higher as the session progressed, leaving the Dow on track to post another monthly gain. All of the S&P 500 sectors ended with solid gains, with financials, materials, and industrials posting the biggest gains, while consumer staples and healthcare logged the smallest advances.

Big banks received a sharp bid, helping the Financial Select Sector SPDR (NYSE:XLF), which rebounded 1.6%. A drop in Italian yields; weekly jobless claims below 400,000, and pending home sales at a 19-month high contributed for banks to stage a rally and led the advance. Bank of America (NYSE:BAC), the largest U.S. lender, jumped 3.31% to $5.46, posting the biggest percentage gain in the Dow Jones Industrial Average. Rival Citigroup (NYSE:C) gained 2.41% to $26.76, trimming its year to date decline to 43.42.

The improved picture in housing not only helped financials, but also homebuilders and housing related stocks, which posted solid gains. PulteGroup (NYSE:PHM), the Michigan based homebuilder, rallied 6.1% to $6.31, posting one of the biggest gains in the S&P 500 and the top performer in the consumer discretionary sector.

In the industrial sector, housing related stocks Masco (NYSE:MAS) and Stanley Black & Decker (NYSE:SWK) jumped to the top of the sector. Masco, the maker of faucets and bath cabinets, rallied 8.41% to $10.7, posting the biggest gain in the S&P 500. Meanwhile, Stanley Black & Decker jumped 3% to $68.33 after trading as low as $66.52.

In tech land, Apple (NASDAQ:AAPL) climbed 0.62% to $405.12, underperforming some in the sector and the S&P 500. The stock traded as low as $400.51 and as high as 405.65 after speculation grew on what kind of new features the iPad 3 will have or if Apple will come up with two versions, with one tailored to compete against Amazon’s 7-inch Kindle Fire. Apple also received support and a lift after BMO Capital bumped its price target to $460, citing strong iPhone sales amid what appears to be strong uptake at Sprint Nextel. The firm raised its iPhone shipment estimate to 29.5 million and its EPS estimate to $9.82 from $9.55 per share. Meanwhile, BMO also raised its fiscal 2012 estimates on the tech giant to $34.68 per share. Current consensus for Apple is $9.83 per share for the quarter and $34.79 per share for the year.

Yahoo! (NASDAQ:YHOO), the Internet media company that owns the second largest search engine, gained 2.22 to $16.13 following reports stating that the Alibaba Group has hired a lobbying firm. The Chinese company move suggests that it might be eyeing a bid for all of the company in the event that talks to unwind their Asian partnership fail. A bid by Alibaba Group will likely raise concerns in the U.S. government, as Yahoo is the largest provider of email in the U.S.

Elsewhere, Amazon.com (NASDAQ:AMZN) fell 0.02% to $173.86. The largest online retailer traded as low as $166.97 following cautious comments from Goldman Sachs. The firm raised concern over possible to high quarterly estimates after online sales climbed less than what they had expected. Meanwhile, Amazon said that 2011 is the best holiday ever for its Kindle family, thanks to the introduction of the new Kindle Fire. The stock was able to make a reversal of more than 4% after Piper Jaffray defended the stock, saying that it sees Amazon’s holiday quarter results with slight upside versus consensus.

At the end of the week and the trading year, stocks fell, capping a very volatile year, which resulted with the Dow closing higher for the year, while the S&P 500 erased its prior gains to end largely flat for the year.

In Europe, equity markets gained in the session but logging sharp annual drops. The dismal performance for the year, their worst since 2008 came after the region was involved in a sovereign debt crisis that threatened to bring the global economy back into recession. Banks were biggest losers of the year, as participants hammered the space amid concerns over liquidity, exposure to the euro zone sovereign debt, and capital ratios.

Amid the S&P 500 sectors, utilities, consumer discretionary, and industrials posted the biggest declines, while energy and materials saw the smallest losses. The Utilities SPDR ETF (NYSE:XLU) fell 0.72% to $35.28, but still posted the biggest gain for the year, as shares jumped close to 15%. ONEOK (NYSE:OKE), the natural gas distributor, closed practically flat for the session, as it logged the best year to date gain in the sector, with a jump of 56.35%. ONEOK also logged a new 52-week high of $87.18 earlier in the week.

Consumer discretionary stocks were also under some pressure. Sears Holdings (NASDAQ:SHLD), the holding company that owns and operates the Sears and Kmart retail chains, tumbled 3.4% to $31.78 after the S&P placed the company’s credit rating on review for a possible downgrade. Sears ended with a year to date loss of 55.4%. Earlier in the week announced a drop in same store sales and the closure of 100 to 120 stores, which resulted in a stock plunge of close to 30%.

Also in the bottom of the sector for the year was Netflix (NASDAQ:NFLX). The online video rental service had a dismal performance, with one of the biggest declines in the S&P 500, with shares plunging 60.56%. Netflix traded as low as $62.37 and as high as $304.79 during the year. The stock broke down following a series of blunders by the company, which included a price increase of 60%, which its subscriber base massively rejected, prompting faster than expected cancellations primarily over their DVD only subscription plan. The stock also suffered from concern over the increasing content costs for its streaming service amid also competitive threats from the Cloud services from Apple and Amazon. Netflix also moved to raised additional capital through a secondary offering to strengthen its cash position and which was seen as a negative by investors, as the company was buying its own stock north of the $200 per share earlier in the year. The Netflix debacle started after July 13^th, when the stock logged its all-time high of $304.79.

Financials closed in the same fashion than most of the trading sessions during the year, lower. The sector was the worst performer in the year with shares of the Financial SPDR ETF (NYSE:XLF) plunging 18%. Bank of America (NYSE:BAC), the largest U.S. lender, was at the bottom of the sector and the Dow Jones Industrial Average for the year. The Charlotte, NC based bank tumbled 59% in the year. The stock logged a new multiyear low of $4.92 earlier last week. BofA was hammered through the year amid euro zone debt crisis jitters, worries over mortgage putback liability, and regulatory burden weighing on its depressed earnings power amid a slow economic recovery and threat of recession.

Also in the blue chip index, the best performer was McDonald’s (NYSE:MCD). The world’s largest restaurant chain closed the year with a gain of 30.7%. McDonald’s also traded at an all-time high of $101 just in the prior session, as participants embraced the stock amid solid sales performances around the world and as investors sought safe dividend plays amid the market turmoil.

Meanwhile, in technology, Google (NASDAQ:GOOG), the owner of the largest Internet search engine, gained 0.54% to $645.90 in the session after trading at a new 52-week high of $646.76. The stock received a lift from Robert W. Baird, which bumped its target price to $760 from $700. The new target that implies a 17% upside potential, pushed the stock to the new yearly high. For the year, Google gained 8.7%.

And Apple (NASDAQ:AAPL) ended flat for the session at $405. The stock gained 25.6% during the year, while also logging a new all-time high of $426.70. Apple encountered some weakness in the fall after missing earnings expetations for the first time since 2004 and on concern over the iPad and iPhone sales momentum was easing. Participants also had to digest the company without Steve Jobs, its iconic founder and CEO, which lost its battle with cancer in September. However the iPhone 4S proved to be a strong hit, with demand for the device outpacing estimated and forcing analysts to adjust their estimates for the holiday quarter and 2012. Prospects of new launches next year, like the iTV and the iPad 3, coupled with the introduction of a possible dividend will likely keep participants engaged in the stock into the next year.