Stocks Logged Weekly Loss amid Greek Drama

Published on Saturday, 11 February 2012 09:14 Written by TradersHuddle Staff

Weston, February 11^th (Tradershuddle.com) – Stocks fell for the week, as enthusiasm over better than expected economic data waned amid renewed jitters over the European debt crisis. Uncertainty over the Greek bailout outweighed positive data, as participants took a breather amid the outsize gains so far this year. Several stocks continued to work on full cylinders and hitting new all-time highs; however the broad market suffered from investors shifting focus to Europe.

For the week the Dow fell 0.47%, while the NASDAQ slid 0.06% and the S&P 500 lost 0.17%.

At the start of the week, Stocks closed with modest losses, as participants decided to stay in the sidelines amid increased jitters over a Greek disorderly default and concern over the strength of Chinese economic growth.

Despite the slow news flow, markets were able to trim their losses in afternoon trading, as the euro reversed from earlier weakness to post a modest gain against the Dollar. Greece’s ongoing woes with austerity measures and creditors continued to keep investors on edge, despite a new round of rumors around the trading floors that a deal was near.

Despite crude oil falling 1% to settle below $97 per barrel amid Greek woes and the IMF cutting its economic growth outlook for China, oil equities had a decent day, with Chevron (NYSE: CVX) jumping more than 1% and posting one of the top gains in the Dow Jones Industrial Average.

Also in the sector, Alpha Natural Resources (NYSE: ANR), the steam and metallurgical coal producer, jumped 3.34% to $23.54 after trading as low as $22. The company announced late Friday that it was cutting coal production in central Appalachia due to the decreased demand. Alpha Natural will cut about 4 million tons of production by impacting 10 of its mining operations.

Meanwhile in the financial sector, Bank of America (NYSE: BAC) continued in its upside swing, with shares jumping to the top of the blue chip index. BofA climbed 1.7% to $7.97, as investors kept pushing the stock ever closer to the $8 per share level, as put action showed increased activity perhaps as some traders doubt the sharp gains in the bank.

Apple (NASDAQ: AAPL) was able to post a new all-time high of $464.98, with shares closing with a 0.93% gain in the session, settling at $463.97. Jefferies joined the speculation about the Apple TV set, which according to the firm, the tech giant will likely name iTV. Jefferies said that video content would also become the next big focus for the iPad and the iPhone maker.

Elsewhere in the consumer discretionary space, Netflix (NASDAQ: NFLX) jumped 2.8% in the session amid blog reports that suggested that Netflix Streaming service could be included in the highly anticipated Apple TV set. Shares of Netflix traded as low as $121.85 after Coinstar (NASDAQ: CSTR), the operator of the Redbox DVD rental kiosks, announced that it was teaming up with Verizon (NYSE: VZ) in order to provide a streaming service aiming to take on Netflix.

And Abercrombie & Fitch (NYSE: ANF), the specialty retailer, surged 9.5%, the biggest gain in the S&P 500. The stock was rebounding after trading at 52-week lows last week amid disappointment over its gloomy outlook.

On Tuesday, the market started under modest downward pressure as trading in Europe weighed on sentiment. The increased uncertainty over the Greece bailout deal, spurred jitters over a disorderly default. Solid earnings reports from Coca-Cola (NYSE: KO) and Yum Brands (NYSE: YUM) supported futures, while poor results from UBS in Europe weighed on banks.

Shares of DTE Energy (NYSE: DTE) jumped more than 2%, posting the biggest gains in the Utilities sector and helping the Utilities SPDR ETF (NYSE: XLU) gain 0.72%, which was the biggest gain amid the S&P select sectors.

Meanwhile energy received a lift from higher crude oil prices after the Iranian threats and ongoing unrest in the Middle East spurred a move higher in the commodity. Speculation that Greece was edging closer to deal to access new funds also boosted oil to close at $98.48 per barrel. In addition the oil pits also received support from an increased in global demand forecasts by the U.S. Energy Information Administration.

The sector benefited from the performance of big oil and stocks like Anadarko Petroleum (NYSE: APC), which surged 5.24% to a new 52-week high on volume that was better than double the daily average, while it posted the biggest gain in the sector. The largest U.S. independent oil and gas producer reported fourth-quarter earnings Monday after the close, helping Anadarko broke through critical resistance at $85.

Tesoro (NYSE: TSO), The San Antonio, TX based crude oil refiner, climbed 4.8% to $27 after the spread between Brent and WTI surged to its highest level since October 2011 earlier in the session. The company is scheduled to present at the Credit Suisse Energy Summit later in the week.

Also in the space, BP (NYSE: BP), Europe’s second-largest oil company, fell after its earnings report. BP raised its dividend to eight cents a share from seven cents, while it said year-over-year production fell 5%, but increased 5% on a sequential basis.

The consumer discretionary space received a boost from solid earnings in the space and apparently ongoing short covering in Sears Holdings. The Consumer Discretionary SPDR ETF (NYSE: XLY) gained 0.45% to $42.314 after posting a new all-time high of $42.42.

Sears Holdings (NASDAQ: SHLD) surged to the top of the S&P 500, as shares rallied 6.17% to $47.30. The stock saw another big upside day on no apparent news, which suggest additional short covering. Sears has been able to rebound sharply from last year, surging close to 50% year to date.

Also in the sector, Yum! Brands (NYSE: YUM), the Pizza Hut, KFC, and Taco Bell restaurant chains owner and operator, jumped 2.63% to $64.85 after the company posted better than expected earnings on higher than estimated revenues thanks to a surge in sales in China. Rival McDonald’s (NYSE: MCD) climbed 1.43% to $100.91 on the news, posting the biggest percentage gain in the Dow Jones Industrial Average.

In tech land, Apple (NASDAQ: AAPL) outperformed, climbing 1.05% to $468.83. The stock posted a new all-time high of $469.75 amid ongoing chatter of the potential of an Apple TV set. Barclays joined the conversation by saying that it estimates that the Apple TV or iTV could add $5.40 per share in earning in fiscal 2013.

Also helping the sector to the upside and the Technology SPDR ETF (NYSE: XLK) to post a new 52-week high in the session were shares of Advance Micro Devices (NYSE: AMD). The chipmaker jumped more than 3% after it was upgraded to a Buy at Longbow Research.

Elsewhere in the blue chip index, Coca-Cola (NYSE: KO) gained 0.76% to $68.55 after the world’s largest soft drink maker reported better than expected quarterly earnings on revenues that were higher than consensus.

Mid week, stocks were able to overcome earlier losses and move to the upside, with financials and technology stocks leading the move higher. Concerns over delays in the Greek debt negotiations weighed, capping the upside.

Stocks traded with modest losses, but they were able to gradually battle their back into positive territory, with both financials and technology leading the charge higher. Helping the financial sector were Bank of America (NYSE: BAC) and Citigroup (NYSE: C).

BofA rallied 3.57% to $8.13, posting the biggest percentage gain in the Dow Jones Industrial Average and breaking above the psychological level of $8 per share, which did offer some resistance. The bank was able to continue its upswing despite increase chatter among analysts and some participants that the stock is heavily overbought. Meanwhile, Citigroup (NYSE: C) jumped 3.5% to $34.23, extending its year to date gain to 30%.

Also closing in positive territory was Morgan Stanley (NYSE: MS). The stock gained despite Collins Stewart downgrading it to a Hold from Buy.

Also lifting the market higher and helping the NASDAQ outperformed in the session was the technology sector. The Technology SPDR ETF (NYSE: XLK) gained 0.61% to $27.97 after posting a 52-week high of $27.99. The sector was received boost from better than expected earnings from Computer Sciences (NYSE: CSC) and as Apple logged a new all-time high at $476.79.

Computer Sciences (NYSE: CSC), the IT consulting services provider, surged to the top of the S&P 500, with shares rallying 18.5% to $31.39 after the company posted better than expected earnings and announced the appointment of a new CEO.

Apple (NASDAQ: AAPL) gained 1.67% to $476.68. Chatter regarding the highly anticipated Apple TV set continued. Yesterday, Barclays said that its estimates that the iTV could add $5.40 per share to earnings in fiscal 2013. The stock was also climbing amid the news from Sprint Nextel (NYSE: S) in which the iPhone subsidies pressure results. Meanwhile, Sprint shares fell 1.63% to $2.41 after trading as high as $2.49 and as $2.27.

Consumer discretionary stocks were also in demand, with the SPDR ETF (NYSE: XLY) gaining 0.31% to $42.47 after posting a new all-time high of $42.66.

Stocks leading the charge higher in the sector included Ralph Lauren (NYSE: RL), Coach (NYSE: COH), and Walt Disney (NYSE: DIS).

Ralph Lauren surged more than 9% to $171.49 after posting a new all-time high at $178.47. The stock rallied on news of a solid earnings report and increased revenue guidance for fiscal 2012. News helped Coach, which also jumped to a new record high of $74.21.

And Walt Disney gained 0.71% to $41.27 after beating earnings expectations. The stock continued to grind higher despite revenues falling a little short of estimates.

On Thursday, the market started in positive territory after futures received a bid, following news headlines that Greek politicians have reached a deal on new austerity measures and after the Bank of England boosted quantitative easing and the ECB left rates unchanged. Participants were also spur to bid, as risk appetite increased after better than expected weekly jobless claims data.

Stocks were able to hold to gains, despite some concern over Chinese inflation and as new measures to relax bank eligibility to access 3-year funding in the ECB failed to inspire a much higher move.

The Technology SPDR ETF (NYSE: XLK) gained 0.97% to $28.24 after posting a new 52-week high of $28.27. The sector received a boost from better than expected earnings from Akamai (NASDAQ: AKAM) and Teradata (NYSE: TDC) and as Apple continued to function in all cylinders hitting new record highs on speculation over new products, with analysts bumping estimates and price targets.

Apple (NASDAQ: AAPL) jumped 3.46% to $493.17 after posting a new all-time high of $496.75 on speculation the company will launch its iPad 3 in early March. Mizuho Initiated coverage on the stock with a Buy and a target price of $635, while Needham raised its target price to $620 from $520, citing the push the company is doing in the business market with its iPad and the halo effect it could have on Mac sales. Additionally, Canaccord Genuity bumped its target price to $665 from $650 on strong iPhone sales momentum.

Consumer staples were also higher, with Lorillard (NYSE: LO) jumping more than 9% to a new 52-week high of $127.68 after the company beat earnings expectations on revenues that were above consensus. Lorillard also raised its dividend by 19%. Philip Morris (NYSE: PM) also lifted the space, with shares climbing 2.8% following solid quarterly results and upside earnings guidance for fiscal 2012.

But not all was positive in the sector, as PepsiCo (NYSE: PEP) tumbled 3.7% in the session after forecasting a drop in 2012 earnings. The company said that the year would be a transitional one in which it will increase advertising and marketing costs while it undergoes a restructuring effort that will result in a cut of 8,700 jobs.

Financials also garnered attention following news of the largest government settlement with an industry since a deal with the tobacco industry in 1998.  The agreement covers five banks, which include major players such as Bank of America, J.P. Morgan Chase and Wells Fargo. Together, the five banks handled mortgage payments on 55% of outstanding home loans.

The settlement involves billions, payable to borrowers, states and the federal government. The deal allots payments to borrowers who went through foreclosure between September 2008 and December 2011. The settlement also calls for the banks to create loans and aid for borrowers who previously did not have access to funding.

Bank of America (NYSE: BAC) gained despite the news of the $26 billion settlement, in which the Charlotte, NC based bank will bear about $11.8 billion. The stock continued to defy gravity and kept this year rally going.

Rival JPMorgan (NYSE: JPM) fell 1.15% to $37.86, while Wells Fargo (NYSE: WFC) dropped 0.16% to $30.58. And Citigroup (NYSE: C) fell more than 1.5% on news that it will have to pay $2.2 billion, with the bank having to take $209 million in retroactive charges for the prior quarter.

At the end of the week, stocks fell, posting their biggest single session loss of the year, as uncertainty over the Greek bailout rose amid calls for further conditions and cuts in order for the country to access new bailout funds. Both the NASDAQ and the S&P 500 snapped a five winning streak. Adding to the woes, S&P cut it’s rating on almost all of the Italian banks, citing worries over the banking industry and economic risks.

The Materials SPDR ETF (NYSE: XLB) tumbled close to 2% in the day, as the euro fell below the $1.32 level. The increased worries over Greece and concern over the global economy impacted the space. Alcoa (NYSE: AA), the aluminum producer, lost more than 3%, posting the biggest percentage decline in the Dow Jones Industrial Average.

Meanwhile, steelmakers also suffered, with both AK Steel (NYSE: AKS) and United States Steel (NYSE: X) tumbling more than 5% on concerns over global demand. AK Steel was downgraded to a Neutral from Buy at Citigroup.

In the energy sector, crude oil fell more than 1%, settling below $99 per barrel. ConocoPhillips (NYSE: COP) escape weakness in the sector, climbing almost 1% to $72.25 after Deutsche Bank upgraded the stock to a Buy from Hold. The firm raised its target price to $90 from $82, citing a compelling valuation for a post-split ConocoPhillips.

The Technology SPDR ETF (NYSE: XLK), which had closed at a new 52-week high in the prior session, outperformed the broad market index. Shares fell 0.71%.

Salesforce.com (NYSE: CRM) helped the sector outperformance, jumping the most in the space, with shares gaining 2.25% in the session on reports of an order in the financial services vertical area. Visa (NYSE: V) extended its positive move from the prior session, which came after a solid earnings report and a buyback announcement. The stock gained 1.32% to $113.9 after posting a new all-time high of $114.

Apple (NASDAQ: AAPL) also defied weakness in the broad market, with shares edging a gain of 0.05% after the stock logged a new all-time high of $497.62, as participants pushed the stock towards the $500 psychological barrier.

Weighing on the sector, were shares of First Solar (NASDAQ: FSLR) and Electronic Arts (NASDAQ: EA). The solar panels maker plunged 10.4%, logging the biggest decline in the S&P 500, after it was downgraded to a Neutral at Collins Stewart. While Electronic Arts lost 2.52% to $17.42 after it was downgraded to a Neutral from Outperform at Macquarie and after research firm NPD said that sales of video games in the U.S. tumbled 34% year over year in January, with consumers purchasing more games in smartphones and or social media platforms.