Market Focus with Tom Hudson – Monday, Mar 5, 2012

TOM HUDSON: Let’s get you updated with tonight’s “Market Focus”.

It’s choppy, but it could have been a lot worse by the closing bell as
the major stock indices climbed out of really what was a pretty stiff
morning sell-off to end with just more muted losses we mentioned earlier.
After China reduced its economic growth target, U.S. stocks fell and we
have the added pressure coming out of Europe. But throughout the session,
the selling abated in the S&P 500, and index closed down with just a
fraction lost.

The losing sectors really reflect the worries about a slow growing
economy in China. The materials sector dropped more than 1.5 percent.
Info tech stocks were down 1 percent.

In technology, it was semiconductor stocks, specifically, that really
weighed on the tech sector. The trio we’re going to look at here fell by
at least 5 percent each. Chip makers Advanced Micro Devices (NYSE:AMD),
AMD, Micron Technologies, MU, and chip test equipment manufacture, Teradyne
(NYSE:TER), TER, all fell about 5 percent or more.

Now, with worries about China in the headlines, it’s no surprise two
Dow industrial stocks doing a lot of business overseas in China helped pull
that index down. First, Alcoa (NYSE:AA), AA. Shares dropped more than 3.5
percent, falling blow $10 for the first time since the middle of January.

And then Big Cat, Caterpillar (NYSE:CAT) fell more than 2 percent.
This is Cat’s lowest price since the last day in January. Better profit-
taking with worries about the Chinese economy.

One industry feeling the China news: steel stocks. About half of the
world’s steel appetite comes from China. So, a slower Chinese economy
fueled worries about slower steel demand. AK Steel dropped more than 5.5
percent in the news. U.S. Steel fell about 5 percent. Nucor (NYSE:NUE)
shedding about 2.5 percent of its share price today.

While gasoline prices continue to be in focus, nat gas has cooled to
new decade lows. Prices are now below their late January lows as the warm
winter is forecast to continue. New sources of nat gas throughout the
nation have been filling up those storage sites to record inventories while
demand has been weak — thanks to the mild temperatures.

Now, the warm winter also has meant less electricity demand, hurting
coal demand from utility companies. How about these coal stocks? Alpha
Natural Resources (NYSE:ANR) down 6 percent in the session. Arch Coal
(NYSE:ACI) falling more than 5 percent. Peabody Energy (NYSE:BTU) shedding
better than 4 percent.

The relative calm winter has been good news for travelers — fewer
delays for some airlines. U.S. Airways, for instance, credits the mild
winter weather with a record low flight cancellation rate in February.
Still, how about the selloff? Shares fell more than 8 percent today, down
to a six week-low. It was because revenue per available seat mile, that’s
a key measure of growth in the airlines, was still up in February, but up
by the smallest amount the airlines seen since June.

Meantime, onetime flights are improving at United Continental three
days after the merged airline combined its flight reservation systems.
During the switch over, things were a bit of a mess. There were flight
delays and problems with airport check-ins. And shares responding a bit
today, falling by 2.25 percent.

More Americans seem to be putting money into their mattresses —
really buying mattress actually. A trade group says mattress sales numbers
were up 17 percent in January, revenues up almost twice that, meaning that
shoppers were buying higher end, more expensive mattresses.

Select Comfort (NASDAQ:SCSS) shares, SCSS, continue to rally on the
news, ending over $30 per share for the first time ever, an all time high.

Stifel Nicolaus was encouraged enough to increase its earnings and
price target on the stock.

Now, finally, we saw some volatility with a trio of new dot-com
stocks. Online music firm Pandora received an analyst upgrade. Shares
shot up 5.4 percent. Online gaming company Zynga (NASDAQ:ZNGA) fell 5
percent as a separate analyst downgraded shares due to their recent rally.
And in its second day as a public company, online review Web site Yelp
cooled considerably, falling 14.5 percent.

And that is tonight’s “Market Focus”.

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