From Briefing.com: 4:10 pm : The stock market finished the Tuesday session on the defensive after spending the entire day in a steady retreat. The S&P 500 (-0.6%) posted its third consecutive decline, while the small-cap Russell 2000 (-0.9%) slipped behind the broader market during afternoon action.
Equity indices were pressured from the start following some overnight developments that weighed on sentiment. The market tried to overcome the early weakness, but could not stage a sustained rebound, which resulted in follow-through selling in the afternoon.
Mixed PMI data from the eurozone combined with an announcement from the U.S. Treasury concerning tax inversion deals factored into the cautious action. Under a new notice released by the Treasury Department, an inverted company is subject to potential adverse tax consequences if, after the transaction: (1) less than 25% of the new multinational entity's business activity is in the home country of the new foreign parent, and (2) the shareholders of the old US parent end up owning at least 60% of the shares of the new foreign parent. The same tax treatment would still apply if 80% or more of the new foreign parent is owned by the US parent company's shareholders.
Fittingly, the news caused early weakness in the health care sector (-0.6%), which has been at the center of recent M&A deals. The sector was able to cut its early loss in half, while Dow component Pfizer (PFE 30.05, -0.13) narrowed its loss to 0.4% by the close. The stock received an afternoon boost after Bloomberg reported the company has approached Actavis (ACT 240.87, +5.25) about a potential acquisition.
Elsewhere among influential sectors, financials (-0.7%) and technology (-0.2%) displayed relative strength at the start, but only the tech sector was able to end near its flat line. The top-weighted component, Apple (AAPL 102.64, +1.58), did some heavy lifting, while other influential names like Facebook (FB 78.29, +1.49) and Google (GOOGL 591.18, -6.09) ended mixed.
Outside of technology, the energy sector (-0.3%) was the only other cyclical outperformer, while crude oil rose 0.7% to $91.55/bbl. The other commodity-related sector-materials (-0.6%)-ended in line with the market.
Also of note, the industrial sector (-0.8%) struggled amid weakness in defense and transport stocks. The PHLX Defense Index lost 1.2% and the Dow Jones Transportation Average fell 0.8%.
The daylong retreat contributed to increased demand for volatility protection that sent the CBOE Volatility Index (VIX 14.87, +1.18) to its highest level in five weeks.
Treasuries ended on their highs with the 10-yr yield down four basis points at 2.53%.
Today's participation was ahead of recent averages with roughly 700 million shares changing hands at the NYSE floor.
Economic data was limited to the July Housing Price Index from the FHFA, which rose 0.1% to follow a revised increase of 0.3% (from 0.4%) observed during the prior month.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while New Home Sales for August (Briefing.com consensus 435K) will cross the wires at 10:00 ET.
Nasdaq Composite +8.0% YTD
S&P 500 +7.3% YTD
Dow Jones Industrial Average +2.9% YTD
Russell 2000 -3.8% YTD
DJ30 -116.81 NASDAQ -19.00 SP500 -11.52 NASDAQ Adv/Vol/Dec 822/1.70 bln/1946 NYSE Adv/Vol/Dec 892/703.1 mln/2187 3:30 pm : Nov crude oil rose for the first time in five sessions as the U.S. and Arab allies launched missile strikes in Syria on the Islamic State. The energy component lifted from its session low of $90.77 per barrel and traded as high as $92.09 per barrel before settling with a 0.7% gain at $91.55 per barrel.
Oct natural gas rose as high as $3.90 per MMBtu in morning action but gave up the early gain as it fell into negative territory later in the session. It settled 0.8 lower at $3.82 per MMBtu, just above its session low of $3.81 per MMBtu.
Dec gold pulled back from a session high of $1231.30 per ounce set at pit trade open and brushed a session low of $1220.50 per ounce. It then traded in a consolidative pattern near the $1222 per ounce level for the remainder of the session and settled with a 0.3% gain at $1222.10 per ounce.
Dec silver chopped around near the unchanged line for most of today's floor trade. It touched a session high of $17.84 per ounce in early morning action and eventually settled with a 0.1% gain at $17.78 per ounce.
4:52 pm SolarCity launches $500 mln convertible senior notes offering (SCTY) : Co announced that it intends to offer and sell, subject to market and other conditions, $500 million aggregate principal amount of its Convertible Senior Notes due 2019. The Company expects to use (i) a portion of the net proceeds of this offering for the cost of the capped call transactions described below and (ii) the remaining net proceeds for general corporate purposes, including working capital, capital expenditures and potential acquisitions.
12:24 pm Notable movers of interest (:SCANX) : The following are some of today's most notable movers of interest, categorized by market capitalization (large cap over $10 billion and mid cap between $2-10 billion) and ranked by % change (all stocks over 100K average daily volume).
Large Cap Gainers
MBLY (52.73 +6.4%): Mentioned favorably on Mad Money.
SLXP (168.55 +5.46%): Allergan (AGN) plans to reject offer from Actavis (ACT) and may now bid for SLXP itself, according to reports; CNBC's David Faber reported AGN and SLXP have just started discussions regarding price; tgt raised to $181 from $154 at Cantor Fitzgerald.
CF (272.51 +6.54%): Yara ASA confirmed discussions with CF regarding potential merger of equals.
Large Cap Losers
KMX (47.95 -9.2%): Reported Q2 earnings of $0.70 per share (including a $0.06 benefit), may not be comparable to $0.67 est, revs in-line.
AZN (71.83 -3.8%): Select Tax Inversion related names showing weakness - Treasury announced first steps to reduce tax benefits of corporate inversions; said 'today's action eliminates certain techniques inverted companies currently use to gain tax-free access to the deferred earnings of a foreign subsidiary (MDT, SNN, COV, SHPG also lower).
Mid Cap Gainers
GPRO (72.37 +6.01%): Mentioned favorably on Mad Money.
AEO (14.82 +4.92%): Co's Interim CEO bought 148,942 shares at $14.10 worth ~$2.1 mln.
SPB (88.81 +3.11%): Co to acquire Procter & Gamble's (PG) European pet food business.
Mid Cap Losers
ASNA (13.86 -16.15%): Missed on EPS by $0.05, missed on revs; guided FY15 EPS below consensus; Telsey Advisory Group lowered its ASNA tgt to $16 from $18; Oppenheimer lowered its ASNA tgt to $19 from $22; target lowered to $17 from $21 at Sun Trust Rbsn Humphrey.
HCLP (55.31 -6.71%): Unfavorable mention on Mad Money.
BBRY (10.49 -4.05%): Downgraded to Market Perform from Speculative Buy at Cormark; tgt $11.50.
11:51 am Stocks/ETFs that traded to new 52 week highs/lows this session - New lows (197) outpacing new highs (24) (:SCANX) : Stocks that traded to 52 week highs: AMBA, BDL, CCL, CF, CNSL, DRC, EMKR, FISH, GPRO, KT, MSON, NRIM, OABC, PFSW, PRXL, PSBH, PTCT, PW, SKM, SLXP, SPB, STRP, TTPH, UTHR
Stocks that traded to 52 week lows: ABCO, ACI, ADNC, AGCO, AHPI, AKAO, ALCS, ALE, ALG, ALOG, ALSK, ALXA, AMDA, AMRN, ARTW, ASNA, ASTM, AVHI, AXU, AXX, B, BABA, BAXS, BBSI, BCOV, BEBE, BECN, BGC, BH, BID, BIOD, BPI, BXE, CACH, CACQ, CASS, CBMX, CBNK, CCG, CCS, CHOP, CHS, CIEN, CIK, CLNE, CLNT, CNHI, COOL, CPA, CPST, CRR, CTT, CVGI, CWST, CYD, DCOM, DDE, EC, ECR, ECT, EDMC, EGLE, ELSE, EMMS, EPM, ERA, ETN, EVC, EVV, EXEL, EXXI, FELE, FHCO, FLO, FLR, FLY, FMC, FMD, FRO, GES, GIG, GLF, GOV, GTE, GTXI, GTY, GUID, HDNG, HERO, HMNY, ICEL, IIVI, IMPR, IMRS, INNL, IOSP, IRET, IRG, JE, JIVE, KBR, KEG, KIPS, KRA, LEDS, LZB, MAT, MCP, MDGN, MDR, MEIL, MFG, MHR, MLAB, MOSY, MTL, MVC, MZOR, NCI, NCT, NEON, NGS, NGVC, NL, NM, NMIH, OC, ODC, OI, OII, OIIM, OMN, ONCY, OPXA, PACD, PDII, PER, PERI, PHMD, PICO, PIR, PLPM, PRGN, QRM, RBC, RDC, RFIL, RGDO, RGR, RIG, RLOC, RNDY, ROG, RRST, RSO, RVLT, SALT, SANW, SCL, SDT, SEAC, SHOS, SIR, SNTA, SOQ, SPKE, SPU, STRM, SUTR, SVBL, SWHC, SWSH, SZYM, TERP, TGA, TGB, THRX, TLM, TRIB, TTMI, TUP, UAN, UFPT, USU, UTI, VIAB, VNOM, VOC, VOLC, VPCO, VTG, WAC, WSO, XCO, XIN, XUE, ZIOP
ETFs that traded to 52 week highs: HYD, NIB
ETFs that traded to 52 week lows: EWO, FUD, JJG, REMX, UHN, URA
9:01 am NXP Semi will supply Delphi Automotive (DLPH) with its RoadLINK chipset for Vehicle-to-Vehicle and Vehicle-to-Infrastructure communication (NXPI) : NXP supplies Delphi with RoadLINK technology enabling cars to securely connect with one another and with traffic infrastructure.
For the second consecutive session, the US stock market got hit with broad-based selling interest and it was the Russell 2000 (-0.8%) that bore the brunt of the losses. In the last two sessions, the Russell 2000 has declined 2.4% whereas the Dow, Nasdaq, and S&P 500 have declined 1.3%, 1.6%, and 1.4%, respectively, over the same period.
The weak price action comes on the heels of the S&P 500 hitting a record high last Friday, suggesting it may be a function of profit taking by fund managers looking to protect nice-looking performance records going into quarter end.
The prevailing narrative, though, is that it is a function of global growth concerns that have triggered increased selling interest predicated on the belief the stock market got ahead of itself with its late-summer rally.
On Tuesday every sector ended the day lower.
Two points worth mentioning for our purposes here are: (1) there wasn't a fire-sale mentality as no sector declined at least 1.0% and (2) the information technology sector was the "best-performing" sector with a decline of 0.2%.
Market watchers can thank Apple (AAPL 102.64, +1.58) for the sector's relative strength. Its largest and most influential component gained 1.6% in a trade that probably had more to do with its aura as a "safe" stock in downtrodden market times than anything else. Apple did, however, shoot down speculation from Monday that it might shut down Beats Music.
Facebook (FB 78.29, +1.49), Micron (MU 31.20, +0.60), and Yahoo (YHOO 39.05, +0.40) were three other notable names to rise above the fray.
The Wall Street Journal cited reports Tuesday morning that said Facebook is planning to introduce a new ad platform; Micron benefited from upbeat views about its third earnings prospects from the analyst at Credit Suisse, and Yahoo rebounded from Monday's 5.6% decline on no news of note.
A day after reports swirled that EMC Corp. (EMC 29.85, +0.17) may be exploring strategic alternatives, Bloomberg reported in its real M&A column that EMC may need to buy Tableau Software (DATA 70.91, -1.16) or Fortinet (FTNT 25.51, -0.57) to increase growth; meanwhile Re Code reported that any interest Hewlett-Packard (HPQ 35.79, -0.68) might have in EMC is really related to the company's stake in VMWare (VMW 95.60, -0.56).
Google (GOOG 581.13, -6.24), Microsoft (MSFT 46.56, -0.50), Oracle (ORCL 38.83, -0.75), Cisco (CSCO 24.70, -0.27), Corning (GLW 19.94, -0.29), and Applied Materials (AMAT 21.63, -0.31) all dropped more than 1.0% and acted as an offset to the strength seen in many of the names mentioned above.
Google was under pressure after a Wall Street Journal article suggested the company may need to improve its search settlement or face more charges. Microsoft confirmed it will release Xbox One in China on September 29. Oracle, Cisco, and Corning fell on no news of note while AMAT dropped in the wake of new provisions instituted by the Treasury Department to curtail tax inversions for all deals closed on or after September 22. AMAT has a merger agreement pending with Japanese company Tokyo Electron Limited.
Elsewhere, several of the Chinese Internet stocks bounced back on Tuesday, including Dangdang (DANG 12.71, +0.40), which was a big loser on Monday.
China's e-commerce leader, Alibaba Group (BABA 87.17, -2.72), continued to back up after its record-setting IPO on Friday that arguably got this week's profit-taking ball rolling on the belief that IPO marked a near-term peak in the market.
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