From Briefing.com: 4:10 pm : The stock market ended the midweek affair on a modestly lower note as weakness from the oil patch applied pressure to the broader market. For the most part, equities endured another quiet session as the quarterly earnings reporting season continues to taper off. Today's trade also featured a bid in Treasuries, softening in the dollar, and relative weakness from the heavily-weighted technology (-0.3%), health care (-0.4%), and financial (-0.8%) sectors. The Nasdaq Composite (-0.4%) settled behind the S&P 500 (-0.3%) and the Dow Jones Industrial Average (-0.2%). The major averages vacillated at the start of the session as investors responded to a modest downturn in global markets and a mixed set of U.S. quarterly earnings reports. European averages paced the retreat as weaker-than-expected stockpile data from the American Petroleum Institute weighed on the energy component. Conversely, OPEC's Oil Market Report for August added some early support to the commodity. The oil collective increased its demand outlook for 2016, estimating that demand growth will average 1.22 million barrels per day.
The major averages yielded to selling pressure in the late morning as investors pored over the Energy Information Administration's latest stockpile data. The Department of Energy reported that crude oil inventories rose by 1.055 million barrels (estimated: -1.025 million barrels), but that gasoline inventories fell by 2.807 million barrels (estimated: -1.063 million barrels). In response, WTI crude slipped from the $42.00/bbl price level and ended its day lower by 2.3% ($41.76/bbl; -$0.98).
The S&P 500 (-0.3%) endured a range-bound session, maintaining a meager 11-point trading range. The index finished near its worst level of the day while four sectors ended above their flat lines. In front of the pack, countercyclical consumer staples (+0.4%) and telecom services (+0.3%) outperformed while energy (-1.4%) financials (-0.8%), health care (-0.4%), and technology (-0.3%) ended with the largest losses.
The economically-sensitive financial sector (-0.8%) demonstrated broad-based weakness as the group saw pressure from declining long-term interest rates. In the group, Wells Fargo (WFC 48.18, -0.75) and Bank of America (BAC 14.81, -0.38) declined 1.5% and 2.5%, respectively. Elsewhere, MetLife (MET 40.15, -1.13) weighed on the life insurance sub-group, extending its post-earnings loss to 8.1%. The broader sector trimmed its monthly gain to 0.9% and returned to negative territory on a year-to-date basis (UNCH).
Biotechnology weighed on the health care space (-0.4%) as the iShares Nasdaq Biotechnology ETF (IBB 288.81, -5.75) ended lower by 2.0%. In the ETF, Mylan Labs (MYL 48.79, -1.13) underperformed after reporting a mixed quarter. The group also traded lower in sympathy with specialty pharmaceutical name Perrigo (PRGO 86.00, -9.09). The company disappointed investors with its quarterly results and guidance. The broader ETF sports a monthly loss of 0.2%, which compares to a decline of 1.0% in the broader sector.
The Dow Jones Transportation Average (-0.4%) ended its day behind the benchmark index as cautious revenue guidance from Southwest Air (LUV 36.99, -0.47) weighed. Southwest trimmed its revenue per available seat mile guidance for the third quarter ahead of today's open. The broader U.S. Global Jets ETF (JETS 22.13, -0.17) ended the day lower by 0.8%.
In the consumer discretionary (+0.2%) sector, retail names outperformed as they gained alongside Fossil (FOSL 30.57, +0.21) and Ralph Lauren (RL 103.14, +8.07). The two names reported above-consensus quarterly results and issued better-than-expected guidance. Separately, Dow component Disney (DIS 97.86, +1.19) ended higher by 1.2% after topping bottom-line estimates for the quarter.
The U.S. Dollar Index (95.65, -0.53) finished broadly lower as the pound, euro, and yen each ended with gains against the greenback. The pound/dollar pair gained 0.1% (1.3013) while the single currency advanced 0.6% against the dollar (1.1176). Elsewhere, the dollar lost 0.6% against the safe-haven yen (101.29) as investors reacted to a positive reading of Japan's Core Machinery Orders for June (+8.3% month-over-month; expected 3.1%).
Treasuries ended higher as yields slid throughout the complex. The yield on the 10-yr note settled lower by four basis points (1.51%).
Today's participation was below the recent average as fewer than 745 million shares changed hands at the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index, the Job Openings and Labor Turnover Survey for June, and the Treasury Budget for July:
The weekly MBA Mortgage Index showed a seasonally adjusted increase of 7.1% in mortgage applications after declining 3.5% in the prior week.
The June Job Openings and Labor Turnover Survey showed that job openings increase to 5.624 million from a revised 5.514 million (from 5.500 million) in May.
The Treasury Budget for July showed a deficit of $112.8 billion versus a deficit of $149.2 billion in July 2015.
The Treasury Budget data is not seasonally adjusted, so the July deficit cannot be compared to the $6.3 billion surplus registered in June.
Total receipts in July were $210.0 billion while total outlays were $322.8 billion.
Receipts were $15.5 billion less than receipts in July 2015. Total outlays, meanwhile, were $51.9 billion less than the same period a year ago.
The 12-month deficit narrowed to $487.2 billion from $523.6 billion in June.
Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 266k) and Import/Export Prices for July, which will each cross the wires at 8:30 ET.
Russell 2000 +7.7% YTD
S&P 500 +6.4% YTD
Dow Jones +6.1% YTD
Nasdaq Composite +3.9% YTD
DJ30 -37.39 NASDAQ -20.90 SP500 -6.25 NASDAQ Adv/Vol/Dec 994/1.524 bln/1953 NYSE Adv/Vol/Dec 1311/744.0 mln/1639 3:30 pm :
The dollar index held onto initial morning losses, down -0.5% around the 95.67 level, aiding precious metals
Commodities, as measured by the Bloomberg Commodity Index, -0.6% around the 83.23
Crude oil remained volatile post-EIA, initially rallying 1% after the release before reversing and closing at fresh session lows
September crude oil futures fell $0.98 (-2.3%) to $41.76/barrel
EIA highlights:
Crude oil inventories had a build of +1.06 mln (consensus called for a draw between -800K & -1.75 mln barrels)
Gasoline inventories had a draw of -2.81 mln (consensus called for a draw between -1.0 & -1.2 mln barrels)
Distillate inventories had a draw of -1.96 mln
Monthly IEA data will be released tomorrow
Baker Hughes rig count data will be released on Friday at 1 pm ET
Natural gas ended near session lows ahead of tomorrow's inventory data
September natural gas closed $0.06 lower (-2.3%) at $2.56/MMBtu
EIA natural gas inventory data will be released tomorrow at 10:30 am ET
In precious metals, gold & silver saw a boost as the dollar index took a dive
December gold ended today's session up $5.00 (+0.4%) to $1351.70/oz
September silver closed today's session $0.34 higher (+1.7%) at $20.19/oz
Base metal copper gave up a portion of its initial morning gains, still closing higher on the day
September copper closed $0.02 higher (+0.9%) at $2.17/lb
Today's session began on a choppy note as investors eyed quiet overseas action. Global bourses tilted to the downside as limited macro data kept participants focused on movements in the commodity market. Oil futures were at the forefront after weekly inventory data from the American Petroleum Institute showed a larger-than-expected build in crude oil of 2.09 million barrels.
Additionally, the energy component managed to erase an overnight loss following the release of OPEC's Oil Market Report for August. The report indicated that the oil collective raised its demand growth forecast for this year while maintaining its demand outlook for 2017. However, the reprieve for oil futures would prove to be short-lived. The energy component yielded to mounting selling pressure shortly after the Department of Energy reported mixed inventory data as September crude oil futures closed down $0.98 (-2.3%) to $41.76/barrel.
Market data today came in the form of the weekly MBA Mortgage Index which showed a seasonally adjusted increase of 7.1% in mortgage applications after declining 3.5% in the prior week. Also, the June Job Openings and Labor Turnover Survey showed that job openings increased to 5.624 million from a revised 5.514 million (from 5.500 million) in May. Lastly, the Treasury Budget for July showed a deficit of $112.8 billion versus a deficit of $149.2 billion in July 2015. The Treasury Budget data is not seasonally adjusted, so the July deficit cannot be compared to the $6.3 billion surplus registered in June. The 12-month deficit narrowed to $487.2 billion from $523.6 billion in June.
At the end of the Wednesday session, trading ended lower as oil pulled the markets into the red. Leading the session to the downside, the Nasdaq Composite lost 20.90 points (-0.40%) to 5204.58. (Not) helping the cause, Nasdaq 100 components LRCX -4.5%, BMRN -3.9%, INCY -3.5%, VRTX -3.0%, MYL -2.3% and BIIB -1.8% all finished in the red, pushing the index lower. The S&P 500 was down 6.25 points (-0.29%) to 2175.49, and the Dow Jones Industrial Average shed 37.39 points (-0.20%) to 18495.66. Dow components XOM -1.8%, CVX -1.2%, NKE -1.2% and AXP -1.0% all finished in negative territory, aided the index decline.
Technology (XLK 46.99, -0.15 -0.32%) was an underperformer today as the sector began near flat lines and sellers took hold following yesterday's rally. Component KLA-Tencor (KLAC 69.47, -7.94 -10.26%) was the worst performer today in spite of reporting better than expected Q4 results, but non-GAAP EPS and revenue guidance for Q1 was worse than expectations. Other sectors as measured by the S&P closed XLP +0.37%, XLY +0.21%, XLB +0.02%, XLU +0.02%, XLI -0.05%, XLV -0.34%, IYZ -0.75%, XLF -0.79%, XLE -1.09% with the Energy component lagging and Consumer Staples posting back to back strong sessions.
In the S&P 500 Information Technology (779.92, -2.65 -0.34%) sector, trading was near lows as the modest morning turned lower and never looked back. Component CSRA (CSRA 26.28, +0.46 +1.78%) was strong ahead of its quarterly results which are expected tonight after the close. Other names in the space that underperformed with the broader market FSLR -7.20%, WDC -4.66%, LRCX -4.48%, STX -3.42%, MU -1.93%, AMAT -1.42%, CRM -1.16%, INTC -1.15%, TDC -1.11%, RHT -1.09%.
Other notable news items among sector components:
Intel (INTC 34.53, -0.39 -1.12%) signed a definitive agreement to acquire Nervana Systems. Financial terms of the deal were not disclosed.
Accenture (ACN 113.22, +0.34 +0.30%) was chosen by Skanska to help manage its Oracle (ORCL 41.09, -0.01 -0.01%) Fusion applications in Sweden and Finland for greater operational efficiencies and enhanced application management services. The agreement is for a three-year duration. Financial terms were not disclosed.
KLA-Tencor (KLAC) and Lam Research (LRCX 89.11, -4.18 -4.48%) announced that obtaining regulatory clearances in one or more of the remaining jurisdictions may extend beyond Oct 20, 2016.
Elsewhere in the tech space:
ComScore (SCOR 27.20, +1.16 +4.45%) appointed co-founder Gian Fulgoni as CEO, and appointed David Chemerow as CFO. The company also filed to delay its Form 10-Q, stating the internal investigation is substantially complete.
Fortinet (FTNT 32.92, -0.27 -0.81%) signed an agreement with the Korea Internet & Security Agency to conduct two-way information sharing on cyber threat intelligence.
Rambus (RMBS 13.59, -0.21 -1.52%) signed an agreement with Idaho Scientific, LLC to license its Differential Power Analysis for use in Idaho Scientific's security IP Cores for FPGAs and defense ASICs.
Magal Security (MAGS 5.33, -0.03 -0.56%) filed $25 million mixed securities offering.
Energous (WATT 13.01, +0.84 +6.90%) announced a $20 million private placement.
Cavium Networks (CAVM 48.49, -0.68 -1.38%) announced the extension of an offer to exchange all outstanding shares of common stock of QLogic Corporation (QLGC 15.69, -0.18 -1.13%) for $11 per share in cash and 00.098 shares of common stock for each share of QLogic common stock.
ManTech (MANT 40.03, +0.18 +0.45%) was awarded $110 million for two task orders by the General Services Administration Federal Acquisition Service on behalf of the U.S. Department of Homeland Security to provide cybersecurity.
Enphase Energy (ENPH 1.83, -0.15 -7.58%) announced the resignation of CFO, Kris Sennesael.
In reaction to quarterly results:
Avnet (AVT 40.99, -0.49 -1.18%) reported better than expected Q4 EPS of $0.86 on revenues which fell 8.4% compared to last year to $6.23 billion. AVT also guided Q1 EPS and revenues in-line at $0.84-0.94 and $5.8-6.4 billion, respectively.
ViaSat (VSAT 74.75, -0.23 -0.31%) reported worse than expected Q1 EPS and revenues of $0.23 and $363.1 million, respectively.
Yelp (YELP 36.83, +4.19 +12.84%) reported better than expected Q2 EPS and revenues of $0.16 and $173.4 million, respectively. For Q3, the company sees better than expected revenues of $180-184 million. For FY16, YELP sees better than expected revenues of $700-708 million.
SolarCity (SCTY 24.38, -0.17 -0.69%) reported a better than expected Q2 loss per share of $2.32 on better than expected revenues of $185.8 million. For Q3, SCTY sees worse than expected EPS of ($2.55)-($2.65) on worse than expected revenues of $155-168 million. For FY16, the company sees total MW Installed of 900-1,000 MW (down from 1.0-1.1 GW).
Paylocity (PCTY 45.55, -0.81 -1.75%) reported a better than expected Q4 loss per share of $0.01 on better than expected revenues which rose 49.5% compared to last year to $59.8 million. For Q1, PCTY sees in-line EPS of $0.01-0.03 and better than expected revenues of $63.0-64.0 million. For FY17, PCTY sees in-line EPS of $0.35-0.38 and better than expected revenues of $296.0-298.0 million.
Lumentum (LITE 31.82, -0.31 -0.96%) reported better than expected Q2 EPS of $0.41 on better than expected revenues which rose 15.7% compared to last year to $241.7 million. For Q1, LITE sees EPS of $0.40-0.46 and revenues of $245-255 million.
SunPower (SPWR 10.31, -4.47 -30.24%) reported a Q2 loss per share of $0.22 on better than expected revenues of $401.8 million. For Q3, the company sees revenues of $750-850 million. For FY16 the company sees revenues of $3.0-3.2 billion.
SolarEdge Technologies (SEDG 16.82, -1.80 -9.67%) reported better than expected Q4 EPS of $0.44 on worse than expected revenues which rose 26.8% compared to a year ago to $124.8 million. For Q1, SEDG sees in-line revenues of $130-139 million.
ComScore (SCOR 27.20, +1.16 +4.45%) sees 1H2016 revenues of $214-218 million. (filed to delay the Form 10-Q).
KLA-Tencor (KLAC) reported better than expected Q4 EPS and revenues of $1.77 and $919.17 million, respectively. Sees Q1 non-GAAP EPS of $0.90-1.10 on revenues of $695-755 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: PMTS, CSRA, DTRM, GLOB, MXPT, WSTL/AIXG, HIMX, MTLS
Analyst actions:
YELP was upgraded to Outperform at Raymond James, to Neutral at BofA/Merrill, to Buy at Axiom Capital and to Buy at Mizuho,
LOGI was upgraded to Equal Weight from Underweight at Morgan Stanley,
VRNS was upgraded to Buy from Hold at Needham,
HLIT was upgraded to Buy from Hold at Drexel Hamilton;
SPWR was downgraded to Hold at Deutsche Bank, to Neutral at Credit Suisse, to Neutral at Janney, to Perform at Oppenheimer and to Neutral at JP Morgan,
YRD was downgraded to Reduce from Neutral at Nomura,
KEYW was downgraded to Hold from Buy at Noble Financial,
TTGT was downgraded to Hold from Buy at Craig Hallum,
MCHX was downgraded to Neutral from Buy at Roth Capital,
G was downgraded to Underweight from Equal Weight at Morgan Stanley;
TECD was initiated with a Neutral at Northcoast,
IMASY was initiated with a Buy at Goldman
