From Briefing.com: 4:16 pm Cree misses by $0.01, reports revs in-line with preannouncement; guides Q1 with and without Wolfspeed business, being sold to Infineon (IFNNY) (CREE) : Reports Q4 (Jun) earnings of $0.19 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus of $0.20; revenues rose 1.6% year/year to $388.4 mln vs the $384.96 mln Capital IQ Consensus.
Co preannounced rev $388 mln vs. $383 mln consensus on July 14 when it announced sale of Wolfspeed to Infineon (IFNNY).Co issues guidance for Q1 including Wolfspeed, sees EPS of $0.10-0.16 on revs of 356-378, may not be comparable to $0.21 and $387 mln Capital IQ Consensus Estimate; some analysts have put Wolfspeed business into discontinued operations but this is unclear.Excluding Wolfspeed, which co is selling to Infineon (IFNNY) for $850 mln in cash; Q1 guidance is for non-GAAP EPS of $0.06-0.11 on rev of $310-330 mln.
4:25 pm : The stock market ended a relatively quiet session on a lower note as volatility in the foreign exchange market and some hawkish-sounding talk from a few Federal Reserve officials pressured the major averages out of record territory.
The Nasdaq Composite (-0.7%) finished behind the S&P 500 (-0.6%) and the Dow Jones Industrial Average (-0.5%). Mid-cap and small-cap stocks, though, bore the brunt of the selling interest, evidenced by the S&P 400 Midcap Index and the Russell 200 dropping 1.0% and 0.9%, respectively.
The future path of interest rate normalization was in focus as investors weighed the latest Consumer Price Index (CPI) reading. The CPI was unchanged in July, as expected. Core CPI, which excludes food and energy, ticked higher by 0.1% (Briefing.com consensus +0.2%). On a year-over-year basis, total CPI was up 0.8% in July while core CPI was up 2.2%, versus gains of 1.0% and 2.3%, respectively, in June.
Despite the tempered inflation rates, rate-hike expectations inched higher following remarks from New York Fed President William Dudley (an FOMC voter) and Atlanta Fed President Dennis Lockhart (non-FOMC voter).
Mr. Dudley stated that a rate hike remains on the table at the FOMC's September meeting while adding that he thinks the fed funds futures market appears too complacent with regard to future hikes and that current high valuations in the Treasury market are concerning. Separately, Mr. Lockhart said he was unable to rule out at least one rate hike before the end of the year.
In response, the implied probability of an interest rate hike at the September meeting increased to 18.0% from 9.0% in the prior session. The implied probability of an interest rate hike at the December meeting rose to 54.2% from yesterday's implied probability of 41.9%.
The perspective from those two officials weighed on the Treasury market, which saw price weakness across the curve. Investors will be looking for further clues on possible rate-hike timing when the FOMC Minutes from the July meeting are released on Wednesday at 2:00 p.m. ET.
The S&P 500 (-0.4%) settled the day at its low for the session as nine sectors settled with losses.
The defensively-oriented telecom services (-2.0%) and utilities (-1.2%) were the biggest laggards while the remaining decliners showed losses between 0.3% (financials) and 0.9% (health care). The commodity-sensitive energy sector (+0.2%) finished above its flat line, responding in kind to a 1.8% increase in crude oil futures ($46.57/bbl, +$0.84).
Biotechnology demonstrated relative weakness in the health care sector (-0.7%) as the iShares Nasdaq Biotechnology ETF (IBB 291.09, -4.12) declined 1.4%. Vertex Pharmaceuticals (VRTX 100.00, -2.48) underperformed after halting a study involving its VX-661 and ivacaftor therapy. In the broader health care sector, Dow component Johnson & Johnson (JNJ 120.33, -1.98) slipped 1.6%.
In the consumer discretionary space (-0.3%), Dow component Home Depot (HD 136.23, -0.83) underperformed despite beating bottom-line estimates for the quarter and raising its full-year outlook. The increased guidance was largely in-line with analysts' consensus expectations. TJX (TJX 77.97, -4.80) declined by 5.8% as its disappointing guidance overshadowed better-than-expected quarterly results. Lowe's (LOW 81.48, -0.06) inched lower by 0.1% ahead of the company's earnings report tomorrow morning.
The influential technology sector (-0.6%) finished in-line with the broader market, trimming its monthly gain to 1.7%. Microsoft (MSFT 57.44, -0.32) displayed relative weakness after several money managers noted decreased exposure to the stock in recently released 13F forms. Apple (AAPL 109.38, -0.10) for its part slipped 0.1% even though Berkshire Hathaway disclosed a 55.0% increase in its equity stake in the company. The top-weighted component trimmed its post-earnings advance to 13.2%.
The U.S. Dollar Index (94.79, -0.94) ended off its worst level as the euro and yen pared gains against the greenback. The single currency advanced 0.9% against the buck (1.1279) while the dollar/yen pair ended lower by 1.0% (100.28).
Treasuries ended the day near their lows. The yield on the benchmark 10-yr note settled higher by two basis points at 1.57% while the yield on the 2-yr note edged up two basis points to 0.75%.
Today's participation was below the recent average as fewer than 730 million shares changed hands at the NYSE floor.
Today's economic data included the CPI, Housing Starts and Building Permits, and Industrial Production and Capacity Utilization reports for July:
The Consumer Price Index (CPI) for July was unchanged, as expected, after increasing 0.2% in June. Core CPI, which excludes food and energy, was up just 0.1% (Briefing.com consensus +0.2%) after a 0.2% increase in June.
The key takeaway from the report is that consumer inflation pressure eased in July, which will leave the market inclined to think that the Fed is going to hold off on a rate hike at its next meeting.
On an unadjusted basis, CPI was up 0.8% year-over-year in July while core CPI was up 2.2%. Those growth rates mark a slowdown from June when they stood at 1.0% and 2.3%, respectively.
Housing starts in July were up 2.1% to a seasonally adjusted annual rate of 1.211 million units (Briefing.com consensus 1.167 million). Building permits declined 0.1% to 1.152 million (Briefing.com consensus 1.153 million).
The key takeaway from the report -- and a source of relative disappointment -- is that there was little to no growth in the single-family sector
In terms of starts, single-family starts were up just 0.5% to 770,000 while single-family permits actually declined 3.7% to 711,000.
Industrial production increased 0.7% in July (Briefing.com consensus +0.3%) on the heels of a downwardly revised 0.4% increase (from 0.6%) in June. The Capacity Utilization Rate increased to 75.9% (Briefing.com consensus 75.7%) from an unrevised 75.4% in June.
The key takeaway from the report is that the improvement in July was driven by increases across all major industry groups, which is an encouraging focal point for third quarter growth prospects, assuming the strength is maintained
Manufacturing output increased 0.5%, which was its largest gain since July 2015; mining output increased 0.7%; and utilities output surged 2.1% for the second consecutive month as hotter temperatures increased air conditioning demand.
For further detail on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will be limited to the 7:00 a.m. ET release of the MBA Mortgage Index and the 2:00 p.m. ET release of the FOMC Minutes from the July meeting. Tucked in between the Department of Energy will release its closely-followed inventory report at 10:30 a.m. ET.
Russell 2000 +8.6% YTD
S&P 500 +6.6% YTD
Dow Jones +6.5% YTD
Nasdaq Composite +4.4% YTD
DJ30 -84.03 NASDAQ -34.90 SP500 -12.00 NASDAQ Adv/Vol/Dec 891/1.547 bljn/2099 NYSE Adv/Vol/Dec 918/729.7 mln/2019
3:30 pm :
The dollar index extended its initial morning losses further, down -0.8% around the 94.81 level
Commodities, as measured by the Bloomberg Commodity Index, are up +0.6% around the 85.72 level
Crude oil closed at fresh 5-week highs, extended gains for the fourth consecutive session
September crude oil futures rose $0.84 (+1.8%) to $46.57/barrel
The next OPEC meeting will take place in Algeria on Sept 26-28
EIA petroleum data will be released tomorrow at 10:30 am ET
API data will be released after the bell today
Rig count data will be released Friday at 1 pm ET
Natural gas rallied for the third trading session in a row
September natural gas closed $0.01 higher (+0.4%) at $2.61/MMBtu
EIA natural gas data will be released Thursday at 10:30 am ET
In precious metals, gold & silver inched higher as the dollar exhibited notable weakness
December gold ended today's session up (+0.7%) $8.80 to $1356.40/oz
September silver closed today's session $0.03 higher (+0.2%) at $19.88/oz
Base metal copper closed at today's highs in afternoon trade
September copper closed $0.02 higher (+0.9%) at $2.17/lb
Equity indices began the day under modest selling pressure as investors weighed a negative bias in global bourses and some largely in-line U.S. housing and inflation data. Japan's Nikkei (-1.6%) paced the retreat overnight, undercut by a strengthening in the yen. Separately, the euro saw a fair amount of buying interest, helped in part by Germany's ZEW Current Conditions Survey for August (57.6) checking in ahead of estimates.
Additionally, the U.S. Consumer Price Index (CPI) for July came in flat. Core CPI, which excludes food and energy, was up 0.1% in July, compared to the year-over-year reading to 2.2% from 2.3% in June. Despite the tempered inflation trend, fed funds rate hike expectations ticked up a bit following remarks from New York Fed President and FOMC voter William Dudley, who stated that a rate hike remains possible at the FOMC's September meeting and that the fed funds futures market appears too complacent.
Also, housing starts in July were up 2.1% to a seasonally adjusted annual rate of 1.211 million units. Building permits declined 0.1% to 1.152 million. Further, industrial production increased 0.7% in July on the heels of a downwardly revised 0.4% increase (from 0.6%) in June. The Capacity Utilization Rate increased to 75.9% from an unrevised 75.4% in June.
At the end of Tuesday, trading carved out new lows. The sellers took hold as the bell rang and all three major US indices capped off the Tuesday session at LoDs, led by the Nasdaq Composite which shed 34.90 points (-0.66%) to 5227.11. Aiding the decline today, heavily weighted Nasdaq 100 components INCY -3.4%, VRTX -2.4%, REGN -2.2%, ILMN -2.1% and CELG -2.1% all under-performed benchmark index. The S&P 500 lost 12.00 points (-0.55%) to 2178.15, and the Dow Jones Industrial Average was lower by 84.03 points (-0.45%) to 18552.02.
Also peeling off Monday strength, the Technology (XLK 46.99, -0.34 -0.72%) sector traded in a relatively wide range today, albeit ending at a loss. Component VeriSign (VRSN 75.97, -5.84 -7.14%) was the weakest component today as the company announced the upside trigger was met for the six-month interest payment period from Aug. 15, 2016, to Feb. 14, 2017. Other sectors as measured by the S&P ended the day IYZ -1.50%, XLU -1.18%, XLV -0.89%, XLY -0.57%, XLB -0.53%, XLI -0.44%, XLP -0.44%, XLF -0.25%, XLE +0.16% as Telecoms lagged following the start of the second round of the FCC's spectrum auction, and Energy was the lone sector that managed to withstand the selling.
In the S&P 500 Information Technology (781.49, -4.37 -0.56%) sector, trading took a slide into the slide and ended just shy of LoDs. Component Activision Blizzard (ATVI 39.31, -2.17 -5.23%) was also weak today in light of shareholder ASAC II (CEO Robert Kotick) announcement of their lowered active stake to 2.7% from 5.3%. Other names in the space which finished lower today included CSRA -2.91%, JNPR -2.54%, GPN -1.88%, EA -1.80%, AVGO -1.79%, FSLR -1.54%, FIS -1.50%, ADS -1.50%, GLW -1.43%.
Other notable news items among sector components:
According to BeyondCore, Salesforce.com (CRM 77.96, -0.96 -1.22%) will acquire the company for an undisclosed amount.
NVIDIA (NVDA 62.60, -0.38 -0.60%) introduced NVIDIA GeForce GTX 1080, 1070 and 1060 GPUs for notebooks, now available worldwide.
CaribShopper announced a partnership with eBay (EBAY 30.83, -0.22 -0.71%).
VeriSign (VRSN) announced that the upside trigger on its 3.25% junior subordinated convertible debentures due 2037 has been met for the six-month interest payment period from Aug. 15, 2016, to Feb. 14, 2017. As a result, contingent interest will be paid on the Notes for that six-month interest payment period. Contingent interest of about $7.7 million on the $1.25 billion outstanding principal amount of the Notes, or about $6.1750 per $1,000 principal amount of the Notes, will be paid on Feb. 15, 2017, to the holders of record as of Feb. 1, 2017.
According to Engadget, Intel (INTC 35.21, +0.30 +0.86%) announced a new wireless VR headset, Project Alloy.
Investor ASAC II (CEO Robert Kotick) lowered its active stake in Activision Blizzard (ATVI) to 2.7% from 5.3%.
Elsewhere in the tech space:
Shopify (SHOP 38.37, -0.71 -1.82%) filed a preliminary prospectus supplement to its short form base shelf prospectus dated August 5.; 7.5 million Class A subordinate voting shares will be offered for sale under the Offering.
Vicon (VII 0.76, -0.01 -1.32%) filed to delay its 10-Q. The company does not expect significant changes in results of operations.
Elephant Talk (ETAK 0.13, +0.00 +1.51%) reached an agreement in principle with its senior secured lender to increase and restructure its existing $6 million. The company also reaffirmed its relationship with its largest customer.
Quintiles Transnational (Q 76.11, -0.40 -0.52%) merger with IMS Health Holdings (IMS 29.30, -0.26 -0.88%) was approved by the EU.
In reaction to quarterly results:
Alarm.com (ALRM 29.96, -2.97 -9.02%) reported better than expected Q2 EPS and revenues of $0.15 and $64.42 million, respectively. For FY16, ALRM sees EPS and revenues ahead of market expectations at $0.49-0.51 and $242.3-245.8 million, respectively.
Fabrinet (FN 39.79, -2.51 -5.93%) reported in-line Q4 EPA of $0.60 on better than expected revenues of $276.4 million. For Q1, FN sees EPS and revenues ahead of market expectations at $0.70-0.72 and $306-310 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: VNET, CREE, JKHY, OSIS/ADI, JASO
Analyst actions:
SHEN was upgraded to Outperform from Mkt Perform at Raymond James;
RUBI and TUBE were downgraded to Equal Weight from Overweight at First Analysis Sec,
ALRM was downgraded to Mkt Perform from Outperform at Raymond James,
LXFT was downgraded to Neutral from Buy at UBS;
GRUB was initiated with a Hold at Jefferies
