From Briefing.com: Weekly Recap - Week ending 19-Aug-16The stock market had to contend with another range-bound week, which ended on a slightly lower note. The S&P 500 ended the week just below its flat line while the Dow (-0.1%) and Nasdaq (+0.1%) were also little changed.
Investors received a few more quarterly reports over the past week with the bulk of the latest batch coming from the retail sector, which is traditionally left for the tail end of each reporting period. All in all, the results were better than feared with Gap (GPS), Foot Locker (FL), L Brands (LB), and Urban Outfitters (URBN) beating estimates.
In addition to hearing from apparel retailers, market participants received some cautious-sounding quotes from influential fund managers. Carl Icahn said he is "More hedged than ever" while Paul Singer noted that he believes the bond market is broken, and warned of a sharp downturn that could be sudden and would likely ripple through to other asset classes.
Investor participation remained light with an average of 756 million shares changing hands at the NYSE floor per day.
There has been a bit of a shift in rate hike expectations over the past week and the fed funds futures market is once again suggesting that a hike could take place by the end of 2016. The implied probability of a hike in December ended the week at 53.5%.
Index Started Week Ended Week Change % Change YTD %
DJIA 18576.47 18552.57 -23.90 -0.1 6.5
Nasdaq 5232.89 5238.38 5.49 0.1 4.6
S&P 500 2184.05 2183.87 -0.18 -0.0 6.8
Russell 2000 1229.82 1236.86 7.04 0.6 8.9
4:14 pm Closing Market Summary: Indices Flat, Ending Range-Bound Week (:WRAPX) :
The major averages ended a flat week on a similar note as early selling gave way to a partial rebound in afternoon action. The Dow Jones Industrial Average (-0.2%) settled behind the S&P 500 (-0.1%) and slightly behind the Nasdaq Composite ( UNCHF).
Equity indices began the day under moderate selling pressure as investors adjusted U.S. rate hike expectations and responded to a downturn in European markets. European bourses tilted to the downside as weakness in Italian banking names weighed on regional indices. Additionally, reports indicated that U.K. Prime Minister Theresa May hopes to invoke Article 50 of the Lisbon Treaty by April 2017. The move would begin formal talks for the country's withdrawal from the European Union.
On the central bank front, San Francisco Fed President Williams (not an FOMC voter) surprised market participants last evening by stating that the Fed should get back to hiking rates sooner rather than later. Recall that Mr. Williams published a letter earlier in the week, calling on central banks to reexamine their policy framework. Separately, Dallas Fed President Kaplan (not an FOMC voter) indicated that the Fed has room to maneuver on rates, but that a lower neutral rate does limit the central bank's policy options.
The prospect of a sooner-than-expected rate hike helped keep a lid on buying interest at the open. The benchmark index violated technical support near the 2178/2180 price level before finding its bearings near its 20-day simple moving average (2175.80).
The broader market marched off that level through the afternoon as heavily-weighted industrials ( UNCHF), consumer discretionary ( UNCHF), and technology (+0.2%) helped lead the rebound effort. Seven sectors ended in the red with defensively-oriented telecom services (-0.9%) and utilities (-1.2%) rounding out the leaderboard.
The influential technology space (+0.2%) ended near the front of the pack as top-weighted Apple (AAPL 109.36, +0.28) outperformed. The Dow component erased a 0.7% decline, ending higher by 0.3%. The early selling followed reports of a string of insider sales. Chipmakers led in the sector as Applied Materials (AMAT 29.64, +1.96) jumped 7.1%. The semiconductor name topped bottom-line estimates for the quarter and raised its fourth-quarter outlook above consensus.
In the industrial space ( UNCHF), Deere (DE 87.32, +10.38) demonstrated relative strength, surging 13.5%. The company beat bottom-line estimates for the quarter and increased its net income guidance for the full-year. Courier names also outperformed in the group as FedEx (FDX 168.63, +1.44) and JB Hunt Transportation (JBHT 83.53, +1.15) moved higher by 0.9% and 1.4%, respectively. Conversely, Emerson (EMR 52.98, -1.69) ended lower by 3.1% after announcing the acquisition of Pentair's (PNR 65.79, -0.74) valve control business.
The consumer discretionary space ( UNCHF) ended flat while retail names displayed relative strength. The SPDR S&P Retail ETF (XRT 45.94, +0.19) finished higher by 0.4% as above-consensus earnings results from Gap (GPS 26.89, +1.01), Ross Stores (ROST 65.06, +2.18), and Foot Locker (FL 68.49, +6.81) boosted the sub-group. Separately, Dow component Nike (NKE 58.90, +1.69) ended at the top of the price-weighted index.
The U.S. Dollar Index (94.48, +0.32, 0.34%) ended off its session high as the greenback gained against the yen, euro, and pound. The dollar/yen pair ended higher by 0.3% (100.14) while the single currency declined 0.2% against the buck (1.1326). Separately, cable declined 0.7% (1.3085), but rebounded from the 1.3020 price level.
The Treasury complex settled off session lows while yields gained across the curve. The yield on the 2-yr note rose five basis points (0.75%) while the yield on the 10-yr note ended at 1.58% (+4 bps).
Today's participation was above the recent average as more than 824 million shares changed hands at the NYSE floor.
There was no economic data of note released today and investors will not receive any economic data on Monday.
Russell 2000 +8.8% YTDS&P 500 +6.9% YTDDow Jones +6.5% YTD
Nasdaq Composite +4.6% YTD
Week in Review: Range-Bound Once Again
The stock market had to contend with another range-boundweek, which ended on a slightly lower note. The S&P 500 ended the week just below its flat line while theDow (-0.1%) and Nasdaq (+0.1%) were also little changed.
Investors received a few more quarterly reports over thepast week with the bulk of the latest batch coming from the retail sector,which is traditionally left for the tail end of each reporting period. All inall, the results were better than feared with Gap ( GPS), Foot Locker ( FL), L Brands ( LB), and Urban Outfitters ( URBN) beating estimates.
In addition to hearing from apparel retailers, marketparticipants received some cautious-sounding quotes from influential fundmanagers. Carl Icahn said he is "More hedged than ever" while Paul Singer notedthat he believes the bond market is broken, and warned of a sharp downturn thatcould be sudden and would likely ripple through to other asset classes.
Investor participation remained light with an average of 756 million shares changing hands at the NYSE floor per day.
There has been a bit of a shift in rate hike expectationsover the past week and the fed funds futures market is once again suggestingthat a hike could take place by the end of 2016. The implied probability of ahike in December ended the week at 53.5%.
The major averages began the day under selling pressure as a downturn in European markets and a pause in the recent oil rally weighed on equities. Italy's MIB (-2.2%) led the retreat in Europe as relative weakness from the country's banking sector weighed on the index. Separately, reports indicated that U.K. Prime Minister Theresa May hopes to invoke Article 50 of the Lisbon Treaty by April 2017. The action would begin formal talks regarding the country's withdrawal from the European Union.
San Francisco Fed President Williams (not an FOMC voter) stated last evening that the Fed should get back to hiking rates sooner rather than later. Meanwhile, Dallas Fed President Kaplan (not an FOMC voter) indicated that the Fed has space to maneuver on a rate hike, but that a lower neutral rate narrows that room.
The week came to a close with a more negative note. Stocks were down, albeit in moderation, as the Dow Jones Industrial Average lost 45.13 points (-0.24%) to 18552.57. The heavily-weighted commodity index was lower despite a modestly higher session from crude oil; October crude oil futures rose $0.19 (+0.4%) to $49.07/barrel. The S&P 500 was down 3.15 points (-0.14%) to 2183.87, and the Nasdaq Composite finished lower by 1.77 points (-0.03%) to 5238.38. This week's jostling left the three major US indices +6.5%, +6.8% and +4.6% YTD, respectively.
Technology (XLK 47.04, +0.08 +0.17%) ended a pressured past five days on a high note as the space managed to climb out of morning losses. Component Applied Materials (AMAT 29.64, +1.96 +7.08%) was the best performer today in the sector following strong Q3 results and Q4 EPS and revenue guidance which came in ahead of expectations. Other sectors as measured by the S&P closed Friday XLU -1.22%, IYZ -0.97%, XLE -0.83%, XLP -0.24%, XLV -0.08%, XLF -0.04%, XLI -0.03%, XLY +0.06%, XLB +0.14% with Utilities returning to the red after two sessions of gains.
In the S&P 500 Information Technology (783.36, +1.57 +0.20%) sector, trading capped off the week on the positive side of flat lines as morning losses would not hold. Component Symantec (SYMC 23.72, +0.61 +2.64%) was an out-performer today on the heels of a premarket upgraded to a Buy rating from Neutral at Citigroup. Other names in the space which outperformed included NTAP +2.45%, QRVO +1.87%, KLAC +1.75%, WDC +1.72%, TEL +1.68%, FLIR +1.53%, CSRA +1.15%, AKAM +1.15%, VRSN +1.15%, JNPR +1.13%, APH +1.12%, EA +0.96%, STX +0.81%.
Notable news items in the tech space:
ComScore (SCOR 27.47, +0.08 +0.29%) received expected notification of deficiency from Nasdaq related to delayed quarterly report on Form 10-Q.
Marvell (MRVL 12.15, +0.50 +4.29%) announced Jean Hu as new CFO effective August 22, 2016.
FXCM (FXCM 9.42, -0.75 -7.37%) the CFTC charged Forex Capital Markets, LLC with under-capitalization, failing to timely report under-capitalization violation, and guaranteeing against customer losses.
TerraForm Power (TERP 11.41, -0.17 -1.55%) disclosed the termination of a purchase and sale agreement relating to the Comanche solar project.
Zebra Tech (ZBRA 68.89, +2.04 +3.05%) named Colleen O'Sullivan as Chief Accounting Officer.
Monster Worldwide's (MWW 3.78, +0.34 +9.88%) largest shareholder MediaNews Group voices opposition to its proposed sale to Randstad North America.
In reaction to quarterly results:
Mentor Graphics (MENT 23.49, +1.33 +6.00%) reported better than expected Q2 EPS and revenues of $0.15 and $254.34 million. For Q3, MENT sees EPS of about $0.42 on revenues of about $310 million.
Applied Materials (AMAT) reported better than expected Q3 EPS of $0.50 on in-line revenues which rose 13.3% compared to a year ago to $2.82 billion. Additionally, the company sees Q4 EPS of $0.61-0.69 on revenues of $3.2-3.36 billion.
Cheetah Mobile (CMCM 11.75, -0.08 -0.68%) reported a worse than expected loss per share for Q2 of RMB 0.44 on revenues which rose 20.2% year-over-year to RMB 1.05 billion.
Analyst actions:
SYMC was upgraded to Buy from Neutral at Citigroup,
ANGI was upgraded to Outperform from Mkt Perform at Raymond James;
NTES was downgraded to Neutral from Outperform at Credit Suisse
4:30 pm TerraForm Power Operating, LLC launches amended and restated consent solicitation related to senior notes ( TERP) :
Co has launched the amended and restated solicitation of consents from holders of record as of 5pm ET August 16, 2016 of its 5.875% Senior Notes due 2023 and its 6.125% Senior Notes due 2025 to obtain waivers relating to certain reporting covenants under the indenture dated as of January 28, 2015 with respect to the 2023 Notes, and the indenture dated as of July 17, 2015 with respect to the 2025 Notes, in each case among TerraForm Power, as issuer, the Guarantors party thereto and U.S. Bank National Association, as trustee, and to effectuate certain amendments to the respective Indentures. The Consent Solicitation amends and restates the terms of the solicitation of consents of holders of the Notes by TerraForm Power, as set forth in the Consent Solicitation Statement and the related Letter of Consent, each dated June 24, 2016, and as extended. Any holder that previously consented to the consent solicitation as set forth in the Consent Solicitation Statement and the related Letter of Consent, each dated June 24, 2016 (prior to the amendment and restatement on the date hereof), is required to re-submit its consent to the Proposed Waiver and Amendments by properly completing and executing the Letter of Consent in accordance with the instructions set forth in the Consent Solicitation Statement and the related Letter of Consent in order to receive the Consent Fee.The Proposed Waiver would waive any and all Defaults or Events of Default existing as of the Waiver Effectiveness Date, and the consequences thereof, with respect to any failure to comply with the respective Indentures, the respective Notes or the respective Note Guarantees that may have occurred, directly or indirectly, as a result of, arising from, relating to or in connection with a failure to comply with the covenants set forth in Section 4.03 of the respective Indentures other than those under Section 4.03(a)(3) thereof relating to current reports on Form 8-K and (ii) compliance with the Annual and Quarterly Reporting Covenants, in each case from the Waiver Effectiveness Date until 5:00 p.m., New York City time, on December 6, 2016 if TerraForm Power has not, by the Waiver Effectiveness Date, filed with the SEC or made publicly available all annual and quarterly reports that would have been required to be so filed or made publicly available pursuant to the Annual and Quarterly Reporting Covenants and cured each Default or Event of Default in connection therewith.
