From Briefing.com: 4:35 pm Semtech beats by $0.02, reports revs in-line; guides Q3 EPS in-line, revs above consensus (SMTC) : Reports Q2 (Jul) earnings of $0.35 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.33; revenues rose 8.1% year/year to $135.9 mln vs the $135.38 mln Capital IQ Consensus.
Non-GAAP gross margin for the second quarter of fiscal year 2017 was 60.4%. Non-GAAP gross margin for the first quarter of fiscal year 2017 was 60.2% and 60.4% in the second quarter of fiscal year 2016.
Co issues guidance for Q3, sees EPS of 0.34-0.38, excluding non-recurring items, vs. $0.36 Capital IQ Consensus Estimate; sees Q3 revs of $134-142 mln vs. $137.73 mln Capital IQ Consensus Estimate.Non-GAAP gross margin is expected to be in the range of 60.0% to 60.5%"Semtech delivered another solid performance this quarter driven by strong demand from the Datacenter, IOT and Smartphone markets. We continue to believe that our balanced end-market approach and focus on delivering disruptive solutions to exciting growth markets should help the Company outperform the industry."
4:16 pm Advanced Micro amends its Wafer Supply Agreement with Globalfoundries for the period from Jan. 1, 2016 to Dec. 31, 2020 (AMD) :
AMD will hold a conference call for the financial community at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss the sixth amendment to the WSA.
4:10 pm : The stock market ended the midweek affair on a modestly lower note as investors favored a cautious approach ahead of Friday's employment report. Other focal points impacting today's trade included a downturn in crude oil futures and relative weakness from the heavily-weighted industrial (-0.5%) sector. The S&P 500 (-0.2%) erased a modest month-to-date gain, surrendering 0.1% in August.
The major averages slipped at the beginning of the session as investors responded to weakness from the oil patch and a mixed performance from global bourses. Crude oil futures were under pressure overnight after the American Petroleum Institute reported a larger-than-expected build in crude oil stockpiles. The energy component extended its loss after the Department of Energy confirmed the disappointing reading with its more influential stockpile data.
The EIA reported that crude oil stockpiles rose by 2.27 million barrels (consensus: +0.92 million) while gasoline inventories declined by 0.69 million barrels (consensus: -1.15 million). As a result, WTI crude slipped from the $46.00/bbl price level, remaining pressured throughout the session. Crude oil ended lower by 3.5% ($44.71/bbl; -$1.63), narrowing its August gain to 7.6%.
Sellers pressed the broader market near midday, corresponding with remarks from Leon Cooperman of Omega Advisors. The investment fund chairman stoked selling interest when he stated that his fund recently trimmed its equity exposure. Mr. Cooperman expressed concerns regarding finding undervalued assets in the "fairly but fully" valued state of the broader market.
The benchmark index pared losses in the second half of trade, reclaiming technical support near the 2170 price level. Seven sectors ended in the red with commodity-sensitive materials (-0.9%) and energy (-1.4%) acting as notable laggards. Conversely, financials (+0.1%), consumer staples (+0.1%), and utilities (+0.3%) ended with the only gains.
The Dow Jones Transportation Average (-0.4%) ended behind the broader market as airlines underperformed. The U.S. Global Jets ETF (JETS 22.54, -0.16) settled lower by 0.7%, pulling back from yesterday's 2.1% gain. In the broader industrial sector (-0.5%), Dow component Boeing (BA 129.49, -1.32) ended behind the price-weighted index while Lockheed Martin (LMT 243.01, +3.56) rebounded 1.5%.
Retail names underperformed in the consumer discretionary sector (-0.3%) as investors looked ahead to the release of same-store sales data later in the week. Nordstrom (JWN 50.45, -1.00) and Gap (GPS 24.87, - 0.47) ended lower by 1.9% apiece. The broader discretionary sector declined 1.4% this month, trailing the remaining cyclical sectors.
In the financial sector (+0.1%), rate-sensitive real estate investment trusts outperformed, evidenced by the 0.2% gain in the iShares Dow Jones Real Estate ETF (IYR 82.54, +0.16). On a related note, the real estate sub-group will be removed from the broader financial sector tomorrow and a REIT sector will be formed. This will be the first change to the ten economic sectors since 1999. The financial space gained 3.6% in August, leading the remaining sectors.
Treasuries ended on a mixed note with the short end of the curve demonstrating relative strength. The yield on the 10-yr note ended higher by one basis point (1.58%) while the yield on the 2-yr note settled flat at 0.81%.
Today's participation was above the recent average as more than 1.08 billion shares changed hands on the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index, the ADP Employment Change Report for August, Chicago PMI for August, and Pending Home Sales for July:
The MBA Mortgage Index showed that mortgage applications increased 2.8% in the week ending August 27. This followed a 2.1% decline in the prior week.
The ADP Employment Change report for August estimated that 177,000 positions were added to private sector payrolls versus the Briefing.com consensus estimate of 170,000. July was revised up to 194,000 from 179,000.
The report doesn't alter expectations for Friday's Employment Situation report nor does it weaken any inclination the Fed might have to raise rates at its September meeting.
The Chicago Purchasing Managers Index (PMI) dropped to 51.5 in August (Briefing.com consensus 54.5) from 55.8 in July. The demarcation point between expansion and contraction for this report is 50.0.
The report suggests that the pickup in manufacturing activity in the Chicago Fed region in June and July may have only been a temporary condition, bolstered simply by the need to increase inventory levels.
Pending Home Sales for July rose by 1.3% while the Briefing.com consensus expected an increase of 0.7%. Separately, the June reading was revised to -0.8% from 0.2%.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include the 7:30 ET release of the Challenger Job Cuts Report for August. Weekly initial claims (Briefing.com consensus 265k) and the revised estimate for second quarter Productivity (Briefing.com consensus -0.6%) and Unit Labor Costs (Briefing.com consensus 2.1%) will each cross the wires at 8:30 ET. Construction Spending for July (Briefing.com consensus +0.6%) and the ISM Index for August (Briefing.com consensus 52.2) will each be released at 10:00 ET. Separately, August Auto and Truck Sales data will be made available throughout tomorrow's session.
Russell 2000 +9.2% YTD
S&P 500 +6.2% YTD
Dow Jones +5.6% YTD
Nasdaq Composite +4.1% YTD
DJ30 -53.42 NASDAQ -9.77 SP500 -5.18 NASDAQ Adv/Vol/Dec 1052/1.587 bln/1821 NYSE Adv/Vol/Dec 1106/1.080 bln/1870 3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, -1.1% around the 82.77 level
Crude oil closed near levels not seen in 3 weeks, also at session lows post-EIA
October crude oil futures fell $1.63 (-3.5%) to $44.71/barrel
The next OPEC meeting will take place in Algiers, Algeria from Sept 26-28
Rig count data will be released Friday at 1 pm ET
Natural gas rallied ahead of tomorrow's inventory number
October natural gas closed $0.06 higher (2.1%) at $2.89/MMBtu
In precious metals, gold & silver diverged, the gold:silver ratio dropped as gold became cheaper in oz of silver
December gold ended today's session down $4.70 (-0.4%) to $1311.40/oz
December silver closed today's session $0.03 higher (+0.2%) at $18.70/oz
The major averages began the day on a modestly lower note as participants weighed mixed performances from global markets and a leg lower in crude oil futures. European bourses led to the downside as participants deciphered a mixed bag of economic data. Notably, eurozone CPI came in below consensus for August, indicating year-over-year inflation growth of 0.2%. Separately, the American Petroleum Institute reported that crude oil inventories rose faster than expected, rising by 0.94 million barrels.
Crude oil futures extended overnight losses following the release of the Department of Energy's weekly inventory data. The EIA reported that crude oil stockpiles increased by 2.27 million barrels while gasoline inventories declined by 0.69 million barrels. To that end, oil closed the session with October crude oil futures down $1.63 (-3.5%) to $44.71/barrel.
Leon Cooperman of Omega Advisors may have also contributed to selling interest, stating on CNBC that it is hard to find undervalued assets right now. Mr. Cooperman cited accommodative policies from the Fed for the fairly or fully valued state of the broader market.
Market data today included the MBA Mortgage Index which showed that mortgage applications increased 2.8% in the week ending August 27. This followed a 2.1% decline in the prior week. Also, the ADP Employment Change report for August estimated that 177,000 positions were added to private sector payrolls. July was revised up to 194,000 from 179,000. Additionally, the Chicago Purchasing Managers Index (PMI) dropped to 51.5 in August from 55.8 in July. The demarcation point between expansion and contraction for this report is 50.0. Lastly, Pending Home Sales for July rose by 1.3% and the June reading was revised to -0.8% from 0.2%.
Following a slight rebound yesterday, stocks again turned lower on Wednesday but finished off session lows. Leading the decline, the Dow Jones Industrial Average shed 53.42 points (-0.29%) to 18400.88. The S&P 500 lost 5.17 points (-0.24%) to 2170.95, and the Nasdaq Composite ended the final trading day of August down 9.77 points (-0.19%) to 5213.22. Today's move cemented the first monthly declines in six months as the broader market has recovered nicely off January/February lows. Sellers have emerged as summer comes to a close, leaving the three major US indices with healthy, yet tamer gains than a month ago +5.6%, +6.2% and +4.1% YTD, respectively.
Among other S&P sectors, Technology (XLK 46.99, -0.08 -0.17%) finished today on the more modest end of losses and just below flat lines. Component First Solar (FSLR) was pressured as the stock was downgraded premarket to Hold from Buy at Argus. Other sectors as measured by the S&P closed today XLU +0.41%, XLFS +0.17%, XLP +0.13%, IYZ +0.12%, XLF +0.08%, XLY -0.26%, XLV -0.30%, XLI -0.56%, XLB -1.00%, XLE -1.58% as Utilities and Consumer Staples climbed out of the red and Energy lagged.
In the S&P 500 Information Technology (782.90, -1.16 -0.15%) sector, action turned lower to start, but came back as buyers attempted to take the sector positive, but failed. Component Cisco Systems (CSCO 31.44, -0.10 -0.32%) managed modest losses following news the company intended to acquire ContainerX. Other names in the space that were lower today included TDC -2.64%, MU -1.49%, FFIV -1.31%, FSLR -1.12%, CA -1.08%, ADSK -0.93%, NTAP -0.92%, WDC -0.91%, CTSH -0.81%, CTXS -0.77%, MSFT -0.74%.
Other notable news items among sector components:
Cisco Systems (CSCO) announced its intent to acquire early-stage privately held ContainerX. Terms of the deal were not yet disclosed. Dell Inc. and EMC Corp. (EMC 28.99, flat) announced that they intend to close the transaction to combine Dell and EMC on Wednesday, September 7, 2016.Royal Philips (PHG 28.94, -0.17 -0.58%) and Qualcomm (QCOM 63.07, +0.13 +0.21%) through its subsidiary, Qualcomm Life, Inc., announced a strategic technology collaboration to advance connected health across the health continuum -- from healthy living and prevention to chronic care management and home care. This collaboration will enable both companies to offer care providers enhanced, scalable, connected care solutions and services within a secure global ecosystem.
Corning (GLW 22.69, -0.08 -0.35%) announced a new innovation - Corning Gorilla Glass SR+. Specifically designed for wearable devices, this new glass composite significantly reduces visible scratches while delivering the toughness, optical clarity and touch sensitivity that make Gorilla Glass famous. Corning Gorilla Glass SR+ is commercially available and is expected to be on product models from leading global brands later this year.
TE Connectivity Ltd. (TEL 63.57, +0.13 +0.20%) has named Heath Mitts the company's EVP and CFO, effective September 12, 2016. Mitts joins TE from IDEX Corporation (IEX 93.44, -1.40 -1.48%), where he most recently served as SVP and CFO.
Elsewhere in the tech space:
In addition to reporting quarterly results, Palo Alto Networks (PANW 133.17, -10.28 -7.17%) announced a $500 million buyback program.Interactive Intelligence (ININ 59.85, +3.18 +5.61%) agreed to be acquired by Genesys for $60.50 per share in cash, or about $1.4 billion.Tesla Motors (TSLA 212.01, +0.67 +0.32%) filed a S-4 proxy statement for SolarCity (SCTY 20.66, -0.03 -0.14%) merger proposal, including an offering for 15.08 million shares. GlobalStar (GSAT 1.56, +0.04 +2.63%) signed a strategic agreement with Carmanah Technologies. The deal is expected to be ready for market in mid-2017.FEI (FEIC 106.47, +0.01 +0.01%) shareholders approved acquisition by Thermo Fisher Scientific (TMO 152.19, -0.97 -0.63%), transaction expected to be completed by end of 2016.Monotype Imaging (TYPE 21.10, +0.31 +1.49%) announced a $25 million stock repurchase program.
Fitbit (FIT 15.48, +0.11 +0.72%) announced the opening of its Europe, Middle East and Africa headquarters in Dublin, Ireland and appointed a new Managing Director, Des Power.
In reaction to quarterly results:
Palo Alto Networks (PANW) reported better than expected Q4 EPS and revenues of $0.50 and $400.8 million, respectively. For Q1, the company sees EPS and revenues worse than market expectations at $0.51-0.53 and $396-402 million, respectively. For FY17, the company issued EPS guidance ahead of expectations at $2.75-2.80. Veeva Systems (VEEV 40.92, +3.28 +8.71%) reported better than expected Q2 EPS and revenues of $0.15 and $131.3 million, respectively. For Q3, the company sees better than expected EPS and revenues of $0.15-0.16 and $134.5-136.0 million, respectively. VEEV also raised FY17 EPS and revenue guidance to $0.60-0.61 (from $0.55-0.57) and $525.0-528.0 million (from $516.0-520.0 million), respectively. Companies scheduled to report quarterly results tonight/tomorrow: BOX, PI, BLOX, CRM, SMTC/CIEN, ITRI, MEI, XCRAAnalyst actions:
MTD was upgraded to Buy from Neutral at BofA/Merrill, APPS was upgraded to Buy from Neutral at Ladenburg Thalmann; FSLR was downgraded to Hold from Buy at Argus, PANW was downgraded to Outperform from Strong Buy at Raymond James, ORAN was downgraded to Neutral from Buy at BofA/Merrill; YY and MOMO were initiated with Overweight ratings at JP Morgan, FDC was initiated with a Buy at Jefferies, JCOM was initiated with an Outperform at Robert W. Baird
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