From Briefing.com: Weekly Recap - Week ending 04-Nov-16
The stock market registered its second consecutive weekly decline as the looming election contributed to increased caution among participants. The S&P 500 lost 1.9% for the week while the Nasdaq Composite (-2.8%) underperformed.
With the presidential election coming up on Tuesday, participants saw no reason to rush into stocks, especially when confronted with last Friday's news that the FBI is once again investigating Hillary Clinton after a new batch of emails was uncovered. The news led to a tightening in polls while market participants who had priced in an easy Clinton victory were forced to adjust their positions.
The down week appeared to be on track for a higher close on Friday, after the S&P 500 resisted a move below its 200-day moving average (2083). However, the index slid from its high in afternoon action, but avoided a close beneath the 200-day average. The Friday volatility took place after the release of the Employment Situation report for October, which was mixed relative to expectations. Nonfarm Payrolls increased by a below-consensus 161,000 (Briefing.com consensus 175,000), but average hourly earnings increased at a faster-than-expected 0.4% (Briefing.com consensus 0.3%).
Although the upcoming election received a lot of attention, market participants also had to deal with the last heavy batch of third-quarter earnings. Facebook (FB) was one of the most notable companies to report, but its shares retreated as cautious guidance overshadowed better than expected results.
The busy week also featured the latest policy decision from the Federal Reserve, but to no one's surprise, the central bank held pat, showing little willingness to rock the policy boat ahead of the election. The policy statement did say that the case for a rate hike has strengthened, but the probability of a December rate raise declined, as indicated by the fed funds futures market. The implied likelihood of a December hike ended the week at 66.8%, down from last week's 74.2%.
Index Started Week Ended Week Change % Change YTD %
DJIA 18161.19 17888.28 -272.91 -1.5 2.7
Nasdaq 5190.10 5046.37 -143.73 -2.8 0.8
S&P 500 2126.41 2085.18 -41.23 -1.9 2.0
Russell 2000 1187.61 1163.81 -23.80 -2.0 2.5
When the week came to a close, the broader market faded afternoon gains into the weekend. Opening modestly below flat lines, the broader market would peak just after midday with all three US indices firmly in the green. Stocks quickly turned lower, though, and ultimately ended at lows. Leading the decline, the Dow Jones Industrial Average swung 103 points from high to low today, ending Friday down 42.39 points (-0.24%) to 17888.28. The Nasdaq Composite also lost (-0.24%), declining 12.04 points to 5046.37. The S&P 500 closed lower by 3.48 points (-0.17%) to 2085.18. The week's moves take the three major US indices +2.7%, +0.8% and +2.0% YTD, respectively.
As is were, the Technology (XLK 46.18, -0.08 -0.17%) sector ended below flat lines, pressured in the end by the broader market sell-off. Components Qorvo (QRVO 51.08, -5.66 -9.98%) and Symantec (SYMC 23.49, -1.96 -7.70%) were pressured today on the back of their latest quarterly earnigs reports. Other sectors as measured by the S&P closed Friday IYZ +1.06%, XLRE +0.84%, XLV +0.71%, XLB +0.35%, XLI +0.09%, XLY -0.20%, XLF -0.31%, XLU -0.31%, XLFS -0.39%, XLE -0.57%, XLP -0.90% ended split with Telecoms outperforming and Energy lagging.
In the S&P 500 Information Technology (777.71, -3.13 -0.40%) sector, trading also collapsed into the close as afternoon gains did not hold. Component Motorola Solutions (MSI 75.90, +4.61 +6.47%) was the best performer in the sector today after the company reported better than expected Q3 earnings. Other names in the space which closed modestly lower included XRX -1.93%, FFIV -1.51%, AKAM -1.07%, XLNX -1.05%, INTC -0.94%, ADBE -0.91%, AAPL -0.90%, MSFT -0.83%, VRSN -0.77%, WU -0.76%, FLIR -0.75%, MA -0.72%, PYPL -0.70%.
Other notable news items among sector components:
In addition to reporting quarterly results, Qorvo (QRVO) announced a $500 million share repurchase program.
In addition to reporting quarterly results, Symantec (SYMC) announced that Thomas Seifert, Executive Vice President and CFO plans to step down as CFO at the end of the month. The company appointed Nick Noviello, formerly CFO of Blue Coat, as Executive Vice President and CFO effective December 1, 2016.
CACI Intl (CACI 102.70, +1.65 +1.63%), Harris (HRS 94.25, +1.45 +1.56%), and L-3 (LLL 134.59, +0.54 +0.40%) were named as part of $200 million US Air Force contract.
NetApp (NTAP 30.45, -2.00 -6.16%) committed to a restructuring and reduction in workforce as a part of its planned transformation efforts to streamline its core business and reduce operating expenses. The company stated it will reduce its headcount by 6%.
In addition to reporting quarterly results, Activision (ATVI 41.70, -1.67 -3.85%) announced the availability of Call of Duty: Infinite Warfare both digitally and at global retailers worldwide
Elsewhere in the tech space:
TiVo (TIVO 21.00, +1.90 +9.95%) and Samsung (SSNLF 1250.00, flat) agreed to terms regarding a broad intellectual property license that will provide certain rights under TiVo's patent portfolios for Samsung's mobile, consumer electronic and set-top box businesses.
In addition to reporting quarterly results, Web.com (WEB 13.45, -2.10 -13.50%) announced that its Board increased its stock repurchase plan by $100 million and extended the expiration date to December 31, 2018.
In addition to reporting quarterly results, Imperva (IMPV 35.55, +0.45 +1.28%) detailed expected charges from restructuring initiative. IMPV expects these efforts will result in an estimated annual savings of $15 million and anticipates they will be completed by the end of the quarter.
In addition to reporting quarterly results, Glu Mobile (GLUU 1.83, -0.11 -5.67%) announced that Niccolo de Masi will transition from his roles as Chairman and CEO to become the company's Executive Chairman; also, Nick Earl, President of Global Studios, has been named CEO. GLUU also acquired a controlling interest in Crowdstar for $45.5 million in cash.
CenturyLink (CTL 23.05, +0.05 +0.22%) entered into a definitive agreement to sell its data centers and colocation business for $2.1 billion; anticipated to close in Q1 of FY17.
SolarCity (SCTY 20.18, +1.63 +8.79%) was strong today on the heels of a premarket report that proxy firm ISS has backed the pending merger with Tesla (TSLA 190.56, +3.14 +1.68%).
CGI Group (GIB 47.12, -0.23 -0.49%) acquired Collaborative Consulting. Financial details of the deal were not disclosed.
CNBC reported that Twitter's (TWTR 12.18, +0.19 +1.58%) Board was not actively pushing for CEO Jack Dorsey to choose between his role there, and as CEO of Square (SQ).
In reaction to quarterly results:
Activision Blizzard (ATVI) reported better than expected Q3 EPS of $0.49 on in-line revenues which rose 58.4% compared to last year to $1.57 billion. The company also sees Q4 EPS of $0.40 on revenues of $1.856 billion with FY16 EPS of $1.92 on revenues of $6.450 billion.
Glu Mobile (GLUU) reported a worse than expected Q3 loss per share of $0.33 on in-line revenues of $51.4 million.
Imperva (IMPV) reported better than expected Q3 EPS and revenues of $0.08 and $68.4 million, respectively. For Q4, the company sees EPS and revenues ahead of market expectations at $0.01-0.04 and $69-71 million, respectively.
Web.com (WEB) reported better than expected Q3 EPS of $0.76 on revenues which rose 37.3% compared to last year to $192.79 million.
Qorvo (QRVO) reported worse than expected Q2 EPS of $1.29 and better than expected revenues of $864.7 million. For Q3, the company sees in-line EPS of $1.15-1.35.
Symantec (SYMC) reported better than expected Q2 EPS of $0.30 on revenues which rose 8.1% compared to a year ago to $979 million. For Q3, the company guided EPS worse than expected at ($0.02)-($0.00). For FY17, the company sees EPS of $1.12-1.18, up from $1.08-1.174 and revenues of $3.925-4.005 billion.
Motorola Solutions (MSI) reported better than expected Q3 EPS and revenues of $1.37 and $1.53 billion, respectively. The company also guided Q4 EPS of $1.82-1.87 on worse than expected revenue growth of +9-10% to about $1.83-1.85 billion.
Companies scheduled to report quarterly results Monday morning: CTSH ELNK EPAM FDC MEET ON SPNS VSH WIN
Analyst actions:
IMPV was upgraded at Macquarie, DA Davidson and Evercore ISI,
TRUE was upgraded at Loop Capital and Craig Hallum,
MCHP was upgraded to Neutral from Sell at Goldman,
QLYS was upgraded to Neutral from Underweight at JP Morgan,
GPN was upgraded to Buy from Hold at Stifel,
OLED was upgraded to Buy from Hold at Gabelli & Co.,
PCTY was upgraded to Overweight from Equal Weight at First Analysis Sec;
FIT was downgraded to Equal Weight from Overweight at Barclays,
BNFT was downgraded to Outperform from Strong Buy at Raymond James,
QRVO was downgraded to Underperform from Buy at BofA/Merrill,
NTAP was downgraded to Negative from Mixed at OTR Global,
CSOD was downgraded at Credit Suisse, JP Morgan, UBS and Needham,
WEB was downgraded to Hold from Buy at SunTrust,
PRFT was downgraded to Mkt Perform from Mkt Outperform at Avondale,
PCTY was downgraded to Hold from Buy at Craig Hallum;
ADS was initiated with a Sell at Compass Point,
PTC was initiated with a Buy at Goldman,
MOMO was initiated with a Buy at T.H. Capital
