From Briefing.com: Weekly Recap - Week ending 18-Nov-16
The stock market enjoyed its second consecutive week of gains that lifted the S&P 500 into the neighborhood of its record high. The benchmark index gained 0.8% for the week while the Nasdaq Composite (+1.6%) outperformed after lagging one week ago. Conversely, the Dow Jones Industrial Average (+0.1%) underperformed after showing relative strength during the election week.
The overall post-election narrative did not change much during the past week. Expectations for inflationary fiscal policy kept the bond market under pressure, driving the benchmark 10-yr yield up to a one-year high of 2.34% from last Friday's 2.14%. Continued steepening in the yield curve helped the financial sector extend its November gain to 12.3% while the U.S. Dollar Index (101.34) climbed to its best level since early 2003.
Market participants received a batch of quarterly earnings from the retail sector during the past week. Apparel retailers had a mixed showing while electronics retailer Best Buy (BBY) surpassed estimates and issued upbeat guidance for the holiday quarter. Home Depot (HD) also released upbeat earnings and guidance while Wal-Mart (WMT) struggled after its earnings beat was overshadowed by declining profitability. More than 95.0% of S&P 500 components have now reported their third-quarter results, showing an earnings growth rate of 3.0%.
Last week featured Janet Yellen's testimony before the Joint Economic Committee of Congress, but the appearance was free of any big surprises. Chair Yellen acknowledged that recent economic data has lived up to the Federal Reserve's expectations, and noted that a rate hike will be appropriate "relatively soon." Ms. Yellen's appearance had little impact on the fed funds futures market, which continues pointing to a near certainty of a rate hike in December. The implied probability of a December hike rose to 95.4% from last Friday's 81.1%.
Index Started Week Ended Week Change % Change YTD %
DJIA 18847.66 18868.00 20.34 0.1 8.3
Nasdaq 5237.11 5321.51 84.40 1.6 6.3
S&P 500 2164.45 2181.91 17.46 0.8 6.8
Russell 2000 1281.53 1317.14 35.61 2.8 16.0
4:11 pm Closing Market Summary: Stocks Inch Lower at the End of an Upbeat Week (:WRAPX) :
The stock market ended an upbeat week on a modestly lower note as the major averages consolidated after an impressive post-election run. The S&P 500 lost 0.2%, narrowing its weekly gain to 0.8%. Separately, the Russell 2000 (+0.5%) and the Nasdaq Composite (-0.2%) outperformed, rising a respective 2.6% and 1.6% this week.
The major averages jumped out of the gate as the S&P 500 (-0.2%) and the Nasdaq Composite (-0.2%) each zeroed in on their respective all-time highs. The tech-heavy index notched a new all-time intraday high (5346.80), but was unable to establish a new closing high. The benchmark index, however, reversed just below the 2190 price level.
Equities were unable to regain their footing as investors assessed whether the broader market has risen too far, too fast. An appreciating US Dollar Index (101.28, +0.39, +0.39%), rising market rates, and volatility from the oil pit also worked to keep the broader market in check.
The long-end of the yield curve has been on the rise in recent days as investors mull rising inflation concerns and improving economic data. The combination has prompted an exodus from longer-dated issues. The yield on the benchmark 10-yr note increased four basis points to 2.34%, leaving the yield up 51 basis points since the end of October. An improving rate hike outlook has also dampened buying interest in the bond market.
Per the CME's FedWatch Tool, the implied probability of an interest rate hike at the December FOMC meeting has increased to 95.4% from yesterday's 90.6%. A number of Federal Reserve speakers contributed to the uptick, indicating that the FOMC will likely go ahead with its next rate hike in December.
The benchmark index finished just below its flat line with seven sectors ending in negative territory. The health care (-1.1%) space outpaced today's losses in the broader market while energy (+0.5%), telecom services (+0.5%), and financials (+0.1%) finished at the top of the sector leaderboard.
Biotechnology demonstrated relative weakness in the health care space (-1.1%), evidenced by the 1.3% loss in the iShares Nasdaq Biotechnology ETF (IBB 284.72, -3.80). The industry group has narrowed its gain in recent days as investors walk back their post-election reaction. Mylan (MYL 36.47, -1.09) ended lower by 2.9% after Mizuho trimmed its price target from $49 to $47. The broader sector lost 1.2% this week, but remains up 3.2% in November.
In the consumer discretionary space (-0.3%), Gap (GPS 25.61, -5.10, -16.6%) and Abercrombie & Fitch (ANF 14.60, -2.33, -13.8%) weighed on the broader retail sub-group. The two demonstrated relative weakness after disappointing participants with their quarterly results and guidance. Conversely, casual restaurant names outperformed after Yum! Brands (YUM 62.36, +1.60, +2.6%) added $2 billion to its share repurchase program.
The financial (+0.1%) group extended its recent winning streak as banking names continued to outperform. The industry group has surged in the aftermath of the election as steepening in the yield curve boosted the earnings prospects for the group. The SPDR S&P Bank ETF (KBE 40.41, +0.24) gained 0.6%, extending its November gain to 16.6%. This compares to a gain of 12.1% in the broader sector.
The commodity-sensitive energy sector (+0.5%) led the pack as investors reevaluated the likelihood of an OPEC supply cap agreement. WTI crude finished the day higher by 1.0% ($46.38/bbl; +$0.45).
Today's trading volume was below the recent average of one billion as fewer than 926 million shares changed hands at the NYSE floor.
Today's economic data was limited to Leading Indicators for October:
The Conference Board's Leading Economic Index increased 0.1% in October after increasing 0.2% in September.
It was noted by the Conference Board that the six-month growth rate has moderated, but that the index still points to the economy continuing to expand into early 2017.
Investors will not receive any noteworthy data on Monday.
Russell 2000: +15.9% YTD
Dow Jones: +8.3% YTDS&P 500: +6.8% YTDNasdaq Composite: +6.3% YTD
Week in Review: S&P 500 Back Near Record Levels
The stock market enjoyed its second consecutive week ofgains that lifted the S&P 500 into the neighborhood of its record high. Thebenchmark index gained 0.8% for the week while the Nasdaq Composite (+1.6%)outperformed after lagging one week ago. Conversely, the Dow Jones IndustrialAverage (+0.1%) underperformed after showing relative strength during theelection week.
The overall post-election narrative did not change muchduring the past week. Expectations for inflationary fiscal policy kept the bondmarket under pressure, driving the benchmark 10-yr yield up to a one-year highof 2.34% from last Friday's 2.14%. Continued steepening in the yield curve helpedthe financial sector extend its November gain to 12.3% while the U.S. Dollar Index(101.34) climbed to its best level since early 2003.
Market participants received a batch of quarterly earningsfrom the retail sector during the past week. Apparel retailers had a mixed showingwhile electronics retailer Best Buy (BBY) surpassed estimates andissued upbeat guidance for the holiday quarter. Home Depot (HD) also releasedupbeat earnings and guidance while Wal-Mart (WMT) struggled after its earnings beat was overshadowed by declining profitability.More than 95.0% of S&P 500 components have now reported their third-quarterresults, showing an earnings growth rate of 3.0%.
Last week featured Janet Yellen's testimony before the JointEconomic Committee of Congress, but the appearance was free of any bigsurprises. Chair Yellen acknowledged that recent economic data has lived up to theFederal Reserve's expectations, and noted that a rate hike will be appropriate "relativelysoon." Ms. Yellen's appearance had little impact on the fed funds futuresmarket, which continues pointing to a near certainty of a rate hike inDecember. The implied probability of a December hike rose to 95.4% from lastFriday's 81.1%.
Stocks closed the last full week of November lower. Leading the negative action, the S&P 500 shed 5.22 points (-0.24%) to 2181.90. The Nasdaq Composite lost 12.46 points (-0.23%) to 5321.51, and the Dow Jones Industrial Average closed 35.89 points (-0.19%) lower to 18867.93. This week's moves take the three major US indices +6.8%, +6.3% and +8.3% YTD, respectively.
Equities were unable to regain their footing as investors assessed whether the broader market has risen too far, too fast. An appreciating US Dollar Index (101.28, +0.39, +0.39%), rising market rates, and volatility from the oil pit also worked to keep the broader market in check.
The long-end of the yield curve has been on the rise in recent days as investors mull rising inflation concerns and improving economic data. The combination has prompted an exodus from longer-dated issues. The yield on the benchmark 10-yr note increased four basis points to 2.34%, leaving the yield up 51 basis points since the end of October. An improving rate hike outlook has also dampened buying interest in the bond market.
Per the CME's FedWatch Tool, the implied probability of an interest rate hike at the December FOMC meeting has increased to 95.4% from yesterday's 90.6%. A number of Federal Reserve speakers contributed to the uptick, indicating that the FOMC will likely go ahead with its next rate hike in December.
The Technology (XLK 47.36, -0.04 -0.08%) sector ended the week modestly lower. Component Salesforce.com (CRM 77.77, +2.58 +3.43%) was among the best performing names today after the company reported a better than expected Q3. Other sectors as measured by the S&P ended Friday XLFS +2.19%, IYZ +0.77%, XLE +0.42%, XLRE +0.20%, XLF +0.00%, XLI -0.03%, XLB -0.04%, XLU -0.30%, XLP -0.36%, XLY -0.36%, XLV -1.06%.
In the S&P 500 Information Technology (796.32, -1.78 -0.22%) sector, trading ended below flat lines. Component First Solar (FSLR 29.21, -1.95 -6.26%) was the worst performing name today as the stock was downgraded to a Sell rating at UBS; among the better performing names, Intuit (INTU 115.98, +2.18 +1.92%) and Applied Materials (AMAT 30.74, +0.01 +0.03%) were the beneficiaries of their latest quarterly reports. Other names in the space which were modestly weak today included ATVI -3.91%, TDC -3.39%, ADSK -1.99%, CA -1.49%, XRX -1.46%, CTSH -1.44%, GOOG -1.39%, GOOGL -1.35%, MCHP -1.34%, FFIV -1.32%, CTXS -1.32%, CSRA -1.28%, HPE -1.23%.
Other notable news items among components:
Lam Research (LRCX104.71, +0.91 +0.88%) approved a $1 billion share repurchase authorization, with execution planned over the next 12 to 18 months; and a 50% increase of the company's quarterly dividend. The company also gave 2017-2018 targets for revenues of $7.25-8 billion and a 2019 target of $8-8.75 billion in revenues and $8.5-9.25 billion in revenues for 2020.
Sigfox announced it is closing its Series E funding round of 150 million to accelerate the expansion of its global network and soon reach worldwide coverage. Salesforce (CRM), Total (TOT 45.81, -0.30 -0.65%), Henri Seydoux, Alto Invest, Swen CP and Tamer Group will join Sigfox as new investors. Existing shareholders including Bpifrance, Elliott, Intel Capital (INTC 34.95, -0.07 -0.20%), Air Liquide (AIQUY 19.76, -0.43 -2.13%), Idinvest Partners and IXO, will also re-invest in the company. Additional new investors are also expected to join this financing round shortly to reach the 150 million level.
Verizon (VZ 48.07, +0.23 +0.48%) filed for EU approval of its pending deal to acquire Yahoo's (YHOO 41.19, -0.26 -0.63%) operating business.
Intel (INTC) planned to use chips acquired through deal with Nervana Systems to compete with Nvidia (NVDA 93.36, +0.97 +1.05%), according to WSJ.
Elsewhere in the tech space:
In addition to reporting quarterly results, Nuance Communications (NUAN16.91, +1.36 +8.75%) extended Chairman and CEO Paul Ricci's employment agreement through the first half of fiscal 2018. Mr. Ricci has advised the Board that he intends to retire at the end of this term. The Board of Directors will undertake a search process to choose Mr. Ricci's successor during the term. Nuance also announced that Bill Robbins, executive vice president, Worldwide Sales, will be leaving the company for another role and as part of a planned transition of sales responsibilities into Nuance's four business divisions.
In addition to reporting quarterly results, Marvell (MRVL 14.80, +1.44 +10.78%) announced that the Board of Directors has authorized a $1 billion share buyback program. This newly authorized stock repurchase program replaces in its entirety the prior $3.25 billion stock repurchase program, which had about $115 million of repurchase authority remaining. The Company currently intends to repurchase about $500 million worth of shares over the next 12 months.
Acxiom (ACXM 26.87, -0.24 -0.89%) entered into definitive purchase agreements to acquire Arbor and Circulate for $140 million in cash.
FireEye (FEYE 13.63, -0.15 -1.09%) named former Symantec (SYMC 23.75, -0.08 -0.34%) and Nuance (NUAN) executive Bill Robbins Head of Worldwide Sales.
Tesla Motors (TSLA 185.02, -3.64 -1.93%) shareholders approved the proposed merger with SolarCity (SCTY 20.34, -0.06 -0.29%).
Black Box (BBOX 15.00, +0.15 +1.01%) named Anthony Massetti as CFO.
Perceptron (PRCP 6.19, +0.18 +3.00%) appointed CFO David Watza as new CEO effective immediately.
Kratos Defense and Security (KTOS 6.26, -0.59 -8.61%) priced a public offering of 11.67 million shares of its common stock at $6.00 per share.
Allscripts Healthcare (MDRX 10.85, -0.04 -0.37%) announced a new stock repurchase program under which Allscripts may purchase up to $200 million of its common stock through December 31, 2019.
Impinj (PI 29.82, -3.01 -9.17%) filed for $75 million common stock offering.
MGT Capital Investments (MGTI 1.33, +0.17 +14.66%) officially appointed John Mcafee as CEO effective immediately.
In reaction to quarterly results:
Salesforce.com (CRM) reported better than expected Q3 EPS and revenues of $0.24 and $2.14 billion, respectively. For Q4, the company sees in-line EPS of $0.24-0.25 and better than expected revenues of $2.267-2.277 billion. For FY18, the company sees revenues ahead of market expectations at $10.10-10.15 billion.
Intuit (INTU) reported better than expected Q1 EPS and revenues of $0.06 and $778 million, respectively. For Q2, the company sees in-line EPS and revenues of $0.33-0.36 and $1.045-1.065 billion, respectively. For FY17, the company sees in-line EPS and revenues of $4.30-4.40 and $5.0-5.1 billion, respectively.
Nuance Communications (NUAN) reported better than expected Q4 EPS and revenues of $0.41 and $512.4 million, respectively. For Q1, the company sees worse than expected EPS and revenues of $0.32-0.35 and $483-497 million, respectively. For FY17, NUAN sees EPS modestly worse than expected at $1.53-1.63 and revenues in-line at $2.02-2.07 billion.
Applied Materials (AMAT) reported better than expected Q4 EPS of $0.66 on revenues which rose 39.2% compared to last year to $3.3 billion. For Q1, the company sees better than expected EPS and revenues of $0.62-0.70 and $3.20-3.34 billion, respectively.
Marvell (MRVL) reported better than expected Q3 EPS and revenues of $0.20 and $654 million, respectively. For Q4, the company sees adj. EPS of $0.17-0.21 on revenues of $553.7-576.3 million.
Amtech Systems (ASYS 5.06, -0.29 -5.42%) reported a better than expected Q4 loss per share of $0.02 and revenues which beat expectations at $42.41 million. For Q1, the company sees revenues of $25-27 million.
Companies scheduled to report quarterly results Monday morning: CSIQ, CMCM
Analyst actions:
NUAN was upgraded to Strong Buy from Outperform at Raymond James,
HPE was upgraded to Outperform from Mkt Perform at Raymond James,
MRVL was upgraded to Positive from Neutral at Susquehanna,
BAH was upgraded to Buy from Neutral at BofA/Merrill;
FSLR was downgraded to Sell from Neutral at UBS,
IEC was downgraded to Neutral from Buy at B. Riley & Co.,
ACXM was downgraded to Equal Weight from Overweight at First Analysis Sec,
ASYS was downgraded to Hold from Buy at The Benchmark Company,
KLIC and CLS were downgraded to Hold from Buy at Standpoint Research;
MTCH was initiated with a Buy at Aegis Capital,
FIS was initiated with an Overweight at Pacific Crest,
FISV and QTWO were initiated with a Sector Weight at Pacific Crest
4:18 pm Kopin receives notice from NASDAQ due to delay in filing of form 10-Q (as expected) (KOPN) : The notice also indicated that Kopin's common stock is subject to delisting from The NASDAQ Global Market unless Kopin provides a plan within 60 calendar days to NASDAQ Qualifications Panel to regain compliance. If Kopin is unable to complete its investigation and file its Form 10-Q within 60 days it will file a plan on how it expects to regain compliance.
12:58 pm Earnings Calendar for the week of November 21 (:SUMRX) :
Monday (November 21)
Pre-Market: TSN, IGT, CMCM, CSIQ, CUB
After-Hours: VIPS, BECN, DY, BRCD, PANW, JACK, CPRT, SINA, WB, PNNT, ENTA
Tuesday (November 22)
Pre-Market: MDT, TECD, DLTR, JEC, QIWI, HRL, CPB, PDCO, BURL, SIG, ADI, BKS, SDRL, CBRL, DSW, HQCL, EV, AMWD, MOV, CTRN, EVLV, DAKT, KIRK, NM
After-Hours: HPE, HPQ, GME, URBN, CAL, MENT, VEEV, NMBL, QADA
Wednesday (November 23)
Pre-Market: DE, ICL, TSL
After-Hours: None confirmed
Thursday (November 24)
Market closed in obeservance of Thanksgiving
Friday (November 25)
Pre-Market: None confirmed
