From Briefing.com: Weekly Recap - Week ending 16-Dec-16
The past trading week featured sideways action in the major averages as the S&P 500 shed 0.1% while the Dow Jones Industrial Average (+0.4%) outperformed. Small caps saw relative weakness with the Russell 2000 falling 1.7% after being at the forefront of the post-election rally.
The first session of the trading week was headlined by news from Vienna, where non-OPEC producers agreed to reduce their output by 558,000 barrels per day. In addition, a Saudi official indicated that his country may implement a larger cut than what was agreed to on November 30. Crude oil surged to a fresh 2016 high on the news, but pulled back as the week wore on to end the week with a modest gain.
Equity indices surged on Tuesday as the Fed began its two-day meeting, which concluded with a Wednesday rate hike. However, in addition to increasing the fed funds target range by 25 basis points, the FOMC signaled the intention to raise rates three times in 2017, which was up from market expectations for two rate hikes.
The FOMC decision and guidance weighed on Treasuries and boosted the dollar. Selling in the 10-yr note pushed up its yield to 2.60% from last Friday's 2.47% while the U.S. Dollar Index jumped 1.3% to its best level since early 2003.
The past week saw increased trading volume due to Wednesday's FOMC decision, but participation is expected to be on the decline going into the last two weeks of the year.
Index Started Week Ended Week Change % Change YTD %
DJIA 19756.85 19843.41 86.56 0.4 13.9
Nasdaq 5444.50 5437.16 -7.34 -0.1 8.6
S&P 500 2259.53 2258.07 -1.46 -0.1 10.5
Russell 2000 1388.08 1363.46 -24.62 -1.8 20.0
4:09 pm Closing Market Summary: Friday Slip Leads to Weekly Decline (:WRAPX) :
The stock market registered a modest decline on Friday to end the week on a slightly lower note. The S&P 500 shed 0.2%, ending the week lower by 0.1%. The Dow Jones Industrial Average (-0.04%) also posted a Friday loss, but gained 0.4% for the week.
Equities spent the Friday affair inside narrow ranges amid a mixed showing from individual sectors. Most countercyclical groups displayed strength from the start, but their gains were not sufficient to offset losses among cyclical sectors. In addition, a late morning report indicated that the Chinese Navy seized an unmanned U.S. Navy submarine that was conducting operations in the South China Sea. The incident took place yesterday and the U.S. government demanded the return of the Navy drone.
The news weighed on sentiment, keeping the market near its low into the afternoon. Treasuries climbed off their lows in reaction to the news, but afternoon backtracking left the 10-yr note in the middle of its range. The benchmark yield slipped one basis point to 2.59%.
Heavily-weighted technology (-0.8%) and financials (-0.9%) lagged from the start, which prevented the market from staging a meaningful rebound. The financial sector narrowed its December gain to 4.3% while technology trimmed this month's advance to 2.5%. Oracle (ORCL 39.13, -1.73) and Adobe Systems (ADBE 103.52, -1.58) were among the notable laggards after both reported earnings. However, their bottom-line beats were overshadowed by weak guidance. Oracle lost 4.2% while Adobe fell 1.5%. High-beta chipmakers also lagged, sending the PHLX Semiconductor Index lower by 1.0%.
Staying on the cyclical side, the consumer discretionary sector (-0.5%) also contributed to the weakness in the market as retail stocks recorded broad-based losses in the wake of yesterday's report from the NPD, which showed a 3.0% year-over-year decline in cumulative dollar sales in the first five weeks of the holiday shopping season. The SPDR S&P Retail ETF (XRT 45.91, -0.64) surrendered 1.4%.
The energy sector (+0.6%) was the only cyclical group that spent the day above its flat line, thanks to a 2.0% spike in crude oil, which settled at $51.90/bbl. The energy component gained 0.8% for the week after marking a new 2016 high on Monday ($54.51/bbl).
Similar to energy, countercyclical sectors recorded gains. Real estate (+1.2%) and utilities (+1.2%) held the lead throughout the day while consumer staples (+0.5%), telecom services (+0.6%), and health care (+0.1%) posted modest gains.
Investor participation was well above average due to quadruple witching. More than two billion shares changed hands at the NYSE floor.
Economic data was limited to Housing Starts and Building Permits:
November housing starts declined 18.7% to a seasonally adjusted annual rate of 1.090 million units (Briefing.com consensus 1.225 mln).
Building permits declined 4.7% to a seasonally adjusted annual rate of 1.201 million (Briefing.com consensus 1.236 million), although permits for single-family homes increased 0.5% to 778,000
The November report followed a big beat in October, thus market reaction was limited
Investors will not receive any economic data on Monday.
Russell 2000 +20.7% YTD
Dow Jones Industrial Average +13.9% YTD
S&P 500 +10.5% YTD
Nasdaq Composite +8.6% YTD
Week in Review: Stocks Hold Ground as Fed Hikes
The past trading week featured sideways action in the major averages as the S&P 500 shed 0.1% while the Dow Jones Industrial Average (+0.4%) outperformed. Small caps saw relative weakness with the Russell 2000 falling 1.7% after being at the forefront of the post-election rally.
The first session of the trading week was headlined by news from Vienna, where non-OPEC producers agreed to reduce their output by 558,000 barrels per day. In addition, a Saudi official indicated that his country may implement a larger cut than what was agreed to on November 30. Crude oil surged to a fresh 2016 high on the news, but pulled back as the week wore on to end the week with a modest gain.
Equity indices surged on Tuesday as the Fed began its two-day meeting, which concluded with a Wednesday rate hike. However, in addition to increasing the fed funds target range by 25 basis points, the FOMC signaled the intention to raise rates three times in 2017, which was up from market expectations for two rate hikes.
The FOMC decision and guidance weighed on Treasuries and boosted the dollar. Selling in the 10-yr note pushed up its yield to 2.60% from last Friday's 2.47% while the U.S. Dollar Index jumped 1.3% to its best level since early 2003.
The past week saw increased trading volume due to Wednesday's FOMC decision, but participation is expected to be on the decline going into the last two weeks of the year.
After an impressive Thursday session, stocks broke down on Friday as the Nasdaq Composite turned in the worst percentage losses. The index shed about 19.69 points (-0.36%) to 5437.16. The S&P 500 was down 3.96 points (-0.18%) today to 2258.07, and the Dow Jones Industrial Average lost 8.83 points (-0.04%) to 19843.41. This week's moves take the three major US indices +8.6%, +10.5% and +13.9% YTD, respectively.
Equities spent the Friday affair inside narrow ranges amid a mixed showing from individual sectors. Most countercyclical groups displayed strength from the start, but their gains were not sufficient to offset losses among cyclical sectors. In addition, a late morning report indicated that the Chinese Navy seized an unmanned U.S. Navy submarine that was conducting operations in the South China Sea. The incident took place yesterday and the U.S. government demanded the return of the Navy drone.
Among market data metrics today, November housing starts declined 18.7% to a seasonally adjusted annual rate of 1.090 million units. Building permits declined 4.7% to a seasonally adjusted annual rate of 1.201 million, although permits for single-family homes increased 0.5% to 778,000.
Investor participation was well above average due to quadruple witching. More than two billion shares changed hands at the NYSE floor.
The Technology (XLK 48.59, -0.35 -0.72%) space was the one of the hardest hit in the S&P today as trading was pressured nearly the entire day. Component Adobe Systems (ADBE 103.52, -1.58 -1.50%) was weak today following last night's Q4 beat. Other sectors as measured by the S&P closed XLRE +1.40%, XLU +1.22%, IYZ +0.62%, XLE +0.62%, XLP +0.57%, XLV +0.08%, XLI -0.22%, XLB -0.35%, XLY -0.49%, XLF -0.86%.
In the S&P 500 Information Technology (815.63, -6.18 -0.75%) space, trading saw modest losses on the back of yesterday's equally modest positive session. Component Oracle (ORCL 39.13, -1.73 -4.23%) was lower today after last night's Q2 report. Other names in the space which felt the broader market pressure included STX -3.69%, ADSK -3.09%, HPQ -2.97%, SYMC -2.90%, XLNX -2.86%, EA -2.45%, QCOM -2.31%, CA -2.23%, ADI -2.06%, MCHP -1.97%, QRVO -1.80%, AMAT -1.66%, LRCX -1.57%.
Other notable news items in the tech space:
Viacom's (VIAB 35.22, +0.31 +0.89%) Sumner Redstone to step down from Board, according to CNBC.
Priceline (PCLN 1484.28, -16.92 -1.13%) named Head of Strategy and EVP of Corporate Development, Glenn Fogel, as CEO effective January 1.
trivago (TRVG 11.85, +0.85 +7.73%) opened for trading at $11.20 after pricing IPO at $11.
Wi-LAN's (WILN 1.48, -0.02 -1.33%) Smart Wearable Technologies entered into patent license agreement with TCL Communication (TCCLF 0.99, flat).
Rogers Comms (RCI 38.15, -0.37 -0.96%) announced a partnership with Comcast (CMCSA 69.87, -0.01 -0.01%) to bring its customers Comcast's X1 IP-based video platform. As a result, RCI will discontinue any further investment in the IPTV product.
FireEye (FEYE 13.21, +0.03 +0.23%) and the NATO Communications and Information Agency announced Industry Partnership Agreement for cyber security information sharing.
FARO Techs (FARO 37.90, -0.60 -1.56%) promoted Robert Seidel to CFO.
SS&C Techs (SSNC 29.44, +0.55 +1.90%) acquired Conifer Financial Services for $88.5 million.
Cognizant Tech (CTSH 56.26, -0.54 -0.95%) to acquire Adaptra. Financial terms of the deal were not disclosed.
M/A-COM Tech (MTSI 48.86, -0.78 -1.57%) announced final order of preliminary injunction against Infineon (IFNNY 16.98, -0.05 -0.29%).
xG Technology (XGTI 2.30, -0.90 -28.15%) announced a 1:10 reverse split.
Finisar (FNSR 31.17, -1.55 -4.74%) announced a private placement of $450 million of convertible senior notes due 2036.
In reaction to quarterly results:
Adobe Systems (ADBE) reported better than expected Q4 EPS and revenues of $0.90 and $1.61 billion, respectively. For Q1, the company sees better than expected EPS of $0.87. For FY17, ADBE sees EPS of $3.75 and revenues of $6.95 billion.
Oracle (ORCL) reported better than expected Q2 EPS of $0.61 on revenues of $9.04 billion. For Q3, ORCL sees revenue growth of 3-5% on EPS of between $0.61-0.64 in constant currency.
Jabil Circuit (JBL 24.15, +2.58 +11.96%) reported better than expected Q1 EPS and revenues of $0.69 and $5.1 billion, respectively. For Q2, the company sees in-line EPS and revenues of $0.35-0.57 and $4.2-4.5 billion, respectively.
Analyst actions:
ADP was upgraded to Conviction Buy from Neutral at Goldman,
ERIC was upgraded to Buy from Neutral at BofA/Merrill,
PAYX was upgraded to Buy at Goldman,
VEEV was upgraded to Market Outperform from Market Perform at JMP Securities;
IPAS was downgraded to Neutral from Buy at Chardan Capital Mkts,
GIB was downgraded to Sell from Neutral at Goldman,
FDC was downgrade to Neutral from Buy at Goldman;
SBAC, CCI, AMT were initiated with Neutral ratings at Guggenheim,
SQ was initiated with a Buy at Needham,
HIVE was initiated with a Buy at DA Davidson,
FDC and TSS were initiated with Overweight ratings at Pacific Crest,
CY was initiated with a Buy at Loop Capital,
GOOG was initiated with a Neutral at Cleveland Research
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