From Briefing.com: 4:10 pm : The stock market began the new year on a higher note, but the bulk of today's advance took place during the initial minutes of the session. The S&P 500 added 0.9% after being up 1.1% during the opening hour.
The long weekend was fairly quiet from the news standpoint, but investors did receive upbeat economic data from China (Caixin Manufacturing PMI 51.9; previous 50.9) and the eurozone (December Manufacturing PMI 54.9; previous 54.9). The data was used to justify the sunny disposition in the pre-market, but roughly half of the early gains faded shortly after the open. The morning pullback coincided with a spike in the yen after the dollar/yen pair failed to climb above its December high (118.67). The yen picked up about 100 pips against the dollar in just over an hour, and the risk-off move in the currency market helped cool the buying jets in the stock market. However, the last 30 minutes of the session saw the market rally back towards its early high.
Ten out of eleven sectors ended the day in positive territory with health care (+1.4%) and telecom services (+1.9%) climbing into the lead as the broader market retreated during the late morning. Telecom services rallied behind Verizon (VZ 54.58, +1.20) after the stock was upgraded to 'Buy' from 'Neutral' at Citigroup while the health care sector received support from biotech names. The iShares Nasdaq Biotechnology ETF (IBB 270.24, +4.86) spiked 1.8%. Although biotechnology lifted the health care sector, it could not keep the Nasdaq Composite (+0.9%) ahead of the broader market due to relative weakness in chipmaker names. The PHLX Semiconductor Index (+0.1%) spent the bulk of the day in negative territory, but late afternoon buying prevented a lower finish while the broader technology sector (+0.9%) settled just ahead of the broader market.
Like technology, financials (+1.0%) settled in the neighborhood of the S&P 500, but the sector flirted with a 2.0% gain at the start. Similarly, energy (+1.2%) backed off its opening high, but still ended comfortably in the green even though crude oil surrendered a big gain to end lower by 2.6% at $52.33/bbl after climbing above $55.00/bbl in overnight action.
Automakers were in the news today, starting with General Motors (GM 35.15, +0.31). Shares of GM ended higher by 0.9% after being down 1.0% in pre-market after President-elect Donald Trump said, in a tweet, that GM should pay a "big border tax" on Chevrolet Cruze vehicles produced in Mexico. General Motors responded by saying that most Cruze vehicles for U.S. distribution are produced in Ohio. Separately, Ford (F 12.59, +0.46) climbed 3.8% after announcing it will expand its plant in Michigan instead of developing a new location in San Luis Potosi, Mexico.
On the downside, the utilities sector (-0.3%) was the lone decliner, spending the day in negative territory even as intraday demand for Treasuries pressured yields off their overnight highs. The 10-yr note ended flat with its yield at 2.45%.
Today's participation was above average as more than one billion shares changed hands at the NYSE floor.
Economic data included Construction Spending and ISM Index:
Total construction spending increased 0.9% in November (Briefing.com consensus +0.5%) on top of an upwardly revised 0.6% increase (from +0.5%) in October. On a year-over-year basis, total construction spending increased at a seasonally adjusted annual rate of 4.1%.
The key takeaway from the report is that construction spending is increasing and will serve as a positive input for Q4 GDP forecasts.
The ISM Manufacturing Index closed 2016 on an upbeat note, hitting 54.7 (Briefing.com consensus 53.6), which was up from 53.2 in November and the highest reading all year. December marked the fourth straight month that the index was above 50.0, which is the dividing line between expansion and contraction.
The key takeaway from the report is that it helps validate the market's budding growth assumptions for 2017 considering the strength in December was forged on the back of a big uptick in the component indexes for new orders and prices.
For further detail on today's economic releases, be sure to visit Briefing.com's Economic Calendar
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while the Federal Reserve will release the December FOMC Minutes at 14:00 ET.
S&P 500 +0.9% YTD
Nasdaq Composite +0.9% YTD
Dow Jones Industrial Average +0.6% YTD
Russell 2000 +0.5% YTD
When the bell rang on the first trading day of 2017, stocks were all higher. Leading the opening charge, the S&P 500 and the Nasdaq Composite both advanced +0.85%. The S&P added 19.00 points to 2257.83, and the Nasdaq gained 45.97 points to 5429.08. The Dow Jones Industrial Average was the "laggard" today, albeit posting gains of 119.16 points (+0.60%) to 19881.76.
The long weekend was fairly quiet from the news standpoint, but investors did receive upbeat economic data from China (Caixin Manufacturing PMI 51.9; previous 50.9) and the eurozone (December Manufacturing PMI 54.9; previous 54.9). The data was used to justify the sunny disposition in the pre-market, but roughly half of the early gains faded shortly after the open. The morning pullback coincided with a spike in the yen after the dollar/yen pair failed to climb above its December high (118.67). The yen picked up about 100 pips against the dollar in just over an hour, and the risk-off move in the currency market helped cool the buying jets in the stock market. However, the last 30 minutes of the session saw the market rally back toward its early high.
Today's econ data included total construction spending which increased 0.9% in November on top of an upwardly revised 0.6% increase (from +0.5%) in October. On a year-over-year basis, total construction spending increased at a seasonally adjusted annual rate of 4.1%. Also, the ISM Manufacturing Index closed 2016 on an upbeat note, hitting 54.7, which was up from 53.2 in November and the highest reading all year. December marked the fourth straight month that the index was above 50.0, which is the dividing line between expansion and contraction.
The Technology (XLK 48.79, +0.43 +0.89%) sector ended the session about middle of the daily trading range, yet ultimately higher on a premarket gap up. Component Xerox (XRX 6.89, +1.14 +19.83%) was the best performer today after the completion of the spin-off of its Conduent (CNDT 13.72, -1.18 -7.92%) business. Other sectors as measured by the S&P closed Tuesday IYZ +4.43%, XLV +1.31%, XLE +1.13%, XLF +1.12%, XLI +0.59%, XLY +0.59%, XLB +0.58%, XLP +0.37%, XLRE +0.33%, XLU -0.25%.The lone laggard, the XLU was pressured today by components like PEG -1.1%, PNW -0.9%, EXC -0.9% and ETR -0.7%.
On the flip side, US Telecoms - IYZ - were particularly strong today on the back of strong sessions out of heavily weighted components like Verizon (VZ 54.58, +1.20 +2.25%) - which saw a strong reaction to a premarket upgrade of the stock to a Buy rating at Citigroup, GlobalStar (GSAT 1.77, +0.19 +12.03%) and CenturyLink (CTL 25.35, +1.57 +6.60%).
In the S&P 500 Information Technology ( 815.12, +7.17 +0.89%) sector, trading closed with a strong positive bias as action surged out of the gate and held onto decent morning gains. Component Total System (TSS 51.44, +2.41 +4.92%) turned in a strong Tuesday after a bullish analyst note, and chip name Intel (INTC 36.60, +0.33 +0.91%) was equally as strong following an investment announcement in HERE. Other names in the space which gained today included FSLR +4.52%, STX +3.80%, CRM +3.04%, ADSK +2.93%, MU +2.87%, WDC +2.18%, MA +2.07%, PYPL +1.98%, ADS +1.97%, GOOGL +1.96%.
Other notable news items among tech names:
Conduent (CNDT) completed its separation from Xerox (XRX) and is now an independent public company trading on the NYSE. Conduent debuts as the world's largest pure-play business process services leader with about $6.7 billion in annual revenue, a portfolio of differentiated offerings and a vision focused on technology and innovation to advance the client and constituent experience.
Intel (INTC) confirmed it is acquiring a 15% ownership stake in HERE. The 15% ownership stake in HERE, a global provider of digital maps and location-based services, was bought from HERE's current indirect shareholders: AUDI AG (AUDVF 645.00, flat), BMW AG (BMWYY 31.56, +0.55 +1.77%) and Daimler AG (DDAIF 75.16, +1.01 +1.36%). In conjunction with INTC's acquisition of a stake in HERE, the two companies also signed an agreement to collaborate on the research and development of a highly scalable proof-of-concept architecture that supports real-time updates of high definition maps for highly and fully automated driving. Additionally, the two companies plan to jointly explore strategic opportunities that result from enriching edge-computing devices with location data.
MINDBODY (MB 21.65, +0.35 +1.64%) partnered with Alphabet's (GOOGL 807.57, +15.12, +1.91%) Google to pilot new fitness booking integration.
Tesla Motors' (TSLA 216.99, +3.30 +1.54%) Elon Musk confirmed autopilot uploads were underway over the weekend.
Liberty Global (LBTYA 30.65, +0.06 +0.20%) and Vodafone (VOD 24.96, +0.53 +2.17%) completed a Dutch joint venture, creating a fully-converged national communications operator.
Energous (WATT 17.59, +0.74 +4.39%) announced JT Group is making a $5 million investment. JT Group will be the preferred backhaul and cloud connectivity partner for IoT customers that use its WattUp technology.
Canadian Solar (CSIQ 12.67, +0.49 +4.02%) announced that its wholly-owned subsidiary, CSI New Energy Holding Co. has completed the sale of 2 solar power plants in Jiangsu Province, China to Shenzhen Energy Nanjing Holding Co., a subsidiary of Shenzhen Energy Group Co., for about RMB223.48 million (US$32.2 million). The transaction was closed on December 30, 2016 and the Company expects to recognize the difference between the sales proceeds and the book value of the projects under 'Other income (expenses)' in the income statement for the fourth quarter of 2016.
Payment Data Systems (PYDS 1.84, -0.01 -0.54%) announced the purchase of shares from several executives at $1.75 per share. The company intended to cover tax liabilities incurred due to the vesting of previously disclosed stock grants.
magicJack VocalTec (CALL 7.50, +0.65 +9.49%) filed a preliminary proxy statement for the February 28 Annual Meeting, announced a CEO transition plan and updated Kanen Wealth Management talks.
Finjan (FNJN 1.21, +0.07 +6.82%) closed on a patent license agreement with F5 Networks (FFIV 144.80, +0.08 +0.06%).
Analyst actions:
XRX was upgraded to Outperform from Neutral at Credit Suisse,
VZ was upgraded to Buy from Neutral at Citigroup,
CUDA was upgraded to Mkt Perform from Mkt Underperform at JMP Securities,
CTL was upgraded to Overweight from Neutral at JP Morgan,
PYPL was upgraded to Buy from Neutral at Monness Crespi & Hardt,
GRPN was upgraded to Sector Perform from Underperform at RBC Capital Mkts,
FDC and TSS were upgraded to Overweight from Equal Weight ratings at a boutique firm;
TWX was downgraded to Market Perform from Outperform at Telsey Advisory Group,
P and TSQ were downgraded to Mkt Perform from Mkt Outperform ratings at Barrington Research,
XLNX was downgraded to Reduce from Neutral at Instinet,
ARW was downgraded to Hold from Buy at SunTrust,
NOK and DATA were downgraded to Perform ratings from Outperform at Oppenheimer,
EIGI was downgraded to Sell from Neutral at Goldman,
GRUB was downgraded to Sell from Neutral at Monness Crespi & Hardt;
SSYS was initiated with a Buy at Standpoint Research,
VOD was initiated with an Accumulate at Standpoint Research,
ICHR was initiated with a Buy at Stifel,
MBLY was initiated with a Buy at Monness Crespi & Hardt,
TWTR was initiated with a Sell at Aegis Capital,
EBAY and FB were initiated with Buy ratings at Aegis Capital,
EGOV was initiated with a Mkt Perform at Barrington Research
