From Briefing.com: Weekly Recap - Week ending 13-Jan-17The S&P 500 took a breather during the past week, logging a modest downtick of 0.1%, while the Nasdaq Composite added 1.0% thanks to relative strength in the technology sector.
The benchmark index spent the week inside a 25-point range as participants awaited the start of the fourth-quarter earnings season. On Friday, Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) got things going with a set of mixed results. Bank of America and JPMorgan Chase topped bottom-line expectations while Wells Fargo reported below-consensus results. The three names surged at the start of Friday's session, but saw intraday profit taking. It is worth remembering that the financial sector enjoyed a huge post-election run, soaring more than 15.0% in just one month. During the past week, the sector shed 0.1%.
Meanwhile, the top-weighted technology sector advanced 0.8% with chipmakers leading the way. The PHLX Semiconductor Index climbed 1.8% ahead of next week's release of quarterly results from index components like ASML (ASML), Linear Technology (LLTC), and Skyworks (SWKS).
Investors received a small batch of economic reports last week with the most noteworthy pair crossing the wires on Friday. December PPI (+0.3%; Briefing.com consensus +0.3%) and core PPI (+0.2%; Briefing.com consensus +0.1%) were close to expectations while December Retail Sales (+0.6%; Briefing.com consensus +0.7%) and Retail Sales ex-auto (+0.2%; Briefing.com consensus +0.6%) disappointed. Recall that two weeks ago, several apparel retailers made cautious comments about their expectations for fourth-quarter earnings. The consumer discretionary sector added 0.8% for the week, extending its January gain to 3.2%.
Rate hike expectations barely budged during the past week. The implied probability of a hike in June ticked up to 69.7% from last Friday's 69.0%, according to the fed funds futures market.
Index Started Week Ended Week Change % Change YTD %
DJIA 19963.80 19885.73 -78.07 -0.4 0.6
Nasdaq 5521.06 5574.12 53.06 1.0 3.5
S&P 500 2276.98 2274.64 -2.34 -0.1 1.6
Russell 2000 1367.15 1372.04 4.89 0.4 1.1
4:26 pm Closing Market Summary: Stock Market Closes Friday Modestly Higher (:WRAPX) : The major averages finished Friday's session mixed. The S&P 500 (+0.2%) and the Nasdaq (+0.5%) closed in the green, while the Dow (unch) finished in the red.
Investors had high hopes for today's earnings reports, looking for banks to validate the financial sector's 20.5% Q4 advance. What they received wasn't great, yet it wasn't all that bad either as Bank of America (BAC 23.01, +0.09), JPMorgan Chase (JPM 86.70, +0.46), and Wells Fargo (WFC 55.31, +0.81) came up short on revenue. Wells Fargo also missed bottom-line expectations while Bank of America and JPMorgan beat their respective earnings estimates.
Investors chose to run with the good news, pushing the financial sector, and the market, upward out of the gate. However, profit taking in the financial sector pressured the influential group off its high, leading to a sideways drift in the broader market as the session wore on. Bank of America (+0.4%), JPMorgan Chase (+0.5%), and Wells Fargo (+1.5%) finished off their session highs, but still outpaced the broader market. Similarly, the financial sector (+0.6%) ended atop the leaderboard, but only kept a portion of its opening gain.
Most cyclical sectors outperformed with consumer discretionary (+0.3%), industrials (+0.3%), and technology (+0.3%) closing in positive territory. The top-weighted technology sector had a mixed showing from its top components as Apple (AAPL 119.04, -0.21) lost 0.2% while Facebook (FB 128.34, +1.72) climbed 1.4%. On the other hand, chipmakers finished overwhelmingly in the green, with Qualcomm (QCOM 66.88, +0.76) pacing the advance. The PHLX Semiconductor Index closed higher by 0.7%.
On the countercyclical side, health care (+0.1%) outpaced its defensive peers. The space leaned on biotechnology to counter losses from large cap components like UnitedHealth (UNH 161.80, -0.56) and Bristol-Myers Squibb (BMY 56.22, -0.33) which lost 0.3% and 0.6%, respectively. The iShares Nasdaq Biotechnology ETF (IBB 280.01, +1.08) countered with a 0.4% gain. The remaining four countercyclical sectors finished just below their flat lines in negative territory.
For the week, the cyclical, non-cyclical trend continued as four of the six growth-sensitive sectors posted week-to-date gains. Comparatively, all five countercyclical sectors finished the week lower. The ends of the leaderboard were represented by consumer discretionary (+0.8%) at the top, riding a 0.7% week-to-date gain in the SPDR S&P 500 Retail ETF (XRT 44.01, +0.04), and real estate (-2.3%) at the bottom.
U.S. Treasuries were under moderate selling pressure early, sustaining losses immediately following the opening bell. The Treasury market recouped some of the loss, but still closed in negative territory with the 10-yr yield higher by two basis points at 2.39%.
Today's economic data included PPI, Retail Sales, Business Inventories, and the Michigan Sentiment Index:
December producer prices increased 0.3%, which is in line with the Briefing.com consensus. Core producer prices increased 0.2% while the Briefing.com consensus expected an increase of 0.1%.
The key takeaway from the report is that higher energy prices are driving up producer prices and continue to support the notion that inflation rates are apt to pick up in 2017.
December retail sales increased 0.6%, which compares to the Briefing.com consensus of 0.7%. The prior month's reading was revised higher to 0.2% from 0.1%. Excluding autos, retail sales rose 0.2% while the consensus expected an uptick of 0.6%. The prior month's reading was revised higher to 0.3% from 0.2%.
The key takeaway from the report is that consumers were somewhat guarded with their discretionary spending on goods in December despite some decent wage growth and reports of increased confidence.
Business Inventories rose 0.7% in November while the Briefing.com consensus expected an uptick of 0.6%. The prior month's reading was revised to -0.1% from -0.2%. The key takeaway from the report is that business inventories continue to remain at an elevated level relative to sales, which will continue to weigh on pricing power. The preliminary reading of the Michigan Consumer Sentiment Index for January declined to 98.1 (Briefing.com consensus 98.5) from 98.2 in December. The key takeaway from the report is that there is a real divide between positive and negative concerns among consumers pertaining to the Trump Administration. However, when the outlook from consumers who didn't share any views on government is considered, the Expectations Index was a strong 90.9. The latter, according to the report, supports a real consumption growth rate of 2.7% in 2017. The stock market will be closed on Monday, January 16 in observance of Martin Luther King Jr. Day. The next economic report will be January Empire Manufacturing (Briefing.com consensus 8.3), which will be released on Tuesday morning at 8:30 am ET.
Russell 2000 +1.1% YTD
Dow Jones Industrial Average +0.6% YTD
S&P 500 +1.6% YTD
Nasdaq Composite +3.6% YTD
Week in Review: Nasdaq Climbs While S&P 500 Holds Ground
The S&P 500 took a breather during the past week,logging a modest downtick of 0.1%, while the Nasdaq Composite added 1.0% thanksto relative strength in the technology sector.
The benchmark index spent the week inside a 25-point rangeas participants awaited the start of the fourth-quarter earnings season. OnFriday, Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) got things going with a set of mixed results. Bank ofAmerica and JPMorgan Chase topped bottom-line expectations while Wells Fargoreported below-consensus results. The three names surged at the start of Friday'ssession, but saw intraday profit taking. It is worth remembering that the financialsector enjoyed a huge post-election run, soaring more than 15.0% in just onemonth. During the past week, the sector shed 0.1%.
Meanwhile, the top-weighted technology sector advanced 0.8%with chipmakers leading the way. The PHLX Semiconductor Index climbed 1.8%ahead of next week's release of quarterly results from index components like ASML (ASML), Linear Technology (LLTC), and Skyworks (SWKS).
Investors received a small batch of economic reports lastweek with the most noteworthy pair crossing the wires on Friday. December PPI(+0.3%; Briefing.com consensus +0.3%) and core PPI (+0.2%; Briefing.comconsensus +0.1%) were close to expectations while December Retail Sales (+0.6%;Briefing.com consensus +0.7%) and Retail Sales ex-auto (+0.2%; Briefing.comconsensus +0.6%) disappointed. Recall that two weeks ago, several apparelretailers made cautious comments about their expectations for fourth-quarterearnings. The consumer discretionary sector added 0.8% for the week, extendingits January gain to 3.2%.
Rate hike expectations barely budged during the past week.The implied probability of a hike in June ticked up to 69.7% from last Friday's69.0%, according to the fed funds futures market.
Exactly a week from the United States ushering in a new presidential administration, the broader market ended split. Action in the Dow Jones Industrial Average barely dipped into the red at the close, losing about 5.27 points (-0.03%) to 19885.73. The Nasdaq Composite was the best performer today, adding 26.63 points (+0.48%) when the bell rang to 5574.12, and the S&P 500 gained 4.20 points (+0.18%) to 2274.64. This week's moves take the broader market to +0.6%, +3.5% and +1.6% YTD, respectively.
Market data today included the December producer prices reading which increased 0.3% and core producer prices increased 0.2%. Also, December retail sales increased 0.6% and the prior month's reading was revised higher to 0.2% from 0.1%. Excluding autos, retail sales rose 0.2% while the consensus expected an uptick of 0.6%. The prior month's reading was revised higher to 0.3% from 0.2%. Further, business inventories rose 0.7% in November and the prior month's reading was revised to -0.1% from -0.2%. Lastly, the preliminary reading of the Michigan Consumer Sentiment Index for January declined to 98.1 from 98.2 in December.
In the Technology (XLK 49.66, +0.15 +0.30%) space, trading capped off the week in the green, heading higher at the open and holding those gains. Component Facebook (FB 128.34, +1.72 +1.36%) was higher today after an upgrade of the stock premarket at Raymond James to a 'Strong Buy' rating. Other sectors as measured by the S&P closed IYZ +0.88%, XLF +0.56%, XLI +0.38%, XLY +0.37%, XLV +0.10%, XLP +0.06%, XLU -0.14%, XLB -0.16%, XLRE -0.23%, XLE -0.29%.
In the S&P 500 Information Technology (834.02, +2.27 +0.27%) sector, action held onto morning gains, ending slightly off highs. Components QRVO +3.04%, FSLR +2.52%, LRCX +2.19%, SWKS +2.06%, SYMC +1.71%, KLAC +1.67%, XRX +1.59%, AMAT +1.44%, TSS +1.39%, GLW +1.26%, QCOM +1.15% helped the sector maintain a strong close to the week.
Other notable news items among sector components:
GameStop (GME 22.74, -1.98 -8.01%) reaffirmed its Q4 EPS guidance citing lower tax rate. The company also lowered Q4 comp guidance after holiday comps fell 18.7%. Total global sales for the holiday period were $2.50 billion, a 16.4% decline compared to the 2015 holiday sales period. Total comparable store sales decreased 18.7%. GME reiterated its previously announced Q4 and full-year 2016 EPS guidance of $2.23 to $2.38 and $3.65 to $3.80, respectively, excluding any year-end impairments and store closing charges, based on a favorable fourth quarter tax rate of between 32.5% and 34.5% compared to the initially forecasted rate of 36.0%.
Pandora Media (P 12.75, +0.75 +6.29%) gave expectations to exceed Q4 guidance, citing subscription momentum and RPM growth. The company will also undertake operational efficiency measures. Specifically, P expects to exceed previously announced Q4 revenue and adjusted EBITDA guidance given strong advertising performance and has surpassed 4.3 million in paid subscription customers. The prior guidance called for revenue of $362-374 million on an adjusted EBITDA loss of $51-39 million. P also plans to reduce its U.S. employee base (excluding Ticketfly) by about 7% by the end of Q1 2017.
GameStop (GME) is now taking pre-orders on Nintendo (NTDOY 25.85, -1.75 -6.34%) Switch, Nintendo's new gaming system launching March 3.
Immersion (IMMR 10.70, +0.46 +4.49%) signed a multi-year agreement with Nintendo (NTDOY) to allow Immersion to adapt its TouchSense technology to the new Nintendo Switch system.
MAXIMUS (MMS 58.51, +0.89 +1.54%) received a spot in Wales on the Umbrella Agreement for the provision of Employment and Health Related Services.
Rubicon Project (RUBI 8.55, +0.91 +11.98%) may consider a sale, according to the Wall Street Journal.
Microsoft (MSFT 62.70, +0.09 +0.14%) acquired deep-learning startup Maluuba. Financial terms of the deal were not disclosed.
Hortonworks (HDP 9.31, +0.11 +1.20%) appointed Raj Verma as President and Chief Operating Officer.
CenturyLink (CTL 25.26, +0.08 +0.32%) refiled pre-merger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with its previously-announced acquisition of Level 3 (LVLT 58.40, +0.18 +0.31%).
Zillow's (ZG 38.00, +0.71 +1.90%) StreetEasy acquired Hamptons Real Estate Online. No financial terms were disclosed.
Analyst actions:
FB was upgraded to Strong Buy from Outperform at Raymond James,
NFLX was upgraded to Hold from Sell at Deutsche Bank,
CMCSA was upgraded to Buy from Hold at Deutsche Bank,
GRUB was upgraded to Overweight from Equal Weight at Morgan Stanley,
FTV was upgraded to Outperform from Neutral at Credit Suisse,
MX was upgraded to Buy from Hold at Needham;
NOK was downgraded to Hold from Buy at Canaccord Genuity,
NICE was downgraded to In-Line from Outperform at Imperial Capital,
Z was downgraded to Equal Weight from Overweight at Morgan Stanley,
ACLS was downgraded to Hold from Buy at Stifel;
FEYE was initiated with a Buy at Standpoint Research,
FEYE was initiated with an Outperform at Northland,
CIEN was initiated with a Buy at UBS, CCOI and
ZAYO were initiated with Buy ratings at Stifel,
MBLY was initiated with a Buy at Jefferies,
SSNI was initiated with a Mkt Outperform at JMP Securities,
TRMB was initiated with a Neutral at Rosenblatt
