From Briefing.com: 4:06 pm Adobe Systems authorizes new $2.5 bln stock repurchase program through the end of fiscal year 2019 (ADBE) : The new stock repurchase program, approved by Adobe's Board of Directors, is substantially similar to the company's previous program authorizing the repurchase of up to $2.0 billion in common stock through fiscal year 2017, which authority will soon be exhausted.
4:25 pm : The major averages opened the shortened week on a losing note, succumbing to profit-taking activity in the face of some political angst. The S&P 500 finished Tuesday's session 0.3% lower, while the Nasdaq (-0.6%) and Russell 2000 (-1.4%) underperformed, weighed down principally by losses in the financial, semiconductor, transportation, and biotech groups.
Over the weekend, President-elect Trump may have instilled a sense of doubt about his administration's ability to smoothly implement the pro-growth policies that the stock market has rallied around. Mr. Trump's comments raised some concerns that he and the GOP could be on different pages regarding tax policy and the repeal and replacement of Obamacare.
The President-elect also restated his claim that drug companies will have to negotiate with the government on prices for drugs in Medicare and Medicaid. That view prompted a pullback in drug stocks, like Merck (MRK 61.48, -0.86, -1.4%) and Pfizer (PFE 32.06, -0.46, -1.4%), as well as many biotech issues, which could be seen in the underperformance of the iShares Nasdaq Biotechnology ETF (IBB 274.52, -5.49). The S&P 500 health care sector closed the day 0.5% lower.
On the other hand, the retail space received a nice bump after Mr. Trump voiced his thoughts on a potential border tax, stating that the current GOP plan is too complicated. Retailers, many of which source their goods overseas, pushed the SPDR 500 Retail ETF (XRT 44.36, +0.35) 0.8% higher on the hope that a punitive border tax on imported goods won't come to fruition as feared. Naturally, the consumer discretionary sector also benefited, posting a 0.2% gain for the day.
Energy was the only other cyclical sector to finish Tuesday's session in the green, adding 0.6% on the back of an uptick in crude oil. The commodity ended its trading day far below its session high at $52.46/bbl, an increase of 0.2%. The gain came amid a weakening U.S. dollar, which fell 1.2%.
In addition to strength in the eruo and the Japanese yen, the British Pound had a hand in pushing the greenback lower, rallying 3.0% after a Brexit speech from UK Prime Minister Theresa May and a Consumer Price Index report showing the highest year-over-year pace for inflation (+1.6%) for the UK since July 2014. Ms. May confirmed that Britain will leave the single market, but that it is aiming for a flexible and phased Brexit transition, which will be put to a parliamentary vote. For good measure, President-elect Trump also expressed his belief that the dollar is "too strong."
On the earnings front, Morgan Stanley (MS 42.15, -1.66) reported better-than-expected top and bottom line results today, but traded down with the entire financial sector (-2.3%) as the stock saw some profit-taking activity. The negative response to Morgan Stanley's otherwise good news triggered some broader profit-taking efforts in the space. That selling picked up in the afternoon trade and drove the indices to new session lows before some late buying interest helped pare today's losses.
Financials will also headline tomorrow's earnings reports. Both Goldman Sachs (GS 235.74, -8.56) and Citigroup (C 58.38, -1.25) are scheduled to report before the opening bell. Investors will be looking for numbers that validate the sector's huge post-election run, but certainly after today's action, they will be watching more intently to see if Goldman Sachs and Citigroup report better-than-expected results and still trade lower.
In addition to energy and consumer discretionary, only four other sectors finished in positive territory -- utilities (+1.1%), real estate (+0.8%), telecom services (+0.4%), and consumer staples (+1.4%). Those four sectors combined have a roughly 18% weight in the S&P 500, so their gains were not enough to offset selling elsewhere.
The outperformance of the consumer staples sector was forged on the back of British American Tobacco's (BTI 113.10, -2.11) $49 billion offer to acquire the remaining 57.8% of Reynolds American (RAI 57.68, +1.71) that it does not already own, as well as a solid gain in sector heavyweights Walmart (WMT 68.42, +1.29, +1.9%), Procter & Gamble (PG 85.21, +1.20, +1.4%), and CVS Health (CVS 83.92, +1.94, +2.4%).
Reviewing today's lone economic report, the Empire Manufacturing Survey:
The Empire Manufacturing Survey for January fell to 6.5 from the prior month's reading of 9.0. The Briefing.com consensus estimate was pegged at 8.3.
Tomorrow will see a batch of economic data with the most notable reports being December CPI (Briefing.com consensus 0.3%) and December Industrial Production (Briefing.com consensus 0.6%). The two reports will cross the wires at 8:30 am ET and 9:15 am ET, respectively.
Wednesday's remaining economic reports will include the MBA Mortgage Index at 7:00 am ET, the NAHB Housing Market Index at 10:00 am ET, the Fed's Beige Book at 2:00 pm ET, and Net Long-Term TIC Flows at 4:00 pm ET.
Russell 2000 -0.3% YTD
Dow Jones Industrial Average +0.3% YTD
S&P 500 +1.3% YTD
Nasdaq Composite +2.9% YTD
DJ30 -58.96 NASDAQ -35.39 SP500 -6.75 NASDAQ Adv/Vol/Dec 865/1.59 bln/2138 NYSE Adv/Vol/Dec 1343/1.11 bln/1631
3:30 pm :
After seeing a morning rally, Feb crude oil prices pulled back, erasing the majority of its gains and finishing the day +0.2% at $52.46/barrel
In other energy, Feb natural gas recovered most of today's losses to end floor trading just 0.3% lower at $3.41/MMBtu.
The dollar index slid lower today and held its losses
Although this didn't do that much for oil futures, precious metals benefitted from the weakness in the dollar
Feb gold ended today's floor session 1.4% higher at $1212.80/oz, while Mar silver rallied 2.3% at $17.15/oz
In base metals, Mar copper slipped 2.6% to close at $2.62/lb
To begin inauguration week, the broader market fell across the board. Action was weakest in the Nasdaq Composite as the index fell 35.39 points (-0.63%) when all was said and done to 5538.73. The S&P 500 was lower by 6.75 points (-0.30%) to 2267.89, and the Dow Jones Industrial Average lost 58.96 points (-0.30%) to 19826.77.
The sole piece of economic data that came out on Tuesday was the Empire Manufacturing Survey for January which fell to 6.5 from the prior month's reading of 9.0.
The Technology (XLK 49.47, -0.19 -0.38%) space was held down today by the broader market action. Component Qualcomm (QCOM 64.19, -2.69 -4.02%) was the hardest hit today in light of afternoon news from the Federal Trade Commission by which the FTC charged QCOM with, 'using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products.' Other sectors as measured by the S&P closed Tuesday XLP +1.42%, XLU +1.11%, XLRE +0.81%, XLE +0.58%, XLY +0.17%, IYZ -0.06%, XLB -0.45%, XLV -0.48%, XLI -0.78%, XLF -2.25%.
In the S&P 500 Information Technology (831.04, -2.98 -0.36%) space, trading commenced with a seller's bias as the sector never saw positive action. Component Alliance Data (ADS 230.00, -7.55 -3.18%) was weaker today in light of the company's December 2016 card services data which showed net charge-offs were up 5.3% compared to last year and average receivables were up 22% versus a year ago; additionally, ADS maintained its FY16 guidance of $16.90 in core EPS on $7.2 billion in revenues. Other names which displayed weakness today included GLW -2.62%, NVDA -2.24%, QRVO -2.20%, MCHP -2.11%, MU -1.94%, MSI -1.87%, SWKS -1.84%, KLAC -1.77%, XRX -1.70%, JNPR -1.65%, FSLR -1.62%.
Other notable news items among sector components:
The FTC confirmed charges against Qualcomm (QCOM) for 'using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products.'
Alliance Data (ADS) reported December 2016 card services data which showed net charge-offs were up 5.3% compared to last year and average receivables were up 22% versus a year ago; additionally, ADS maintained its FY16 guidance of $16.90 in core EPS on $7.2 billion in revenues.
Toshiba (TOSBF 2.60, +0.09 +3.7%) might spin-off its flash memory unit, according to Kyodo.
Honeywell (HON 117.23, -0.84 -0.71%) will collaborate with Intel (INTC 36.81, +0.02 +0.05%) to develop new Internet of Things solutions for the retail industry to enhance logistics, improve inventory visibility and drive supply chain efficiencies.
Microsoft (MSFT 62.53, -0.17 -0.27%) acquired automatic 3D data-optimization solutions developer Simplygon. Financial terms of the deal were not disclosed.
Digital Ally (DGLY 4.25, +0.15 +3.66%) announced a legal victory as that the United States Court of Appeals for the Federal Circuit issued a Judgment invalidating nearly all the claims asserted in U.S. Patent No. 6,831,556 ('556 Patent) of which Utility Associates is the owner.
Digital Ally (DGLY) states it's 'disappointed' that the U.S. District Court of Kansas dismissed its allegations that TASER International (TASR 24.82, -0.41 -1.63%) improperly secured contracts with police precincts nationwide in violation of antitrust and unfair competition statutes.
Professional Diversity Network (IPDN 9.64, +0.26 +2.77%) to sell 312,500 shares of its common stock to Cosmic Forward at $9.60 per share
Pointer Telocation (PNTR 7.30, +0.02 +0.34%) won a 5 year driver behavior project with an applicant of the American Transit Insurance Company (ATIC). The system integrates technology from Mobileye (MBLY 42.03, -0.15 -0.36%) with Pointer's Cellocater hardware and software technologies, which will add intelligent fleet management abilities and driver behavior analysis.
Baidu.com (BIDU 176.95, +0.47 +0.27%) appointed Dr. Qi Lu as Group President and COO.
Ericsson (ERIC 6.01, +0.09 +1.52%) announced that in connection with Brje Ekholm assuming the position as President and CEO of Ericsson, Jan Frykhammar, who has temporarily held the position as President and CEO, remains a member of the Executive Leadership Team and is appointed Executive Vice President and Advisor to the CEO. Jan Frykhammar will support Brje Ekholm during a transition period and will focus on corporate governance and efficiency.
LifeLock (LOCK 23.92, -0.03 -0.13%) amended its merger agreement with Symantec (SYMC 26.20, +0.06 +0.23%), extending the closing date.
Support.com (SPRT 0.78, -0.01 -2.26%) announced a 1:3 stock split. Shares will begin trading ex-split on January 20.
GameStop (GME 23.34, +0.61 +2.68%) has reserved all of its first allotment of Nintendo (NTDOY 26.12, +0.27 +1.04%) Switch systems. On Friday, the retailer began taking reservations for the Nintendo Switch online and in its more than 3,900 stores nationwide.
In reaction to quarterly results:
Progress Software (PRGS) reported better than expected Q4 earnings of $0.62 on revenues which rose 2.3% compared to last year yet were worse than expected at $118 million. For Q1, the company sees worse than expected EPS and revenues of $0.25-0.27 and $86-89 million, respectively. For FY17, the company sees EPS of $1.64-1.69 and $388-396 million, respectively.
GigPeak (GIG) reported in-line Q4 EPS and revenues of $0.05 and $16.2 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: ADTN, LLTC/ASML, AMTD
Analyst actions:
NFLX was upgraded to Buy from Neutral at Mizuho,
FN was upgraded to Strong Buy from Buy at Needham,
VNET was upgraded to Equal Weight from Underweight at Morgan Stanley;
TWTR was downgraded to Neutral from Buy at UBS,
COMM was downgraded to Mkt Perform from Outperform at Raymond James,
BIDU was downgraded to Equal Weight from Overweight at Morgan Stanley,
CRNT was downgraded to Hold from Buy at Needham,
MMS was downgraded to Mkt Perform from Mkt Outperform at Avondale,
HOLI was downgraded to Hold from Buy at Deutsche Bank;
KTOS was initiated with a Buy at Canaccord Genuity,
MIME was initiated with an Outperform at Northland Capital
