From Briefing.com: 4:23 pm Closing Market Summary: Dow Posts 10th Consecutive Record Close (:WRAPX) :
Investors hurdled news headline after news headline on Thursday, but still drove the Dow (+0.2%) to its tenth consecutive record close, a feat that has not been achieved since 1987, when the price-weighted average recorded 12 consecutive record closes. The benchmark S&P 500 (unch) finished flat while the Nasdaq (-0.4%) and the small-cap Russell 2000 (-0.6%) couldn't keep pace.
Early on Thursday morning, Treasury Secretary Steven Mnuchin said that he anticipates the new administration's tax reform plan to to pass through congress before the August recess.
Mr. Mnuchin's timeline may have cooled the recent bullish sentiment surrounding President Trump's upcoming "phenomenal" tax-related announcement, a promise which sent the stock market on its most recent rally. However, the financial sector (+0.1%), which has led the post-election rally on promises of deregulation and tax reform, finished Thursday with a small gain.
On the earnings front, Tesla (TSLA 255.99, -17.52) disappointed investors with a wider than expected loss per share, but the automaker did announce that the mass-market electric Model 3 sedan is on track for initial production in July.
Similarly, L Brands (LB 48.94, -9.19) finished Thursday lower, plummeting 15.8%, after the company's below-consensus guidance overshadowed better than expected earnings. LB's slide weighed on the SPDR S&P 500 Retail ETF (XRT 43.10, -1.03), which ended lower by 2.3%, while the consumer discretionary sector (-0.7%) also underperformed.
Technology (-0.1%) was plagued by a poor showing from chipmakers, evidenced by the 1.6% decrease in the PHLX Semiconductor Index. The semiconductor industry was led lower by NVIDIA (NVDA 100.49, -10.27). The company plunged 9.3% after analysts from both BMO Capital and Instinet downgraded NVDA shares on Thursday morning. To be fair, NVDA shares skyrocketed 223.9% in 2016, so a pullback of this magnitude isn't really all that surprising.
However, a 8.6% jump in shares of HP (HPQ 17.60, +1.40) put a lid on the tech sector's loss. The company's spike followed its most recent earnings report, which showed better than expected top and bottom lines.
Industrials (-0.8%) finished Thursday at the bottom of the leaderboard amid growing speculation of a potential delay in the implementation of the Trump administration's infrastructure plan. Likewise, the materials sector closed lower by 0.6%.
On a positive note, the energy sector finished 0.5% higher thanks to crude oil's solid performance. The energy component finished up 1.6% at $54.47/bbl following Thursday's EIA crude inventory report, which showed a build of 0.6 million barrels while the consensus called for a build of about 3.475 million barrels. Today's EIA report confirmed yesterday's bullish API reading.
On the countercyclical side, health care (+0.7%) also closed in the green. Outside of the biotechnology industry, health care components showed broad strength. It is also worth pointing out that Former House Speaker John Boehner said a full repeal and replacement of the Affordable Care Act is "not going to happen." Considering that Mr. Boehner led Republican opposition to the Affordable Care Act for years, his comments are particularly notable.
The remaining sectors--consumer staples, utilities, telecom services, and real estate--all closed with gains between 0.3% and 1.1%.
U.S. Treasuries finished Thursday modestly higher. The benchmark 10-yr yield closed three basis points lower at 2.38%.
Today's economic data included Initial Claims and December FHFA Housing Price Index:
The latest weekly initial jobless claims count totaled 244,000 while the Briefing.com consensus expected a reading of 242,000. Today's tally was above the revised prior week count of 238,000 (from 239,000). As for continuing claims, they declined to 2.060 million from the revised count of 2.077 million (from 2.076 million).
The key takeaway from this report is that it covers the period in which the survey for the February Employment Situation report was conducted, and given the low level of claims, it will likely feed a belief that nonfarm payrolls are apt to increase by 200,000+ again.
The key takeaway from this report is that it covers the period in which the survey for the February Employment Situation report was conducted, and given the low level of claims, it will likely feed a belief that nonfarm payrolls are apt to increase by 200,000+ again.
The FHFA Housing Price Index for December rose 0.4%, which followed a revised increase of 0.7% in November (from 0.5%). The reading was in line with Briefing.com consensus (+0.4%).
On Friday, Investors will receive January New Home Sales (Briefing.com consensus 566,000) and the final reading of the University of Michigan Sentiment Index for February (Briefing.com consensus 95.8). Both reports will be releases at 10:00 am ET.
Nasdaq Composite +8.4% YTD
S&P 500 +5.6% YTD
Dow Jones Industrial Average +5.3% YTD
Russell 2000 +2.8% YTD
4:11 pm Hewlett Packard Enterprise beats by $0.01, misses on revs; guides Q2 EPS below consensus; lowers FY17 EPS, in-line (HPE) :
Reports Q1 (Jan) earnings of $0.45 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.44; revenues fell 10.4% year/year to $11.41 bln vs the $12.05 bln Capital IQ Consensus.
Enterprise Group revenue was $6.3 billion, down 12% year over year, down 6% when adjusted for divestitures and currency, with a 12.7% operating margin. Servers revenue was down 12%, down 11% when adjusted for divestitures and currency, Storage revenue was down 13%, down 12% when adjusted for divestitures and currency, Networking revenue was down 33%, up 6% when adjusted for divestitures and currency, and Technology Services revenue was down 2%, up 4% when adjusted for divestitures and currency.
Enterprise Services revenue was $4.0 billion, down 11% year over year, down 6% when adjusted for divestitures and currency, with a 7.0% operating margin. Infrastructure Technology Outsourcing revenue was down 8%, down 7% when adjusted for divestitures and currency, and Application and Business
Services revenue was down 17%, down 3% when adjusted for divestitures and currency.
Software revenue was $721 million, down 8% year over year, down 1% when adjusted for divestitures and currency, with a 21.4% operating margin. License revenue was down 9%, down 2% when adjusted for divestitures and currency, Support revenue was down 9%, down 2% when adjusted for divestitures and currency, Professional Services revenue was down 7%, down 5% when adjusted for divestitures and currency, and Software-as-a-service (SaaS) revenue was up 4%, up 6% when adjusted for divestitures and currency.
Financial Services revenue was $823 million, up 6% year over year, net portfolio assets were up 2%, and financing volume was down 10%. The business delivered an operating margin of 9.5%.
Enterprise Group revenue was $6.3 billion, down 12% year over year, down 6% when adjusted for divestitures and currency, with a 12.7% operating margin. Servers revenue was down 12%, down 11% when adjusted for divestitures and currency, Storage revenue was down 13%, down 12% when adjusted for divestitures and currency, Networking revenue was down 33%, up 6% when adjusted for divestitures and currency, and Technology Services revenue was down 2%, up 4% when adjusted for divestitures and currency.
Enterprise Services revenue was $4.0 billion, down 11% year over year, down 6% when adjusted for divestitures and currency, with a 7.0% operating margin. Infrastructure Technology Outsourcing revenue was down 8%, down 7% when adjusted for divestitures and currency, and Application and Business
Services revenue was down 17%, down 3% when adjusted for divestitures and currency.
Software revenue was $721 million, down 8% year over year, down 1% when adjusted for divestitures and currency, with a 21.4% operating margin. License revenue was down 9%, down 2% when adjusted for divestitures and currency, Support revenue was down 9%, down 2% when adjusted for divestitures and currency, Professional Services revenue was down 7%, down 5% when adjusted for divestitures and currency, and Software-as-a-service (SaaS) revenue was up 4%, up 6% when adjusted for divestitures and currency.
Financial Services revenue was $823 million, up 6% year over year, net portfolio assets were up 2%, and financing volume was down 10%. The business delivered an operating margin of 9.5%.
Co issues downside guidance for Q2, sees EPS of $0.41-0.45, excluding non-recurring items, vs. $0.45 Capital IQ Consensus Estimate.
Co issues in-line guidance for FY17, lowers EPS to $1.88-1.98 from $2.00-2.10, excluding non-recurring items, vs. $1.93 Capital IQ Consensus. Three significant headwinds have developed since Hewlett Packard Enterprise provided its original fiscal 2017 outlook at its Securities Analyst Meeting in October 2016: increased pressure from foreign exchange movements, higher commodities pricing, and some near-term execution issues. Given these challenges, the company is reducing its FY17 outlook by $0.12 in order to continue making the appropriate investments to secure the long-term success of the business.
