From Briefing.com: 4:27 pm Closing Market Summary: Averages Start the Week with Modest Losses (:WRAPX) :
A morning sell-off was met with a slight uptick in buying interest on Monday afternoon, leaving the major averages with modest losses to start the new week on lower-than-average trading volume. The Dow finished lower by 0.2% while the S&P 500 (-0.3%) and Nasdaq (-0.4%) performed slightly worse. Small-caps were hit the heaviest with the Russell 2000 closing lower by 0.7%.
Given the pace and scope of gains this year, and really since President Trump's election on November 8 -- a period in which the S&P 500 has gained over 11.0% -- it should come as little surprise to see the stock market succumb to some profit-taking interest.
There were some news headlines over the weekend that may have contributed to the profit taking from what many pundits are describing as a market that is overextended on a short-term basis.
The most notable of these headlines was North Korea's most recent act of defiance in which Pyongyang launched four ballistic missiles into the Sea of Japan, marking the third time since August that North Korean missiles have fallen in Japan's exclusive economic zone.
Other notable news included allegations from President Trump that former President Obama ordered a wiretap of his Trump Tower offices prior to the presidential election and an announcement from Deutsche Bank (DB) that the company will raise $8.5 billion of capital through the issuance of stock.
These headlines, though, appeared to serve more as convenient excuses to do some selling than anything else considering the stock market did make a rebound effort intraday and the CBOE Volatility Index increased less than 1.0%, hinting at some limited hedging activity among today's participants.
Ten of eleven sectors finished Monday's session in the red. The energy sector (+0.3%) was the lone winner. The top spot on the leaderboard has been an elusive one for the energy sector, which remains in last place in the 2017 sector standings with a year-to-date loss of 5.2%.
Crude oil didn't aid the energy sector's uptick, finishing Monday's session with a loss of 0.2% at $53.22/bbl. The commodity was pressured somewhat by a strengthening U.S. dollar, which was reflected in the 0.3% uptick for the U.S. Dollar Index (101.69, +0.34).
The top-weighted technology sector (-0.2%) saw some slight outperformance versus the broader market, but still ended the day lower. The semiconductor stocks helped keep the sector's losses in check, as they rebounded from early losses to help the PHLX Semiconductor Index eke out a small gain for the session.
The financial sector (-0.6%) led the stock market's retreat in the morning session, but received a jumpstart in the afternoon to climb past the materials sector (-0.7%) at the bottom of the leaderboard.
News on the corporate front was limited, but it is worth noting that airlines suffered after Delta Air Lines (DAL 48.85, -1.28) cut its first quarter guidance in light of more moderate than expected unit revenues in February. Despite the airlines' losses, the industrial sector (-0.3%) finished in line with the benchmark index.
Losses in the remaining sectors -- consumer discretionary, health care, consumer staples, utilities, telecom services, and real estate-- were modest, between 0.2% and 0.4%.
U.S. Treasuries finished slightly lower as fixed-income markets were still digesting last week's aggressive campaign by Fed officials to prepare markets for the possibility of a March 15 rate hike. The benchmark 10-yr yield closed Monday one basis point higher at 2.49%.
Monday's lone economic report was January Factory Orders:
The Factory Orders Report for January showed an increase of 1.2% while the Briefing.com consensus expected a increase of 1.0%. The December reading was left unrevised at 1.3%.
The key takeaway from the report is that it should contribute to some slight upward revisions to economists' first quarter GDP estimates since shipments of nondefense capital goods excluding aircraft were not down as much as the advanced report for durable goods indicated.
The key takeaway from the report is that it should contribute to some slight upward revisions to economists' first quarter GDP estimates since shipments of nondefense capital goods excluding aircraft were not down as much as the advanced report for durable goods indicated.
Tomorrow's data will include January Trade Balance (Briefing.com consensus -$48.5 billion) at 8:30 ET and January Consumer Credit (Briefing.com consensus $17.0 billion) at 15:00 ET.
Nasdaq Composite +8.7% YTD
S&P 500 +6.1% YTD
Dow Jones Industrial Average +6.0% YTD
Russell 2000 +2.0% YTD
After starting the session on a gap lower, the broader market cooled off as the session progressed, paring losses into the close. Ultimately, the Nasdaq Composite lost about 21.58 points (-0.37%) to 5849.17. The S&P 500 was down 7.81 points (-0.33%) to 2375.31, and the Dow Jones Industrial Average shed 51.37 (-0.24%) to 20954.34.
The lone piece of economic data today was the Factory Orders Report for January which showed an increase of 1.2% while the December reading was left unrevised at 1.3%.
Mirroring a tough day in the broader market, the Technology (XLK 52.78, -0.08 -0.15%) space was also lower today. Component CSRA (CSRA 28.66, -1.28 -4.28%) was the worst performer following a premarket downgrade at Cowen. The lone S&P sector which managed to escape Monday with gains was Energy XLE +0.24%, followed by XLU -0.19%, XLI -0.24%, XLY -0.32%, XLV -0.38%, XLRE -0.41%, XLP -0.44%, XLB -0.65%, XLF -0.76%, IYZ -1.15%.
In the S&P 500 Information Technology (891.28, -1.46 -0.16%) space, trading squeaked back into the red at the close despite a few positive ticks in the final moments of action. Component HP (HPQ 17.30, +0.08 +0.48%) managed modest gains today after Wells Fargo upgraded the stock to Outperform this morning. Other names in the space which closed lower with the sector though included FSLR -3.70%, ADSK -2.79%, TEL -1.80%, CTSH -1.75%, TSS -1.60%, FFIV -1.07%, WDC -0.95%, INTC -0.92%, STX -0.92%, NVDA -0.77%.
Other notable news items among sector components:
Accenture (ACN 123.25, -0.39 -0.32%) signed a global original equipment manufacturer (OEM) agreement with SAP SE (SAP 94.09, -0.55 -0.58%) to offer its human capital management (HCM) applications on SAP Cloud Platform.
Analog Devices (ADI 83.85, +0.67 +0.81%) received regulatory approval from the Ministry of Commerce of China to complete its acquisition of Linear Technology (LLTC 65.45, +0.59 +0.91%). The company also now sees Q2 revenue and EPS between the mid-point and high end of guidance.
Advanced Micro (AMD 13.04, +0.01 +0.08%): Mubadala Development Company PJSC proposes the sale of 45 million shares under form 144.
Canadian Solar (CSIQ 13.74, -0.76 -5.24%) raised $20 million in funding from the CPD Fund.
Cisco (CSCO 34.19, -0.10 -0.29%) and IBM (IBM 180.47, +0.42 +0.23%) announced new solutions for VersaStack.
ON Semiconductor (ON 15.26, +0.05 +0.33%) will acquire and license mmWave technology for automotive radar applications developed by IBM's (IBM) Haifa research team. Financial terms of the deal were not disclosed.
Analyst actions:
NFLX was upgraded to Buy from Neutral at UBS,
HPQ was upgraded to Outperform from Market Perform at Wells Fargo,
EXPE was upgraded to Outperform from Neutral at Macquarie,
TWLO was upgraded to Outperform from Market Perform at Northland Capital,
CAJ was upgraded to Overweight from Neutral at JP Morgan;
GPRO was downgraded to Sell from Neutral at Goldman,
CSRA was downgraded to Market Perform from Outperform at Cowen,
TWX was downgraded to Neutral from Buy at UBS;
SNAP was initiated with an Underperform at Needham
4:32 pm Rambus signs a broad patent license agreement with Western Digital Corporation (WDC); financial details not disclosed (RMBS) : The agreement covers the use of Rambus patented memory technologies, including high-speed interfaces, memory architectures, resistive memory and security technologies, in Western Digital products through 2021. The agreement also includes an additional 5-year extension option. Specific terms of the agreement were not disclosed.
