From Briefing.com: 4:16 pm Closing Market Summary: Stock Market Finishes Tuesday Modestly Lower (:WRAPX) :
Tuesday's session was largely uneventful as market-moving catalysts were in short supply. The major averages trended just below their flat lines for the majority of the session, but a late afternoon sell-off left them near their worst levels of the day. The Nasdaq (-0.3%) finished in line with the S&P 500 (-0.3%) while the Dow (-0.1%) closed with a slight advantage.
Despite the equity market's minimal movement, House Republicans mixed things up beneath the surface after unveiling their first attempt at replacing the Affordable Care Act, also known as Obamacare, on Monday evening. The proposed legislation was a hit with President Trump, but other members within the GOP have demonstrated resistance to the bill, indicating that its implementation may be somewhat challenging. Investors are keeping an anxious eye on Washington, knowing that any delay in health care reform also postpones the impending tax reform, which has been a key catalyst to the stock market's huge post-election rally.
The health care sector (-0.7%) finished the day behind the broader market as investors digested the latest news from the nation's capital. The biotechnology industry showed relative weakness within the group, evidenced by the 1.7% drop in the iShares Nasdaq Biotechnology ETF (IBB 294.75, -5.08).
At the bottom of Tuesday's leaderboard, energy (-0.9%) and telecom services (-0.7%) struggled throughout the day. The energy space didn't find much support from crude oil, which finished 0.2% lower at $53.13/bbl, as futures traders displayed caution ahead of the American Petroleum Institute (:API) data release on Tuesday evening.
Conversely, utilities (unch) and technology (+0.2%) finished at the top of the day's sector standings with the technology group profiting on gains from large-cap components like Apple (AAPL 139.52, +0.18) and Alphabet (GOOGL 851.15, +3.88). Chipmakers also 'chipped' in to help the tech sector's outperformance, evidenced by the 0.3% increase in the PHLX Semiconductor Index.
The remaining sectors--financials, consumer discretionary, industrials, materials, consumer staples, and real estate--finished with losses between 0.1% and 0.6%.
U.S. Treasuries had a rather range-bound session, failing to deviate much from their flat lines throughout the day's action. The 10-yr Treasury note finished modestly lower with its yield closing one basis point higher at 2.51%.
Tuesday's economic data included January Trade Balance and January Consumer Credit:
The January trade balance showed a deficit of $48.5 billion, which is in line with the Briefing.com consensus. The previous month's deficit was left unrevised at $44.3 billion.
The key takeaway from the report is twofold: (1) it will feed the White House's concerns about unfair trade dynamics and (2) it presents a negative input for first quarter GDP forecasts as the real goods deficit of $65.3 billion widened from the fourth quarter average of $62.2 billion.
The Consumer Credit report for January showed an increase of $8.8 billion while the Briefing.com consensus expected growth of $17.0 billion. The prior month's credit growth was revised to $14.8 billion from $14.2 billion.
The key takeaway from the report is that consumer credit decelerated in January, which is apt to contribute to subdued expectations for the pace of consumer spending and GDP growth in the first quarter.
Tomorrow's economic data will include the weekly MBA Mortgage Index at 7:00 ET, February ADP Employment Change (Briefing.com consensus 180,000) at 8:15 ET, fourth quarter Productivity (Briefing.com consensus 1.5%) & Unit Labor Costs (Briefing.com consensus 1.6%) at 8:30 ET, and January Wholesale Inventories (Briefing.com consensus -0.1%) at 10:00 ET.
Nasdaq Composite +8.4% YTD
Dow Jones Industrial Average +5.9% YTD
S&P 500 +5.8% YTD
Russell 2000 +1.3% YTD
After a brief period of positive action in the morning session, the major averages cooled down and eventually settled into a modestly lower channel, ultimately ending near lows on Tuesday. At the bell, the S&P 500 was the worst performer, shedding 6.92 points (-0.29%) to 2368.39. The Nasdaq Composite lost about 15.25 points (-0.26%) today, ending 5833.93, and the Dow Jones Industrial Average declined 29.58 points (-0.14%) to 20924.76.
Today's economic data included the January trade balance which showed a deficit of $48.5 billion, as the previous month's deficit was left unrevised at $44.3 billion. Also, the total outstanding consumer credit increased by $8.8 billion in January after increasing an upwardly revised $14.8 billion (from $14.2 billion) in December.
Despite ending flat, the Technology's (XLK 52.78, flat) sector was the best performing space in the S&P; action was back and forth in the early going, eventually carving out decent gains in the early afternoon only to give up those gains and trade places between gains and losses in the final moments of action.
Component Frontier Communications (FTR 2.62, -0.14 -5.07%) was the worst performer today after BofA/Merrill downgraded the stock premarket. After the Technology space, all other S&P sectors ended in the red, with the US Telecom space IYZ -1.32% performing the worst on Tuesday, followed by XLE -0.89%, XLV -0.70%, XLB -0.55%, XLRE -0.35%, XLY -0.32%, XLI -0.29%, XLF -0.28%, XLP -0.16%, XLU -0.06%.
In the S&P 500 Information Technology (892.58, +1.30 +0.15%) space, trading ended higher today despite carrying modest losses into the bell. Component CA Tech (CA 31.97, -0.85 -2.59%) was the worst performing name in the space today after the company acquired Veracode for $614 million in cash. Other names in the space which closed higher today included FFIV +1.60%, EA +1.33%, NVDA +1.10%, TXN +1.03%, GPN +0.85%, ACN +0.73%, QRVO +0.71%, INTC +0.65%, AVGO +0.60%, SYMC +0.58%.
Other notable news items among sector components:
Nimble Storage (NMBL 12.58, +3.98 +46.28%) to be acquired by Hewlett Packard Enterprise (HPE 22.82, -0.25 -1.08%) for $12.50 per share in cash, or $1.0 billion. HPE expects earnings accretion.
IBM (IBM 180.38, -0.09 -0.05%) and Salesforce (CRM 82.97, +0.47 +0.57%) announced a global strategic partnership to deliver joint solutions designed to leverage artificial intelligence.
TerraForm Global (GLBL 4.92, +0.67 +15.88%) to be acquired by Brookfield Asset Management (BAM 36.12, +0.22 +0.61%) for $787 million in cash, including $455 million of net debt. The company also entered into a settlement agreement with SunEdison (SUNEQ 0.09, +0.02 +26.63%). Also, Brookfield Renewable
Partners (BEP 28.67, -0.11 -0.38%) will acquire a 51% interest in TerraForm Power (TERP 12.01, +0.42 +3.62%). The company's commitment expected to be in the range of $500 million.
Qualcomm (QCOM 56.73, +0.28 +0.50%) has extended the offering period of its previously announced cash tender offer to purchase all of the outstanding common shares of NXP Semi (NXPI 103.77, -0.12 -0.12%).
The Colorado Center for Personalized Medicine (CCPM) is using Tableau Software (DATA 50.16, -0.86 -1.69%) and Google Cloud Platform (GOOG 831.91, +4.13 +0.50%) to analyze patient data to predict disease risk and develop targeted treatments based on an individual's health history in support of breakthrough research projects.
CA Tech (CA) to acquire Veracode for $614 million in cash. CA expects earnings accretion in 2020.
In addition to reporting quarterly results, MeetMe (MEET 5.89, +0.82 +16.17%) executed a definitive agreement to acquire If(we), Inc., a social and mobile technology company, for $60.0 million in cash.
Rambus (RMBS 13.10, +0.30 +2.34%) signed a broad patent license agreement with Western Digital (WDC 76.80, flat). The agreement covers the use of RMBS patented memory technologies, including high-speed interfaces, memory architectures, resistive memory and security technologies, in WDC products through 2021. The agreement also includes an additional 5-year extension option. Specific terms of the agreement were not disclosed.
Western Digital (WDC) announced that the HGST Active Archive System is enabling the cole Polytechnique Fdrale de Lausanne (EPFL) to archive more than 17,000 hours' worth of live music, video, and data from the Montreux Jazz Festival.
Fitbit (FIT 5.89, -0.11 -1.83%) announced changes to its senior leadership team and provided updates on its previously announced efforts to reorganize its business to reignite growth and return to profitability. The company has promoted Vice President of Engineering, Samir Kapoor, to Senior Vice President of Device Engineering, reporting to co-founder and CTO, Eric Friedman. The company also announced the departure of two executives by the end of the month: Woody Scal, Chief Business Officer, and Tim Roberts, Executive Vice President, Interactive.
In reaction to quarterly results:
Momo (MOMO 30.00, +3.39 +12.74%) reported better than expected Q4 EPS and revenues of $0.44 and $246.1 million, respectively. For Q1, the company sees revenues better than expectations at $238.0-243.0 million.
Nimble Storage (NMBL) reported a better than expected loss of $0.12 per share on better than expected revenues of $117.03 million.
MeetMe (MEET) reported better than expected Q4 EPS of $0.19 on in-line revenues of $29.2 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: WIFI/CIEN, PCTI, TECD
Analyst actions:
SIMO was upgraded to Buy from Hold at Standpoint Research,
TERP was upgraded to Mkt Outperform from Mkt Perform at Avondale,
PEGA was upgraded to Buy from Hold at The Benchmark Company;
FTR and CSOD were downgraded to Neutral from Buy at BofA/Merrill,
DBD was downgraded to In-Line from Outperform at Imperial Capital,
NMBL was downgraded to Market Perform at BMO Capital and to Hold at Jefferies
