From Briefing.com: 4:17 pm Closing Market Summary: Oil Influences Stocks Lower on Tuesday (:WRAPX) :
Crude oil was a persuasive force in the stock market on Tuesday, leading the major averages into negative territory after OPEC's latest Monthly Oil Market Report (:MOMR) showed some concerning production figures out of Saudi Arabia. The S&P 500 and the Nasdaq lost 0.3% apiece while the Dow (-0.2%) held up modestly better.
The energy sector (-1.1%) closed at the bottom of the day's leaderboard as WTI crude suffered from a wave of selling pressure in response to an increase in production out of Saudi Arabia in the month of February. However, Saudi officials did make follow-up comments to the report, saying that the uptick in production went into domestic storage, not international markets. The claim helped the energy component regain some of its early loss in the afternoon session, but WTI crude still closed the day lower by 1.5% at $47.69/bbl.
Finishing near the energy sector, the industrials (-0.9%) and materials (-0.8%) groups struggled to keep pace with the broader market as political uncertainty regarding President Trump's proposed budget, which is expected to include $1 trillion for infrastructure spending, looms in Washington.
Elsewhere in the nation's capitol, House Republicans' proposed replacement of the Affordable Care Act was being met with increased resistance after the Congressional Budget Office (CBO) released its research report on Monday evening. Details of the report aside, it is clear that passing the bill may prove to be challenging for GOP leaders, which could delay the tax reform that investors have been counting on. Despite all the noise, the health care sector (-0.3%) finished in line with the broader market.
At the top of the day's leaderboard was the consumer discretionary space (unch) with retailers representing a pocket of strength; the SPDR S&P Retail ETF (XRT 41.91, +0.03) finished the day higher by 0.1%. The rate-sensitive utilities (-0.1%) and real estate (-0.2%) groups also outperformed as increased buying interest in the Treasury market left interest rates lower. The benchmark 10-yr yield closed three basis points lower at 2.59%.
The start of the week has been slow but investors will need to have their heads on a swivel tomorrow as they will be hit with a slew of economic reports, the latest EIA crude oil inventory report, and, most notably, the FOMC's official rate decision.
Today's lone economic report, February PPI, came in hotter than expected:
February producer prices increased 0.3%, which is above the Briefing.com consensus of 0.1%. Core producer prices increased 0.3% while the Briefing.com consensus expected an increase of 0.2%.
The key takeaway from the report is that inflation at the producer level is picking up and is feeding concerns about a potential pass-through effect to consumers.
The key takeaway from the report is that inflation at the producer level is picking up and is feeding concerns about a potential pass-through effect to consumers.
Tomorrow's economic data will include the weekly MBA Mortgage Applications Index at 7:00 ET, February CPI (Briefing.com consensus 0.1%), February Retail Sales (Briefing.com consensus 0.1%), and March Empire Manufacturing (Briefing.com consensus 14.5) at 8:30 ET, January Business Inventories (Briefing.com consensus 0.3%) and March NAHB Housing Market Index (Briefing.com consensus 65) at 10:00 ET, and the FOMC Rate Decision at 14:00 ET.
Nasdaq Composite +8.8% YTD
S&P 500 +5.7% YTD
Dow Jones Industrial Average +5.4% YTD
Russell 2000 +0.4% YTD
4:14 pm Rubicon Project beats by $0.22, beats on revs; guides Q1 EPS below consensus, revs below consensus (RUBI) :
Reports Q4 (Dec) earnings of $0.37 per share, $0.22 better than the Capital IQ Consensus of $0.15; revenues fell 20.1% year/year to $66.9 mln vs the $63.6 mln Capital IQ Consensus.
Adjusted EBITDA was $21.7 million, compared to Adjusted EBITDA of $36.0 million for 4Q15.
Co issues downside guidance for Q1, sees EPS of ($0.26)-($0.22) vs. $0.10 Capital IQ Consensus Estimate; sees Q1 revs of $41-$44 mln vs. $57.30 mln Capital IQ Consensus Estimate.
4:08 pm NeoPhotonics beats by $0.05, beats on revs; guides Q1 below consensus (NPTN) :
Reports Q4 (Dec) earnings of $0.13 per share, $0.05 better than the Capital IQ Consensus of $0.08; revenues rose 23.2% year/year to $109.84 mln vs the $106.96 mln Capital IQ Consensus.
Non-GAAP Gross margin was 29.9%, down from 32.4% in the fourth quarter of 2015, and up from 27.6% in the prior quarter
Co issues guidance for Q1, sees EPS of ($0.30-0.20), may not be comparable to $0.05 Capital IQ Consensus Estimate; sees Q1 revs of $67-73 mln vs. $98.03 mln Capital IQ Consensus Estimate.
4:07 pm Semi Manufacturing executes a technology transfer and license agreement for Invensas' (XPER) Direct Bond Interconnect technology (SMI) : Through this agreement, SMIC will be able to offer this bonding technology for use by image sensor manufacturing customers. Invensas is a wholly owned subsidiary of Xperi Corporation (XPER)
Out of the gate, the major averages were soft on Tuesday. Ending with the worst losses, the S&P 500 shed about 8.02 points (-0.34%) today to close 2365.45. The Nasdaq Composite wasn't far behind, losing about 18.97 points (-0.32%) to 5856.82, while the Dow Jones Industrial Average closed about 44.11 points (-0.21%) lower to 20837.37.
In the nation's capital, today marked the start of the two-day Federal Open Market Committee meeting. As long as Winter Storm Stella cooperates, the Fed will make its rate hike decision on Wednesday afternoon. However, considering it's pretty much a given the U.S. central bank will vote to tighten monetary policy, investors will be more interested in the Fed's updated rate projections for 2017 and beyond.
Spending the entirety of Tuesday below flat lines, the Technology (XLK 53.04, -0.12 -0.23%) space ended modestly off lows. Components WU +3.52%, MSI +2.07%, ADI +1.11%, JNPR +0.61%, ORCL +0.49% bucked today's overall trend, ending in the green. The worst performing S&P sector today was Energy XLE -1.14%, followed by IYZ -0.92%, XLI -0.90%, XLB -0.86%, XLV -0.37%, XLF -0.28%, XLP -0.27%, XLRE -0.13%, XLU -0.10%, XLY -0.02%.
In the S&P 500 Information Technology (896.32, -2.29 -0.25%) space, trading ended off lows after being pressured all day. Component Citrix Systems (CTXS 82.02, -2.91 -3.43%) was the worst performer today, following a spike yesterday, on a report that the company may explore a possible sale. Other names in the space which closed lower today included GLW -3.10% FSLR -2.33% STX -1.83% AKAM -1.49% PYPL -1.15% TSS -1.13% MA -0.93% AVGO -0.93% ADS -0.92% ADSK -0.90%.
Other notable news items among sector components:
Euronet (EEFT 83.22, +0.26 +0.31%) made a proposal to acquire all shares outstanding of MoneyGram (MGI 15.77, +3.11 +24.57%) for $15.20 in cash for each share of MGI Common Stock and MGI Preferred Stock on an as-converted basis, valuing the company at more than $1 billion, in addition to the assumption of about $940 million of MGI's debt outstanding.
Cognizant (CTSH 59.16, -0.09 -0.15%) entered into accelerated share repurchase agreements with Barclays Bank PLC, Citibank N.A., and UBS AG, London Branch to repurchase an aggregate of $1.5 billion of Cognizant's Class A common stock.
Citrix Systems (CTXS) shares were weak today following a Bloomberg article which highlighted the company may be considering a possible sale.
ON Semiconductor (ON 15.35, +0.04 +0.26%) to offer $500 million convertible senior notes due 2023 in a private offering.
DragonWave (DRWI 1.90, +0.75 +65.22%) signed a new Master Sales and Services Agreement with Ingram Micro Australia.
In reaction to quarterly results:
Coupa Software (COUP 23.89, -3.17 -11.71%) reported a better than expected Q4 loss per share of $0.05 on better than expected revenues which grew about 44.2% to $38.02 million. Further, the company guided Q1 EPS and revenues ahead of market expectations at ($0.17)-($0.12) and $38.0-38.5 million, respectively. For FY18, the company also guided ahead of market expectations with EPS in the range of ($0.58)-($0.53) and revenues between $167-170 million.
Phoenix New Media Limited (FENG 3.66, -0.02 -0.54%) reported better than expected Q4 EPS of $0.08 on revenues of $59.32 million. For Q1, the company expects its total revenues to be between RMB285 million and RMB300 million. Net advertising revenues are expected to be between RMB239 million and RMB249 million, and paid service revenues are expected to be between RMB46 million and RMB51 million.
Companies scheduled to report quarterly results tonight: CNXR, EVRI, NPTN, RST, RUBI
Analyst actions:
ARRS was upgraded to Buy from Neutral at Goldman;
MBLY was downgraded at Jefferies, Wells Fargo, RBC Capital Mkts, Raymond James, SunTrust and Needham,
GLW was downgraded to Neutral from Buy at Goldman,
HLIT was downgraded to Hold from Buy at Drexel Hamilton;
ELLI was initiated with a Neutral at Wedbush,
BKFS was initiated with an Outperform at Wedbush,
HQY was initiated with an Outperform at Oppenheimer,
IMPV was initiated with a Buy at Monness Crespi & Hardt,
CHKP was initiated with a Neutral at Monness Crespi & Hardt
