From Briefing.com: 4:15 pm Closing Market Summary: Financials Pace Stock Market's Tuesday Tumble (:WRAPX) :
Investors attempted to make the most out of some positive overnight developments on Tuesday morning, but a modest gain at the opening bell was the straw that broke the back of a stock market that may have extended itself a little too far. The major averages finished their worst day of 2017 solidly lower with the Nasdaq (-1.8%) leading the retreat. The S&P 500 settled lower by 1.2%, marking the first time since October that the index closed with a loss of more than 1.0%. That streak is the longest since 1995.
The financial sector (-2.9%), the poster child of the stock market's post-election rally, tumbled deep into negative territory on Tuesday, signaling the possible end of the new administration's honeymoon phase. The reversal of fortune had its roots in the inverse relationship between the yield curve and the banks. The former is flattening in a contradiction of the pro-growth narrative that has driven the stock market to record highs in the post-election period; meanwhile, the banks are getting flattened as investors re-think the high earnings expectations related to a widening yield spread that have driven many bank stocks sharply higher since the election.
As they have since the presidential election on November 8, most sectors followed the financial group's lead to finish the day solidly lower. The cyclical sectors absorbed the worst of the selling pressure with the consumer discretionary, industrials, materials, and technology sectors closing lower between 1.2% and 1.7%.
Countercyclical groups outperformed amid the day's risk-off sentiment with the rate-sensitive utilities sector (+1.4%) closing atop the day's leaderboard. The sector profited from the increased buying interest in the Treasury market, which left yields lower across the board; the benchmark 10-yr yield finished Tuesday's session three basis points lower at 2.43%.
Like its defensive peers, the health care sector (-0.8%) also outperformed the broader market, but it showed relative weakness within the countercyclical space as the debate on health care reform picked up steam in Washington. The GOP's proposed health care legislation will go the floor of the House on Thursday, but reports indicate that the Republicans will not have enough votes to move the bill to the Senate.
Investors will keep their fingers crossed, hoping that a resolution can be worked out in the nation's capital so that lawmakers can move on to tax reform--another promise that has propped up the stock market.
Tuesday's lone economic report was fourth quarter Current Account Balance:
The current account deficit for the four quarter totaled $112.4 billion while the Briefing.com consensus expected the deficit to hit $128.2 billion. The third quarter deficit was revised to $116.0 billion from $113.0 billion.
On Wednesday, investors will receive the weekly MBA Mortgage Applications Index at 7:00 ET, January FHFA Housing Price Index at 9:00 ET, and February Existing Home Sales (Briefing.com consensus 5.54 million) at 10:00 ET.
Nasdaq Composite +9.6% YTD
S&P 500 +6.0% YTD
Dow Jones Industrial Average +5.8% YTD
Russell 2000 +2.0% YTD
4:03 pm Microsemi to close its manufacturing facility in China; no material impact on earnings expected (MSCC) : Focused on lower value discrete solutions, the devices manufactured at the facility are not aligned with Microsemi's strategic direction, and company resources will be invested elsewhere in higher value, higher growth products and end markets. Customers have been notified and the process of closure is under way. No material impact on earnings for the company is expected due to this closure.
Despite opening the session in the green, all three major averages quickly turned lower as the session entered its second hour, with stock ending near lows on Tuesday. The bell rang as the Nasdaq Compsite made daily lows, shedding 107.70 points (-1.83%) to 5793.83. The S&P 500 lost 29.45 points (-1.24%) to 2344.02, and the Dow Jones Industrial Average posted losses of 237.85 (-1.14%) to 20668.01.
The Technology (XLK 52.61, -0.76 -1.43%) space was pounded lower with the broader market today. Component Facebook (FB 138.51, -1.43 -1.02%) was stark evidence of the gravity of today's decline as the stock was upgraded before the bell at BTIG Research to a 'Buy' rating yet the stock failed to hold onto morning gains.
In the S&P 500 Information Technology (891.97, -13.34 -1.47%) space, trading also finished lower despite a positive start. Component Apple (AAPL 139.85, -1.61 -1.13%) displayed weakness today despite announcing a new, cheaper iPad and a special edition of the iPhone 7 and 7 Plus.
Other notable news items among sector components:
Micron (MU 25.52, -0.69 -2.63%) won an auction for Cando Corporation assets for $89.2 million.
Apple (AAPL) announced a cheaper version of the 9.7 inch iPad; will start for $329 at lowest storage. Also announced a special edition iPhone 7 and 7 Plus model.
Seagate Technology (STX 44.51, -1.57 -3.41%), in collaboration with Synology, announced the availability of IronWolf Health Management for Synology's DiskStation Manager 6.1.
In addition to reporting quarterly results, Cheetah Mobile's (CMCM 11.07, -1.31 -10.58%) CFO, Ka Wai Andy Yeung, announced his resignation.
Accenture (ACN 124.64, +0.29 +0.23%) acquired Focus Group Europe, a United Kingdom-based, privately owned, ServiceNow consulting services provider and software reseller that is one of the largest remaining pure-play ServiceNow consulting partners in the UK. Financial details were not disclosed.
Adobe (ADBE 125.07, -1.24 -0.98%) and Microsoft (MSFT 64.21, -0.72 -1.11%) announced availability of their first set of joint solutions. These solutions will transform cross-channel experiences and campaign orchestration using Adobe Experience Cloud and Microsoft Azure, Dynamics 365 and Power BI. In addition, the companies will announce they are collaborating on an industry standard to define and unify the language for marketing, sales and services data needed to deliver digital experiences consistently at scale.
Court of Appeals for the Federal Circuit has, in a precedential opinion, unanimously upheld a lower court's ruling that Synopsys (SNPS 70.61, -0.91 -1.27%) infringed on Mentor Graphic's (MENT 37.15, -0.05 -0.13%) patent for emulation technology.
Salesforce (CRM 81.55, -1.35 -1.63%) will continue its international infrastructure expansion on the
Amazon Web Services (AMZN 843.20, -13.77 -1.61%) Cloud to the AWS Sydney Region in order to support its growing customer base in Australia.
AT&T (T 42.08, -0.33 -0.78%) and IBM (IBM 173.88, -1.86 -1.06%) announced a new AT&T IoT analytics capability, a pilot collaboration between the two companies, aiming to help AT&T's enterprise customers transform their industrial IoT data into analytic insights so they can take immediate action to improve business operations.
In reaction to quarterly results:
Canadian Solar (CSIQ 12.33, -1.22 -9.00%) reported worse than expected Q4 EPS and revenues of $0.24 and $668.4 million, respectively. For Q1, the company sees worse than expected revenues in the range of $570-590 million. For FY17, CSIQ sees better than expected revenues between $4.0-5.0 billion.
Cheetah Mobile (CMCM) reported better than expected Q4 EPS and revenues of RMB0.80 and RMB1.27 billion, respectively. For Q1, the company sees worse than expected revenues of RMB1.15-1.19 billion.
Companies scheduled to report quarterly results after the bell: ATTO, HQY, NQ
Analyst actions:
FB was upgraded to Buy from Neutral at BTIG Research,
MSI was upgraded to Buy from Hold at Jefferies,
QLYS was upgraded to Overweight from Equal Weight at Stephens;
HUBS was downgraded to Outperform from Strong Buy at Raymond James;
SQ was initiated with a Mkt Perform at Raymond James,
AXE was initiated with a Market Perform at Wells Fargo,
AKAM was initiated with a Buy at Drexel Hamilton
