From Briefing.com: 4:27 pm Closing Market Summary: Stocks Squander Early Gains After Hawkish FOMC Minutes (:WRAPX) :
Stocks started strong out of the gate following an upbeat ADP Employment Change Report on Wednesday morning, but the hawkish tone of the FOMC Minutes prompted an afternoon retreat. The S&P 500 settled lower by 0.3% while the Dow (-0.2%) performed slightly better and the Nasdaq (-0.6%) finished slightly worse.
The ADP National Employment Report, which showed an increase of 263,000 in March (Briefing.com consensus 175,000), provided an encouraging signal for the domestic labor market and future economic growth. However, the domestically-oriented Russell 2000 (-1.0%), which is closely tied to the performance of the U.S. economy, struggled to keep pace with the broader market. The lack of buying conviction among small caps pointed to the fact that not all market participants bought into the positive narrative attached to the better than expected ADP reading.
That narrative was tested during the afternoon session with the release of the FOMC Minutes from the March meeting. In the report, the committee revealed that it would like to start reducing the Fed's balance sheet later in the year. In addition, the Minutes showed that some Fed officials are worried about high equity valuations. Stocks held steady immediately following the report, but the hawkish tone eventually seeped in, sending the cash market into the red.
It's also important to note that investors have been on edge all week amid a cloud of uncertainty; it's unclear what will come from President Trump's upcoming meeting with Chinese President Xi Jinping, what the resurgence of health care reform will mean for tax reform, and how the U.S. will deal with the ongoing tensions in Syria and North Korea, among a host of other concerns. With all of these narratives playing in the background, it would be unfair to attribute today's slip to any one factor.
On that note, House Speaker Paul Ryan added to the market's anxiety on Wednesday afternoon, acknowledging that tax reform will take longer than repealing and replacing the Affordable Care Act. Mr. Ryan said that the House currently has a tax reform plan, but the Senate is still working on its version.
Most sectors finished today's session in negative territory with only a couple countercyclical groups--utilities (+0.5%) and real estate (+0.2%)--escaping with wins. The financial sector (-0.7%) settled at the bottom of the day's leaderboard with the remaining sectors closing modest lower with losses no greater than 0.4%.
It's worth pointing out that crude oil settled 0.3% higher at $51.14/bbl despite a bearish inventory report from the Energy Information Administration. The EIA reading showed a build of 1.6 million barrels while the consensus called for a modest draw. Nonetheless, the energy sector (-0.3%) performed in line with its cyclical peers throughout the majority of today's action.
In the Treasury market, Treasuries experienced increased demand in the wake of the FOMC Minutes. The benchmark 10-yr yield finished four basis points lower at 2.33%.
On the data front, investors received March ADP Employment Change, March ISM Services, and the weekly MBA Mortgage Applications Index:
The ADP National Employment Report showed an increase of 263,000 in March (Briefing.com consensus 175,000) while the February reading was revised lower to 245,000 from 298,000.
The ADP reading precedes Friday's more influential Employment Situation Report for March, which the Briefing.com consensus expects will show the addition of 180,000 nonfarm payrolls. The Employment Situation Report for February indicated that nonfarm payrolls increased by 235,000.
The ISM Services Index for March declined to 55.2 from an unrevised reading of 57.6 in February while the Briefing.com consensus expected a downtick to 57.0.
The key takeaway from the report is that growth in the services sector, which accounts for a much bigger slice of economic activity than the manufacturing sector does, persisted for the 87th straight month.
The weekly MBA Mortgage Applications Index decreased 1.6% to follow last week's 0.8% decline.
Tomorrow, March Challenger Job Cuts will be released at 7:30 ET while Initial Claims (Briefing.com consensus 245,000) will cross the wires at 8:30 ET.
Nasdaq Composite +8.9% YTD
S&P 500 +5.1% YTD
Dow Jones Industrial Average +4.5% YTD
Russell 2000 -0.4% YTD
4:16 pm Kopin announces two agreements w/ 'two leading global OLED companies' as part of its manufacturing strategy for its OLED displays introduced at CES in January 2017 (KOPN) :
Co signed an agreement with Yunnan OLiGHTEK Opto-electronics Technology Co. Ltd.
The parties will jointly purchase an advanced production OLED deposition line to be installed within OLiGHTEK's facility in order to augment OLiGHTEK's existing capabilities.
This OLED deposition line is expected to be ready for volume production by the end of 2017.
Under the terms of the agreement, Kopin will be entitled to 50% of the new line output.
Co has also entered into a separate agreement with BOE Technology Group Co. and OLiGHTEK.
The agreement will establish a high-volume, state of the art facility to manufacture OLED micro-displays to support the growing AR and VR markets.
The new facility will be managed by BOE and is expected to be built in Kunming, Yunnan Province, China.
Neither of these new agreements involves licensing of any Kopin technologies.
4:15 pm 8point3 Energy Partners LP reports Q1 results; See 16:05 news as FSLR reviewing alternatives for its interest; Reaffirms 2017 guidance (CAFD) :
For the first quarter of fiscal 2017, 8point3 Energy Partners reported revenue of $9.9 million, net loss of $5.3 million, adjusted EBITDA of $13.1 million and cash available for distribution (CAFD) of $22.1 million.
"As of the end of February, our portfolio consisted of interests in 945-megawatts (:MW) of U.S. solar generating assets including the recent acquisition of First Solar's 34 percent minority interest in its 300-MW Stateline project.
"With the completion of our Stateline interest acquisition and the predictable cash flows from our other projects, we believe we will be able to reduce leverage and achieve our distribution growth rate target of 12 percent this year."
Also, First Solar, one of the Partnership's sponsors, has publicly announced and notified the general partner's Board of Directors of its intention to explore alternatives related to its interests in the Partnership. Given First Solar's intention, SunPower, the Partnership's other sponsor, has likewise publicly announced and notified the general partner's Board of Directors that it is exploring alternatives related to its interests in the Partnership, including but not limited to, seeking a potential new joint venture partner in the Partnership.
Despite the sponsors' review of alternatives with respect to their interests in the Partnership, I want to assure our investors that we do not expect this process to have an impact on our financial results for the year. Given our cash flow profile, we are well positioned to achieve our guidance for the year as well as reach our 12 percent distribution growth rate for 2017,"
The Board of Directors of the Partnership's general partner also declared a cash distribution for its Class A shares of $0.2565 per share for the first quarter.
The Partnership's second quarter 2017 guidance is as follows:
Revenue of $14.0 million to $16.0 million,
Net income of $3.0 million to $5.0 million,
Adjusted EBITDA of $24.0 million to $26.5 million,
CAFD of $15.0 million to $17.5 million and a
Distribution of $0.2642 per share, a forecasted increase of 3.0 percent compared to the Q1 2017 distribution.
The Partnership's fiscal year 2017 guidance remains unchanged:
Revenue of $63.3 million to $66.7 million;
Net income of $27.0 million to $32.6 million;
Adjusted EBITDA of $106.5 million to $113.1 million;
CAFD of $91.5 million to $101.0 million;
The Partnership also expects a distribution growth rate of 12 percent for fiscal year 2017
4:05 pm 8point3 Energy Partners LP: First Solar (FSLR) says reviewing alternatives for the sale of its interests in 8point3 Energy Partners (CAFD) :
First Solar (FSLR) announced that it, working together with its financial and legal advisors, is reviewing alternatives for the sale of its interests in 8point3 Energy Partners. First Solar will coordinate this review with its partner SunPower (SPWR).
In recent months, First Solar has taken actions to strategically align the company's resources and capital in support of its transition to its new Series 6 product offering. As a continuation of these efforts, First Solar is exploring options for the sale of its interests in 8point3 in order to refocus resources on Series 6 objectives and allow for faster
As a continuation of these efforts, First Solar is exploring options for the sale of its interests in 8point3 in order to refocus resources on Series 6 objectives and allow for faster recycling of systems business capital. This capital would support the planned transition to Series 6 production and provide additional funding for the expected deployment of multiple gigawatts of Series 6 capacity over the next several years. First Solar intends to accelerate the return of capital from its systems business by selling projects earlier in the construction phase. This includes the California Flats and Cuyama projects, which have been formally offered to 8point3. If 8point3 is unable to acquire these projects, First Solar expects to sell these projects to third parties.
The moment of truth came today moments after the Fed Minutes were released. Commentary from the latest FOMC minutes took stocks on a ride down the roller coaster after spending the entirety of the morning session well in the green. In all, the Nasdaq Composite led the major averages lower today shedding 34.13 points (-0.58%) to 5864.48. The S&P 500 followed, down about 7.21 points (-0.31%) to 2352.95, while the Dow Jones Industrial Average declined 41.09 points (-0.20%) to 20648.15.
Today's economic data included the ADP National Employment Report which showed an increase of 263,000 in March while the February reading was revised lower to 245,000 from 298,000. Also, the ISM Services Index for March declined to 55.2 from an unrevised reading of 57.6 in February. Lastly, the weekly MBA Mortgage Applications Index decreased 1.6% to follow last week's 0.8% decline.
Pressured late by the sell-off in the broader market, the Technology (XLK 53.08, -0.22 -0.41%) plunged into the red in the final moments of action. Despite the broader sector weakness, component Salesforce.com (CRM 85.34, +2.37 +2.86%) was the best performer as the sell side weighed in on the company's Impact Level 4 authorization, which occurred yesterday. The Utilities and Real Estate spaces were the lone standouts today in the S&P XLU +0.56%, XLRE +0.16%, XLB -0.08%, XLP -0.18%, XLY -0.24%, IYZ -0.30%, XLV -0.31%, XLE -0.31%, XLI -0.32%, XLF -0.76%.
In the S&P 500 Information Technology (901.95, -2.87 -0.32%) space, trading also fell off into the close after positive action all session. Components ADSK -1.66%, AMAT -1.59%, ADI -1.48%, FLIR -1.26%, CSCO -1.23%, MU -1.15%, RHT -1.09%, TDC -0.99%, EA -0.99%, EBAY -0.97%, HRS -0.96% were among those stock which displayed pressure today.
Other notable news items among sector components:
Rumors circulated this morning surrounding a DigiTimes article that Apple (AAPL 144.02, -0.75 -0.52%) may delay its new iPhone until October or November rather than the typical September release.
TASER (TASR 21.90, -0.10 -0.45%) began a program to provide every police officer in America with a body camera. Also announced the company will formally change its name to Axon and ticker to AAXN effective tomorrow.
HP's (HPQ 17.68, -0.04 -0.23%) acquisition of Samsung Electronics' (SSNLF 1500.00, flat) printing business was cleared by the EU.
Zayo Group Holdings (ZAYO 32.54, +0.04 +0.12%) announced Andrew Crouch as new COO. Additionally, ZAYO intends to offer $500 million of its 5.750% Senior Notes due 2027 through an add-on to its existing issue.
New Relic (NEWR 38.98, +1.92 +5.18%) raised Q4 guidance. The company sees Q1 revenues above market expectations and FY18 revenues up at least 30%, targeting break even non-GAAP results exiting FY18. Additionally, the company announced President Hilarie Koplow-McAdams' retirement.
PayPal (PYPL 42.89, +0.17 +0.40%) and Visa (V 89.04, +0.26 +0.29%) extended their partnership to accelerate adoption of digital and mobile payments across Asia Pacific.
Analyst actions:
TU was upgraded to Sector Outperform from Sector Perform at CIBC;
RCI was downgraded to Sector Perform from Sector Outperform at CIBC;
GUID was initiated with an Overweight at Piper Jaffray,
ACIA was initiated with a Neutral at B. Riley & Co.,
BAH was initiated with an In Line at Evercore ISI,
CSRA was initiated with an Outperform at Evercore ISI
