From Briefing.com: 4:26 pm Closing Market Summary: Averages Trim Early Losses to End Little Changed (:WRAPX) :
The market appeared in position to break this week's sideways trend to the downside, but an afternoon recovery helped the major averages trim their losses. The S&P 500 and the Nasdaq shed 0.2% apiece while the Dow (-0.1%) settled just a tick higher. The small-cap Russell 2000 underperformed, losing 0.7%.
Earnings were problematic on Thursday with retailers receiving the biggest blow. Macy's (M 24.35, -4.99) plunged 17.0% after the company reported worse than expected earnings/revenues and a 5.2% decline in comparable store sales. Similarly, Kohl's (KSS 37.16, -3.16) dropped 7.8% in reaction to disappointing top-line results. In the end, the retail industry's poor performance can be summed up with the SPDR S&P Retail ETF (XRT 42.91, -1.19), which declined 2.7%. Unsurprisingly, the retail-heavy consumer discretionary sector (-0.6%) finished near the bottom of the day's leaderboard.
Snap (SNAP 18.05, -4.93) was also hit by a wave of selling pressure after its first earnings report as a public company fell short of expectations. The company missed both top and bottom line estimates in addition to undershooting the target for daily active user growth. SNAP shares settled with a big loss of 21.5%. However, the company's tumble didn't have much sway over the technology sector (-0.2%), which closed in line with the broader market, thanks in part to a solid showing from chipmakers. The PHLX Semiconductor Index added 0.3%.
Crude oil underpinned the energy sector (-0.2%) for a while again on Thursday, climbing 1.1% to $47.80/bbl, as investors continued to cheer yesterday's bullish EIA inventory report. However, the energy space slipped in the late afternoon to finish in line with the benchmark index.
Conversely, the consumer staples sector (+0.1%) held its slight edge to the end, helped by Whole Food Market's (WFM 37.03, +0.78) latest earnings report. The company jumped 2.2% after reporting better than expected revenues, increasing its dividend, announcing a share repurchase program, and appointing five new independent directors and a new CFO. A handful of other sectors also showed relative strength, including health care (+0.1%), industrials (unch), and utilities (unch).
For the remaining groups, financials (-0.5%), real estate (-0.5%), and telecom services (-0.5%) underperformed while the materials space (-0.3%) settled roughly in line with the broader market.
U.S. Treasuries settled slightly higher with the benchmark 10-yr yield (2.40%) dropping two basis points. The CBOE Volatility Index (VIX 10.53, 0.32, +3.1%) also signaled increased caution, closing above the 10.00 mark for the first time this week.
It is worth adding that Moody's downgraded six major Canadian banks by one notch apiece, citing a more challenging operating environment for banks in Canada due to a sharp increase in household debt and housing prices. The Canadian dollar (1.3695) shed 0.3% against the U.S. dollar today, but is down nearly 3.0% over the past month despite the U.S. Dollar Index declining 1.1% in that timeframe.
On the data front, investors received April PPI and Initial Claims:
April producer prices increased 0.5%, which is above the Briefing.com consensus of 0.2%. Core producer prices rose 0.4% while the Briefing.com consensus expected an increase of 0.2%.
The key takeaway from this report is that inflation pressures picked up for producers in April and that is going to create some concerns about a pass-through effect to consumers, particularly since there were price pressures noted across all four stages of intermediate demand.
The latest weekly initial jobless claims count totaled 236,000 while the Briefing.com consensus expected a reading of 242,000. Today's tally was below the unrevised prior week count of 238,000. As for continuing claims, they declined to 1.918 million from the revised count of 1.979 million (from 1.964 million).
The jobless claims data certainly fits well with the tight labor market narrative even if the subdued average hourly earnings growth seen in the April employment report does not.
Tomorrow, market participants will receive April CPI (Briefing.com consensus 0.2%) and April Retail Sales (Briefing.com consensus 0.6%) at 8:30 ET and then March Business Inventories (Briefing.com consensus 0.1%) and the preliminary reading of the University of Michigan Consumer Sentiment Survey for May (Briefing.com consensus 96.5) at 10:00 ET.
Nasdaq Composite +13.6% YTD
S&P 500 +7.0% YTD
Dow Jones Industrial Average +5.9% YTD
Russell 2000 +2.4% YTD
Today's action ended with losses across the board as the S&P 500 and the Nasdaq Composite both lost 0.22%. To that end, the S&P 500 shed about 5.19 points today to end 2394.44, while the Nasdaq Composite lost about 13.18 points, ending Thursday at 6115.96. The Dow Jones Industrial Average declined a more modest -0.11%, or 23.69 points, to 20919.42. It's worth mentioning that Snap (SNAP 18.05, -4.93 -21.45%) fell to below IPO levels today after its worse than expected Q1 report and underperforming user numbers.
Among the economic data today, the April producer prices reading increased 0.5%, while Core producer prices rose 0.4%. The latest weekly initial jobless claims count totaled 236,000, below the unrevised prior week count of 238,000. As for continuing claims, they declined to 1.918 million from the revised count of 1.979 million (from 1.964 million).
Finishing modestly lower today, the Technology (XLK 55.42, -0.07 -0.13%) space climbed into the close, having slumped to as low as 55.11. Component Frontier Communications (FTR 1.20, -0.12 -9.09%) was the worst performer today, piggy backing off losses from Verizon (VZ 46.02, -0.36 -0.78%) which today disclosed it bought Straight Path Comms (STRP 178.11, -45.68 -20.41%) for $184 per share. Fitting then that the worst performing S&P sector was the US Telecoms space IYZ -2.18% followed by the XLF -0.63%, XLY -0.60%, XLRE -0.47%, XLE -0.21%, XLB -0.15%, XLI -0.03%, XLV +0.05%, XLU +0.14%, XLP +0.15%.
In the S&P 500 Information Technology (948.56, -1.42 -0.15%) space, trading ended just shy of highs of the day as the breadth of the morning losses did not hold. Component Symantec (SYMC 31.46, -1.68 -5.07%) was the worst performer in the space today after the in-line Q4 report and worse than expected guidance. Other names in the space which underperformed today included ADS -2.69%, TDC -1.48%, STX -1.46%, FFIV -1.26%, VRSN -1.25%, MSFT -1.23%, QCOM -1.17%, GLW -1.06%, MU -0.99%.
Other notable news items among sector components:
Straight Path Comms (STRP) confirmed an agreement to be acquired by Verizon (VZ) for $184.00 per share in stock.
Interdigital Comm (IDCC 86.10, -0.30 -0.35%) entered into a settlement agreement and release of claims with Microsoft (MSFT 68.46, -0.85 -1.23%).
KEYW Holding (KEYW 8.44, +0.11 +1.325) COO Mark Willard will step down. The company appointed John Sutton as COO effective May 15, 2017.
Canadian Solar (CSIQ 13.27, -0.42 -3.07%) acquired a 10% equity interest in eNow, a U.S. company specializing in solar-based energy management system for the commercial transportation industry; terms not disclosed.
Cisco Systems (CSCO 33.63, -0.11 -0.33%) announced its intent to acquire MindMeld for $125 million.
Alphabet (GOOG 930.60, +1.82 +0.20%) acquired VR games studio Owlchemy Labs.
The National Football League and Twitter (TWTR 18.39, -0.15 -0.81%) announced a new multiyear deal to deliver official NFL video and other types of content to fans.
Dataram (DRAM 4.99, -0.16 -3.11%) filed for $20 million mixed securities shelf offering.
In reaction to quarterly results:
Netease.com (NTES 276.76, -2.29 -0.82%) reported better than expected Q1 EPS and revenues of $4.75 and $1.98 billion, respectively.
Telus (TU 33.42, -0.04 -0.12%) reported better than expected Q1 earnings of CAD0.74 on revenues of CAD 3.2 billion. For FY17, the company sees EPS of CAD2.49-2.66 (from CAD2.49-2.64) on revenues between CAD13.18-13.31 billion (from CAD13.12-13.25 billion).
Symantec (SYMC) reported in-line Q4 EPS and revenues of $0.28 and $1.18 billion, respectively. For Q1, the company sees worse than expected EPS and revenues of $0.28-0.32 and $1.185-1.215 billion, respectively. For FY18, SYMC sees EPS of $1.75-1.85 from $1.70-1.80 and revenues of $5.1-5.2 billion.
Snap (SNAP) reported a worse than expected Q1 GAAP loss of $2.31 on worse than expected revenues of $149.6 million. Further, SNAP averaged 166 million daily active users in the quarter.
Himax Tech (HIMX 7.25, +.0.40 +5.84%) reported worse than expected Q1 EPS and revenues of $0.01 and $155.2 million, respectively. For Q2, the company sees EPS and revenues worse than expected of ($0.01)-($0.00) and 'down 5% to flat quarter-over-quarter' which equates to about $147-155 million.
Companies scheduled to report earnings tonight: APDN, CA, CYBR, HOLI, PSDO, TLND, TTD, UNXL, UPLD
Analyst actions:
YELP was upgraded to Buy from Neutral at Citigroup,
SNAP was upgraded to Neutral from Underweight at Cantor Fitzgerald and to Outperform from Perform at Oppenheimer,
SYMC was upgraded to Overweight from Equal Weight at First Analysis Sec,
EA was upgraded to Buy from Hold at Ascendiant Capital Markets,
LPSN was upgraded to Buy from Hold at Craig Hallum;
ORCL was downgraded to Hold from Buy at Societe Generale,
NTES was downgraded to Neutral from Buy at Instinet,
YY was downgraded to Neutral from Overweight at JP Morgan,
ACIA was downgraded to Equal Weight from Overweight at Morgan Stanley,
QUIK was downgraded to Neutral from Buy at Roth Capital;
CTRL was initiated with a Hold at Maxim Group,
PTC was initiated with an Outperform at Robert W. Baird
