From Briefing.com: 4:24 pm Closing Market Summary: Stocks Register Bounce-Back Performance (:WRAPX) :
Investors 'bought the dip' on Thursday as the major averages enjoyed a bounce-back performance following the stock market's worst one-day decline in eight months just 24 hours earlier. The S&P 500 (+0.4%) settled below its 50-day moving average (2,369) after some selling in the final minutes left the index in the middle of the day's trading range. The Nasdaq (+0.7%) and the Dow (+0.3%) closed on opposite sides of the benchmark index.
The equity market opened Thursday's session slightly lower but quickly recovered, climbing into positive territory on the back of a solid performance from the semiconductor and biotechnology industries. These two industries were watched closely throughout the day as a gauge of investor sentiment since they often exhibit leadership in up markets given their growth characteristics. Both the PHLX Semiconductor Index and the iShares Nasdaq Biotechnology ETF (IBB 292.27, +3.68) kept their bullish tones until the closing bell, adding 1.9% and 1.3%, respectively.
The opening move higher was followed by sideways action into the afternoon, followed by a second push led by the financial sector (+0.3%). There was no clear catalyst for the move, but it took place shortly after the U.S. Dollar Index (97.71, +0.37) spiked to a fresh session high at the expense of the pound (1.2944). Speculation that Brazil's President Michel Temer would resign following charges of corruption were also circulating at this time, however, Mr. Temer later said that he will not be stepping down. The iShares MSCI Brazil Capped ETF (EWZ 32.75, -6.39) plunged 16.3% while the iShares MSCI Emerging Markets ETF (EEM 40.29, -0.68) lost 1.7%.
However, the endless squabble in Washington kept a lid on the day's bullish sentiment. Yesterday's New York Times article, which highlighted a potential obstruction of justice move by President Trump, was followed by another concerning report that Trump campaign officials might have had at least 18 undisclosed contacts with Russian officials leading up to, and after, the U.S. presidential election. To be clear, the real concern for investors isn't so much the headlines themselves, rather, it's the notion that President Trump's pro-growth agenda items (i.e. tax reform, deregulation, and infrastructure spending) might not come to fruition as quickly as envisioned (i.e. before the end of the year) or perhaps at all.
Treasury Secretary Steven Mnuchin also made his way into today's news flow, stating that the Trump administration did not support the break up of big banks. In the past, President Trump has floated the idea of reinstating a '21st century' version of the Glass-Steagall Act, which was originally aimed at separating commercial and investment banking. However, the president has not taken a clear stance on the issue. The financial sector slipped to the bottom of the sector standings on the heels of Mr. Mnuchin's comments, but it regained its legs to lead the afternoon rally.
In U.S. corporate news, Wal-Mart (WMT 77.54, +2.42) jumped 3.2% after beating bottom line estimates. Conversely, Cisco Systems (CSCO 31.38, -2.44) tumbled 7.2% after disappointing revenue guidance overshadowed better than expected earnings. The results had a muted impact on the broader sectors. Consumer staples (+0.1%) finished behind the broader market despite WMT's solid performance while technology (+0.6%) outperformed in the face of CSCO's plunge.
In the end, nine of eleven sectors finished in positive territory with nearly all groups posting gains between 0.1% and 0.6%. The energy sector (-0.1%) settled at the bottom of the leaderboard, despite crude oil climbing 0.7% to $49.26/bbl, while the lightly-weighted telecom services group (+1.2%) finished at the top.
U.S. Treasuries ended Thursday relatively flat with the benchmark 10-yr yield (2.23%) adding one basis point. The CBOE Volatility Index (VIX 14.63, -0.96, -6.2%) reflected the improvement in risk tolerance, dropping one point.
On the data front, investors received several economic reports on Thursday, including Initial Claims, the Philadelphia Fed Index for May, and April Leading Indicators:
The latest weekly initial jobless claims count totaled 232,000 while the Briefing.com consensus expected a reading of 240,000. Today's tally was below the unrevised prior week count of 236,000. As for continuing claims, they declined to 1.898 million from the revised count of 1.920 million (from 1.918 million).
The key takeaway from this report is that it covered the period in which the employment survey was conducted for the May employment report, so it will foster an expectation for another month of strong nonfarm payrolls growth.
The Philadelphia Fed Survey for May rose to 38.8 from an unrevised 22.0 in April while economists polled by Briefing.com had expected a reading of 18.5.
The key takeaway from the report is that firms continue to expect growth, yet the optimism surrounding that growth outlook has faded, evidenced by the drop in the diffusion index for future general activity from 45.4 to 38.4, which was the second consecutive decline.
The Conference Board's Leading Indicators report for April increased 0.3% (Briefing.com consensus 0.4%) after moving higher by a revised 0.3% in March (from 0.4%).
The key takeaway from the report is that the strengths among the leading indicators have remained widespread.
Investors will not receive any economic data on Friday.
Nasdaq Composite +12.5% YTD
S&P 500 +5.7% YTD
Dow Jones Industrial Average +4.6% YTD
Russell 2000 +0.3% YTD
After yesterday's abysmal session, the markets recouped slightly. Leading the action higher, the tech-heavy Nasdaq Composite added 43.89 points (+0.73%) to 6055.13. The S&P 500 was up 8.71 points (+0.37%) to 2365.74, while the Dow Jones Industrial Average added 54.85 points (+0.27%) to 20661.78.
Market data today included the latest weekly initial jobless claims count which totaled 232,000, below the unrevised prior week count of 236,000. As for continuing claims, they declined to 1.898 million from the revised count of 1.920 million (from 1.918 million). Also, the Philadelphia Fed Survey for May rose to 38.8 from an unrevised 22.0 in April. The Conference Board's Leading Indicators report for April increased 0.3% after moving higher by a revised 0.3% in March (from 0.4%).
The Technology (XLK 54.92, +0.32 +0.59%) space was tied with Consumer Discretionary as the best performing S&P space. Component Applied Materials (AMAT 43.91, +1.15 +2.69%) performed well today ahead of quarterly earnings scheduled to be released after the close. As mentioned, the Consumer Discretionary space held pace with the tech sector XLY +0.59% followed by IYZ +0.53%, XLV +0.44%, XLF +0.39%, XLU +0.35%, XLRE +0.19%, XLI +0.14%, XLP +0.07%, XLB +0.06%, XLE -0.03%.
In the S&P 500 Information Technology (940.20, +5.46 +0.58%) space, trading recovered a portion of yesterday's losses. Component Facebook (FB 147.66, +2.81 +1.94%) performed well despite being handed an EUR110 million fine from the European Commission in relation to misleading information about its WhatsApp deal from a few years ago. Names like NVDA +4.19%, QRVO +4.15%, AVGO +2.78%, SWKS +2.64%, ADI +2.63%, ADSK +1.98%, MU +1.78%, LRCX +1.72%, ATVI +1.70%, helped the space climb out of yesterday's rut.
Other notable news items among sector components:
Facebook (FB) received a EUR110 million fine from European Commission for misleading information about WhatsApp takeover.
Autodesk (ADSK 95.83, +1.86 +1.98%) filed for offering of senior debt securities; size not disclosed.
According to CNBC, Pandora Media (P 9.41, +0.48 +5.38%) and Sirius (SIRI 4.86, +0.13 +2.75%) remain in talks but have yet to agree on valuation; June 8 is a deadline due to KKR (KKR 18.16, +0.23 +1.28%) investment.
In addition to reporting earnings, Cisco Systems (CSCO 31.38, -2.44 -7.21%) also disclosed additional restructuring, including 1,100 more layoffs.
Shopify (SHOP 92.05, +2.21 +2.47%) filed for $2.5 billion mixed securities shelf offering. The company also filed a preliminary prospectus supplement, 5.5 million Class A subordinate voting shares will be offered.
Orange (ORAN 16.87, +0.05 +0.30%) said it is in exclusive negotiations to acquire Business & Decision.
In reaction to quarterly results:
Cisco Systems (CSCO) reported better than expected Q3 EPS of $0.60 on revenues of $11.94 billion. For Q4, the company sees in-line EPS of $0.60-0.62 on revenues between $11.88-12.13 billion.
Synopsys (SNPS 70.93, -2.46 -3.36%) reported better than expected Q2 EPS and revenues of 40.88 and $680.07 million, respectively. For Q3, the company sees EPS and revenues ahead of market expectations at $0.91-0.94 and $685-700 million, respectively. For FY17, SNPS sees EPS and revenues above market expectations at $3.24-3.29 and $2.65-2.67 billion, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: AMAT, ADSK, GLOB, CRM/MMYT, QSII
Analyst actions:
TEF was upgraded to Buy from Neutral at Goldman;
EXPE was downgraded to Mkt Perform from Outperform at Raymond James,
SYMC was downgraded to Neutral from Buy at UBS,
FSLR was downgraded to Neutral from Outperform at Robert W. Baird, S
SYS was downgraded to Hold from Buy at Jefferies,
PSTG was downgraded to Equal Weight from Overweight at Morgan Stanley;
PTC was initiated with a Buy at The Benchmark Company
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