From Briefing.com: 4:26 pm Closing Market Summary: Stocks Bounce Back from Tuesday's Tumble (:WRAPX) :Wall Street registered a solid win on Wednesday as the top-weighted financials (+1.6%) and technology (+1.3%) sectors carried the S&P 500 (+0.9%) back to its flat line for the week. The Nasdaq (+1.4%) outperformed the benchmark index while the Dow (+0.7%) lagged, but all three major averages settled near the top of the day's trading range. The small-cap Russell 2000 added 1.6%.
The heavily-weighted financial sector (+1.6%) led Wednesday's session from start to finish, extending its week-to-date gain to 2.7%, which was undoubtedly a positive for investor sentiment considering the group's important role in driving economic activity. However, the bounce-back performance of the top-weighted information technology sector (+1.3%), which suffered back-to-back losses on Monday and Tuesday, was just as important in fueling the stock market's advance.
Tech stocks were lagging in pre-market action, but then showed signs of life after the European Central Bank said that the market misjudged yesterday's remarks from ECB President Mario Draghi, which were originally deemed as hawkish. The tech-heavy Nasdaq tested its 50-day simple moving average (6,234) in the opening minutes and then quickly moved higher, most likely on the back of some short-covering activity, after the key technical level held.
Most other cyclical groups also finished solidly higher, including consumer discretionary (+1.0%), industrials (+0.9%), energy (+0.6%), and materials (+0.8%). The consumer discretionary space benefited from broad strength, but homebuilders showed particular resolve after KB Home (KBH 24.06, +1.24) beat both top and bottom line estimates and issued upbeat guidance. The iShares U.S. Home Construction ETF (ITB 34.05, +0.56) added 1.7%.
Transports helped underpin the industrial sector, sending the Dow Jones Transportation Average higher by 1.4%. Industrial heavyweight Caterpillar (CAT 106.45, +2.52) also pitched in, adding 2.4%.
For the energy sector, the bullish bias stemmed from the crude oil futures market, which advanced for the fifth session in a row after the Department of Energy reported that U.S. crude inventories increased by 0.1 million barrels (consensus -2.6 million barrels) and gasoline stockpiles decreased by 0.9 million barrels for the week ended June 23. WTI crude recovered the last leg of last week's swoon, climbing 1.1% to $44.73/bbl.
Meanwhile, on the countercyclical side, the influential health care sector (+0.5%) struggled to keep pace with the broader market as some of its top components by market cap, including Johnson & Johnson (JNJ 133.82, -1.19) and Pfizer (PFE 33.75, -0.02), weighed. However, most components finished in the green. Biotech stocks bounced back from their two-day swoon, sending the iShares Nasdaq Biotechnology ETF (IBB 316.88, +5.99) higher by 1.9%.
Like health care, the consumer staples (+0.4%) and telecom services (+0.4%) groups underperformed, but still finished in the green. Meanwhile, the real estate group finished just a tick below its unchanged mark while the utilities space settled lower by 1.0%.
Outside of the equity market, the U.S. Dollar Index (95.72, -0.46) slipped for the second day in a row, losing 0.5%, as the euro (1.1383) added 0.4% on the greenback. The British pound (1.2929) did even better, adding 0.9% against the U.S. dollar, after Bank of England Governor Mark Carney noted that the time for removing some stimulus may be close at hand.
U.S. Treasuries settled mixed in a curve-steepening trade, which helped underpin the financial sector. The 10-yr yield climbed one basis point to 2.22% while the 2-yr yield slipped two basis points to 1.36%. For the week, the 2yr-10yr spread has increased by five basis points to 86 basis points.
Reviewing today's economic data, which included May Pending Home Sales, the Advance Report for International Trade in Goods for May, and the weekly MBA Mortgage Applications Index:
Pending Home Sales for May declined 0.8% (Briefing.com consensus +0.5%). Today's reading follows a revised 1.7% decrease in April (from -1.3%).The Advance Report for International Trade in Goods for May showed a deficit of $65.9 billion, down from a revised deficit of $67.1 billion for April (from -$67.6 billion).The weekly MBA Mortgage Applications Index declined 6.2% to follow last week's 0.6% increase.On Thursday, investors will receive Initial Claims (Briefing.com consensus 241,000) and the third estimate of first quarter GDP (Briefing.com consensus 1.2%). Both reports will be released at 8:30 ET.
Nasdaq Composite +15.8% YTD
S&P 500 +9.0% YTD
Dow Jones Industrial Average +8.6% YTD
Russell 2000 +5.0% YTD
4:04 pm Kulicke & Soffa guides Q3 revs at the high end of prior range; sees FY17 revs above consensus; strength driven by semiconductor unit growth (KLIC) :
Co issues upside guidance for Q3 (Jun), sees Q3 (Jun) revs at the high end of $235-245 mln vs. $239.89 mln Capital IQ Consensus Estimate.
The Company expects one-time, non-recurring charges and credits in the third fiscal quarter, consisting of a favorable foreign tax credit, goodwill impairment and restructuring charges collectively resulting in a non-cash expense of $35.2 mln and a cash gain of $18.9 mln
As part of its annual strategic planning process, the Company proceeded with tactical and strategic initiatives to better execute on its collective long-term core, advanced packaging and electronics assembly related opportunities. Largely triggered by this annual process, the Company anticipates several unique charges and credits during the June quarter relating to a favorable foreign tax credit, non-cash goodwill impairment expenses and restructuring related charges. These collective items are anticipated to result in a non-cash expense of $35.2 mln and a cash gain of $18.9 mln.
Co issues upside guidance for FY17 (Sep), sees FY17 (Sep) revs of $765-815 mln vs. $752.29 mln Capital IQ Consensus Estimate. The Company's ongoing strength continues to be driven by higher levels of semiconductor unit growth, dominant share positions and a diversified exposure to end applications.
Tech Stocks from Briefing.com
In all, Wednesday was a strong session as the broader market notched some decent gains, for the most part erasing yesterday's rough affair from memory. The Nasdaq Composite almost doubled up the percentage gains of the S&P 500 today as the index added 87.79 points (+1.43%) to 6234.41. The S&P 500, for its part, gained 21.31 points (+0.88%) to 2440.69, while the Dow Jones Industrial Average put up a solid 143.95 (+0.68%) to 21454.61.
Economic data today included Pending Home Sales for May which declined 0.8%. Today's reading follows a revised 1.7% decrease in April (from -1.3%). Also, the Advance Report for International Trade in Goods for May showed a deficit of $65.9 billion, down from a revised deficit of $67.1 billion for April (from -$67.6 billion). Lastly, the weekly MBA Mortgage Applications Index declined 6.2% to follow last week's 0.6% increase.
The Technology (XLK 55.77, +0.69 +1.25%) space modestly snapped the recent losing streak, partly enabled by the stronger broader market. Component Paychex (PAYX 57.65, -0.97 -1.65%) was the worst performer in the space today following its Q4 results and FY18 guidance. Financials XLF +1.57% ended higher today, followed by IYZ +1.40%, XLY +1.01%, XLI +0.90%, XLB +0.89%, XLE +0.55%, XLV +0.53%, XLP +0.40%, XLRE +0.12%, XLU -0.96%.
In the S&P 500 Information Technology (958.90, +12.51 +1.32%) space, trading ended near highs after opening flat. Component NVIDIA (NVDA 151.75, +5.17 +3.53%) was the best performing name in the space today following favorable sell-side commentary. Other names in the space which outperformed today included PYPL +3.15%, SYMC +2.77%, WDC +2.54%, AVGO +2.43%, HPE +2.42%, QRVO +2.26%, GPN +2.25%, LRCX +2.22%, KLAC +1.99%, NTAP +1.97%, XRX +1.95%.
Other notable news items among sector components:
Toshiba (TOSBF 2.57, -0.03 -1.15%) filed a lawsuit against Western Digital (WDC 93.67, +2.32 +2.54%) for JPY120 billion in damages.
Qualcomm (QCOM 56.16, +0.73 +1.32%) further extended offering period of its previously announced cash tender offer for NXP Semi (NXPI 109.90, +0.38 +0.35%); now scheduled to expire at 5:00 p.m., New York City time, on July 27.
The Meet Group (MEET 4.92, +0.07 +1.44%) reached an agreement with 6.3% holder Harvest Capital; the company agreed to appoint two new independent directors to its Board.
Accenture (ACN 123.74, +1.55 +1.27%) acquired Boston-based mobile design and development firm Intrepid; terms not disclosed.
Samsung (SSNLF 2000, flat) to expand U.S. operations, open $380 million home appliance manufacturing plant in South Carolina.
Match Group (MTCH 17.56, +0.06 +0.37%): Tinder introduces Tinder Gold, a premium subscription service.
In reaction to quarterly results:
CalAmp (CAMP 20.44, +1.19 +6.18%) reported better than expected Q1 EPS and revenues of $0.29 and $88.1 million, respectively. The company also guided Q2 EPS midpoint below market expectations at $0.23-0.29 and revenues in-line at $86-91 million.
Paychex (PAYX) reported better than expected Q4 EPS of $0.54 on in-line revenues of $799 million. The company also guided FY18 EPS and revenues below market expectations at about $2.35-2.38 and $3.309 billion, respectively.
Analyst actions:
CY was upgraded to Overweight from Equal Weight at Barclays,
EXPE was upgraded to Buy from Neutral at Citigroup,
UMC was upgraded to Buy from Neutral at UBS;
QCOM was downgraded to Market Perform from Outperform at Northland Capital,
FDC was downgraded to Equal Weight from Overweight at Morgan Stanley;
AABA was initiated with an Overweight at JP Morgan,
V, GPN, WEX, SEIC, HAWK were all initiated with Buy ratings at Mizuho,
MA, PYPL, TSS, VNTV were all initiated with Neutral ratings at Mizuho,
WU was initiated with an Underperform at Mizuho,
FARO was initiated with a Buy at Craig Hallum,
EGOV was initiated with a Neutral at DA Davidson,
GECC was initiated with an Outperform at Oppenheimer
