From Briefing.com: 4:30 pm Closing Market Summary: Stocks Finish Mixed on Thursday (:WRAPX) :Equities got off to a good start on Thursday, but most gains were unwound during an afternoon sell off in which technology stocks suffered the heaviest losses. The Nasdaq (-0.6%) and the Russell 2000 (-0.6%) finished behind the benchmark S&P 500 (-0.1%). Meanwhile, the Dow (+0.4%) advanced to a new record high, largely thanks to the outperformance of four companies--Verizon (VZ 47.81, 3.41), Boeing (BA 241.00, +7.55), Merck (MRK 63.69, +1.89), and Walt Disney (DIS 110.00, +3.06). A late-afternoon uptick left the indices in the middle of their trading ranges.
The top-weighted technology sector (-0.8%) exhibited relative strength in the morning session as Facebook (FB 170.44, +4.83) surged to a new record high in reaction to its better than expected earnings and revenues. However, tech stocks began to sell off sharply in the early afternoon, sending the technology group, and the tech-heavy Nasdaq, deep into negative territory.
Facebook managed to settle with a solid gain of 2.9%, but fellow mega-cap names like Apple (AAPL 150.56, -2.90), Microsoft (MSFT 73.16, -0.89), and Alphabet (GOOGL 952.51, -12.80) were hit hard, dropping between 1.2% and 1.9%. Chipmakers also faced heavy selling pressure, sending the PHLX Semiconductor Index lower by 1.6%.
Amazon (AMZN 1046.00, -6.80) held a big gain of around 2.9% before the afternoon sell off, but slipped into the red alongside the broader market as investors divested some of their shares ahead of the company's earnings report, which crossed the wires following Thursday's closing bell. AMZN settled Thursday's session with a loss of 0.7%.
In total, six of the eleven sectors settled in the red with losses ranging from 0.1% to 0.8%. Outside of technology, health care was the worst-performing sector, dropping 0.7% amid broad weakness. The heavily-weighted financial space (-0.5%) also underperformed, as did the industrial group (-0.5%), which was led lower by transport names.
The Dow Jones Transportation Average plunged 3.1% on Thursday as just about every one of its 20 components settled with notable losses. Southwest Airlines (LUV 56.57, -2.95) and UPS (UPS 107.79, -4.50) were among the weakest components, dropping 5.0% and 4.0%, respectively, despite both companies reporting better than expected earnings.
However, on the upside, the lightly-weighted telecom services group rallied for the second day in a row, adding 5.2% to increase its two-day advance to 8.3%. Verizon (VZ 47.81, +3.41) led the charge, surging 7.7%, after reporting better than expected revenues. The wireless giant added 614,000 monthly subscribers in Q2--soundly beating consensus estimates that called for around 70,000 additions--thanks in part to the company's new unlimited data plan, which it launched back in February.
Elsewhere on the earnings front, Procter & Gamble (PG 90.68, +1.38) jumped 1.6% after reporting better than expected earnings and issuing upbeat guidance. The company's solid performance helped the consumer staples space (+0.9%) finish solidly ahead of the broader market, alongside the consumer discretionary (+0.7%) and energy (+1.0%) groups. The utilities space (+0.2%) also settled in the green.
In Washington, the GOP announced that its long-awaited tax reform plan will not include a border-adjustment tax. The SPDR S&P Retail ETF (XRT 41.37, +0.56) moved sharply higher following the announcement, ending the day with a gain of 1.4%, as retailers depend heavily on the free flow of goods from overseas, where much of their products are manufactured.
U.S. Treasuries moved lower in a curve-steepening trade following a stronger than expected reading for June Durable Orders (6.5% actual vs 2.9% consensus). The benchmark 10-yr yield climbed two basis points to 2.31%.
Also of note, crude oil rose 0.4% to $48.96/bbl, the U.S. Dollar Index (93.76, +0.47) added 0.5%, gold rallied 0.8% to $1,259.90/ozt, and the CBOE Volatility Index (VIX 10.24, +0.64) climbed 6.7%.
Reviewing Thursday's economic data, which included June Durable Orders, the weekly Initial Claims Report, and June International Trade in Goods:
June durable goods orders rose 6.5%, which is above the 2.9% increase expected by the Briefing.com consensus. The prior month's reading was revised to -0.1% (from -1.1%). Excluding transportation, durable orders increased 0.2% (Briefing.com consensus 0.5%) to follow the prior month's revised uptick of 0.6% (from 0.1%).
The key takeaway from the report is that orders for nondefense capital goods excluding aircraft -- a proxy for business investment -- were down 0.1%. Shipments of those same goods, though, were up 0.2% on the heels of a 0.4% increase in May, which will be a positive input for Q2 GDP forecasts.
The latest weekly initial jobless claims count totaled 244,000 while the Briefing.com consensus expected a reading of 240,000. Today's tally was above the revised prior week count of 234,000 (from 233,000). As for continuing claims, they declined to 1.964 million from the unrevised count of 1.977 million.
The key takeaway from the report is that it's more of the same on the initial claims front, which portends good news most likely for nonfarm payroll increases.
The Advance report for International Trade in Goods for June showed a deficit of $63.9 billion, down from a revised deficit of $66.3 billion for May (from -$65.9 billion).On Friday, investors will receive the advance estimate for second-quarter GDP (Briefing.com consensus 2.8%) and the final reading of the University of Michigan Consumer Sentiment Index for July (Briefing.com consensus 93.1). The two reports will cross the wires at 8:30 ET and 10:00 ET, respectively.
Nasdaq Composite +18.6% YTD
S&P 500 +10.6% YTD
Dow Jones Industrial Average +10.3% YTD
Russell 2000 +5.6% YTD
4:31 pm Ultra Clean Holdings beats by $0.11, beats on revs; guides Q3 above consensus (UCTT) :
Reports Q2 (Jun) earnings of $0.62 per share, $0.11 better than the Capital IQ Consensus of $0.51; revenues rose 75.8% year/year to $228.26 mln vs the $213.92 mln Capital IQ Consensus.
Co issues upside guidance for Q3, sees EPS of $0.62-0.68 vs. $0.39 Capital IQ Consensus Estimate; sees Q3 revs of $235.0-245.0 mln vs. $193.84 mln Capital IQ Consensus Estimate.
"With elevated WFE spending challenging the supply chain, UCT once again delivered another exceptional quarter, exceeding both our top and bottom line expectations," said Jim Scholhamer, President and CEO. "Our focus on successfully fulfilling our customers' increasing demand resulted in opportunities to meet their increased manufacturing capacity needs. The flexibility of our operations and our ability to deliver in the current environment is providing high value to our customers worldwide and demonstrating the leverage of our operating model."
4:29 pm Cypress Semi beats by $0.05, beats on revs; guides Q3 EPS above consensus, revs above consensus (CY) :
Reports Q2 (Jun) earnings of $0.21 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.16; revenues rose 11.6% year/year to $593.8 mln vs the $546.82 mln Capital IQ Consensus.
Co issues upside guidance for Q3, sees EPS of $0.21-0.25 vs. $0.21 Capital IQ Consensus Estimate; sees Q3 revs of $585-615 mln vs. $576.12 mln Capital IQ Consensus Estimate.
"We remain laser-focused on driving revenue and earnings growth by investing in high-growth end-markets, expanding gross margins and broadening our customer base."
4:29 pm KLA-Tencor beats by $0.05, beats on revs (KLAC) :
Reports Q4 (Jun) earnings of $1.64 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $1.59; revenues rose 2.1% year/year to $938.6 mln vs the $923.8 mln Capital IQ Consensus. New orders exceeded the $1 billion mark and shipments were a record $971 million.
4:28 pm Cohu beats by $0.09, beats on revs; guides Q3 revs in-line (COHU) :
Reports Q2 (Jun) earnings of $0.48 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus of $0.39; revenues rose 22.9% year/year to $93.9 mln vs the $92.91 mln Capital IQ Consensus.
Luis Mller, President and Chief Executive Officer of Cohu stated, "We reported strong results, achieving the highest quarterly sales since 2014, driven by continued momentum in the automotive, mobility and IoT markets. Additionally, orders increased for industrial and solid state lighting test applications. Our contactor business increased to over 10% of quarterly sales as a result of strong customer demand for our new RF solution and digital contactors coupled with Kita spring probes, and is a growing opportunity for Cohu."
Co issues in-line guidance for Q3, sees Q3 revs of $88.0-$95.0 mln vs. $90.94 mln Capital IQ Consensus Estimate.
Cohu's Board of Directors approved a quarterly cash dividend of $0.06 per share payable on October 20, 2017 to shareholders of record on August 25, 2017. Cohu has paid consecutive quarterly cash dividends since 1977.
4:28 pm Western Digital beats by $0.07, reports revs in-line (WDC) :
Reports Q4 (Jun) earnings of $2.93 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $2.86 and above its June 26 guidance of approx $2.85; revenues rose 38.5% year/year to $4.84 bln vs the $4.82 bln Capital IQ Consensus and vs prior guidance of approx $4.80 bln.
4:20 pm Cray beats by $0.34, beats on revs; guides Q3 revs in-line; guides FY17 revs in-line (CRAY) :
Reports Q2 (Jun) loss of $0.20 per share, excluding non-recurring items, $0.34 better than the Capital IQ Consensus of ($0.54); revenues fell 13.1% year/year to $87.1 mln vs the $60.18 mln Capital IQ Consensus.
Co issues in-line guidance for Q3, sees Q3 revs of Approx $60 mln vs. $78.05 mln Capital IQ Consensus Estimate.
Co issues in-line guidance for FY17, sees FY17 revs of Approx $400 mln vs. $427.42 mln Capital IQ Consensus Estimate.
GAAP and non-GAAP gross margins for the year are expected to be in the low- to mid-30% range.
Non-GAAP operating expenses for 2017, including an estimate for what the impact of the Seagate transaction would be, are expected to be in the range of $190 million.
For 2017, GAAP operating expenses are anticipated to be about $24 million higher than non-GAAP operating expenses, driven by stock-based compensation, restructuring, and costs related to the Seagate transaction.
4:15 pm Intel beats by $0.04, beats on revs; guides Q3 EPS and revenue above consensus; raises FY17 EPS and rev above consensus (INTC) :
Reports Q2 (Jun) earnings of $0.72 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $0.68; revenues rose 9.1% year/year to $14.76 bln vs the $14.39 bln Capital IQ Consensus.
Client Computing +12% to $8.2 bln
Data Center +9% to $4.4 bln
IoT +26% to $720 mln
Non-Vol Memory +58% to $874 mln
Programmable -5% to $440 mln
Co issues upside guidance for Q3, sees EPS of $0.75-0.85, excluding non-recurring items, vs. $0.74 Capital IQ Consensus Estimate; sees Q3 revs of $15.2-16.2 bln vs. $15.33 bln Capital IQ Consensus Estimate.
Co issues upside guidance for FY17 based on strong first-half results and higher expectations for the PC business, raises EPS $0.15 to $2.85-3.15, excluding non-recurring items, vs. $2.86 Capital IQ Consensus; raises FY17 revs $1.3 bln to $60.8-61.8 bln vs. $60.22 bln Capital IQ Consensus Estimate.
"Q2 was an outstanding quarter with revenue and profits growing double digits over last year," said Brian Krzanich, Intel CEO. "We also launched new Intel Core, Xeon and memory products that reset the bar for performance leadership, and we're gaining customer momentum in areas like AI and autonomous driving. With industry-leading products and strong first-half results, we're on a clear path to another record year."
4:12 pm Flex misses by $0.02, beats on revs; guides Q2 EPS below consensus, revs in-line (FLEX) :
Reports Q1 (Jun) earnings of $0.24 per share, at low end of guidance, $0.02 worse than the Capital IQ Consensus of $0.26; revenues rose 2.2% year/year to $6.01 bln vs the $5.91 bln Capital IQ Consensus.
Co issues guidance for Q2, sees EPS of $0.24 to $0.28 vs. $0.29 Capital IQ Consensus Estimate; sees Q2 revs of $5.90 bln to $6.30 bln vs. $6.15 bln Capital IQ Consensus Estimate.
4:12 pm Microsemi reports EPS in-line, revs in-line; guides Q4 EPS in-line, revs in-line and announces stock repurchase program (MSCC) :
Reports Q3 (Jun) earnings of $0.99 per share, in-line with the Capital IQ Consensus of $0.99; revenues rose 6.2% year/year to $458.1 mln vs the $457.87 mln Capital IQ Consensus.
Non-GAAP gross margin for the third quarter of 2017 was 63.9 percent, up 200 basis points from the 61.9 percent in the third quarter of 2016.
Co issues in-line guidance for Q4, sees EPS of $1.02-1.14 vs. $1.06 Capital IQ Consensus Estimate; sees Q4 revs of $463-487 mln vs. $472.48 mln Capital IQ Consensus Estimate.
4:11 pm Power Integrations beats by $0.02, reports revs in-line; guides Q3 revs in-line; expands repurchase authorization (POWI) :
Reports Q2 (Jun) earnings of $0.69 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.67; revenues rose 10.2% year/year to $107.56 mln vs the $107.85 mln Capital IQ Consensus.
Power Integrations' board of directors has expanded the company's share-repurchase authorization by $30 million; the company now has $53.6 million available for the repurchase of its common stock.
Co issues in-line guidance for Q3, sees Q3 revs of $108-114 mln vs. $113.00 mln Capital IQ Consensus
Estimate; GAAP gross margin is expected to be approximately 49.3 percent; non-GAAP gross margin is expected to be approximately 50.5 percent.See 16:05 comment for more details about stock repurchase program
4:09 pm First Solar beats by $0.60, beats on revs; guides FY17 EPS above consensus, revs in-line (FSLR) :
Reports Q2 (Jun) earnings of $0.64 per share, excluding non-recurring items, $0.60 better than the Capital IQ Consensus of $0.04; revenues fell 38.7% year/year to $623 mln vs the $591.55 mln Capital IQ Consensus.
Co issues guidance for FY17, sees EPS of $2.00-2.50, excluding non-recurring items, vs. $0.59 Capital IQ Consensus Estimate; sees FY17 revs of $3.0-3.1 bln (Prior $2.85-2.95 bln) vs. $2.9 bln Capital IQ Consensus Estimate.
Raises Gross Margin guidance to 17-18% from 12.5-14.5%
Raises Operating expenses to $330-340 mln from $320-330 mln
Raises operating Cash Flow to $850-950 mln from $350-450 mln
Lowers CapEx to $400-500 mln from $525-625 mln.
Tech Stocks from Briefing.com
After enjoying some all-time highs early in the session, the broader market collapsed near midday as big name tech sector components sold off. When the bell rang, however, the Dow Jones Industrial Average peeked its head above water and posted gains of 85.54 points (+0.39%) to 21796.55 - an all-time high. The tech-heavy Nasdaq Composite, by contrast, fell about 40.56 points (-0.63%) to 6382.19, while the S&P 500 declined about 2.41 points (-0.10%) to 2475.42.
In market data, June durable goods orders rose 6.5%, while the prior month's reading was revised to -0.1% (from -1.1%). Excluding transportation, durable orders increased 0.2% to follow the prior month's revised uptick of 0.6% (from 0.1%). The latest weekly initial jobless claims count totaled 244,000, above the revised prior week count of 234,000 (from 233,000). As for continuing claims, they declined to 1.964 million from the unrevised count of 1.977 million. The Advance report for International Trade in Goods for June showed a deficit of $63.9 billion, down from a revised deficit of $66.3 billion for May (from -$65.9 billion).
The Technology (XLK 57.50, -0.22 -0.38%) space took a hit when the broader market fell near midday. Component Automatic Data (ADP 115.63, +9.65 +9.11%) got some love today, despite the weaker sector, as the company's results and guidance were outshined by reports of a possible stake by Pershing Square's Bill Ackman. The US Telecom IYZ +1.25% space performed admirably in the face of a weaker broader market today, followed by XLE +1.02%, XLP +0.98%, XLY +0.73%, XLU +0.25%, XLRE -0.09%, XLB -0.36%, XLF -0.56%, XLI -0.57%, XLV -0.69%.
In the S&P 500 Information Technology (986.55, -8.17 -0.82%) space, trading also fell when the broader market peeled back. Component Facebook (FB 170.44, +4.83 +2.92%) was another name that bucked the broader trend lower today as shares reacted positively to the company's latest quarterly report. Other names in the space which underperformed with the broader sector today included CA -10.25%, FFIV -7.16%, NVDA -3.30%, GLW -3.06%, AMAT -2.97%, FLIR -2.95%, ADBE -2.39%, AVGO -2.36%, EBAY -2.35%, ATVI -2.35%.
Other notable news items among sector components:
HP (HPQ 19.20, -0.06 -0.31%) Chairman Meg Whitman steps down from board. The Board has appointed Lead Independent Director Chip Bergh as Independent Board Chairman, effective immediately.
Alliance Data (ADS 240.57, +1.81 +0.76%) has approved a $500 million increase in the company's previously announced stock repurchase program for 2017, resulting in an aggregate authorization of up to $1 billion.
According to Bloomberg, Bill Ackman might be building a stake in Automatic Data (ADP).
Brightcove (BCOV 6.40, -0.60 -8.57%) appointed Andrew Feinberg, currently President and COO, as acting CEO, effective immediately.
ShoreTel (SHOR 7.50, +1.65 +28.21%) to be acquired by Mitel Networks (MITL 7.94, +0.44 +5.87%) in an all-cash transaction, at a price of $7.50 per share.
Synaptics (SYNA 56.31, +2.38 +4.41%) Board increased stock repurchase program by $150 million.
Zebra Tech (ZBRA 102.77, +2.71 +2.71%) announced comprehensive actions to restructure its debt; repriced and reduces balance on $1.4 billion Term Loan B.
Cray (CRAY 19.00, +0.40 +2.15%) signed definitive agreement with Seagate (STX 32.56, +0.22 +0.68%) to complete a strategic transaction and enter partnership to collaborate on future ClusterStor products.
In reaction to quarterly results:
Facebook (FB) reported better than expected Q2 EPS and revenues of $1.32 and $9.32 billion, respectively. Daily active users were 1.32 billion, a 17% increase compared to last year. Monthly active users were 2.01 billion, a 17% increase over last year and mobile advertising revenues were about 87% of total ad revenues, up from about 84% of ad revenues a year ago.
Verizon (VZ 47.83, +3.43 +7.74%) reported in-line Q2 EPS of $0.96 and revenues which beat market expectations at $30.55 billion. Total retail churn was 0.94% in Q2 with retail postpaid phone churn was 0.70%. Net phone additions were 358,000.
PayPal (PYPL 60.15, +1.36 +2.31%) reported better than expected Q2 EPS and revenues of $0.46 and $3.14 billion, respectively. For Q3, the company sees in-line EPS of $0.42-0.44 and better than expected revenues of $3.14-3.19 billion. For FY17, the company sees better than expected EPS and revenues of $1.80-1.84 and $12.775-12.875 billion, respectively.
Automatic Data (ADP) reported worse than expected Q4 EPS of $0.66 and in-line revenues of $3.06 billion. For FY18, the company sees EPS growth of 2-4% to $3.77-3.85 on revenues of $13.02-13.14 billion.
Twitter (TWTR 16.84, -2.77 -14.13%) reported better than expected Q2 EPS and revenues of $0.08 and $574 million, respectively. Average monthly active users were 328 million, up 5% y/y. For Q3, the company sees adjusted EBITDA between $130-150 million and adjusted EBITDA margins between 25-26%.
Analyst actions:
FFIV was downgraded at Oppenheimer and Wells Fargo,
GLOB was downgraded to Hold from Buy at SunTrust,
GUID was downgraded at B. Riley & Co, Gabelli & Co and The Benchmark Company,
UMC was downgraded to Underperform from Mkt Perform at Bernstein and to Underperform at Credit Suisse,
AUO was downgraded to Underperform at BofA/Merrill
Companies scheduled to release quarterly results tonight/tomorrow morning: EGHT ATEN AMZN TEAM BIDU COHU CRAY CY DGII ECHO EA ELLI EXPE FSLR FLEX FTV GIMO GSIT IMPV INTC KLAC KTOS LOGM MTD MSCC MSTR MITK MOBL MULE NATI CNXN PDFS PLT POWI PFPT SPSC SSNC UCTT VDSI VRSN WDC WIX XPER/MGI TYPE YNDX
