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Wall Street Holds On, Averages End Slightly Higher
16-Aug-17 16:30 ET
Dow +25.88 at 22024.87, Nasdaq +12.10 at 6345.09, S&P +3.50 at 2468.07
https://www.briefing.com/investor/markets/stock-market-update/2017/8/16/wall-street-holds-on-averages-end-slightly-higher.htm
[BRIEFING.COM] The major averages registered modest victories on Wednesday, but their performances felt somewhat disappointing as an optimistic steady climb in the morning turned into a fight to hold on in the afternoon. The Nasdaq (+0.2%) finished slightly above the S&P 500 (+0.1%) and the Dow (+0.1%) while the small-cap Russell 2000 (unch) lagged.
Equity indices opened Wednesday's session with modest gains and continued ticking up into the early afternoon. However, news that President Trump will end the Manufacturing Council and Strategy & Policy Forum after several CEOs announced their departures from the two groups prompted a modest sell off that left the major averages just north of their flat lines going into the FOMC minutes release.
The minutes from the July FOMC meeting showed increasing concern among several policymakers about softer than expected inflation readings. Despite the concern about slowing inflation, most Fed officials remain in favor of announcing a balance sheet move at the upcoming policy meeting. The FOMC will kick off its next two-day meeting on September 19.
U.S. Treasuries finished higher across the yield curve on Thursday. The bulk of the gains came in response to the disbandment of President Trump's business councils, but the minutes also played a supporting role. The 10-yr yield slipped four basis points to 2.23% while the 2-yr yield dropped three basis points to 1.33%. Meanwhile, the U.S. Dollar Index (93.42, -0.33) finished lower by 0.4%.
Stocks seesawed a bit following the minutes release, but ultimately ended near their pre-release levels. Nine of the S&P 500's eleven sectors finished in the green with the lightly-weighted materials sector (+0.9%) leading the charge. Copper-mining giant Freeport-MCMoRan (FCX 14.77, +0.80) was the sector's top performer, climbing 5.7%, amid a rally in the copper futures market ($2.95/lb, +2.4%).
The consumer discretionary sector (+0.5%) also showed relative strength as investors cheered the latest earnings reports from Target (TGT 56.31, +1.96) and Urban Outfitters (URBN 19.76, +2.94). TGT added 3.6% after reporting better than expected earnings and an increase of 1.3% in comparable same-store sales while URBN surged 17.5% after beating top and bottom line estimates.
On the flip side, the energy and financials sectors were the only two spaces to finish in negative territory, losing 1.1% and 0.2%, respectively. While the financial sector's loss was modest, its status as the second-heaviest sector by weight--first being technology (+0.3%)--and its important role in driving economic activity didn't bode well for the broader market.
Meanwhile, crude oil weighed on the energy sector, dropping 1.6% to $46.78/bbl, following a mixed EIA inventory report. The Energy Information Administration reported that U.S. crude stockpiles decreased by 8.9 million barrels (consensus -3.0 million barrels) for the week ended August 11 while gasoline inventories increased by 22,000 barrels (consensus -1.1 million barrels).
Reviewing Wednesday's economic data, which was limited to Housing Starts for July and the weekly MBA Mortgage Applications Index:
Housing starts decreased to a seasonally adjusted annualized rate of 1.155 million units in July, down from a revised 1.213 million units in June (from 1.215 million). The Briefing.com consensus expected starts to increase to 1.217 million units. Building permits decreased to a seasonally adjusted 1.223 million in July from a revised 1.275 million in June (from 1.245 million). The Briefing.com consensus expected a reading of 1.247 million.
The key takeaway from the report is that a pullback in starts occurred after a strong June, returning the series to the middle of a range that has been in effect over the past two years. Single-family starts declined 0.5% from June, which won't do much to alleviate supply constraints.
The weekly MBA Mortgage Applications Index ticked up 0.1% to follow last week's 3.0% increase.
On Thursday, investors will receive a slew of economic reports, including the weekly Initial Claims Report (Briefing.com consensus 240K) at 8:30 ET, the August Philadelphia Fed Index (Briefing.com consensus 17) also at 8:30 ET, the July Industrial Production (Briefing.com consensus 0.3%) and Capacity Utilization (Briefing.com consensus 76.7%) Report at 9:15 ET, and the Conference Board's Leading Economic Index for July (Briefing.com consensus 0.3%) at 10:00 ET.
Nasdaq Composite +17.9% YTD
Dow Jones Industrial Average +11.5% YTD
S&P 500 +10.2% YTD
Russell 2000 +2.0% YTD
Good morning. Happy Wednesday.
The Asian/Pacific markets close mostly up. Hong Kong, South Korea, India, New Zealand, Austria, Indonesia and the Philippines did the best; Singapore was weak. Europe, Africa and the Middle East are mostly up. Poland, France, Germany, Greece, South Africa, Finland, Spain, Italy, Belgium and Austria are leading; Turkey is down. Futures in the States point to positive open for the cash market.
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eBook: High Probability Setups for Stocks and Options
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The dollar is up. Oil and copper are up. Gold and silver are down. Bonds are down.
Stock headlines from barchart.com…
Target (TGT -2.58%) rallied over 4% in pre-market trading after it reported Q2 adjusted EPS of $1.23, higher than consensus of $1.19, and then raised guidance on full-year adjusted EPS to $4.34-$4.54, the midpoint stronger than consenus of $4.41.
Urban Outfitters (URBN -5.13%) jumped 18% in pre-market trading after it reported Q2 EPS of 44 cents, higher than consensus of 36 cents.
Dick’s Sporting Goods (DKS -23.03%) was downgraded to ‘Neutral’ from ‘Buy’ at Buckingham Research Group.
Biogen (BIIB +0.65%) was added to the ‘Conviction Buy List’ at Goldman Sachs.
Facebook (FB +0.15%) may move higher today after it was initiated a new ‘Buy’ at SunTrust Robinson Humphrey with an 18-month target price of $210.
Snap (SNAP +1.11%) may move lower today after it was initiated a new ‘Sell’ at SunTrust Robinson Humphrey with an 18-month target price of $10.
Expedia (EXPE -0.35%) may move higher today after it was initiated a new ‘Buy’ at SunTrust Robinson Humphrey with an 18-month target price of $190.
Agilent Technologies (A -0.40%) rose 4% in after-hours trading after it reported Q3 net revenue of $1.11 billion, higher than consensus of $1.09 billion, and then said it sees full-year revenue of $4.44 billion-$446 billion, above consensus of $4.41 billion.
Nexstar Media Group (NXST -0.40%) lost 1% in after-hours trading after a block of 1.1 million shares of Nexstar shares were offered via Morgan Stanley for an unknown seller.
Bristol-Myers Squibb (BMY +0.43%) fell 3% in after-hours trading after a kidney cancer study of its combination of its Opdivo and Yervoy did not meet its primary endpoint of statistical significance in a Phase 3 study.
Viavi Solutions (VIAV -1.12%) lost almost 4% in after-hours trading after it said it sees Q1 adjusted EPS of 6 cents-9 cents, below consensus of 10 cents.
Intec Pharma Ltd (NTEC -4.90%) slid 3% in after-hours trading after it announced the launch of an underwritten public offering of up to $50 million in ordinary shares.
Tuesday’s Key Earnings
Home Depot (NYSE:HD) -2.7% with fears about online retail.
TJX Companies (NYSE:TJX) +0.8% lifting its profit guidance.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
8:30 Housing Starts
10:00 Atlanta Fed’s Business Inflation Expectations
10:30 EIA Petroleum Inventories
2:00 PM FOMC minutes
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings from Morningstar
this week’s Economic Numbers/Reports powered by ECONODAY
Range-Bound Tuesday Session Leaves Equities Little Changed
15-Aug-17 16:30 ET
Dow +5.28 at 21998.99, Nasdaq -7.22 at 6332.99, S&P -1.23 at 2464.57
https://www.briefing.com/investor/markets/stock-market-update/2017/8/15/rangebound-tuesday-session-leaves-equities-little-changed.htm
[BRIEFING.COM] Wall Street followed up Monday's rally with a rather dull, range-bound session on Tuesday that left the major averages little changed. The Dow (unch) eked out a narrow victory while the S&P 500 (-0.1%) and the Nasdaq (-0.1%) each settled just a tick below their unchanged marks. Small caps underperformed, sending the Russell 2000 lower by 0.8%.
Investors rolled into pre-market action on Tuesday with a boost of confidence following news that North Korea's Supreme leader Kim Jong-un has decided against launching missiles towards the U.S. territory of Guam, which he threatened to do last week. However, he did warn that he could change his mind "if the Yankees persist in their extremely dangerous reckless actions."
A hotter than expected July Retail Sales Report (+0.6% actual vs +0.3% Briefing.com consensus) tempered the upbeat sentiment, though, forcing investors to rethink their rate-hike expectations. At the closing bell, the fed funds futures market assigned an implied probability of 55.2% to a December rate hike, up from 37.4% on Monday.
U.S. Treasuries slid to new lows following the retail sales release, pushing the benchmark 10-yr yield as high as 2.28%. In the end, the 10-yr yield finished five basis points higher at 2.27% and the 2-yr yield finished four basis points higher at 1.35%. Underpinned by the increase in interest rates, the U.S. Dollar Index (93.72, +0.38) advanced 0.4%.
The most influential sectors--technology (+0.2%) and financials (+0.2%)--exhibited relative strength throughout the session, helping to keep losses in check. The financial space opened with a gain of around 1.0%, but began fading almost immediately. The technology group was underpinned by yet another positive performance from Apple (AAPL 161.60, +1.75), which climbed 1.1% to a new all-time high.
In addition to technology and financials, the utilities (+0.5%), consumer staples (+0.5%), and materials (unch) sectors finished in positive territory. On the flip side, the consumer discretionary (-0.9%), industrials (-0.2%), energy (-0.4%), health care (unch), telecom services (-1.0%), and real estate (-0.3%) groups closed in the red.
Retailers headlined the earnings front after names like Home Depot (HD 150.17, -4.09), TJX (TJX 70.16, +0.54), Coach (COH 40.64, -7.28), Advance Auto (AAP 87.08, -22.24), and Dick's Sporting Goods (DKS 26.87, -8.04) delivered their quarterly results. The reactions were largely negative as four of the five aforementioned companies finished in negative territory.
Dick's Sporting Goods, Advanced Auto, and Coach plunged 23.0%, 20.3%, and 15.2%, respectively, after all three companies lowered their outlooks for the fiscal year. AAP and DKS also missed earnings estimates while COH came up short on revenue expectations. Meanwhile, Home Depot dropped 2.7% despite beating bottom-line estimates and raising its guidance.
TJX was the lone advancer, climbing 0.8%, in reaction to better than expected earnings. The SPDR S&P Retail ETF (XRT 38.59, -1.07) dropped 2.7% to close at its worst level since February 2016.
Reviewing Tuesday's big batch of economic data, which included July Retail Sales, July Import/Export Prices, June Business Inventories, August Empire Manufacturing, and the August NAHB Housing Market Index:
July retail sales increased 0.6%, which is above the Briefing.com consensus of +0.3%. The prior month's reading was revised to +0.3% from -0.2%. Excluding autos, retail sales increased 0.5% while the Briefing.com consensus expected an increase of 0.3%. The prior month's reading was revised to +0.1% from -0.2%. Core retail sales, which exclude auto, gasoline station, building materials, and food services & drinking places sales, increased 0.5% and the June decline of 0.1% was revised to an uptick of 0.1%.
Core retail sales is the component that factors into the PCE goods component of the GDP report, so the key takeaway from the retail sales data is that it points to a rebound in spending on consumer goods in July after a weak finish to the second quarter. This should be a positive input for Q2 GDP models.
Import prices excluding oil declined 0.1% in July after rising 0.1% in June. Export prices excluding agriculture increased 0.3% in July after finishing flat in June.
The key takeaway from the report is that inflation readings remain low, but there are some hints of a possible turn in the near future.
Business Inventories rose 0.5% in June, which is above the Briefing.com consensus of 0.4%. The prior month's reading was left unrevised at +0.3%.
The key takeaway from the report is that while sales have increased, the pace of growth was below that of inventories. This means there are still some hurdles in the way of restoration of pricing power.
The Empire Manufacturing Survey for August rose to 25.2 from the prior month's reading of 9.8. The Briefing.com consensus estimate was pegged at 13.0.
The NAHB Housing Market Index for August rose to 68 (Briefing.com consensus 65) from an unrevised reading of 64 in July.
On Wednesday, investors will receive just two pieces of economic data--the weekly MBA Mortgage Applications Index and July Housing Starts (Briefing.com consensus 1.217 million). The two reports will be released at 7:00 ET and 8:30 ET, respectively.
Also of note, the minutes from the July 25-26 FOMC meeting will be released at 14:00 ET.
Nasdaq Composite +17.7% YTD
Dow Jones Industrial Average +11.3% YTD
S&P 500 +10.1% YTD
Russell 2000 +1.9% YTD
Wall Street Opens Week on Positive Note, Reclaims Chunk of Last Week's Decline
14-Aug-17 16:30 ET
Dow +135.39 at 21993.71, Nasdaq +83.68 at 6340.21, S&P +24.52 at 2465.80
https://www.briefing.com/investor/markets/stock-market-update/2017/8/14/wall-street-opens-week-on-positive-note-reclaims-chunk-of-last-weeks-decline.htm
[BRIEFING.COM] The weekend came and went without any major developments on the North Korean front, allowing investors to breath a sigh of relief and launch another 'buy-the-dip' campaign on Monday. The major averages finished solidly higher across the board with the tech-heavy Nasdaq (+1.3%) leading the charge. The S&P 500 and the Dow settled with gains of 1.0% and 0.6%, respectively.
Following a mixed performance from Asian equity markets and amid an upbeat performance from the major European bourses, Wall Street opened Monday's session comfortably higher and extended its gain throughout the first hour and a half of trading. From there, the major averages trended sideways, slipped a bit moving into the final stretch, and then rallied back near their session highs before the day's end.
For perspective, at last Thursday's closing bell, the benchmark S&P 500 sat about 43 points, or 1.7%, below the record-high close (2,480.9) it posted on Monday, August 7. Today's advance brings the benchmark index within 15 points, or 0.6%, of its record mark. For the month, the S&P 500 currently shows a loss of 0.2%.
The lightly-weighted real estate sector (+1.7%) finished at the top of Monday's leaderboard, but it was the top-weighted technology (+1.6%) and financials (+1.4%) sectors that drove the upbeat performance. The two groups, which represent around 35.0% of the broader market combined, benefited from broad strength with just about all of their components finishing in positive territory.
In total, ten of the eleven sectors--financials (+1.4%), consumer discretionary (+0.7%), industrials (+1.0%), materials (+0.9%), technology (+1.6%), health care (+0.7%), consumer staples (+0.5%), utilities (+0.6%), telecom services (+1.2%), and real estate (+1.7%)--finished in the green. The energy sector (-0.3%) was the lone laggard.
Crude oil weighed on the energy group, dropping 2.5% to $47.59/bbl, which marks a three-week low for the commodity. The Energy Information Administration (EIA) said that it expects oil production to increase by 117,000 barrels a day--to a total of 6.149 million barrels a day--in September. The EIA report has shown an increase in shale-oil production every month this year.
In the bond market, U.S. Treasuries began the week on a lower note, giving back a portion of their gains from the end of last week. The benchmark 10-yr yield climbed three basis points to 2.22%.
It's also worth pointing out that the CBOE Volatility Index (VIX 12.37, -3.14), which surged to a four-month high last Thursday, dropped 20.1% on Monday.
Investors did not receive any economic data on Monday. However, on Tuesday, investors will receive a number of economic reports, including July Retail Sales (Briefing.com consensus 0.3%), July Import/Export Prices, and August Empire Manufacturing (Briefing.com consensus 13) at 8:30 ET, and both June Business Inventories (Briefing.com consensus 0.4%) and the August NAHB Housing Market Index (Briefing.com consensus 65) at 10:00 ET.
Nasdaq Composite +17.8% YTD
Dow Jones Industrial Average +11.3% YTD
S&P 500 +10.1% YTD
Russell 2000 +2.7% YTD
Wall Street Ends Three-Day Slide
11-Aug-17 16:30 ET
Dow +14.31 at 21858.32, Nasdaq +39.68 at 6256.53, S&P +3.11 at 2441.28
https://www.briefing.com/investor/markets/stock-market-update/2017/8/11/wall-street-ends-threeday-slide.htm
[BRIEFING.COM] The stock market's three-day slide came to an end on Friday, but just barely, as the S&P 500 (+0.1%) eked out a narrow victory. The Dow (+0.1%) finished in line with the benchmark index while the Nasdaq outperformed, advancing 0.6%. For the week, the S&P 500 lost 1.4%.
Geopolitical tensions continued to linger on Friday, pushing both European and Asian markets lower and keeping gains on Wall Street in check. President Trump issued another statement regarding the ongoing situation with North Korea, saying "[m]ilitary solutions are now fully in place, locked and loaded, should North Korea act unwisely."
However, the market's anxiety was obviously dialed back a bit as the CBOE Volatility Index (VIX 15.52, -0.52) declined 3.2%, retreating from the four-month high it posted on Thursday. Conversely, U.S. Treasuries moved higher once again, but the rally had more to do with another tepid inflationary reading than with geopolitical concerns.
Both the Consumer Price Index and the core Consumer Price Index, which excludes food and energy, increased 0.1% in July. Those monthly readings were below expectations--the Briefing.com consensus anticipated an increase of 0.2% for both--and left the CPI up 1.7% year-over-year, versus 1.6% in June, and the core CPI up 1.7%, unchanged from June.
The Fed will like that there wasn't any further deterioration in consumer inflation trends, yet with its preferred PCE Price Index up just 1.4% year-over-year in June, today's CPI report isn't going to change the prevailing belief that the Fed will want to take more time to determine if inflation is picking up toward its 2.0% target on a sustained basis.
Treasuries moved higher across the curve, but buying was heaviest at the front end; the 2-yr yield dropped four basis points to 1.29% while the 10-yr yield slipped two basis points to 2.19%. Meanwhile, the U.S. Dollar Index (92.95, -0.35) lost 0.4% as the greenback dropped 0.5% against the euro to 1.1825 and 0.3% against the pound to 1.3019.
As for the equity market, the S&P 500's most influential sectors--technology (+0.8%) and financials (-0.5%)--battled each other from opposite ends of the leaderboard. The tech group benefited from broad strength with mega-cap names like Apple (AAPL 157.48, +2.16) and Microsoft (MSFT 72.50, +1.09) showing particular resolve. The two names advanced 1.4% and 1.5%, respectively.
NVIDIA (NVDA 155.96, -8.78) was one of the few laggards in the tech space, dropping 5.3% despite beating both top and bottom line estimates and raising its revenue guidance for the third quarter. However, the good news was likely priced in ahead of the report as the chipmaker did come into Friday's session with an impressive year-to-date gain of 54.3%.
Elsewhere on the earnings front, Snap (SNAP 11.83, -1.94) plunged 14.1% after reporting worse than expected earnings, revenues, and daily active users. Following Friday's slide, the social media company now sits 59.8% below its all-time high of $29.44 per share, which it posted shortly after its IPO in early March.
In total, five sectors--technology (+0.8%), consumer discretionary (+0.5%), health care (+0.3%), industrials (+0.1%), and consumer staples (+0.1%)--finished in the green while six sectors--energy (-0.7%), utilities (-0.6%), real estate (-0.6%), financials (-0.5%), materials (-0.2%), and telecom services (-0.1%)--finished in the red.
Looking ahead, investors will not receive any economic data of note on Monday.
Nasdaq Composite +16.2% YTD
Dow Jones Industrial Average +10.6% YTD
S&P 500 +9.0% YTD
Russell 2000 +1.3% YTD
Week In Review: Wall Street Slips Alongside U.S.-North Korea Relations
Wall Street took it to the chin this week as a war of words between the U.S. and North Korea prompted investors to take some profits on the heels of the stock market's most recent run to new record highs. Small caps paced the retreat, sending the Russell 2000 lower by 2.7%. The benchmark S&P 500 dropped 1.4% while the Dow (-1.1%) did a little better and the Nasdaq (-1.5%) did a little worse.
After closing Monday at record highs, the S&P 500 and the Dow showed no signs of slowing down on Tuesday morning, further extending their all-time intraday highs. But then sentiment began to shift. The major averages retraced the bulk of their gains as the heavily-weighted financial sector, which led the early rally on Tuesday, began to weaken. Then a second wave of selling took Wall Street into the red.
The second round of selling followed a statement from President Trump, in which he warned that North Korea will be "met with fire and fury like the world has never seen" if it continues to threaten action against the United States. Mr. Trump's comment came just a few hours after the Washington Post reported that North Korea now has the capability to load its missiles with miniaturized nuclear warheads.
Selling extended into Wednesday's session after Pyongyang responded to President Trump's Tuesday comment by saying that it's examining a plan to send missiles towards the U.S. territory of Guam. However, it's important to note that selling on Tuesday and Wednesday was very modest, leaving the S&P 500 with a two-day loss of just 0.3%.
That changed on Thursday though as investors began selling with conviction, sending the S&P 500 lower by 1.5%. While the jawboning between the U.S. and North Korea certainly threw the bulls off balance, Thursday's slide, which marked the S&P 500's worst one-day loss since May, pointed to a market that was probably overdue for a pullback following yet another run to new record highs.
In other words, the U.S.-North Korea spat certainty didn't help investor sentiment, but, more than anything, it provided a convenient excuse for investors to take some money off the table.
Boosted by another lukewarm inflationary reading and an ever-persistent "buy the dip" mentality, the bulls won out on Friday, pushing the stock market slightly higher. The Consumer Price Index ticked up just 0.1% in July, missing the Briefing.com consensus of +0.2%. The Fed prefers the PCE Price Index, but it's clear that the latest CPI reading didn't help the case for a third rate hike in 2017.
The fed funds futures market now points to the June FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 57.5%. Last week, the market expected the next rate hike to occur in December with an implied probability of 50.4%.
It's also worth pointing out that the CBOE Volatility Index (VIX) spiked 5.5 points, or 54.7%, this week after drifting near an all-time low from mid-July to early August. The VIX shows what kind of a move, in percentage terms, the market is pricing in for a one-month period from the spot reading. The index is derived from near-dated options on the S&P 500.
Sell Off Picks Up the Pace on Thursday
https://www.briefing.com/investor/markets/stock-market-update/2017/8/10/sell-off-picks-up-the-pace-on-thursday.htm
10-Aug-17 16:30 ET
Dow -204.69 at 21844.01, Nasdaq -135.46 at 6216.85, S&P -35.81 at 2438.17
[BRIEFING.COM] The equity market took a sizable blow on Thursday as combative jawboning between the U.S. and North Korea weighed on investor sentiment for the third day in a row. Tech stocks led the retreat, sending the tech-heavy Nasdaq (-2.1%) and the S&P 500 (-1.5%) below their 50-day simple moving averages for the first time in a month. The Dow also finished solidly lower, dropping 0.9%.
President Trump dialed up his warning to North Korea on Thursday afternoon, saying Tuesday's 'fire and fury' comment--in which the president promised action against North Korea if it continues to threaten the United States--may not have been tough enough. Pyongyang has threatened a strike on the U.S. territory of Guam, laying out a plan in detail, in response to Mr. Trump's Tuesday statement.
The U.S.-North Korea spat got the bearish ball rolling on Tuesday and Wednesday, sending the S&P 500 lower by 0.2% and 0.1% on each day, respectively, but today's much larger decline points to a market that was most likely overdue for a pullback following yet another run to record highs.
Recent trends seem to validate this belief, including the underperformance of transports and small caps, which are seen as leading indicators, a rally in the Treasury market, and a lack of conviction among investors throughout a strong earnings season.
Today's risk-off sentiment was distinguishable in the sector standings as countercyclical groups largely outperformed their cyclical peers. In total, ten of eleven sectors settled in negative territory with the rate-sensitive utilities group (+0.3%) being the lone advancer as a rally in the Treasury market left rates lower across the curve; the benchmark 10-yr yield dropped three basis points to 2.21%.
The top-weighted technology sector (-2.2%) settled at the very bottom of the day's leaderboard. The sector's most influential component--Apple (AAPL 155.32, -5.11)--plunged 3.2% while chipmakers also showed notable weakness, sending the PHLX Semiconductor Index lower by 2.8%.
The heavily-weighted financial sector (-1.8%) also settled behind the broader market, as did the consumer discretionary group (-1.5%), which was weighed down by retailers in particular, evidenced by the 3.1% decrease in the SPDR S&P 500 Retail ETF (XRT 39.40, -1.24). Kohl's (KSS 39.50, -2.43) and Macy's (M 20.67, -2.36) led the retail retreat, dropping 5.8% and 10.3%, respectively, despite beating bottom-line estimates.
It's also worth pointing out that the CBOE Volatility Index (VIX 15.74, +4.63) surged 41.7% to a four-month high after drifting near an all-time low from mid-July to early August.
Reviewing Thursday's economic data, which included the July Producer Price Index and the weekly Initial Claims Report:
July producer prices came in at -0.1%, which is below the Briefing.com consensus of +0.2%. Core producer prices also declined 0.1% while the Briefing.com consensus expected an increase of 0.2%.
The Producer Price Index (PPI) report for July was weaker than expected. The key takeaway from the report is that the downturn in producer prices will presumably keep a lid on consumer inflation expectations.
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 241,000 (from 240,000). As for continuing claims, they declined to 1.951 million from the revised count of 1.967 million (from 1.968 million).
There are no new takeaways from those data series, which remain at low levels reflective of a tight labor market.
On Friday, economic data will be limited to the July Consumer Price Index (Briefing.com consensus +0.2%), which will cross the wires at 8:30 ET.
Nvidia shares fall despite earnings beat
https://finance.yahoo.com/m/f4a27744-be5f-369a-98a3-8711160f6054/ss_nvidia-shares-fall-despite.html
Graphics chipmaker Nvidia (NASDAQ: NVDA) saw its stock fall more than 7 percent on Thursday after it reported stronger-than-expected earnings for the second quarter of its 2018 fiscal year, which ended on July 31. The company will discuss the earnings report with financial analysts on a conference call at 5 p.m. Eastern time.
EPS: Excluding certain items, $1.01 in earnings per share vs. $0.70 in earnings per share as expected by analysts, according to Thomson Reuters.
Revenue: $2.23 billion vs. $1.96 billion as expected by analysts, according to Thomson Reuters.
In terms of guidance, the company said it expects to generate $2.35 billion in revenue, plus or minus 2 percent, in the third quarter of its 2018 fiscal year. Analysts were expecting guidance of $2.13 billion for the upcoming quarter, according to Thomson Reuters.
Strong reactions to earnings results are not unusual for Nvidia. In May Nvidia stock rose more than 13 percent after the company released its earnings results for the previous quarter, beating estimates on both EPS and revenue. Ahead of earnings on Thursday Nvidia stock fell more than 4 percent.
Revenue was up 56 percent year over year, with the company's Datacenter revenue -- including sales of graphics processing units, or GPUs, to cloud providers like Amazon Web Services -- leading the way at 175 percent revenue growth.
Sentiment around Nvidia has continued to be generally positive since then. Last month Canaccord Genuity raised its estimates for Nvidia "yet again" as it sees continuing strength in the gaming and automotive markets.
The opportunity around cryptocurrency has caused some analysts to become more optimistic about Nvidia. Two months after Pacific Crest downgraded Nvidia stock, the company made a U-turn and raised the stock's rating .
Nvidia's next quarter could see gains as the company releases its Volta Tesla V100 GPU -- listed under the company's Datacenter business -- to public cloud vendors. That GPU could be used for artificial intelligence workloads, not unlike Alphabet's (NASDAQ: GOOGL) second-generation tensor processing unit (TPU), which will become available for anyone to use exclusively on Google's public cloud. Meanwhile Intel (NASDAQ: INTC) has been cooking up chips that are more geared toward AI , and Microsoft said it's working on an AI coprocessor for its HoloLens mixed reality headset.
In May Softbank disclosed that it had taken a stake in Nvidia through its Vision Fund, sending Nvidia stock up 1.8 percent .
Nvidia stock -- the best performing stock of the year , as CNBC's Tae Kim noted on Wednesday -- is up 55 percent since the beginning of the year, according to FactSet.
This is breaking news. Please check back for updates.
U.S.-North Korea Concerns Linger
https://www.briefing.com/investor/markets/stock-market-update/2017/8/9/usnorth-korea-concerns-linger.htm
09-Aug-17 16:30 ET
Dow -36.64 at 22048.70, Nasdaq -18.13 at 6352.31, S&P -0.90 at 2473.98
[BRIEFING.COM] Investors took some additional profits on Wednesday as concerns surrounding the continued breakdown of U.S.-North Korea relations weighed on investor sentiment for the second day in a row. However, the cautious tone largely subsided by the day's end, making way for a late-afternoon rally that left the major averages at their best marks of the day. The S&P 500 finished just a tick below its flat line while the Dow and the Nasdaq settled lower by 0.2% and 0.3%, respectively. Small caps underperformed, sending the Russell 2000 lower by 0.9%.
On Tuesday, President Donald Trump warned that North Korea will be "met with fire and fury" if it continues to threaten nuclear action against the United States. Undeterred, North Korea responded just a few hours later by saying it's "carefully examining" a plan to strike the U.S. territory of Guam.
Investors have largely shrugged off the ongoing feud between the U.S. and North Korea, but yesterday's comments held a little more weight following reports that Pyongyang now has the capability to load their missiles with miniaturized nuclear warheads. Still, given the stock market's very modest two-day decline, it's clear that investors don't truly believe conflict is on the horizon.
Rather, market participants have used the aforementioned headlines as a convenient excuse to take some money off the table following the stock market's most recent run to new record highs.
Sector movement was pretty modest with eight of the eleven groups settling within 0.2% of their unchanged marks. Six sectors finished in the green with health care (+0.2%) leading the advance. On the flip side, four sectors closed in negative territory with the consumer discretionary (-0.5%) and utilities (-0.5%) spaces pacing the retreat. The industrial group finished flat.
Walt Disney (DIS 102.83, -4.15) and Netflix (NFLX 175.78, -2.58) weighed on the consumer discretionary space, dropping 3.9% and 1.5%, respectively, after Disney announced that it will end its distribution agreement with Netflix in 2019 in favor of a new direct-to-consumer streaming strategy. In addition, Disney reported earnings, beating bottom-line estimates, but missing on revenues.
Elsewhere on the earnings front, Priceline (PCLN 1906.80, -142.20) plunged 6.9% after below-consensus guidance overshadowed the company's better than expected earnings and revenues.
In the bond market, U.S. Treasuries climbed higher as safe-haven assets benefited from the day's risk-off tone; the benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, slipped four basis points to 2.24%. Meanwhile, gold jumped 1.3% to $1,279.20/ozt and the Japanese yen climbed 0.3% to 110.02 against the U.S. Dollar.
Crude oil advanced 1.0% to $49.59/bbl after the Department of Energy reported a larger than expected draw in U.S. crude inventories (-6.5 million barrels actual vs -2.2 million barrels consensus). The commodity trended sideways near its flat line for some time before moving decidedly higher in the afternoon.
Reviewing Wednesday's economic data, which included second quarter Productivity and Unit Labor Costs, June Wholesale Inventories, and the weekly MBA Mortgage Applications Index:
The preliminary unit labor costs increased 0.6% during the second quarter, which was lower than the 1.5% increase that had been anticipated by the Briefing.com consensus. The preliminary productivity reading came in at +0.9% while the Briefing.com consensus expected an increase of 0.5%.
The key takeaway from the report, which also included revisions for the first quarter 2014 through the first quarter 2017, is that productivity continues to be weak, which is an impediment for an increased standard of living. In fact, with the revisions, it was shown that productivity decreased 0.1% in 2016, which is the first annual decrease since a 1.0% decrease in 1982.
June Wholesale Inventories increased 0.7% (Briefing.com consensus +0.6%). The prior month's reading was revised to +0.6% from +0.4%.
The key takeaway from the report is that there wasn't any progress in reducing the inventory-to-sales ratio, which would be helpful for wholesalers looking to gain some more pricing power.
The weekly MBA Mortgage Applications Index increased 3.0% to follow last week's 2.8% decrease.
On Thursday, investors will receive two pieces of economic data--the July Producer Price Index (Briefing.com consensus +0.2%) and the weekly Initial Claims Report (Briefing.com consensus 240K). Both reports will be released at 8:30 ET.
Nasdaq Composite +18.0% YTD
Dow Jones Industrial Average +11.6% YTD
S&P 500 +10.5% YTD
Russell 2000 +2.9% YTD
Heightened North Korea Tensions Weigh
08-Aug-17 16:30 ET
Dow -33.08 at 22085.34, Nasdaq -13.31 at 6370.44, S&P -5.99 at 2474.88
https://www.briefing.com/investor/markets/stock-market-update/2017/8/8/heightened-north-korea-tensions-weigh.htm
[BRIEFING.COM] Wall Street went on a bit of a roller coaster ride on Tuesday as equities climbed to new record highs in the morning only to drop into the red in the late afternoon. The Dow broke its streak of nine consecutive record-high closes, ending the session lower by 0.2%. The S&P 500 (-0.2%) and the Nasdaq (-0.2%) finished in line with the industrial average.
The major averages opened Tuesday's session with modest losses, but quickly entered into a slow and steady climb that carried into the afternoon. At its peak, the S&P 500 held a gain of 0.4%. However, shortly after hitting said peak, the benchmark index started moving back towards its flat line as the heavily-weighted financial sector, which led the morning rally, hit a wave of selling pressure.
Selling began shortly after the Washington Post reported that North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles. However, the aforementioned move lower was more likely technical in nature considering it was led by the financial sector, which sharply reversed its slow and steady upward trend right at the 424.00 mark. At its best mark of the day (423.99), the financial space held a gain of 0.9%, but, in the end, the sector settled lower by 0.2%.
After retreating to their flat lines, the major averages then hit another wave of selling pressure, this one dragging them into negative territory, in the late afternoon after President Trump warned that North Korea will be "met with fire and fury like the world has never seen" if it continues to threaten nuclear action against the United States.
Investors have had a muted response to each of Pyongyang's 11 ballistic missile tests this year, but today's strong statement from Mr. Trump clearly upped the ante a bit. Still, today's move was very minor in the grand scheme of things and comes at a time when many investors are looking for an excuse to sell as equities hover at all-time highs.
The lightly-weighted utilities sector (+0.3%) was the only space to finish today's session in positive territory. The ten remaining groups settled with losses ranging from less than 0.1% to 0.9%.
Apple (AAPL 160.08, +1.27)--the largest component in the S&P 500 by market cap--put together a solid performance, helping the top-weighted technology sector (-0.1%) settle ahead of the broader market. The tech group held the top spot on today's leaderboard for much of the session, but slipped with the broader market in its late-afternoon slide. AAPL shares added 0.8% and closed at an all-time high.
On the earnings front, Michael Kors (KORS 42.25, +8.02) and Ralph Lauren (RL 88.53, +10.38) surged 21.5% and 13.3%, respectively, after both companies reported better than expected earnings. In addition, Michael Kors beat top-line estimates and issued above-consensus guidance. However, the SPDR S&P 500 Retail ETF (XRT 41.11, -0.22) still finished lower by 0.5%.
Treasuries moved lower in a curve-steepening trade, leaving the 2-yr yield (1.36%) and the 10-yr yield (2.28%) higher by one basis point and three basis points, respectively. Meanwhile, the U.S. Dollar Index (93.52, +0.22) climbed 0.2% and crude oil dropped 0.6% to $49.09/bbl.
Reviewing today's economic data, which was limited to the Job Openings and Labor Turnover Survey (JOLTS) for June:
The June Job Openings and Labor Turnover Survey showed that job openings increased to 6.163 million from a revised 5.702 million (from 5.666 million) in May.
On Wednesday, investors will receive several economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, second quarter Productivity (Briefing.com consensus +0.5%) and Unit Labor Costs (Briefing.com consensus +1.5%) at 8:30 ET, and June Wholesale Inventories (Briefing.com consensus +0.6%) at 10:00 ET.
Nasdaq Composite +18.3% YTD
Dow Jones Industrial Average +11.8% YTD
S&P 500 +10.6% YTD
Russell 2000 +3.9% YTD
InvestmentHouse - Jobs Report Shows Some Decent Improvement (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
- Jobs report beats, shows some decent improvement (though still not that
great), market goes nowhere. Again.
- Another piece of good news cannot break the indices higher, but they also
don't break lower and remain in position to bounce.
- Jobs market will never change with these policies in place.
- Plenty of bulls, lots of expert bears, but no one saying a correction is
imminent. Does that mean it is?
- Indices in position, good leadership remains as does the Fed. Have to
respect that.
Futures were up a bit before the July Jobs Report. They were up a bit after
the July Jobs Report. By the end of the session the stock indices were up a
bit. DJ30 put in yet another new high. SP500 continued to walk laterally
on the 10 day EMA and just below the 2009 upper channel line. NASDAQ and
SOX show doji over the 50 day EMA. SP400 and RUTX bounced to test the break
below the 50 day MA, below some resistance but still in the ballpark to hold
and resume the upside. In position, they just couldn't make the move even
after a pretty solid jobs report, strong AAPL earnings, and of course, a
continued benevolent Federal Reserve.
SP500 4.67, 0.19%
NASDAQ 11.22, 0.18%
DJ30 66.71, 0.30%
SP400 0.24%
RUTX 0.50%$
SOX 0.06%
NASDAQ 100 0.15%
The close looks better than it was 10 minutes before the close. SOX was
negative, SP500 was flirting with negative -- then a late bid bounced things
to a better finishing look.
VOLUME: NYSE -6%; NASDAQ -10%. Upside session volume failure with both
NYSE and NASDAQ dropping below average. Even with a jobs report. But, it
was a Friday in late summer and volume can be lower.
ADVANCE/DECLINE: NYSE 1.3:1; NASDAQ 1.4:1. About in line with lackluster
gains.
It was a do nothing session in terms of overall movement and in terms of
altering the index patterns of the past 1 to 2 weeks.. Sometimes, however,
doing nothing can be the better option, particularly on a Friday after some
downside weeks.
Specifically, SP500, NASDAQ, and SOX are in very good position to start a
new upside leg. SOX is showing a doji at the 50 day EMA. NASDAQ a doji at
the 20 day EMA as it sits on top of the June prior high. SP500 is still
below its 2009 upper channel line, riding the 10 day EMA. A good
consolidation of the last highs, a nice quiet test.
SP400 and RUTX are not as neat and tidy, but they are at least holding near
the 50 day MA after breaking them Thursday. Not perfect but if the other
indices move up, they will likely follow. Likely. The economic data,
July's Jobs Report notwithstanding, is not good. ISM Services managed to
hold expansion territory, but dropped to the lowest in a year. Services led
the expansion. That puts it more in perspective. Then there are June's
Factory Orders that were all Boeing. Without those planes, orders were
negative. Capex investment was flat. Small and midcaps are domestically
economically sensitive. Thus it is not surprising their patterns have sold
more and harder than the large cap indices.
Leadership remains good enough. AAPL, FB and even NFLX are solid enough.
The financials are hanging in. China stocks ditto. Software had a good
week on some solid earnings. Large drugs and biotechs are good enough.
Large manufacturing, e.g. CAT, HON. After a week or more of selling chips
may be ready to attempt a bounce. It is no surprise the large cap leaders
are in better shape: look at what indices are in better shape.
In sum, the action leaves the non-DJ30 large cap indices in good position to
bounce. Leadership is good enough and after a test others are in position
to rebound. The small and midcaps are weaker but nothing a new general
market bounce cannot overcome.
NEWS/ECONOMY
June Jobs Report beats, is not bad, but it is not great.
The jobs report was stronger than expected across the board: wages, jobs,
participation, and revisions. "A little bit of a pickup" says CNBC's Kelly
Evans, hating the number. Okay, economist Mark Zandi says, after his ADP
report Thursday, the jobs market is in "high gear." The report blows out
anticipated non-farm numbers and CNBC says it is a 'little bit' better.
What is it? It is decent, but it is also likely lagging the economic data
that is sliding lower. Without tax reform, healthcare reform, or some kind
of meaningful reform, the numbers will regress because expectations of
economic increase will temper even more.
Non-Farm Payrolls: 209K vs 175K exp vs 231K June (from 187K)
Averages: 195K jobs last 3 months, 184K/month in 2017
Unemployment Rate: 4.3 vs 4.3 vs 4.4
Wages/earnings: 0.3% vs 0.2%. +2.5% year/year. Same gains as before.
Average Workweek: 34.5 vs 34.5
U-6 (less than full employed though wanting full employment): 8.6% vs 8.6%
Participation: 62.9% vs 62.8%. Workforce +349K, increasing the last 4
months. Some said this was because of increased confidence in the jobs
market. Perhaps, but it also doesn't hurt that the Trump administration
tossed out the Obama changes to what constitutes looking for work in order
to qualify for assistance. No longer is reading the classified ads looking
for work. Nor is bed rest, or taking sick kids to the doctor, signing up
for AA, etc. Looking for work is not actually looking for work, and thus
people must get off the non-working 'work' assistance program.
Employment +345K. Unemployed +4K
The Mix: Where are the jobs and who is getting them?
There is change occurring, and it is without any tax or healthcare reform.
Regulatory reduction and change is helping, one example just being who is
considered looking for work in order to receive assistance.
Structural changes, however, remain and are still occurring as retail has to
adjust on top of all other areas. Retail continues to show weak growth as
retailers shutter stores and try to figure out how to compete with Amazon.
Manufacturing shows solid gains. Those latter are high paying jobs. Some
improvement, but still the same, serious problems.
Part-time: +349K
Full-time: -54K
Food & Beverage (waiters): +53K
Prof/Business services: +49K
Healthcare: +39K
Manufacturing: +16K
Construction: +6K
Retail: +9K
If the job distribution above is not convincing, consider the following
complied by the New York Federal Reserve:
Education distribution of people obtaining jobs growth.
Less than high school education: +0.4% year/year
High School education: +0.9% year/year
College Educated and/or post-graduate degree: -0.2% year/year
This is the year/year trend. The trend lower in college and higher
education has been ongoing.
Consider the following:
The biggest problem according to major tech companies is finding qualified
people to hire. That may or may not be the case (studies show there are
tens of thousands of US educated STEM graduates who cannot find work), but
even if so, look at the jobs per industry distribution above. The economy
is still producing mostly low wage, hourly service jobs and thus most jobs
filled are in those areas.
Just look at the part-time jobs versus fulltime: 349K versus -54K. Even
now we are STILL killing off full-time jobs. The legacy of the ACA
continues as the Senate cowardly fails to act. Hopefully Trump will go
ahead and end insurance subsidies and have the complete failure of the ACA
rapidly come about.
Just look at US Productivity: with so many low-wage, menial jobs dominating
the economy, is there any wonder productivity has collapsed so sharply the
past four years?
Despite more jobs being created, they are the same kind of jobs. The
economy is not morphing into a new small business creating dynamo. Indeed,
we are still killing more businesses than creating, and until the ACA is
repealed as THE major step, then remove most all of the regulations from the
prior 8 years, and then put in meaningful tax reform to get investment in
the US going again (remember, capex is still virtually nonexistent), there
will be no change for most Americans.
Why? The bifurcation in wealth will necessarily continue because the Fed
will have no choice but to continue its low interest rate policies in
attempts to keep the markets afloat -- just as it did after the financial
crisis. No real gains, just inflated financial assets making certain
portions of society wealthier to spend and keep the economy moving. No
money to invest in small businesses to create the next new great jobs, just
keeping the old line of companies alive as well as the few newer companies
that run the communications everyone uses. The result is endless stagnation
and the hope that the debt bubble will not burst.
Greenspan still in denial.
But, according to Allen Greenspan, the Bond bubble is about to burst due to
'abnormally low' rates. Ironic. Greenspan was the main proponent of the
debt-financed economy. Is he now remorseful? No, he still does not
acknowledge his role. He is blaming others for expanding what he started.
That makes perfect sense in our society today: it is always someone else's
fault.
THE MARKET
LEADERSHIP
Tech: Not a bad session. MSFT gapped modestly upside off its test. AAPL
started back up after a brief test of its earnings gap higher. ORCL holds
its 7 week lateral move after gapping upside. Not bad.
Software: Remains solid. DATA adds more upside after its earnings gap.
VMW trying to make the break higher. GLUU continues upside. CALD gapped to
a higher high, faded some but still strong.
Chips: Those that sold back the past 1-2 weeks are trying to set up for a
bounce, e.g. AMAT, LRCX, AMD. SWKS held up longer but then broke and still
dos not look great. XLNX gapped upside Friday, but to a doji below the 10
day EMA on low trade. Not a lot of power. Important group, will see if it
can put in a decent move.
Drugs/biotech: JNJ still solid as is CELG. Large caps okay, small caps
still struggling, e.g. AXGN, IMGN, IMMU.
China stocks: Overall okay but some issues. YY remains strong as does
HTHT, BZUN, SINA, SOHU, BIDU. NTES fell under some pressure. JD looks
great.
Industrials: Large cap industrials were fine. HON continued its run for the
week. CAT bounced off a 10 day EMA test. HOLI, small cap, was not bad with
a bounce off the 20 day EMA.
Financial: WFC dropped hard but closed down just 1%. More fake accounts,
irregularities handling mortgages, and other issues surfaced again. Jerks.
C still edging up the 10 day EMA. BAC jumped off support and scored a nice
gain. JPM gapped but gave back a pretty good part of it. GS put in a solid
break higher on volume.
MARKET STATS
DJ30
Stats: +66.71 points (+0.3%) to close at 22092.81
Nasdaq
Stats: +11.22 points (+0.18%) to close at 6351.56
Volume: 1.9B (-9.95%)
Up Volume: 925.29M (-29.44M)
Down Volume: 960.76M (-159.24M)
A/D and Hi/Lo: Advancers led 1.42 to 1
Previous Session: Decliners led 1.45 to 1
New Highs: 89 (0)
New Lows: 74 (-9)
S&P
Stats: +4.67 points (+0.19%) to close at 2476.83
NYSE Volume: 785M (-5.64%)
A/D and Hi/Lo: Advancers led 1.3 to 1
Previous Session: Decliners led 1.34 to 1
New Highs: 146 (+24)
New Lows: 51 (-19)
SENTIMENT INDICATORS
VIX: 10.03; -0.41
VXN: 14.09; -0.6
VXO: 8.9; +0.44
Put/Call Ratio (CBOE): 1; -0.01. Second straight session over 1.0.
Bulls and Bears: Bully. Bulls were lower but still at 60, the key level for
corrections. Of course the market has fade a week or two, but that is not
the kind of correction I am talking about. A real correction. We will see.
Bulls: 60.0 versus 60.2
Bears: 16.2 versus 16.5
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 60.0 versus 60.2
60.2 versus 57.8 versus 50.0 versus 52.5 versus 54.9 versus 51.5 versus
50.00 versus 55.8 versus 50.00 versus 51.9 versus 58.1 versus 58.7 versus
58.5 versus 54.7 versus 51.9 versus 56.3 versus 55.8 versus 49.5 versus 56.7
versus 53.4 versus 57.7 versus 63.1 versus 61.2 versus 61.8 versus 62.7
versus 61.8 versus 58.2 versus 60.6 versus 58.6 versus 60.2 versus 59.8
versus 59.8 versus 59.6 versus 58.8 versus 56.3 versus 55.6 versus 51.0
versus 42.9 versus 41.7 versus 47.1 versus 42.9 versus 46.1 versus 46.7
versus 45.2
Bears: 16.2 versus 16.5
16.5 versus 16.7 versus 18.6 versus 18.8 versus 18.6 versus 18.3 versus 19.2
versus 18.3 versus 17.1 versus 17.3 versus 17.9 versus 17.9 versus 18.3
versus 17.5 versus 18.3 versus 18.1 versus 17.3 versus 13.75 versus 17.3
versus 16.5 versus 17.5 versus 17.6 versus 16.7 versus 17.6 versus 17.5
versus 17.3 versus 18.3 versus 18.4 versus 19.6 versus 19.6 versus 19.2
versus 19.6 versus 22.3 versus 21.6 versus 23.5 versus 25.7 versus 24.3
versus 23.1 versus 23.8 versus 23.1 versus 22.8 versus 23.1 versus 24.3
OTHER MARKETS
Bonds: 2.264% versus 2.221%. Modest drop in bonds on the jobs report. For
so strong, bonds were not surging. TLT is holding the 50 day MA, bouncing
off the low.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.221%
versus 2.266% versus 2.253% versus 2.296% versus 2.291% versus 2.303% versus
2.287% versus 2.330% versus 2.255% versus 2.241% versus 2.270% versus 2.261%
versus 2.318% versus 2.331% versus 2.346% versus 2.316% versus 2.361% versus
2.375% versus 2.375% versus 2.368% versus 2.34% versus 2.304% versus 2.268%
versus 2.20% versus 2.140% versus 2.140% versus 2.148% versus 2.165% versus
2.156% versus 2.191% versus 2.155% versus 2.162% versus 2.209% versus 2.21%
versus 2.21% versus 2.19% versus 2.176% versus 2.14% versus 2.183% versus
2.154% versus 2.21% versus 2.20%
EUR/USD: 1.17738 versus 1.18718. Wow, the dollar actually rose against the
euro. Sold to the 10 day EMA, the support it has held the past 5 weeks on
the rally.
Historical: 1.18718 versus 1.18457 versus 1.18072 versus 1.18281 versus
1.18293 versus 1.1683 versus 1.17419 versus 1.1646 versus 1.1637 versus
1.16640 versus 1.16271 versus 1.15280 versus 1.15549 versus 1.14735 versus
1.14672 versus 1.13986 versus 1.14335 versus 1.14682 versus 1.13964 versus
1.14010 versus 1.14220 versus 1.13508 versus 1.13710 versus 1.13510 versus
1.14208 versus 1.14432 versus 1.13786 versus 1.13409 versus 1.11834 versus
1.11928 versus 1.11484 versus 1.11670 versus 1.11346 versus 1.11419 versus
1.11968 versus 1.11466 versus 1.12213 versus 1.12086 versus 1.11930 versus
1.11965
USD/JPY: 110.689 versus 109.963. Dollar bouncing after a three week drop.
Historical: 109.963 versus 110.717 versus 110.368 versus 110.28 versus
110.704 versus 111.07 versus 111.166 versus 111.897 versus 111.176 versus
111.128 versus 111.863 versus 111.89 versus 112.096 versus 112.582 versus
112.536 versus 113.314 versus 113.152 versus 113.929 versus 114.063 versus
113.913 versus 113.126 versus 113.253 versus 113.270 versus 112.413 versus
111.993 versus 112.340 versus 112.24 versus 111.943 versus 111.299 versus
111.357 versus 111.278 versus 111.470 versus 111.729 versus 110.873 versus
110.854 versus 109.560 versus 110.060 versus 109.97 versus 110.334 versus
110.299 versus 109.355
Oil: 49.58, +0.55. Still bumping up against the 200 day SMA as oil forms a
weeklong pennant testing the last break higher.
Gold: 1264.60, -9.80. Faded to the 10 day EMA in a 3 session pullback
testing the 3 week run off the May low.
MONDAY
NASDAQ, SP500, SOX are all snuggled against near support after just over a
week of a lateral move or a pullback. Not bad positioning, and there is
still leadership to that could throw in upside and break the indices higher
off support.
At the same time the good earnings news could not do that trick. AAPL
'rescued' the market but the indices sat on support. The jobs report was
solid enough but not too great, and the indices sat on support. They did
not break lower, but good news did not break them higher. Perhaps they were
just ignoring the market, doing what they needed to do. Perhaps.
Regardless of how they got there and why they stayed, those key indices are
at support and in position to rally. Now we see if they do.
The interesting aspect: bulls are at 60 for the second week. In early 2017,
bulls were over 60 for 7 weeks. No serious selloff resulted, an aberration
for the market and this indicator. Oh they tried to sell off, and several
times the indices made moves that historically would market a rollover.
Yet, bids came back in and thwarted the selling pressure and the indices
recovered. Magic. Ready to roll over, rolling over, then caught and
supported.
There is also Jim Paulson who said Friday that we can do all we want
"without aggravating inflation and interest rates." Moreover, he added, "if
that's going to continue, I think the bull market could continue forever."
Forever. Indeed.
Back to the interesting aspect. The other one. Even as bulls move over 60
and we see calls for unending bull markets (as I recall some saying in 1998
just before the Dow crashed), more and more expert money managers call for a
serious market correction. Interactive Brokers raised its margin
requirements on trades on volatility products. Friday another joined in.
BAC's Michael Hartnett, citing a euphoric bull/bear level, said a "little
more meaningful" correction, "not your average correction," is coming in the
fall. Still, he says it is not time to move out of equities just yet.
Whew. So this is not THE pullback that leads to that selloff. Gee, it
seems everyone, EVEN THE BEARS, don't think the correction is nigh. Maybe
they are in the know, but the fact that everyone says it is coming but not
yet means they don't have a clue as to the when. History says when everyone
says it isn't happening is when it happens. The experts rarely hit the nail
on the head. Anyone can say a correction is coming because of any number of
factors. We even say that, but at least we are not so arrogant (stupid?) to
say we know when.
So, very bullish, experts cautious, but not THAT cautious just yet. That
just means beware. The indices are in a position where they could bounce,
they just have to show they can do it. As there are still stocks that are
in position to rally as well, you have to be ready for that to happen.
Have a great weekend.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6351.56
Resistance:
6461 is the June 2017 prior all-time high
Support:
6341.70 is the all-time high from early June.
The 20 day EMA at 6333
6300 is the mid-June interim high
The 50 day EMA at 6252
6205 is the late May all-time high
The 2016 trendline at 6117
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
The 200 day SMA at 5812
5800 from the February consolidation lows
5661 is the late January upper gap point
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
S&P 500: Closed at 2476.83
Resistance:
2484 is the upper channel line from the March 2009 uptrend channel
Support:
The 20 day EMA at 2465
2453.46 is the June prior all-time closing high
The 50 day EMA at 2443
2439 is the early June all-time closing high
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
The 200 day SMA at 2331
2322 is the March 2017 low
2319 is the 78% Fibonacci retracement
2301 is the late January 2017 high
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
Dow: Closed at 22,092.81
Resistance:
Support:
The 10 day EMA at 21,887
21,681is the July prior all-time high
The 20 day EMA at 21,746
The 50 day EMA at 21,482
21,169 is the March 2017 all-time high
20,553 is the lows of the week of May 15
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
The 200 day SMA at 20,388
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015
From Briefing.com: 4:30 pm Closing Market Summary: Stocks Settle Monday Mixed (:WRAPX) :The stock market ended July's last trading session on a mixed note; the Dow climbed 0.3%, to another record high, while the S&P 500 and the Nasdaq settled lower by 0.1% and 0.4%, respectively. The major averages drifted within a fairly narrow range from start to finish. For the month, the S&P 500 added 1.9%.
Monday's action resembled a sector rotation trade as the four advancing sectors--financials (+0.6%), energy (+0.2%), utilities (+0.4%), and telecom services (+0.4%)--have struggled to keep pace with the broader market throughout the year. On the flip side, the strongest sector in 2017--information technology (-0.5%)--settled near the bottom of the leaderboard.
The heavily-weighted financial sector benefited from broad strength with just about all of its components finishing in positive territory. Meanwhile, the energy group leaned on Dow components Exxon Mobil (XOM 80.04, +0.44) and Chevron (CVX 109.19, +1.07), which advanced 0.6% and 1.0%, respectively.
On a related note, crude oil settled in positive territory for the sixth session in a row thanks to a sharp afternoon rally. The commodity went from a loss of 0.8% to a gain of 1.0% in about an hour, eventually settling higher by 0.9% at a price of $50.20/bbl. Today's advance left crude oil higher by 9.0% for the month of July, its best month since April 2016.
The technology and materials spaces were the weakest sectors on Tuesday, dropping 0.5% and 0.8%, respectively. Mega-cap tech names like Facebook (FB 169.25, -3.20) and Alphabet (GOOGL 945.50, -12.83) weighed on the technology group, losing 1.9% and 1.3%, respectively. Chipmakers also underperformed, sending the PHLX Semiconductor Index lower by 0.7%.
Today's tech retreat precedes tomorrow's main event--the release of Apple's (AAPL 148.73, -0.77) latest earnings report. Apple, which is the largest S&P 500 component by market cap, will deliver its quarterly results following Tuesday's closing bell. Entering Tuesday's session, AAPL shares hold a huge year-to-date gain of 28.4%.
As for the remaining sectors--consumer discretionary (-0.1%), industrials (-0.1%), health care (-0.1%), consumer staples (-0.1%), and real estate (-0.1%)--losses were very modest.
In M&A news, Discovery Communications (DISCA 24.60, -2.20) plunged 8.2% after agreeing to acquire Scripps Networks (SNI 87.41, +0.50) for $14.6 billion, or $90 per share, in cash and stock.
On a separate note, reports indicate that SoftBank (SFTBY 40.15, -1.37)--the parent company of Sprint (S 7.98, -0.24)--is still interested in acquiring Charter Communications (CHTR 391.91, +21.65) despite Charter saying that it is not interested in acquiring Sprint.
In the bond market, U.S. Treasuries settled Monday's session relatively flat with the benchmark 10-yr yield finishing unchanged at 2.29%. The 2-yr yield climbed one basis point to 1.36%.
On the political front, the White House announced that Anthony Scaramucci will be leaving his role as White House Communications Director, giving newly appointed Chief of Staff John Kelly the ability to build his own team. The equity market had a muted reaction to the news.
Reviewing Monday's economic data, which was limited to July Chicago PMI and June Pending Home Sales:
Chicago PMI for July decreased to 58.9 from 65.7 in June while the Briefing.com consensus expected a reading of 60.0.
The key takeaway from the report is that the headline dip reflects some normal slowing after a remarkably strong month in June. All five barometer components declined in July, with new orders and production setting the pace.
Pending Home Sales for June rose 1.5% (Briefing.com consensus +1.1%). Today's reading follows a revised 0.7% decrease in May (from -0.8%).On Tuesday, investors will receive several economic reports, including June Personal Income (Briefing.com consensus 0.3%) and Personal Spending (Briefing.com consensus 0.1%) at 8:30 ET, June Construction Spending (Briefing.com consensus 0.5%) at 10:00 ET, and the July ISM Index (Briefing.com consensus 56.2) also at 10:00 ET.
In addition, July auto and truck sales will be released throughout the day.
Nasdaq Composite +17.9% YTD
S&P 500 +10.3% YTD
Dow Jones Industrial Average +10.8% YTD
Russell 2000 +5.0% YTD
6:08 pm Silicon Motion misses by $0.01, reports revs in-line with guidance and consensus; issues downside Q3 /FY17 guidance; announces new $200 mln share repurchase program and management to purchase shares (SIMO) :
Reports Q2 (Jun) earnings of $0.71 per ADS, excluding items, $0.01 worse than the Capital IQ Consensus of $0.72; revenues fell 5.7% year/year to $132.7 mln vs the $132.92 mln Capital IQ Consensus.
Business Outlook: "We are now seeing material amounts of new 64L 3D NAND flash coming to market, with most still being directed towards the enterprise SSD market, which we believe will benefit our SSD solutions business," said Wallace Kou, President and CEO of Silicon Motion. "Since NAND availability remains very tight, NAND pricing continues to be high, which will temporarily affect our SSD solutions and overall gross margins. Separately, based on what we are seeing from our customers' rolling forecasts, we anticipate that our client SSD controller sales will rebound meaningfully in the fourth quarter. We believe our business will improve as NAND supply improvements accelerate over the next few quarters."
Co sees Q3 revs of $122-129 mln vs. $145.62 mln Capital IQ Consensus Estimate, non GAAP op margin 19-21% and gross margin 45-47%
Co lowers FY17 revs to $512-528 mln vs. $558.87 mln Capital IQ Consensus Estimate, non GAAP op margin 22-24%, gross margin 47.5-49%
Board of Directors has authorized a new program for the Company to repurchase up to $200 million of its ADS over a 12 month period. Separately, Silicon Motion executive officers have notified the Company that they intend to purchase $2.5 million of its ADSs. The Company's CEO, CFO and several other executive officers have notified us of their intention to acquire within the next 6 months a total of up to $2.5 million of the Company's ADSs, subject to compliance with relevant securities laws and regulations and company policies.
4:11 pm Amkor beats by $0.02, reports revs in-line; guides Q3 EPS below consensus, revs below two analyst estimate (AMKR) :
Reports Q2 (Jun) earnings of $0.14 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.12; revenues rose 7.9% year/year to $989 mln vs the $996.1 mln two analyst estimate.
Co issues downside guidance for Q3, sees EPS of $0.10-0.27 vs. $0.32 Capital IQ Consensus Estimate; sees Q3 revs of $1.04-1.12 bln vs. $1.16 bln two analyst estimate, driven by the launch of flagship mobile devices. Sees Q3 gross margin of 17% to 20%.
4:08 pm Integrated Device beats by $0.01, reports revs in-line (IDTI) :
Reports Q1 (Jun) earnings of $0.33 per share, $0.01 better than the two analyst estimate of $0.32; revenues rose 2.4% year/year to $196.71 mln vs the $195.1 mln Capital IQ Consensus.
Gross profit for the fiscal first quarter of 2018 was $120.7 million, or 61.4 percent, compared with gross profit of $106.1 million, or 60.4 percent last quarter, and $117.9 million, or 61.3 percent, reported in the same period one year ago.
R&D expense for the fiscal first quarter of 2018 was $40.3 million, compared with R&D expense of $31.0 million last quarter, and $37.7 million in the same period one year ago.
4:07 pm Intevac beats by $0.05, beats on revs (IVAC) :
Reports Q2 (Jun) earnings of $0.05 per share, $0.05 better than the Capital IQ Consensus of ($0.00); revenues rose 108.1% year/year to $31 mln vs the $28.76 mln Capital IQ Consensus.
Order backlog totaled $68.9 million on July 1, 2017, compared to $73.0 million on April 1, 2017 and $75.3 million on July 2, 2016. Backlog at July 1, 2017 included five 200 Lean HDD systems and twelve ENERGi solar ion implant systems. Backlog at April 1, 2017 included three 200 Lean HDD systems, one pilot INTEVAC MATRIX solar system and fourteen ENERGi solar ion implant systems. Backlog at July 2, 2016 included four 200 Lean HDD systems, three INTEVAC VERTEX systems for display cover panels, two INTEVAC MATRIX solar systems, and three ENERGi solar ion implant systems.
4:07 pm Advanced Energy beats by $0.15, beats on revs; guides Q3 EPS above consensus, revs above consensus (AEIS) :
Reports Q2 (Jun) earnings of $1.22 per share, $0.15 better than the Capital IQ Consensus of $1.07; revenues rose 39.7% year/year to $165.95 mln vs the $155.72 mln Capital IQ Consensus.
Co issues upside guidance for Q3, sees EPS of $1.10-1.20, excluding non-recurring items, vs. $0.99 Capital IQ Consensus Estimate; sees Q3 revs of $160-170 mln vs. $151.82 mln Capital IQ Consensus Estimate.
4:06 pm Harmonic reports EPS in-line, beats on revs; guides Q3 EPS and revs below consensus, guides FY17 EPS & revs below consensus (HLIT) :
Reports Q2 (Jun) loss of $0.20 per share, in-line with the Capital IQ Consensus of ($0.20); revenues fell 24.9% year/year to $82.3 mln vs the $80.88 mln Capital IQ Consensus.
Bookings for 2Q17 were $91.1 million, compared with $82.1 million for 1Q17 and $117.3 million for 2Q16.
Co issues downside guidance for Q3, sees revenue of $80-$90 million vs. $92.8 mln Capital IQ Consensus, gross margin of 48-49%, and loss per share of ($0.11)-($0.03) vs. $0.02 consensus.
Co issues downside guidance for FY17, sees revs of $336-$356 mln vs. $379.9 mln Capital IQ Consensus, gross margin of 51-51.5%, and loss per share of ($0.50)-($0.33) vs. ($0.04) Capital IQ Consensus.
Co states, "During 2Q17, with respect to our OTT SaaS business, TCV grew 90% sequentially to 8% of total bookings, reducing near-term revenue and profitability but establishing a trajectory for stronger financial performance mid- to long-term. Additionally, recent material CableOS bookings and field deployment success bolster our confidence in the growth outlook for our Cable Edge segment."
Tech Stocks from Briefing.com
Bucking the broader push lower today, the Dow Jones Industrial Average seemingly defied gravity as the index flew to all-time highs on the wings of a blue-chip bellwether which in-turn made all-time highs today. Dow component Boeing (BA 242.46, +0.93 +0.39%) has been on quite the run lately, skying to all-time highs in each of its last five trading sessions, and the final trading day of July was no different.
To that end, the Dow was up nicely today, adding 60.81 points (+0.28%) to 21891.12. The tech-heavy Nasdaq Composite led the three major averages lower again today as big name tech continues its bearish decline; the index fell 26.55 points (-0.42%) to 6348.12. The S&P 500 finished 1.80 points lower (-0.07%) to 2470.30.
The Technology (XLK 57.16, -0.28 -0.49%) space was dragged lower as large cap Nasdaq 100 names TSLA -3.5%, REGN -3.4%, AMZN -3.2% and AMAT -2.1% held the space lower. Component Micron (MU 28.10, -1.18 -4.03%) turned lower today on broader semi (SMH 86.84, -0.51 -0.59%) weakness. In what turned out to be a session of lower lows, the Materials XLB -0.76% space led the decline among S&P sectors, followed by IYZ -0.22%, XLRE -0.15%, XLI -0.13%, XLP -0.07%, XLV -0.06%, XLY -0.03%, XLE +0.23%, XLU +0.34%, XLF +0.64%.
In the S&P 500 Information Technology (980.40, -5.27 -0.53%) space, trading fell into the close ultimately finishing near lows. Component Facebook (FB 169.25, -3.20 -1.86%) was pressured today as the stock was downgraded to a Sell rating at Pivotal Research. Other names in the space which outperformed today included AMAT -2.08%, KLAC -1.88%, TEL -1.83%, AVGO -1.48%, GOOGL -1.34%, LRCX -1.32%, VRSN -1.30%, EA -1.28%, GOOG -1.17%, NVDA -1.14%.
Other notable news items among sector components:
Snap (SNAP 13.67, -0.13 -0.98%) shares were weaker today as the company's first post-IPO lock-up period expired.
AT&T (T 39.00, flat) made executive appointments to prepare for Time Warner (TWX 102.47, -0.26 -0.25%) merger close.
Sprint (S 7.97, -0.25 -3.04%) and Charter (CHTR 391.91, +21.65 +5.85%) might be in merger talks, according to WSJ.
Later, a Charter (CHTR) spokesperson said the company is not interested in Sprint (S), but Softbank (SFTBY 40.15, -1.37 -3.30%) might still be interested in CHTR acquisition, according to Reuters.
United States Defense Information Systems Agency extended its contract with ViaSat (VSAT 66.09, -0.50 -0.75%) to continue to provide senior leaders and their support staff with in-flight broadband and connectivity services on senior leader aircraft.
Altaba's (AABA 58.40, -0.80 -1.35%) Board authorized the repurchase of up to $5 billion of its common stock.
Analyst actions:
BIDU was upgraded at Macquarie and Nomura,
ADP was upgraded to In-Line from Underperform at Evercore ISI,
GIMO was upgraded to Buy from Neutral at Dougherty,
GPRO was upgraded to Equal Weight from Underweight at Morgan Stanley;
FB was downgraded to Sell from Hold at Pivotal Research,
SNAP was downgraded to Mixed from Positive at OTR Global,
SHOR was downgraded to Hold from Buy at Lake Street,
ECHO was downgraded to Neutral from Outperform at Credit Suisse;
CRTO was initiated with an Overweight at KeyBanc Capital Mkts,
CCOI was initiated with a Sell at Off Wall Street
Expect quarterly results tonight/tomorrow morning from the following companies: AEIS, AABA, AMKR, BLKB, CGNX, ELVT, FICO, HLIT, INST, IDTI, IVAC, P, ROG, SBAC, SIMO, TNET/ALLT, CDK, EIGI, HRS, IPGP, QSII, SQNS, SHOP, S, VSM, XRX, YRD
InvestmentHouse - Dow Continues Higher Unfazed (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
- Stocks calm down after the Thursday action but still sluggish, hanging
onto support.
- Dow continues higher unfazed while the other indices decently save
themselves.
- Healthcare goes down in defeat. Now time to get serious and cut the
insurance company payoffs.
- Bulls top 60, indicating an overexcited market, but the rollover goalie is
still there to save the day.
- A bit more volatile, but the patterns remain solid for many leading
groups.
- Rotation returned on the week, and thus far more of the zero sum type.
The summer games continue with national USATF and AAU this weekend and into
next week. We are still on the go as my son jumps in nationals. As a result
the reports will be pared down some, i.e. no video. I appreciate your
understanding during this crunch time when all the training comes to bear.
Thank you!
Thursday the stock indices turned choppy with SP400 and NASDAQ still trying
to spit the bit on new highs. With this market's track record for giving up
new highs as fast as they are hit, that was worth some worry. Some, but
perhaps not a lot: even when they reversed sharply from new highs, the
selling was not long-lived as the powers that be do not want and indeed
cannot afford a prolonged market selloff.
Friday things calmed down a bit, but just a bit. All but the Dow lost
ground, but a half percent on SP400 was the largest decline. Not bad
considering AMZN missed on its earnings, though there were not many viewing
the miss as anything deeply nefarious about AMZN's prospects. The market
overall was down, but certainly not in a full dive after AMZN's results.
SP500 -3.32, -0.13%
NASDAQ -7.51, -0.12%
DJ30 33.76, +0.15%
SP400 -0.49%
RUTX -0.30%
SOX -0.39%
The indices all gapped lower, but DJ30 turned positive. The others opened,
sold farther, then managed varying degrees of recovery.
SP400 showed the most wear and tear, and not surprisingly it is one of the
indices that appears to have a real aversion to new highs over the past many
months. It does not completely roll over after a new high -- the PPT and
Fed help avoid that -- but it does tend to hit the highs only to
significantly jolt downside. After rallying off the low Thursday SP400
could not capitalize on the bounce, instead gapping lower again Friday. It
managed a small recovery, but still closed below the 20 day EMA as well as
the June prior recovery high. Last selling the 50 day MA held as support
and that level may come into play again.
RUTX has sold 3 sessions the same as SP400, but RUTX is very contained,
showing a doji with tail over the 20 day EMA. It is also holding over its
June prior high. This looks more like a rally to a new high being tested.
Likely if RUTX manages a good bounce off this test, SP400 can do likewise.
NASDAQ: Thursday NASDAQ gapped to a new high an then unceremoniously
reversed. A bounce off the 20 day EMA closed it over the 10 day and out of
harm's way, but Friday NASDAQ gapped lower again. Managed to recover to
basically flat, even with the AMZN earnings issues. That leaves NASDAQ
sitting on the June high as well. Got a bit squirrely around the new high,
but that is also somewhat par for the course in these rallies.
SOX: Reversed Thursday at the recent lower highs. Managed to hold the 20
day EMA and showed a doji Friday right on the 20 day. Not leading the way
for certain, but it is holding its own and trying to perhaps build an
inverted head and shoulders.
SP500 also bucked some at a new high, but it is far from reversing,
recovering nicely Thursday off the intraday weakness to hold the 10 day EMA
and holding that level again Friday on light trade. Nothing really out of
the norm here.
DJ30 is the index that shows the most comfort with success, hitting
successive higher highs Wednesday through Friday. Decent volume as well.
Not great, but it was very solid Thursday.
LEADERSHIP
Financial: Post-Yellen the banks suffered but the pullbacks have been
contained, at least for the banks. Now they are showing some good setups,
e.g. C, BAC.
China stocks: A bit volatile Thursday, but hung on and bounced, e.g. NTES,
BABA, SOHU, SINA.
Chips: Struggling some, but after their runs, this is more like a normal
pullback: LRCX, SWKS, AMAT, AMD.
Metals, materials: After very good strength they had issues. CX fell to the
50 day EMA but held. LPX looks good at the 20 day EMA, showing a doji. AKS
is bombing lower. STLD tanked. CENX is struggling in aluminum.
Drugs/biotechs: Some big names felt the pressure last week though did not
break down. CELG, AMGN. IMGN is surging in a good move. AGEN came under
fire itself. Very mixed, but some good looking setups.
FAANG: FB looks very good to continue its breakout over the channel line.
AAPL sold into Friday but is holding the 50 day SMA. AMZN gapped lower on
earnings but was contained over the 50 day SMA. NFLX held the 10 day EMA
test. GOOG gapped below the 50 day EMA but managed to hold it on the close.
MARKET STATS
DJ30
Stats: +33.76 points (+0.15%) to close at 21830.31
Nasdaq
Stats: -7.51 points (-0.12%) to close at 6374.68
Volume: 1.87B (-24.9%)
Up Volume: 784.07M (-166.88M)
Down Volume: 1.04B (-480M)
A/D and Hi/Lo: Decliners led 1.18 to 1
Previous Session: Decliners led 2.04 to 1
New Highs: 65 (-127)
New Lows: 55 (+9)
S&P
Stats: -3.32 points (-0.13%) to close at 2472.1
NYSE Volume: 772M (-14.22%)
A/D and Hi/Lo: Advancers led 1.18 to 1
Previous Session: Decliners led 1.22 to 1
New Highs: 87 (-76)
New Lows: 26 (+1)
SENTIMENT INDICATORS
VIX: 10.29; +0.18
VXN: 15.91; +0.02
VXO: 8.26; -0.13
Put/Call Ratio (CBOE): 0.83; -0.11
Bulls and Bears: Bully. After a surge of 8 points the prior week, bulls
continued the charge, moving back over 60 for the first time since early
2017. This is again putting out a caution flag for the upside, so much so
that Investor's Intelligence issued an alert on this showing in its survey.
The market tried to roll over several times since that bout of 60+ readings
in early 2017, but the selling was blunted by the PPT, then the buyers could
come back in and rescue the market. They did. Now with this reading, you
have to start watching for rollover attempts. Late last week could be one,
but it was not much, at least not yet.
Bulls: 60.2 versus 57.8
Bears: 16.5 versus 16.7
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 60.2 versus 57.8
57.8 versus 50.0 versus 52.5 versus 54.9 versus 51.5 versus 50.00 versus
55.8 versus 50.00 versus 51.9 versus 58.1 versus 58.7 versus 58.5 versus
54.7 versus 51.9 versus 56.3 versus 55.8 versus 49.5 versus 56.7 versus 53.4
versus 57.7 versus 63.1 versus 61.2 versus 61.8 versus 62.7 versus 61.8
versus 58.2 versus 60.6 versus 58.6 versus 60.2 versus 59.8 versus 59.8
versus 59.6 versus 58.8 versus 56.3 versus 55.6 versus 51.0 versus 42.9
versus 41.7 versus 47.1 versus 42.9 versus 46.1 versus 46.7 versus 45.2
Bears: 16.5 versus 16.7
16.7 versus 18.6 versus 18.8 versus 18.6 versus 18.3 versus 19.2 versus 18.3
versus 17.1 versus 17.3 versus 17.9 versus 17.9 versus 18.3 versus 17.5
versus 18.3 versus 18.1 versus 17.3 versus 13.75 versus 17.3 versus 16.5
versus 17.5 versus 17.6 versus 16.7 versus 17.6 versus 17.5 versus 17.3
versus 18.3 versus 18.4 versus 19.6 versus 19.6 versus 19.2 versus 19.6
versus 22.3 versus 21.6 versus 23.5 versus 25.7 versus 24.3 versus 23.1
versus 23.8 versus 23.1 versus 22.8 versus 23.1 versus 24.3
OTHER MARKETS
Bonds: 2.291% versus 2.303%. Bonds still attempting to bounce off the 200
day SMA test.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.303%
versus 2.287% versus 2.330% versus 2.255% versus 2.241% versus 2.270% versus
2.261% versus 2.318% versus 2.331% versus 2.346% versus 2.316% versus 2.361%
versus 2.375% versus 2.375% versus 2.368% versus 2.34% versus 2.304% versus
2.268% versus 2.20% versus 2.140% versus 2.140% versus 2.148% versus 2.165%
versus 2.156% versus 2.191% versus 2.155% versus 2.162% versus 2.209% versus
2.21% versus 2.21% versus 2.19% versus 2.176% versus 2.14% versus 2.183%
versus 2.154% versus 2.21% versus 2.20%
EUR/USD: 1.17497 versus 1.1683. That one-day dollar bounce sure didn't
last.
Historical: 1.1683 versus 1.17419 versus 1.1646 versus 1.1637 versus 1.16640
versus 1.16271 versus 1.15280 versus 1.15549 versus 1.14735 versus 1.14672
versus 1.13986 versus 1.14335 versus 1.14682 versus 1.13964 versus 1.14010
versus 1.14220 versus 1.13508 versus 1.13710 versus 1.13510 versus 1.14208
versus 1.14432 versus 1.13786 versus 1.13409 versus 1.11834 versus 1.11928
versus 1.11484 versus 1.11670 versus 1.11346 versus 1.11419 versus 1.11968
versus 1.11466 versus 1.12213 versus 1.12086 versus 1.11930 versus 1.11965
USD/JPY: 110.704 versus 111.07
Historical: 111.07 versus 111.166 versus 111.897 versus 111.176 versus
111.128 versus 111.863 versus 111.89 versus 112.096 versus 112.582 versus
112.536 versus 113.314 versus 113.152 versus 113.929 versus 114.063 versus
113.913 versus 113.126 versus 113.253 versus 113.270 versus 112.413 versus
111.993 versus 112.340 versus 112.24 versus 111.943 versus 111.299 versus
111.357 versus 111.278 versus 111.470 versus 111.729 versus 110.873 versus
110.854 versus 109.560 versus 110.060 versus 109.97 versus 110.334 versus
110.299 versus 109.355
Oil: 49.71, +0.67. Oil continues upside, now at the 200 day SMA and the
upper channel line in the down channel. That said, 52-53 is the top of the
range. Getting close, another important test ahead.
Gold: 1268.40, +0.67%
MONDAY
Healthcare 'reform' was shot down by one vote from McCain as he is into
legacy building, wanting to be the man who 'stood' for working with the
other side to craft legislation. Of course that was not the case when he
wanted war and the democrats did not. Priorities, right? Now, perhaps,
Trump will do the right thing, finally, and stop subsidizing the insurance
companies to write bad insurance in the ACA 'markets.' That will bring
about the end to the majority of those plans in a hurry, requiring the need
to take action.
Then the BIG question faces America: do we go full socialism (a government
payor) or do we get back to what has made us great (still, not again) and
free up markets to be the efficient mechanisms they are AND provide for
those instances where cancer or other multi-year/lifetime ailments strike.
Those people cannot be abandoned just because of the hand they were dealt.
There ARE ways to do this and I have discussed some before. The question is
whether those in power want to relinquish their power over this aspect of
our lives and thus relinquish power back to The People.
Weighty stuff, but the market is not that concerned. Earnings are getting
longer in the tooth and now AAPL comes next week to try and get the animal
spirits back on track. The indices got a bit squirrely last week, reversed
off of some new highs, but they did not roll over.
Moreover, there are still good patterns to move on if they show good breaks.
The financials, drugs/biotechs/healthcare, materials in nice pullbacks, some
retailers making moves.
The point: still good patterns to drive the market higher -- as long as
money gets pushed there way.
The rub: this past week there was the more vicious type of rotation, i.e.
one area rises, one falls as money is yanked. That makes the market more of
a zero sum game as the algos move money around. Fortunately many stocks
continue to hold their patterns regardless, and we will try to focus on
those.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6374.68
Resistance:
Support:
6341.70 is the all-time high from early June.
The 20 day EMA at 6320
6300 is the mid-June interim high
6205 is the late May all-time high
The 50 day EMA at 6230
The 2016 trendline at 6110
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
5800 from the February consolidation lows
The 200 day SMA at 5783
5661 is the late January upper gap point
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
S&P 500: Closed at 2472.10
Resistance:
Support:
The 20 day EMA at 2458
2453.46 is the June prior all-time closing high
2439 is the early June all-time closing high
The 50 day EMA at 2435
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
2322 is the March 2017 low
The 200 day SMA at 2322
2319 is the 78% Fibonacci retracement
2301 is the late January 2017 high
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
Dow: Closed at 21,830.31
Resistance:
Support:
21,535 is the all-time high
The 20 day EMA at 21,575
The 50 day EMA at 21,367
21,169 is the March 2017 all-time high
20,553 is the lows of the week of May 15
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
The 200 day SMA at 20,292
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015
From Briefing.com: 4:37 pm Closing Market Summary: Stocks Settle Mixed Following Amazon Earnings (:WRAPX) :Equity indices finished Friday's session mixed; the Dow (+0.2%) advanced to a new record high for the third day in a row while the S&P 500 (-0.1%) and the Nasdaq (-0.1%) settled a tick below their unchanged marks. All three major averages finished near their best marks of the day. For the week, the S&P 500 finished flat.
The Nasdaq opened Friday's session with a sizable loss of 0.7% after one of its most influential components--Amazon (AMZN 1020.04, -25.96)--missed earnings expectations. The online retailer was down as much as 4.3% in early action, but, like the Nasdaq, the company was able to trim its loss a bit, eventually settling lower by 2.5%.
Amazon's negative performance took a toll on the consumer discretionary sector (-0.7%), which finished near the bottom of the day's leaderboard. In addition, coffee giant Starbucks (SBUX 54.00, -5.50) weighed on the consumer discretionary space--plunging 9.2% to its lowest level in six months--after the company missed top-line estimates and issued disappointing guidance.
The consumer staples sector (-0.9%) finished at the very bottom of the sector standings with tobacco giant Altria (MO 66.94, -7.02) leading the retreat. MO shares sold off sharply after the U.S. Food and Drug Administration announced a plan to reduce nicotine levels in cigarettes. Altria reclaimed a chunk of its initial decline, but still ended the day with a solid loss of 9.5%.
Meanwhile, the energy sector (-0.2%) settled roughly in line with the broader market despite a solid performance from crude oil, which climbed 1.4% to $49.74/bbl. For the week, WTI crude advanced 8.7%, which marks its biggest one-week rally of the year.
Within the energy sector, Dow components Exxon Mobil (XOM 79.60, -1.23) and Chevron (CVX 108.12, +2.01) saw a mixed response to their latest earnings reports; CVX jumped 1.9% after reporting better than expected revenues while XOM dropped 1.5% after missing earnings expectations.
The top-weighted technology sector (-0.1%) also finished roughly in line with the broader market. Intel (INTC 35.31, +0.34) advanced 1.0% after beating both top and bottom line estimates and issuing upbeat guidance. However, the PHLX Semiconductor Index dropped 0.4% despite Intel's positive performance.
In total, eight of the eleven sectors finished in the red with losses ranging from 0.1% to 0.9%. The health care (+0.5%), financials (unch), and industrials (+0.2%) spaces were the three advancers.
Merck (MRK 64.11, +0.42) helped the health care sector finish at the top of the leaderboard after the company reported better than expected earnings and revenues; MRK shares settled higher by 0.7%. It's also worth noting that the Senate failed to pass a 'skinny' repeal of the Affordable Care Act in a tight 49-51 vote.
As for industrials, transports bounced back on Friday after sending the Dow Jones Transportation Average on a 3.1% plunge in the prior session. The DJTA finished Friday higher by 0.4%.
It's also worth noting that North Korea launched another intercontinental ballistic missile (:ICBM) on Friday, marking Pyongyang's 11th ballistic missile test this year. Stocks did not react to the news.
Outside of the stock market, Treasuries rallied in a curve-flattening trade, leaving the 2-yr yield (1.36%) and the 10-yr yield (2.29%) lower by one basis point and three basis points, respectively. Meanwhile, the U.S. Dollar Index (93.15, -0.62) dropped 0.7% to a fresh 15-month low.
Reviewing Friday's economic data, which included the advance estimate for second quarter GDP, the second quarter Employment Cost Index, and the final reading of the University of Michigan Consumer Sentiment Index for July:
Advance second quarter GDP pointed to an expansion of 2.6%, while the Briefing.com consensus expected a reading of 2.8%. The second quarter GDP Deflator came in at 1.0%, which is below the Briefing.com consensus of 1.3%.
The key takeaway from the Q2 GDP report, then, is that the average for the first half of 2017 was subpar at 1.9%, which should continue to keep any concerns about the prospect of a near-term rate hike from the Fed under wraps.
The second quarter Employment Cost Index rose 0.5%, while the Briefing.com consensus expected an increase of 0.6%.
The key takeaway from the report is that there was a moderation in year-over-year growth rates for wages and salaries, reflecting the lack of wage-based inflation pressure that has helped keep consumer spending activity modest and overall inflation low.
The final reading of the University of Michigan Consumer Sentiment Index for July rose to 93.4 (Briefing.com consensus 93.1) from 93.1 in the preliminary reading.
Despite the small decline, the key takeaway from the report is the indication that the Sentiment Index is still higher in the first seven months of 2017 than in any other year since 2004.
On Monday, investors will receive just two pieces of economic data--July Chicago PMI (Briefing.com consensus 60) and June Pending Home Sales (Briefing.com consensus 1.1%). The two reports will be released at 9:45 ET and 10:00 ET, respectively.
Nasdaq Composite +18.4% YTDS&P 500 +10.4% YTDDow Jones Industrial Average +10.5% YTDRussell 2000 +5.3% YTD Week In Review: Up to the Ears in Earnings
Investors had a massive pile of earnings reports to work through this week. The results were generally positive, but equities still sold off in some instances as many companies rallied for several weeks in front of their reports, pricing in much of the good news beforehand. The S&P 500 finished the week just a tick below its flat line, the Nasdaq dropped 0.2%, and the Dow outperformed, climbing 1.2%.
The stock market began the week with a rather range-bound performance on Monday as small victories from the top-weighted technology and financials sectors roughly canceled out losses from the nine remaining groups. Alphabet (GOOGL) helped carry the tech space, muscling one more win ahead of its earnings report, which crossed the wires on Monday evening.
Alphabet reported better than expected earnings and revenues, but slid 2.9% on Tuesday nonetheless. In general, earnings continued to eclipse expectations on Tuesday with Caterpillar (CAT), McDonald's (MCD), DuPont (DD), and United Technologies (UTX) all beating earnings per share estimates. The positive results helped push the S&P 500 and the Nasdaq to modest victories and new record highs.
The Dow joined the record-high club in the midweek session, outpacing its peers on the back of Boeing (BA). The airplane maker surged 9.9% after reporting better than expected earnings and raising its earnings guidance for the fiscal year. Wireless giant AT&T (T) also moved solidly higher, adding 5.0%, following its latest quarterly report, which showed above-consensus earnings.
Investors took a break, albeit a short one, from earnings season on Wednesday afternoon when the Fed released its latest policy directive. However, the release largely turned out to be a nonevent. The FOMC decided to keep the fed funds target range at 1.00%-1.25%, as expected, and noted that it expects to begin paring its balance sheet "relatively soon", which was interpreted by many to mean September.
Earnings came back into focus on Thursday with Facebook (FB) headlining the lineup. The social media giant jumped to a new record high after reporting better than expected earnings and revenues, however, the company gave back a good portion of said advance as tech stocks began to sell off in the afternoon, pushing the technology sector to the bottom of the leaderboard.
Transports struggled mightily on Thursday, sending the Dow Jones Transportation Average lower by 3.1%. The DJTA's weakness was broad, but UPS (UPS) and Southwest Airlines (LUV) exhibited particular weakness despite beating earnings estimates. However, on a positive note, Verizon (VZ) surged 7.7% on better than expected revenues. Equity indices settled mixed with the S&P 500 losing 0.1%.
Moving into Friday's session, investor sentiment was down mildly after Amazon (AMZN) reported worse than expected earnings on Thursday evening. The e-commerce giant dropped 2.5%, but the broader market held up relatively well with the Dow settling at another record high, its third in a row. Also of note, the advance estimate of Q2 GDP came in slightly below expectations (2.6% actual vs 2.8% Briefing.com consensus).
Following this week's policy directive, the fed funds futures market now points to the January FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 50.8%. At this time last week, investors were anticipating the next rate hike to occur in December.
Tech Stocks from Briefing.com
The broader market slumped into the weekend, yet the Dow Jones Industrial Average managed modest gains of 33.76 points (+0.15%) to 21830.31. The S&P 500 declined about 3.32 points (-0.13%) to 2472.10, and the Nasdaq Composite shed about 7.51 points (-0.12%) to 6374.68. All told, this week's moves take the three major US indices to +10.5%, +10.4% and +18.4% YTD, respectively.
Market data today included the advance second quarter GDP reading which pointed to an expansion of 2.6%, while the second quarter GDP Deflator came in at 1.0%. The second quarter Employment Cost Index rose 0.5%, and the final reading of the University of Michigan Consumer Sentiment Index for July rose to 93.4 from 93.1 in the preliminary reading.
The Technology (XLK 57.44, -0.06 -0.10%) space tripped into the weekend, ending just under flat lines. Component Western Digital (WDC 84.97, -6.93 -7.54%) was the worst performing name in the ETF today despite announcing better than expected earnings. At US Telecoms IYZ -1.30% space was the worst performing sector on Friday, followed by XLP -0.84%, XLY -0.76%, XLB -0.36%, XLU -0.15%, XLE -0.08%, XLRE -0.06%, XLF +0.00%, XLI +0.23%, XLV +0.50%.
In the S&P 500 Information Technology (985.67, -0.88 -0.09%) space, trading was mostly flat today, albeit with minimal losses. Component Intel (INTC 35.31, +0.34 +0.97%) posted modest gains following its latest quarterly report. Other names in the space which trickled lower with the sector today included KLAC -5.53%, MU -3.17%, PAYX -3.15%, FLIR -1.99%, LRCX -1.92%, AMAT -1.72%, PYPL -1.58%, MSI -1.30%, TDC -1.19%, NTAP -1.18%, SWKS -1.16%, INTU -0.90%.
Other notable news items among sector components:
Expedia (EXPE 159.50, +5.25 +3.40%) and Traveloka Holding a leading Southeast Asian online travel company, announced today that Expedia made a $350 million primary minority investment in Traveloka. The company also declared quarterly cash dividend of $0.30/share, prior $0.28/share
Microsemi (MSCC 52.59, -1.06 -1.98%) announced a $250 million stock repurchase program.
Ultra Clean Holdings' (UCTT 24.36, -0.18 -0.73%) President and CEO Jim Scholhamer to take leave of absence starting July 31 for approximately 2 months to address a treatable medical condition.
SCANA Corp's (SCG 61.31, -4.33 -6.60%) South Carolina Electric & Gas and Santee Cooper entered definitive agreement for Toshiba (TOSBF 2.17, -0.23 -9.66%) to pay $2.168 billion for obligations of Westinghouse Electric Company.
Motorola Solutions (MSI 91.01, -1.20 -1.30%) will acquire Plant Holdings, Inc., which holds the Airbus DS Communications business; terms not disclosed and expected to be completed by end of 2017.
Verizon (VZ 47.93, +0.12 +0.25%) said to be in talks to acquire WideOpenWest's (WOW) Chicago fiber network, according to Reuters.
Sprint (S 8.22, +0.02 +0.24%) in talks with Comcast (CMCSA 39.52, +0.09 +0.23%) / Charter (CHTR 370.26, +3.36 +0.92%) for partnership / investment, according to Bloomberg.
In reaction to quarterly results:
Amazon (AMZN 1020.04, -25.96 -2.48%) reported worse than expected Q2 EPS of $0.40 on better than expected revenues of $37.95 billion. For Q3, the company sees in-line revenues of $39.25-41.75 billion on operating income of ($400)-300 million.
Intel (INTC) reported better than expected Q2 EPS and revenues of $0.72 and $14.76 billion, respectively. For Q3, the company sees EPS and revenues ahead of market expectations at $0.75-0.85 and $15.2-16.2 billion, respectively. For FY17, the company raised EPS and revenue guidance to $2.85-3.15 and $60.8-61.8 billion.
Baidu.com (BIDU 220.00, +19.00 +9.45%) reported better than expected Q2 EPS and revenues of $1.67 and $3.08 billion, respectively. For Q3, the company sees revenues ahead of market expectations at $3.412-3.503 billion.
Electronic Arts (EA 118.25, +0.65 +0.55%) reported Q1 EPS of $2.06 on better than expected revenues of $775 million. For Q2, the company sees a loss of $0.18 on revenues of $1.160 billion. The company also reaffirmed FY18 EPS guidance of $3.57 on revenues of $5.1 billion.
Western Digital (WDC) reported better than expected Q4 EPS of $2.93 on in-line revenues of $4.84 billion.
Expedia (EXPE) reported worse than expected Q2 EPS of $0.89 and better than expected revenues of $2.59 billion.
Analyst actions:
LOGM was upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts,
BIDU was upgraded to Overweight at Cantor Fitzgerald;
ELLI was downgraded to Neutral from Buy at Roth Capital,
ECHO was downgraded to Sell from Neutral at UBS,
TTMI was downgraded to Hold from Buy at Stifel,
PLT was downgraded to Neutral from Overweight at JP Morgan,
EGHT and PDFS were downgraded to Hold from Buy at Craig Hallum,
SHOR was downgraded to Market Perform from Outperform at Northland Capital,
MSTR was downgraded to Hold from Buy at Deutsche Bank;
SSTI was initiated with an Outperform at Imperial Capital,
APTI was initiated with an Outperform at Oppenheimer
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
From Briefing.com: Tech Stocks from Briefing.com
When the dust settled on Wednesday, the trifecta was complete as the broader market made new all-time highs across the board; the Dow Jones Industrial Average led out of the gate and never looked back, advancing 97.58 points (+0.45%) to 21711.01. The Nasdaq Composite came in second, adding 10.57 points (+0.16%) to 6422.75, while the S&P 500 gained less than a point (+0.03%) to 2477.83. To that end, all three major US averages made all-time highs today.
As expected, the FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25%. Regarding the central bank's $4.5 trillion balance sheet, the Fed indicated that it expects to begin the paring process "relatively soon", which has been largely interpreted as September.
Market data today included the New Home Sales reading for June which hit an annualized rate of 610,000, which was above the revised May rate of 605,000 (from 610,000). Also, the weekly MBA Mortgage Applications Index rose 0.4% to follow last week's 6.3% increase.
The Technology (XLK 57.72, +0.22 +0.38%) space cracked into all-time high territory today. Component AT&T (T 38.03, +1.81 +5.00%) was the best performing name today after reporting better than expected Q2 earnings and best-ever postpaid phone churn of 0.79%. As it were, the Utility XLU +0.95% space was the best performing S&P sector today, followed by XLRE +0.83%, IYZ +0.47%, XLI +0.13%, XLE +0.11%, XLP -0.02%, XLY -0.04%, XLV -0.34%, XLB -0.61%, XLF -0.67%.
In the S&P 500 Information Technology (994.72, +1.98 +0.20%) space, trading managed to climb out of the red as afternoon losses did not hold. Component Electronic Arts (EA 118.00, +4.34 +3.82%) had a hot session after a premarket upgrade of the stock to a Buy rating at BofA/Merrill. On the flip side, component Corning (GLW 30.42, -1.71 -5.32%) was pressured today despite an earnings and revenue beat. Other names which got hot today included ATVI +2.77%, ADP +2.71%, LRCX +2.36%, AMAT +2.26%, MCHP +2.16%, EBAY +1.98%, TSS +1.78%, KLAC +1.76%, ADSK +1.62%, ADI +1.51%.
Other notable news items among sector components:
Qualcomm (QCOM 53.14, -0.13 -0.24%) and Japanese-based Nichicon enter into a Wireless Electric Vehicle Charging license agreement.
Guidance Software (GUID 7.11, +0.21 +3.04%) to be acquired by OpenText (OTEX 34.42, +1.08 +3.24%) for $7.10 per share in cash; transaction valued at about $240 million.
ViaSat (VSAT 67.68, +0.25 +0.37%) was selected by Northrop Grumman (NOC 263.86, -0.19 -0.07%) in the delivery of a next-generation satellite communications network to the Australian Defence Force.
LINE Corp (LN 34.20, -0.72 -2.06%) to establish a new subsidiary, LINE Friends Japan Corporation, by a simplified incorporation-type company split to succeed its LINE Friends Store business.
SITO Mobile (SITO 5.12, -0.61 -10.65%) responded to the 13D/A filing by the Singer Group 'that included material erroneous misstatements'.
In reaction to quarterly results:
AT&T (T) reported better than expected Q2 EPS of $0.79 on in-line revenues of $39.84 billion. Reported 2.8 million wireless net adds; 2.3 million in U.S., driven by connected devices, prepaid and postpaid 476,000 Mexico net adds. Also reported best-ever postpaid phone churn of 0.79% with total postpaid churn, including tablets, of 1.01%.
Texas Instruments (TXN 82.55, +1.16 +1.43%) reported better than expected Q2 EPS and revenues of $1.03 and $3.69 billion, respectively. For Q3, the company sees in-line EPS and revenues of $1.04-1.18 and $3.74-4.06 billion, respectively.
TE Connectivity (TEL 80.65, -2.57 -3.09%) reported better than expected Q3 EPS and revenues of $1.24 and $3.37 billion. Also guided Q4 EPS and revenues ahead of market expectations at $1.14-1.16 and $3.2-3.3 billion, respectively. For FY17, the company sees EPS ahead of market expectations at $4.72-4.74 on in-line revenues of $12.85-12.95 billion.
Corning (GLW) reported better than expected Q2 EPS and revenues of $0.42 and $2.59 billion, respectively.
Advanced Micro (AMD 14.76, +0.65 +4.61%) reported better than expected Q2 EPS and revenues of $0.02 and $1.22 billion, respectively. For Q3, the company sees revenue growth of 20-26% quarter-over-quarter to about $1.47-1.54 billion.
Analyst actions:
EA was upgraded to Buy from Neutral at BofA/Merrill,
MBT was upgraded to Overweight from Neutral at JP Morgan,
VEON was upgraded to Neutral from Underweight at JP Morgan;
STX was downgraded to Hold from Buy at Craig Hallum,
AMD was downgraded to Market Perform from Outperform at BMO Capital,
ITRI was downgraded to Neutral from Outperform at Robert W. Baird,
CEL was downgraded to Sell at Citigroup,
GUID was downgraded to Neutral at Piper Jaffray,
UMC was downgraded at Daiwa and Citigroup;
AMD was initiated with an Outperform at Robert W. Baird,
CALD was initiated with a Buy at Jefferies
Expect quarterly results tonight/tomorrow morning from the following companies: AXTI BCOV CMPR DMRC FFIV FB FORR FTNT KS KN LRCX LLNW LPSN MLNX MB MPWR NTGR NTRI PYPL NOW TER TYL XLNX/ACIW ADP BCOR CCMP CLFD CTS DHX DSPG DST ENTG EXLS I IDCC IRDM MA MITL NTCT NOK SFE TDC TZOO TWTR VZ WEX
4:31 pm Closing Market Summary: Stocks Settle Slightly Higher (:WRAPX) :
The Fed's latest policy directive did little to upset equity investors on Wednesday as all three major averages notched new record highs. The S&P 500 (unch) and the Nasdaq (+0.2%) fought hard for their slim gains while the Dow (+0.5%) settled with a more comfortable margin of victory thanks to Boeing's (BA 233.45, +20.99) upbeat earnings report. Meanwhile, the small-cap Russell 2000 underperformed, dropping 0.6%.
As expected, the FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25%. Regarding the central bank's $4.5 trillion balance sheet, the Fed indicated that it expects to begin the paring process "relatively soon", which has been largely interpreted as September.
Treasuries rallied to fresh session highs following the release of the Fed's policy statement while the U.S. Dollar Index (93.35, -0.56, -0.6%) slid into negative territory from its flat line. The 2-yr yield was hovering three basis points below its flat line in front of the release and eventually settled six basis points lower at 1.34%. Similarly, the benchmark 10-yr yield also dropped six basis points to 2.28%.
The somewhat counter-intuitive reactions in the bond and currency markets have been attributed to the notion that it seems unlikely that the Fed would announce a rate hike at the September meeting if it plans to start paring its balance sheet at that time. The CME FedWatch Tool now points to the March FOMC meeting (from December) as the most likely time for the next rate-hike announcement with an implied probability of 55.1%.
Outside of monetary policy, earnings season was the focal point on Wall Street as another batch of quarterly reports came in largely better than expected. Boeing was maybe the most notable post-earnings advancer, surging 9.9%, after reporting better than expected earnings and raising its earnings guidance for the fiscal year.
AT&T (T 38.03, +1.81) also had a solid performance, pinning the telecom services sector (+3.0%) to the top of the leaderboard. T shares jumped 5.0% after AT&T beat bottom-line estimates.
As for the remaining ten sectors, six finished in positive territory with gains ranging between 0.1% and 0.9%. The rate-sensitive utilities (+0.9%) and real estate (+0.8%) groups exhibited relative strength, benefiting from the slide in interest rates.
Meanwhile, the energy sector (+0.1%) eked out a slim victory despite a strong performance from crude oil, which climbed 1.8% to $48.73/bbl. The commodity rallied around the EIA's latest crude inventory report, which showed a much larger than expected draw in U.S. stockpiles for the week ended July 21 (-7.2 million barrels actual vs -3.0 million consensus).
Like energy, the consumer staples space (+0.1%) also eked out a slim victory with soft-drink giant Coca-Cola (KO 45.74, +0.50) advancing 1.1% on better than expected earnings.
On the flip side, the heavily-weighted financial sector weighed on the broader market, dropping 0.6%. The bulk of the sector's loss came in the afternoon session amid the bond market's post-FOMC decision rally. The lightly-weighted materials sector (-0.6%) also registered a notable decline.
Similarly, the influential health care sector (-0.3%) struggled amid broad weakness. Amgen (AMGN 175.89, -5.00) was one of the sector's weakest components despite reporting better than expected earnings/revenues and issuing upbeat revenue guidance. AMGN shares settled with a loss of 2.8%.
Reviewing Wednesday's economic data, which was limited to June New Home Sales and the weekly MBA Mortgage Applications Index:
New Home Sales in June hit an annualized rate of 610,000, which was above the revised May rate of 605,000 (from 610,000), and in line with the Briefing.com consensus.
The key takeaway from the report is that sales activity was subdued month-over-month despite a 3.4% drop in the median sales price of $310,800. The average sales price, however, was up 4.2% to $379,500, which points to the affordability factor acting as a sales constraint.
The weekly MBA Mortgage Applications Index rose 0.4% to follow last week's 6.3% increase.On Thursday, investors will receive three pieces of economic data--June Durable Orders (Briefing.com consensus 2.9%), the weekly Initial Claims Report (Briefing.com consensus 240K), and June International Trade in Goods (Briefing.com consensus -$64.9 billion). All three reports will be released at 8:30 ET.
Nasdaq Composite +19.3% YTD
S&P 500 +10.7% YTD
Dow Jones Industrial Average +9.9% YTD
Russell 2000 +6.3% YTD
4:28 pm Monolithic Power beats by $0.01, beats on revs; guides Q3 revs above consensus (MPWR) :
Reports Q2 (Jun) earnings of $0.68 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.67; revenues rose 19.3% year/year to $112.2 mln vs the $110.94 mln Capital IQ Consensus.
Non-GAAP gross margin was 55.6%, excluding the impact of $0.5 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets, compared with 55.1% for the quarter ended June 30, 2016, excluding the impact of $0.4 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets.
Co issues upside guidance for Q3, sees Q3 revs of $124-128 mln vs. $123.49 mln Capital IQ Consensus Estimate; sees Non-GAAP gross margin between 55.2% and 56.2%,
4:25 pm Xilinx beats by $0.03, reports revs in-line; guides Q2 EPS in-line, revs in-line (XLNX) :
Reports Q1 (Jun) earnings of $0.63 per share, $0.03 better than the Capital IQ Consensus of $0.60; revenues rose 7.0% year/year to $615.4 mln vs the $615.69 mln Capital IQ Consensus.
Co issues in-line guidance for Q2, sees EPS of ~$0.55-0.69 (assuming 265 mln shares), excluding non-recurring items, vs. $0.61 Capital IQ Consensus Estimate; sees Q2 revs of $605-635 mln vs. $617.05 mln Capital IQ Consensus Estimate; GM 69-71%.
"Our focused investment in software, integration and technology leadership has driven a fundamental transformation, allowing Xilinx to expand from a supplier of FPGAs to an innovator of All Programmable devices and programming models," said Moshe Gavrielov, Xilinx President and Chief Executive Officer. "We continue to consistently execute across the board-in engineering, operations and sales while maintaining robust profitability and cash generation. Growth from Advanced Products continues to be solid, increasing 33% from the same quarter a year ago. Sales from the 28nm, 20nm and 16nm technology nodes increased during the quarter driven by multi-market strength."
4:16 pm AXT reports EPS in-line, beats on revs (AXTI) :
Reports Q2 (Jun) earnings of $0.05 per share, in-line with the Capital IQ Consensus of $0.05; revenues rose 14.9% year/year to $23.56 mln vs the $22.55 mln Capital IQ Consensus.
Gross margin was 30.8 percent of revenue for the second quarter of 2017, compared with 30.5 percent of revenue in the first quarter of 2017. Second quarter substrate gross margin was higher than the total company gross margin and was offset by lower gross margin on raw materials.
"Across our portfolio, we are seeing emerging technologies and strengthening demand from established applications that are driving growth in each of our substrate product categories. As a result, we achieved record revenue in indium phosphide substrates in Q2, and posted solid improvement in semi-insulating gallium arsenide, semi-conducting gallium arsenide, and germanium substrates. Our customer and revenue base continues to diversify, giving us a broad-based opportunity for continued business expansion."
4:14 pm Lam Research beats by $0.10, beats on revs; guides Q1 EPS above consensus, revs above consensus (LRCX) :
Reports Q4 (Jun) earnings of $3.11 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $3.01; revenues rose 51.6% year/year to $2.34 bln vs the $2.31 bln Capital IQ Consensus.
Shipments were $2.542 bln.
Co issues upside guidance for Q1, sees EPS of $3.13-3.37, excluding non-recurring items, vs. $2.76 Capital IQ Consensus Estimate; sees Q1 revs of $2.35-2.55 bln vs. $2.17 bln Capital IQ Consensus Estimate.
Sees Q1 shipments in the range of $2.25-2.45 bln.
4:13 pm Mellanox Tech reports EPS in-line, beats on revs; guides Q3 revs below consensus (MLNX) :
Reports Q2 (Jun) earnings of $0.44 per share, in-line with the Capital IQ Consensus of $0.44; revenues fell 1.3% year/year to $212 mln vs the $209.62 mln Capital IQ Consensus.
Co issues downside guidance for Q3, sees Q3 revs of $222-232 mln vs. $233.60 mln Capital IQ Consensus Estimate.
4:08 pm Facebook beats by $0.20, beats on revs (FB) :
Reports Q2 (Jun) earnings of $1.32 per share, $0.20 better than the Capital IQ Consensus of $1.12; revenues rose 44.8% year/year to $9.32 bln vs the $9.19 bln Capital IQ Consensus.
Daily active users (DAUs)- DAUs were 1.32 billion on average for June 2017, an increase of 17% year-over-year.
Monthly active users (MAUs)- MAUs were 2.01 billion as of June 30, 2017, an increase of 17% year-over-year.
Mobile advertising revenue- Mobile advertising revenue represented approximately 87% of advertising revenue for the second quarter of 2017, up from approximately 84% of advertising revenue in the second quarter of 2016.
Capital expenditures for the second quarter of 2017 were $1.44 billion.
Cash and cash equivalents and marketable securities were $35.45 billion at the end of the second quarter of 2017.
Headcount was 20,658 as of June 30, 2017, an increase of 43% year-over-year.
Operating Margin 47% compared to 42% in prior year and Q1.
Effective Tax Rate 13%, expectations were for mid teens.
4:07 pm NETGEAR beats by $0.06, beats on revs; guides Q3 revs in-line (NTGR) :
Reports Q2 (Jun) earnings of $0.60 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $0.54; revenues rose 6.1% year/year to $330.72 mln vs the $324.64 mln Capital IQ Consensus.
Operating margin, computed in accordance with GAAP, for the second quarter of 2017 was 5.8%, as compared to 8.2% in the year ago comparable quarter, and 7.0% in the first quarter of 2017. Non-GAAP operating margin was 8.5% in the second quarter of 2017, as compared to 11.6% in the second quarter of 2016 and 10.0% in the first quarter of 2017.
Co issues in-line guidance for Q3, sees Q3 revs of $340-355 mln vs. $348.69 mln Capital IQ Consensus Estimate. GAAP operating margin is expected to be in the range of 6.5% to 7.5% and non-GAAP operating margin is expected to be in the range of 9.0% to 10.0%.
4:07 pm F5 Networks reports EPS in-line, misses on revs; guides Q4 EPS in-line, revs below consensus (FFIV) :
Reports Q3 (Jun) earnings of $2.03 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $2.03; revenues rose 4.3% year/year to $517.8 mln vs the $525.57 mln Capital IQ Consensus.
Growth compared with the third quarter of fiscal 2016 was driven by iSeries appliance and security solutions adoption and Services revenue. Results were impacted by slower activity in EMEA and Japan.
Co issues guidance for Q4, sees EPS of $2.20-2.23, excluding non-recurring items, vs. $2.23 Capital IQ Consensus Estimate; sees Q4 revs of $530-540 mln vs. $551.46 mln Capital IQ Consensus Estimate.
"While we delivered year-over-year revenue growth and strong profitability in the third quarter, our product revenue performance fell short of our expectations, in particular in Europe and Japan," said Franois Locoh-Donou, F5 President and Chief Executive Officer. "As we look at the broader environment, we continue to see some pause in activity as customers evaluate how a long-term cloud strategy could impact their application deployment architectures. Where customers have made these decisions around the cloud, the evidence shows we are their critical partner in providing consistent application services and security across environments.
"The reacceleration of product revenue growth is our top priority and we believe we are well positioned to deliver on this over the coming periods. The entire F5 team is focused on ensuring our solutions fit our customers' evolving application deployment needs and we continue to grow our relevance in providing secure application services."
From Briefing.com: 4:30 pm Closing Market Summary: Investors Take Earnings in Stride (:WRAPX) :The stock market cruised to a victory on Tuesday with the S&P 500 (+0.3%), the Nasdaq (unch), and the small-cap Russell 2000 (+0.9%) all settling at fresh record highs. The Dow (+0.5%) outperformed the benchmark index, but finished just 30 points shy of its record mark. The Nasdaq lagged as a handful of influential tech stocks underperformed.
Investors were drowning in earnings reports on Tuesday, but took the news in stride as the results largely came in better than expected. For instance, out of the five Dow components that reported their quarterly results on Tuesday morning, four of them--Caterpillar (CAT 114.54, +6.36, +5.9%), McDonald's (MCD 159.07, +7.22, +4.8%), DuPont (DD 85.49, +1.14, +1.4%), and United Technologies (UTX 120.42, -2.71, -2.2%)--beat earnings per share estimates. 3M (MMM 199.39, -10.61, -5.1%) was the only Dow component to miss bottom-line estimates.
However, stock movement didn't necessarily reflect earnings performance, at least on the surface, with Alphabet (GOOGL 969.03, -29.28) serving as a prime example. The tech giant reported better than expected earnings and revenues, but slipped 2.9% nonetheless. There were some concerns surrounding a 28.0% year-over-year increase in the company's traffic acquisition costs (TAC), but the sell off was more likely a signal that the good earnings news was priced in during a three-week rally leading up to the report; GOOGL shares jumped 8.6% from July 3 to July 24.
Alphabet weighed on the top-weighted technology sector, which finished with a loss of 0.2%. The industrial (-0.1%) sector also settled with a modest decline while the health care and utilities spaces suffered more substantial losses, losing 0.7% and 0.5%, respectively. Biotechnology names struggled, sending the iShares Nasdaq Biotechnology ETF (IBB 323.81, -3.53) lower by 1.1%. However, pharmaceutical giant Eli Lilly (LLY 82.19, -2.55) did even worse, dropping 3.0%, despite beating top and bottom line estimates.
On a related note, the Senate voted to move forward with a debate on health-care reform on Tuesday afternoon with Vice President Mike Pence breaking a 50-50 tie.
Seven of eleven sectors advanced on Tuesday with the financials (+1.3%), energy (+1.3%), and materials (+1.2%) groups leading the charge. The financial space benefited from Citigroup's (C 68.03, +1.93) upbeat long-term profitability projections, which were provided at its first investor day since the Great Recession. In addition, a curve-steepening trade in the Treasury market also underpinned financials' positive performance.
Treasuries settled lower across the curve with the heaviest selling taking place at the back end; the 10-yr yield climbed eight basis points to 2.33% while the 2-yr yield climbed three basis points to 1.39%.
Meanwhile, the energy space benefited from a rally in the crude oil market. The commodity advanced for the second day in a row, underpinned by yesterday's news that Saudi Arabia will curb its exports next month. Technical trading also played a factor as WTI crude managed to break above its 50-day simple moving average ($46.52/bbl), which acted as a level of resistance on Monday. WTI crude settled higher by 3.3% at a price of $47.89/bbl.
As for the materials sector, Freeport-McMoRan (FCX 14.87, +1.91) was the top performer, surging 14.7%, after saying on its post-earnings conference call that copper demand from China has been better than expected. FCX beat revenue estimates, but came up a little short on earnings. Meanwhile, copper jumped 3.9% to $2.84/lb.
Out of the remaining advancers--consumer discretionary (+0.7%), consumer staples (+0.7%), telecom services (+0.3%), and real estate (+0.1%)--the consumer discretionary and consumer staples groups were the top performers as retailers outperformed. The SPDR S&P Retail ETF (XRT 40.81, +1.05) climbed 2.6% amid broad strength.
Reviewing Tuesday's economic data, which included the Conference Board's Consumer Confidence Index for July, the May FHFA Housing Price Index, and the May S&P 500 Case-Shiller Home Price Index:
The consumer confidence reading for July rose to 121.1 from the prior month's revised reading of 117.3 (from 118.9). The Briefing.com consensus expected the survey to hit 116.8.
The key takeaway from the report is that the uptick in July was forged by a pickup in sentiment for current conditions as well as the short-term outlook.
The FHFA Housing Price Index for May rose 0.4%, while the Briefing.com consensus expected an increase of 0.7%. The prior month's reading was revised to 0.6% (from 0.7%). The May Case-Shiller 20-city Index hit 5.7%, which is in line with the Briefing.com consensus. The prior month's reading was left unrevised at 5.7%.On Wednesday, investors will receive just two pieces of economic data--the weekly MBA Mortgage Applications Index and the June New Home Sales Report (Briefing.com consensus 610K). The two reports will cross the wires at 7:00 ET and 10:00 ET, respectively.
Also of note, the Fed's latest policy directive will be released on Wednesday afternoon at 14:00 ET.
Nasdaq Composite +19.1% YTD
S&P 500 +10.6% YTD
Dow Jones Industrial Average +9.4% YTD
Russell 2000 +6.9% YTD
Tech Stocks from Briefing.com
After a split start, the broader market finished higher as the Dow Jones Industrial Average peeled ahead. The Dow gained 100.26 points (+0.47%) today to end 21613.43. The S&P 500 was up 7.17 points (+0.29%) to 2477.08, and the Nasdaq Composite added 1.37 points (+0.02%) to 6412.17.
Market data today included the consumer confidence reading for July which rose to 121.1 from the prior month's revised reading of 117.3 (from 118.9). Also, the FHFA Housing Price Index for May rose 0.4%, while the prior month's reading was revised to 0.6% (from 0.7%). Lastly, the May Case-Shiller 20-city Index hit 5.7%, while the prior month's reading was left unrevised at 5.7%.
The Technology (XLK 57.50 -0.11 -0.19%) space retreated modestly off yesterday's gains. Component Seagate Tech (STX 33.20, -6.56 -16.50%) was the worst performer today after missing Q4 earnings and revenue expectations and announcing job cuts. When Tuesday came to a close, the Energy XLE +1.26% space led the pack, followed by XLF +1.24%, IYZ +1.08%, XLB +1.07%, XLY +0.70%, XLP +0.69%, XLRE +0.00%, XLI -0.13%, XLU -0.57%, XLV -0.72%.
In the S&P 500 Information Technology (992.74, -1.74 -0.17%) space, trading ended off lows and modestly in the red. Component Alphabet (GOOG 950.70, -29.64 -3.02%) was another underperformer today as the company reported an earnings beat yet ended lower. Some remaining names which underperformed today included MU -5.59%, KLAC -1.09%, WDC -0.92%, ADBE -0.88%, AMAT -0.81%, ATVI -0.80%, PYPL -0.55%, NVDA -0.48%, FIS -0.47%, FB -0.43%.
Other notable news items among sector components:
In addition to reporting earnings, Seagate Tech (STX) committed to additional restructuring plan to reduce cost structure, intends to reduce global headcount by about 600 employees.
HubSpot (HUBS 74.80, -0.65 -0.86%) acquired Kemvi; terms not disclosed.
Agilent (A 60.54, -0.96 -1.56%) acquired molecular and sample barcoding patent portfolios of Population Genetics Technologies; terms not disclosed.
IBM (IBM 146.19, +0.20 +0.14%) was granted patent on approach for utilizing the inherent structure of a printed circuit board to protect cryptographic keys and codes in a manner that is designed to be highly tamper-resistant.
LG Display (LPL 14.49, -0.59 -3.91%) reported Q2 results; will invest in a new 8.5th generation large-size organic light emitting diodes production line in Guangzhou, China.
Nuance Communications (NUAN 17.39, -0.06 -0.34%) and Seiko Epson (SEKEY 11.76, +0.01 +0.13%) form worldwide strategic partnership.
Telefonica S.A. (TEF 10.88, flat) named Angel Vil Boix as Chief Operating Officer.
In reaction to quarterly results:
Alphabet (GOOG) reported better than expected Q2 EPS and revenues of $5.01 and $26.01 billion, respectively. Google Properties revenue $18.42 billion, +19.6% y/y; Paid Click on Google Properties +61%; Paid Clicks on Google Network Member +9%
Cadence Design (CDNS 36.64, +1.57 +4.48%) reported better than expected Q2 EPS of $0.34 on revenues which were in-line at $479 million. For Q3, the company sees EPS and revenues in-line at $0.33-0.35 and $475-485 million, respectively. For FY17 the company sees EPS of $1.36-1.42 (from $1.32-1.42) on revenues of $1.91-1.95 billion (from $1.90-1.95 billion).
Seagate Tech (STX) reported worse than expected Q4 EPS and revenues of $0.65 and $2.41 billion, respectively.
Logitech Intl SA (LOGI 36.55, -4.20 -10.31%) reported better than expected Q1 EPS and revenues of $0.24 and $530 million, respectively. For FY18, the company sees revenue growth of 10-12% y/y to $2.43-2.47 billion.
Siliconware Precision (SPIL 8.15, -0.01 -0.18%) reported worse than expected Q2 EPS and revenues of NT$0.69 and NT$20.42 billion, respectively.
Analyst actions:
TEAM was upgraded to Overweight from Equal Weight at Morgan Stanley,
TKC was upgraded to Buy from Neutral at Citigroup;
SNAP was downgraded to Neutral from Buy at Cleveland Research,
POWI was downgraded to Hold from Buy at Deutsche Bank,
WBMD was downgraded at SunTrust and Raymond James;
TNTR was initiated at Piper Jaffray, KeyBanc Capital Mkts, BofA/Merrill and Morgan Stanley among others,
AAPL, LOGI, STX, XRX, EFII and WDC were all initiated with Buy ratings at Loop Capital,
SSYS was initiated with a Hold at Loop Capital,
HDP and MIME were initiated with Buy ratings at Needham
Expect quarterly earnings tonight/tomorrow from the following companies: AMD, AKAM, AABA, T, CLS, CLGX, DLB, EEFT, JNPR, MKSI, TXN, TSS/APH, ANGI, AUO, AUDC, AVX, GLW, FLIR, LN, SLAB, STM, TEL, UMC
4:33 pm Qualcomm and Nichicon enter into a Wireless Electric Vehicle Charging license agreement (QCOM) : By this agreement Qualcomm has granted Nichicon a royalty bearing license to develop, make and supply WEVC systems based on Qualcomm Halo technology. Qualcomm will also provide a comprehensive technology transfer package to help Nichicon to develop commercially and technically viable WEVC systems and support the future design of improved WEVC systems.
4:23 pm Advanced Micro beats by $0.02, beats on revs; guides Q3 revs above consensus; raises FY17 sales growth (AMD) :
Reports Q2 (Jun) earnings of $0.02 per share, $0.02 better than the Capital IQ Consensus of ($0.00); revenues rose 19.0% year/year to $1.22 bln vs the $1.16 bln Capital IQ Consensus, driven by higher revenue in the Computing and Graphics segment. Revenue was up 24 percent sequentially, driven by increased sales in both business segments. Gross margin was 33 %, up 2 percentage points year-over-year due to a richer product mix and a higher percentage of revenue from the Computing and Graphics segment, driven by the first full quarter of Ryzen processor sales.
Computing and Graphics segment revenue was $659 million, up 51 percent year-over-year, driven by demand for graphics and Ryzen desktop processors. Operating income was $7 million, compared to an operating loss of $81 million in Q2 2016. The year-over-year improvement was driven primarily by higher revenue and improved product mix. Client average selling price (:ASP) increased significantly year-over-year, as desktop processor ASP increased due to the first full quarter of Ryzen processor shipments. GPU ASP increased year-over-year. Enterprise, Embedded and Semi-Custom segment revenue was $563 million, down 5 percent year-over-year primarily due to lower semi-custom SoC sales. In the quarter, AMD reached an important milestone by recognizing initial revenue from EPYC datacenter processor shipments.
Co issues upside guidance for Q3, sees Q3 revs of +20-26% Q/Q to ~$1.47-1.54 bln vs. $1.39 bln Capital IQ Consensus Estimate; adj. gross margin ~34%.
Raises FY17 rev growth to mid to high teens % from low double digits; semi-custom revenue to be down year-over-year based on the maturity of the current game console cycle, non-GAAP gross margin to be ~34%, achieve non-GAAP net income.
4:22 pm Juniper Networks beats by $0.03, beats on revs; guides Q3 EPS in-line, revs in-line (JNPR) :
Reports Q2 (Jun) earnings of $0.57 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.54 and at the high end of prior guidance of $0.51-0.57; revenues rose 7.2% year/year to $1.31 bln vs the $1.29 bln Capital IQ Consensus and vs prior guidance of $1.25-1.31 bln.
Non-GAAP operating margin in Q2 was 24.2%, an increase from 22.5% in 2Q16 and an increase from 20.8% in 1Q17.
Co issues in-line guidance for Q3, sees EPS of $0.55-0.61, excluding non-recurring items, vs. $0.58 Capital IQ Consensus Estimate; sees Q3 revs of $1.29-1.35 bln vs. $1.33 bln Capital IQ Consensus
Estimate. Co guides to Q3 non-GAAP operating margin of approximately 24.1% at the midpoint of revenue guidance.
"We had good revenue growth and earnings expansion in [Q2]...We are executing on our strategy to lead the transformation to the cloud...We believe our innovative product portfolio has us well positioned to expand our business opportunities as customers look for high-performance network solutions that deliver scale, performance and automation."
4:17 pm Celestica reports EPS in-line, revs in-line; guides Q3 EPS in-line, revs in-line (CLS) :
Reports Q2 (Jun) earnings of $0.32 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.32; revenues rose 4.9% year/year to $1.56 bln vs the $1.55 bln Capital IQ Consensus.
Co issues in-line guidance for Q3, sees EPS of $0.28-0.34, excluding non-recurring items, vs. $0.33 Capital IQ Consensus Estimate; sees Q3 revs of $1.5-1.6 bln vs. $1.59 bln Capital IQ Consensus Estimate.
Revenue dollars from our Communications end market increased 14% compared to the second quarter of 2016, and represented 44% of total revenue, compared to 41% of total revenue for the second quarter of 2016
4:05 pm Texas Instruments beats by $0.07, beats on revs; guides Q3 in-line (TXN) :
Reports Q2 (Jun) earnings of $1.03 per share, $0.07 better than the Capital IQ Consensus of $0.96; revenues rose 12.8% year/year to $3.69 bln vs the $3.57 bln Capital IQ Consensus.
Co issues in-line guidance for Q3, sees EPS of $1.04-1.18 vs. $1.05 Capital IQ Consensus Estimate; sees Q3 revs of $3.74-4.06 bln vs. $3.8 bln Capital IQ Consensus Estimate.
"Revenue increased 13 percent from the same quarter a year ago. Demand for our products continued to be strong in the automotive market and continued to strengthen in the industrial market. "In our core businesses, Analog revenue grew 18 percent and Embedded Processing revenue grew 15 percent from the same quarter a year ago. Operating margin increased in both businesses. "Gross margin of 64.3 percent reflected the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-millimeter Analog production.
From Briefing.com: 4:29 pm Closing Market Summary: Equities Finish Monday Mixed (:WRAPX) :Equities opened the week with a mixed performance; the Nasdaq (+0.4%) finished at another record close, its fourth in the last five sessions, while the S&P 500 (-0.1%) and the Dow (-0.3%) settled with modest losses. Monday's action was fairly range-bound with the benchmark index staying true to a seven-point range from start to finish.
Investors understandably lacked conviction on Monday ahead of several notable events on this week's calendar, including:
a Senate vote on health-care reform, which President Trump says will take place on Tuesdaythe Fed's latest policy directive, which will cross the wires at 14:00 ET on Wednesday the advance estimate for second-quarter GDP, which will be released at 8:30 ET on Fridayand a slew of influential earnings reports that will be delivered throughout the week The cautious sentiment was present in pre-market action on Monday morning, leaving the major averages modestly lower at the opening bell. Nine of eleven sectors finished in negative territory with the two advancers being the top-weighted technology (+0.3%) and financials (+0.3%) groups.
Financials exhibited relative strength throughout the session while tech stocks took awhile to come around. In the end, the positive performances of mega-cap tech names like Apple (AAPL 152.09, +1.82), Facebook (FB 166.00, +1.57), and Alphabet (GOOGL 998.31, +4.47) were enough to push the tech sector to victory. Chipmakers underperformed, leaving the PHLX Semiconductor Index lower by 0.4%.
As for the declining sectors, they finished with losses ranging between 0.1% and 1.0%. The telecom services (-1.0%) and utilities (-0.9%) groups were the weakest performers while the remaining laggards finished with losses of no more than 0.4%.
The consumer discretionary sector (-0.4%) underperformed following a negative reaction on the earnings front. Hasbro (HAS 105.00, -10.95) dropped 9.4% after concerns surrounding economic conditions overseas overshadowed the company's better than expected earnings. Similarly, Stanley Black & Decker (SWK 143.70, -3.09) slipped 2.1% despite beating top and bottom line estimates.
In addition, Hibbett Sports (HIBB 13.10, -6.60) plunged 33.5% after the company issued a profit warning, saying that it expects comparable-store sales to drop around 10.0% in the second quarter. Peer Dick's Sporting Goods (DKS 35.12, -2.04) also sold off following the announcement, dropping 5.5%.
Crude oil jumped 1.3% to $46.36/bbl on Monday following news that Saudi Arabia will limit its oil exports to 6.6 million barrels per day (bpd) in August, nearly one million bpd below the level it produced a year ago. In addition, Nigeria, which was originally exempt from the OPEC-led production cut agreement, has pledged to limit its exports to 1.8 million barrels per day.
However, the energy sector, which typically moves in tandem with crude oil, lost 0.3%. Halliburton (HAL 42.51, -1.87) weighed on the sector, dropping 4.2%, after saying that North American customers are 'tapping the brakes'. However, the company did beat top and bottom line estimates.
In the bond market, U.S. Treasuries settled the day with modest losses. The benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, climbed one basis point to 2.25%.
Reviewing Monday's economic data, which was limited to June Existing Home Sales:
Existing home sales for June decreased 1.8% from May to an annualized rate of 5.52 million units while the Briefing.com consensus expected a reading of 5.58 million. The prior month's reading was left unrevised at 5.62 million.
The key takeaway from the report is that neither the availability nor the affordability of homes is high, which is keeping sales activity from being all that it could be otherwise.
On Tuesday, investors will receive the May FHFA Housing Price Index (Briefing.com consensus 0.7%) at 9:00 ET, the May S&P 500 Case-Shiller Home Price Index (Briefing.com consensus 5.7%) at 9:00 ET, and the Conference Board's Consumer Confidence Index for July at 10:00 ET.
In addition, several notable companies will report earnings on Tuesday morning, including 3M (MMM 210.00, -1.16), McDonald's (MCD 151.85, -2.07), United Technologies (UTX 123.13, -0.36), DuPont (DD 84.35, -0.19), and Caterpillar (CAT 108.18, +1.59), among many others.
Nasdaq Composite +19.1% YTD
S&P 500 +10.3% YTD
Dow Jones Industrial Average +8.9% YTD
Russell 2000 +6.0% YTD
Tech Stocks from Briefing.com
After a slide into the weekend, the broader market bounced back on Monday. Given that, only the Nasdaq Composite ended higher, yet all three major US indices finished off lows. The Nasdaq Composite ended the day up 23.05 points (+0.36%) to 6410.81. The Dow Jones Industrial Average, by contrast, was the worst performing average, losing 66.90 points today (-0.31%) to 21513.17. The S&P 500 shed about 2.63 points (-0.11%) to 2469.91.
The lone piece of economic data today, the existing home sales reading for June decreased 1.8% from May to an annualized rate of 5.52 million units while the prior month's reading was left unrevised at 5.62 million.
The Technology (XLK 57.61, +0.14 +0.24%) space was the only S&P sector in the green today, along with the Financial space. Component Xerox (XRX 30.56, +1.11 +3.77%) was the best performer on an overall tepid session as the stock got a premarket upgrade at Barclays to an Equal Weight rating. As mentioned, the Financial space XLF +0.40% led all others higher today, followed by XLRE -0.06%, XLV -0.06%, XLB -0.09%, XLE -0.18%, XLI -0.22%, XLP -0.27%, XLY -0.34%, XLU -0.94%, IYZ -1.47%.
As a subsector of Tech, the Social Media (SOCL 30.41, +0.33 +1.10%) space had a mini-breakout today as shares of components YY +4.59% RENN +4.23% WB +3.75% NTRI +3.38% TCEHY +2.06% SINA +2.03% P +1.80% MTCH +1.41% NTES +1.40% YNDX +1.37% LN +1.29%all surged today. The main reason for the outperformance could be pegged on Alphabet's (GOOG 980.34, +7.42 +0.76%) quarterly print which is scheduled for tonight after the close.
In the S&P 500 Information Technology (994.48, +2.51 +0.25%) space, trading came back off Friday's modest losses, making fresh all-time highs. Component Seagate Tech (STX 39.76, +0.18 +0.45%) was another name which stood out today, edging higher ahead of tomorrow morning's quarterly results. Other names in the space which outperformed today included ADS +1.53%, EA +1.36%, TSS +1.35%, AAPL +1.21%, GPN +1.09%, INTU +1.05%, VRSN +1.02%, ADSK +0.97%, FB +0.95%.
Other notable news items among sector components:
Applied Materials (AMAT 46.78, 0.03 -0.06%) announced that Dan Durn will join the company as senior vice president on August 7, 2017 and assume the role of CFO, on August 24. Durn disclosed his departure from NXP Semi (NXPI 109.55, -0.31 -0.28%) today as well.
Motorola Solutions (MSI 90.67, +0.15 +0.17%) filed new patent infringement complaints with the Regional Court of Mannheim in Germany against Hytera Communications.
WebMD Health (WBMD 66.10, +10.91 +19.77%) confirmed agreement to be acquired by KKR (KKR 19.30, -0.08 -0.41%) for $66.50 per share in cash.
Analyst actions:
XRX was upgraded to Equal Weight from Underweight at Barclays;
NPTN was downgraded to Outperform from Strong Buy at Raymond James;
WIX and MSCC were initiated with Overweight ratings at KeyBanc Capital Mkts
Expect quarterly earnings tonight/tomorrow morning from the following companies: GOOG, CDNS, LOGI, RMBS, SANM/AXE, CVLT, CTG, STX
4:09 pm Sanmina reports EPS in-line, misses on revs; guides Q4 EPS in-line, revs below consensus (SANM) :
Reports Q3 (Jun) earnings of $0.74 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.74; revenues rose 2.5% year/year to $1.71 bln vs the $1.74 bln Capital IQ Consensus.
Non-GAAP operating income in the third quarter was $71.4 million or 4.2 percent of revenue, compared to $61.9 million or 3.7 percent of revenue in the third quarter fiscal 2016.
Co issues guidance for Q4, sees EPS of $0.73-0.79, excluding non-recurring items, vs. $0.79 Capital IQ Consensus Estimate; sees Q4 revs of $1.725-1.775 bln vs. $1.78 bln Capital IQ Consensus Estimate.
4:09 pm Cadence Design beats by $0.02, reports revs in-line; guides Q3 EPS in-line, revs in-line; raises bottom end of FY17 EPS/rev guidance (CDNS) :
Reports Q2 (Jun) earnings of $0.34 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.32; revenues rose 5.7% year/year to $479 mln vs the $476.21 mln Capital IQ Consensus.
Co issues in-line guidance for Q3, sees EPS of $0.33-0.35, excluding non-recurring items, vs. $0.35 Capital IQ Consensus Estimate; sees Q3 revs of $475-485 mln vs. $481.52 mln Capital IQ Consensus Estimate.
Co issues narrows guidance for FY17, sees EPS of $1.36-1.42 from $1.32-1.42, excluding non-recurring items, vs. $1.38 Capital IQ Consensus Estimate; sees FY17 revs of $1.91-1.95 bln from $1.90-1.95 vs. $1.93 bln Capital IQ Consensus Estimate.
"Our excellent financial results for the second quarter were highlighted with revenue near the high end of our guidance range and operating margin, EPS and operating cash flow all exceeding expectations."4:09 pm Alphabet beats by $0.58, beats on revs (GOOG) :
Reports Q2 (Jun) earnings of $5.01 per share, $0.58 better than the Capital IQ Consensus of $4.43; revenues rose 21.0% year/year to $26.01 bln vs the $25.61 bln Capital IQ Consensus.
Operating Margin 16% compared to 28% in prior year; Recall this year includes the $2.7 bln fee paid to the EU.
Google Properties revenue $18.42 bln, +19.6% y/y.
Google Network Members properties revenue $4.24 bln, +13% y/y
Other Bets Revenue- $248 mln, +34% y/y; Other Bets operating loss was ($772 mln), compared to street expectations of ($970 mln)
Total TAC as a percentage of revenue was 22% compared to 21% in prior year period.
Aggregate Clicks Paid: 52%; Q1 +44%; Q4 +36%, Q3 +33%; Q2 +29%.
Paid Click on Google Properties +61%
Paid Clicks on Google Network Member +9%
Aggregate cost per click: -23%; Q1 -19%; Q4 -15%, Q3 -11%; Q2 -7%,
CPC on Google Properties -26%
CPC on Google Network Members properties -11%
On June 27, 2017, the EC announced its decision that certain actions taken by Google regarding its display and ranking of shopping search results and ads infringed European competition law. The EC decision imposes a 2.42 billion (approximately $2.74 billion) fine, which we accrued in the second quarter of 2017. The fine is included in "accrued expense and other current liabilities" on our Consolidated Balance Sheet.
4:09 pm Rambus beats by $0.01, beats on revs; guides Q3 EPS in-line, revs in-line (RMBS) :
Reports Q2 (Jun) adj. earnings of $0.14 per share, $0.01 better than the Capital IQ Consensus of $0.13; revenues rose 23.8% year/year to $94.7 mln vs the $93 mln Capital IQ Consensu; execution in Security Division and Lighting Division offset the anticipated seasonality of our business. As a result of our execution on acquisitions, revenue for Memory and Interface Division was up 24% year over year and revenue for the Security Division was up 42% year over year.
Co issues in-line guidance for Q3, sees EPS of $0.14-0.20, excluding non-recurring items, vs. $0.16 Capital IQ Consensus Estimate; sees Q3 revs of $96-102 mln vs. $98.06 mln Capital IQ Consensus Estimate.
"We continue to build upon our positive start to the year with strength in our patent and technology licensing programs, as well as ongoing validation from our partners and customers that our technologies are solving the critical problems facing the data center and mobile edge markets," said Dr. Ron Black, chief executive officer of Rambus. "We are excited by the momentum in our Security Division, signing agreements with Cybertrust and Synopsys on our CryptoManager Infrastructure and introducing our in-field CryptoManager IoT Device Management service for easy and broad adoption of our provisioning solutions."
From Briefing.com: 4:30 pm Closing Market Summary: Stocks Tick Down on Friday (:WRAPX) :
The major averages rode a late-afternoon rally to fresh session highs, but, unfortunately, it just wasn't quite enough to get them into the green. The Nasdaq (unch) finished just a tick below its flat line, breaking its ten-session winning streak. The S&P 500 (unch) settled in line with the Nasdaq while the Dow (-0.2%) and the Russell 2000 (-0.5%) underperformed. For the week, the S&P 500 ended higher by 0.5%.
Five of eleven sectors settled Friday's session in negative territory, but losses were modest for the most part. The energy sector registered the widest decline, dropping 0.9%, after reports of increased OPEC oil production sent crude oil into negative territory. The energy component lost 2.7%, finishing at a price of $45.64/bbl.
Like energy, the industrial sector settled below the broader market, slipping 0.2%, with its largest component by market cap--General Electric (GE 25.91, -0.78)--leading the retreat. GE shares tumbled 2.9%, to their worst level since October 2015, after disappointing organic revenue growth for the company's industrial segment overshadowed better than expected top and bottom lines.
Microsoft (MSFT 73.79, -0.43) also declined after beating top and bottom line estimates, losing 0.6%. However, the company did enjoy a ten-day rally in front of the release, suggesting that its upbeat earnings report was priced in ahead of time. Conversely, Visa (V 99.60, +1.49) climbed 1.5%, to a new all-time high, after reporting above-consensus earnings and revenues, in addition to raising its guidance for the fiscal year.
The top-weighted technology sector (-0.1%), which houses both Microsoft and Visa, managed to settle roughly in line with the broader market. However, in addition to MSFT's slide, the tech space had to overcome a negative performance from chipmakers in order to do so; the PHLX Semiconductor Index dropped 0.8% amid broad weakness.
Conversely, biotech stocks rallied on Friday, pushing the iShares Nasdaq Biotechnology ETF (IBB 324.88, +1.96) higher by 0.6%. However, the health care sector wasn't able to finish ahead of the broader market, ending the day lower by 0.1%.
The influential financial space (unch) outperformed for much of the day, but eventually slipped back into the middle of the sector standings. Capital One (COF 87.94, +6.93) was the sector's top-performing component, jumping 8.6%, after the company reported better than expected earnings.
Countercyclical sectors like utilities (+0.8%), consumer staples (+0.3%), and telecom services (unch) settled near the top of the leaderboard. The rate-sensitive utilities group benefited from a rally in the Treasury market that left the 10-yr yield (2.23%) and the 2-yr yield (1.34%) lower by two basis points apiece.
Meanwhile, on the cyclical side, the consumer discretionary (+0.1%), real estate (+0.2%), and materials (unch) groups also outperformed. Netflix (NFLX 188.54, +4.94) led consumer discretionary's advance, jumping 2.7%, to end the week higher by 17.0%. The company surged 13.5% on Tuesday after reporting a much larger than expected increase in subscribers.
In the currency market, the U.S. Dollar Index (93.74, -0.34) slipped another 0.4% on Friday to end the week with a loss of 1.3%. Both the euro (1.1667) and the yen (111.06) climbed against the greenback, adding 0.3% and 0.8%, respectively.
Investors did not receive any notable economic data on Friday.
On Monday, market participants will receive just one piece of economic data--June Existing Home Sales. The report will be released at 10:00 ET.
Nasdaq Composite +18.7% YTD
S&P 500 +10.4% YTD
Dow Jones Industrial Average +9.2% YTD
Russell 2000 +5.8% YTD
Week In Review: Record Highs
Equities kept chugging along this week, underpinned by a generally solid batch of earnings reports and the notion that monetary policy will remain accommodative for the foreseeable future. The S&P 500 ended the week higher for the third-consecutive time, adding 0.5%, but the real star was the Nasdaq, which climbed 1.2% and settled at a new record high for three sessions in a row. The Dow lagged this week, finishing with a small loss of 0.3%.
The stock market kicked off the week with a rather uneventful performance on Monday that left the major averages little changed. However, activity picked up on Tuesday as the Nasdaq climbed to a new record high for the first time since June 8. Netflix (NFLX) headlined the earnings front, surging 13.5%, after adding a surprisingly-large number of new subscribers in the second quarter.
Buyers were in the driver's seat during the midweek session, pushing the Nasdaq, the S&P 500, the Dow, and the small-cap Russell 2000 to new all-time highs. Each of the S&P 500's 11 sectors finished in the green with the energy group setting the pace following an upbeat EIA crude inventory report. Conversely, financials and transports struggled once again, shrugging off some relatively upbeat earnings reports.
However, it's important to note that the S&P 500's financial sector and the Dow Jones Transportation Average both had bullish, multi-week runs ahead of earnings season, making it difficult for their components to advance on upbeat results alone.
On Thursday, monetary policy was the focal point as investors digested the latest policy decisions from the European Central Bank and the Bank of Japan. Both central banks decided to leave interest rates unchanged and sounded dovish about future accommodation. However, the euro rallied against the U.S. dollar nonetheless as ECB President Mario Draghi failed to dispel the notion that the ECB might soon announce a tapering of its asset purchase program.
The Nasdaq eked out another record close, extending its winning streak to ten sessions in a row, while the S&P 500 and the Dow finished just shy of their unchanged marks. The telecom services sector was the top-performing group--which has been a rarity this year--following an upbeat earnings report from T-Mobile US (TMUS). However, ironically, TMUS shares finished solidly lower.
Equity indices ended the week with small losses on Friday. General Electric (GE) weighed on the industrial sector, dropping 2.9%, after reporting disappointing organic revenue growth for its industrial segment. Microsoft (MSFT) also faced selling pressure as its better than expected earnings and revenues failed to fully justify its preceding ten-day rally. Energy was the worst-performing sector following news of increased OPEC production, which sent crude oil on a 2.7% plunge.
The fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 52.0%, up slightly from last week's 50.6%. The Fed will release its latest policy statement on Wednesday afternoon at 14:00 ET.
Tech Stocks from Briefing.com
Perhaps the biggest surprise on the street today, at least in the tech world, was Microsoft (MSFT 73.79, -0.43 -0.58%). Shares slipped despite an earnings beat as broader tech weakness today was perhaps the culprit for the losses. Not to mention, MSFT has enjoyed some pretty substantial gains month-to-date, up 6.4%.
In the broader market, action was decidedly negative today as the recent win streak in the S&P and Nasdaq ran dry on Friday. That being said, losses were modest as the Dow Jones Industrial Average (today's worst performer) lost only 31.71 points (-0.15%) to 21580.07. The S&P 500 was down less than a points today (-0.04%) to 2472.54, while the Nasdaq Composite also posted a tempered decline, down 2.25 points (-0.04%) to 6387.75.
The Technology (XLK 57.47, -0.07 -0.12%) space opened lower today and steadily climbed into the close, and modest losses. Component eBay (EBAY 36.61, -0.57 -1.53%) was one of the weaker names today after a mostly in-line earnings report precipitated modest losses after yesterday's all-time highs. Performing the best on Friday, the Utility XLU +0.72% space was followed by IYZ +0.69%, XLRE +0.19%, XLP +0.16%, XLY +0.07%, XLF +0.00%, XLB -0.04%, XLV -0.12%, XLI -0.19%, XLE -0.99%.
In the S&P 500 Information Technology (991.97, -0.74 -0.07%) space, trading snapped the recent win streak. Component Visa (V 99.60, +1.49 +1.52%) was the best performing names today as an earnings beat and guidance raise pushed the stock higher in the face of broader weakness. Other names in the space which xxx.
Other notable news items among sector components:
eBay (EBAY) in addition to reporting quarterly results, announced the addition of $3 billion to its buyback program.
Nuance Communications (NUAN 17.20, +0.35 +2.08%) expected June global malware incident to have impact on Q3/Q4 financial results; sees Q3 revenues and EPS below consensus.
Arista Networks (ANET 152.92, -3.88 -2.47%) confirmed that the International Trade Commission has denied Arista's motions to suspend the limited exclusion order and cease and desist order issued in connection with Investigation No. 337-TA-945 against Cisco (CSCO 31.84, -0.02 -0.06%).
Jabil's (JBL 30.74, +0.09 +0.29%) Board authorized a $450 million share repurchase program, represents the second portion of the previously announced two-year capital return framework.
Sphere 3D (ANY 4.59, +0.23 +5.28%) filed for 2,176,797 common share offering by holders.
In reaction to quarterly results:
Microsoft (MSFT) reported better than expected Q4 EPS and revenues of $0.75 and $24.7 billion, respectively.
Visa (V) reported better than expected Q3 EPS and revenues of $0.86 and $4.57 billion, respectively. For FY17, the company raised its outlook; now sees annual net revenue growth of about 20% on a nominal dollar basis, including about 2.0 ppts of negative foreign currency impact (Prior guidance was for High end of 16% to 18% range on a nominal dollar basis, including 2.0 to 2.5 ppts of negative foreign currency impact).
eBay (EBAY) reported in-line Q2 EPS and revenues of $0.45 and $2.33 billion, respectively. For Q3, the company sees EPS and revenues of $0.46-0.48 and $2.35-2.39 billion, respectively. For FY17, EBAY reaffirmed EPS guidance of $1.98-2.03 and revenue guidance of $9.3-9.5 billion.
Analyst actions:
DXC was upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts,
JNPR was upgraded to Outperform from Mkt Perform at Raymond James,
VIAV was upgraded to Buy from Neutral at B. Riley & Co.;
ADP and PAYX were downgraded to Mkt Perform from Outperform at William Blair,
ADS was downgraded to Equal Weight from Overweight at Barclays,
CHKP was downgraded to Neutral from Overweight at Piper Jaffray,
HIMX was downgraded to Sell from Neutral at Rosenblatt,
EGOV was downgraded to Neutral from Buy at Sidoti;
PFPT was initiated with a Buy at Needham,
CARS was initiated with a Hold at Craig Hallum,
SPSC was initiated with an Outperform at Oppenheimer
From Briefing.com: 4:29 pm Closing Market Summary: Nasdaq Ekes Out Another Record Close (:WRAPX) :The Nasdaq (+0.1%) eked out another record close on Thursday, its third in a row, while the S&P 500 (unch) and the Dow (-0.1%) settled just short of their unchanged marks. Action was fairly range-bound with the benchmark index staying true to a ten-point range from start to finish.
There were few surprises in the latest policy decisions from the European Central Bank and the Bank of Japan, with both central banks deciding to leave interest rates unchanged. ECB President Mario Draghi said in his post-decision press conference that the economy has continued to expand, but a substantial degree of accommodation is still necessary as underlying inflation remains subdued.
However, Mr. Draghi didn't dispel the notion that the ECB might soon announce a tapering of the bank's asset purchase program, saying simply the ECB is not setting a date for a change to quantitative easing. The euro climbed 1.0% to 1.1627 against the greenback, sending the U.S. Dollar Index (94.09, -0.55) to an 11-month low.
Meanwhile, the BoJ pushed back the expected time frame for hitting its inflation target of 2.0% to "around FY19" from "around FY18", leaving the impression that it won't be changing its ultra-accommodative monetary policy anytime soon. The yen slipped 0.1% to 112.00 against the U.S. dollar.
In the states, Treasuries rallied across the curve following the aforementioned policy decisions. The benchmark 10-yr yield traded as low as 2.24%, but came up a bit in the late afternoon to finish just one basis point below its flat line at 2.26%.
Earnings season was once again the focal point in the stock market on Thursday. Dow components American Express (AXP 85.35, -0.58) and Travelers (TRV 124.57, -1.89) sold off after delivering their quarterly reports, losing 0.7% and 1.5%, respectively. AXP beat top and bottom line estimates, but reported a 33.0% decline in profit for the second quarter. Meanwhile, TRV missed bottom-line estimates.
However, despite the negative performances from AXP and TRV, the influential financial sector (-0.1%) managed to stay in line with the broader market. Similarly, the top-weighted technology space (unch) was able to keep pace despite challenges on the earnings front. Namely, Qualcomm (QCOM 53.97, -2.81) dropped 5.0% after providing disappointing earnings guidance.
The lightly-weighted telecom services group (+1.4%) settled at the top of the leaderboard after T-Mobile US (TMUS 61.12, -0.85) beat top and bottom line estimates in addition to raising its full-year guidance. However, ironically, TMUS was one of the only telecom components to not finish in positive territory, ending the day lower by 1.4%.
Like telecom services, the health care (+0.6%) and utilities (+0.7%) sectors outperformed, but, on the downside, a total of seven spaces finished in the red. The industrial space was one of the weakest performers, dropping 0.6%, as transports weighed, evidenced by the 1.0% decrease in the Dow Jones Transportation Average.
C.H. Robinson (CHRW 65.01, -3.68) paced the DJTA's retreat, dropping 5.4%, after missing bottom-line estimates. Union Pacific (UNP 106.14, -1.70) also underperformed, losing 1.6%, after its better than expected earnings and revenues were overshadowed by projections for flat volume growth in the third quarter.
It's also worth pointing out that Special Counsel Robert Mueller will be considering President Trump's business dealings in his investigation on Russia's involvement in the 2016 U.S. presidential election. The stock market slipped on the initial headline, but reclaimed the slide within 30 minutes.
Reviewing Thursday's economic data, which included the July Philadelphia Fed Index, the weekly Initial Claims Report, and the June Leading Indicators Index:
The Philadelphia Fed Survey for July declined to 19.5 from an unrevised 27.6 in June while economists polled by Briefing.com had expected a reading of 22.0.
The key takeaway from the report is that the downturn was led by a sharp drop in new orders, which isn't the best preliminary signal for third quarter economic growth prospects.
The latest weekly initial jobless claims count totaled 233,000 while the Briefing.com consensus expected a reading of 245,000. Today's tally was below the revised prior week count of 248,000 (from 247,000). As for continuing claims, they rose to 1.977 million from the revised count of 1.949 million (from 1.945 million).
The report covered the period in which the survey for the July employment report was conducted; accordingly, the key takeaway is that it should feed expectations for another month of strong nonfarm payroll gains.
The Conference Board's Leading Indicators report for June increased 0.6% (Briefing.com consensus 0.4%) after moving higher by an unrevised 0.3% in May.Investors will not receive any economic data on Friday.
Nasdaq Composite +18.7% YTD
S&P 500 +10.5% YTD
Dow Jones Industrial Average +9.4% YTD
Russell 2000 +6.3% YTD
Tech Stocks from Briefing.com
Action was mostly flat today, yet the tech-heavy Nasdaq Composite found a way to stay above water when others could not. The index added 4.96 points (+0.08%) to 6390.00. The Dow Jones Industrial Average, by contrast, lost 28.97 points (-0.13%) today to close at 21611.78, and the S&P 500 shed less than a point (-0.02%) to 2473.45.
The Technology (XLK 57.55, +0.13 +0.23%) space posted another strong session on Thursday, taking month-to-date gains to 4.7%. Component CenturyLink (CTL 23.22, +0.54 +2.38%) performed the best today after announcing its Managed Security Services 2.0 suite is now available in Asia Pacific. The remaining S&P sectors were led by the US Telecom space IYZ +0.92% and followed by XLU +0.72%, XLV +0.66%, XLP +0.02%, XLF -0.04%, XLY -0.21%, XLRE -0.28%, XLE -0.30%, XLI -0.56%, XLB -0.74%.
In the S&P 500 Information Technology (992.71, +0.42 +0.04%) space made it an ever 10 sessions of gains today. Despite this, there were weak points as component Alliance Data (ADS 238.62, -24.91 -9.45%) showed particular weakness following Q2 results and lowered FY17 guidance; similarly, component Qualcomm (QCOM 53.97, -2.81 -4.95%) was hit hard today after giving some unimpressive Q4 guidance in concurrently with earnings. In spite of these select weak points, other names which followed the broader trend higher today included SWKS +2.12%, QRVO +1.60%, NVDA +1.45%, CSRA +1.33%, FSLR +1.31%, HPE +1.30%, HPQ +1.28%, PYPL +1.27%, CRM +1.09%, NTAP +1.00%, MCHP +0.89%.
Other notable news items among sector components:
Corning (GLW 31.71, -0.02 -0.06%) acquired SpiderCloud Wireless a provider of in-building wireless solutions; terms not disclosed.
SAP AG (SAP 105.82, +0.28 +0.27%) in addition to reporting earnings announced an EUR500 million share buyback.
DXC Technology's (DXC 78.63, -0.08 -0.10%) Enterprise Services entered into Master Accounts Receivable Purchase Agreement.
Camtek (CAMT 5.41, -0.20 -3.57%) to sell its PCB business for $35 million to Principle Capital, a private-equity fund; co will sell it for $35 million, of which $32 million will be paid in cash upon closing and an additional amount of up to $3 million conditioned upon the PCB business' financial performance in 2018.
USA Tech (USAT 5.25, +0.45 +9.38%) priced a 8,333,333 common stock offering at $4.50 per share.
Pareteum (TEUM 1.15, +0.19 +19.79%) received two new cloud services contracts from UK-based Communications Service Providers; the new three-year contracts represent an additional $1 million to the company's current revenue backlog.
DragonWave (DRWI 0.89, flat) announced receipt of a repayment notice from Comerica Bank for the repayment in the amount of $17,243,336.
In reaction to quarterly results:
SAP AG (SAP) reported in-line Q2 EPS of EUR0.94 on better than expected revenues of EUR5.78 billion. The company also guided FY17 revenues in-line at EUR23.3-23.7 billion.
Qualcomm (QCOM 53.97, -2.81 -4.95%) reported better than expected Q3 EPS and revenues of $0.83 and $5.37 billion, respectively. For Q4, the company sees EPS below market expectations at $0.75-0.85 on revenue guidance mostly above market views at $5.4-6.2 billion.
T-Mobile US (TMUS 61.12, -0.85 -1.37%) reported better than expected Q2 EPS and revenues of $0.67 and $10.21 billion, respectively. For FY17, the company sees adjusted EBITDA of $10.5-10.9 billion, up from $10.4-10.8 billion.
Rogers Comms (RCI 51.58, +0.77 +1.52%) reported better than expected Q2 EPS of CAD1.00 on in-line revenues of CAD3.59 billion.
Check Point Software (CHKP 107.41, -8.31 -7.18%) reported better than expected Q2 EPS of $1.26 on in-line revenues of $458.6 million. The company also guided Q3 EPS of $1.18-1.28 on revenues between $440-465 million. CHKP also reaffirmed FY17 EPS of $5.05-5.25 and revenues of $1.85-1.90 billion.
Analyst actions:
HPQ was upgraded to Outperform from Sector Perform at RBC Capital Mkts;
NEWR and RNG were downgraded to Equal Weight from Overweight at Morgan Stanley,
NVEC was downgraded to Hold from Buy at Craig Hallum,
DIOD was downgraded to Neutral from Buy at Cleveland Research;
COUP was initiated with an Overweight at Cantor Fitzgerald
Expect quarterly results tonight from the following companies: ETFC, EBAY, MANH, MXIM, MSFT, NCR, SWKS, V
4:35 pm Super Micro Computer raises Q4 revenue guidance on strong Asia and storage demand, lowers EPS guidance due to three factors (SMCI) :
Raises Q4 rev to $712-717 mln from $655-715 mln vs $681.96 mln Capital IQ Consensus. Revenue exceeded expectations primarily due to stronger sales in Asia and at storage customers with strong shipments that accelerated late in the quarter.
Lowers Q4 EPS to $0.35-0.37 from $0.40-0.50 vs $0.45 Capital IQ Consensus. This includes an estimated negative impact of $0.09 related to three major items: expiring customer agreements with unfavorable DRAM and SSD pricing; urgent new projects with unanticipated R & D expense from major partners with NRE to be recovered in later quarters; and tax impact due to our global corporate tax structure.
Co will report on Aug 3.
4:20 pm Skyworks beats by $0.05, beats on revs; guides Q4 EPS above consensus, revs above consensus; increases quarterly dividend 14% QoQ to $0.32/share (SWKS) :
Reports Q3 (Jun) earnings of $1.57 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $1.52; revenues rose 19.8% year/year to $900.8 mln vs the $890.58 mln Capital IQ Consensus.
Co issues upside guidance for Q4, sees EPS of $1.75, excluding non-recurring items, vs. $1.73 Capital IQ Consensus Estimate; sees Q4 revs of $980 mln vs. $973.09 mln Capital IQ Consensus Estimate.
Skyworks' Board of Directors has declared a cash dividend of $0.32 per share of the Company's common stock, representing a 14 percent increase from the prior quarterly dividend of $0.28 per share. The dividend is payable on August 29, 2017, to stockholders of record at the close of business on August 8, 2017.
"Given our design win momentum and new product pipeline, we intend to sustainably outpace growth in our addressable markets."SWKS is an Apple (AAPL) supplier -- AAPL reports earnings August 1 after the close
4:14 pm Microsoft beats by $0.04, beats on revs (MSFT) :
Reports Q4 (Jun) earnings of $0.75 per share, excluding a $0.23/share ($1.8 bln) tax benefit, $0.04 better than the Capital IQ Consensus of $0.71; revenues rose 9.1% year/year to $24.7 bln vs the $24.29 bln Capital IQ Consensus.
Revenue in Productivity and Business Processes was $8.4 billion and increased 21% (up 23% in constant currency), with the following business highlights:
Office commercial products and cloud services revenue increased 5% (up 6% in constant currency) driven by Office 365 commercial revenue growth of 43% (up 44% in constant currency)
Office consumer products and cloud services revenue increased 13% (up 13% in constant currency) and Office 365 consumer subscribers increased to 27.0 million
Dynamics products and cloud services revenue increased 7% (up 9% in constant currency) driven by Dynamics 365 revenue growth of 74% (up 75% in constant currency)
LinkedIn contributed revenue of $1.1 billion during the quarter
Revenue in Intelligent Cloud was $7.4 billion and increased 11% (up 12% in constant currency), with the following business highlights:
Server products and cloud services revenue increased 15% (up 16% in constant currency) driven by Azure revenue growth of 97% (up 98% in constant currency)
Enterprise Services revenue decreased 3% (down 1% in constant currency) with declines in custom support agreements offset by growth in Premier Support Services
Revenue in More Personal Computing was $8.8 billion and decreased 2% (down 1% in constant currency) driven primarily by lower phone revenue, with the following business highlights:
Windows OEM revenue increased 1% (up 1% in constant currency), slightly ahead of the overall PC market
Windows commercial products and cloud services revenue increased 8% (up 8% in constant currency) driven by annuity revenue growth
Surface revenue decreased 2% (down 1% in constant currency) mainly due to product lifecycle transitions
Search advertising revenue excluding traffic acquisition costs increased 10% (up 11% in constant currency) driven by higher revenue per search and search volume
Gaming revenue increased 3% (up 4% in constant currency) as strength in Xbox software and services offset lower hardware revenue.
"We delivered a strong finish to the year with 30% growth in commercial bookings this quarter."
Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.
4:08 pm Maxim Integrated beats by $0.01, misses on revs; guides Q1 EPS below consensus, revs in-line; co raises quarterly dividend 9% to $0.36/share; co announces new share repurchase authorization $1 bln (MXIM) :
Reports Q4 (Jun) earnings of $0.63 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.62; revenues rose 6.3% year/year to $602 mln vs the $609.52 mln Capital IQ Consensus.
Co downside EPS guidance for Q1, sees EPS of $0.48-0.54, excluding non-recurring items, vs. $0.58 Capital IQ Consensus Estimate; sees Q1 revs of $555-595 mln vs. $592.35 mln Capital IQ Consensus Estimate.
From Briefing.com: 4:28 pm Closing Market Summary: Stocks Cruise to Record Highs Again on Wednesday (:WRAPX) :
The Nasdaq (+0.6%) kept on rolling in the midweek session, cruising to its ninth-consecutive victory--which marks its longest winning streak in two years--and a new all-time high. The S&P 500 (+0.5%), the Dow (+0.3%), and the Russell 2000 (+1.0%) also notched new record closes, finishing at their best marks of the day.
Today's win was a team effort with all 11 of the S&P 500's sectors finishing in positive territory. The industrial sector (+0.2%) was the weakest performer while the energy group (+1.4%) was the strongest.
The energy space was underpinned by a positive performance from crude oil, which climbed 1.5% to $47.31/bbl on the heels of a better than expected EIA inventory report. According to the Department of Energy, U.S. crude stockpiles declined by 4.7 million barrels last week while the consensus expected a draw of just 3.5 million barrels.
Elsewhere, the influential health care sector (+0.8%) exhibited strength throughout the session with Vertex Pharmaceuticals (VRTX 159.69, +27.53) leading the charge. VRTX shares spiked 20.8% to a fresh all-time high after the biotech company announced positive clinical trial results for three of its newest Cystic-Fibrosis drugs. Unsurprisingly, the iShares Nasdaq Biotechnology ETF (IBB 319.63, +4.49) finished comfortably ahead of the broader market, climbing 1.4%.
The top-weighted technology sector (+0.6%) advanced for the ninth session in a row, but struggled to keep ahead of the broader market. IBM (IBM 147.53, -6.47) weighed on the group, dropping 4.2%, after reporting a decline in revenue for the 21st quarter in a row. Meanwhile, chipmakers finished modestly ahead of the benchmark index, evidenced by the 0.9% increase in the PHLX Semiconductor Index.
As for the laggards, financials struggled to stay afloat despite relatively upbeat earnings reports from Morgan Stanley (MS 46.62, +1.48) and US Bancorp (USB 52.08, +0.45). MS shares jumped 3.3% after the company reported better than expected earnings and revenues while USB shares added 0.9% after the company beat bottom-line estimates. Still, no matter how small the margin of victory, the financial group (+0.2%) managed to put an end to its three-session losing streak.
Like financials, the industrial group finished at the back of the pack. Transports weighed, sending the Dow Jones Transportation Average lower by 0.6%, with CSX (CSX 51.87, -2.77) and United Continental (UAL 74.24, -4.66) pacing the retreat. Both companies beat earnings per share estimates, with CSX also reporting better than expected revenues, but slipped on relatively unimpressive third-quarter guidance. CSX shares dropped 5.1% while UAL shares slipped a bit further, losing 5.9%.
In the bond market, U.S. sovereign debt finished relatively flat as participants hesitated to alter their positioning ahead of policy statements from two major central banks--the Bank of Japan and the European Central Bank. The BoJ will release its policy decision overnight while the ECB will release its decision tomorrow morning. The benchmark 10-yr yield climbed one basis point to 2.27%.
Reviewing Wednesday's economic data, which was limited to June Housing Starts and the weekly MBA Mortgage Applications Index:
Housing starts increased to a seasonally adjusted annualized rate of 1.215 million units in June (Briefing.com consensus 1.160 million), up from a revised 1.122 million units in May (from 1.092 million). Building permits increased to a seasonally adjusted 1.254 million in June (Briefing.com consensus 1.196 million), up from an unrevised 1.168 million in May.
The key takeaway from the report is that there was solid growth in both single-family starts (+6.3%) and permits for single-family homes (+4.1%), both of which are important given the supply constraints in the housing market that have crimped affordability for many prospective home buyers.
The weekly MBA Mortgage Applications Index rose 6.3% to follow last week's 7.4% decrease.On Thursday, investors will receive several economic reports, including the July Philadelphia Fed Index (Briefing.com consensus 22.0) at 8:30 ET, the weekly Initial Claims Report (Briefing.com consensus 245K) also at 8:30 ET, and the June Leading Indicators Index (Briefing.com consensus 0.4%) at 10:00 ET.
Nasdaq Composite +18.6% YTD
S&P 500 +10.5% YTD
Dow Jones Industrial Average +9.5% YTD
Russell 2000 +6.2% YTD
4:09 pm Qualcomm beats by $0.02, beats on revs; guides Q4 EPS below consensus, revs mostly above consensus (QCOM) :
Reports Q3 (Jun) earnings of $0.83 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.81; revenues fell 11.1% year/year to $5.37 bln vs the $5.25 bln Capital IQ Consensus.
Co issues mixed guidance for Q4, sees EPS of $0.75-0.85, excluding non-recurring items, vs. $0.91 Capital IQ Consensus Estimate; sees Q4 revs of $5.4-6.2 bln vs. $5.48 bln Capital IQ Consensus Estimate.
"We delivered better than expected results in our semiconductor business this quarter, which drove EPS above the midpoint of our expectations versus our April updated guidance," said Steve Mollenkopf, CEO of Qualcomm Incorporated. "Our products and technologies continue to enable the global smartphone industry, and we are expanding into many exciting new product categories, including automotive, mobile computing, networking and IoT. We believe that we hold the high ground with regard to the dispute with Apple [AAPL], and we have initiated new actions to protect the well-established value of our technologies."
As a result of the recent actions taken by Apple's contract manufacturers and the other licensee in dispute, we currently do not believe total reported device sales and related estimated ranges of device shipment and average selling price are meaningful in measuring our QTL business, and therefore, we are not providing such metrics for the fiscal third quarter.
During Q3, co returned $1.1 billion to stockholders, including $844 million, or $0.57 per share, of cash dividends paid and $300 million through repurchases of 5.2 million shares of common stock
Expects NXPI deal to clsoe by year end.
4:07 pm Plexus beats by $0.03, beats on revs; guides Q4 EPS in-line, revs in-line (PLXS) :
Reports Q3 (Jun) earnings of $0.74 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.71; revenues fell 7.3% year/year to $618.8 mln vs the $608.95 mln Capital IQ Consensus and at the high end of $595 mln to $625 mln guidance range.
Co issues in-line guidance for Q4, sees EPS of $0.77 to $0.87 vs. $0.84 Capital IQ Consensus Estimate; sees Q4 revs of $660 mln to $700 mln vs. $672.12 mln Capital IQ Consensus Estimate.
"We expect fiscal fourth quarter revenue to increase significantly as a result of ramping previously reported program wins. Consequently, we are guiding fiscal fourth quarter revenue in the range of $660 to $700 million. At this revenue level, in conjunction with continued strong operating performance, we anticipate GAAP EPS in the range of $0.77 to $0.87. Our wins momentum and qualified funnel of opportunities remain robust, giving us confidence that we can achieve meaningful growth in fiscal 2018."
Tech Stocks from Briefing.com
Both the Nasdaq Composite and the S&P 500 notched new all-time highs today as stocks surged with earnings season fully underway. The tech-heavy Nasdaq Composite won the day, though, adding 40.74 points (+0.64%) to 6385.04. Heavily weighted Nasdaq 100 names VRTX +20.9%, ISRG +2.1%, REGN +1.8%, DLTR +1.5% and GILD +1.4% all aided the strength. The S&P 500 was a close second, gaining 13.22 points (+0.54%) today to 2473.83, while the Dow Jones Industrial Average advanced about 66.02 points (+0.31%) to 21640.75.
The Technology (XLK 57.42, +0.29 +0.51%) space fell just shy of making all-time highs today as the broader market surge percolated down to the sector. Component Autodesk (ADSK 110.25, +2.55 +2.37%) was among the better performing names today as the stock was initiated ahead of the bell with a Buy rating at Deutsche Bank. As it were, all 11 S&P sectors finished in the green today, led by the Energy XLE +1.46% space, followed by XLB +0.96%, IYZ +0.90%, XLV +0.81%, XLRE +0.74%, XLY +0.47%, XLU +0.42%, XLP +0.37%, XLF +0.12%, XLI +0.09%.
In tech, Semis (SMH 87.77, +0.86 +0.99%) were among the best performing names today. Component ASML (ASML 150.63, +7.38 +5.15%) led the pack after reporting better than expected Q2 results. Peers IDCC +5.11%, CRUS +3.16%, CAVM +2.63%, ON +2.02%, MPWR +1.95%, MRVL +1.67%, TSM +1.51%, AVGO +1.40%, MKSI +1.39%, MSCC +1.37% all put up strong Wednesday sessions.
In the S&P 500 Information Technology (992.29, +5.50 +0.56%) space, trading made new all-time highs today; the IT space has not posted a down session in nine trading days. Component First Solar (FSLR 45.67, +1.65 +3.75%) was strong after receiving a premarket upgrade to a Buy rating from Axiom Capital's Gordon Johnson; shares were later downgraded to Hold at Standpoint Research citing valuation. Other names in the space which outperformed today included LRCX +3.06%, HPE +3.03%, CTXS +1.93%, JNPR +1.77%, HPQ +1.69%, TEL +1.60%, KLAC +1.56%, CA +1.56%, SWKS +1.52%, MSI +1.50%.
Other notable news items among sector components:
Hortonworks' (HDP 13.18, -1.10 -7.70%) Rajnish Verma, COO, has stepped down. Current CFO, Scott Davidson, will assume the additional responsibility of COO. The company also updated guidance for Q2 total GAAP revenue of $58-59 million.
Cray (CRAY 19.45, +0.55 +2.91%) implemented a restructuring plan, expects to reduce its workforce by approximately 190 employees.
Rapid7 (RPD 17.30, +0.26 +1.53%) acquired Komand; financial terms were not disclosed.
Booz Allen Hamilton (BAH 33.48, +0.48 +1.45%) was awarded a $140 million Air Force contract and $49.9 million Army contract.
xG Technology (XGTI 2.20, +0.12 +5.77%) received an order valued at about $1.5 million for microwave communications equipment from a 'leading' medical device manufacturer.
Science Applications (SAIC 71.04, +1.51 +2.17%) has been awarded a task order for $621 million from the U.S. General Services Administration (GSA) Federal Systems Integration and Management Center.
Toshiba (TOSBF 2.36, -0.05 -2.40%) won a court ruling to resume efforts to protect its intellectual property and deny Western Digital (WDC 94.48, +0.21 +0.22%) workers access to certain data and facilities effective immediately.
In reaction to quarterly results:
ADTRAN (ADTN 22.00, +1.50 +7.32%) reported better than expected Q2 EPS of $0.30 on revenues which rose about 13.5% compared to last year to $184.7 million. Also guided Q3 revs flat q/q compared to $184.7 million.
ASML (ASML) reported better than expected Q2 EPS and revenues of EUR1.08 and EUR2.1 billion, respectively. For Q3, the company sees revenues ahead of market expectations at about EUR2.2 billion.
IBM (IBM 147.53, -6.47 -4.20) reported better than expected Q2 EPS of $2.97 on in-line revenues of $19.29 billion. The company also reaffirmed FY17 EPS guidance of at least $13.80.
Analyst actions:
FSLR was upgraded to Buy from Hold at Axiom Capital,
JASO was upgraded to Hold at Axiom Capital,
TRIP was upgraded to Market Perform from Underperform at Cowen,
CSOD was upgraded to Outperform from Neutral at Credit Suisse;
PYPL was downgraded to Hold from Buy at SunTrust,
FSLR was downgraded to Hold from Buy at Standpoint Research;
From Briefing.com: 4:31 pm Closing Market Summary: Nasdaq Advances to New All-Time High (:WRAPX) :For the first time since June 8, the tech-heavy Nasdaq (+0.5%) advanced to a new record high on Tuesday as tech stocks continued their bullish run. The S&P 500 (+0.1%) also finished at a new record high while the Dow and the small-cap Russell 2000 underperformed, dropping 0.3% apiece. The three major averages settled the session at their best marks of the day.
Only five of the S&P 500's eleven sectors settled in positive territory, but, luckily for the broader market, one of those groups was the top-weighted technology space (+0.5%). Mega-cap names like Facebook (FB 162.86, +3.13) and Alphabet (GOOGL 986.95, +10.99) paced the sector's advance, adding 2.0% and 1.1%, respectively, with FB notching a new all-time high.
Today's win marks the eighth in a row for the technology sector, which has fully recovered from last month's swoon. For the year, the tech space trades comfortably ahead of its peers with a year-to-date gain of 22.1%. For comparison, the S&P 500 holds a year-to-date gain of 9.9% and the health care sector, which hovers in second place on the 2017 leaderboard, is up 15.9% on the year.
Meanwhile, the consumer discretionary sector (+0.4%) also put together a relatively solid performance, leaning on Amazon (AMZN 1024.38, +14.34) to overcome losses from most components. AMZN shares advanced 1.4% to a new all-time high. Netflix (NFLX 183.60, +21.90) was a top performer, surging 13.5%, after reporting a much larger than expected increase in subscribers and providing upbeat guidance. The lightly-weighted utilities group (+0.3%) was the only other sector to settle ahead of the broader market.
The influential health care group (+0.1%) eked out a narrow victory, thanks in part to the solid performances of Johnson & Johnson (JNJ 134.46, +2.31) and UnitedHealth (UNH 186.85, +0.50). The two companies advanced 1.8% and 0.3%, respectively, after reporting better than expected earnings and issuing upbeat guidance.
On a related note, Senate Majority Leader Mitch McConnell decided to pave a new direction for the upper chamber on Monday evening, trimming aspirations to repeal and replace the Affordable Care Act in favor of a straight repeal with no immediate replacement. However, three centrist-Republican Senators publicly opposed the idea on Tuesday, sending Republican leaders back to the drawing board.
Back on Wall Street, earnings played a role in the heavily-weighted financial sector's underperformance as Goldman Sachs (GS 223.31, -5.95) and Bank of America (BAC 23.90, -0.12) beat earnings and revenue estimates, but failed to live up to the bullish five-week run that financials enjoyed ahead of earnings season. The financial sector ended the day lower by 0.3%.
Like financials, the energy sector (-0.5%) also had a rough showing, despite a positive performance from crude oil, which climbed 0.8% to $46.40/bbl. The commodity benefited from reports that Saudi Arabia is considering a reduction in its crude exports, in addition to a weakening U.S. Dollar; the U.S. Dollar Index (94.42, -0.50) dropped 0.5% to settle at an 11-month low.
As for the remaining laggards, the telecom services group (-1.0%) was the weakest performer while the industrials (-0.3%), materials (-0.4%), and real estate (-0.1%) spaces settled with more moderate losses.
Reviewing Tuesday's economic data, which included June Export/Import Prices and the July NAHB Housing Market Index:
Import prices excluding oil rose 0.1% in June after finishing flat in May. Export prices excluding agriculture were unchanged in June (0.0%) after declining 0.4% in May (from -0.6%).
The key takeaway from the report is that it doesn't change the market's understanding -- or the Fed's -- that inflation readings remain low.
The NAHB Housing Market Index for July declined to 64 (Briefing.com consensus 67) from a revised reading of 66 in June (from 67).On Wednesday, investors will receive the weekly MBA Mortgage Applications Index and June Housing Starts (Briefing.com consensus 1160K) at 7:00 ET and 8:30 ET, respectively.
Nasdaq Composite +17.9% YTDS&P 500 +9.9% YTDDow Jones Industrial Average +9.2% YTDRussell 2000 +5.2% YTD
Tech Stocks from Briefing.com
After a slow start on Tuesday which saw all three major US indices being choked lower, action eventually picked up and buyers stepped in across the board. The benchmark S&P 500 ended just above flat lines when all settled, up 1.47 points (+0.06%) to 2460.61. The tech-heavy Nasdaq Composite ended higher, perhaps aided by Netflix's (NFLX 183.60, +21.90 +13.54%) strong results from last night, up 29.87 points (+0.47%) to 6344.31. The Dow Jones Industrial Average was dragged lower by commodities, which finished modestly higher ahead of tomorrow's inventory data yet still saw the overall index shed 54.99 points (-0.25%) to 21574.73.
The Technology (XLK 57.13, +0.26 +0.46%) space was the best performer in the S&P today. Component PayPal (PYPL 58.96, +1.38 +2.40%) was one of the better performing names in the space today after come favorable sell side commentary and the confirmation of a partnership extension with Visa (V 97.58, +0.75 +0.77%). Following tech's strong Tuesday, the Consumer Discretionary XLY +0.45% space edged out others, followed by XLU +0.29%, XLV +0.18%, XLP +0.02%, XLRE -0.12%, XLF -0.16%, XLI -0.23%, XLB -0.42%, XLE -0.47%, IYZ -0.98%.
In the S&P 500 Information Technology (986.79, +5.27 +0.54%) space, trading climbed higher as the session progressed. Component Activision Blizzard (ATVI 61.33, +0.83 +1.37%) performed swimmingly today after a premarket initiation of the stock at a Buy at Needham. Other names in the space which outperformed today included FSLR +3.04%, FB +1.96%, TSS +1.70%, LRCX +1.51%, GOOG +1.26%, GOOGL +1.13%, NVDA +1.04%, AMAT +1.02%, ADBE +1.02%, V +0.77%, EA +0.77%.
Other notable news items among sector components:
GoDaddy (GDDY 43.70, +0.89 +2.08%) to sell PlusServer business to funds advised by BC Partners, for an enterprise value of 397 million.
Rocket Fuel (FUEL 2.70, +0.01 +0.37%) to be acquired by Sizmek for $2.60 per share in cash; pre-announced Q2 earnings.
Microsoft (MSFT 73.30, -0.05 -0.07%) and Baidu (BIDU 189.51, +1.28 +0.68%) announced plans to partner in order to take the technical development and adoption of autonomous driving worldwide; financial details not disclosed.
Digital Ally (DGLY 3.60, flat) was awarded a 'significant' new patent by the USPTO.
FireEye's (FEYE 15.62, +0.12 +0.77%) FireEye Government Email Threat Prevention Service, which was granted an Authorization to Operate (ATO) from the U.S. Department of the Interior (DOI), has received a Federal Risk and Authorization Management Program Authorization.
CalAmp (CAMP 19.04, -0.26 -1.35%) named Kurtis Binder as CFO effective today.
Benefitfocus (BNFT 35.30, flat) appointed Jonathon Dussault as CFO.
Toshiba (TOSBF 2.42, +0.32 +15.24%) provided an update on Western Digital (WDC 94.27, -0.30 -0.32%) preliminary injunctive relief.
PayPal (PYPL) and Visa (V) confirmed the extension of their strategic partnership to Europe, enables PayPal in Europe to issue Visa accounts.
In reaction to quarterly results:
Netflix (NFLX) reported worse than expected Q2 EPS of $0.15 on in-line revenues of $2.79 billion. The company also reported net adds for the quarter of 5.20 million vs guidance of 3.20 million. NFLX also gave some strong Q3 guidance, forecasting EPS of $0.32 on revenues of $2.969 billion, both ahead of market expectations.
Ericsson (ERIC 6.06, -1.21 -16.69%) reported worse than expected Q2 earnings of SEK0.17 on worse than expected revenues of SEK49.9 billion.
Analyst actions:
NFLX was upgraded to Buy from Neutral at Rosenblatt,
XLNX was upgraded to Equal Weight from Underweight at Barclays,
SEDG was upgraded to Outperform from Perform at Oppenheimer;
CRUS and AMD were downgraded to Underweight from Equal Weight at Barclays,
ADP was downgraded to Equal Weight from Overweight at Barclays,
IPGP was downgraded to Hold from Buy at Canaccord Genuity,
EXLS was downgraded to Neutral from Buy at Citigroup;
ATVI and EA were initiated with Buy ratings at Needham,
ZG was initiated with a Sector Weight at KeyBanc Capital Mkts,
TWOU was initiated with a Buy at Citigroup,
INFN was initiated with a Buy at Craig Hallum,
BCE was initiated with a Hold at Argus,
ITI was initiated with a Buy at Dougherty,
NCR was initiated with a Buy at Compass Point
Expect quarterly results tonight/tomorrow morning from: ADTN, IBM/ASML, DBD
4:10 pm IBM beats by $0.23, reports revs in-line; reaffirms FY17 EPS guidance (IBM) :
Reports Q2 (Jun) earnings of $2.97 per share, excluding non-recurring items, $0.23 better than the Capital IQ Consensus of $2.74; revenues fell 4.7% year/year to $19.29 bln vs the $19.45 bln Capital IQ Consensus.
Segment Results for Second Quarter
Cognitive Solutions (includes solutions software and transaction processing software)- revenues of $4.6 billion, down 2.5 percent (down 1.4 percent adjusting for currency).
Global Business Services (includes consulting, global process services and application management)- revenues of $4.1 billion, down 3.7 percent (down 1.7 percent adjusting for currency). Strategic imperatives grew 8 percent led by the cloud and mobile practices.
Technology Services & Cloud Platforms (includes infrastructure services, technical support services and integration software)- revenues of $8.4 billion, down 5.1 percent (down 3.6 percent adjusting for currency). Strategic imperatives, driven by hybrid cloud services, grew 20 percent.
Systems (includes systems hardware and operating systems software)- revenues of $1.7 billion, down 10.4 percent (down 9.6 percent adjusting for currency).
Global Financing (includes financing and used equipment sales)- revenues of $415 million, down 2.2 percent (down 1.7 percent adjusting for currency).
Co reaffirms guidance for FY17, sees EPS of 'at least' $13.80, excluding non-recurring items, vs. $13.68 Capital IQ Consensus Estimate.
4:10 pm Exponent beats by $0.10, beats on revs (EXPO) :
Reports Q2 (Jun) earnings of $0.51 per share, $0.10 better than the Capital IQ Consensus of $0.41; revenues rose 14.7% year/year to $84.1 mln vs the $79.3 mln Capital IQ Consensus
Co raises its 2017 expectations to reflect Exponent's strong performance in the first half of the year and its expectations for near-term market trends
Co expects 2017 revenues before reimbursements to grow in the mid- to high-single digits, up from the low to mid-single digits
Expects EBITDA margin to grow between 40 and 80 basis points vs. prior guidance, which called for EBITDA margins to decline 25 to 75 basis points
From Briefing.com: 4:29 pm Closing Market Summary: Equities Finish Flat on Monday (:WRAPX) :
The equity market opened the week with a sleepy, range-bound performance that left the major averages little changed from where they closed on Friday. The S&P 500 and the Dow finished just a tick below their flat lines while the Nasdaq eked out a narrow victory.
Sector movement was very modest as market-moving headlines were few and far between. Seven groups advanced--technology (unch), consumer discretionary (+0.3%), utilities (+0.4%), consumer staples (+0.1%), real estate (+0.2%), telecom services (+0.2%), and materials (+0.2%)--and four groups declined--financials (-0.1%), health care (-0.3%), industrials (-0.1%), and energy (-0.2%).
The influential health care sector struggled following weekend reports that the Senate will delay a vote on health care reform, which was originally scheduled for this week, and ahead of tomorrow morning's earnings reports Johnson & Johnson (JNJ 132.15, -0.45) and UnitedHealth (UNH 186.35, -0.55).
Meanwhile, the consumer discretionary group outperformed, thanks in large part to retailers, which pushed the SPDR S&P 500 Retail ETF (XRT 40.22, +0.36) higher by 0.9%. Amazon (AMZN 1010.04, +8.23) also exhibited relative strength, adding 0.8%, after the company's target price was raised to $1,200 at UBS.
Outside of the equity market, select safe-haven assets, including gold and U.S. Treasuries, ticked up on Monday; gold advanced 0.5% to $1,234.00/ozt while the benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, slipped three basis points to 2.31%.
In addition, the CBOE Volatility Index (VIX 9.87, +0.36), which is used to gauge investors' anticipation of short-term volatility, jumped 3.7%. However, it's important to note that, despite today's advance, the VIX remains at a historically-low level.
Reviewing today's economic data, which was limited to the Empire Manufacturing Survey for July:
The Empire Manufacturing Survey for July fell to 9.8 from the prior month's reading of 19.8. The Briefing.com consensus estimate was pegged at 13.0.
On Tuesday, investors will receive several economic reports, including June Export/Import Prices at 8:30 ET, the July NAHB Housing Market Index (Briefing.com consensus 67) at 10:00 ET, and July Net Long-Term TIC Flows at 16:00 ET.
Nasdaq Composite +17.3% YTD
S&P 500 +9.8% YTD
Dow Jones Industrial Average +9.5% YTD
Russell 2000 +5.4% YTD
Tech Stocks from Briefing.com
Lower than average participation on Monday took morning gains off the table as the broader market gradually stepped lower into the close. A mixed finish saw the tech-heavy Nasdaq Composite as the only major index ending higher, up 1.97 points (+0.03%) to 6314.43. The Dow Jones Industrial Average lost about 8.02 points (-0.04%) today to 21629.72, while the S&P 500 finished less than a point lower (-0.01%) to 2459.14.
The Technology (XLK 56.87, +0.01 +0.02%) space ended just on this side of flat lines today. Component Akamai Tech (AKAM 51.77, +1.15 +2.27%) was strong today after CEO T. Leighton disclosed the purchase of about 19K shares under his 10b5-1 trading plan. The US Telecom IYZ +0.48% space was the best performer today, followed by XLU +0.46%, XLY +0.24%, XLRE +0.22%, XLB +0.20%, XLP +0.11%, XLI -0.06%, XLE -0.12%, XLF -0.32%, XLV -0.36%.
In the S&P 500 Information Technology (981.52, +0.44 +0.04%) space, trading escaped Monday with minimal gains. Component Fiserv (FISV 125.25, +1.64 +1.33%) performed well today after a premarket upgrade of the stock to a Buy rating at Guggenheim. Other names in the space which outperformed today included FFIV +2.21%, SYMC +1.46%, VRSN +1.11%, FLIR +1.03%, GLW +0.80%, MSFT +0.78%, PYPL +0.73%, CTXS +0.54%, JNPR +0.41%.
Other notable news items among sector components:
Western Digital's (WDC 94.57, +0.13 +0.14%) SanDisk obtained a court protection against Toshiba (TOSBF 2.10, +0.01 +0.48%) in preliminary injunction hearing.
Asure Software's (ASUR 13.76, -1.20 -8.02%) CFO Brad Wolfe resigned.
PayPal (PYPL 57.58, +0.42 +0.73%) expanded its partnership with Samsung (SSNLF 2080, flat) to enable PayPal as a payment method in Samsung Pay.
VirnetX Holding (VHC 4.05, -0.55 -11.96%) was informed by investor the previously disclosed share purchase will not occur on July 17 because the investor's financing sources have not yet completed their diligence.
Rubicon Project (RUBI 5.03, -0.04 -0.79%) acquired nToggle, a technology company that makes it easier and more cost effective for programmatic buyers to find the inventory they're looking for among the bid requests they receive each day; Rubicon paid $38.5 million in cash.
Alliance Data (ADS 262.07, -2.07 -0.78%) reported average receivables of $15,933,375 +16% Y/Y and Net charge-offs of 63,916; sees net loss rates consistent with its FY guidance.
Analyst actions:
FISV and VNTV were upgraded to Buy from Neutral at Guggenheim,
EPAY was upgraded to Outperform from Mkt Perform at Raymond James,
DLB was upgraded to Buy from Neutral at B. Riley & Co.,
EGOV was upgraded to Outperform from In-Line at Imperial Capital;
SAIC and BAH were downgraded to Hold from Buy at Jefferies;
HDP was initiated with a Buy at Craig Hallum,
ANSS and PTC were initiated with Neutral ratings at Goldman
Expect quarterly results after the close/before the open tomorrow from: NFLX/ERIC, AMTD
4:19 pm Netflix misses by $0.01, reports revs in-line; guides Q3 EPS above consensus, revs above consensus (NFLX) :
Reports Q2 (Jun) earnings of $0.15 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus of $0.16; revenues rose 32.3% year/year to $2.79 bln vs the $2.76 bln Capital IQ Consensus.
See Full List of Key Metrics in 16:14 comment
Co issues upside guidance for Q3, sees EPS of $0.32, excluding non-recurring items, vs. $0.22 Capital IQ Consensus Estimate; sees Q3 revs of $2969 vs. $2.88 bln Capital IQ Consensus Estimate.
Key excerpts from Shareholders Letter
In Q2, we underestimated the popularity of our strong slate of content which led to higher-than-expected acquisition across all major territories. As a result, global net adds totaled a Q2-record 5.2 million (vs. forecast of 3.2m) and increased 5% sequentially, bucking historical seasonal patterns. For the first six months of 2017, net adds are up 21% year-on-year to 10.2m.
International contribution profit of -$13 million vs. -$69 million was better than our -$28 million forecast due primarily to higher-than-forecasted paid members.
We are making good progress with our international expansion as improving profitability in our earlier international markets helps fund significant investment in our newer territories. As a result, we expect positive international contribution profit for the full year 2017, at current F/X exchange rates. This would mark the first ever annual contribution profit from our international segment.
Through the first half of 2017, our operating margin was 7.1%, putting us on track for our full year target of 7%, which we plan on growing in 2018 and beyond.
On competition: It seems our growth just expands the market. The largely exclusive nature of each service's content means that we are not direct substitutes for each other, but rather complements.
We anticipate free cash flow of -$2.0 to -$2.5 billion for the full year 2017. With our content strategy paying off in strong member, revenue and profit growth, we think it's wise to continue to invest.
Briefing.com Note: Prior guidance was for $2 bln.
InvestmentHouse - Economic Data Limps In (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
- Economic data limps in, giving the Fed's new normal dovishness support.
- Stocks take solace, embracing 'bad is good' once again.
- No volume, lousy breadth, new highs for DJ30, SP500, RUTX.
- Thus far rotation is helping all, hurting few. Earnings are coming and
may change that.
Friday saw more weak economic data from the CPI to Retail Sales. I suppose
you can conclude the Fed had this data before Yellen's return to not so
lonesome dove status in her Wednesday congressional address.
The market returned as well, i.e. returned to the 'bad is good' mindset.
Why not? The Fed has its back for economic AND political risk as learned
Wednesday. So, bad news equals good news equals buy.
That sent DJ30 to another new high as SP500 and RUTX joined it. NASDAQ and
SP400 are very close as well. A new normal in normalization of rates and
all is well again in terms of buying stocks.
SP500 11.44, 0.47%
NASDAQ 38.03, 0.61%
DJ30 85.65, 0.39%
SP400 0.34%
RUTX 0.22%
SOX 1.30%
VOLUME: NYSE -12%, NASDAQ -11%. Amazingly low volume. Yes, yes, it is
summer and vacation time, but you would think the Fed's 'run to the light'
capitulation this week trade would perk up a bit.
Advance/Decline: NYSE 2.5:1, NASDAQ 1.3:1. Seriously? NASDAQ is punching
at a new high and breadth is not even 3:2? Trying to figure out how NYSE
breadth hit 5:2 given the weak gains in small and midcaps. Suffice it to
say, breadth was a putrid as volume on this move. But, in a 'ignore the
dangers, enjoy the ride' Fed and PPT-induced rally, who cares, right?
It really does appear as if the Fed and the government (through the Plunge
Protection Team established under Reagan) will do anything to keep stock
markets higher. Why? Because likely they know that if this rally ever
stops and the algos that run the big buys and sells (versus the fund
managers that used to move the markets) flip their bias, the selling would
be historic in its descent, both in rate and magnitude.
It appeared the FOMC was on a 'bold' road to normalization. A steady,
methodical pace of modest rate hikes and a reduction in the ballooned
balance sheet thanks to buying any and all junk the financial markets
produced during the financial crisis and beyond.
Ostensibly this was keeping in step with an improving economy, though as we
pointed out for the past several months, the economic activity is not
improving. The reality appeared to be the Fed realized it was way behind
the curve, and if the domestic political and geopolitical stage continued to
worsen in addition to weakening economic data (to which the Fed would not
admit), the Fed did not have enough silver bullets to forestall any new
crises that might threaten the power of those in power. Thus, the need to
hike.
Then something happened. The data was worse than expected, even worse than
the Fed could gloss over. Jobs beat expectations and that is always good
for an excuse to look the other way, but jobs lag economic activity, and of
course the jobs report these days, similar to most government economic
reports, is hardly a representation of reality. Wages were still bad,
almost 100M (and some say over 100M) working aged are out of the workforce,
GDP was weak and saw corporate profits (as measured by IRS payments) fall,
retail sales fell for a second month, Inflation remains weak (at least
according to the government), and of course the President's healthcare
reform and tax cut agenda is at best in limbo.
Wednesday Chairman Yellen produced a much more dovish economic assessment
for Congress, lowering the Fed's GDP expectations.
So, no bold move back to normalization of rates? No, just the way the
government normalizes these days: CHANGE THE DEFINITION of normal.
Apparently permanently low growth rates and low interest rates are the Fed's
new normal. As with what you hear from many in Congress and 'expert'
economists, US economic growth is now permanently mired at European levels.
This has been said before about the US. Back in the 1970's when the US went
through stagflation and other woes thanks to overregulation, many said the
US economy was a nice experiment, had a good run, but it had run its course.
Then Reagan came along, implemented pro-growth policies, reduced regulation,
returned the power regarding investment decisions (in other words, money)
back to the people, and voila, a 20 year boom started.
The US population ran full circle from free markets and the boom they
produced to largess and entitlement expectation in the almost 40 years since
the Reagan era that Clinton helped keep alive with some good policy
decisions that overcame bad policy decisions, at least for awhile. After 8
years of massive, massive regulation and taxation, the votes came in for a
return to again freer markets, less regulation, less taxation.
The sad thing is, the Administration's propensity to self-inflict wounds
combined with an organized and motivated opposition and an utterly hapless,
power-consumed Congress has road-blocked what most people in the US want:
less regulation, less taxation, and a return of the power regarding
important life decisions such as healthcare.
Thus, perhaps Yellen's and the FOMC's read on the outlook is correct.
Realizing the politics are swinging against any real reform, the Fed was
compelled to adjust its view, fearing that in Yellen's twilight the markets
might actually roll over because of the political obstacles blocking what
sparked the November to early Summer stock market rally. Yellen cannot have
that blemish on her record just before Trump appoints another for the Chair.
Alas, the Fed is political as well. Who would have thought?
The upshot, however, is the Fed again has the market's back. It was
comfortable with letting the market correct a bit, but with these new
potential perils to Yellen's legacy it is taking no chances. So, the Fed
now has the market's back for economics and politics. And Yellen's legacy.
Of course the market responded upside. A new high for DJ30 on Wednesday,
the day of Yellen's new normal. SP500 and RUTX joined in with new all-time
highs on Friday. NASDAQ and SP400 midcaps are knocking on the new high
door.
Excruciatingly light volume and not even a lot of breadth on the move to the
highs, even after the Yellen capitulation. Yet stocks climb. There is no
reason, again, to go lower if the Fed is going to back the stock market for
all reasons. Even Yellen's putative replacement, Mr. Kohn, is viewed by the
financial markets as uber-market friendly. That thought simply added
further giddiness to the upside.
Now the big names are second-guessing whether there will be a late
summer/early fall selloff as they alter their rate hike forecasts. Of
course those forecasts are worthless, but the market, despite rather
terrible internals, continues higher because the Fed has its back and there
is nowhere else to go. Savings? The Fed just knifed the elderly again;
banks should clone the democrat's healthcare commercial of a Paul Ryan
look-alike wheeling granny off the cliff and give the person doing the
pushing a Yellen look. Gold? You can buy it again. The dollar? It just
broke to a lower low out of the bottom of its channel. Hmmm. Perhaps
stocks?
THE MARKET
CHARTS
SP500: New all-time high as SP500 gapped off the 50 day EMA Wednesday and
rallied straight up. No volume, lousy breadth, but it made the new high
without the help from financials as their earnings were met with selling,
but they all recovered nicely. New high, lousy internals. Technically
something of a nightmare, but the market continues to move higher.
RUTX: New high as well though losing as much off the high on the close as
it gained. Still trying to figure out NYSE breadth gains with this kind of
move, a kind of 'excuse me' new high.
DJ30: Another new high here as well, its third straight. On no volume.
NASDAQ: Gapped higher and rallied close to a new high, just 9 points off
the early June closing high. No volume and it will be interesting to see
how NASDAQ reacts at the prior all-time high.
SOX: Broke higher over the June highs, still well off the early June peak.
Up 6 of 8 sessions.
SP400: The small caps touched the June all-time high then faded the gain.
5 of 6 days up, moving off the 50 day MA double bottom formed in June. Not
a bad pattern, new all-time high appears imminent, even with pathetic volme.
LEADERSHIP
Biotechs/Drugs: Overall solid on the week with some good moves Friday, e.g.
DVAX, AMGN. TTPH, AGEN, MNTA and others still look very good.
China: Some very good moves on the week and some on Friday. BABA continued
upside through Friday. YY is one we picked up Wednesday and it shot higher
9% Friday. YNDX gapped massively; could not buy it. NTES started a good
move though Thursday tested back to the 10 day EMA. Solid overall.
FAANG: Helped lead NASDAQ higher Friday, adding more gains. GOOG filled
the late June gap lower. AMZN is in a very nice test after approaching the
prior high. AAPL continued higher to the 50 day SMA. FB gapped a bit higher
to a doji. NFLX added more upside on its rebound.
Financial: Gapped lower on the JPM, C, WFC, GS earnings, these stocks did a
credible job of recovering off the opening lows. C puts in a very nice doji
with tail at the 20 day EMA. JPM gapped to the 20 day EMA then rebounded
sharply. Not bad, still showing good patterns.
Chips: Still recovering. LRCX edged higher on low volume in its week-plus
move. AMAT edged higher as well along with SWKS. AMD, MU faded some on the
week, moved higher Friday.
Metals: Faded some Friday but overall a solid week, maintaining good
patterns. SCHN, STLD, CENX, FCX.
Manufacturing, Machinery, Construction, Materials: Overall a decent week
though not hugely powerful. TEX broke to a higher rally high. MDR rallied
nicely on the week. HOLI rallied, still holding a good pattern.
Energy: Still well down in its selling but once again attempting to build a
foundation to move up. APA, HOS, SPN, PTEN, HAL. Possible, we will see.
MARKET STATS
DJ30
Stats: +84.65 points (+0.39%) to close at 21637.74
Nasdaq
Stats: +38.03 points (+0.61%) to close at 6312.47
Volume: 1.62B (-10.5%)
Up Volume: 1.11B (+167.28M)
Down Volume: 483.29M (-351.3M)
A/D and Hi/Lo: Advancers led 1.3 to 1
Previous Session: Advancers led 1.01 to 1
New Highs: 151 (+45)
New Lows: 36 (-9)
S&P
Stats: +11.44 points (+0.47%) to close at 2459.27
NYSE Volume: 674.3M (-12.22%)
A/D and Hi/Lo: Advancers led 2.49 to 1
Previous Session: Advancers led 1.09 to 1
New Highs: 187 (+66)
New Lows: 8 (-4)
SENTIMENT INDICATORS
VIX: 9.51; -0.39
VXN: 13.8; -0.82
VXO: 8.64; +0.24
Put/Call Ratio (CBOE): 0.84; -0.03
Bulls and Bears: Bulls slip to match the lows of 2017. Hit highs in early
2017, now bulls are falling but surely the Fed's largesse will bounce them
back up. Right?
Bulls: 50.0 versus 52.5
Bears: 18.6 versus 18.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 50.0 versus 52.5
52.5 versus 54.9 versus 51.5 versus 50.00 versus 55.8 versus 50.00 versus
51.9 versus 58.1 versus 58.7 versus 58.5 versus 54.7 versus 51.9 versus 56.3
versus 55.8 versus 49.5 versus 56.7 versus 53.4 versus 57.7 versus 63.1
versus 61.2 versus 61.8 versus 62.7 versus 61.8 versus 58.2 versus 60.6
versus 58.6 versus 60.2 versus 59.8 versus 59.8 versus 59.6 versus 58.8
versus 56.3 versus 55.6 versus 51.0 versus 42.9 versus 41.7 versus 47.1
versus 42.9 versus 46.1 versus 46.7 versus 45.2
Bears: 18.6 versus 18.8
18.8 versus 18.6 versus 18.3 versus 19.2 versus 18.3 versus 17.1 versus 17.3
versus 17.9 versus 17.9 versus 18.3 versus 17.5 versus 18.3 versus 18.1
versus 17.3 versus 13.75 versus 17.3 versus 16.5 versus 17.5 versus 17.6
versus 16.7 versus 17.6 versus 17.5 versus 17.3 versus 18.3 versus 18.4
versus 19.6 versus 19.6 versus 19.2 versus 19.6 versus 22.3 versus 21.6
versus 23.5 versus 25.7 versus 24.3 versus 23.1 versus 23.8 versus 23.1
versus 22.8 versus 23.1 versus 24.3
OTHER MARKETS
Bonds: 2.332 versus 2.346%. Bonds gapped sharply higher, hitting 2.28% on
the 10 year, before failing at the 50 day MA and falling back to close at
the 200 day MA. Tried to rally on the Yellen dovishness but having a hard
time advancing the move.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.346%
versus 2.316% versus 2.361% versus 2.375% versus 2.375% versus 2.368% versus
2.34% versus 2.304% versus 2.268% versus 2.20% versus 2.140% versus 2.140%
versus 2.148% versus 2.165% versus 2.156% versus 2.191% versus 2.155% versus
2.162% versus 2.209% versus 2.21% versus 2.21% versus 2.19% versus 2.176%
versus 2.14% versus 2.183% versus 2.154% versus 2.21% versus 2.20%
EUR/USD: 1.14672 versus 1.13986
Historical: 1.13986 versus 1.14335 versus 1.14682 versus 1.13964 versus
1.14010 versus 1.14220 versus 1.13508 versus 1.13710 versus 1.13510 versus
1.14208 versus 1.14432 versus 1.13786 versus 1.13409 versus 1.11834 versus
1.11928 versus 1.11484 versus 1.11670 versus 1.11346 versus 1.11419 versus
1.11968 versus 1.11466 versus 1.12213 versus 1.12086 versus 1.11930 versus
1.11965 versus 1.1199 versus 1.12491 versus 1.12798 versus 1.12684 versus
1.12811 versus 1.12181 versus 1.12547 versus 1.11768 versus 1.11810 versus
1.12148 versus 1.12240 versus 1.11868 versus 1.12390 versus 1.11916 versus
1.23077 versus 1.10985 versus 1.11557 versus 1.10862 versus 1.09833 versus
1.09328 versus 1.08655 versus 1.08671
USD/JPY: 112.536 versus 113.314. Dollar tested on the week then fell hard
Frida through the 200 day SMA.
Historical: 113.314 versus 113.152 versus 113.929 versus 114.063 versus
113.913 versus 113.126 versus 113.253 versus 113.270 versus 112.413 versus
111.993 versus 112.340 versus 112.24 versus 111.943 versus 111.299 versus
111.357 versus 111.278 versus 111.470 versus 111.729 versus 110.873 versus
110.854 versus 109.560 versus 110.060 versus 109.97 versus 110.334 versus
110.299 versus 109.355
Oil: 46.54, +0.46. Oil rallied back up to the 50 day MA Friday after
failing at that level two weeks back. Faded, put in a higher low, rallied
back. Now if the range is going to hold, oil should continue the break
higher in the range.
Gold: 1227.50, +10.20. Gold broke below the May low last week, rebounded
to recover it this week, gratis Yellen. Tapped the 200 day SMA on the high
then faded the gain. In a range and trying to roll back up from the lows.
MONDAY
NYSE indices were building patterns but were sluggish, not going anywhere.
NASDAQ and SOX started with a relief move after 2 weeks of selling. Then
that relief move took on new life Wednesday with the release of the Yellen
testimony to Congress. Wednesday to Friday those two put in solid moves.
Friday saw the NYSE indices coming around now as well, indeed beating SOX
and NASDAQ to new highs simply, however, because they did not rally before
or sell; they just were.
NASDAQ will be bumping the early June high to start the week with low, low
volume and MACD well, well lower as NASDAQ tests the prior high.
Technically it doesn't have a lot of power, and indeed the NYSE indices rose
on low volume and narrow breadth. Yet the Fed is there along with the PPT,
and the market has put in another recovery.
They may be ready for a test of the week to the upside though whether it is
more than a test becomes less likely now that the Fed is running cover. So,
we see if there is a test we can use to exit some plays and then set up new
upside buys. If a test is just a test, then we have new upside entries. If
not, if the rebound was just the last bit of fluff and rolls over hard, then
we will have some downside plays as well.
Of course, not everything has to fall. Rotation has given to some, taken
from others. It could return, but again, with the Fed becoming more dovish,
new money may enter the market allowing all areas to rise. That is not all
that evident yet given the very, very light trade, but both scenarios are
something to keep in mind when watching the market action this coming week.
Have a great weekend!
SUPPORT AND RESISTANCE
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6312.47
Resistance:
6341.70 is the all-time high from early June.
Support:
6300 is the mid-June interim high
6205 is the late May all-time high
The 50 day EMA at 6153
The 2016 trendline at 6050
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
5800 from the February consolidation lows
The 200 day SMA at 5729
5661 is the late January upper gap point
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
S&P 500: Closed at 2459.27
Resistance:
Support:
2453.46 is the all-time closing high
2439 is the early June prior all-time closing high
The 50 day EMA at 2417
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
2322 is the March 2017 low
2319 is the 78% Fibonacci retracement
The 200 day SMA at 2306
2301 is the late January 2017 high
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
Dow: Closed at 21,637.74
Resistance:
Support:
21,535 is the all-time high
The 50 day EMA at 21,224
21,169 is the March 2017 all-time high
20,553 is the lows of the week of May 15
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
20,126 is the January 2017 intraday high
The 200 day SMA at 20,121
20,101 is the late January closing high.
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015
From Briefing.com:4:39 pm Closing Market Summary: S&P 500, Dow Advance to New All-Time Highs (:WRAPX) :
The stock market closed the week on a positive note with the S&P 500 (+0.5%) and the Dow (+0.4%) both advancing to new record highs. Meanwhile, the Nasdaq climbed 0.6% and finished just nine points below its record close. For the week, the S&P 500 moved higher by 1.4%, which marks its best weekly performance since the end of May.
Financial heavyweights JPMorgan Chase (JPM 92.25, -0.85, -0.9%), Citigroup (C 66.72, -0.30, -0.5%), and Wells Fargo (WFC 54.99, -0.61, -1.1%) unofficially kicked off the second-quarter earnings season on Friday morning with all three companies beating earnings per share estimates. However, the banks sold off nonetheless as their results weren't quite good enough, at least in the market's mind, to extend the six-week bullish run that they rode into Friday's session.
The heavily-weighted financial sector (-0.5%) opened the session with a sizable loss of around 1.5%, but the group immediately started chipping away. The sector reduced its loss to 1.0% within the first 30 minutes of action and nearly reached its flat line in the afternoon. Selling in the last few minutes left the group a step below its session high.
Technology--the only sector with more influence than the financial group--cruised to its sixth-consecutive win on Friday, which helped keep a lid on the financial sector's bearish influence. The tech group rose 0.9% with just about all of its components finishing in positive territory. Microsoft (MSFT 72.78, +1.01) was particularly bullish, finishing the day with a gain of 1.4%.
The health care group (+0.6%) also finished ahead of the broader market despite a relatively disappointing performance from the biotechnology industry; the iShares Nasdaq Biotechnology ETF (IBB 316.41, 0.00) finished right at its unchanged mark. As for the remaining advancers, gains ranged from 0.2% (telecom services) to 1.1% (real estate).
Crude oil locked in a weekly gain of 5.3% with a 1.1% advance on Friday. Reports of supply issues in Nigeria, which is currently exempt from the OPEC-led production cut agreement, helped underpin the commodity. WTI crude settled at a price of $46.58/bbl while the energy sector (+0.5%) settled in line with the benchmark index.
In the bond market, U.S. Treasuries rallied on weaker than expected economic data, which was highlighted by below-consensus readings for June Retail Sales (-0.2% actual vs +0.1% consensus) and June core CPI (+0.1% actual vs +0.2% consensus). The benchmark 10-yr yield finished three basis points lower at 2.32% while the 2-yr yield dropped one basis point to 1.36%.
Reviewing Friday's big batch of economic data, which included June CPI, June Retail Sales, the June Industrial Production and Capacity Utilization Report, May Business Inventories, and the preliminary reading of the University of Michigan Consumer Sentiment Index for July:
Total CPI was unchanged (Briefing.com consensus 0.0%) in June while core CPI, which excludes food and energy, increased 0.1% (Briefing.com consensus 0.2%). On a year-over-year basis, total CPI is up 1.6% and core CPI has increased 1.7%.
The key takeaway from this report is that the trend of disinflation for the Consumer Price Index, which began in March, remained intact and will force the Fed to take more time to determine if it ultimately flows through and undercuts the stable trend in core CPI.
June retail sales decreased 0.2%, which is below the Briefing.com consensus of +0.1%. The prior month's reading was revised to -0.1% from -0.3%. Excluding autos, retail sales decreased 0.2% while the Briefing.com consensus expected an increase of 0.2%. The prior month's reading was left unrevised at -0.3%.
Core retail sales is the component that factors into the PCE goods component of the GDP report, so the key takeaway from the retail sales data is that it points to weak spending on consumer goods in June and will be a negative input for Q2 GDP models.
Industrial Production increased 0.4% in June (Briefing.com consensus 0.4%) while Capacity Utilization ticked up to 76.6% (Briefing.com consensus 76.8%) from a revised reading of 76.4% in May (from 76.6%). The Industrial Production reading for May was revised to 0.1% from 0.0%.
The key takeaway from the report is that factory output in June was little different from where it was in February. Additionally, the low level of capacity utilization points to continued resource slack that will temper inflation expectations.
Business Inventories rose 0.3% in May, which is in line with the Briefing.com consensus. The prior month's reading was left unrevised at -0.2%.
The key takeaway from the report is that business inventories remain elevated relative to sales, which is standing in the way of restoring pricing power.
The preliminary reading of the University of Michigan Consumer Sentiment Index for July declined to 93.1 (Briefing.com consensus 95.1) from 95.1 in June.
The key takeaway from the report is that it is fitting a pattern seen around past cyclical peaks, whereby the assessment of current conditions hits new peaks at the same time expectations start to post significant declines.
Monday's economic data will be limited to the Empire Manufacturing Report for July (Briefing.com consensus 13.0), which will be released at 8:30 ET.
Nasdaq Composite +17.3% YTD
S&P 500 +9.9% YTD
Dow Jones Industrial Average +9.5% YTD
Russell 2000 +5.3% YTD
Week In Review: Yellen Sparks Second-Half Rally
The stock market got off to a slow start this week, but Fed Chair Janet Yellen's semiannual testimony before Congress sparked a rally in the midweek session that lingered all the way into Friday's closing bell. In the end, the S&P 500 registered its largest weekly gain since the end of May and settled Friday's session at a new record close. For the week, the S&P 500 advanced 1.4%.
For the most part, the first two sessions of the week were uneventful. The stock market did make a sharp move lower on Tuesday after Donald Trump Jr. tweeted an email exchange that involved him setting up a meeting with a Russian lawyer in an attempt to gain some possibly incriminating information on then-presidential candidate Hillary Clinton. However, the bearish sentiment didn't last and the S&P 500 entered Wednesday's session flat for the week.
Equities rallied in the midweek session after Fed Chair Janet Yellen's semiannual monetary policy testimony came off less hawkish than many were anticipating. One of the key takeaways from Ms. Yellen's prepared remarks was her acknowledgment that "the federal funds rate would not have to rise all that much further to get to a neutral policy stance." The statement created a sense that the Fed may in fact follow a shorter path of rate hikes that will keep the longer-run neutral level of the federal funds rate below levels that prevailed in previous decades.
The S&P 500 leaned on its most influential sectors, namely technology and financials, to capture its third win of the week on Thursday. The financial sector's positive performance was particularly notable as the group plays an important role in driving economic activity and had failed to keep pace with the broader market in the three prior sessions. Financials remained a focal point once again on Friday with JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) headlining the earnings front.
All three of the aforementioned banks reported better than expected earnings--with JPM and C also beating revenue estimates--but the results were just not enough, at least in the market's mind, to justify the bullish six-week run that JPM, WFC, and C rode into Friday's session. The financial sector settled in the red, losing 0.5%, but the S&P 500 managed to advance to a new all-time high thanks to gains from ten of its eleven sectors.
In addition to earnings, economic data was also a focal point on Friday as below-consensus retail sales and core CPI readings for the month of June prompted a rally in the Treasury market; the benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, dropped three basis points to 2.32%, ending the week with a seven-basis point loss.
Like Treasury yields, rate-hike expectations were also dialed back a bit this week. However, the fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 50.6%. This time last week, the implied probability of a December rate hike sat at 59.1%.
Tech Stocks from Briefing.com
Technology stocks and the broader market finished a strong week on an impressive note. Technology (XLK) stocks rose 0.9% while the Nasdaq 100 (QQQ) rose 0.8%, outpacing the gains seen in the broader market (SPY +0.5%), although the DJIA and S&P 500 closed at new all-time highs while the QQQ lags after leading to the downside in the quick corrective move we saw in late June. Semiconductiors (SMH +1.2%) hit a one month high.
Some notable technology stocks warned about second quarter results:
CyberArk (CYBR) fell 16% after the company warned about second quarter results. This marks the first time the company missed expectations since the company came public almost three years ago. The company said "The primary reason for our revenue shortfall was our performance in EMEA, where certain deals that we anticipated would close did not close by the end of the quarter. We are actively working to determine and implement the appropriate steps to improve execution, drive stronger results and enhance visibility into our EMEA performance." Deutsche Bank and JP Morgan downgraded the stock this morning but the stock did find support in the low 40s.
Acacia Communications (ACIA) fell 6.5% after the company lowered Q2 guidance and guided Q3 vbelow consensus this morning. This follows a guide-up from optical peer AOI (AAOI +7%) yesterday. "Our second quarter results were adversely affected by the quality issue identified at one of our three contract manufacturers that we announced on May 31. As we previously announced, we identified a circuit board cleaning process as the likely root cause of the quality issue. This cleaning process was eliminated and manufacturing at the impacted contract manufacturer resumed. Although we began to ramp manufacturing capacity with our contract manufacturers during the quarter, we experienced supply constraints as capacity was used to both build replacement units and to meet new demand from customers for our AC400 and CFP units," said Raj Shanmugaraj, President and Chief Executive Officer of Acacia Communications. "We anticipate completing our remediation efforts with respect to the remaining impacted units during the third quarter of 2017." "While we are disappointed with the impact that the quality issue had on second quarter results, looking ahead to the third quarter, we believe we are well positioned to meet customer demand for our products This is the third disappointing quarter in row from Acacia after their first two reports after the IPO last year were incredibly strong. A 300%+ return from the IPO has now seen a 70% drawdown.
A10 Networks (ATEN) fell 16% after lowering second quarter guidance. The company said 'a number of opportunities in our pipeline did not close primarily in North America and to a lesser degree in Japan.'Twitter (TWTR +2%) hit a nine-month high after the company hired a former VP at Intuit (Ned Segal) as CFO. On Tuesday
Himax Tech (HIMX +1%) rose despite Oppenheimer downgrading the stock to Underperform. They don't see a turnaround for the core DDIC business.
Nutanix (NTNX) rose 9% after Goldman Sachs added it to their Conviction Buy List, calling it a takeover candidate.
Cowen downgraded Snap (SNAP -2.5%) to Market Perform, killing yesterday's bounce from an upgrade.
Some of the biggest tech stocks in the world will report next week. NFLX will report on Monday afternoon, IBM on Tuesday afternoon, QCOM on Wednesday, SAP and CHKP on Thursday morning and MSFT, V, EBAY, SWKS, MXIM on Thursday afternoon.
From Briefing.com: 4:29 pm Closing Market Summary: Stocks Move Modestly Higher; Dow Notches Another Record Close (:WRAPX) :
The stock market moved higher in a range-bound trade on Thursday with the S&P 500's most influential sectors--technology (+0.3%) and financials (+0.6%)--leading the charge. The Dow Jones Industrial Average (+0.1%) notched another record close (21,553) while the Nasdaq (+0.2%) finished in line with the benchmark index (+0.2%).
Fed Chair Janet Yellen wrapped up her semiannual testimony on monetary policy today with an appearance before the Senate Banking Committee. The highlights of Ms. Yellen's testimony--namely, her acknowledgement that the federal funds rate would not have to rise all that much further to get to a neutral policy stance--were largely found in the prepared remarks she released on Wednesday morning.
However, it's worth pointing out that Ms. Yellen stated today that it's premature to conclude that the underlying inflation trend is falling well short of the Fed's 2.0% target. In addition, the Fed chair noted that the Fed will consider the yield curve when setting rates, which created a sense that the central bank would like to see a steepening of the curve predicated on rising inflation expectations.
As it so happens, the yield curve did steepen a bit on Thursday as the Treasury market gave back a good portion of Wednesday's advance. The 2-yr yield climbed two basis points to 1.36% while the 10-yr yield jumped three basis points to 2.35%.
The steepening of the yield curve benefited the heavily-weighted financial sector (+0.6%), which typically responds well to widening spreads due to the favorable impact on net interest margins for lenders. The financial group outperformed for the vast majority of Thursday's session, but picked up even more steam in the final stretch to finish at the top of the sector standings by a comfortable margin.
Meanwhile, Apple (AAPL 147.77, +2.03) shrugged off yesterday's underperformance to advance 1.4% and help the top-weighted technology sector (+0.3%) cruise to its fifth-consecutive victory. Apple's mega-cap peer Microsoft (MSFT 71.77, +0.62) also outperformed, settling higher by 0.9%.
The health care sector (+0.1%)--which comes just after the technology and financial groups in terms of weight--was a late bloomer on Thursday, spending the majority of the session in the red, but eventually rode an afternoon biotech rally into positive territory. The iShares Nasdaq Biotechnology ETF (IBB 316.24, +2.23) settled with a gain of 0.7% following headlines that the Independent Payment Advisory Board, which was created by the Affordable Care Act to reign in Medicare costs, will not be activated.
On a related note, Senate Republican leaders released their updated version of a health care reform bill on Thursday that is aimed at bridging the gap that currently exists between centrist-leaning and more-conservative members of the GOP. However, reports indicate that, despite the revisions, the GOP still doesn't have enough votes to pass the measure.
As for the remaining sectors, the consumer discretionary (+0.1%), energy (+0.4%), real estate (+0.2%), and consumer staples (unch) groups settled in the green while the industrials (-0.1%), materials (-0.1%), utilities (-0.4%), and telecom services (-0.6%) spaces finished in the red.
In corporate news, Target (TGT 53.31, +2.44) jumped 4.8% after raising its second-quarter forecast for earnings per share and comparable sales. The positive sentiment caught on within the broader retail industry, sending the SPDR S&P Retail ETF (XRT 39.93, +0.90) higher by 2.3%.
Reviewing Thursday's economic data, which included June PPI, the weekly Initial Claims Report, and the June Treasury Budget:
June producer prices came in at +0.1%, which is above the Briefing.com consensus of -0.1%. Core producer prices rose 0.1% while the Briefing.com consensus expected an increase of 0.2%.
The key takeaway from the report is that producer price trends are also seeing some disinflation, which will likely keep the Fed in observation mode, as opposed to action mode, when it comes to the policy rate.
The latest weekly initial jobless claims count totaled 247,000 while the Briefing.com consensus expected a reading of 245,000. Today's tally was below the revised prior week count of 250,000 (from 248,000). As for continuing claims, they declined to 1.945 million from the revised count of 1.965 million (from 1.956 million).
The key takeaway is that a low level of initial jobless claims reflects a tight labor market.
The Treasury Budget for June showed a deficit of $90.2 billion versus a surplus of $6.3 billion for June 2016. The Treasury Budget data is not seasonally adjusted, so the June deficit cannot be compared to the $88.0 billion deficit registered in May.
On Friday, investors will receive a slew of economic reports, including June CPI (Briefing.com consensus 0.0%) at 8:30 ET, June Retail Sales (Briefing.com consensus +0.1%) at 8:30 ET, June Industrial Production (Briefing.com consensus +0.4%) and Capacity Utilization (Briefing.com consensus 76.8%) at 9:15 ET, May Business Inventories (Briefing.com consensus +0.3%) at 10:00 ET, and the preliminary reading of the University of Michigan Consumer Sentiment Index for July (Briefing.com consensus 95.1) at 10:00 ET.
Also of note, JPMorgan Chase (JPM 93.10, +0.59), Wells Fargo (WFC 55.60, +0.43), and Citigroup (C 67.02, +0.10) will release their latest earnings reports on Friday morning before the opening bell.
Nasdaq Composite +16.6% YTD
S&P 500 +9.3% YTD
Dow Jones Industrial Average +9.1% YTD
Russell 2000 +5.1% YTD
Tech Stocks from Briefing.com
The broader market followed up yesterday's strength with an equally impressive session on Thursday. The tech-heavy Nasdaq Composite once again edged out others, adding 13.27 points (+0.21%) to 6274.44. The S&P 500 once again finished second, up 4.58 points (+0.19%) to 2447.83, while the Dow Jones Industrial Average brought up the rear yet again, gaining 20.95 points (+0.10%) to 21553.09.
Market data today included June producer prices which came in at +0.1%, which is above the Briefing.com consensus of -0.1%; Core producer prices rose 0.1%. The latest weekly initial jobless claims count totaled 247,000 compared to the revised prior week count of 250,000 (from 248,000). As for continuing claims, they declined to 1.945 million from the revised count of 1.965 million (from 1.956 million).
The Technology (XLK 56.38, +0.13 +0.23%) space as a whole fared fairly well on Thursday, edged out only by the Energy and Financial space. Component PayPal (PYPL 57.90, +1.35 +2.39%) was strong today, piggy-backing off an equally strong session yesterday as sell side commentary held its bullish view. Top dog Financials XLF +0.60% were the best performing S&P sector today, followed by XLE +0.45%, XLRE +0.19%, XLV +0.13%, XLP +0.07%, XLY +0.01%, XLB -0.07%, XLI -0.09%, XLU -0.35%, IYZ -0.39%.
In the S&P 500 Information Technology (972.39, +3.20 +0.33%) space, trading strong off the open and never looking back. Component Alliance Data (ADS 264.57, +4.30 +1.65%) was especially strong today after Argus initiated coverage on the name with a Buy rating in the premarket. Other names in the space which outperformed today included NTAP +3.01%, HPE +1.79%, SYMC +1.47%, AAPL +1.39%, EBAY +1.30%, TDC +1.28%, FLIR +1.26%, SWKS +1.01%, MSFT +0.87%.
Other notable news items among sector components:
Shopify (SHOP 93.01, -1.67 -1.76%) and eBay (EBAY 36.50, +0.47 +1.30%) announced that Shopify merchants will soon be able to list and sell their products on eBay directly from their Shopify account.
Yandex N.V. (YNDX 31.70, +4.37 +15.99%) and Uber to combine their ridesharing businesses in Russia, Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia into a new company valued at $3.725 billion.
Cisco Systems (CSCO 31.27, +0.11 +0.35%) announced its intent to acquire Observable Networks; terms not disclosed.
Teradata (TDC 29.27, +0.37 +1.30%) acquired StackIQ; financial details not disclosed.
Upland Software (UPLD 23.97, +0.77 +3.32%) acquired Waterfall International for $24.4 million in cash at closing, also raised 2017 guidance.
Snap (SNAP 15.69, +0.45 +2.95%) and Formula 1 (FWONA 32.62, -0.36 -1.09%) unveiled a new global partnership.
Box (BOX 18.81, +0.14 +0.75%) President and COO Dan Levin will step down; Stephanie Carullo will succeed Levin as COO.
CenturyLink (CTL 22.78, +0.28 +1.24%) was weaker following reports that the company was named by the Minnesota Attorney General related to a lawsuit regarding billing concerns.
Paychex (PAYX 57.20, -0.04 -0.07%) increased its quarterly dividend to $0.50 from $0.46 per share.
Analyst actions:
SNAP upgraded to Buy from Hold at Stifel,
TWTR was upgraded to Mixed from Negative at OTR Global,
A and MTD were upgraded to Outperform from Market Perform at Wells Fargo,
VNTV was upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts;
TWTR was downgraded to Hold from Reduce at Standpoint Research,
T was downgraded to Neutral from Buy at BofA/Merrill,
STX was downgraded to Underweight from Equal Weight at Barclays;
HPQ and SSYS were initiated with Neutral ratings at Susquehanna,
ADS was initiated with a Buy at Argus,
ETFC and AMTD were initiated with Buy ratings at Rosenblatt,
BKYI was initiated with a Buy at Maxim Group
From Briefing.com: 4:32 pm Closing Market Summary: Stocks Rally Following Yellen Testimony (:WRAPX) :The stock market cruised to a comfortable win on Wednesday as investors dialed back their rate-hike expectations a bit following Fed Chair Janet Yellen's semi-annual monetary policy testimony. The Dow climbed 0.6% to a new record high while the Nasdaq and the S&P 500 settled with gains of 1.1% and 0.7%, respectively.
Fed Chair Yellen came off a bit more dovish in the prepared remarks she delivered before the House Financial Services Committee, saying that "...the federal funds rate would not have to rise all that much further to get to a neutral policy stance." This statement created a sense that the Fed may in fact follow a shorter path of rate hikes that will keep the longer-run neutral level of the federal funds rate below levels that prevailed in previous decades.
Today's statement eased some of the rate-hike concerns that surfaced last week following the release of the FOMC minutes from the June meeting, which initially left the impression that the Fed plans to press on with a tightening of policy despite the persistence of below-target inflation data. At the stock market's close, the implied probability of a December rate hike had declined to 52.0% from 58.9% on Tuesday, according to the fed funds futures market.
Treasuries rallied across the curve on Ms. Yellen's remarks with the benchmark 10-yr yield dropping four basis points to 2.32%. However, currency traders were a bit more undecided in their interpretations, leaving the U.S. Dollar Index (95.49, 0.00) at its unchanged mark.
On Wall Street, all 11 sectors finished in positive territory with the top-weighted technology group (+1.3%) pacing the advance. The tech space's heaviest component by market cap--Apple (AAPL 145.74, +0.21)--struggled amid continued concerns of production and delivery delays for the newest iPhone, but mega-cap names like Facebook (FB 158.90, +3.63), Microsoft (MSFT 71.15, +1.16), and Alphabet (GOOGL 967.66, +14.13) picked up the slack, settling with gains between 1.5% and 2.3%.
Chipmakers also outperformed, pushing the PHLX Semiconductor Index higher by 1.6%, with NVIDIA (NVDA 162.51, +6.63) leading the charge. The company jumped 4.3% after NVDA shares were upgraded to 'Buy' from 'Hold' at Sun Trust.
However, on the downside, a couple of notable sectors underperformed on Wednesday, keeping the broader market's gain somewhat in check. The most influential of these groups was the financial sector (+0.1%), which was weighed down by the notion that interest rates could be suppressed for longer than some expected.
The energy sector (+0.3%) also struggled after the weekly crude inventory report from the Energy Information Administration (EIA) showed that U.S. production increased by 59,000 barrels per day last week. However, on a positive note, the EIA did report a draw of 7.6 million barrels, which was much larger than the 2.9 million barrel decline that the consensus was anticipating.
Crude oil was trading around 2.5% above its flat line going into the EIA release, but gave back a good portion of that gain in the aftermath. The energy component settled higher by 1.1% at a price of $45.53/bbl.
As for the remaining sectors--consumer discretionary (+0.8%), industrials (+0.6%), materials (+1.1%), health care (+0.7%), consumer staples (+0.6%), utilities (+0.9%), telecom services (+0.5%), and real estate (+1.3%)--most finished roughly in line with the benchmark index.
Wednesday's economic data was limited to the Fed's Beige Book and the weekly MBA Mortgage Applications Index:
The Fed's Beige Book showed that economic activity expanded across all 12 Federal Reserve Districts in June at a slight to moderate pace. In addition, the majority of districts expect to see modest to moderate economic growth in the months ahead.The weekly MBA Mortgage Applications Index declined 7.4% to follow last week's 1.4% increase.On Thursday, investors will receive several economic reports, including the Producer Price Index for June (Briefing.com consensus -0.1%) at 8:30 ET, the weekly Initial Claims Report (Briefing.com consensus 245,000) also at 8:30 ET, and the June Treasury Budget at 14:00 ET.
Nasdaq Composite +16.3% YTD
S&P 500 +9.1% YTD
Dow Jones Industrial Average +9.0% YTD
Russell 2000 +5.0% YTD
Tech Stocks from Briefing.com
The market ran on Wednesday, led by the tech-heavy Nasdaq Composite which added 67.87 points (+1.10%) to 6261.17. The S&P 500 was higher by 17.72 points (+0.73%) to 2443.25, while the Dow Jones Industrial Average turned in an impressive 123.07 points session (+0.57%) to 21532.14.
The Technology (XLK 56.25, +0.72 +1.30%) space was strong again on Wednesday, edged out only by the Real Estate sector. Component Activision Blizzard (ATVI 61.02, +3.04 +5.24%) led all other names higher today following news that the company would sell its first Overwatch League teams; among new team owners, CEO of the Kraft Group and owner of the New England Patriot franchise, Robert Kraft. All 11 S&P sectors ended higher on Wednesday, led by the Real Estate space XLRE +1.31%, XLB +1.16%, XLU +0.86%, XLY +0.76%, XLV +0.68%, XLP +0.56%, XLI +0.55%, XLF +0.32%, XLE +0.28%, IYZ +0.16%.
In the S&P 500 Information Technology (969.19, +12.52 +1.31%) space, trading ended near highs. Component NVIDIA (NVDA 162.51, +6.63 +4.25%) ended as one of the better performing names following an upgrade of the stock to a Buy rating at SunTrust. Other names in the space which outperformed today included PYPL +3.27%, SYMC +3.14%, NTAP +2.82%, WDC +2.59%, STX +2.53%, TEL +2.46%, EBAY +2.39%, CTXS +2.38%, FB +2.34%, QRVO +2.34%, CRM +2.32%.
Other notable news items among sector components:
Twitter (TWTR 19.25, +0.61 +3.27%) appointed Ned Segal as Chief Financial Officer effective in late August.
Forrester Research (FORR 40.45, +0.50 +1.25%) expects to exceed or be at the high end of its revenue and earnings guidance for Q2; named Kelley Hippler Chief Sales Officer.
Western Digital (WDC 94.13, +2.38 +2.59%) won a court ruling ordering Toshiba (TOSBF 2.28, +0.15 +7.04%) to allow WDC to access databases and chip samples, according to Reuters.
Logitech Intl SA (LOGI 39.19, +1.49 +3.95%) to acquire console gaming brand ASTRO Gaming for $85 million in cash.
I.D. Systems (IDSY 6.19, +0.63+ 11.33%) to acquire substantially all of the assets of electronics manufacturer/marketer Keytroller for $9 million (and up to $3 million earn-out consideration); proposes underwritten public offering.
PayPal (PYPL 56.55, +1.79 +3.27%) stated the company's service is now available on Apple's (AAPL 145.74 +0.21 +0.14%) App Store, Apple Music, iTunes and more.
Nam Tai Property (NTP 10.00, +1.80 +21.95%) confirmed a share purchase agreement to sell 6,504,355 shares of the Company held by the company's Chairman M.K. Koo and his wife at $17.00 per share to the Kaisa Group.
Commscope (COMM 35.52, -2.48 -6.53%) to acquire Cable Exchange; term not disclosed. Also commented that the overall business environment remains challenging.
Accenture (ACN 125.47, +1.62 +1.31%) acquired Clearhead a digital optimization company, to strengthen the personalization services of Accenture Interactive.
Analyst actions:
NVDA was upgraded to Buy from Hold at SunTrust,
GRUB was upgraded to Outperform from Market Perform at Cowen,
PDFS was upgraded to Buy from Hold at Craig Hallum;
AUO was downgraded to Neutral from Outperform at Credit Suisse;
INTC was initiated with a Long-term Buy at Hilliard Lyons,
SHOP was initiated with a Hold at The Benchmark Company,
TRVG was initiated with a Market Perform at Wells Fargo,
OTIV was initiated with a Buy at Lake Street,
ELVT was initiated with a Buy at Maxim Group
From Briefing.com: 4:34 pm Closing Market Summary: Averages Settle Tuesday Mixed (:WRAPX) :The S&P 500 gave back its slim Monday advance in the second session of the week, dropping 0.1%, with nine of its eleven sectors settling in negative territory. Meanwhile, the Nasdaq (+0.3%) cruised to its second win of the week as technology stocks outperformed and the Dow (unch) eked out a very narrow victory.
With the week's first major event--Wednesday's testimony from Fed Chair Janet Yellen--on the horizon, investors were cautious at the start of Tuesday's session, leaving the S&P 500 near its unchanged mark for the majority of the morning. However, the benchmark index made a sharp move into the red around 11:00 ET, dropping as low as 0.6% below its flat line, after Donald Trump Jr. tweeted an email exchange that involved him setting up a meeting with a Russian lawyer in an attempt to gain some possibly incriminating information on then-presidential candidate Hillary Clinton.
The market's initial reaction was likely prompted by the notion that there might have been collusion between Russia and the Trump campaign to influence the outcome of the U.S. presidential election. However, the risk-off sentiment didn't stick and the benchmark index quickly rebounded, retracing about half of its loss in just 30 minutes.
Outside of the equity market, safe-haven assets like U.S. Treasuries, gold, and the Japanese yen did move modestly higher on Tuesday, but the CBOE Volatility Index (VIX 10.91, -0.20)--which points to the market's anticipation of short-term uncertainty--declined by 1.8%. Gold climbed 0.2% to $1,215.90/ozt, the yen added 0.2% against the U.S. dollar, and the benchmark 10-yr yield--which moves inversely to the price of the 10-yr Treasury note--dropped one basis point to 2.36%.
Only the energy and technology sectors finished Tuesday in the green with energy (+0.5%) being the top-performing group, thanks in large part to crude oil's positive performance. The commodity jumped 1.5% to $45.07/bbl despite trading around 1.0% below its Monday closing price in early-morning action. It's tough to credit a single bullish catalyst for crude oil's advance as technical forces have been coming into play within the crude futures market as of late, but it's worth noting that a European inventory report showed a decline in European product stockpiles.
Meanwhile, the top-weighted technology sector (+0.4%) put together another solid performance, extending its two-day gain to 1.2%, with Facebook (FB 155.27, +1.77) showing relative strength. FB shares jumped to a new session high after the company announced that ads for Facebook Messenger will become available to advertisers globally. Chipmakers also outperformed, pushing the PHLX Semiconductor Index higher by 0.8%.
On the downside, the influential financial sector (-0.7%) struggled on Tuesday, especially following the release of Donald Trump Jr.'s email exchange, and eventually settled with the telecom services group (-0.7%) at the very bottom of the day's leaderboard. However, Dow component Goldman Sachs (GS 226.95, +1.11) was able to register its second win of the week, climbing 0.5%.
In Washington, Senate Majority Leader Mitch McConnell announced that the upper house will delay its August recess by two weeks, giving Senate Republicans some extra time to iron out their version of the health care reform bill. The health care sector (-0.1%) finished in line with the broader market.
Reviewing today's economic data, which was limited to May Wholesale Inventories and May JOLTS:
May Wholesale Inventories increased 0.4% (Briefing.com consensus +0.3%). The prior month's reading was revised to -0.4% from -0.5%.
The market doesn't typically pay much attention to this release since the full business inventories report is usually released a short time later.
The May Job Openings and Labor Turnover Survey showed that job openings decreased to 5.666 million from a revised 5.967 million (from 6.044 million) in April.On Wednesday, investors will receive the weekly MBA Mortgage Applications Index and the Fed's Beige Book for July. The two reports will be released at 7:00 ET and 14:00 ET, respectively.
Nasdaq Composite +15.1% YTD
S&P 500 +8.3% YTD
Dow Jones Industrial Average +8.3% YTD
Russell 2000 +4.1% YTD
Tech Stocks from Briefing.com
A rocky Tuesday ended with the broader market split on either side of flat lines. For the most part, the Dow Jones Industrial Average ended flat (21409.07, +0.55 +0.00%). The S&P 500 turned in a losing affair, but only just, as the index lost 1.90 points (-0.08%) to 2435.53. The tech-heavy Nasdaq Composite registered the strongest Tuesday session, adding 16.91 points (+0.27%) to 6193.30 as heavily-weighted NASDAQ 100 names AAPL +0.3%, GOOGL +0.3%, MSFT +0.0% and INTC +0.8% all turned in strong sessions.
The Technology (XLK 55.53, +0.12 +0.22%) space finished higher, one of only two S&P sectors which could say that at the bell on Tuesday. Component Micron (MU 31.37, +0.87 +2.85%) held up nicely among the up and down action on Tuesday as the stock benefitted from favorable sell side commentary regarding strong June PC data. The Energy XLE +0.55% space was the other S&P sector which ended the session in the green, followed by XLU -0.08%, XLI -0.09%, XLB -0.11%, XLV -0.11%, XLRE -0.16%, XLY -0.23%, XLP -0.26%, XLF -0.76%, IYZ -1.61%.
Looking at a tech name which didn't fare as well today, however, social media platform Snap (SNAP 15.47, -1.52 -8.95%) saw shares break the IPO price lower today only to commence a free-fall (of sorts) to post-IPO lows. The stock was downgraded ahead of the open this morning to an Equal Weight rating at Morgan Stanley, one of the lead underwriters of the IPO from early-March. The street was tough on this name today, but rightfully so as Facebook's (FB 155.27, +1.77 +1.2%) Instagram is hot on its heels with some strong offerings of its own.
In the S&P 500 Information Technology (956.67, +3.39 +0.36%) space, trading climbed out of an afternoon dip to end just shy of highs. Component Western Digital (WDC 91.73, +2.46 +2.76%) captured solid gains today after reports surfaced that it has submitted a matching bid for Toshiba's (TOSBF 2.13, -0.10 -4.48%) flash memory unit. Other names in the space which outperformed today included AMAT +2.70%, FLIR +2.24%, LRCX +1.91%, ADI +1.44%, QRVO +1.43%, NVDA +1.42%, KLAC +1.36%, NTAP +1.30%, ADS +1.28%, MA +1.22%, FB +1.15%.
Other notable news items among sector components:
Symantec (SYMC 29.01, +0.01 +0.03%) to acquire U.S. and Israel-based Skycure; terms not disclosed.
Western Digital (WDC) was strong today after reports suggested WDC submitted a matching bid for
Toshiba's (TOSBF) flash memory unit.
Facebook (FB 155.27, +1.77 +1.15%) said Messenger ads to become available to advertisers globally.
Sphere 3D (ANY 0.13, -0.02 -16.69%) completed a 1:25 reverse stock split; to begin trading ex-split tomorrow.
Citrix Systems (CTXS 78.56, -1.37 -1.71%) announced a leadership transition to accelerate cloud transformation, enhance profitability and return capital to shareholders; reaffirmed Q2 guidance.
Immersion (IMMR 8.60, +0.04 +0.47%) filed a complaint in the US District Court alleging Fitbit (FIT 5.24, +0.01 +0.19%) infringed 3 of its US patents.
Cypress Semi (CY 13.77, +0.06 +0.44%) director Wilbert van den Hoek resigned due to a disagreement with the Board.
In reaction to quarterly results:
Barracuda Networks (CUDA 23.18, -0.82 -3.42%) reported in-line Q1 EPS of $0.18 on better than expected revenues of $94.18 million. The company also guided Q2 revenues in the range of $92-94 million on EPS between $0.16-0.18. For FY18, the company expects revenues between $370-380 million on EPS of $0.73-0.78.
Analyst actions:
STM was upgraded to Overweight at JP Morgan;
SNAP downgraded to Equal Weight from Overweight at Morgan Stanley;
TWLO was initiated with an Outperform at Robert W. Baird,
VSM was initiated with a Buy at Needham
From Briefing.com: Tech Stocks from Briefing.com
News flow was comparatively light while today's action ended split as a modest sell-off into the close took the Dow into the red. By contrast, the Nasdaq Composite finished up 23.31 points (+0.38%) to 6176.39. The S&P 500 added 2.25 points (+0.09%) to 2427.43, and the Dow Jones Industrial Average lost 5.82 points (-0.03%) to 21408.52. Volume was slightly less than average as about 799.0 mln shares traded hands on the NYSE floor (vs average near 1,000.7 mln) with the NASDAQ floor moving about 1,662.8 mln shares being traded (vs average near about 1,995.6 mln).
The Technology (XLK 55.41, +0.40 +0.73%) space was the best performing S&P ETF today. Component NVIDIA (NVDA 153.70, +6.94 +4.73%) was the best performer on Monday as bullish analyst commentary drove the stock higher. Following tech, the Materials XLB +0.64% sector outperformed, followed by XLI +0.29%, XLE +0.28%, XLY +0.19%, XLU -0.08%, XLF -0.12%, XLV -0.19%, IYZ -0.22%, XLP -0.66%, XLRE -0.79%.
In the S&P 500 Information Technology (953.28, +7.71 +0.82%) space, trading finished off highs as some sellers emerged into the close. Component HP (HPQ 17.87, +0.52 +3.00%) was among the better performers today after the stock was upgraded to a Buy rating at Mizuho ahead of the open. Other names in the space which outperformed included FLIR +3.00%, XLNX +2.80%, WDC +2.68%, JNPR +2.64%, EBAY +2.37%, SYMC +2.08%, PYPL +1.83%, LRCX +1.83%, AMAT +1.54%, FB +1.36%, V +1.25%, KLAC +1.12%.
Other notable news items among sector components:
Alibaba (BABA 143.81, +1.38 +0.97%) and Tencent (TCEHY 35.05, +0.39 +1.13%) partner with on-line payment firm Stripe.
Cincinnati Bell (CBB 18.00, -1.35 -6.98%) to combine with Hawaiian Telcom (HCOM 29.03, +4.59 +18.78%) and privately-held OnX Enterprise Solutions.
Best Buy (BBY 54.23, -3.64 -6.29%) shares were weaker today after a Recode report which suggested
Amazon (AMZN 996.47, +17.71 +1.81%) is working to establish a Geek Squad-like service of its own.
Nxt-ID (NXTD 1.60, -0.12 -6.98%) entered into a definitive agreement with existing institutional investors to purchase an aggregate of about $3,432,000 of shares of common stock in a registered direct offering and common stock purchase warrants in a concurrent private placement.
Westell Tech (WSTL 3.05, flat) appointed Matthew Brady as its new President and CEO, effective July 17, 2017.
Analyst actions:
HPQ was upgraded to Buy from Neutral at Mizuho,
PYPL was upgraded to Outperform from Mkt Perform at Bernstein,
CDK was upgraded to Outperform from In-Line at Evercore ISI,
JNPR was upgraded to Outperform from Market Perform at BMO Capital,
XLNX and CAVM were upgraded to Buy from Hold at Jefferies,
FLIR was upgraded to Strong Buy from Mkt Perform at Raymond James;
INTC was downgraded to Underperform from Hold at Jefferies,
PAYC was downgraded to Neutral from Buy at Mizuho;
QLYS was initiated with a Neutral at Monness Crespi & Hardt,
SSTI was initiated with a Buy at Roth Capital,
VSM was initiated with a Buy at Needham
InvestmentHouse - Better Jobs Headlines Help the Market Rally (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
- Friday rebound post-jobs, trying to stave off a serious tech, chip
selloff.
- Jobs headlines are better, the rest is all the same and will remain the
same without policy changes
- Better jobs headlines help the market rally as market needs good economics
to rally with the Fed hiking.
- Just a tech/chip bounce or rotation back to those areas? Still better
patterns in other groups, making this week a tell between the two.
A back and forth week ended on the upside with a jobs report that easily
topped expectations. With the FOMC in a tightening mode the best thing for
the stock market is stronger economic activity. The market needed some good
economic data given the recent data has proved less than solid; otherwise a
Fed hiking campaign is not good news for the rally. With a good enough jobs
report, the market responded with sharp upside.
Friday the action was not as bifurcated as the prior sessions for the week.
Other sessions on one day would show NASDAQ and SOX stronger when recent
leaders such as biotech, machinery, manufacturing, financial were weaker.
The next session was the flip. Friday, many sectors rallied. Still, the
focus was on tech, chips, and even FAANG as they were scooped up after being
rejected the prior month.
SP500, SP400, RUTX bounced off their tests near the 50 day MA, moving up off
of or back through the that level. Good responses to the dives lower
Thursday. DJ30 shows no wear and tear, holding at the 20 day EMA in rather
normal action as it moves up the near term moving averages.
NASDAQ and SOX rebounded as well, posting solid percentage moves. NASDAQ
recovered the 50 day EMA but could not take out the 50 day SMA. SOX gapped
and rallied to the 50 day SMA. It faded from there and indeed closed just
below the 50 day EMA.
Good responses to the back and forth action, particularly the very weak
action early week for SOX and the Thursday sharp selling on SP500, SP400,
and RUTX.
SP500 15.43, 0.64%
NASDAQ 63.62, 1.04%
DJ30 94.30, 0.44%
SP400 0.96%
RUTX 1.07%
SOX 1.72%
NASDAQ 100 1.05%
VOLUME: NYSE -16%, NASDAQ -14%. Despite the solid price surges Friday,
volume lagged. NYSE trade was lower and well, well below average. NASDAQ
volume was lower and also well below average. Despite the moves higher,
volume did not track with it. All buyers on the session but not more buyers
than the Thursday sellers. That is a telling aspect.
A/D: NYSE 2.2:1, NASDAQ 2.6:1. Breadth was decent but with 1+% moves on
NASDAQ to SOX to RUTX to almost SP400, this was puny breadth. Indeed, if
you compare NASDAQ to NASDAQ 100 you see virtually identical percentage
gains; in other words, NASDAQ moved higher thanks to its large caps stocks.
So, the internals were not great. Passable. Enough to support a recovery
and a new rally to higher highs? This current uptrend has seen its share of
less than inspiring recoveries off of sharp selloffs. At least this one had
strong price moves.
Nice price moves, weaker internals than they should have been for the price
moves. The weakest indices, NASDAQ and SOX, are off the recent lows but
still below key resistance. To us that means Friday was not definitive in
terms of a new upside rally leg. So we opted to limit our action and see
how the moves play out to start the next week, to see if the back and forth
moves establish a trend.
Our own belief is that the Fed is in a different mode this time, i.e. it is
going to hike rates and reduce its balance sheet regardless, and that
economic data is not going to improve. Indeed, in its July Monetary Policy
Report released Friday (basically the testimony Yellen will deliver to
Congress next week), the Fed stated that "valuation pressures across a range
of assets and several indicators of investor risk appetite have increased
further since mid-February."
That does not bode well for the markets, but right now the NYSE indices are
still holding their trends while the bond and gold markets are now selling
as they should if economics are improving. That means they can still rise
and rally yet again. If they are showing more of that Friday upside
strength this coming week, the market is going to try yet another run. We
feel that the runs are on their last gasps, but if they run, they run, and
we will play choice stocks accordingly.
ECONOMICS/NEWS
Jobs Report tops, prior months revised upside.
222K versus 173K expected versus 152K May (from 138K) versus 207K April
(from 174K)
Unemployment Rate: 4.4% versus 4.3% versus 4.3% May
U6 rate (those wanting full-time but cannot find it, those recently giving
up looking for work): 8.6% versus 8.4%.
Average Hourly Wages: 0.153% versus 0.3% expected versus 0.1% May.
2.5% year/year, barely with inflation.
Participation Rate: 62.8% versus 62.7% May
How can there be changes when nothing has changed?
Sounds great, and there are some real positives. Also, however, the same
problems. Why? Because there are structural changes in the jobs market
wrought by the economic policies of the past 12 years that the past six
months have not changed. The ACA is still in place, the taxes are still in
place, most of the massive numbers of regulations remain in place, minimum
wage laws are pushing people out and machines in (see the recent University
of Washington study of Seattle's jobs market after implementing its $15/hour
minimum wage) -- quite simply, not nearly enough has changed to spark
business creation, innovation, and of course, jobs.
Thus, most all areas showed the same recent trends.
The one change: Government jobs posted strong gains at 35K, almost 100% of
which was at the local level. Fiscal year end for most states and time to
hire and use up your budget or lose it. Heaven forbid any department risk a
budget cut.
Manufacturing: a strong 1K jobs created. Overheating, huh?
Healthcare: 37K
Education: 8K
Construction: 16K
Professional: 45K
Food and Restaurant: 29K
Mining: 8K
Temp: 13.4K
Prognosis: Marginally better but still the same market with 180K jobs per
month average the past six months. No real change, and as noted above,
without serious policy change there is no turning back from an economy that
produces lots of low wage hourly jobs. You cannot do the same thing and
expect change.
THE MARKET
CHARTS
Bounces on low volume and breadth not commensurate with price gains? A
'poser' move?
SP500: The volatility of the past 3 weeks continues. Four times in that
span the index has either gapped up followed immediately by a gap down or
gapped down only to be followed by a gap up, the latest on Thursday and
Friday. That last action occurred at the 50 day MA on Thursday and Friday
and keeps SP500 in position to bounce as it has since March, using the 50
day as support. The volatility is a bit more violent this time around and
this week it will show us if Friday's news-driven, quite low volume bounce
meant anything.
NASDAQ: After breaking the 50 day EMA and the bottom of the four week
pennant attempt, NASDAQ recovered some ground Friday, but remains below the
50 day EMA. Weak volume on the Friday recovery attempt. The Friday action
did not change the struggles for techs and leaves NASDAQ questionable.
SOX: So important to the market. After breaking below the 50 day MA the
prior week and bombing lower Monday, SOX gapped up Wednesday and again
Friday, recovering to the 50 day EMA. Something of an ABCD bounce attempt,
but as noted earlier in the week, not a great ABCD and thus the test of the
50 day MA currently in progress is a major tell for SOX and the overall
market.
RUTX: Small caps are also key as an economic indicator. Thursday they
bombed from the cusp of a new high to the 50 day MA. Friday a strong
rebound definitely keeps them in the game as the jobs report encouraged
small cap investors. The pattern remains solid enough, particularly with
the reaction off the 50 day MA dive.
DJ30: Not really impacted by all of the volatility plaguing the other
indices. DJ30 is in a 3 week lateral choppy range, but is easily holding
the 20 day EMA and is in very good position to finish consolidating and
continue upside. Ironically, DJ30 and the small caps are the most stable
patterns in the market right now.
SP400: Gave up the 50 day MA Thursday with a nasty gap and selloff, but it
held the June intraday lows and reversed Friday with a strong surge back
through the 50 day. That keeps SP400 in the upper part of its range and
similar to RUTX, in contention for a breakout to a higher high. Well, not
as much as RUTX as SP400 has the April, March and then June highs still
ahead of it as of the Friday close.
LEADERSHIP
Buying growth was back on Friday tech, chips, and FAANG attracted the most
interest and thus the largest gains. Before that, those stocks saw weakness
all week with biotechs, machinery, manufacturing and other more 'stoic'
sectors receiving some money. Friday there was rotation back to the growth
and the question is whether they last. From looking at the recent leaders
that tested and the patterns they have, it appears the late week move to
techs, chips is temporary.
FAANG: FB managed to hold through the chop at the 50 day MA and bounce
Friday, but even lower volume here. AMZN moved back through the 50 day MA,
also on very low volume. AAPL remains in a lateral move below the 10 day
EMA. NFLX sold to a Thursday doji, bounced Friday, stronger trade, trying
to bounce back from a selloff in a head and shoulders. GOOG rebounded to
end the week, closing below the 50 day MA after a big break lower. Overall
these stocks still look weak.
Chips: Finished the week on an upside rebound after struggling the most of
any sector. Analyst comments on LRCX, AMAT helped bolster the group Friday.
Key tests for stocks such as AMAT that is back at the 50 day SMA, ditto
LRCX. AVGO managed to break through the 50 day MA Friday. Important week
ahead: a real move higher or just a rebound in overall selling.
Biotechs/Drugs: The stronger moves from Wednesday tempered into the weekend
as money moved back toward chips, tech. CELG jumped Wednesday, then just
drifted higher into Friday. IMGN posted another strong week with higher
highs. ARRY looked good but then struggled Friday. AGEN looks solid to
break higher. Still very good patterns in this group.
Financial: Excellent week. JPM surged early and then drifted upside to end
the week, posting a second good week. GS was up early week but then faded
back to the 10 day EMA Friday; still in great position. C in a very nice
test to end the week, waiting on the 10 day. TCBI tested its break higher,
showing a big doji at the 10 day EMA Friday. Group looks good.
Machinery: Still very good setups after a modest test on the week. TEX at
the 10 day EMA and looks good. CAT is in a flat lateral move after a higher
high. CMI to a higher high. Looks good.
Telecom: Down for 5 weeks after good moves on earnings, many of these are
in very good patterns: SWIR, CIEN.
China: Faded, we will see. NTES at the 50 day MA and we see if it can
bounce. BABA continues working along the 10 day EMA in a 3 week lateral
move. SINA still in its shallow double bottom pullback. SOHU at the 50 day
MA.
Materials: Still solid in many cases, e.g. USCR, CX (concrete), MAS
(general building materials).
Metals: Some good tests to end the week setting up moves. SCHN in a great
breakout test. SID trying to set something up. STLD testing a solid 3 week
move to the top of the range. AKS is the downer of the group, struggling
all week.
MARKET STATS
DJ30
Stats: +94.3 points (+0.44%) to close at 21414.34
Nasdaq
Stats: +63.61 points (+1.04%) to close at 6153.08
Volume: 1.71B (-14.07%)
Up Volume: 1.21B (+853.48M)
Down Volume: 461.67M (-1.148B)
A/D and Hi/Lo: Advancers led 2.6 to 1
Previous Session: Decliners led 3.41 to 1
New Highs: 45 (+4)
New Lows: 57 (+17)
S&P
Stats: +15.43 points (+0.64%) to close at 2425.18
NYSE Volume: 735.3M (-16.21%)
A/D and Hi/Lo: Advancers led 2.23 to 1
Previous Session: Decliners led 4.19 to 1
New Highs: 82 (+49)
New Lows: 72 (+23)
SENTIMENT INDICATORS
VIX: 11.19; -1.35
VXN: 16.81; -1.19
VXO: 9.97; -2.19
Put/Call Ratio (CBOE): 0.93; -0.19
Bulls and Bears: No real change, just back and forth in the recent ranges,
Bulls just off highs earlier in the year in the 60's, bears just off lows
around 15. Those readings in the 60's suggest a market pullback, but to
this point, no serious backtracking.
Bulls: 52.5 versus 54.9
Bears: 18.8 versus 18.6
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 52.5 versus 54.9
54.9 versus 51.5 versus 50.00 versus 55.8 versus 50.00 versus 51.9 versus
58.1 versus 58.7 versus 58.5 versus 54.7 versus 51.9 versus 56.3 versus 55.8
versus 49.5 versus 56.7 versus 53.4 versus 57.7 versus 63.1 versus 61.2
versus 61.8 versus 62.7 versus 61.8 versus 58.2 versus 60.6 versus 58.6
versus 60.2 versus 59.8 versus 59.8 versus 59.6 versus 58.8 versus 56.3
versus 55.6 versus 51.0 versus 42.9 versus 41.7 versus 47.1 versus 42.9
versus 46.1 versus 46.7 versus 45.2
Bears: 18.8 versus 18.6
18.6 versus 18.3 versus 19.2 versus 18.3 versus 17.1 versus 17.3 versus 17.9
versus 17.9 versus 18.3 versus 17.5 versus 18.3 versus 18.1 versus 17.3
versus 13.75 versus 17.3 versus 16.5 versus 17.5 versus 17.6 versus 16.7
versus 17.6 versus 17.5 versus 17.3 versus 18.3 versus 18.4 versus 19.6
versus 19.6 versus 19.2 versus 19.6 versus 22.3 versus 21.6 versus 23.5
versus 25.7 versus 24.3 versus 23.1 versus 23.8 versus 23.1 versus 22.8
versus 23.1 versus 24.3
OTHER MARKETS
Bonds: 2.386% versus 2.368%. Bonds continued to sell all week, now down 8
sessions off the late June rally high, taking out the 200 day SMA Thursday.
Showing the weakness you would anticipate when the Fed is serious about
hiking and, supposedly, economics are better.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.368%
versus 2.34% versus 2.304% versus 2.268% versus 2.20% versus 2.140% versus
2.140% versus 2.148% versus 2.165% versus 2.156% versus 2.191% versus 2.155%
versus 2.162% versus 2.209% versus 2.21% versus 2.21% versus 2.19% versus
2.176% versus 2.14% versus 2.183% versus 2.154% versus 2.21% versus 2.20%
EUR/USD: 1.14010 versus 1.14220. Modest dollar recovery Friday, but euro
made a strong move off a flag test Thursday.
Historical: 1.14220 versus 1.13508 versus 1.13710 versus 1.13510 versus
1.14208 versus 1.14432 versus 1.13786 versus 1.13409 versus 1.11834 versus
1.11928 versus 1.11484 versus 1.11670 versus 1.11346 versus 1.11419 versus
1.11968 versus 1.11466 versus 1.12213 versus 1.12086 versus 1.11930 versus
1.11965 versus 1.1199 versus 1.12491 versus 1.12798 versus 1.12684 versus
1.12811 versus 1.12181 versus 1.12547 versus 1.11768 versus 1.11810 versus
1.12148 versus 1.12240 versus 1.11868 versus 1.12390 versus 1.11916 versus
1.23077 versus 1.10985 versus 1.11557 versus 1.10862 versus 1.09833 versus
1.09328 versus 1.08655 versus 1.08671
USD/JPY: 113.913 versus 113.126. Solid new break higher Thursday and
Friday after a quick test following the move over the 200 day SMA. Dollar
looking better and now very near the May high, the last high before the
selloff into June.
Historical: 113.126 versus 113.253 versus 113.270 versus 112.413 versus
111.993 versus 112.340 versus 112.24 versus 111.943 versus 111.299 versus
111.357 versus 111.278 versus 111.470 versus 111.729 versus 110.873 versus
110.854 versus 109.560 versus 110.060 versus 109.97 versus 110.334 versus
110.299 versus 109.355
Oil: 44.23, -1.29. Well, after a very solid rebound into the range, oil
stalled at the 50 day MA and has suffered two big downside sessions
Wednesday and Friday.
Gold: 1209.70, -13.60. No doubt vexing those believing gold must surge,
instead gold plunges below the May low and is heading for the March low at
1200.
MONDAY
The market did have a jobs report reaction, likely given the Fed set on a
rate hiking and balance sheet reducing mindset. Again, if the Fed is
hiking, the market wants to see positive economic data. But there are
problems. As seen in the GDP reports, corporate profits are falling based
upon the real test, i.e. the tax receipts. That is the real measure of
earnings, not the fake news non-GAAP earnings reported each quarter. The
toads in the Senate are now starting to say they cannot repeal the ACA and
will just have to tinker with its small business and jobs-killing
structures. Hell, there is even talk now that republicans cannot agree on
removing the onerous taxes inside the ACA that utterly crush small
businesses.
If this legislature impotence remains, if they cannot find a shipment of
backbones or at least Viagra for Congress, there won't be any changes in
healthcare or tax policy and the lethargy will continue. That will be
cemented in the midterm elections when the conservatives who voted to have
action taken once again are burned and once again realize voting for the GOP
is pointless. The market figures this stuff out. With no 'got your
backside' Fed, you get reality check. That is some of what you were seeing
in tech and chips during the past month or so.
That does not mean there is not more upside. There are still plenty of good
patterns to play upside. The next decision for the market is which groups
rise. Outside of Wednesday, not much new money is coming in. It is more a
game of moving money around inside the market. If the Fed is on, rates are
rising, growth may have issues. It has had issues the past 6 or so weeks,
and Friday was not really, as shown from the technical discussion, a rebirth
of growth upside.
We will see this week if the Friday money movement to growth sustains.
There are many other solid upside patterns in other groups that have good
roots versus just rebounds from selling. The former is typically more
reliable in making money unless there is a sea change of money on short
order. Likely not the case. They can bounce near term, and we will play
good patterns in those if they are there. At the same time we look at those
really good patterns as well. And of course, bigger picture, it is a weaker
time of the year ahead, the Fed is hiking, economics are not great,
legislative agendas are highly questionable. At some point it all breaks,
but technically it is not at hand unless, again, there is something that
causes a sea change.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 6153.08
Resistance:
6205 is the late May all-time high
6300 is the mid-June interim high
6341.70 is the all-time high.
Support:
The 50 day EMA at 6132
The 2016 trendline at 5997
5996 is the recent May 2017 low
5937 is the all-time high from April
5915 is the tops of the March to April 2017 range
5910 is the lower gap point from mid-April
5800 from the February consolidation lows
The 200 day SMA at 5705
5661 is the late January upper gap point
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
5287.61 is the September 2016 high
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
5170 is the October intraday low.
5162 is the early November peak, 5176 is the December intraday peak
5100 from the April peak and early May peak
5042 is the March 2015 high
5008.57 is the early March 2015 post-bear market high
5007 is the 12/31 upper gap point from that big gap lower
S&P 500: Closed at 2425.18
Resistance:
2439 is the early June prior all-time closing high
2453.46 is the all-time closing high
Support:
The 50 day EMA at 2412
2406 is the all-time high from May 2017
2401 is the March 2017 all-time high
2352 is the recent May 2017 low
2348 is the April 2017 lower gap point
2329 is the March and April twin lows
2322 is the March 2017 low
2319 is the 78% Fibonacci retracement
2301 is the late January 2017 high
The 200 day SMA at 2299
2298 is the late January 2017 high
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
Dow: Closed at 21,414.34
Resistance:
21,535 is the all-time high
Support:
21,169 is the March 2017 all-time high
The 50 day EMA at 21,161
20,553 is the lows of the week of May 15
20,547 is the lower gap point from late April 2017
20,412 is the March 2017 low
20,400 is the mid-April 2017 low.
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
The 200 day SMA at 20,040
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
19,732 is the January 2017 low
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
18,351 is the prior all-time high from May 2015
From Briefing.com: 4:30 pm Closing Market Summary: Investors Rally Around June Jobs Report (:WRAPX) :Investors rallied around the Employment Situation Report for June on Friday to finish the abbreviated week on a positive note. The Nasdaq led the advance, moving higher by 1.0%, while the S&P 500 and the Dow settled with gains of 0.6% and 0.4%, respectively. All three major averages finished the week modestly higher with the S&P 500 advancing by 0.1%.
The Employment Situation Report for June was well received by the market as it emphasized the economy's modest growth rate with a solid nonfarm payrolls reading (222,000 actual vs 173,000 Briefing.com consensus) while at the same time tempering inflation concerns with a lower than expected average hourly earnings reading (+0.2% actual vs +0.3% Briefing.com consensus). In other words, it was another 'Goldilocks' report that should give the Fed some cause for pause when considering the timing of the next rate hike.
Following the jobs report, the CME FedWatch Tool is still pointing to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 59.1%, down ever so slightly from yesterday's 60.0%.
The S&P 500 opened Friday's session with a modest gain and continued climbing throughout the morning, eventually settling near its session high. Eight of eleven sectors settled in the green, but none with a greater gain than the top-weighted technology sector (+1.3%), which outperformed from start to finish. The influential financial sector (+0.6%) got off to a slow start, but eventually moved in line with the broader market.
Transports underpinned the industrial sector (+0.8%), sending the Dow Jones Transportation Average (+1.2%) to a new all-time high. The consumer discretionary sector (+0.8%) also outperformed, benefiting from broad strength. The remaining advancers finished with gains ranging from 0.1% (utilities) to 0.7% (real estate).
On the downside, three groups--telecom services (-0.4%), energy (-0.1%), and consumer staples (-0.1%)--finished in the red. Crude oil weighed on the energy sector, dropping 2.9% to $44.25/bbl, following Thursday's EIA inventory report, which showed a rise in U.S. production alongside a surprisingly large drop in crude and gasoline stockpiles.
U.S. Treasuries moved lower in a curve-steepening trade on Friday, increasing the 2yr-10yr spread by one basis point. The benchmark 10-yr yield climbed two basis points to 2.39%, extending its weekly advance to nine basis points.
It's also worth pointing out that U.S. President Donald Trump and Russian President Vladimir Putin reached an agreement on a ceasefire in western Syria in their first face-to-face meeting since Mr. Trump's victory in the 2016 presidential election.
Taking another look at Friday's economic data, which was limited to the Employment Situation Report for June:
May nonfarm payrolls hit 222,000 while the Briefing.com consensus expected a reading of 173,000. The prior month's reading was revised to 152,000 from 138,000. Nonfarm private payrolls added 187,000 while the Briefing.com consensus expected an increase of 175,000. The previous month's reading was revised to 159,000 from 147,000. The unemployment rate rose to 4.4% (Briefing.com consensus 4.3%). Average hourly earnings increased 0.2% (Briefing.com consensus +0.3%), while the previous month's reading was revised to +0.1% (from +0.2%). The average workweek was reported at 34.5, which is slightly higher than the Briefing.com consensus of 34.4. The previous month's reading was left unrevised at 34.4.The labor force participation rate increased to 62.8% in June from 62.7% in May.
The key takeaway from the report is that the weak year-over-year growth in average hourly earnings (2.5%) is apt to give the Fed some cause for pause when considering the timing of its next rate hike.
On Monday, investors will receive May Consumer Credit (Briefing.com consensus $12.7 billion) at 15:00 ET.
Nasdaq Composite +14.3% YTDS&P 500 +8.3% YTDDow Jones Industrial Average +8.4% YTDRussell 2000 +4.3% YTD Week In Review: Equities Eke Out Slim Gains in an Abbreviated Week
Equity indices kicked off the third quarter on a positive note, finishing the first week of July with modest gains. Trading volume was light as many investors took some extra time off to celebrate the Fourth of July holiday. The S&P 500 added 0.1% while the Nasdaq and the Dow finished with gains of 0.2% and 0.3%, respectively.
The major averages settled mixed in an abbreviated session on Monday. The financials and energy sectors were bullish, finishing at the top of the day's leaderboard, and helped the S&P 500 overcome the top-weighted technology sector's third-consecutive loss. The tech-heavy Nasdaq wasn't so lucky, dropping 0.5%, while the Dow outperformed, hitting a new intraday record high.
U.S. markets were closed on Tuesday in observance of the Fourth of July holiday, but the benchmark index picked up where it left off in the midweek session, registering another modest win with the technology group leading the charge. The minutes from the June 13-14 FOMC meeting were released on Wednesday, but did little to change the market's rate-hike expectations.
In the minutes, Fed members seemed generally upbeat about economic activity and gave the impression that they believe the recent softness in inflation is transitory. In addition, Fed officials were divided on when to start unwinding the Fed's balance sheet; some wanted to start in a couple of months while others preferred to hold off until the end of the year.
Investors pulled back on Thursday, dragging all three major averages into negative territory for the week and leaving the S&P 500 below its 50-day simple moving average for the first time in nearly two months. The market expressed concerns about less accommodative central bankers, evidenced by rising interest rates around the globe. U.S. Treasuries moved in a curve-steepening trade, helping to keep the influential financial sector ahead of the broader market.
The Employment Situation Report for the month of June, which showed the addition of 222,000 nonfarm payrolls (Briefing.com consensus 173,000) and stable hourly earnings (+0.2% vs Briefing.com consensus +0.3%), was the focus of Friday's session. The report was largely seen as another 'Goldilocks' report, pointing to an economy that is growing at a modest rate without the worry of inflation.
Eight of the S&P 500's eleven sectors ended Friday in the green, which was just enough to bring the benchmark index back into positive territory for the week. The technology group was the top-performing sector, benefiting from broad strength. However, the energy group underperformed as crude oil weighed.
WTI crude futures struggled this week, dropping 4.1%, following news that OPEC exports increased in the month of June and headlines that Russia is not in favor of deepening the current OPEC-led production cut agreement. In addition, the weekly inventory report from the Department of Energy, which showed a rise in U.S. production alongside a larger than expected drop in crude and gasoline stockpiles, also prompted selling pressure.
The fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 59.1%, up from last week's 54.4%.
Tech Stocks from Briefing.com
Friday ended with gains across the board. The Nasdaq Composite added 63.61 points (+1.04%) to 6153.08. The S&P 500 was up 15.43 points (+0.64%) to 2425.18, while the Dow Jones Industrial Average advanced 94.30 points (+0.44%) to 21414.34. This week's moves take the three major US indices to +14.3%, +8.3% and +8.3% YTD, respectively.
Today's economic data included May nonfarm payrolls which hit 222,000 while the prior month's reading was revised to 152,000 from 138,000. Nonfarm private payrolls added 187,000 while the previous month's reading was revised to 159,000 from 147,000. Additionally, the unemployment rate rose to 4.4% while average hourly earnings increased 0.2%; the previous month's reading was revised to +0.1% (from +0.2%). The average workweek was reported at 34.5, while the previous month's reading was left unrevised at 34.4.
The Technology (XLK 55.01, +0.63 +1.16%) space was the best performer in the S&P today, finishing the week on a high note. Component Qualcomm (QCOM 55.35, +0.56 +1.02%) posted nice gains today after disclosing it filed a complaint with the US ITC against Apple (AAPL 144.15, +1.42 +0.99%). The Consumer Discretionary XLY +0.87% space was the next best after tech, followed by XLI +0.78%, XLF +0.72%, XLRE +0.57%, XLV +0.56%, XLB +0.52%, XLU +0.08%, IYZ -0.03%, XLP -0.06%, XLE -0.16%.
In the S&P 500 Information Technology (945.57, +11.70, +1.25) space, trading ended the week with some nice gains, just off intraday highs. Components AMAT +3.40%, LRCX +2.95%, QRVO +2.89%, ATVI +2.60%, SYMC +2.49%, STX +2.44%, JNPR +2.37%, HRS +2.29%, NVDA +2.29%, KLAC +2.29%, TXN +2.11%, CSRA +1.98%, SWKS +1.95%, AVGO +1.95% aided the advance.
Other notable news items among sector components:
Qualcomm (QCOM) filed a complaint with the U.S. International Trade Commission (ITC) alleging that Apple (AAPL) has engaged in the unlawful importation and sale of iPhones that infringe one or more claims of six Qualcomm patents.
Agilent (A 59.64, +0.42 +0.71%) acquired Cobalt Light Systems for EUR 40 million in cash.
Digital Ally (DGLY 4.20, +0.95 +29.31%) announced the USPTO 'rejected every single ground of invalidity that Axon (AAXN 25.09, +0.04 +0.16%) put forward challenging claims 7-10 and 20'.
RadiSys (RSYS 2.99, -0.61 -16.94%) guided Q2 revenue below prior guidance; cited delayed buying decisions at two of its largest customers.
GlobalStar (GSAT 2.02, -0.06 -2.88%) disclosed entry into common stock purchase agreement with Thermo Funding.
Frontier Communications (FTR 1.06, -0.04 -3.64%) announced a 1:15 reverse split; to begin trading ex-split on Monday, July 10.
MTS Systems (MTSC 51.40, +0.35 +0.69%) completed repricing of existing $457 million senior secured Term Loan B facility; no material change to outstanding debt, maturities or covenants as a result of this repricing.
Synchronoss Tech (SNCR 16.50, +0.64 +4.04%) initiated a process to evaluate strategic alternatives that may include a sale or other transaction.
Analyst actions:
PANW was upgraded to Buy from Neutral at Citigroup;
DMRC was downgraded to Hold from Buy at Craig Hallum,
RATE was downgraded to Equal Weight from Overweight at Stephens,
GLOB was downgraded to Sector Weight from Overweight at KeyBanc Capital Mkts;
BSFT was initiated with an Equal Weight at Barclays,
PTNR was initiated with a Buy at Roth Capital
From Briefing.com: 4:29 pm Closing Market Summary: S&P 500 Slips Below 50-Day Simple Moving Average (:WRAPX) :
Stocks moved into negative territory for the week on Thursday as the S&P 500 (-0.9%) tumbled below its 50-day simple moving average (2,414) for the first time in seven weeks. The Nasdaq (-1.0%) and the Dow (-0.7%) also registered sizable declines, but none as great as the small-cap Russell 2000, which settled lower by 1.4%.
The major averages were bearish from the jump on Thursday, quickly turning their opening losses into sizable declines within the first few minutes of action. The S&P 500 found some support at its 50-day simple moving average (2,414) in the morning, bouncing off the key technical level to climb back to its opening mark. However, the bears reclaimed control in the afternoon, sending the benchmark index, and its peers, to a fresh session low.
There wasn't a specific catalyst to credit for the equity market's poor performance, but the market did express concerns about less accommodative central bankers, evidenced by rising interest rates around the globe. U.S. Treasuries moved lower in a curve-steepening trade that left the 10-yr yield five basis points higher at 2.37% and the 2-yr yield unchanged at 1.40%.
The heavily-weighted financial sector (-0.7%) benefited from the steepening of the yield curve and exhibited relative strength throughout the session. However, late-afternoon selling did trim the financial sector's advantage over the broader market a bit, leaving the group at its worst mark of the day. The consumer staples (-0.5%), materials (-0.4%), and utilities (-0.1%) sectors also outperformed.
Out of the remaining seven sectors, the lightly-weighted telecom services (-2.3%), real estate (-1.9%), and energy (-1.8%) groups finished with the widest declines. The energy sector struggled for the majority of the session despite an upbeat EIA crude inventory report, which showed that oil inventories declined by 6.3 million barrels last week (consensus -2.0 million).
Crude oil immediately shot to a new session high following the EIA release, trading as high as +3.0%, but eventually retraced a good portion of that gain to settle at a price of $45.52/bbl (+0.9%).
The influential technology (-0.9%) and health care (-1.3%) sectors struggled early on, but the tech group was able to move back in line with the broader market, thanks in large part to the positive performance of chipmakers; the PHLX Semiconductor Index settled with a modest loss of 0.5%.
Meanwhile, the health care group was never able to recover. All health care components finished in the red, but biotechnology companies showed particular weakness, sending the iShares Nasdaq Biotechnology ETF (IBB 310.45, -4.84) lower by 1.5%.
It's also worth pointing out that retailers struggled today, dragging the SPDR S&P Retail ETF (XRT 39.46, -0.87) lower by 2.2%. L Brands (LB 46.49, -7.62) led the retreat, plunging 14.1%, after reporting a 9.0% decline in June comparable sales vs +6.0% a year ago and -7.0% last month.
Reviewing today's large batch of economic data, which included June ADP Employment Change, the weekly Initial Claims Report, June ISM Services, May Trade Balance, the weekly MBA Mortgage Applications Index, and June Challenger Job Cuts:
The ADP National Employment Report showed an increase of 158,000 in June (Briefing.com consensus 185,000) while the May reading was revised lower to 230,000 from 253,000.
The ADP reading precedes Friday's more influential Employment Situation Report for June, which the Briefing.com consensus expects will show the addition of 173,000 nonfarm payrolls.
The latest weekly initial jobless claims count totaled 248,000 while the Briefing.com consensus expected a reading of 244,000. Today's tally was above the unrevised prior week count of 244,000. As for continuing claims, they rose to 1.956 million from the revised count of 1.945 million (from 1.948 million).
The key takeaway from the report is that jobless claims continue to remain at low levels that are consistent with a tight labor market.
The ISM Services Index for June rose to 57.4 from an unrevised reading of 56.9 in May. The Briefing.com consensus expected a reading of 56.6.
The key takeaway from the report is that the services side of the economy continues to perform well, evidenced by every index component registering a reading above 50.0 in June.
The May trade balance showed a deficit of $46.5 billion while the Briefing.com consensus expected the deficit to hit $46.1 billion. The previous month's deficit was left unrevised at $47.6 billion.
The key takeaway from the report is that the average real trade balance for the second quarter is higher than the average for the first quarter, which implies net exports will have a negative contribution on Q2 GDP growth.
The weekly MBA Mortgage Applications Index rose 1.4% to follow last week's 6.2% decrease.
June Challenger Job Cuts showed a year-over-year decrease of 19.3% to follow last month's year-over-year increase of 9.7%.
On Friday, investors will receive the Employment Situation Report for June, which the Briefing.com consensus expects will show the addition of 173,000 nonfarm payrolls. The report will be released at 8:30 ET.
Nasdaq Composite +13.1% YTD
S&P 500 +7.6% YTD
Dow Jones Industrial Average +7.9% YTD
Russell 2000 +3.2% YTD
Tech Stocks from Briefing.com
TThe broader market turned in a tough Thursday as the Nasdaq Composite fell a clean 1% (6089.46, -61.39). The S&P 500 was barely better, losing 22.79 points (-0.94%) to 2409.75. The Dow Jones Industrial Average shed 158.13 points (-0.74%) to 21320.04.
Thursday housed a plethora or market data points, including the ADP National Employment Report which showed an increase of 158,000 in June while the May reading was revised lower to 230,000 from 253,000. The latest weekly initial jobless claims count totaled 248,000 while last week's reading was unrevised at 244,000. As for continuing claims, they rose to 1.956 million from the revised count of 1.945 million (from 1.948 million). The ISM Services Index for June rose to 57.4 from an unrevised reading of 56.9 in May. The May trade balance showed a deficit of $46.5 billion compared to the previous month's deficit which was left unrevised at $47.6 billion. The weekly MBA Mortgage Applications Index rose 1.4% to follow last week's 6.2% decrease. Lastly, June Challenger Job Cuts showed a year-over-year decrease of 19.3% to follow last month's year-over-year increase of 9.7%.
The Technology (XLK 54.38, -0.50 -0.91%) space wasn't the worst performing S&P sector today but it certainly wasn't the best. Component Amphenol (APH 72.48, -1.29 -1.75%) was weak today following a premarket downgrade of the stock to a Neutral rating at Goldman. All 11 S&P sectors finished in the red; aside from tech, the remaining sectors finished Thursday XLRE -1.81%, IYZ -1.43%, XLV -1.26%, XLE -1.13%, XLY -1.01%, XLI -0.82%, XLF -0.76%, XLP -0.57%, XLB -0.43%, XLU -0.06%.
In the S&P 500 Information Technology (933.87, -8.10 -0.86%) space, trading fell at the open and never looked back, ultimately finishing just above lows. Bellwethers like AAPL -0.94%, MSFT -0.74%, FB -1.01%, GOOG -0.55%, GOOGL -0.49%, V -0.81%, ORCL -1.23%, INTC -2.07%, CSCO -1.24% all finished lower today.
Other notable news items among sector components:
Symantec (SYMC 27.72, -0.07 -0.25%) to acquire Israel-based Fireglass; terms not disclosed.
Kulicke & Soffa (KLIC 19.06, -0.14 -0.73%) acquired Liteq BV; terms not disclosed.
First Data (FDC 17.93, -0.47 -2.55%) completed its acquisition of CardConnect (CCN 15.05).
CNBC's David Faber said, citing sources, that Time Warner's (TWX 101.53, +0.36 +0.36%) deal with
AT&T (T 37.18, -0.45 -1.20%) is likely to close as soon as within the next 60 days despite ongoing speculation the deal could be delayed.
Cisco Systems (CSCO 30.72, -0.39 -1.24%) responded to latest development in ITC case vs. Arista Networks (ANET 145.43, -3.19 -2.15%).
Brooks Automation (BRKS 22.35, -0.02 -0.09%) acquired Pacific Bio-Material Management for $33 million in cash.
Cypress Semi (CY 13.37, -0.22 -1.62%) reached cooperation and settlement agreement with former CEO (largest individual stockholder) T.J. Rodgers.
Tesla's Model (TSLA 308.89, -18.20 -5.56%) S was among select vehicles that did not receive any safety awards from Insurance Institute for Highway Safety.
Analyst actions:
MSCC was upgraded to Buy from Neutral at Goldman;
APH was downgraded to Neutral from Buy at Goldman;
AABA was initiated with an Outperform at Oppenheimer,
SWKS was initiated with a Buy at Argus,
LOGI was initiated with a Buy at Citigroup,
MKSI was initiated with a Buy at Deutsche Bank,
ENTG was initiated with a Hold at Deutsche Bank,
ELVT was initiated with a Buy at BTIG Research
From Briefing.com: 4:30 pm Closing Market Summary: S&P 500 Registers Modest Win on Wednesday (:WRAPX) :The benchmark S&P 500 (+0.2%) registered its second win of the week on Wednesday, settling near the top of its trading range, but activity was subdued with only 886.2 million shares changing hands at the NYSE floor following the July Fourth holiday. The Nasdaq (+0.7%) outperformed while the Dow (unch) lagged, finishing just a tick below its unchanged mark. Also of note, the small-cap Russell 2000 underperformed, settling lower by 0.5%.
Investors got their hands on the minutes from the June 13-14 FOMC meeting on Wednesday afternoon, but the initial reaction was muted as the minutes did little to change the market's rate-hike expectations; the fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 64.8%, which is slightly higher than Monday's reading of 62.2%.
In the minutes, Fed members seemed generally upbeat about economic activity and attributed the recent softness in inflation to idiosyncratic factors. In addition, Fed officials were divided on when to start unwinding the central bank's balance sheet; several preferred to start the process within a couple of months while others wanted to defer the decision until later in the year.
Looking ahead, inflation data, like the CPI Report and the average hourly earnings growth seen in the monthly employment reports, will take on an increasingly important role in guiding the market's thinking about when the Fed will next raise the target range for the fed funds rate and start reducing reinvestment of the Fed's securities holdings.
The Employment Situation Report for June (Briefing.com consensus 173,000), which includes average hourly earnings (Briefing.com consensus +0.3%), will be released on Friday morning at 8:30 ET.
In the equity market, the top-weighted technology sector (+1.0%) was able to reclaim all of Monday's slide on Wednesday, providing solid sector leadership from start to finish amid broad strength. Chipmakers showed notable strength, sending the PHLX Semiconductor Index higher by 2.1%, as did mega-cap names like Microsoft (MSFT 69.08, +0.91), Facebook (FB 150.34, +1.91), and Alphabet (GOOGL 932.26, +12.80).
Biotech names also had a solid showing, evidenced by the 1.4% increase in the iShares Nasdaq Biotechnology ETF (IBB 315.29, +4.34), helping to keep the influential health care sector (+0.5%) near the top of the day's leaderboard. The financials (+0.2%) and industrials (+0.3%) spaces also finished in positive territory.
The seven laggards--consumer discretionary (-0.2%), energy (-1.3%), materials (-0.4%), consumer staples (-0.1%), utilities (-0.4%), telecom services (-0.4%), and real estate (-1.2%)--put up a good fight, but were ultimately no match for the technology, health care, financials, and industrials sectors, which represent around 60.0% of the broader market combined.
Crude oil weighed heavily on the energy sector, dropping 4.2% to $45.10/bbl, following reports that Russia will oppose any proposals to deepen the existing production-cut agreement. In addition, news that OPEC exports increased by 450,000 barrels per day month-over-month in June also acted as a bearish catalyst. The loss ended the commodity's longest bull-run in more than five years.
In the bond market, the 10-yr yield slipped two basis points to 2.33% while the 2-yr yield settled unchanged at 1.41%. Treasuries gave back their modest gains immediately following the release of the FOMC minutes, but eventually closed in the green near their best marks of the day.
Reviewing Wednesday's economic data, which was limited to the Factory Orders Report for May:
The Factory Orders Report for May showed a decrease of 0.8%, which is below the Briefing.com consensus of -0.5%. The April reading was revised to -0.3% (from -0.2%).
The key takeaway from the report is that order and shipments activity for nondefense capital goods excluding aircraft were higher than first reported and will improve the expected contribution to Q2 GDP growth forecasts.
On Thursday, investors will receive a slew of economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, June Challenger Job Cuts at 7:30 ET, June ADP Employment Change (Briefing.com consensus 185,000) at 8:15 ET, the weekly Initial Claims Report (Briefing.com consensus 244,000) at 8:30 ET, May Trade Balance (Briefing.com consensus -$46.1 billion) at 8:30 ET, and June ISM Services (Briefing.com consensus 56.6) at 10:00 ET.
Nasdaq Composite +14.3% YTD
S&P 500 +8.7% YTD
Dow Jones Industrial Average +8.7% YTD
Russell 2000 +4.6% YTD
Tech Stocks from Briefing.com
Following the abbreviated Monday session and the off day on Tuesday, the markets opened surprisingly strong as volume eventually evened out on both the NYSE floor (886 mln vs average near 1,000 mln) and the NASDAQ floor (1,857 mln vs average near 1,999 mln). When all was said and done, the Nasdaq Composite was the best performer on Wednesday, adding 40.80 points (+0.67%) to 6150.86. The S&P 500 managed gains of 3.53 points (+0.15%) to 2432.54, while the Dow Jones Industrial Average lost about 1.10 points (-0.01%) to 21478.17.
The Technology (XLK 54.88, +0.54 +0.99%) space rebounded modestly today and was the best performing S&P sector. Component Advanced Micro (AMD 13.19, +1.04 +8.56%) was strong today on the back of an increased stake from Mubadala Investment Company. The Energy XLE -2.03% space got shredded today, followed by XLRE -1.20%, IYZ -0.86%, XLU -0.48%, XLB -0.33%, XLY -0.25%, XLP -0.11%, XLF +0.08%, XLI +0.29%, XLV +0.57%.
In the S&P 500 Information Technology (941.97, +9.68 +1.04%) space, trading finished just off highs but firmly in the green. Component Oracle (ORCL 49.46, +0.10 +0.20%) was modestly higher following a premarket upgrade of the stock to an Overweight rating at KeyBanc Capital Mkts. Other names in the space which outperformed today included MU +4.70%, PYPL +3.29%, ADSK +3.26%, QRVO +3.21%, MCHP +2.81%, AMAT +2.71%, NVDA +2.67%, INTC +2.63%, LRCX +2.33%, SWKS +2.30%, XLNX +2.29%, ADI +2.14%, ADBE +2.02%.
Other notable news items among sector components:
Diebold Nixdorf (DBD 21.60, -6.40 -22.86%) cut its FY17 guidance citing elongated conversion cycles for large orders in banking and the delay in systems rollouts in the service business. Sees non-GAAP EPS of $0.95-1.15 (down from $1.40-1.70) on revenues of $4.7-4.8 billion (down from $5.0 billion).
Ericsson's (ERIC 7.23, +0.10 +1.40%) Chairman to not make himself available for re-election in 2018; Nomination committee has initiated the search for a replacement.
Mercury (MRCY 43.26, +1.25 +2.98%) acquired Richland Technologies; terms not disclosed.
Xperi's (XPER 33.70, +1.20 +3.69%) Tessera Technologies confirmed more details today on its win against
Broadcom (AVGO 231.61, +1.85 +0.81%) and certain of its customers in the U.S. International Trade Commission.
Vantiv (VNTV 61.06, -1.45 -2.32%) and Worldpay Group plc (WDDYF 4.88, +0.83 +20.49%) agreed to key terms of possible offer.
Baidu.com (BIDU 183.83, +3.86 +2.14%) and NVIDIA (NVDA 143.05, +3.72 +2.67%) announced a broad partnership to bring the world's leading artificial intelligence technology to cloud computing, self-driving vehicles and AI home assistants.
Advanced Energy (AEIS 65.80, +1.27 +1.97%) acquired Excelsys Holdings for EUR 15.5 million.
DXC Technology (DXC 76.23, +0.28 +0.37%) acquired Tribridge; terms not disclosed.
Analyst actions:
ORCL was upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts,
TER was upgraded to Buy from Hold at Stifel,
FTNT was upgraded to Positive from Mixed at OTR Global;
MRVC was downgraded to Market Perform from Outperform at Northland Capital,
RATE downgraded to Hold from Buy at Needham,
CHU and CHL were both downgraded to Underweight ratings from Overweight at Morgan Stanley
From Briefing.com: 1:08 pm Closing Market Summary: Tech Stocks Pressured in Abbreviated Session (:WRAPX) :
The major averages ended an abbreviated Monday session on a mixed note. The Nasdaq Composite (-0.5%) could not hold its opening gain and spent the session in a steady slide, preventing the broader S&P 500 (+0.2%) from finishing near its own opening high. The limited number of technology stocks in its composition helped the Dow Jones Industrial Average (+0.6%) settle near its best level of the day, marking a fresh intraday record high (21562.75) in the process.
With the market closed on Tuesday for Independence Day, today's session was not expected to be particularly active. However, the daylong weakness in the technology sector (-0.9%) prevented the key indices from rising in unison. The top-weighted sector was a clear laggard while other decliners-consumer discretionary (-0.2%), consumer staples (-0.1%), and utilities (-0.5%)-ended closer to their flat lines.
The weakness in technology was not isolated to any single component. Instead, top-weighted names like Apple (AAPL 143.50, -0.52), Microsoft (MSFT 68.17, -0.76), and Alphabet (GOOGL 919.46, -10.22) began on a higher note, but slid into the close. High-beta chipmakers followed suit, sending the PHLX Semiconductor Index lower by 1.4%.
Unlike the Nasdaq, the S&P 500 remained in the green until the close as technology's underperformance was offset by gains among financials (+1.3%), industrials (+0.6%), and energy (+2.0%). Lightly-weighted sectors also chipped in with materials, real estate, and telecom services adding between 0.8% and 0.9%.
Industrials were underpinned by the Dow Jones Transportation Average, which gained 1.1% to end the day at a fresh record high while the energy sector followed crude oil, which jumped 1.5% to $46.73/bbl.
Elsewhere, the consumer discretionary sector finished among the laggards, but it worth noting that Ford (F 11.56, +0.37) and General Motors (GM 35.57, +0.64) posted respective gains of 3.3% and 1.8% even though both saw their June sales fall roughly 5.0% year-over-year. Toyota Motor (TM 106.03, +1.01) climbed 1.0% after reporting a 2.1% increase in sales while Honda Motor (HMC 27.41, +0.02) added 0.1% after announcing that its June sales grew 0.8%.
Treasuries held modest gains in early morning action, but slid into the afternoon. The bond market will remain open for another hour, but the 10-yr note is on track to finish in the red with its yield rising four basis points to 2.34%.
Today's economic data included May Construction Spending and June ISM:
Total construction spending was basically flat in May (Briefing.com consensus +0.3%) following an upwardly revised 0.7% decline (from -1.4%) for April. Nonresidential spending was up 0.3% month-over-month, so the drag in May was residential spending, which declined 0.5%.
The key takeaway from the report is that private residential spending was down in May, signaling that the housing market growth will continue to be pinched by limited supply.
The ISM Manufacturing Index for June hit 57.8, which was above the Briefing.com consensus estimate of 55.0 and the highest level since August 2014. The dividing line between expansion and contraction is 50.0 and June marked the 10th consecutive month the ISM Index has been above 50.0.
The key takeaway from the report is that it featured a faster pace of new orders, which bodes well for future production and serves as a good sign of increased manufacturing demand.
Bond and equity markets will be closed tomorrow for Independence Day. On Wednesday, investors will receive the weekly MBA Mortgage Index at 7:00 ET while May Factory Orders will be reported at 10:00 ET. The FOMC will release the minutes from its June policy meeting at 14:00 ET.
Nasdaq Composite +13.5% YTD
S&P 500 +8.5% YTD
Dow Jones Industrial Average +8.7% YTD
Russell 2000 +5.2% YTD
Tech Stocks from Briefing.com
The broader market finished on a flat note in the abbreviated pre-holiday session on Monday. Action in the Dow Jones Industrial Average outperformed today as the index notched new all-time highs on its way to a 21479.27 close (+129.64, +0.61%). The S&P 500 also gained today, ending at 2429.01 (+5.60, +0.23%) while the Nasdaq Composite (along with the tech space as a whole) took a hit to 6110.06 (-30.36, -0.49%).
Today's finish was a contrast to Friday's final moments when the market was riding highs but quickly collapsed as sellers got out into the bell.
Technology (XLK 54.34, -0.38 -0.69%) opened with some modest gains but quickly fell to the dogs about an hour past the bell. Component Western Digital (WDC 85.29, -3.31 -3.74%) was one of the worst performing names today after Toshiba (TOSBF 2.32, -0.08 -3.33%) filed in opposition to the case between the two parties. The tech space was the worst performing sector today; the S&P ended with Energy XLE +1.93% posting the best gains, followed by XLF +1.46%, XLRE +0.93%, XLB +0.84%, XLI +0.62%, IYZ +0.43%, XLV +0.19%, XLY -0.10%, XLP -0.13%, XLU -0.46%.
The S&P Information Technology (932.29, -7.99 -0.85%) ended near lows today despite modest opening gains. Particularly, Semi (SOX 1020.51, -14.40 -1.39%) names took a hit today with components NVDA -3.65%, AMD -2.64%, MRVL -2.60%, MU -2.41%, CAVM -2.25%, MPWR -2.24%, ADI -2.17%, CY -2.05%, IDTI -2.02%, MCHP -1.78%, ON -1.71% turning in especially tough sessions. Other names in the IT space which underperformed today include FB -1.69%, XLNX -1.65%, ORCL -1.56%, LRCX -1.51%, PYPL -1.49%, ADSK -1.45%, AVGO -1.41%, NTAP -1.20%, GOOG -1.10%, MSFT -1.10%.
From Briefing.com: 4:24 pm Closing Market Summary: Down Week Ends on Shaky Note (:WRAPX) :
The stock market was on track to end Friday on its session high, but quarter-end selling during the final minutes of the action knocked the key indices off their afternoon highs. The S&P 500 added 0.2%, trimming this week's loss to 0.6%, while the Nasdaq Composite (-0.1%) underperformed, widening its weekly decline to 2.0%. Shielded from this week's underperformance in technology, the Dow Jones Industrial Average (+0.3%) shed just 0.2% for the week. The S&P 500 ended the second quarter with a gain of 2.6% while Dow climbed 3.3% and Nasdaq advanced 3.9%.
Equity indices began the day with modest gains that were a by-product of relative strength in groups like consumer discretionary (+0.6%), industrials (+0.8%), and energy (+0.4%) while top-weighted sectors like financials (-0.1%), technology (-0.1%), and health care (-0.1%) could not stay away from their flat lines. The three influential groups reluctantly followed the market higher in the afternoon, but a wave of selling in the final minutes of the session knocked the market to lows.
The discretionary sector received an early boost from NIKE (NKE 59.00, +5.83) after the apparel heavyweight beat fourth quarter expectations. The company issued cautious revenue guidance for the first quarter, but its top-line outlook for the full year was in line with expectations. In addition to reporting results, NIKE announced a pilot program to begin selling its products on Amazon (AMZN 968.00, -7.93). Shares of NIKE soared 11.0%, helping the Dow Jones Industrial Average spend the day ahead of its peers. Apparel retailers had a good showing overall and the SPDR S&P Retail ETF (XRT 40.74, +0.26) rose 0.6%.
Like the discretionary sector, industrials outperformed throughout the day. Transport stocks fueled the rally as the Dow Jones Transportation Average climbed 0.9%, extending its June gain to 4.4%.
The energy sector (+0.4%) was not far behind, catching a bid amid a 2.6% spike in crude oil, which jumped to $46.03/bbl and snapped its five-week skid. WTI crude gained 7.0% for the week while the energy sector advanced 0.7%, finishing only behind financials (week-to-date +3.3%).
The lightly-weighted materials sector (+0.5%) also finished ahead of the broader market while the remaining groups settled closer to their flat lines. Technology saw an intraday gain, which vanished during the late-afternoon slide. Micron (MU 29.86, -1.61) reported better than expected quarterly results, but the stock slid 5.1% nonetheless. The broader PHLX Semiconductor Index fell 0.5%, losing 4.9% for the week.
Treasuries held modest losses in morning action before retreating into the close. The benchmark 10-yr yield rose three basis points to 2.30%.
Economic data included Personal Income/Spending, Chicago PMI, and Michigan Sentiment:
Personal income increased 0.4% in May (Briefing.com consensus +0.3%) after a downwardly revised 0.3% increase (from 0.4%) for April. Personal spending was up 0.1%, as expected, following an unrevised 0.4% increase in April. The core PCE Price Index, which excludes food and energy, increased 0.1%, as expected.
The key takeaway is that inflation moved away from the Fed's longer-run inflation target of 2.0%, not toward it as the Fed is anticipating. That will help solidify the market's belief that the Fed doesn't have enough data-based scope to raise the fed funds rate until perhaps its December meeting at the earliest.
The Chicago Business Barometer, otherwise known as the Chicago Purchasing Managers Index, jumped to 65.7 in June (Briefing.com consensus 57.8) from 59.4 in May.
The key takeaway from the report is that the New Orders Index served as the springboard for the June jump, rising from 61.4 to 71.9 and signaling solid manufacturing demand in the Chicago Fed region.
The University of Michigan's Index of Consumer Sentiment was revised from the preliminary reading of 94.5 for June to 95.1 with the final reading. The latter was above the briefing.com consensus estimate of 94.7, but below the final May reading of 97.1.
The key takeaway from the report is that consumer confidence has dipped to its lowest level since the election, yet it still remains at favorable levels as the average level of 96.8 for the first half of the year was the best half-year average since the second half of 2000.
Monday's economic data will feature the 10:00 ET release of May Construction Spending and June ISM Index while June auto and truck sales will be reported throughout the abbreviated session, which will end at 13:00 ET.
Nasdaq Composite +14.1% YTD
S&P 500 +8.2% YTD
Dow Jones Industrial Average +8.0% YTD
Russell 2000 +4.3% YTD
Week In Review: Nasdaq Stumbles
The stock market endured some volatility, which resulted in a lower finish for the major indices. Relative weakness among technology stocks sent the Nasdaq Composite down 2.0% for the week while the S&P 500 surrendered 0.6%. The price-weighed Dow Jones Industrial Average (-0.2%) ended the week little changed.
The influential financial sector opened the week on a positive note, ending its four-session losing streak with a gain of 0.5%. However, negative performances from the heavily-weighted technology and health care groups mitigated the bullish influence of financials, leaving the benchmark index just a tick above its unchanged mark. Meanwhile, crude oil registered its third-consecutive win, climbing 0.8%.
Things got a bit more interesting on Tuesday, especially in the global bond market, where sovereign yields jumped after European Central Bank President Mario Draghi provided an upbeat assessment of eurozone inflation and growth trends. The financial group outperformed, once again, amid a steepening of the yield curve, but the ten remaining sectors finished in the red with the technology group pacing the retreat.
The midweek session brought some relief as investors bought the dip and put the S&P 500 back at its flat line for the week. The financials and technology sectors led the charge, but strength was broad-based with nine sectors settling in the green. The improvement in risk sentiment came after the ECB said that Mr. Draghi's Tuesday remarks were misinterpreted as hawkish while they were meant to strike a balance. However, longer-dated Treasuries and German bunds held their ground.
The relief rally didn't last long as the market reversed and set a fresh low for the week on Thursday. The technology sector fell to heavy profit-taking, dropping 1.8%. Selling was broad-based with only the financials and energy spaces escaping the session with wins. Banks underpinned the financial group after the Federal Reserve approved the capital plans of all 34 banks required to partake in the annual stress test.
Thursday also saw more selling in the global bond market. Treasuries tumbled in a curve-steepening trade while German bunds slid following hotter than expected inflation data out of Germany.
Friday's session featured a weak rebound in the broader market, as financials, health care, and technology struggled. NIKE (NKE) surged more than 10.0% after beating earnings expectations, which helped keep the market above water.
The fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 54.4%, up from last week's 51.3%.
Tech Stocks from Briefing.com
Technology stocks ended a strong first half of the year on a soft note in June. The Nasdaq 100 (QQQ) is up 16% year-to-date after adding 4% in the second quarter, but this massive momentum trade is starting to break down as the index fell through its 50-day moving averages this week. The Nasdaq 100 closed the month lower (-2%) for the first time since October, ending a seven-month win streak.
Today: DJIA +0.3% to 21351; S&P 500 +0.2% to 2423; Nasdaq 100 -0.1% to $5647.
Large-cap tech stocks continue to set the tone for the market so the recent weakness in the sector that accounts for 22% of the S&P 500 and has led the market higher has some investors concerned. On the other hand, a rotation of sector leadership is quite normal and healthy in a bull market.
The valuation on most of the dominant technology giants remains reasonable, but the massive momentum trade can result in some violent corrective moves.
Outside of the mega-cap tech stocks, semiconductors have traded in similar fashion. The Semiconductor ETF (SMH) also recorded its first monthly drop (-4%) since October of last year.
Micron (MU) shares fell 5% today despite beating quarterly estimates and guiding above consensus for the second quarter in a row.
"The global trends taking shape today, including machine learning and big data analytics, are exciting and create significant opportunities for Micron." The fiscal third quarter revenue increase of 20% compared to the previous quarter was due primarily to a 14% increase in DRAM average selling prices and a 17% increase in trade NAND sales volumes. The company's overall consolidated gross margin for Q3 was ~10 percentage points higher compared to the previous quarter primarily due to increases in DRAM average selling prices and manufacturing cost reductions for both NAND and DRAM.
Cloud Computing company Tintri (TNTR) went IPO today. Tintri sells an enterprise cloud platform which is a cloud infrastructure deployed in a company's own data center but with connections to public cloud services. It offers many of the same benefits as public cloud (autonomous services, automation, self-service and analytics) but with the added control, security, and support for enterprise applications that only a private cloud can provide. The expected pricing on this deal was slashed to $7-8 from $10.50-12.50. It priced at $7 and closed up 4%.
The next interesting earnings report from the technology sector will be Barracuda Networks (CUDA) on July 10.
From Briefing.com: 4:31 pm Closing Market Summary: Stocks Settle Solidly Lower on Thursday (:WRAPX) :
Thursday's session looked eerily similar to Tuesday's session as the top-weighted technology sector (-1.8%) led the S&P 500 (-0.9%) solidly lower, the financials (+0.7%) and energy (+0.1%) sectors outperformed, and Treasuries tumbled across the curve. The Dow (-0.8%) settled roughly in line with the benchmark index while the Nasdaq (-1.4%) underperformed. All three major averages closed in the middle of the day's trading range.
The S&P 500 opened Thursday's session with a slim gain, but immediately started trending downward as the bearish sentiment within the technology sector caught fire in the broader market. Only two sectors--financials and energy--were able to dodge the wave of selling pressure and finish the day in positive territory. As for the laggards, the technology space led the retreat with a big decline of 1.8% while the others settled with losses between 0.8% (industrials) and 1.2% (consumer staples).
There wasn't a specific reason for today's slide, but another quick jump in long-term rates certainly didn't help. Treasuries moved lower in a curve-steepening trade after inflation data from Germany came in stronger than expected; the 10-yr yield climbed four basis points to 2.27% and the 2-yr yield ticked up one basis point to 1.37%. The U.S. Dollar Index (95.34, -0.44) also finished solidly lower, dropping 0.5% to a nine-month low.
Technology components were hit hard virtually across the board with mega-cap names like Apple (AAPL 143.68, -2.15), Microsoft (MSFT 68.49, -1.31), Facebook (FB 151.04, -2.20), and Alphabet (GOOGL 937.82, -23.19) finishing with losses between 1.4% and 2.4%. Chipmakers were among the weakest performers, sending the PHLX Semiconductor Index lower by 2.5%. For the week, the tech group trades at the bottom of the sector standings with a loss of 2.8%.
Meanwhile, in the financial sector, banks moved solidly higher after the Federal Reserve approved the capital plans of all 34 firms required to partake in its annual stress test. In many instances, those plans included larger than expected dividend increases and/or share buyback programs. Influential names like Wells Fargo (WFC 55.78, +1.45), Citigroup (C 66.98, +1.80), Bank of America (BAC 24.32, +0.44), and JPMorgan Chase (JPM 91.15, +1.33) finished with gains between 1.5% and 2.8%.
Crude oil eked out a slim victory, its sixth in a row, which helped the energy sector fend off the bears throughout Thursday's session. WTI crude advanced 0.1% to a price of $44.76/bbl. However, the commodity's performance was somewhat disappointing considering it held a much more substantial gain of 1.5% early on Thursday morning.
In U.S. corporate news, Rite Aid (RAD 2.89, -1.04) and Walgreens Boot Alliance (WBA 78.37, +1.28) terminated their merger agreement and signed a new deal whereby Walgreens will acquire 2,186 RAD stores, related distribution assets, and inventory from Rite Aid for an all-cash purchase price of $5.175 billion. The divestiture agreement with Fred's (FRED 9.51, -2.81) was also terminated. FRED shares plunged 22.8% following the termination of the WBA/RAD deal, while RAD shares tumbled 26.5% and WBA shares added 1.7%.
It's also worth pointing out that the CBOE Volatility Index (VIX 11.56, +1.53, +15.3%), which is often referred to as the "investor fear gauge", spiked to its highest level in over five weeks.
Reviewing Thursday's economic data, which included Initial Claims and the third estimate of first quarter GDP:
The latest weekly initial jobless claims count totaled 244,000 while the Briefing.com consensus expected a reading of 241,000. Today's tally was above the revised prior week count of 242,000 (from 241,000). As for continuing claims, they rose to 1.948 million from the revised count of 1.942 million (from 1.944 million).
The key takeaway from the report is that it continues to support the notion that the labor market is tight, as employers appear reluctant to let employees go.
The third reading of first quarter GDP pointed to an expansion of 1.4%, while the Briefing.com consensus expected a reading of 1.2%. The third estimate of first quarter GDP Deflator came in at 1.9%, which is below the Briefing.com consensus of 2.2%.
The key takeaway is that first quarter GDP growth was better than expected, but as the report from the BEA itself says, "...the general picture of economic growth remains the same," which is to say it remains below potential.
On Friday, investors will receive several economic reports, including May Personal Income and Personal Spending (Briefing.com consensus 0.3%; 0.1%) at 8:30 ET, June Chicago PMI (Briefing.com consensus 57.8) at 9:45 ET, and the final reading of the University of Michigan Consumer Sentiment Index for June (Briefing.com consensus 94.7) at 10:00 ET.
Nasdaq Composite +14.1% YTD
S&P 500 +8.1% YTD
Dow Jones Industrial Average +7.7% YTD
Russell 2000 +4.4% YTD
4:08 pm Micron beats by $0.11, beats on revs; guides Q4 EPS above consensus, revs in-line (MU) :
Reports Q3 (May) earnings of $1.62 per share, excluding non-recurring items, $0.11 better than the Capital IQ Consensus of $1.51; revenues rose 92.2% year/year to $5.57 bln vs the $5.41 bln Capital IQ Consensus.
The fiscal third quarter revenue increase of 20 percent compared to the previous quarter was due primarily to a 14 percent increase in DRAM average selling prices and a 17 percent increase in trade NAND sales volumes.
On a GAAP basis, gross margin was 46.9 percent compared to gross margin of 36.7 percent for the second quarter of fiscal 2017 and gross margin of 17.2 percent , for the third quarter of fiscal 2016. Guidance was 44-48%
Operating Cash Flow $2.41 bln
Co issues guidance for Q4, sees EPS of $1.73-1.87, excluding non-recurring items, vs. $1.60 Capital IQ Consensus Estimate; sees Q4 revs of $5.7-6.1 bln vs. $5.63 bln Capital IQ Consensus Estimate.
Ramping 64-layer 3D NAND and 1x DRAM; expect to achieve meaningful output by end of 2017; Initial revenue has been recognized.
DRAM Industry bit supply growth 15-20% in 2017
NAND industry bit supply growth of high 30s to low 40s% in 2017
Expect healthy industry demand to persist into 2018
Q3 Gross Margin 47-51%
Q3 Operating Income $2.2-2.4 bln
Tech Stocks from Briefing.com
A pretty poor session out of almost the entire market ended with the Nasdaq Composite again almost doubling up the percentage losses of the next worst index. The Nasdaq Composite finished 90.06 points lower (-1.44%) to 6144.35. The S&P 500 declined 20.99 points (-0.86%) to 2419.70, while the Dow Jones Industrial Average shed 167.58 (-0.78%) to 21287.03.
Economic data today included the latest weekly initial jobless claims count totaled 244,000 compared to the revised prior week count of 242,000 (from 241,000). As for continuing claims, they rose to 1.948 million from the revised count of 1.942 million (from 1.944 million). Also, the third reading of first quarter GDP pointed to an expansion of 1.4%, while the third estimate of first quarter GDP Deflator came in at 1.9%.
The Technology (XLK 54.77, -1.00 -1.79%) space returned to its bearish ways today, ending a clean point down compared to yesterday's close. Component Advanced Micro (AMD 12.60, -0.63 -4.76%) was the worst performer today, succumbing to the broader pressure despite announced another tier of CPU in its Ryzen PRO desktop processor portfolio. The Materials XLB -1.16% sector followed tech for the worst performing S&P sector today, followed by IYZ -1.16%, XLP -1.10%, XLRE -1.01%, XLY -0.97%, XLV -0.95%, XLI -0.82%, XLU -0.80%, XLE +0.20%, XLF +0.69%.
In the S&P 500 Information Technology (941.33, -17.57 -1.83%) space turned in, by all accounts, an abysmal Thursday finish after rocking lows near the $933 level slightly after noon. By our coverage, not a single S&P 500 IT name finished in the green today, with notable names in the red including LRCX -3.71%, KLAC -3.37%, NVDA -3.34%, STX -3.16%, MCHP -3.07%, AMAT -2.93%, AVGO -2.91%, SYMC -2.87%, XLNX -2.77%, ADSK -2.77%, MA -2.64%, HPQ -2.55%, QRVO -2.52%.
Other notable news items among sector components:
Baidu.com (BIDU 179.63, +1.63 +0.92%) priced an offering of US$1.5 billion aggregate principal amount of its notes.
ScanSource (SCSC 39.80, -0.25 -0.62%) acquired POS Portal for an upfront payment of about $145 million.
Microsoft (MSFT 68.49, -1.31 -1.88%) acquired Cloudyn; terms not disclosed.
Dialog Semiconductor (DLGNF 43.13, -0.07 -0.16%) invested an additional $15 million in Energous (WATT 16.45, +1.06 +6.89%).
Gilat Satellite (GILT 4.95, +0.18 +3.77%) and Intelsat (I 3.03, -0.13 -4.11%) announced a joint managed services solution to provide 3G infrastructure.
Alibaba (BABA 140.81, -3.14 -2.18%) may be planning an Echo-like Chinese voice-controlled speaker, according to The Information.
In reaction to quarterly results:
Progress Software (PRGS 30.64, -0.18 -0.58%) reported better than expected Q2 EPS and revenues of $0.42 and $93.2 million, respectively. For Q3, the company sees in-line EPS of $0.41-0.43 on worse than expected revenues of $93-96 million. For FY17, PRGS sees EPS ahead of market expectations at $1.73-1.78 and revenues in-line at $391-396 million.
Analyst actions:
GRPN was upgraded to Buy from Neutral at B. Riley & Co.,
SYMC was upgraded to Buy from Hold at Standpoint Research;
EMKR was downgraded to Neutral from Buy at B. Riley & Co.,
UMC was downgraded to Underperform at Macquarie;
PANW and FTNT were initiated with Outperform ratings at Northland Capital,
AZPN was initiated with a Neutral at Wedbush,
MODN was initiated with a Buy at Dougherty
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
From Briefing.com: 4:27 pm Closing Market Summary: Bears Dominate on Tuesday (:WRAPX) :
Wall Street took it to the chin on Tuesday as equities sold off into the closing bell, leaving the major averages at their worst marks of the day. The tech-heavy Nasdaq (-1.6%) was hit the hardest as technology and biotechnology stocks weighed. Meanwhile, the S&P 500 and the Dow settled with losses of 0.8% and 0.5%, respectively.
There was a notable jump in long-term rates on Tuesday as sovereign bond markets came under selling pressure in the wake of a morning remark from ECB President Mario Draghi that the threat of deflation is gone. The yield on the 10-yr Treasury note jumped six basis points to 2.20%, which contributed partly to the selling activity in richly-valued technology stocks and the underperformance of rate-sensitive areas like the S&P 500 utilities sector (-1.3%).
However, the heavily-weighted financial sector (+0.5%) benefited from the activity in the Treasury market as it resulted in a steepening of the yield curve, which is a positive for the financial industry's bottom line. The win marks the second in a row for the financial group and comes ahead of tomorrow's capital return plans, which will be released after the close.
Like financials, the energy sector (-0.2%) finished ahead of the broader market as crude oil cruised to its fourth-consecutive advance. Underpinned by a weaker dollar, the energy component jumped 2.0% to $44.25/bbl. Meanwhile, the U.S. Dollar Index (96.07, -1.04) tumbled 1.1% to a fresh nine-month low in reaction to the aforementioned remark from Mr. Draghi.
However, in the end, the bulls were just no match for the bears on Tuesday as ten of the eleven sectors finished in the red. The top-weighted technology group (-1.7%) finished at the very bottom of the leaderboard amid broad weakness. Alphabet (GOOGL 948.09, -24.00) was one of the sector's weakest components, dropping 2.5%, after European antitrust regulators hit the company with a $2.7 billion fine for skewing search results in favor of its own shopping site. Chipmakers also displayed notable weakness, sending the PHLX Semiconductor Index lower by 2.7%.
The lightly-weighted telecom services space (-1.4%) finished just a tick ahead of the technology group following news that Sprint (S 8.18, +0.17) has entered into exclusive talks with Charter Communications (CHTR 329.87, -2.78) and Comcast (CMCSA 39.25, -0.34) regarding a wireless deal. Wireless heavyweights Verizon (VZ 44.84, -0.91) and AT&T (T 37.70, -0.45) declined 2.0% and 1.2%, respectively, following the news.
Biotechnology stocks also exhibited notable weakness, leaving the iShares Nasdaq Biotechnology ETF (IBB 310.89, -8.65) lower by 2.7%, as investors took some money off the table following last week's biotech rally. However, the health care sector (-0.9%) held up relatively well, settling just a tick below the benchmark index.
Outside of real estate (-0.4%), the remaining laggards--consumer discretionary (-0.7%), industrials (-0.8%), materials (-0.7%), and consumer staples (-0.9%)--finished roughly in line with the broader market.
Also of note, the Senate decided to push back a vote on the Republican healthcare bill until after Congress returns from the July Fourth recess, as most expected.
Reviewing Tuesday's economic data, which included the June Consumer Confidence Index and the April Case-Shiller 20-city Index:
The consumer confidence reading for June rose to 118.9 from the prior month's revised reading of 117.6 (from 117.9). The Briefing.com consensus expected the survey to hit 116.7.
The key takeaway from the report is that consumer expectations for the short-term have been reined in some, but are still upbeat overall.
The April Case-Shiller 20-city Index hit 5.7% (Briefing.com consensus 5.9%) to follow last month's unrevised 5.9% increase.
On Wednesday, investors will receive the weekly MBA Mortgage Applications Index and May Pending Home Sales (Briefing.com consensus 0.5%). The two reports will be released at 7:00 ET and 10:00 ET, respectively.
Nasdaq Composite +14.2% YTD
S&P 500 +8.1% YTD
Dow Jones Industrial Average +7.8% YTD
Russell 2000 +3.4% YTD
4:07 pm CalAmp beats by $0.02, beats on revs; guides Q2 EPS midpoint below consensus; guides Q2 revs in line (CAMP) :
Reports Q1 (May) earnings of $0.29 per share, $0.02 better than the Capital IQ Consensus of $0.27; revenues fell 3.3% year/year to $88.1 mln vs the $86.85 mln Capital IQ Consensus. Adjusted EBITDA for the first quarter of fiscal 2018 was $13.2 million and Adjusted EBITDA margin was 15.0%, compared to Adjusted EBITDA of $13.7 million and Adjusted EBITDA margin of 15.1% in the first quarter of fiscal 2017.
Gross margin was 42.5% in the first quarter of fiscal 2018, up from 38.2% in the first quarter of fiscal 2017.
Co issues guidance for Q2, sees EPS of $0.23-0.29 vs. $0.29 Capital IQ Consensus Estimate; sees Q2 revs of $86-91 mln vs. $89.49 mln Capital IQ Consensus Estimate; Co sees Q2 adjusted EBITDA in the range of $10.5 to $13.5 million.
Tech Stocks from Briefing.com
Overall, the broader market began flat and fell off as the session progressed. Action ultimately wound down on Tuesday with all three major US indices near lows. The tech-heavy Nasdaq Composite doubled the percentage losses of the S&P today, slipping 100.53 points (-1.61%) to 6146.62. The S&P 500, for its part, shed 19.69 points (-0.81%) to 2419.38, while the Dow Jones Industrial Average could call itself the winner of the day, losing only 98.89 points (-0.46%) to 21310.66.
Market data today included the consumer confidence reading for June which rose to 118.9 from the prior months revised reading of 117.6 (from 117.9). Also, the April Case-Shiller 20-city Index hit 5.7% to follow last month's unrevised 5.9% increase.
The Technology (XLK 55.08, -0.92 -1.64%) space was the worst performing S&P sector today. Component Seagate Tech (STX 39.51, -2.88 -6.79%) was pressured by peer Western Digital's (WDC 91.85, -0.81 -0.87%) updated guidance. After tech, the Utilities XLU -1.18% space was the worst performer, followed by XLV -0.91%, XLP -0.88%, XLY -0.79%, XLI -0.75%, IYZ -0.63%, XLB -0.61%, XLRE -0.40%, XLE -0.17%, XLF +0.50%.
In the S&P 500 Information Technology (946.39, -16.06 -1.67%) space, trading ended at lows. Component NVIDIA (NVDA 146.58, -5.57 -3.66%) was lower despite announcing an autonomous driving partnership with Volkswagen (VLKAY 31.14, +0.54 +1.76%). Other names in the space which xxx.
Other notable news items among sector components:
According to the Wall Street Journal, Sprint (S 8.18, +0.17 +2.12%) is in discussions with Charter (CHTR 329.87, -2.78 -0.84%) and Comcast (CMCSA 39.25, -0.34 -0.86%) regarding wireless deal. CNBC's David Faber later commented on S/CHTR/CMCSA wireless talks; said it was unlikely Charter or Comcast will buy a stake in Sprint.
Pandora Media (P 8.47, +0.01 +0.12%) confirmed media reports that Tim Westergren has decided to step down from his position as CEO.
EU commission fined Alphabet (GOOG 927.33, -24.94 -2.62%) EUR 2.42 billion for 'abusing dominance as search engine by giving illegal advantage to own comparison shopping service'. In response, GOOG said it may consider an appeal.
Western Digital (WDC) raised Q4 earnings guidance to $2.85 from $2.55-2.65 and raised gross margin guidance to 41% from 40%, but kept revenue guidance unchanged at $4.8 billion.
PC-TEL (PCTI 6.93, -0.02 -0.29%) increased its quarterly dividend to $0.055 per share from $0.05 per share.
NAVER to acquire Xerox (XRX 29.01, -0.18 -0.62%) Research Centre Europe; expected to close in Q3.
CB&I (CBI 20.02, +5.62 +39.03%) shares were strong in reaction to a Court ruling in the Toshiba (TOSBF 2.60, -0.09 -3.35%) Westinghouse Electric case.
Micron (MU 31.66, -0.84 -2.58%) said it is discontinuing its Lexar removable storage retail business.
America Movil SA (AMX 15.97, -0.19 -1.18%) formed a JV with JCDecaux by merging their OOH businesses in Mexico.
Apple (AAPL 143.74, -2.08 -1.43%) rumored to have acquired German computer vision company SensoMotoric Instruments, according to MacRumors.
In reaction to quarterly results:
FactSet (FDS 165.65, -0.44 -0.26%) reported better than expected Q3 EPS of $1.85 on in-line revenues of $312.12 million. For Q4, the company sees EPS and revenues in-line at $1.86-1.92 and $321-328 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow: CAMP/PAYX
Analyst actions:
BBOX was upgraded to Buy from Neutral at Sidoti,
STM was upgraded to Buy from Hold at Stifel,
CCMP was upgraded to Buy from Hold at Needham;
PI was downgraded to Sector Weight from Overweight at Pacific Crest,
CAMT was downgraded to Hold from Buy at Needham;
WK, ULTI, QTWO, INST, HUBS, EVBG, CRM, BL, UPLD, RNG all initiated with Buy ratings at SunTrust, SHOP, MANH, PCTY were initiated with Hold ratings at SunTrust
From Briefing.com: 4:34 pm Closing Market Summary: Averages Open the Week Mixed (:WRAPX) :
The major averages opened the week on a mixed note as the influential technology (-0.6%) and health care (-0.2%) sectors mitigated gains from seven of the S&P 500's eleven sectors. The benchmark index (unch) eked out a slim victory, as did the Dow (+0.1%), while the tech-heavy Nasdaq (-0.3%) settled with a modest loss.
Led by the top-weighted technology and financials sectors, the S&P 500 quickly advanced to a gain of 0.5% at the start of Monday's session. However, the upbeat sentiment soon began to fade and a wave of selling pressure pulled the benchmark index back to its flat line. The technology group paced the retreat, dropping from +0.5% to -0.6% about an hour or so after the opening bell. The sector challenged its flat line at midday, but couldn't cross the threshold, eventually settling with a loss of 0.6%.
The financial sector also sold off in the mid-morning, but found support at its flat line and eventually worked its way back up to settle near the top of the day's sector standings with a gain of 0.5%. Last week's Dodd-Frank stress test, which went well for all 34 companies that are required to take it, helped underpin the financial group as it is assumed that most, if not all, of those 34 companies will see their capital return plans, which feature share buybacks and dividend increases, approved by the Federal Reserve.
In the end, seven of the eleven sectors finished in positive territory. The lightly-weighted utilities (+0.8%) and telecom services (+0.6%) groups finished at the very top of the day's leaderboard. Meanwhile, the consumer discretionary (+0.3%) and consumer staples (+0.4%) groups also outperformed. The consumer discretionary space used broad strength to overcome Amazon's (AMZN 993.98, -9.76) loss of 1.0% with retailers showing particular resolve, evidenced by the 1.8% increase in the SPDR S&P Retail ETF (XRT 40.25, +0.72).
Within the consumer staples space, drug retailers advanced on news that Walgreens Boot Alliance's (WBA 77.53, +1.19) pending merger with Rite Aid (RAD 4.05, +0.94) may soon be approved by the Federal Trade Commission. The two companies jumped 1.6% and 30.2%, respectively. Costco (COST 160.20, +3.07) also finished solidly higher, adding 2.0%, after the company's stock was upgraded to 'Outperform' from 'Market Perform' at Raymond James.
On the downside, the health care sector (-0.2%) struggled throughout the session as investors engaged in some profit taking following last week's health care rally. Biotechnology stocks contributed to the underperformance, leaving the iShares Nasdaq Biotechnology ETF (IBB 319.72, -1.02) lower for the first time since June 16. The IBB finished with a loss of 0.3%.
The energy sector (-0.2%) also put together a disappointing performance even though crude oil ended higher for the third session in a row. The commodity advanced 0.8% to $43.37/bbl, settling just a step below its best mark of the day.
U.S. Treasuries moved slightly higher across the curve on Monday, leaving the benchmark 10-yr yield one basis point lower at 2.14%. Meanwhile, the CBOE Volatility Index (VIX 9.74, -0.28, -2.8%) slipped to a fresh three-week low, signaling increased complacency within the market regarding near-term risks.
Reviewing Monday's economic data, which was limited to May Durable Orders:
May durable goods orders declined 1.1%, while the Briefing.com consensus expected a decrease of 0.6%. The prior month's reading was revised to -0.9% (from -0.7%). Excluding transportation, durable orders increased 0.1% (Briefing.com consensus 0.3%) to follow the prior month's revised downtick of 0.5% (from -0.4%).
The key takeaway from the report is that it provides "hard" data that suggests economic activity in the U.S. is not as robust as many would like it to be (or would like to think it is).
On Tuesday, investors will receive the April S&P Case-Shiller Home Price Index (Briefing.com consensus 5.9%) at 9:00 ET and the June Consumer Confidence Index (Briefing.com consensus 116.7) at 10:00 ET.
Nasdaq Composite +16.1% YTD
S&P 500 +8.9% YTD
Dow Jones Industrial Average +8.3% YTD
Russell 2000 +4.4% YTD
Tech Stocks from Briefing.com
The broader market lost a little bit of its pep as the bell tolled on Monday, ending flat albeit mixed. The tech-heavy Nasdaq Composite was the lone underperformer, shedding 18.10 points (-0.29%) on its way to 6247.15. The Dow Jones Industrial Average by contrast was the best performer, adding 14.79 points (+0.07%) to 21409.55, while the S&P 500 ended in the middle by gaining less than a point (+0.03%) to 2439.07.
The Technology (XLK 56.00, -0.30 -0.53%) space was the worst performing S&P sector today, ending near lows despite posting modest gains in the morning. Component Qorvo (QRVO 66.41, -3.53 -5.05%) was the worst performer. Utilities XLU +0.68% led the remaining S&P sectors today, followed by XLRE +0.46%, XLF +0.42%, XLP +0.40%, XLY +0.36%, XLB +0.30%, IYZ +0.15%, XLI +0.03%, XLV -0.11%, XLE -0.22%.
In the S&P 500 Information Technology (962.45, -5.73 -0.59%) space, trading fell to lows in the morning session after opening with some gains. Component Alphabet (GOOG 952.27, -13.32 -1.38%) was modestly lower today after announcing an agreement with Avis Budget (CAR 27.67, +3.43 +14.15%) for GOOG's Waymo to offer fleet support and maintenance services for Waymo's self-driving car program at Avis Car Rental and Budget Car Rental locations.. Other names in the space which underperformed included SWKS -2.91%, KLAC -1.97%, AMAT -1.91%, LRCX -1.84%, TXN -1.60%, MCHP -1.58%, ADSK -1.51%, INTU -1.42%, EBAY -1.35%, RHT -1.24%, ADI -1.20%.
Other notable news items among sector components:
Pandora Media (P 8.46, +0.18 +2.17%) CEO Tim Westergren plans to leave the company, according to ReCode.
Avis Budget (CAR) confirmed an agreement with Alphabet's (GOOG) Waymo to offer fleet support and maintenance services for Waymo's self-driving car program at Avis Car Rental and Budget Car Rental locations.
CDK Global (CDK 62.86, +0.21 +0.34%) appointed Joe Tautges as CFO effective August 9.
GTT Communications (GTT 33.90, +1.35 +4.15%) to acquire Global Capacity for $100 million in cash and 1.85 million shares of GTT common stock.
Cisco Systems' (CSCO 32.24, +0.15 +0.47%) CEO adopted pre-arranged stock trading plan to sell up to 339,725 shares of Cisco stock acquired upon vesting of restricted stock units; plan is scheduled to terminate in December 2017.
Telecom Italia (TI 9.09, -0.06 -0.66%) entered a sports programming partnership with Eurosport and
Discovery Communications (DISCA 26.20, +0.41 +1.59%).
VOXX Intl (VOXX 8.75, +0.90 +11.46%) to sell Hirschmann Car Communication GmbH and its worldwide subsidiaries to a subsidiary of TE Connectivity (TEL 78.65, -0.12 -0.15%) for about $166.0 million.
Netease.com (NTES 320.64, -12.92 -3.87%) named Zhaoxuan Yang as Chief Financial Officer effective June 30.
Sky plc (SKYAY 49.20, +0.20 +0.41%) and Vodafone (VOD 28.79, -0.06 -0.21%) terminated sale and purchase agreement.
Analyst actions:
P was upgraded to Sector Weight from Underweight at Pacific Crest;
SSYS was downgraded to Sell from Neutral at Goldman,
GRUB was downgraded to Equal Weight from Overweight at Morgan Stanley,
INTU was downgraded to Neutral from Buy at Citigroup,
SPTN was downgraded to Sell from Hold at Pivotal Research Group;
BL was initiated with a Mkt Perform at JMP Securities,
CARB was initiated with an Equal Weight at Barclays,
EEFT was initiated with a Buy at Lake Street,
VDSI was initiated with an Outperform at Imperial Capital
From Briefing.com: 4:40 pm Closing Market Summary: Bulls Outlast Bears on Friday (:WRAPX) :Wall Street ended the week on a positive note as the S&P 500 (+0.2%) cruised to a modest victory on the backs of the technology (+0.7%) and energy (+0.8%) sectors. The Nasdaq (+0.5%) and the Russell 2000 (+0.7%) outperformed while the Dow (unch) settled just a tick below its unchanged mark.
Equity indices opened Friday's session with slim losses, but quickly moved into positive territory. From there, the stock market stalled and began trending sideways with a modest gain as the bulls and the bears went toe to toe. Buyers rallied around the technology, energy, and industrials groups while sellers took control of the financials, consumer discretionary, and health care spaces.
The energy group (+0.8%) was the strongest sector out of the gate, despite early weakness in the crude oil futures market. However, WTI crude quickly regained its footing and cruised to its second win of the week, ending Friday's session higher by 0.6% at a price of $43.01/bbl. However, for the week, WTI crude settled lower by 4.0%.
Despite a slow start, the top-weighted technology sector (+0.7%) eventually climbed to the top of the day's leaderboard. The tech space benefited from broad strength with mega-cap names like Apple (AAPL 146.35, +0.72), Facebook (FB 155.07, +1.67), Alphabet (GOOGL 986.09, +9.47), and Microsoft (MSFT 71.21, +0.95) adding between 0.5% and 1.4%.
The industrial space (+0.4%) also contributed to the bulls' cause with transports showing relative strength. The Dow Jones Transportation Average (+0.7%) easily outpaced the broader market with names like FedEx (FDX 215.35, +3.72) and Norfolk Southern (NSC 119.29, +1.89) leading the charge. The lightly-weighted materials (+0.4%) and real estate (+0.4%) sectors also outperformed.
However, on the flip side, the influential financials (-0.5%), consumer discretionary (-0.1%), and health care (-0.1%) sectors weighed on the broader market. The financial sector suffered from broad weakness and continued to move deeper into negative territory as the day wore on. Conversely, the health care and consumer discretionary spaces rallied a bit in the final stretch to end little changed.
Biotech stocks weighed on the health care group for much of the day as investors engaged in some profit taking following the iShares Nasdaq Biotechnology ETF's (IBB 320.74, +0.63) four-day rally. However, the IBB eventually shook off the bearish sentiment, settling higher by 0.2%.
In the consumer discretionary sector, home improvement retailers weighed with Home Depot (HD 151.31, -4.17) and Lowe's (LOW 76.07, -2.27) losing 2.7% and 2.9%, respectively. The sector's worst-performing component, however, was Bed Bath & Beyond (BBBY 29.65, -4.09), which plunged 12.1% after the company missed top and bottom line estimates.
The bears made a last-ditch effort in the final stretch, but the bulls were able to hold on for the S&P 500's second win of the week. Today's uptick left the benchmark index higher by 0.2% for the week.
Outside of the stock market, U.S. Treasuries settled modestly higher across the curve on Friday with the benchmark 10-yr yield slipping one basis point to 2.14%. Meanwhile, the CBOE Volatility Index (VIX 10.02, -0.45, -4.1%) closed at the historically-low 10.00 mark.
Reviewing Friday's economic data, which was limited to New Home Sales for May:
New Home Sales in May hit an annualized rate of 610,000, which was above the revised April rate of 593,000 (from 569,000), and more than the 599,000 that was expected by the Briefing.com consensus.
The key takeaway from the report is that affordability constraints driven by rising median prices are going to continue to serve as a headwind for first-time buyers who are facing added supply constraints in the existing home market.
Investors will not receive any economic data on Monday.
Nasdaq Composite +16.4% YTDS&P 500 +8.9% YTDDow Jones Industrial Average +8.3% YTDRussell 2000 +4.3% YTD Week In Review: Biotech Rumbles, Crude Oil Tumbles
After some teeter tottering at the start of the week, the S&P 500 settled into a sideways trend, drifting alongside its unchanged mark, as investors lacked conviction to decisively move the market one way or the other. In the end, the benchmark index sealed its second-consecutive weekly win with a slim gain of 0.2%.
Wall Street kicked off the week on a positive note with both the S&P 500 and the Dow advancing to new all-time highs. The Nasdaq exhibited relative strength as technology and biotechnology stocks outperformed, bucking their recent bearish trends, with names like Apple (AAPL) and Biogen (BIIB) leading the charge. Financials also posted a solid performance, continuing their bullish two-week run.
The tide turned on Tuesday as the benchmark index coughed up nearly all of Monday's advance. The energy sector finished at the bottom of the leaderboard, for the second day in a row, as crude oil continued to tumble amid excess supply concerns. However, despite the bearish tone, biotechnology stocks kept chugging along, pushing the iShares Nasdaq Biotechnology ETF (IBB) higher by 1.3%.
Range-bound action set in on Wednesday as the heavily-weighted health care and technology sectors upheld the S&P 500 amid weakness in the broader market. Staying true to the week's trend, biotech companies were bullish, advancing the IBB higher by 4.1%, while crude oil was bearish, dropping another 2.3%, despite a relatively upbeat inventory report from the Department of Energy.
Investors shifted their attention to Washington on Thursday as the Senate rolled out its version of the healthcare reform bill. Compared to the version that the House passed last month, the Senate's version would roll back the Affordable Care Act's Medicaid expansion more gradually, but the cuts to Medicaid would be larger in total. However, in general, the two versions of the bill are very similar.
The health care sector took the news in stride, moving higher by 1.1%, but the S&P 500 settled slightly lower as the financials, consumer staples, and utilities sectors weighed. Crude oil did manage to secure its first win of the week, but the advance was modest in comparison to the commodity's recent swoon. Moving into Friday's session, the energy component held a week-to-date loss of 4.5%.
Equities ended the week on a positive note as the technology and energy sectors fended off the negatively-charged financials, consumer discretionary, and health care groups. Biotech stocks fell to some profit-taking efforts early, but the IBB still managed to pull out a win, ending the week higher by 9.6%. Crude oil registered another modest win on Friday, but ended the week lower by 4.0%.
Market participants altered their rate-hike expectations a bit this week following comments from several FOMC voters, including Fed Vice Chair Fischer, Fed Governor Powell, New York Fed President Dudley, Chicago Fed President Evans, and Dallas Fed President Kaplan.
The fed funds futures market now points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 51.3%, up from last week's 43.4%.
Tech Stocks from Briefing.com
Today's action closed with the tech-heavy Nasdaq Composite the best performer, adding 28.56 points (+0.46%) to 6265.25. The S&P 500 gained 3.80 (+0.16%) to 2438.30, while the Dow Jones Industrial Average lost 2.53 points (-0.01%) to 21394.76. This week's moves take the three major US indices to +16.4%, +8.9% and +8.3% YTD, respectively.
The Technology (XLK 56.30, +0.35 +0.63%) space, action ended higher today. Component NVIDIA (NVDA 154.11, -4.26 -2.69%) was pressured today following some insider selling. Also lower, BlackBerry (BBRY 9.71, -1.35 -12.21%) got smacked following the mixed Q1 print. The US Telecom IYZ +0.71% space was the best performing S&P sector today, followed by XLE +0.67%, XLRE +0.43%, XLB +0.39%, XLI +0.37%, XLP +0.04%, XLY -0.12%, XLV -0.15%, XLU -0.34%, XLF -0.38%.
In the S&P 500 Information Technology (968.18, +6.43 +0.67%) space, trading ended the week higher. Component Western Digital (WDC 93.34, +3.09 +3.42%) was particularly strong today; the stock goes ex-dividend next Wednesday. Other names in the space which outperformed today included FSLR +3.36%, AKAM +2.56%, WU +2.08%, NTAP +1.94%, TDC +1.92%, MCHP +1.89%, V +1.73%, AMAT +1.73%, XRX +1.68%, STX +1.57%, MSI +1.47%, XLNX +1.43%, MSFT +1.35%.
Other notable news items among sector components:
Toshiba (TOSBF 2.66, -0.22 -7.64%) lowered its FY16 earnings outlook.
Synchronoss Tech (SNCR 16.24, +4.06 +33.33%) shareholder Siris Capital Group affirmed its 12.93% active stake and delivered a letter indicating that they believe they could be able to acquire the company in an all-cash acquisition at $18.00 per share. Management later confirmed the receipt of the takeover interest, and will review its options.
Parkervision (PRKR 2.09, -0.34 -13.98%) announced that the Regional Court of Munich is holding its decision in the ParkerVision v. Apple (AAPL 146.35, +0.72 +0.49%) case until after the German Federal Patent Court rules on the related pending nullity (validity) action.
In addition to reporting earnings, BlackBerry (BBRY) announced a 31 million common share purchase program.
Perficient (PRFT 18.47, +0.92 +5.24%) acquired Clarity Consulting; terms not disclosed.
In reaction to quarterly results:
BlackBerry (BBRY) reported better than expected Q1 EPS of $0.02 on worse than expected revenues of $244 million ($235 million on GAAP basis). For FY18, the company sticks with their prior expectations.
SMART Global (SGH 17.14, +0.94 +5.80%) reported better than expected Q3 EPS and revenues of $0.62 and $206.97 million, respectively. For Q4, the company sees EPS ahead of market expectations at $-0.62-0.66 and revenues in the range of $205-215 million.
Analyst actions:
ORCL was upgraded to Buy from Hold at Argus;
LEJU was downgraded to Underweight at JP Morgan,
MELI was downgraded to Neutral from Buy at Citigroup;
OCLR, ACIA and LITE were initiated with Buy ratings at DA Davidson,
RHT was initiated with a Neutral at Piper Jaffray,
SHOP was initiated with an Equal Weight at Stephens,
NOW was initiated with an Overweight at JP Morgan,
WIX was initiated with an Outperform at Wedbush
From Briefing.com: 4:30 pm Closing Market Summary: Averages Slip Into the Close, End Little Changed (:WRAPX) :The stock market held a modest gain throughout the majority of Thursday's session, but increased selling pressure in the final hour of action dragged the major averages from their best marks of the day. The S&P 500 traded as high as +0.3%, but finished with a loss of 0.1%. The Dow (-0.1%) also finished with slim loss while the Nasdaq (unch) settled just a tick above its unchanged mark.
Equities opened Thursday's session slightly lower, but ticked up into positive territory after the Senate released its version of the healthcare reform bill. The Senate's version would roll back the Affordable Care Act's Medicaid expansion more gradually than the version that the House passed last month, but the cuts to Medicaid would be larger in total under the Senate's bill. However, in general, the two versions of the bill are very similar.
Lawmakers were hoping to vote on the bill before the July 4th recess, but Senate Republicans currently do not have enough votes to pass the piece of legislation. Senators Rand Paul (R-KY), Ted Cruz (R-TX), Mike Lee (R-UT), and Ron Johnson (R-WI) confirmed that they oppose the bill as it does not fully repeal the Affordable Care Act.
The health care sector (+1.1%) was strong from start to finish on Thursday, settling at the top of the day's leaderboard by a comfortable margin. Nearly all of the sector's components finished in positive territory, but the biotechnology industry exhibited particular strength, advancing the iShares Nasdaq Biotechnology ETF (IBB 320.11, +4.01) higher by 1.3%. Today's win marks the fourth in a row for the IBB, which now trades higher by 9.4% for the week.
As for the remaining advancers, gains were relatively modest with no group adding more than 0.2%. The top-weighted technology sector (+0.1%) managed to settled a step ahead of the broader market, but its components were pretty evenly mixed between green and red. Oracle (ORCL 50.30, +3.97) was the sector's top-performer, jumping 8.6%, after the company beat top and bottom line estimates and issued upbeat guidance.
Crude oil managed to break its three-day losing streak with WTI crude finishing higher by 0.5% at $42.74/bbl. However, the commodity drifted from its session high in the afternoon, eventually settling in the middle of the day's trading range. The energy sector (-0.1%) also slipped in the afternoon, retracing all of the modest gain it held throughout the morning.
The heavily-weighted financial sector (-0.6%) was weak throughout Thursday's session and eventually finished in negative territory for the third day in a row. The consumer staples (-0.7%) and utilities (-0.4%) groups also closed notably lower while the remaining laggards--consumer discretionary, industrials, and telecom services--finished with losses of no more than 0.2%.
U.S. Treasuries settled modestly higher across the curve with the benchmark 10-yr yield slipping one basis point to 2.15%. The U.S. Dollar Index (97.25, +0.03) ended the day little changed.
Investor participation was below average as fewer than 900 million shares changed hands at the NYSE floor (50-day simple moving average: 1.0 billion).
Reviewing today's economic data, which included Initial Claims, May Leading Indicators, and the April FHFA Housing Price Index:
The latest weekly initial jobless claims count totaled 241,000 while the Briefing.com consensus expected a reading of 240,000. Today's tally was above the revised prior week count of 238,000 (from 237,000). As for continuing claims, they rose to 1.944 million from the revised count of 1.936 million (from 1.935 million).
The key takeaway from this report is that it will feed expectations for another decent-sized gain in nonfarm payrolls since it encompassed the week in which the survey for the June employment report was conducted.
The Conference Board's Leading Indicators report for May increased 0.3% (Briefing.com consensus 0.3%) after moving higher by a revised 0.2% in April (from 0.3%).
The key takeaway from the report is that strengths among the leading indicators have remained more widespread than weaknesses.
The FHFA Housing Price Index for April increased 0.7%, which followed a revised uptick of 0.7% (from 0.6%) in March.Friday's lone economic report--May New Home Sales (Briefing.com consensus 599,000)--will cross the wires at 10:00 ET.
Nasdaq Composite +15.9% YTD
S&P 500 +8.7% YTD
Dow Jones Industrial Average +8.3% YTD
Russell 2000 +3.5% YTD
Tech Stocks from Briefing.com
The broader market finished on a low note today despite mostly favorable trading action during the majority of the session. The lone gainer today was the tech-heavy Nasdaq Composite; the index added 2.73 points (+0.04%) to 6236.69. The Dow Jones Industrial Average lost 12.74 points (-0.06%) to 21397.29, and the S&P 500 declined 1.11 (-0.05%) to 2434.50.
The Technology (XLK 55.95, +0.02 +0.04%) space sold off modestly into the close but held the flat line to end slightly higher. Component Oracle (ORCL 50.30, +3.97 +8.57%) was the best performer in the space today following better than expected earnings and guidance. The Healthcare XLV +1.04% space finished with the best gains today following the release of the Senate Healthcare Bill; other sectors finished as follows: IYZ +0.12%, XLB +0.11%, XLRE +0.06%, XLE -0.06%, XLI -0.21%, XLY -0.23%, XLU -0.47%, XLF -0.62%, XLP -0.66%.
In the S&P 500 Information Technology (961.75, +0.45 +0.05%) space, trading began the session with modest pressure, but climbed out of the red and held small gains into the bell. Component Accenture (ACN 122.08, -5.03 -3.96%) was the worst performer in the space today after its in-line earnings and guidance. Other names in the space which finished higher today included FSLR +3.20%, ADI +1.68%, AKAM +1.50%, MSI +1.30%, NTAP +1.30%, CRM +1.04%, ADSK +1.03%, GPN +0.97%.
Other notable news items among sector components:
Snap (SNAP 17.61, +0.34 +1.97%) said to have paid $250-350 million to acquire Zenly ahead of launching Snap Map, according to Tech Crunch.
China Unicom (CHU 14.89, +0.23 +1.57%) looking to raise roughly $10 billion with help from Alibaba (BABA 142.28, -1.01 -0.70%) & Tencent (TCEHY 36.33, +0.38 +1.06%), according to Reuters.
YuMe (YUME 4.93, +0.26 +5.57%) declared special dividend of $1.00 per share and quarterly dividend of $0.03 per share; Reaffirmed previous EBITDA guidance.
Wipro (WIT 5.06, +0.07 +1.50%) announced collaboration with Red Hat (RHT 98.89, +0.31 +0.31%) 'to offer developers and IT teams a repeatable and rapid methodology for application modernization across public, private, and hybrid clouds'.
Weibo (WB 72.25, -4.71 -6.12%) confirmed public notice issued by The State Administration of Press, Publication, Radio, Film and Television of the People's Republic of China.
CACI Intl (CACI 125.90, +5.05 +4.18%) reaffirmed FY17 guidance and issued FY18 guidance with in-line sales.
Mitek Systems (MITK 8.75, flat) named Jeff Davison as Chief Financial Officer effective June 21.
STMicroelectronics (STM 14.99, -0.36 -2.35%) announced a $1.5 billion dual-tranche offering of New Convertible Bonds, the early redemption of its 2019 Convertible Bonds, the launch of a share buy-back program.
In reaction to quarterly results:
Oracle (ORCL) reported better than expected Q4 EPS and revenues of $0.89 and $10.94 billion, respectively. For Q1, the company sees EPS in constant currency of $0.59-0.61 on total revenue growth of 4-6%. For FY18, the company sees EPS growth of double digits.
Accenture (ACN) reported in-line Q3 EPS and revenues of $1.52 and $8.87 billion. For Q4, the company sees in-line revenues of $8.85-9.10 billion.
Methode Electronics (MEI 40.10, +1.45 +3.75%) reported worse than expected Q4 EPS of $0.62 on better than expected revenues of $219.7 million. For FY18, the company sees EPS below market expectations at $2.43-2.63 on in-line revenues of $807-827 million.
Analyst actions:
ORCL was upgraded to Outperform from Neutral at Wedbush,
INFN was upgraded to Buy from Neutral at B. Riley & Co.,
SPLK was upgraded to Buy from Neutral at Guggenheim,
VNTV was upgraded to Outperform from Mkt Perform at Keefe Bruyette;
EFII was downgraded to Neutral from Buy at Longbow,
CLS was downgraded to Neutral from Outperform at Macquarie,
TSM and TEO were downgraded to Hold from Buy at HSBC;
MSFT was initiated with a Buy at Cleveland Research,
IBM was initiated with a Neutral at Cleveland Research