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InvestmentHouse - Underlying Jobs Numbers are Finally Better (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
MARKET SUMMARY
- Jobs Report comes, goes, stocks rise, fade, but SOX breaks to a higher
high.
- Jobs headlines are okay while the underlying numbers are finally better.
- Analysts calling for a pullback from the highs. Is that not just what
happened or do they mean a correction?
- Leaders have a pretty good Friday as they and the uptrends still don't
have any real sellers.
- This week sees the Fed rate decision, Dutch election, and debt ceiling all
hit on Wednesday.
February jobs topped Friday's news. It was an okay report on the headlines,
beating expectations along with an upward revision to January. The
internals were significantly better with participation rising to 63.0% as
those not in the workforce fell another 176K on top of January's 736K,
combining for the biggest ever 2 month drop.
Non-farm payrolls: 235K versus 188K expected versus 239K January (from 227K)
Unemployment: 4.7% versus 4.7% expected versus 4.8% January
Hourly wages: 0.2% versus 0.1% prior (revised from 0.2%). +2.8% year/year
Average hourly workweek: Steady at 34.4. Again.
Participation: 63.0%
The mix of jobs improved as well:
Construction 58K, roughly a 10 year high water mark
Manufacturing 28K
Mining 6K, a modest improvement
Private Education 39K
Professional and Business: 37K
Healthcare 27K
Leisure and Hospitality 26K
Retail -26K
Futures were already higher ahead of the report, and when the news hit, they
rallied a bit farther. The news, however, did not have a lot of staying
power. Even before the market opened stocks slid off the pre-market highs,
and when the opening bell sounded prices slid. Three down legs into early
afternoon led to back half recovery, but it was a very anticlimactic session
to a much anticipated report that could have been, but was not, the next
upside catalyst.
SP500 7.73, 0.33%
NASDAQ 22.92, 0.39%
DJ30 44.79, 0.21%
SP400 0.42%
RUTX 0.38%
SOX 1.17%
VOLUME: NYSE -4.5%, NASDAQ +6%. Lower on NYSE as the indices traded more or
less flat, up on NASDAQ as it broke higher, albeit modestly. Not bad
price/volume action.
A/D: NYSE 2:1, NASDAQ 1.4:1. A bit of a recovery in the small and midcaps
helped breadth recover to decent levels.
Thus the market was still in the test mode, more or less; SOX did break to a
higher high, and it is hard to argue with a semiconductor index that wants
to lead higher. Often the rest of the market follows.
Perhaps the market is still contemplating what is to come this week: FOMC
rate decision, Dutch election with a populist anti-EU candidate leading, and
the US debt hitting the ceiling, and all on Wednesday. Will they or won't
they raise it? Republican President, republican Congress. Sure they will.
After the super positive, olive branch extending SOTU address and subsequent
one-day gap and rally, the stock market has tested that move. That entire
move. Lots of infighting subsequent to the address, lots of obstructionism,
yet the Trump administration keeps coming out in decent shape. More
companies announce jobs in the US, even foreign companies. CEO's that talk
with the President come out pumped and excited. Polls show continued
approval of the job being done.
At the same time there is a lot of negativity surrounding a market testing
back from higher highs. I have made it clear; I am not a fan of the move
because of the weak internals and the high bullish sentiment. Yet,
leadership remains despite the dropout of some leader groups (e.g. oil
stocks). Moreover, as soon as the market started to test, bullish advisor
sentiment dropped precipitously -- it would appear advisors are as jumpy as
a 10 year old in a Halloween fright house.
Thus, while we still view this rally as being on its last legs, that is just
opinion. The market punched out some new highs, is putting in a very
orderly test of those highs, and it still has leadership in great position
and indeed making good moves. We bought into some of those moves on Friday
after moving into other positions during the week. Some great moves are in
progress from this new rebound of leaders -- even as the market tests.
SIMO, CTRP, PLX, IMMU, VRSN, BLUE, SWKS, AVGO, SOHU, ATHM -- excellent moves
even as the market tests, not suggesting that buyers are backing away from
the market. Bids are still there, and you have to, as corny as it sounds,
follow the leaders.
MARKET
CHARTS
SOX: The star of the session, SOX put in a rather unheralded break to a new
high, gapping and rallying past the late February high. SOX put in a 3 week
lateral move after a new high in February, and is now at a new high once
more. SOX tends to lead the rest of the market.
NASDAQ: After a four day lateral move over the 20 day EMA, NASDAQ gapped
upside, filled the gap, then rebounded to hold the move. All in all, not bad
with a nice showing of above average volume and some life moving back into
some chips while FANG still showed some upside.
SP500: After a 6 session test of the post-SOTU rally, SP500 completely
filled the gap higher, holding the 20 day EMA. Friday a gap higher to a
doji. Decent but nothing breakthrough, nothing showing a clear return to
the upside. It delivered a bounce where it needed to but did not add any
bling to it.
DJ30: Gapped modestly higher to a doji as well, also coming off a gap fill
and 20 day EMA test. Started higher, but that is about all it did.
SP400: After a 6 session fade to the 50 day MA's, SP400 midcaps gapped
higher Friday but could only manage a doji. As with SP500, it delivered a
bounce where it needed to but not anything more.
RUTX: The small caps fell into the lower third of the December to February
range as of Thursday, posted a modest bounce with a doji. Nothing
definitive, just held after a week of downside.
LEADERSHIP
As noted, there is a swath of leadership from many sectors even as some have
broken lower such as oil stocks. Even some of those, however, after long
selloffs, are going to try and bounce.
Biotech: Continues to produce some impressive moves. CORT is surging for
us. IMMU is in a powerful move. PLX exploded higher. CELG was up on the
week then tried to give it up Friday. BLUE put in solid moves up off the 20
day EMA test. SRPT looks ready to move. Some got away with upside gaps,
e.g. TTPH.
China: Some great moves again Friday, e.g. CTRP, ATHM, SOHU. YY looks
good. Still waiting for BIDU, BABA, YNDX to start upside again.
Chips: Definitely coming back to life as evidenced Friday. SIMO put in a
great week for us as we caught it on the breakout. SWKS put in a new high.
SLAB regained its feet after that early March gap lower, starting up off the
50 day MA on strong volume. AVGO surged Friday.
Financial: Not a spectacular week, but they held the line. BAC working in
a flat lateral move over the 10 day EMA. C gapped higher Wednesday and
edged higher to the early January highs. JPM put in a nice test of the 20
day EMA, looks ready to move. GS looks a bit wobbly as of Friday, trying to
hold the 20 day EMA.
Oil: Bouncing some after big drops but have not reversed the move yet. CVX
bounced but has a lot of resistance. HAL bounced modestly. SPN bombed
lower. SWN will be ready to bounce after putting in a small double bottom.
Industrial machinery: Struggling. TEX broke lower. CAT remains in
trouble. CMI is holding over the 20 day EMA.
Metals: After some selling, some possibilities. AKS is trying to hold the
late January low, showing higher MACD on this second low. It is somewhat by
itself, however, as STLD, SCHN, RS have work to do. AA is trying to break
below the 50 day EMA and the late February low.
Miscellaneous: GRMN breaking higher after testing its earnings gap. VRSN
broke out on the week.
MARKET STATS
DJ30
Stats: +44.79 points (+0.21%) to close at 20902.98
Nasdaq
Stats: +22.92 points (+0.39%) to close at 5861.73
Volume: 1.977B (+5.81%)
Up Volume: 1.23B (+261.52M)
Down Volume: 728.62M (-148.01M)
A/D and Hi/Lo: Advancers led 1.39 to 1
Previous Session: Decliners led 1.4 to 1
New Highs: 99 (+22)
New Lows: 40 (-26)
S&P
Stats: +7.73 points (+0.33%) to close at 2372.6
NYSE Volume: 838.7M (-4.51%)
A/D and Hi/Lo: Advancers led 2.03 to 1
Previous Session: Decliners led 2.32 to 1
New Highs: 71 (+30)
New Lows: 70 (-39)
SENTIMENT INDICATORS
VIX: 11.66; -0.64
VXN: 11.9; -0.57
VXO: 10.5; -0.67
Put/Call Ratio (CBOE): 0.88; -0.24
Bulls and Bears: Bulls fell back below 60 in a big drop. Bears back over
17. A bit of a bluster? Certainly in line with other sentiment we are
hearing.
Bulls: 57.7 versus 63.1
Bears: 17.3 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: 57.7 versus 63.1
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 versus 44.6 versus 49.0
versus 52.5 versus 55.9 versus 56.7 versus 56.2 versus 54.3 versus 52.9%
versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus 41.6% versus
47.5% versus 45.9% versus 47.3% versus 45.4% versus 35.4% versus 40.2 versus
39.2
Bears: 17.3 versus 16.5
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 versus 22.6
versus 22.8 versus 20.6 Versus 20.2 versus 20.0 versus 20.9% versus 21.2%
versus 21.6% versus 23.3% versus 24.7% versus 24.5% versus 23.8% versus
23.2% versus 23.5% versus 23.8% versus 23.7% versus 24.0% versus 21.7%
versus 21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8%
versus 28.9% versus 27.8% versus 30.3% versus 35.4%
OTHER MARKETS
Bonds (10 year): 2.58% versus 2.60%. Trying to put in a second bottom at
the December low. Look oversold from this pattern. Now what does that
suggest? The Fed NOT hiking rates? Would it really do that? Perhaps a
bounce into the FOMC announcement Wednesday.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.60%
versus 2.55% versus 2.51% versus 2.49% versus 2.48% versus 2.46% versus
2.260% versus 2.367% versus 2.31% versus 2.38% versus 2.42% versus 2.43%
versus 2.42% versus 2.45% versus 2.50% versus 2.473% versus 2.43% versus
2.41% versus 2.398% versus 2.340% versus 2.393% versus 2.41% versus 2.48%
versus 2.474% versus 2.477% versus 2.44% versus 2.49% versus 2.48% versus
2.512% versus 2.52% versus 2.467% versus 2.40% versus 2.47% versus 2.468%
versus 2.422% versus 2.372%
EUR/USD: 1.06746 versus 1.05948, Euro surging back upside Thursday and
Friday. Bouncing up off the higher low.
Historical: 1.06746 versus 1.05384 versus 1.0566 versus 1.05764 versus
1.06266 versus 1.05214 versus 1.05327 versus 1.05710 versus 1.05877 versus
1.05616 versus 1.05830 versus 1.0557 versus 1.05474 versus 1.06108 versus
1.06665 versus 1.06148 versus 1.05762 versus 1.06023 versus 1.06411 versus
1.06557 versus 1.06825 versus 1.06814 versus 1.07219 versus 1.07880 versus
1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus 1.06957 versus
1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus 1.0761 versus
1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus 1.06450 versus
1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus 1.05346 versus
105837 versus 1.0525 versus 1.03914 versus 1.05289 versus 1.05155 versus
1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus 1.04412 versus
1.0392
USD/JPY: 114.807 versus 115.259. After a break higher Wednesday and
Thursday out of the handle, the dollar backed off.
Historical: 115.259 versus 114.563 versus 113.498 versus 113.966 versus
114.042 versus 114.169 versus 113.951 versus 112.966 versus 223.982 versus
112.169 versus 112.745 versus 113.324 versus 113.399 versus 112.906 versus
113.356 versus 113.880 versus 114.306 versus 113.65 versus 113.856 versus
113.265 versus 113.401 versus 112.207 versus 112.332 versus 111.815 versus
112.567 versus 112.903 versus 112.68 versus 112.50 versus 114.493 versus
115.094 versus 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983
Oil: 48.49, -0.79. Bombed lower Wednesday to Friday, closing just below
the 200 day SMA. This is where oil held in November, i.e. at the 200 day
SMA.
Gold: 1201.40, -1.80. Nine sessions to the downside, showing a doji just
below the 50 day SMA. Oversold near term.
MONDAY
Some important milestones this coming week converging Wednesday with the
FOMC rate hike (100% according to the Fed Funds Futures), the Dutch
election, and the US reaching the debt ceiling limit. Of course the Jobs
Report supposedly sealed the hike and that could have been a catalyst, but
it was not, at least not for the entire market; there were some good moves.
Friday I heard more than one market analyst talking about a pullback from
the highs being likely before the market rallied again. I looked at the
charts again just to make sure what I saw over the past 7 sessions. Yep,
still a nice orderly pullback off of the highs. Still no signs of sellers.
Now once again the indices have pulled right back off a higher high. Did it
in late January with a gap higher out of a 6 week lateral consolidation, but
they also immediately held the line and rallied sharply in February. New
high 8 sessions back on the post-SOTU rally, now a steady fade to fill the
gap and hold near support. Perhaps a pullback is coming, but with the index
action and the leadership action, once again there appears to be no sellers
of any number willing to take on the uptrend.
That can all change with the right news (wrong news for the bulls), but what
will that news be? The Dutch nationalists winning and wanting out of the EU
as did the UK? The market seemed to get used to the UK leaving and frankly
I don't think it would be surprised if the Dutch want out as well.
A Fed rate hike? That is supposed to be good news, right? Strong economy
if the Fed hikes, right? After 2 hikes in 15 months can the economy stand
another quarter point? If it cannot, and if the market cannot, then perhaps
the Fed grossly 'misoverestimated' the economy's strength. If that is the
case, well then stocks will ultimately react negatively to a hike.
The debt ceiling might be the silent rally killer. Treasury's Mnuchin is
asking to raise the debt limit to keep spending. The ironic news item is
the Deficit is down $90B since January.
So, reason to keep an eye out for what the politics are (and the Fed is
political by the way) as we watch how the indices bounce and behave AND how
leadership works. As of the end of the week it was working pretty well. Of
course we still took advantage of APC selling off to make some downside
money.
As for plays this week, we picked up some nice upside when things were not
so great the past week. Heck they are not all that great now according to
many pundits with this 'market top'. I guess we will just have to look at
those great upside setups and pass them up because the market might top off
of this pullback. Uh, hell no. As noted last week, the trend, despite all
misgivings, is still holding, and our worries or the worries of others don't
really change that trend and certainly have not changed the leaders setting
up and breaking upside. Until the leaders are breaking down and the trends
break, you look for stocks setting up for the upside and play them as them
make their moves.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5861.73
Resistance:
5912 is the March all-time high.
Support:
5800 from the February consolidation lows
5661 is the late January upper gap point
The 50 day EMA at 5697
The 50 day SMA at 5677
The 2016 trendline at 5630
5601 is the January lower gap point
The November prior all-time high at 5404
5340 is the September and October 2016 twin peaks
The 200 day SMA at 5297
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
4999 is the October upper gap point
4980 is the June 2016 peak
S&P 500: Closed at 2372.60
Resistance:
Support:
The 2016 trendline at 2329
2301 is the late January 2017 high
The 50 day EMA at 2313
The 50 day SMA at 2310
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The November 2016 all-time high at 2213.25
The 200 day SMA at 2195
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the September 2016 low; February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
Dow: Closed at 20,902.98
Resistance:
Support:
The 50 day EMA at 20,317
The 50 day SMA at 20,265
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
The 200 day SMA at 18,900
19750 is the lows of the December/January range
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
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
ECONOMIC CALENDAR
March 10 - Friday
Nonfarm Payrolls, February (8:30): 235K actual versus 188K expected, 238K
prior (revised from 227K)
Nonfarm Private Payrolls, February (8:30): 227K actual versus 185K expected,
221K prior (revised from 237K)
Unemployment Rate, February (8:30): 4.7% actual versus 4.7% expected, 4.8%
prior
Avg. Hourly Earnings, February (8:30): 0.2% actual versus 0.2% expected,
0.2% prior (revised from 0.1%)
Average Workweek, February (8:30): 34.4 actual versus 34.4 expected, 34.4
prior (no revisions)
Treasury Budget, February (14:00): -$192.0B actual versus -$192.6B prior
March 14 - Tuesday
PPI, February (8:30): 0.1% expected, 0.6% prior
Core PPI, February (8:30): 0.2% expected, 0.4% prior
March 15 - Wednesday
MBA Mortgage Applica, 03/11 (7:00)
MBA Mortgage Index, 03/11 (7:00): 3.3% prior
CPI, February (8:30): 0.1% expected, 0.6% prior
Core CPI, February (8:30): 0.2% expected, 0.3% prior
Retail Sales, February (8:30): 0.1% expected, 0.4% prior
Retail Sales ex-auto, February (8:30): 0.1% expected, 0.8% prior
Empire Manufacturing, March (8:30): 14.5 expected, 18.7 prior
Business Inventories, January (10:00): 0.3% expected, 0.4% prior
NAHB Housing Market , March (10:00): 65 expected, 65 prior
Crude Inventories, 03/11 (10:30): +8.2M prior
FOMC Rate Decision, March (14:00): 0.875% expected, 0.625% prior
Net Long-Term TIC Flows, March (16:00): -$12.9B prior
March 16 - Thursday
Housing Starts, February (8:30): 1260K expected, 1246K prior
Building Permits, February (8:30): 1251K expected, 1285K prior
Initial Claims, 03/11 (8:30): 242K expected, 243K prior
Continuing Claims, 03/04 (8:30): 2058K prior
Philadelphia Fed, March (8:30): 25.0 expected, 43.3 prior
JOLTS - Job Openings, January (10:00): 5.501M prior
Natural Gas Inventor, 03/11 (10:30): -68 bcf prior
March 17 - Friday
Industrial Production, February (9:15): 0.2% expected, -0.3% prior
Capacity Utilization, February (9:15): 75.4% expected, 75.3% prior
Leading Indicators, February (10:00): 0.5% expected, 0.6% prior
Michigan Sentiment, March (10:00): 96.8 expected, 96.3 prior
From Briefing.com: 4:22 pm Closing Market Summary: Traders Appear OK With March Rate Hike (:WRAPX) :
A rate hike at next week's FOMC meeting appears to be a mere formality following the better than expected Employment Situation Report for February, which crossed the wires early Friday morning. That seemed to be alright with investors as they pushed the major averages higher to finish a slightly disappointing week on a positive note. The Nasdaq (+0.4%) led the modest advance with the S&P 500 (+0.3%) and the Dow (+0.2%) closing just a step behind. For the week, the benchmark S&P 500 lost 0.4%.
The CME Fed Watch Tool now assigns an implied probability of 93.0%, up from 88.6% on Thursday, to a rate hike at the March 14-15 FOMC meeting after the February jobs report showed that nonfarm payrolls increased by 235,000 (Briefing.com consensus 188,000) and average hourly earnings rose 0.2% (Briefing.com consensus +0.2%). The Federal Reserve will announce its decision on Wednesday at 2:00 pm ET.
Crude oil continued to command investors' attention again on Friday, falling 1.5%. The day's tumble left the energy component 8.8% lower since Wednesday's bearish EIA inventory report, which showed record high U.S. inventories. WTI crude finished the Friday session at $48.49/bbl.
All things considered, the energy sector (-0.1%) held up relatively well, finishing the day near its flat line. Real estate (-0.2%) was the only space to post a wider decline.
Conversely, at the top of the leaderboard, the industrials (+0.7%), utilities (+0.8%), and telecom services (+0.7%) spaces settled with solid gains. The top-weighted technology sector (+0.5%) also outperformed as chipmakers finished Friday's session with notable gains; the PHLX Semiconductor Index closed higher by 1.2%.
Retailers provided the consumer discretionary space (+0.1%) with some support, advancing the SPDR S&P Retail ETF (XRT 42.14, +0.31) higher by 0.7% in the wake of Ulta Beauty's (ULTA 286.42, +12.65) most recent earnings report. The company added 4.6% after reporting better than expected top and bottom lines, but it wasn't enough to keep the consumer discretionary sector from underperforming as restaurants weighed.
In the Treasury market, U.S. sovereign debt saw an uptick in buying interest following the release of the February jobs report. The benchmark 10-yr yield closed three basis points lower at 2.58%.
On a related note, the U.S. Dollar Index (101.22, -0.76) finished solidly lower, losing 0.8% in Friday's session.
Friday's economic data included the Employment Situation Report for February and the February Treasury Budget:
February nonfarm payrolls came in at 235,000 while the Briefing.com consensus expected a reading of 188,000. The prior month's reading was revised to 238,000 from 227,000. Nonfarm private payrolls added 227,000 while the Briefing.com consensus expected an increase of 185,000. The unemployment rate decreased to 4.7% (Briefing.com consensus 4.7%). Average hourly earnings increased 0.2% (Briefing.com consensus +0.2%), while the previous month's reading was revised to 0.2% (from +0.1%). The average workweek was reported at 34.4, which is in line with the Briefing.com consensus. The previous month's reading was left unrevised at 34.4.
Average hourly earnings increased 0.2%, leaving them up 2.8% year-over-year and solidifying the prevailing belief that the Federal Reserve will raise the target range for the fed funds rate at its March 14-15 FOMC meeting. That is the key takeaway from this report, followed closely by the encouraging understanding that the labor market is strengthening, which is aiding the prospects for stronger economic growth.
Average hourly earnings increased 0.2%, leaving them up 2.8% year-over-year and solidifying the prevailing belief that the Federal Reserve will raise the target range for the fed funds rate at its March 14-15 FOMC meeting. That is the key takeaway from this report, followed closely by the encouraging understanding that the labor market is strengthening, which is aiding the prospects for stronger economic growth.
The Treasury Budget for February showed a deficit of $192.0 billion versus a deficit of $192.6 billion for February 2016. The Treasury Budget data is not seasonally adjusted, so the February deficit cannot be compared to the $51.3 billion deficit registered in January.
Investors will not receive any economic data on Monday.
Nasdaq Composite +8.9% YTD
S&P 500 +6.0% YTD
Dow Jones Industrial Average +5.8% YTD
Russell 2000 +0.6% YTD
Week in Review: Taking a Breather
After posting six consecutive weekly gains, the stock market saw its third weekly decline of 2017. However, just like the other two weekly downticks, this week's retreat was minor. The S&P 500 shed 0.4%, narrowing its first quarter gain to 6.0%.
The trading week started on an unassuming note with stocks showing limited reaction to a proposal put forth by House Republicans to replace the Affordable Care Act. President Donald Trump spoke favorably about the proposal, but Republicans in Congress have yet to fully support the effort, which has led to concerns that slow progress on the health care front would stymie corporate and personal tax reform, which the market has been anxiously awaiting.
Equity indices inched lower through the first three days of the week, but on Wednesday, it was crude oil that stole the attention, falling more than 5.0% to a fresh 2017 low near $50.30/bbl. The energy component snapped out of a five-point range that has held since the start of the year, responding to the news of yet another significant inventory build. Crude's retreat continued over the next two days, leaving the energy component near $48.50/bbl at the end of the week. Oil lost more than 9.0% during the week while the energy sector surrendered 2.6% since last Friday.
There wasn't much change on the central bank front as Wednesday came and went without any major surprises from the European Central Bank. The ECB made no changes to policy and did not hint at impending tightening even though the 2017 GDP growth forecast for the Eurozone was nudged up to 1.8% from 1.7%. It is worth noting that reports that circulated on Friday suggested the ECB may begin raising rates prior to the end of its asset purchase program. The news coincided with comments from Bundesbank President Jens Weidmann, who said 2017 eurozone inflation is likely to be "far higher" than projected.
As for the Fed, the central bank is now widely expected to announce its next rate hike on March 15 after the Employment Situation report for February did not upset the overall economic picture. With the report showing the addition of 235,000 payrolls, headline expectations (Briefing.com consensus 188K) were beat handily while average hourly earnings increased an in-line 0.2%, bringing the year-over-year growth rate to 2.8%.
The fed funds futures market responded accordingly, pointing to a 93.0% implied likelihood of a rate hike being announced on Wednesday, up from last week's 79.9%.
Winding down the week, the major averages held onto some late gains despite dipping below flat lines toward the middle of the day. Ultimately, the Nasdaq Composite was the best performer, adding about 22.92 points (+0.39%) to 5861.73 today. The S&P 500 was close behind, higher by 7.73 points (+0.33%) when the bell rang to 2372.60, and the Dow Jones Industrial Average posted gains of 44.79 points (+0.21%) to 20902.98. In all, this week's moves took the major averages to +8.9%, +6.0% and +5.8% YTD, respectively.
Today, economic data included the February nonfarm payrolls reading which came in at 235,000 compared to the prior month's reading was revised to 238,000 from 227,000. Nonfarm private payrolls added 227,000 and the unemployment rate decreased to 4.7%. Average hourly earnings increased 0.2%, while the previous month's reading was revised to 0.2% (from +0.1%). The average workweek was reported at 34.4. The previous month's reading was left unrevised at 34.4.
The Technology (XLK 53.11, +0.28 +0.53%) space ended Friday with decided gains. Components FTR +2.69% LRCX +2.59% ADSK +2.23% AMAT +1.98% AVGO +1.95% CTSH +1.86% CTL +1.80% KLAC +1.54% TXN +1.52% FFIV +1.51% all outperformed today. The Utilities space XLU +0.83% was the best performer today, followed by XLI +0.61%, IYZ +0.50%, XLB +0.46%, XLP +0.46%, XLV +0.38%, XLY +0.15%, XLF -0.08%, XLRE -0.10%, XLE -0.16%.
In the S&P 500 Information Technology (897.57, +4.61 +0.52%) space, trading ended modestly higher. Component Seagate Tech (STX 47.28, +0.60 +1.29%) ended slightly higher today after announcing a restructuring plan to take place across Asia, EMEA and the Americas whereby the company would eliminate about 300 jobs.
Other notable news items among sector components:
Seagate Technology (STX) committed to an additional restructuring plan in connection with the continued consolidation of its global footprint across Asia, EMEA, and the Americas. Pursuant to the Plan, the Company intends to close its design center in Korea, which will result in the reduction of the Company's headcount by about 300 employees. This action, which the company expects to be substantially completed by the end of fiscal year 2017, is expected to result in total pre-tax charges of about $50 million, primarily in fiscal year 2017.
IBM (IBM 177.84, +0.66 +0.37%) and DSK Bank have completed the migration of DSK's banking operations to IBM's datacenters as part of a long-term IT services agreement to manage the IBM Cloud infrastructure that supports bank's operations in Bulgaria.
BT (BT 20.88, +0.76 +3.78%) and Ofcom have reached agreement on a long-term regulatory settlement that will see Openreach become a distinct, legally separate company with its own Board1, within the BT Group. The agreement is based upon voluntary commitments submitted by BT that the regulator has said meet its competition concerns.
Edgewater (EDGW 7.12, +0.20 +2.89%) named Jeffrey Rutherford as Chairman and interim President and CEO, replacing Shirley Singleton effective immediately.
ParkerVision (PRKR 2.64, +0.22 +9.09%) completed the sale of about 4.1 million shares of its common stock at an average price of $2.46 per share, for aggregate gross proceeds of $10 million, pursuant to an At Market Issuance Sales Agreement.
In reaction to quarterly results:
Finisar (FNSR 26.98, -7.92 -22.69%) reported worse than expected Q3 EPS and revenues of $0.59 and $380.6 million. The company also guided Q4 EPS and revenues worse than expected at $0.50-0.56 and $360-380 million, respectively.
VeriFone (PAY 19.10, -1.25 -6.14%) reported better than expected Q1 EPS and revenues of $0.21 and $457 million, respectively. For Q2, the company sees EPS below market expectations at $0.29 and revenues in-line at $470-474 million. For FY17, the company sees both in-line EPS and revenues of $1.35-1.39 and $1.895-1.910 billion.
Companies scheduled to report Monday morning: LEJU
Analyst actions:
INAP was upgraded to Buy from Hold at Stifel,
ASML was upgraded to Buy from Neutral at UBS,
CNSL was upgraded to Outperform from Mkt Perform at Raymond James,
HIMX was upgraded to Equal Weight from Underweight at Morgan Stanley,
YY was upgraded to Buy from Hold at T.H. Capital;
PAY was downgraded to Neutral from Buy at BTIG Research;
VIP was initiated with a Buy at ING Group
From Briefing.com: 4:05 pm Finisar misses by $0.03, misses on revs; guides Q4 EPS below consensus, revs below consensus (FNSR) : Reports Q3 (Jan) earnings of $0.59 per share, excluding non-recurring items, $0.03 worse than the Capital IQ Consensus of $0.62; revenues rose 23.1% year/year to $380.6 mln vs the $389.69 mln Capital IQ Consensus.
Co issues downside guidance for Q4, sees EPS of $0.50-0.56 vs. $0.58 Capital IQ Consensus Estimate; sees Q4 revs of $360-380 mln vs. $393.09 mln Capital IQ Consensus Estimate
Finisar has not provided a reconciliation of its fourth quarter outlook for non-GAAP gross margin, non-GAAP operating margin and non-GAAP earnings per fully diluted share because estimates of all of the reconciling items cannot be provided without unreasonable efforts. It is difficult to reasonably provide a forward-looking estimate of certain reconciling items between such non-GAAP forward-looking measures and the comparable forward-looking GAAP measures.
Certain factors that are materially significant to Finisar's ability to estimate these items are out of its control and/or cannot be reasonably predicted, including with respect to restructuring charges, litigation settlements and resolutions and related costs, and the timing of tax related adjustments. Accordingly, a reconciliation of such non-GAAP forward-looking measures to the comparable forward-looking GAAP measures are not available within a reasonable range of predictability.
4:24 pm Closing Market Summary: Energy Shakes Off Crude Oil's Decline to Lead Stocks Higher on Thursday (:WRAPX) :
The bulls and the bears slugged it out on Thursday until the energy sector (+0.6%) gave the bulls a slight edge in the final stretch. The S&P 500 finished with a slim 0.1% gain while the Nasdaq and the Dow closed flat. Meanwhile, the Russell 2000 underperformed, posting a loss of 0.4%.
Crude oil followed up its 5.3% Wednesday plunge with another disappointing performance on Thursday as investors continued to digest yesterday's bearish EIA reading. The energy component closed its trading day 2.1% lower at $49.24/bbl, but regained a good portion of that loss in electronic trade. The energy sector appreciated the belated effort, leading the late afternoon rally and finishing near the top of the day's leaderboard after holding the bottom spot for much of Thursday's action.
One of the reasons energy stocks rebounded so sharply in the afternoon session is that few people expected it given the continued drop in oil prices. The weakness in crude oil likely spurred some participants to short the energy stocks, so when they started to exhibit relative strength, weak-handed short sellers likely got nervous, covered their positions, and effectively aided in the sector's recovery effort.
Outside of the energy world, the European Central Bank (:ECB) captured investors' attention for a while this morning with its latest policy decision to leave rates unchanged. More notably, the ECB raised its 2017 GDP forecast to 1.8% from 1.7%, but did not suggest an impending reduction to stimulus. This gave a boost to the euro, helping the currency climb 0.4% against the dollar to 1.0587.
Back in the U.S., the health care sector (+0.6%) finished with the energy group at the top of the day's leaderboard. Similarly, the financial (+0.3%), consumer staples (+0.2%), and telecom services (+0.4%) sectors also outperformed the broader market.
The financial sector held the top spot on the day's leaderboard going into afternoon action, but comments from White House Press Secretary Sean Spicer were met with some backtracking in bank stocks. During today's press briefing, Mr. Spicer said that President Donald Trump remains committed to restoring the Glass-Steagall Act.
On the flip side, the lightly-weighted real estate group (-1.3%) finished at the bottom of the sector standings while the industrials (-0.5%) and materials (-0.4%) groups also finished solidly lower.
The consumer discretionary space (unch) closed just below the broader market as retailers pushed the SPDR S&P Retail ETF (XRT 41.83, -0.54) lower by 1.3%. Despite its small market cap, Tailored Brands (TLRD 15.84, -7.53), the parent company of Men's Wearhouse and Jos. A. Bank, contributed to the bearish sentiment among retailers after the company missed top and bottom line estimates and issued downbeat guidance. TLRD shares sank 32.2%.
In the Treasury market, U.S. sovereign debt finished Thursday's session lower as investors eyed tomorrow's Employment Situation Report, which is regarded as the last potential barrier to a March rate hike. The benchmark 10-yr yield finished four basis points higher at 2.60%.
Today's economic data included February Export/Import Prices and Initial Claims:
Import prices excluding oil rose 0.3% in February after ticking down 0.1% in January (revised from -0.2%). Export prices excluding agriculture increased 0.3% in February after rising 0.2% in January (revised from +0.1%).
The key takeaway from the report is that it won't alter the market's newfound belief that the Fed is likely to raise the target range for the fed funds rate at its March meeting since there are evident signs of increasing inflation in the year-over-year readings for both import and export prices.
The latest weekly initial jobless claims count totaled 243,000 while the Briefing.com consensus expected a reading of 240,000. Today's tally was above the unrevised prior week count of 223,000. As for continuing claims, they declined to 2.058 million from the revised count of 2.064 million (from 2.066 million).
Despite the jump in initial claims, which was not influenced by any special factors, the key takeaway from the report is that there was no discernible change in the long-term trend in initial claims, which held below 300,000 for the 105th straight week.
Tomorrow's economic data will include the Employment Situation Report for February (Briefing.com consensus 188,000), which will be released tomorrow at 8:30 ET while the February Treasury Budget will follow at 14:00 ET.
Nasdaq Composite +8.5% YTD
S&P 500 +5.6% YTD
Dow Jones Industrial Average +5.5% YTD
Russell 2000 +0.2% YTD
After a modestly higher start on Thursday, the broader market gradually fell off, tapping lows just after midday and ultimately finishing just above flat lines in a surge into the close. The eventual gains were led by the Nasdaq Composite which added a clean 10 points (+0.17%) to 5847.55. The S&P 500 was up 1.89 points (+0.08%) to 2364.87 at the close, while the Dow Jones Industrial Average gained 2.46 points (+0.01%) to 20858.19.
Today's economic data included import prices, which excluding oil rose 0.3% in February after ticking down 0.1% in January (revised from -0.2%). Export prices excluding agriculture increased 0.3% in February after rising 0.2% in January (revised from +0.1%). The latest weekly initial jobless claims count totaled 243,000, above the unrevised prior week count of 223,000. As for continuing claims, they declined to 2.058 million from the revised count of 2.064 million (from 2.066 million).
Hovering around flat lines for the majority of Thursday, the Technology (XLK 52.83, -0.01 -0.02%) space eventually ended modestly lower. Among the worst performers today were STX -2.97%, WDC -2.86%, IBM -1.26%, CTXS -1.11%, ACN -1.03%, MU -0.91%, WU -0.81%, XRX -0.81%, CSRA -0.77%. Other sectors as measured by the S&P closed Thursday XLE +0.66%, XLV +0.54%, IYZ +0.44%, XLF +0.36%, XLP +0.16%, XLY -0.09%, XLU -0.22%, XLB -0.31%, XLI -0.46%, XLRE -1.28%.
In the S&P 500 Information Technology (892.96, -0.52 -0.06%) space, trading also closed slightly lower. Components GPN -0.75%, INTU -0.67%, HPE -0.66%, RHT -0.60%, FSLR -0.55%, EBAY -0.42%, NTAP -0.40%, MSFT -0.40% were among the worst performers.
Other notable news items among sector components:
KEYW Holding (KEYW 8.97, -0.16 -1.75%) acquired Sotera Defense Solutions in an all-cash transaction valued at about $235 million inclusive of an expected $46 million net present value of acquired tax benefits. The deal is also expected to be immediately accretive to 2017 adj. EPS, and significantly accretive to 2018 GAAP EPS.
Hewlett Packard Enterprise's (HPE 22.48, -0.14 -0.62%) pending sale of its software business to Micro Focus was cleared by the EU.
Nokia (NOK 5.27, +0.09 +1.83%) renewed its managed services agreement with Chorus, New Zealand's largest telecommunications infrastructure company, for a further three years.
Commvault (CVLT 48.50, -1.05 -2.12%) announced the integration of its Commvault Data Platform and IntelliSnap technology for FlashStack, a flexible, converged infrastructure solution offered jointly by Cisco (CSCO 34.07, +0.05 +0.15%) and Pure Storage (PSTG 10.10, -0.18 -1.75%), combining the latest in compute, network, and storage hardware into a single, integrated architecture.
In reaction to quarterly results:
Semtech (SMTC 34.05, -0.25 -0.73%) reported better than expected Q4 EPS and revenues of $0.37 and $140 million, respectively. For Q1, the company sees EPS and revenues ahead of expectations at $0.39-0.43 and $142-150 million, respectively.
TeleTech (TTEC 29.45, -1.25 -4.07%) reported worse than expected Q4 EPS of $0.42 on better than expected revenues of $344.9 million.
KEYW Holding (KEYW) reported worse than expected GAAP EPS of $0.08 on worse than expected revenues of $68.9 million. For FY17, the company sees revenues in-line at $300-320 million.
Companies scheduled to report quarterly results tonight: ABTL, FNSR, MGI, QADA, PAY
Analyst actions:
TECD was upgraded to Buy from Hold at Needham,
ERIC was upgraded to Buy from Sell at Goldman,
HIMX was upgraded to Buy at Mizuho,
TEF was upgraded to Buy from Hold at Deutsche Bank;
VRTU was downgraded to Hold from Buy at Maxim Group,
TVPT was downgraded to Neutral from Buy at UBS;
SNAP was initiated with a Sector Perform at FBN Securities,
MRCY was initiated with an Overweight at JP Morgan,
ITRI was initiated with a Mkt Outperform at JMP Securities
From Briefing.com: 4:32 pm Semtech beats by $0.02, beats on revs; guides Q1 EPS above consensus, revs above consensus (SMTC) :
Reports Q4 (Jan) earnings of $0.37 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.35; revenues rose 18.0% year/year to $140 mln vs the $138.34 mln Capital IQ Consensus.
Co issues upside guidance for Q1, sees EPS of $0.39-0.43, excluding non-recurring items, vs. $0.36 Capital IQ Consensus Estimate; sees Q1 revs of $142-150 mln vs. $141.33 mln Capital IQ Consensus Estimate.
4:06 pm Vishay Precision: Activist Ancora Advisors sends a letter to the Board of Directors of Vishay Precision Group actively urging the co's shareholders to support Ancora's 14a-8 proposal to eliminate the company's dual class structure (VPG) : The letter also urges the company to immediately do either of the following: (1) re-engage the strategic alternatives process in order to find a buyer for the company; or (2) replace current CEO Ziv Shoshani with an external highly-qualified and independent chief executive officer.
4:18 pm Closing Market Summary: Crude Oil's Plunge Leads Stock Market Lower On Wednesday (:WRAPX) :
Crude oil ($50.40/bbl) stole the spotlight on Wednesday, plunging 5.3%, after the latest Energy Information Administration (EIA) inventory report showed a much higher build than the consensus estimate (8.2 million vs 2.0 million est.). The major averages held their ground for some time amid the energy component's plummet, but succumbed to selling pressure in the final stretch. The Nasdaq (+0.1%) finished with a slim gain while the S&P 500 and the Dow closed with losses of 0.2% and 0.3%, respectively.
Unsurprisingly, the energy sector closed the day at the bottom of the leaderboard with a loss of 2.5%. The rate-sensitive utilities (-1.5%) and real estate (-1.5%) groups also finished solidly lower amid an increase in interest rates following a better than expected ADP National Employment Report, which clobbered the consensus estimate; the reading showed that a whopping 298,000 private-sector jobs were added in February (Briefing.com consensus 180,000).
In light of the ADP release, economists will be adjusting their estimates for nonfarm payroll gains (Briefing.com consensus 188,000) in Friday's Employment Situation Report for February, which is regarded as the last potential barrier for a rate hike in March. Following today's economic data, the CME Fed Watch Tool now assigns an implied probability of 90.8% to a March rate hike, up from 81.9% on Tuesday. Furthermore, the market expects to see another rate hike by the September meeting. The U.S. Dollar Index (102.04, +0.23) ticked up in tandem with rate hike expectations, adding 0.2%.
In the same breath, U.S. Treasuries finished the day in negative territory with the benchmark 10-yr yield closing four basis points higher at 2.55%.
At the top of the day's sector standings were the health care (+0.3%) and consumer discretionary (+0.3%) sectors with the latter space receiving a boost from retailers. The SPDR S&P Retail ETF (XRT 42.37, +0.43) added 1.0% after the latest batch of earnings reports, which included a stellar performance from The Children's Place (PLCE 118.15, +18.25). PLCE shares spiked 18.3% after the company reported better than expected earnings and issued upbeat guidance. In addition, The Children's Place also announced a new stock buyback and a dividend increase.
For the health care group, today's positive showing was more of a bounce-back performance following Tuesday's tumble, a day in which the sector saw selling pressure in response to the House Republicans' proposed Obamacare replacement.
The technology (+0.1%), financials (unch), and materials (+0.1%) sectors finished near their flat lines while the telecom services (-0.4%), consumer staples (-0.3%), and industrials (-0.4%) groups finished with modest losses.
Today's economic data included February ADP Employment Change, fourth quarter Productivity & Unit Labor Costs, January Wholesale Inventories, and the weekly MBA Mortgage Index:
The ADP National Employment Report showed an increase of 298,000 in February (Briefing.com consensus 180,000) while the January reading was revised to 261,000 from 246,000.
The ADP reading precedes Friday's more influential Employment Situation Report for February, which is widely considered the last potential barrier to a rate hike in March.
The unit labor costs were left unrevised during the fourth quarter, showing an increased 1.7%, which was higher than the 1.6% increase that had been anticipated by the Briefing.com consensus. The productivity reading was also left unrevised, showing an increase of 1.3%. The Briefing.com consensus expected an increase of 1.5%.
The key takeaway from the report is that productivity is low, with the average annual rate of productivity growth from 2011 to 2016 being 0.6% versus the long-term rate of 2.1% from 1947 to 2016. Low productivity gets in the way of a rising standard of living.
January Wholesale Inventories decreased 0.2%, while the Briefing.com consensus expected a downtick of 0.1%. The prior month's reading was left unrevised at +1.0%.
The market doesn't typically pay much attention to this release since the full business inventories report is usually released a few days later.
The weekly MBA Mortgage Applications Index increased 3.3% to follow last week's 5.8% uptick.
On Thursday, investors will receive February Challenger Job Cuts at 7:30 ET, with February Export/Import Prices and Initial Claims (Briefing.com consensus 240,000) following at 8:30 ET.
Nasdaq Composite +8.4% YTD
S&P 500 +5.6% YTD
Dow Jones Industrial Average +5.5% YTD
Russell 2000 +0.7% YTD
As Wednesday came to a close, the broader market seemed to lose its luster (of whatever luster it had today) as all three major averages fell to session lows at the bell tolled. Despite ending at lows, the Nasdaq Composite still managed gains, up 3.62 points (+0.06%) to 5837.55. The Dow Jones Industrial Average was the worst performer, shedding 69.03 points (-0.33%) today to end 20855.73, while the S&P 500 lost 5.41 points (-0.23%) to 2362.98.
Today's economic data included the ADP National Employment Report which showed an increase of 298,000 in February while the January reading was revised to 261,000 from 246,000. Also today, unit labor costs were left unrevised during the fourth quarter, showing an increased 1.7%. The productivity reading was also left unrevised, showing an increase of 1.3%. Additionally, January Wholesale Inventories decreased 0.2%, and the prior month's reading was left unrevised at +1.0%. Lastly, the weekly MBA Mortgage Applications Index increased 3.3% to follow last week's 5.8% uptick.
Despite a late-session decline, the Technology (XLK 52.84, +0.06 +0.11%) space managed to stay above water. Component Qualcomm (QCOM 57.77, +1.04 +1.83%) was the best performer in the sector today despite an unfavorable ruling that came down today in a PTAB case against Parkervision (PRKR 2.81, +0.22 +8.49%). The Consumer Discretionary space XLY +0.42% performed the best out of all S&P sectors today, followed by XLV +0.40%, XLF +0.04%, XLB +0.00%, XLP -0.22%, XLI -0.35%, IYZ -0.56%, XLU -1.44%, XLRE -1.49%, XLE -2.56%.
In the S&P 500 Information Technology (893.48, +0.90 +0.10%) space, trading barely ended above flat lines despite spending the entirety of the session in the green. Component Skyworks (SWKS 96.69, +1.64 +1.73%) was among the better performing names today following a premarket upgrade to a Buy rating on the stock at Mizuho. Other names in the space which outperformed today included ADSK +1.69%, VRSN +1.47%, SYMC +1.16%, XRX +1.09%, ATVI +1.08%, MSFT +0.92%, EA +0.79%, MSI +0.68%, AMAT +0.62%, CRM +0.61%, KLAC +0.56%, YHOO +0.55%.
Other notable news items among sector components:
Parkervision (PRKR) confirmed a favorable PTAB ruling vs. Qualcomm (QCOM).
Amazon's (AMZN 850.50, +4.48 +0.53%) AWS has acquired meeting productivity startup Do.com, according to TechCrunch.
Alphabet (GOOG 835.37, +3.46 +0.42%) said to be acquiring data science community Kaggle, according to TechCrunch.
Munich Leukemia Laboratory (MLL) has teamed up with IBM (IBM 179.45, -0.93 -0.52%) and Illumina (ILMN 164.40, -1.18 -0.71%) to help build a new cognitive technology prototype that aims to help researchers improve leukemia treatment.
GlobalStar (GSAT 1.41, flat) and Inmarsat (IMASY 9.38, +0.66 +7.57%) announced a new partnership to cross-sell their respective products and services.
Microsoft (MSFT 64.99, +0.59 +0.92%) to shutter its So.cl social network project effective March 15.
AMD (AMD 13.22, +0.17 +1.30%) announced their collaboration with Microsoft (MSFT) to incorporate the cloud delivery features of AMD's next-generation "Naples" processor with Microsoft's Project Olympus.
NVIDIA (NVDA 98.56, -0.18 -0.18%) unveiled the NVIDIA Jetson TX2, a credit card-sized platform that delivers AI computing.
Accenture (ACN 124.46, +0.32 +0.26%) has opened a Liquid Studio in Riga to help clients speed up innovation and software development cycles.
Extreme Networks (EXTR 6.77, +0.67 +10.98%) to acquire Avaya's networking business for about $100 million.
Time Warner's (TWX 98.51, +0.27 +0.27%) Turner and Warner Bros. have partnered with standalone domestic premium video subscription service Boomerang. The parties plan a subscription video service will launch in the spring.
In reaction to quarterly results:
Tech Data (TECD 89.87, -3.93 -4.19%) reported better than expected Q4 EPS of $2.45 on in-line revenues of $7.43 billion.
Ciena (CIEN 23.97, -2.20 -8.41%) reported worse than expected Q1 EPS and revenues of $0.26 and $621.5 million, respectively. For Q2, the company sees revenues in-line at $680-710 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: VNET RATE CMTL KEYW NCIT SMTC TTEC XTLY/ACTA CRCM INAP SSYS TSL
Analyst actions:
SWKS was upgraded to Buy from Neutral at Mizuho,
MANT was upgraded to Buy from Hold at Maxim Group,
ORBK was upgraded to Buy from Hold at Standpoint Research,
BT was upgraded to Neutral from Underperform at Macquarie;
NMBL was downgraded at Wells Fargo, Morgan Stanley, Susquehanna and Pacific Crest,
BT was downgraded to Neutral from Buy at Goldman,
VOD was downgraded to Underperform from Neutral at Macquarie;
SWKS was initiated with an Outperform at Wells Fargo,
QRVO was initiated with a Market Perform at Wells Fargo,
SPLK was initiated with a Buy at Rosenblatt,
AUXO was initiated with a Buy at B. Riley & Co.
From Briefing.com: 4:16 pm Closing Market Summary: Stock Market Finishes Tuesday Modestly Lower (:WRAPX) :
Tuesday's session was largely uneventful as market-moving catalysts were in short supply. The major averages trended just below their flat lines for the majority of the session, but a late afternoon sell-off left them near their worst levels of the day. The Nasdaq (-0.3%) finished in line with the S&P 500 (-0.3%) while the Dow (-0.1%) closed with a slight advantage.
Despite the equity market's minimal movement, House Republicans mixed things up beneath the surface after unveiling their first attempt at replacing the Affordable Care Act, also known as Obamacare, on Monday evening. The proposed legislation was a hit with President Trump, but other members within the GOP have demonstrated resistance to the bill, indicating that its implementation may be somewhat challenging. Investors are keeping an anxious eye on Washington, knowing that any delay in health care reform also postpones the impending tax reform, which has been a key catalyst to the stock market's huge post-election rally.
The health care sector (-0.7%) finished the day behind the broader market as investors digested the latest news from the nation's capital. The biotechnology industry showed relative weakness within the group, evidenced by the 1.7% drop in the iShares Nasdaq Biotechnology ETF (IBB 294.75, -5.08).
At the bottom of Tuesday's leaderboard, energy (-0.9%) and telecom services (-0.7%) struggled throughout the day. The energy space didn't find much support from crude oil, which finished 0.2% lower at $53.13/bbl, as futures traders displayed caution ahead of the American Petroleum Institute (:API) data release on Tuesday evening.
Conversely, utilities (unch) and technology (+0.2%) finished at the top of the day's sector standings with the technology group profiting on gains from large-cap components like Apple (AAPL 139.52, +0.18) and Alphabet (GOOGL 851.15, +3.88). Chipmakers also 'chipped' in to help the tech sector's outperformance, evidenced by the 0.3% increase in the PHLX Semiconductor Index.
The remaining sectors--financials, consumer discretionary, industrials, materials, consumer staples, and real estate--finished with losses between 0.1% and 0.6%.
U.S. Treasuries had a rather range-bound session, failing to deviate much from their flat lines throughout the day's action. The 10-yr Treasury note finished modestly lower with its yield closing one basis point higher at 2.51%.
Tuesday's economic data included January Trade Balance and January Consumer Credit:
The January trade balance showed a deficit of $48.5 billion, which is in line with the Briefing.com consensus. The previous month's deficit was left unrevised at $44.3 billion.
The key takeaway from the report is twofold: (1) it will feed the White House's concerns about unfair trade dynamics and (2) it presents a negative input for first quarter GDP forecasts as the real goods deficit of $65.3 billion widened from the fourth quarter average of $62.2 billion.
The Consumer Credit report for January showed an increase of $8.8 billion while the Briefing.com consensus expected growth of $17.0 billion. The prior month's credit growth was revised to $14.8 billion from $14.2 billion.
The key takeaway from the report is that consumer credit decelerated in January, which is apt to contribute to subdued expectations for the pace of consumer spending and GDP growth in the first quarter.
Tomorrow's economic data will include the weekly MBA Mortgage Index at 7:00 ET, February ADP Employment Change (Briefing.com consensus 180,000) at 8:15 ET, fourth quarter Productivity (Briefing.com consensus 1.5%) & Unit Labor Costs (Briefing.com consensus 1.6%) at 8:30 ET, and January Wholesale Inventories (Briefing.com consensus -0.1%) at 10:00 ET.
Nasdaq Composite +8.4% YTD
Dow Jones Industrial Average +5.9% YTD
S&P 500 +5.8% YTD
Russell 2000 +1.3% YTD
After a brief period of positive action in the morning session, the major averages cooled down and eventually settled into a modestly lower channel, ultimately ending near lows on Tuesday. At the bell, the S&P 500 was the worst performer, shedding 6.92 points (-0.29%) to 2368.39. The Nasdaq Composite lost about 15.25 points (-0.26%) today, ending 5833.93, and the Dow Jones Industrial Average declined 29.58 points (-0.14%) to 20924.76.
Today's economic data included the January trade balance which showed a deficit of $48.5 billion, as the previous month's deficit was left unrevised at $44.3 billion. Also, the total outstanding consumer credit increased by $8.8 billion in January after increasing an upwardly revised $14.8 billion (from $14.2 billion) in December.
Despite ending flat, the Technology's (XLK 52.78, flat) sector was the best performing space in the S&P; action was back and forth in the early going, eventually carving out decent gains in the early afternoon only to give up those gains and trade places between gains and losses in the final moments of action.
Component Frontier Communications (FTR 2.62, -0.14 -5.07%) was the worst performer today after BofA/Merrill downgraded the stock premarket. After the Technology space, all other S&P sectors ended in the red, with the US Telecom space IYZ -1.32% performing the worst on Tuesday, followed by XLE -0.89%, XLV -0.70%, XLB -0.55%, XLRE -0.35%, XLY -0.32%, XLI -0.29%, XLF -0.28%, XLP -0.16%, XLU -0.06%.
In the S&P 500 Information Technology (892.58, +1.30 +0.15%) space, trading ended higher today despite carrying modest losses into the bell. Component CA Tech (CA 31.97, -0.85 -2.59%) was the worst performing name in the space today after the company acquired Veracode for $614 million in cash. Other names in the space which closed higher today included FFIV +1.60%, EA +1.33%, NVDA +1.10%, TXN +1.03%, GPN +0.85%, ACN +0.73%, QRVO +0.71%, INTC +0.65%, AVGO +0.60%, SYMC +0.58%.
Other notable news items among sector components:
Nimble Storage (NMBL 12.58, +3.98 +46.28%) to be acquired by Hewlett Packard Enterprise (HPE 22.82, -0.25 -1.08%) for $12.50 per share in cash, or $1.0 billion. HPE expects earnings accretion.
IBM (IBM 180.38, -0.09 -0.05%) and Salesforce (CRM 82.97, +0.47 +0.57%) announced a global strategic partnership to deliver joint solutions designed to leverage artificial intelligence.
TerraForm Global (GLBL 4.92, +0.67 +15.88%) to be acquired by Brookfield Asset Management (BAM 36.12, +0.22 +0.61%) for $787 million in cash, including $455 million of net debt. The company also entered into a settlement agreement with SunEdison (SUNEQ 0.09, +0.02 +26.63%). Also, Brookfield Renewable
Partners (BEP 28.67, -0.11 -0.38%) will acquire a 51% interest in TerraForm Power (TERP 12.01, +0.42 +3.62%). The company's commitment expected to be in the range of $500 million.
Qualcomm (QCOM 56.73, +0.28 +0.50%) has extended the offering period of its previously announced cash tender offer to purchase all of the outstanding common shares of NXP Semi (NXPI 103.77, -0.12 -0.12%).
The Colorado Center for Personalized Medicine (CCPM) is using Tableau Software (DATA 50.16, -0.86 -1.69%) and Google Cloud Platform (GOOG 831.91, +4.13 +0.50%) to analyze patient data to predict disease risk and develop targeted treatments based on an individual's health history in support of breakthrough research projects.
CA Tech (CA) to acquire Veracode for $614 million in cash. CA expects earnings accretion in 2020.
In addition to reporting quarterly results, MeetMe (MEET 5.89, +0.82 +16.17%) executed a definitive agreement to acquire If(we), Inc., a social and mobile technology company, for $60.0 million in cash.
Rambus (RMBS 13.10, +0.30 +2.34%) signed a broad patent license agreement with Western Digital (WDC 76.80, flat). The agreement covers the use of RMBS patented memory technologies, including high-speed interfaces, memory architectures, resistive memory and security technologies, in WDC products through 2021. The agreement also includes an additional 5-year extension option. Specific terms of the agreement were not disclosed.
Western Digital (WDC) announced that the HGST Active Archive System is enabling the cole Polytechnique Fdrale de Lausanne (EPFL) to archive more than 17,000 hours' worth of live music, video, and data from the Montreux Jazz Festival.
Fitbit (FIT 5.89, -0.11 -1.83%) announced changes to its senior leadership team and provided updates on its previously announced efforts to reorganize its business to reignite growth and return to profitability. The company has promoted Vice President of Engineering, Samir Kapoor, to Senior Vice President of Device Engineering, reporting to co-founder and CTO, Eric Friedman. The company also announced the departure of two executives by the end of the month: Woody Scal, Chief Business Officer, and Tim Roberts, Executive Vice President, Interactive.
In reaction to quarterly results:
Momo (MOMO 30.00, +3.39 +12.74%) reported better than expected Q4 EPS and revenues of $0.44 and $246.1 million, respectively. For Q1, the company sees revenues better than expectations at $238.0-243.0 million.
Nimble Storage (NMBL) reported a better than expected loss of $0.12 per share on better than expected revenues of $117.03 million.
MeetMe (MEET) reported better than expected Q4 EPS of $0.19 on in-line revenues of $29.2 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: WIFI/CIEN, PCTI, TECD
Analyst actions:
SIMO was upgraded to Buy from Hold at Standpoint Research,
TERP was upgraded to Mkt Outperform from Mkt Perform at Avondale,
PEGA was upgraded to Buy from Hold at The Benchmark Company;
FTR and CSOD were downgraded to Neutral from Buy at BofA/Merrill,
DBD was downgraded to In-Line from Outperform at Imperial Capital,
NMBL was downgraded to Market Perform at BMO Capital and to Hold at Jefferies
From Briefing.com: 4:27 pm Closing Market Summary: Averages Start the Week with Modest Losses (:WRAPX) :
A morning sell-off was met with a slight uptick in buying interest on Monday afternoon, leaving the major averages with modest losses to start the new week on lower-than-average trading volume. The Dow finished lower by 0.2% while the S&P 500 (-0.3%) and Nasdaq (-0.4%) performed slightly worse. Small-caps were hit the heaviest with the Russell 2000 closing lower by 0.7%.
Given the pace and scope of gains this year, and really since President Trump's election on November 8 -- a period in which the S&P 500 has gained over 11.0% -- it should come as little surprise to see the stock market succumb to some profit-taking interest.
There were some news headlines over the weekend that may have contributed to the profit taking from what many pundits are describing as a market that is overextended on a short-term basis.
The most notable of these headlines was North Korea's most recent act of defiance in which Pyongyang launched four ballistic missiles into the Sea of Japan, marking the third time since August that North Korean missiles have fallen in Japan's exclusive economic zone.
Other notable news included allegations from President Trump that former President Obama ordered a wiretap of his Trump Tower offices prior to the presidential election and an announcement from Deutsche Bank (DB) that the company will raise $8.5 billion of capital through the issuance of stock.
These headlines, though, appeared to serve more as convenient excuses to do some selling than anything else considering the stock market did make a rebound effort intraday and the CBOE Volatility Index increased less than 1.0%, hinting at some limited hedging activity among today's participants.
Ten of eleven sectors finished Monday's session in the red. The energy sector (+0.3%) was the lone winner. The top spot on the leaderboard has been an elusive one for the energy sector, which remains in last place in the 2017 sector standings with a year-to-date loss of 5.2%.
Crude oil didn't aid the energy sector's uptick, finishing Monday's session with a loss of 0.2% at $53.22/bbl. The commodity was pressured somewhat by a strengthening U.S. dollar, which was reflected in the 0.3% uptick for the U.S. Dollar Index (101.69, +0.34).
The top-weighted technology sector (-0.2%) saw some slight outperformance versus the broader market, but still ended the day lower. The semiconductor stocks helped keep the sector's losses in check, as they rebounded from early losses to help the PHLX Semiconductor Index eke out a small gain for the session.
The financial sector (-0.6%) led the stock market's retreat in the morning session, but received a jumpstart in the afternoon to climb past the materials sector (-0.7%) at the bottom of the leaderboard.
News on the corporate front was limited, but it is worth noting that airlines suffered after Delta Air Lines (DAL 48.85, -1.28) cut its first quarter guidance in light of more moderate than expected unit revenues in February. Despite the airlines' losses, the industrial sector (-0.3%) finished in line with the benchmark index.
Losses in the remaining sectors -- consumer discretionary, health care, consumer staples, utilities, telecom services, and real estate-- were modest, between 0.2% and 0.4%.
U.S. Treasuries finished slightly lower as fixed-income markets were still digesting last week's aggressive campaign by Fed officials to prepare markets for the possibility of a March 15 rate hike. The benchmark 10-yr yield closed Monday one basis point higher at 2.49%.
Monday's lone economic report was January Factory Orders:
The Factory Orders Report for January showed an increase of 1.2% while the Briefing.com consensus expected a increase of 1.0%. The December reading was left unrevised at 1.3%.
The key takeaway from the report is that it should contribute to some slight upward revisions to economists' first quarter GDP estimates since shipments of nondefense capital goods excluding aircraft were not down as much as the advanced report for durable goods indicated.
The key takeaway from the report is that it should contribute to some slight upward revisions to economists' first quarter GDP estimates since shipments of nondefense capital goods excluding aircraft were not down as much as the advanced report for durable goods indicated.
Tomorrow's data will include January Trade Balance (Briefing.com consensus -$48.5 billion) at 8:30 ET and January Consumer Credit (Briefing.com consensus $17.0 billion) at 15:00 ET.
Nasdaq Composite +8.7% YTD
S&P 500 +6.1% YTD
Dow Jones Industrial Average +6.0% YTD
Russell 2000 +2.0% YTD
After starting the session on a gap lower, the broader market cooled off as the session progressed, paring losses into the close. Ultimately, the Nasdaq Composite lost about 21.58 points (-0.37%) to 5849.17. The S&P 500 was down 7.81 points (-0.33%) to 2375.31, and the Dow Jones Industrial Average shed 51.37 (-0.24%) to 20954.34.
The lone piece of economic data today was the Factory Orders Report for January which showed an increase of 1.2% while the December reading was left unrevised at 1.3%.
Mirroring a tough day in the broader market, the Technology (XLK 52.78, -0.08 -0.15%) space was also lower today. Component CSRA (CSRA 28.66, -1.28 -4.28%) was the worst performer following a premarket downgrade at Cowen. The lone S&P sector which managed to escape Monday with gains was Energy XLE +0.24%, followed by XLU -0.19%, XLI -0.24%, XLY -0.32%, XLV -0.38%, XLRE -0.41%, XLP -0.44%, XLB -0.65%, XLF -0.76%, IYZ -1.15%.
In the S&P 500 Information Technology (891.28, -1.46 -0.16%) space, trading squeaked back into the red at the close despite a few positive ticks in the final moments of action. Component HP (HPQ 17.30, +0.08 +0.48%) managed modest gains today after Wells Fargo upgraded the stock to Outperform this morning. Other names in the space which closed lower with the sector though included FSLR -3.70%, ADSK -2.79%, TEL -1.80%, CTSH -1.75%, TSS -1.60%, FFIV -1.07%, WDC -0.95%, INTC -0.92%, STX -0.92%, NVDA -0.77%.
Other notable news items among sector components:
Accenture (ACN 123.25, -0.39 -0.32%) signed a global original equipment manufacturer (OEM) agreement with SAP SE (SAP 94.09, -0.55 -0.58%) to offer its human capital management (HCM) applications on SAP Cloud Platform.
Analog Devices (ADI 83.85, +0.67 +0.81%) received regulatory approval from the Ministry of Commerce of China to complete its acquisition of Linear Technology (LLTC 65.45, +0.59 +0.91%). The company also now sees Q2 revenue and EPS between the mid-point and high end of guidance.
Advanced Micro (AMD 13.04, +0.01 +0.08%): Mubadala Development Company PJSC proposes the sale of 45 million shares under form 144.
Canadian Solar (CSIQ 13.74, -0.76 -5.24%) raised $20 million in funding from the CPD Fund.
Cisco (CSCO 34.19, -0.10 -0.29%) and IBM (IBM 180.47, +0.42 +0.23%) announced new solutions for VersaStack.
ON Semiconductor (ON 15.26, +0.05 +0.33%) will acquire and license mmWave technology for automotive radar applications developed by IBM's (IBM) Haifa research team. Financial terms of the deal were not disclosed.
Analyst actions:
NFLX was upgraded to Buy from Neutral at UBS,
HPQ was upgraded to Outperform from Market Perform at Wells Fargo,
EXPE was upgraded to Outperform from Neutral at Macquarie,
TWLO was upgraded to Outperform from Market Perform at Northland Capital,
CAJ was upgraded to Overweight from Neutral at JP Morgan;
GPRO was downgraded to Sell from Neutral at Goldman,
CSRA was downgraded to Market Perform from Outperform at Cowen,
TWX was downgraded to Neutral from Buy at UBS;
SNAP was initiated with an Underperform at Needham
4:32 pm Rambus signs a broad patent license agreement with Western Digital Corporation (WDC); financial details not disclosed (RMBS) : The agreement covers the use of Rambus patented memory technologies, including high-speed interfaces, memory architectures, resistive memory and security technologies, in Western Digital products through 2021. The agreement also includes an additional 5-year extension option. Specific terms of the agreement were not disclosed.
InvestmentHouse - What is So Hard About the Health Care Issue? (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
Indices settle down, test the SOTU rally, leave themselves in good enough
position.
- Same old story with some new twists in DC
- What is so hard about the health care issue? Free markets do actually
work, unless your goal is control.
- Pundits say market surges, pundits say the end is near. Trend is up, no
sellers, and until leaders break down in quantity, the trend continues.
A bit of a hangover after the Wednesday Trump SOTU rally.
After a big surge such as Wednesday in response to a specific catalyst such
as the excitement over the State of the Union address, you have to see how
the market reacts. Thursday was problematic, particularly on the growth
indices; DJ30 and SP500, not so much.
Friday was no great day for the stock indices, but it was good for the
upside in that the indices held, to different degrees, the Wednesday
breakout. Again it was the large cap NYSE holding up quite well thanks to
their financial components while the other indices almost tested the entire
move.
The end result, however, are some pretty decent charts and definitely the
ability to extend the new, SOTU hope higher.
Of course the same old issues emerged immediately after the hope-inspired
move: AG Sessions accused of lying during confirmation, counter accusations
of the same conduct by all senators and House reps, wiretapping of Trump's
offices and campaign with references to Watergate -- you know, the usual
business in DC. One step forward, one step to who knows where.
That leaves many pundits split. After the Wednesday breakout the bullish of
bulls are supercharged, calling for DJ30 23K by Labor Day. Others are
calling for a drop after a last upside move spurred by this latest breakout.
I believed that there would be a last leg and then a drop; thus far that
last leg is still going. The right answer? The way the market goes.
There are many reasons to anticipate a decline even as the market broke to
new highs last week. There are some breaks in leadership. Okay, 'breaks'
are not really the right word. More like leadership is getting ragged and
it needs to clean itself up or find new leaders. That is what has kept the
move going, and with semiconductors, China, oil, and small caps in general
turning choppy (medium volatility) and sporting some breaks, the market
needs to generate some new leadership.
On top of that there is another week of 60+% bullish sentiment, hitting a
cycle high on its seventh of nine weeks over 60%. Coupled with that,
however, is an interesting phenomena that occurred: wealthy investors for
some big banks, etc. sold out only to have to move back in when the rally
continued. Bulls to bears back to reluctant bulls. That prompted BAC to
opine SP500 hitting 2450 as those clients moved back in. THEN the pullback.
Right now everyone is guessing at the top. Dangerous stuff. As long as the
market pushes new leaders upside it is a good idea to play the trend with
those good moves as your dominant strategy. Pick up some downside as they
set up bearish patterns and break lower, but most money has to be focused
with the trend in place.
Yes DC has and will have its impact. If Trump is stymied in the silent coup
many claim is occurring then there will be a stock price to pay. For now it
appears the market is willing to continue on faith that there is enough
momentum to get the job done. With a poll released this weekend showing
Trump with a 53% approval rating it would seem the detractors have not made
significant inroads, at least not yet. So, the market is holding a pretty
solid uptrend, still is summoning leadership, and thus the bias and
expectation, near term, remains upside.
NEWS/ECONOMY
The news impacting the stock market boils down to this: will Trump be able
to move his marquis programs through Congress: ACA repeal, tax reform.
After that there is immigration, etc., but the first two are key. As well
as one of his apparent new initiatives, reducing the federal government
size.
He has tweeted and/or discussed plans of reducing the State Department by
roughly 40%. If he would do that to ALL federal agencies and demand the
same output in services, the federal government might start loosely
approaching the level of private sector output. No slam against public
sector workers, but in many audits the findings are the same: to much staff
for the job at hand, too much management. Cut the middle out and let the
workers do their work without so many managers supposedly managing. That
would be truly game changing and might be the counter silent coup to the
silent coup.
Anyway, with respect to the ACA, the idiots in control of the House majority
show they have learned nothing after the TTP debacle where the document was
locked in a secret room where no cameras, phones, or any writing or copying
material was allowed. You could take notes about what you read and saw but
you had to leave the notes when you left. Those without impressive
photographic memories were simply SOL. Of course most in Congress NEVER
BOTHERED to even go look at it, so I suppose it doesn't really matter.
Garbage in, garbage out, right?
So, somewhere in DC there is a room with the House majority plan for the
ACA. And it is not a repeal. It is doing the same thing just not as much.
Like lessening the tension being used on the 'rack' in a medieval dungeon,
like toning down the level of the 'agony booth' on the parallel universe in
the classic Star Trek episode 'Mirror, Mirror.' Oh, THAT will make us all
whole.
What the hell? What about just the good old free market? Look what it did
for the cost of Lasik and other non-insured procedures: costs have
plummeted, quality is excellent, and now everyone can take part. There was
no fixed overhead, no 'insurance will pay for it' cost inflator attached so
those providing the service had to get real and get prices down to what the
market would bear. That capitalism is a pretty amazing thing.
Hmm, but could it work for insurance, without massive government oversight?
How could that possibly happen. Oh, auto insurance works pretty well; not
great, but pretty well because . . . you can shop all over the country for
it. Geico and others are offering plans where you can get the coverage you
want. Oh sure, you have to actually EDUCATE yourself on what you should
have, but we are grownups or at least should be. And by golly, it seems to
work. Prices are way, way down, and frankly could go even lower if the
regulation was further reduced.
How about college accounts? You don't have to go to your state. The first
529 plans were somewhat high priced but then you could buy them anywhere.
Prices plunged, quality was at least as good.
Brokerage and financial services. You probably don't remember when the big
brokers had the market locked up. You could only trade in large blocks,
minimum of 100 shares. Commissions were astronomical so no one wanted to
trade. Then along came Charles Schwab, and after several court fights the
age of the individual investor was born. People could all of the sudden
take control of their investments. They could shop for the best deal as
they built their own wealth. Prices plunged, and competition is STILL at
play 35 years later as Fidelity just dropped its fees again, now charging
just $4.95 per stock trade with very high quality service. Spreads have
narrowed, market information has improved -- so many wonderful things for
investors.
Wow, the free market CAN work, and it MOST CERTAINLY can and will work with
health insurance. When we had HSA's that actually were worth having we had
great choices and prices. We chose low premium, high deductible plans and
could save tax free into our account. I am talking for a self-employed
family, less than $300/month with a $5K deductible for the whole family,
100% coverage after deductible was paid, no exclusions. Great healthcare,
and that was WITHOUT the ability to really shop from state to state and have
competition lower it even more. Now we pay almost $3,000/month and suffer
an effective $12,000 deductible with a separate $6K carveout for my wife.
Free market versus controlled markets.
Why then try to control the market process? Control. If you control one of
the large and important areas in a person's life, particularly healthcare,
you have a lot of say over a person's life. The governing class, whether
espousing to be liberals or conservatives, democrats or republicans,
communists or capitalists, all want power and control. What better way to
control the masses than control healthcare, education, communications (the
unchecked ability to eavesdrop on every communication), and money (required
declaration of every penny a person possesses, control of money rates, and
ultimately, eliminating cash altogether). You make the call.
THE MARKET
CHARTS
SP500, DJ30: Both are holding the upper gap point from the Wednesday
post-SOTU gap and run, showing tight doji. They are in very good position
to continue the move.
NASDAQ: Faded through the 10 day EMA Friday, but recovered to hold the 10
day EMA and a modest gain. That keeps the breakout intact, the trend up the
10 day EMA in place. Some volatility crept into NASDAQ, but it was on
mostly lower relative volume, and NASDAQ is currently holding that trend. It
can really use the chips to hang onto the trend.
SOX: No new high for SOX on the week as the SOTU address produced a bounce
off the 20 day EMA, but by Friday SOX was right back at the 20 day, closing
with a doji. The trend remains in place using that near support, but over
the past two weeks SOX turned choppy, selling back but it did manage to
close out with the trend. Limping along for now, but it is following the
other indices.
SP400: Midcaps rallied to a higher high Wednesday on the SOTU but sold half
the gain Thursday. Friday SP400 reached lower but held the 10 day EMA on
the close. That keeps the uptrend in place, but as with NASDAQ, a lot of
volatility the past 2 weeks as SP400 continued the uptrend. Lower MACD
suggests slowing momentum. SP400 will show great surge pops but then it
also shows selling sessions on their heels. Will have to hold the trend,
heal itself, then continue. As with SOX, for now it is holding on and
following the other indices.
RUTX: Closed lower Friday but fractionally, holding the 20 day EMA on the
low and showing a tight doji. That is a good hold of support, but as with
SP400, the small caps turned volatile the past 1.5 weeks after moving to a
higher high. Another new high Wednesday was immediately sold. Thus far,
however, no breakdown as it tests and holds the break over the December to
January range.
LEADERSHIP
Materials: Still volatile, surging post-SOTU, selling after that. Friday a
move higher, but not taking on the Wednesday highs. Example: CX.
Interesting thing, CX says it will bid for concrete on the border wall. LPX
is testing the 10 day EMA, looking a bit heavy after lethargic trading on
the week. USCR (concrete) rallied up to the late January high on low MACD,
some decent volumes. Trying to work, but very choppy.
Metals: Weak to end the week but some are still holding support, e.g. STLD.
Have to get the patterns back together, however. AKS showed a doji on
Friday after falling down away from resistance Thursday. AKS is not bad,
but is not the best pattern in the market by a long shot. Precious metals
suffered another week as the Fed appears ready to actually hike rates.
Semiconductors: Ups and downs. AVGO reported strong earnings on the week
and was up though even the surge was sold some. AMD gapped below the 20 day
EMA Friday, holding the mid-February closing low so we see if it can bounce.
XLNX still cannot break the pull of the 50 day MA. SWKS, MCHP, LRCX, QRVO
remain in their trends, but they have been on those trends for some time.
Financial: All financials rallied Wednesday then tested the move Thursday,
Friday rebounding to hold much of the move. C, BAC, JPM all show the same
testing action. GS similar as well. The group is in good shape.
FAANG: FB continued a trend ups the 10 day EMA but rather slow in the
uptake last week. AAPL broke higher Wednesday, held the move to the
weekend. AMZN never made it to a higher high, but did hold the 10 day EMA
on the close. NFLX broke lower Thursday, but showed a doji Friday over the
upper gap point. GOOG rallied to the January highs Wednesday, tested to the
10 day EMA Friday.
Drugs/Biotech: Still looks to be, again, an up and coming group. CELG
rallied early week, tested to the 10 day EMA Friday in a 1-2-3 test, then
rallied higher Friday off that test. AMGN is working on a nice trend up the
10 day EMA. JAZZ is in a nice 3 week test of a run higher into early
February. IMMU still looks as if it wants to break higher while CORT
continues its impressive climb up the 10 day EMA toward the target.
Oil: Breaking down as a group. APC sold to a lower low on this fade. HAL
is struggling below the 50 day MA's. CVX is trying to hold the line and MRO
is trying to set a base over the 200 day SMA, but those are works in
progress. SN is interesting in a pullback to the 50 day MA, but many have a
lot of work to do.
China: Mixed and that is a change for the worse. CTRP still looks good
over the 10 day EMA. SOHU can still pull off a nice break higher as can
VIPS and BABA. BIDU is still in the tank. SINA is struggling. NTES
struggled on the week but held the 20 day EMA Thursday.
MARKET STATS
DJ30
Stats: +2.74 points (+0.01%) to close at 21005.71
Nasdaq
Stats: +9.53 points (+0.16%) to close at 5870.75
Volume: 1.843B (-8.96%)
Up Volume: 893.07M (+255.89M)
Down Volume: 905.84M (-474.16M)
A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Decliners led 2.23 to 1
New Highs: 80 (-69)
New Lows: 38 (-7)
S&P
Stats: +1.2 points (+0.05%) to close at 2383.12
NYSE Volume: 825.3M (-2.38%)
A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Decliners led 2.73 to 1
New Highs: 65 (-61)
New Lows: 38 (+7)
SENTIMENT INDICATORS
VIX: 10.96; -0.85
VXN: 11.77; -0.94
VXO: 10.08; -1.92
Put/Call Ratio (CBOE): 0.94; -0.08. Jumped over 1.0 Thursday and Tuesday.
At this juncture that simply looks like some protection buying.
Bulls and Bears: Bulls rallied to a new cycle high while bears slipped back
a whole point. 7 of 9 weeks over 60%. Not at cycle lows for bears, but
historically low.
Bulls: 63.1 versus 61.2
Bears: 16.5 versus 17.5
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: 63.1 versus 61.2
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 versus 44.6 versus 49.0 versus 52.5
versus 55.9 versus 56.7 versus 56.2 versus 54.3 versus 52.9% versus 53.9%
versus 54.4% versus 52.5% versus 47.1% versus 41.6% versus 47.5% versus
45.9% versus 47.3% versus 45.4% versus 35.4% versus 40.2 versus 39.2
Bears: 16.5 versus 17.5
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 versus 22.6 versus 22.8
versus 20.6 Versus 20.2 versus 20.0 versus 20.9% versus 21.2% versus 21.6%
versus 23.3% versus 24.7% versus 24.5% versus 23.8% versus 23.2% versus
23.5% versus 23.8% versus 23.7% versus 24.0% versus 21.7% versus 21.6%
versus 21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8% versus 28.9%
versus 27.8% versus 30.3% versus 35.4%
OTHER MARKETS
Bonds (10 year): 2.48% versus 2.46%.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.46%
versus 2.260% versus 2.367% versus 2.31% versus 2.38% versus 2.42% versus
2.43% versus 2.42% versus 2.45% versus 2.50% versus 2.473% versus 2.43%
versus 2.41% versus 2.398% versus 2.340% versus 2.393% versus 2.41% versus
2.48% versus 2.474% versus 2.477% versus 2.44% versus 2.49% versus 2.48%
versus 2.512% versus 2.52% versus 2.467% versus 2.40% versus 2.47% versus
2.468% versus 2.422% versus 2.372%
EUR/USD: 1.60266 versus 1.05214. Jumped late week even though Yellen pretty
much confirmed a rate hike. Could it be Commerce Secretary Ross talking
about a "sensible" NAFTA deal?
Historical: 1.05214 versus 1.05327 versus 1.05710 versus 1.05877 versus
1.05616 versus 1.05830 versus 1.0557 versus 1.05474 versus 1.06108 versus
1.06665 versus 1.06148 versus 1.05762 versus 1.06023 versus 1.06411 versus
1.06557 versus 1.06825 versus 1.06814 versus 1.07219 versus 1.07880 versus
1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus 1.06957 versus
1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus 1.0761 versus
1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus 1.06450 versus
1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus 1.05346 versus
105837 versus 1.0525 versus 1.03914 versus 1.05289 versus 1.05155 versus
1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus 1.04412 versus
1.0392
USD/JPY: 114.042 versus 114.169. Rallied on the week just over the 50 day
SMA, then stalled Thursday and Friday.
Historical: 114.169 versus 113.951 versus 112.966 versus 223.982 versus
112.169 versus 112.745 versus 113.324 versus 113.399 versus 112.906 versus
113.356 versus 113.880 versus 114.306 versus 113.65 versus 113.856 versus
113.265 versus 113.401 versus 112.207 versus 112.332 versus 111.815 versus
112.567 versus 112.903 versus 112.68 versus 112.50 versus 114.493 versus
115.094 versus 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983
Oil: 53.33, +0.72. Sold hard to the 50 day EMA then bounced Friday. Tried
the 54-55 level the prior week, stalled, then fell to support. Now it shows
if it can bounce again.
Gold: 1226.50, -6.40. Gold rallied to the 200 day SMA the prior week and
then spent the past week testing the move, falling back to the 50 day EMA
Friday.
MONDAY
The Fed has moved into its quiet time with a series of statements and
speeches about how the time is appropriate for a rate hike. If the Jobs
Report Friday comes in solid enough, then March is on for a rate hike. At
this stage of the Fed cycle and with the hope trade in place, a good report
should be met with cheer if not much rejoicing. Yea.
As noted, the trends remain in place. There is some chop and moderate
volatility in the smaller indices, but they are following the large cap NYSE
lead, and that is still upside. Financial stocks should still provide
leadership, perhaps biotechs and drugs will continue improving, and we will
see if the chips can pull out of their near term choppy trade. The market
will need more than a narrow group of leaders to seriously rally, but of
course certain indices can still push higher on a narrow band of gainers,
e.g. DJ30, SP500.
The trend remains higher with some signs of wear and tear and internal and
sentiment issues, but there is still a lack of sellers -- seller-itis -- and
without earnest sellers, the downside cannot get a foothold. Sure the
market will fade and test moves with a lack of bids, just as it is doing
now. To this point, however, the shortage of bids has been met with new
buys after a rather modest pullback.
Therefore the majority of plays you have to look at are in line with that
trend. It is noteworthy how many good plays/setups there are as that gives
you a barometer of the life of the current upside leg, i.e. if there are few
it could take more testing to better setup the continuation of the upside
move. It does not mean the uptrend is over; that would take actual
breakdowns in several leading groups, demonstrated usually by breakouts that
fail relatively quickly that then break down the pattern. That is when you
have to worry that the trend is over. Before that, it is usually just a lot
of worry for no real reason.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5870.75
Resistance:
5912 is the March all-time high.
Support:
5800 from the February consolidation lows
5661 is the late January upper gap point
The 50 day EMA at 5664
The 50 day SMA at 5640
The 2016 trendline at 5604
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
The 200 day SMA at 5270
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
4999 is the October upper gap point
4980 is the June 2016 peak
S&P 500: Closed at 2383.12
Resistance:
Support:
The 2016 trendline at 2320
2301 is the late January 2017 high
The 50 day EMA at 2305
The 50 day SMA at 2300
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
The 200 day SMA at 2187
2175 is the June 2016 high
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the September 2016 low; February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
Dow: Closed at 21,005.71
Resistance:
Support:
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
The 50 day EMA at 20,189
The 50 day SMA at 20,170
19,994 - 19,999 (early January high, upper gap point from late January
The 200 day SMA at 18,816
19750 is the lows of the December/January range
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
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
ECONOMIC CALENDAR
March 6 - Monday
Factory Orders, January (10:00): 1.0% expected, 1.3% prior
March 7 - Tuesday
Trade Balance, January (8:30): -$48.5B expected, -$44.3B prior
Consumer Credit, January (15:00): $17.0B expected, $14.2B prior
March 8 - Wednesday
MBA Mortgage Index, 03/04 (7:00): 5.8% prior
ADP Employment Chang, February (8:15): 180K expected, 246K prior
Productivity-Rev., Q4 (8:30): 1.5% expected, 1.3% prior
Unit Labor Costs - R, Q4 (8:30): 1.6% expected, 1.7% prior
Wholesale Inventorie, January (10:00): -0.1% expected, 1.0% prior
Crude Inventories, 03/04 (10:30): +1.5M prior
March 9 - Thursday
Challenger Job Cuts, February (7:30): -38.8% prior
Export Prices ex-ag., February (8:30): 0.1% prior
Import Prices ex-oil, February (8:30): -0.2% prior
Initial Claims, 03/04 (8:30): 240K expected, 223K prior
Continuing Claims, 2/25 (8:30): 2066K prior
Natural Gas Inventor, 03/04 (10:30): +7 bcf prior
March 10 - Friday
Nonfarm Payrolls, February (8:30): 188K expected, 227K prior
Nonfarm Private Payr, February (8:30): 185K expected, 237K prior
Unemployment Rate, February (8:30): 4.7% expected, 4.8% prior
Avg. Hourly Earnings, February (8:30): 0.2% expected, 0.1% prior
Average Workweek, February (8:30): 34.4 expected, 34.4 prior
Treasury Budget, February (14:00): -$192.6B prior
From Briefing.com: 5:04 pm Closing Market Summary: Averages Eke Out Gains on Friday (:WRAPX) : The major averages finished Friday's session near their unchanged marks as investors digested the latest remarks from Fed Chair Janet Yellen. The Nasdaq (+0.2%) outperformed while the S&P 500 (+0.1%) finished with a slim gain. The Dow closed the day unchanged.
According to the Fed funds futures market, it appears that a March rate hike is on after Fed Chair Yellen said nothing to upset that notion on Friday afternoon. Ms. Yellen expressed her belief that a March rate hike is indeed appropriate as long as the economy evolves as expected. The CME Fed Watch Tool now assigns an implied probability of 79.7% to a March rate hike, up slightly from yesterday's 77.5%.
The U.S. dollar retreated in the wake of Ms. Yellen's comments, nearly doubling its earlier loss. The U.S. Dollar Index (101.35, -0.81) finished Friday lower by 0.8%.
Conversely, Treasuries climbed back towards their flat lines after holding losses going into Ms. Yellen's speech. The benchmark 10-yr yield finished one basis point higher at 2.48% while the 2-yr yield closed two basis points lower at 1.29%.
The financial sector (+0.4%) profited from the steepening of the Treasury yield curve, closing the day with the health care sector (+0.4%) at the top of the leaderboard. The biotechnology industry had a hand in the health care group's positive performance, evidenced by the 0.9% increase in the iShares Nasdaq Biotechnology ETF (IBB 302.49, +2.70).
Conversely, consumer staples closed Friday near the bottom of the leaderboard following Costco's (COST 170.26, -7.72) most recent earnings report. The wholesale retailer tumbled 4.3% after reporting worse than expected earnings per share results after Thursday's close.
Costco's performance also negatively influenced retailers, evidenced by the 1.4% decline in the SPDR S&P 500 Retail ETF (XRT 42.72, -0.62). The consumer discretionary sector, which comprises many retailers, also underperformed, closing lower by 0.2%.
Crude oil finished the day 1.4% higher at $53.33/bbl, but the energy group (-0.4%) still had trouble keeping pace with the broader market.
Also of note, Snap (SNAP 27.09, +2.61) followed up Thursday's IPO with a 10.7% spike in Friday's session. The social media company had an IPO price of $17.00 per share, but opened for trading late on Thursday morning at $24.00 per share.
Today's lone economic report was February ISM Services:
The ISM Services Index for February increased to 57.6 while the Briefing.com consensus expected reading of 56.5. The prior month's reading was left unchanged at 56.5.
Monday's lone economic report, January Factory Orders (Briefing.com consensus 1.0%), will cross the wires at 10:00 ET.
Nasdaq Composite +9.1% YTD
S&P 500 +6.4% YTD
Dow Jones Industrial Average +6.3% YTD
Russell 2000 +2.7% YTD
Week In Review: Dow 21,000 and Beyond
The stockmarket continued its relentless push higher, which resulted in the sixthconsecutive weekly advance for the S&P 500 and the Dow Jones IndustrialAverage cruising past 21,000. The benchmark index gained 0.7% for the week, extending its first quarter advance to 6.4%. TheNasdaq underperformed during the week (+0.4%),but remains ahead so far in 2017 (+9.1%).
The first twodays of the week were highlighted by sideways action as most participants saton their hands ahead of President Donald Trump's first address to Congress,which took place on Tuesday evening. There was some profit taking ahead of theevening address on Tuesday, but not only was the selling limited, it took placeafter a strong run in February that ended with the S&P 500 gaining 3.7% forthe month.
Tuesday'smodest downtick was wiped out in short order as equity indices charged out ofthe gate on Wednesday, jumping to new record highs. The upbeat disposition wasattributed to President Donald Trump's address, which was free of surprises anddeemed 'presidential' by pundits. President Trump reiterated his commitment toa $1 trillion infrastructure plan and made another mention of a big tax reformplan on the horizon. Details, however, remain to be seen.
However, itwasn't all President Trump as investors received some positive news from theglobal economic front on Thursday. China's Manufacturing PMI for February(51.6; expected 51.1) beat expectations while eurozone Manufacturing PMI (55.4;expected 55.5) ticked down slightly, but remained in expansion.
On the domesticdata front, fourth quarter GDP was left unrevised at 1.9% in the secondestimate, while more recent data like February Chicago PMI (57.4; Briefing.comconsensus 53.0), February Consumer Confidence (114.8; Briefing.com consensus 111.5),and February ISM Index (57.7%; Briefing.com consensus 56.1%) beat expectations.That combination, and some hawkish comments from Fed officials, contributed toa notable shift in rate hike expectations.
The fed funds futures market ended the week showing a 79.9% implied probability of a rate hike inMarch, indicating a prevailing belief that the Federal Reserve is likely toraise the target range for the fed funds rate at its March 14-15 FOMCmeeting. Fed Chair Yellen herself contributed to those increasedexpectations with a speech on Friday in which she indicated a furtheradjustment in the fed funds rate would likely be appropriate at the Marchmeeting if the FOMC's evaluation of matters concludes that employment andinflation are continuing to evolve in line with its expectations.
This week also featured the widely-hyped, andclosely-followed, IPO of social media company Snap (SNAP) on Thursday. The IPO priced at $17, yet the stock snapped higher when it first openedfor trading, hitting the $24.00 mark before closing the session at $24.48 andfinishing the week at $27.08.
The featured item in the coming week will be the FebruaryEmployment Situation Report. The latter will be released on Friday. The nonfarm payrolls number and unemployment rate will capture most of thegeneral media's attention, yet market participants will be focusing moreintently on the average hourly earnings figure and the implications it couldhold for future inflation, consumer spending, and monetary policy decisions.
Friday's action ended modestly higher, though initially pressured this morning. Action was led today by the Nasdaq Composite which added 9.53 points (+0.16%) to 5870.75. The S&P 500 followed, higher by 1.20 points (+0.05%) to 2383.12, and the Dow Jones Industrial Average posted gains of 2.74 points (+0.01%) to 21005.71. All told, this week's moves took the three major averages to +9.0%, +6.4% and +6.3% YTD, respectively.
Today's lone piece of economic data was the ISM Services Index for February which increased to 57.6 and the prior month's reading was left unchanged at 56.5.
After a modestly lower morning session, the Technology (XLK 52.86, +0.12 +0.23%) space turned it around in the latter half of Friday. Components MU +3.52%, GPN +2.99%, FTR +2.14%, WDC +1.65%, NTAP +1.28%, TDC +1.19%, INTU +1.02%, AMAT +1.01%, XRX +0.96% helped solidify the advance. Financials edged out Healthcare for the top spot among S&P sectors on Friday XLF +0.48%, XLV +0.40%, XLI +0.11%, XLB -0.08%, XLY -0.15%, XLE -0.19%, XLU -0.31%, XLRE -0.31%, IYZ -0.33%, XLP -0.38%.
In the S&P 500 Information Technology (892.74, +1.68 +0.19%) space, trading also turned higher in the latter half of Friday. Components FIS +0.83%, ATVI +0.79%, CTXS +0.78%, FISV +0.74%, MSI +0.66%, PYPL +0.61%, AAPL +0.57% all posted modest gains on Friday.
Other notable news items among sector components:
Hewlett Packard Enterprise (HPE 23.04, +0.09 +0.41%) disclosed the board set a record date of Mar 20, 2017 for the previously announced spin-off of its enterprise services business.
Verizon's (VZ 50.08, +0.10 +0.20%) Board authorized the corporation to repurchase up to 100 million shares of its common stock.
GrubHub (GRUB 34.28, -0.59 -1.69%) disclosed that on Mar 1, 2017 the Board appointed Stanley Chia to the position of COO.
Lumentum (LITE 46.70, +0.95 +2.08%) upsized and priced a $400 million offering of convertible notes due 2024.
Alliance Data (ADS 244.48, +0.54 +0.22%) proposed to offer EUR 300 million aggregate principal amount of senior notes due 2022.
Cincinnati Bell (CBB 19.05, +0.05 +0.26%) appointed COO Leigh Fox as President and CEO effective May 31, succeeding Ted Torbeck.
Endurance International (EIGI 8.00, -0.40 -4.76%) disclosed that COO Ronald LaSalvia resigned effective immediately.
Commscope (COMM 39.30, +0.39 +1.00%) priced its offering of $750 million in aggregate principal amount of 5.000% senior unsecured notes due 2027.
TerraForm Power (TERP 11.67, +0.23 +2.01%) secured an additional $86 million expansion of project financing for power plants in Canada.
In reaction to quarterly results:
Autodesk (ADSK 85.32, -2.00 -2.29%) reported a better than expected Q4 loss per share of $0.28 on in-line revenues which fell 26.1% compared to a year ago to $478.8 million. The company also guided Q1 EPS and revenues below market expectations at ($0.27)-($0.21) and $460-480 million, respectively. For FY18, the company sees worse than expected EPS and revenues of ($0.73)-($0.56) and $2.0-2.05 billion, respectively.
Marvell (MRVL 16.09, +0.24 +1.51%) reported better than expected Q4 EPS of $0.22 on in-line revenues of $571.4 million. For Q1, the company sees better than expected EPS and revenues of $0.19-0.23 and $570 million, plus or minus 2% (which equates to about $558-581 million).
Nutanix (NTNX 23.00, -8.12 -26.09%) reported a better than expected Q2 loss per share of $0.28 on better than expected revenues of $182.2 million. The company guided Q3 EPS below market expectations at ($0.45)-($0.48) on in-line revenues of $180-190 million.
Immersion (IMMR 8.58, -2.11 -19.74%) reported a worse than expected Q4 loss per share of $0.27 and worse than expected revenues of $9.3 million. The company also guided FY17 EPS and revenues worse than expected at ($0.76)-($1.05) and $38-42 million.
Analyst actions:
EXPE was upgraded to Neutral from Sell at Citigroup,
SEDG was upgraded to Mkt Outperform from Mkt Perform at JMP Securities;
PANW was downgraded to Hold from Buy at Argus,
CIEN was downgraded to Neutral from Buy at BofA/Merrill,
NTNX was downgraded to Underweight from Equal Weight at Morgan Stanley,
IMMR was downgraded to Hold from Buy at Craig Hallum,
LPL was downgraded to Underperform from Mkt Perform at Bernstein,
ACIW was downgraded to Market Perform from Outperform at Avondale,
AUO was downgraded to Underperform from Mkt Perform at Bernstein,
BCOR was downgraded to Hold from Buy at Standpoint Research;
SNAP was initiated with an Underweight at Atlantic Equities and with a Neutral at Susquehanna,
GPRO was initiated with a Sell at Citigroup,
ULTI and PCTY were initiated with Neutral ratings at Mizuho,
PAYC was initiated with a Buy at Mizuho,
INFY was initiated with a Sell at Goldman,
CSC was initiated with a Sector Weight at Pacific Crest
Large Cap Gainers
MU (25.47 +3.12%): Shares continue to rise after the co presented yesterday at Morgan Stanley's Technology Conference and says Q2 Non-GAAP results expected to be at or above the high end of guidance.
More from Briefing.com: President Trump's first address to Congress appeared to be a hit, at least among investors, as traders confidently pushed the major averages to fresh record highs on Wednesday. All-time highs were had in the Dow Jones Industrial Average which gained 303.31 points (+1.46%) to 21115.55, the S&P 500 +32.32 points (+1.37%) to 2395.96, and the Nasdaq Composite +78.59 points (+1.35%) to 5904.03.
It wasn't necessarily 'what' Mr. Trump said on Tuesday evening that fueled investors' confidence, it was 'how' he said it. The new president looked, well, 'presidential', a good sign that his controversial style can be toned-down when need be. More importantly, he showed investors that he is committed to getting his pro-growth promises through Congress, even if it means a little compromise.
Additionally, selling pressure plagued U.S. Treasuries after hawkish comments from New York Fed President Dudley (FOMC voter) on Tuesday evening. Mr. Dudley got investors seriously thinking about the possibility of a March rate hike, saying the case for increasing interest rates has become "a lot more compelling."
The fed funds futures market now points to March as an increasingly likely time for the next rate hike to be announced with an implied probability of 66.4%, spiking from yesterday's reading of 35.4%.
Today's economic data included the January personal income reading, which rose 0.4. January personal spending increased 0.2% and Core PCE prices for January. The ISM Index for February rose to 57.7 from an unrevised reading of 56.0 in January. Also, the Construction Spending report for January showed a 1.0% decrease and the prior month's reading was revised to +0.1% from -0.2%. Lastly, the weekly MBA Mortgage Applications Index, which was released earlier this morning, increased 5.8% to follow last week's 2.0% downtick.
Technology (XLK 53.09, +0.74 +1.41%) rode the strong session in the broader market to highs of its own dating back to September of 2000. Component Micron (MU 24.55, +1.11 +4.74%) performed the best today after a premarket upgrade of the stock to a 'Buy' rating at Goldman. The Financial XLF +2.85% sector out-performed all other S&P sectors today, followed by the XLE +2.00%, XLB +1.95%, XLI +1.69%, XLY +1.12%, IYZ +1.05%, XLV +1.00%, XLP +0.47%, XLRE -0.25%, XLU -0.89%.
In the S&P 500 Information Technology (897.10, +13.05 +1.48%) space, trading moved to new all-time highs today. Component Salesforce.com (CRM 83.81, +2.46 +3.02%) was among the better performing names today as the company reported better than expected Q4 results. Other names in the space which closed higher today included ATVI +4.45%, ADSK +3.05%, NTAP +2.82%, STX +2.68%, QRVO +2.65%, APH +2.41%, CTXS +2.31%, PAYX +2.26%, ADI +2.23%, TEL +2.23%, GLW +2.14%, AAPL +2.04%.
Other notable news items among sector components:
Square (SQ 17.21, -0.11 -0.64%) upsized its latest offering by $50 million and priced $400 million of convertible senior notes due 2022.
In addition to reporting quarterly results, Palo Alto Networks' (PANW 115.21, -36.69 -24.15%) BoDs authorized a $500 million increase to the existing repurchase program. The company also announced the acquisition of LightCyber for $105 million in cash.
In addition to reporting quarterly revenues, Ambarella (AMBA 56.34, -2.61 -4.43%) approved a share repurchase plan of an aggregate of $75 million through June 30, 2017.
Twilio (TWLO 32.32, +0.60 +1.89%) appointed former Salesforce (CRM) COO George Hu as its COO.
Yelp (YELP 34.66, +0.96 +2.85%) acquired Nowait, a restaurant technology company with waitlist system and seating tool, for $40 million in cash and includes the partial stake which Yelp acquired previously.
Alphabet's (GOOG 835.24, +12.03 +1.46%) Youtube confirmed the launch of live TV (TV membership is only $35 a month).
NVIDIA (NVDA 102.79, +1.31 +1.29%) unveiled the latest Pascal architecture-based GPU, the GeForce GTX 1080 Ti, and GameWorks DX12, a collection of resources for game developers that will increase realism and shorten product cycles in titles designed using DirectX 12, Microsoft's API that unifies graphics and simulation.
Accenture (ACN 124.07, +1.57 +1.28%) acquired Davies Consulting. Financial details of the deal were not disclosed.
Xerox (XRX 7.39, -0.05 -0.67%) announced plans to retire $300 million in debt. The company is targeting to exchange $300 million of existing debt for new debt.
Advanced Micro (AMD 14.95, +0.49 +3.42%) and Bethesda Softworks announce partnership.
Maxwell Tech (MXWL 5.28, +0.20 +3.94%) to acquire substantially all of the assets and business of Nesscap for $23.175 million.
In reaction to quarterly results:
Salesforce.com (CRM) reported better than expected Q4 earnings of $0.28 on revenues which rose about 26.8% compared to last year to $2.29 billion. For Q1, the company sees EPS and revenues below market expectations at $0.25-0.26 and $2.34-2.35 billion, respectively. For FY18, CRM sees EPS in-line at $1.27-1.29 on better than expected revenues in the range of $10.15-10.20 billion, from $10.10-10.15 billion.
Palo Alto Networks (PANW) reported better than expected Q2 EPS of $0.63 on worse than expected revenues and billings of $422.6 million and $561.6 million, respectively. For Q3, the company sees EPS and revenues below market expectations at $0.54-0.56 and $406-416 million, respectively.
Veeva Systems (VEEV 44.90, +1.21 +2.77%) reported worse than expected Q4 EPS of $0.15 on revenues which beat market expectations at $150.2 million. Further, the company guided Q1 EPS in-line with revenues ahead of expectations at $0.18 and $151-152 million, respectively. For FY18, VEEV sees EPS in-line and revenues above market expectations at $0.78-0.80 and $655-660 million, respectively.
Ambarella (AMBA) reported better than expected Q4 EPS of $0.92 on revenues which also came in ahead of market expectations at $87.5 million. For Q1, the company sees revenues worse than expected at $62.5-64.5 million.
XO Group (XOXO 16.50, -1.93 -10.47%) reported better than expected Q4 EPS of $0.13 on in-line revenues which rose 7.6% versus last year to $41 million.
Maxwell Tech (MXWL) reported a worse than expected Q4 loss of $0.23 per share on better than expected revenues which fell about 47% compared to last year to $26.4 million. MXWL also sees Q1 EPS below market expectations at ($0.26)-($0.22) on in-line revenues of $25-27 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: BOX, AVGO, PMTS, PSTG, VEC/ACIW, KVHI, MEI, SFE
Analyst actions:
AMBA was upgraded to Buy from Neutral at Dougherty,
MU was upgraded to Buy from Neutral at Goldman,
MRVL was upgraded to Neutral from Sell at Goldman;
PANW was downgraded at First Analysis Sec, JP Morgan, Robert W. Baird, William Blair, Morgan Stanley, Imperial Capital, UBS and Wunderlich,
INTC was downgraded to Underperform from Mkt Perform at Bernstein,
CRUS was downgraded to Perform from Outperform at Oppenheimer,
WDAY was downgraded to Mkt Perform from Outperform at Bernstein,
AVT was downgraded to Sell from Neutral at Goldman,
XOXO was downgraded to Hold from Buy at Stifel,
JBL was downgraded to Hold from Buy at Standpoint Research;
PTC was initiated with a Buy at Seaport Global Securities
From Briefing.com: 4:05 pm Broadcom beats by $0.15, beats on revs; guides Q2 revs above consensus (AVGO) :
Reports Q1 (Jan) earnings of $3.63 per share, excluding non-recurring items, $0.15 better than the Capital IQ Consensus of $3.48; revenues rose 132.8% year/year to $4.15 bln vs the $4.08 bln Capital IQ Consensus. Gross margin from continuing operations was $2,590 million, or 62.4 percent of net revenue.
This compares with gross margin of $2,522 million, or 60.8 percent of net revenue, in the prior quarter, and gross margin of $1,089 million, or 61.1 percent of net revenue, in the same quarter last year.
Co issues upside guidance for Q2, sees Q2 revs of $4.025-4.175 bln vs. $3.9 bln Capital IQ Consensus Estimate; non-GAAP gross margin 61-63%.
4:23 pm Closing Market Summary: Stocks Dash to New Record Highs Following Trump Address (:WRAPX) :
President Trump's first address to Congress appeared to be a hit, at least among investors, as traders confidently pushed the major averages to fresh record highs on Wednesday. The Dow (+1.5%) finished just slightly ahead of the benchmark S&P 500 (+1.4%) and the Nasdaq (+1.4%), while the small-cap Russell 2000 (+1.9%) outperformed.
It wasn't necessarily 'what' Mr. Trump said on Tuesday evening that fueled investors' confidence, it was 'how' he said it. The new president looked, well, 'presidential', a good sign that his controversial style can be toned-down when need be. More importantly, he showed investors that he is committed to getting his pro-growth promises through Congress, even if it means a little compromise.
Financials (+2.8%) led the day's advance, a role that the sector has taken frequently in the stock market's post-election rally. The financial space is now higher by 26.0% since the presidential election on November 8 and currently hovers at its highest level in over a decade.
The Treasury market aided financials in their advance as unevenly distributed selling pressure steepened the yield curve. Treasuries closed lower across the board but the 2-yr Treasury note held up relatively well compared to its peers. The 2-yr yield finished two basis points higher at 1.29% while the 10-yr yield closed higher by six basis points at 2.46%.
Selling pressure plagued U.S. Treasuries after hawkish comments from New York Fed President Dudley (FOMC voter) on Tuesday evening. Mr. Dudley got investors seriously thinking about the possibility of a March rate hike, saying the case for increasing interest rates has become "a lot more compelling."
The fed funds futures market now points to March as an increasingly likely time for the next rate hike to be announced with an implied probability of 66.4%, spiking from yesterday's reading of 35.4%.
Just behind the financial space at the top of today's leaderboard was the energy sector (+2.1%), which finished Wednesday substantially higher despite a downtick in crude oil. The energy component closed 0.4% lower at $53.82/bbl, squandering its early modest gain following the latest EIA crude inventory report, which showed a build of 1.5 million barrels.
Conversely, the consumer discretionary (+1.0%) and the consumer staples (+0.4%) sectors failed to keep pace with the broader market amid a downtick in retailers. Best Buy (BBY 42.14, -1.99), Ross Stores (ROST 66.80, -1.78), and American Eagle Outfitters (AEO 14.34, -1.51) all reported their earnings between yesterday's close and today's open, but the reactions were generally negative after all three companies issued some form of disappointing guidance.
However, the SPDR S&P 500 Retail ETF's (XRT 42.89, -0.04) loss was capped thanks in part to a positive performance from Lowe's (LOW 81.45, +7.08). The company spiked 9.5% after reporting better than expected earnings and revenues in addition to issuing upbeat guidance.
On the downside, the rate-sensitive utilities (-1.0%) and real estate (-0.3%) sectors were the only two groups to finish Wednesday in the red. The spaces slipped in reaction to today's uptick in interest rates.
Also of note, the Wall Street Journal reported late this afternoon that Snap, the parent company of the popular messaging app Snapchat, will be priced in its IPO at $17.00/share. The company will begin trading on the New York Stock Exchange tomorrow morning under the ticker 'SNAP'.
Today's economic data included January Personal Income, February ISM Index, January Construction Spending, and the MBA Mortgage Applications Index:
January personal income rose 0.4%, which is in line with the Briefing.com consensus. Meanwhile, January personal spending increased 0.2% while the Briefing.com consensus expected a reading of 0.3%. The December Personal Spending and Personal Income readings were both left unrevised at 0.5% and 0.3%, respectively. Core PCE prices for January rose 0.3% (Briefing.com consensus 0.2%). The December reading was left unrevised at 0.1%.
The sticking point with this report is twofold: (1) Real PCE declined 0.3%, led by a 0.3% decline in goods spending and a 0.2% decline in spending on services. That is going to be a negative input for Q1 GDP forecasts; and (2) The PCE Price Index was up 1.9% year-over-year, which leaves it tracking toward, and very close to, the Fed's longer-run inflation target of 2.0%, which is to say it seems to satisfy the argument of any Fed official aiming to raise the policy rate at the March meeting (the core PCE Price Index was up 1.7% year-over-year, unchanged from December).
The ISM Index for February rose to 57.7 from an unrevised reading of 56.0 in January while the Briefing.com consensus expected an uptick to 56.1.
The key takeaway from the report is that manufacturing purchasing managers are feeling better about business prospects based in large part on the faster growth they are seeing in new orders.
The Construction Spending report for January showed a 1.0% decrease while the Briefing.com consensus expected an increase of 0.6%. The prior month's reading was revised to +0.1% from -0.2%.
The key takeaway from the report is that the decline in January was driven by public construction spending.
The weekly MBA Mortgage Applications Index, which was released earlier this morning, increased 5.8% to follow last week's 2.0% downtick.
Additionally, the Fed's Beige Book for March indicated that the economy expanded at a modest to moderate pace from early January through mid-February. The report also showed that business were generally optimistic about the near-term outlook but to a somewhat lesser degree than in the prior report.
On Thursday, investors will receive February Challenger Job Cuts at 7:30 ET and the weekly Initial Claims report at 8:30 ET.
Nasdaq Composite +9.7% YTD
S&P 500 +7.0% YTD
Dow Jones Industrial Average +6.9% YTD
Russell 2000 +4.2% YTD
From Briefing.com: 4:19 pm Microchip narrows guidance ranges for Q4 EPS and net sales while maintaining the midpoints (MCHP) :
Microchip previously provided guidance on February 7, 2017 for consolidated net sales to be down 1% to up 3% with a mid-point of up 1%.
Microchip now expects consolidated net sales to be down 0.5% to up 2.5% with a mid-point unchanged at 1% and non-GAAP earnings per share to be between $1.02 and $1.10 per share.
The original guidance for non-GAAP earning per share was between $1.01 and $1.11 per share.
Due to Microchip's recent convertible debt offering and the related accounting treatment, Microchip is not able to provide GAAP earnings per share guidance at this time.
4:01 pm Advanced Micro and Bethesda Softworks announce partnership (AMD) : Announced on stage at the AMD "Capsaicin" webcast and press event during the 2017 Game Developers Conference, the multi-title agreement will see the two companies collaborate to develop and accelerate the implementation of new technologies, including the full potential of low-level APIs, such as Vulkan, and the computing and graphics power of AMD Ryzen CPUs, Radeon GPUs, and AMD server solutions across existing Bethesda franchises.
4:22 pm Closing Market Summary: Stock Market Closes Lower Ahead of Trump Address (:WRAPX) :
Investors took some money off the table after a strong month and ahead of President Trump's first prime-time address to Congress, which is scheduled for tonight at 9:00 pm ET. The S&P 500 (-0.3%) and the Dow (-0.1%) held slim losses throughout the day's session, while the Nasdaq's (-0.6%) slip was a bit more substantial. Meanwhile, the Russell 2000 finished with a sizable loss of 1.4%. For the month, the Dow gained 4.8% while the Nasdaq and S&P 500 added 3.8% and 3.7%, respectively.
President Trump is expected to touch on variety of topics in his speech, including tax reform, infrastructure spending, health care, military spending, and border security, but it is unclear if Mr. Trump will share any specific details on anything other than his defense budget.
Nonetheless, investors will be watching carefully, looking for any clues as to the timing and the final form of the President's pro-growth promises that have sent the benchmark index nearly 10.5% higher since the November 8 election.
Despite minimal movement on the macro level, micro motion was alive and well, especially on the earnings front. Target (TGT 58.77, -8.14) plunged 12.2% after the company missed earnings estimates and issued weak guidance.
Retailers responded to Target's misstep with a tumble of their own, pushing the SPDR S&P 500 Retail ETF (XRT 42.99, -1.04) lower by 2.4% and leaving the consumer discretionary sector with a loss of 0.7%.
Surprisingly, consumer staples (+0.2%) left Tuesday relatively unscathed, countering losses from retailers like Wal-Mart (WMT 70.93, -0.81) and Costco (COST 177.18, -0.44) with a bounceback performance from multinational food giants like Mondelez International (MDLZ 43.92, +0.15), Kraft-Heinz (KHC 91.50, +0.89), and General Mills (GIS 60.37, +0.43) following their sell-off on Monday.
The financial sector (-0.2%) outpaced the benchmark index on Tuesday despite a slide in discount brokers, who fell in reaction to the decreased earnings prospects linked to Fidelity's decision to reduce the price of its online trading commission. The move was seen as shot fired in the price war that is developing within the industry.
Energy (-0.2%) closed Tuesday's session slightly lower, ticking up in the final minutes following an afternoon spike in crude oil. The energy component finished just below its flat line, down 0.1% at $54.01/bbl, after recouping almost all of its large early-morning loss. An afternoon rally ensued in the wake of a Reuters report that OPEC members have achieved 94.0% compliance with supply cuts that were agreed to in February.
The top-weighted technology sector (-0.4%) also finished the day lower, burdened by a poor showing from chipmakers; the PHLX Semiconductor Index finished Tuesday with a loss of 1.3%.
The U.S. Treasury yield curve flattened today as selling pressure in shorter-dated issues left the 2yr-yield three basis points higher at 1.23%. Meanwhile, the benchmark 10-yr yield finished its trading day unchanged at 2.36%.
Today's economic data included the second estimate of fourth quarter GDP, February Chicago PMI, February Consumer Confidence, January International Trade in Goods, and January Case-Shiller 20-city Home Price Index:
The second reading of fourth quarter GDP pointed to an expansion of 1.9%, while the Briefing.com consensus expected a reading of 2.1%. The second estimate of fourth quarter GDP Deflator came in at 2.0%, while the Briefing.com consensus expected a reading of 2.1%.
The key takeaway from the report is that soft business spending continues to act as a drag on GDP growth.
Chicago PMI for February increased to 57.4 from 50.3 in January while the Briefing.com consensus expected a reading of 53.0.
The key takeaway from the report is that the prices paid component hits its highest level (68.6) in about two and a half years, which speaks to building inflationary pressures for manufacturers in the Chicago Fed region.
The consumer confidence reading for February rose to 114.8 from the prior month's revised reading of 111.6 (from 111.8). The Briefing.com consensus expected the survey to hit 111.5.
The key takeaway from the report is that consumers are feeling better about current business and labor market conditions than they did in January; accordingly, they expect the economy to continue to expand in the months ahead.
The Advance report for International Trade in Goods for January showed a deficit of $69.2 billion, up from a revised deficit of $64.4 billion for December (from $65.0 billion). The Advance report for January Wholesale Inventories decreased 0.1%. The prior month's reading was revised to 0.9% from 1.0%.
The Case-Shiller 20-city Home Price Index for January rose 5.6%. This followed the previous month's unrevised reading of 5.6%.
Tomorrow's economic data will include the MBA Mortgage Applications Index at 7:00 ET, January Personal Income (Briefing.com consensus 0.4%) at 8:30 ET, January Construction Spending (Briefing.com consensus 0.6%) and February ISM Index (Briefing.com consensus 56.1%) at 10:00 ET, and the Fed's Beige Book for March at 14:00 ET.
Also of note, February Auto and Truck sales will be released throughout the day on Wednesday.
Nasdaq Composite +8.2% YTD
S&P 500 +5.6% YTD
Dow Jones Industrial Average +5.3% YTD
Russell 2000 +2.2% YTD
Investors took some money off the table after a strong month and ahead of President Trump's first prime-time address to Congress, which is scheduled for tonight at 9:00 pm ET. President Trump is expected to touch on variety of topics in his speech, including tax reform, infrastructure spending, health care, military spending, and border security, but it is unclear if Mr. Trump will share any specific details on anything other than his defense budget. The end of the session spelled losses across the board, led by the Nasdaq Composite which lost 36.46 points (-0.62%) to 5825.44. The S&P 500 was down 6.11 points (-0.26%) to 2363.64, and the Dow Jones Industrial Average shed 25.20 points (-0.12%) to 20812.24.
Additionally, market data today included the second reading of fourth quarter GDP pointed to an expansion of 1.9%, and the second estimate of fourth quarter GDP Deflator came in at 2.0%. Also, the Chicago PMI for February increased to 57.4 from 50.3 in January. Further, the consumer confidence reading for February rose to 114.8 from the prior month's revised reading of 111.6 (from 111.8). The Advance report for International Trade in Goods for January showed a deficit of $69.2 billion, up from a revised deficit of $64.4 billion for December (from $65.0 billion). The Advance report for January Wholesale Inventories decreased 0.1%. The prior month's reading was revised to 0.9% from 1.0%. And lastly, the Case-Shiller 20-city Home Price Index for January rose 5.6%. This followed the previous month's unrevised reading of 5.6%.
For its part, Technology (XLK 52.35, -0.25 -0.48%) was lower from the get-go and never looked back. Component Hewlett Packard Enterprise (HPE 22.82, +0.51 +2.29%) was the best performer today despite a premarket downgrade to Hold at Argus. The Utilities sector XLU +0.92% led all other S&P spaces today, followed by the XLP +0.13%, XLF -0.04%, XLB -0.10%, XLV -0.20%, XLE -0.31%, XLRE -0.31%, XLI -0.41%, XLY -0.75%, IYZ -2.32%.
The S&P 500 Information Technology (884.05, -3.61 -0.41) space didn't fare any better, as it too headed lower at the start and never gave way. Component First Solar (FSLR 36.19, -1.64 -4.34%) was the worst performer today after a premarket initiation with a 'Sell' rating at Axiom Capital. Other names in the sector which under-performed today included NVDA -2.81%, CSRA -2.61%, WU -2.43%, QRVO -2.25%, ADSK -1.64%, HPQ -1.59%, ADS -1.54%, CTXS -1.51%, PYPL -1.50%, MU -1.35%, HRS -1.32%, ATVI -1.23%.
Other notable news items among sector components:
Intelsat (I 4.98, -0.89 -15.16%) confirmed it will merge with OneWeb in a share-for-share transaction. The company also confirmed a definitive share purchase agreement pursuant to which SoftBank (SFTBY 37.36, -0.12 -0.32%) will invest $1.7 billion in newly issued common and preferred shares of the combined I/OneWeb company.
Microsoft (MSFT 63.98, -0.25 -0.39%) introduced Xbox Game Pass, a gaming subscription service for $9.99 a month which will give customers unlimited access to over 100 Xbox One and backward compatible Xbox 360 games.
Ubisoft (UBSFY 7.31, -0.05 -0.68%) acquired Growtopia in a deal which is expected to be instantly accretive. However, financial details werenot disclosed.
In addition to reporting quarterly results, Priceline's (PCLN 1724.13, +92.12 +5.64%) Board of Directors authorized program in Q1 to repurchase up to $2.0 billion of common stock in addition to amounts previously authorized.
AT&T (T 41.79, -0.03 -0.07%), Orange (ORAN 15.05, -0.06 -0.40%), and Colt Technology Services are working with MEF and TM Forum to release the first set of standard application programming interfaces (APIs) for orchestrated Carrier Ethernet services later this year.
AT&T (T) expects its 2017 capital expenditure to be in the $22 billion range, which will bring its 2-year total to more than $40 billion.
Consumers in Germany can now access a vast selection of channels and video-on-demand (VoD) offers via GigaTV, a next-generation cloud video service from Vodafone (VOD 25.41, flat) Germany, developed by
Cisco (CSCO 34.18, -0.08 -0.23%). The service is accessible through a TV set-top box or smartphone and tablet applications.
Juniper Networks (JNPR 28.00, -0.33 -1.16%) announced that Juniper was selected as a Vodafone (VOD) Global Approved Vendor for its Contrail Networking software-defined networking (SDN) solution.
Saudi Telecom Company and Cisco (CSCO) signed a three-year managed services agreement to transform STC's core network and operations.
Qorvo (QRVO 66.10, -1.52 -2.25%) introduced new multiplexers that support challenging carrier aggregation (CA) requirements in 4G LTE smartphones. Based on Qorvo's BAW 5 filter technology, the new multiplexers deliver superior performance for Band 1/3 and Band 25/66 CA deployments.
ZTE Corp (ZTCOF 1.54, flat) and Intel (INTC 36.20, -0.31 -0.85%) signed a strategic cooperation agreement at an IoT forum in Barcelona, Spain.
RealPage (RP 33.75, +0.25 +0.75%) to acquire Lease Rent Options and related assets from The Rainmaker Group for $300 million in cash.
Pandora Media (P 12.38, -0.79 -6.00%) appointed Naveen Chopra as CFO.
Square (SQ 17.32, -0.61 -3.40%) commenced a $350 million offering of convertible senior notes due in 2022.
Silicon Labs (SLAB 67.50, -4.90 -6.77%) plans to offer $350 million principal amount of its Convertible Senior Notes due 2022 through a private offering.
IBM (IBM 179.82, +0.42 +0.23%) introduced IBM Watson Imaging Clinical Review - a cognitive imaging offering from Watson Health -- and announced the expansion of the Watson Health medical imaging collaborative to 24 organizations worldwide.
In reaction to quarterly results:
Priceline (PCLN) reported better than expected Q4 EPS and revenues of $14.21 and $2.35 billion, respectively. For Q1, the company guided EPS below market expectations at $8.25-8.65.
SBA Comm (SBAC 115.77, +2.98 +2.64%) reported better than expected Q4 funds from operations of $1.63 on revenues of $416.5 million. For FY17, the company guided FFO ahead of market expectations at $6.61-6.95.
Workday (WDAY 82.93, -7.26 -8.05%) reported better than expected Q4 EPS and revenues of $0.07 and $436.7 million. For FY18, the company sees revenues ahead of expectations at $2.005-2.025 billion.
Frontier Communications (FTR 2.93, -0.36 -10.94%) reported a worse than expected Q4 loss per share of $0.12 and revenues which also came in below expectations at $2.41 billion.
RealPage (RP) reported better than expected Q4 EPS of $0.22 on revenues of $148.9 million. The company also sees in-line Q1 EPS of $0.21-0.22 on worse than expected revenues of $151.3-153.3 million. For FY17, RP sees in-line EPS of $0.89-0.94 and revenues ahead of market expectations at $666.3-676.3 million.
Intelsat (I) reported Q4 GAAP EPS of $5.56 on better than expected revenues of $550.7 million. For FY17, the company sees in-line revenues of $2.18-2.23 billion.
Companies scheduled to report quarterly results tonight/tomorrow morning: AMBA BV ENPH HLIT ITRI LOGM MRIN MXWL PANW QUMU CRM TNET VEEV XOXO/BITA INXN WIN
Analyst actions:
WDAY was downgraded to Sell from Neutral at Citigroup and to Hold from Buy at Evercore ISI,
HPE was downgrade to Hold from Buy at Argus,
TRIP was downgraded to Underperform from Hold at Needham,
FTR was downgraded to Neutral from Overweight at JP Morgan,
JBL was downgraded to Mkt Perform from Strong Buy at Raymond James;
FSLR was initiated with a Sell at Axiom Capital,
CTL was initiated with a Neutral at MoffettNathanson
From Briefing.com: 4:24 pm Closing Market Summary: Dow Posts 12th Straight Record Close on Monday (:WRAPX) :
Investors cautiously nudged the major averages higher on Monday in another afternoon rally that has become almost expected as of late. The Dow (+0.1%) closed at a fresh record high for the 12th consecutive time, while the S&P 500 (+0.1%) posted a fresh record high of its own. The Nasdaq finished with a gain of 0.3%.
Equity indices opened the morning session mildly lower following a relatively disappointing durable goods, excluding transportation, reading. However, President Trump got things rolling with some comments shortly after the opening bell.
Bulls turned their attention to aerospace & defense names like Boeing (BA 179.43, +1.99) and Lockheed Martin (LMT 269.36, +5.18) after Mr. Trump proposed a $54 billion boost to defense spending, making good on his promise from last Friday to implement one of the "greatest military buildups in American history." Additionally, the president's comments helped send shares of Caterpillar (CAT 97.44, +1.96) higher after the promise to touch on his infrastructure plan during his first address to Congress, which will take place tomorrow evening.
The industrial space (+0.3%) led the stock market back to its flat line, where it hovered until its afternoon advance.
Energy (+0.9%) finished Monday at the top of the leaderboard. The space did receive some help from crude oil, although not as much as early indications may have predicted. WTI crude finished just above its flat line, higher by 0.1% at $54.04/bbl, despite trading as high as $54.60/bbl in the overnight session.
Financials (+0.5%), health care (+0.4%), and real estate (+0.5%) also outperformed with health care receiving a boost from the biotechnology industry. The iShares Nasdaq Biotechnology ETF (IBB 298.27, +8.37) jumped 2.9% higher, closing near its five-month high.
On the flip side, telecom services finished Monday at the bottom of the leaderboard after AT&T (T 41.82, -0.54) announced that it will be lowering the price of its unlimited data plan, pointing to increased competition within the wireless space.
Consumer staples (-0.6%) fared only slightly better, suffering in light of the dissolved Kraft-Heinz (KHC 90.51, -2.54)-Unilever (UL 47.69, +0.58) merger after Warren Buffett said that KHC is not planning a hostile takeover of UL and that there is no backup deal in the works. Given that Mr. Buffett is the chairman of Berkshire Hathaway (BRK.b 170.63, +0.41), which invested in the Kraft-Heinz merger back in 2015, his comments on the situation hold some weight.
Mr. Buffett also revealed that he more than doubled his holdings in Apple (AAPL 136.93, +0.27) between January 1 and the company's earnings report on January 31. AAPL added 0.2% on the news, but it wasn't enough to keep technology (-0.1%) out of the red.
U.S. Treasuries finished the day with large losses as investors revised up their probabilities for a rate hike at the March 14-15 FOMC meeting; the fed funds futures market now shows an implied probability of 35.4% from 26.6% on Friday. The benchmark 10-yr yield closed Monday five basis points higher at 2.37%. In addition, bond traders have started looking at the possibility of another debt ceiling showdown and a possible government shutdown if there is no agreement on how to deal with the debt limit by March 15.
Today's economic data included January Durable Orders and January Pending Home Sales:
January durable goods orders rose 1.8%, which is in line with the Briefing.com consensus. The prior month's reading was revised to -0.8% (from -0.4%). Excluding transportation, durable orders declined 0.2% (Briefing.com consensus +0.5%) to follow the prior month's revised gain of 0.9% (from 0.5%).
The key takeaway from the report is that the "hard" data indicates business spending declined at the start of the year, which is contradictory of the spending optimism reported in the "soft" survey data.
Pending Home Sales for January declined 2.8% while the Briefing.com consensus expected an increase of 0.9%. Today's reading follows a revised 0.8% uptick in December (from 1.6%).
Tuesday's economic data will include the second estimate of fourth quarter GDP (Briefing.com consensus 2.1%) and January International Trade in Goods at 8:30 ET, February Chicago PMI (Briefing.com consensus 53.0%) at 9:45 ET, and February Consumer Confidence (Briefing.com consensus 111.5) at 10:00 ET.
Nasdaq Composite +8.9% YTD
S&P 500 +5.9% YTD
Dow Jones Industrial Average +5.4% YTD
Russell 2000 +3.7% YTD
The major averages ended positive today, despite morning weakness ahead of President Trump's first address to Congress, which will take place on Tuesday evening. Ultimately, the Nasdaq Composite edged out the others, adding 16.59 points (+0.28%) to 5861.90. The S&P 500 was up 2.39 points (+0.10%) to 2369.73, and the Dow Jones Industrial Average gained about 15.68 points (+0.08%) to 20837.44 as the bell rang.
Equity indices came out of the gate with modest losses, but Mr. Trump increased investors' optimism with some comments earlier this morning. The president touched on a wide-array of subjects, but the market moving material came from a preview of his first proposed budget. Most notably, President Trump proposed a $54 billion boost to defense spending.
Today's market data included the January durable goods orders reading, which rose 1.8%, and the prior month's reading was revised to -0.8% (from -0.4%). Excluding transportation, durable orders declined 0.2% to follow the prior month's revised gain of 0.9% (from 0.5%). Furthermore, Pending Home Sales for January declined 2.8%, following a revised 0.8% uptick in December (from 1.6%).
Technology (XLK 52.60, -0.03 -0.06%) was pressured for the entirety of the day, ending the session near highs, though. Component Hewlett Packard Enterprise (HPE 22.31, -0.65 -2.83%) was the worst performer today despite announcing a deal with AT&T (T 41.82, -0.54 -1.27%) to provide cloud -based data management. Additionally, shares of bellwether Apple (AAPL 136.93, +0.27 +0.20%) were strong today following Warren Buffet's morning appearance on CNBC, on which Mr. Buffet discussed the addition to his stake in the tech giant, more than doubling his position to about 115 million shares. Energy XLE +0.86% was the best performing S&P sector today, followed by -- IYZ +0.59%, XLF +0.53%, XLRE +0.50%, XLV +0.48%, XLI +0.36%, XLY +0.12%, XLB -0.25%, XLP -0.47%, XLU -0.56%.
In the S&P 500 Information Technology (887.66, -0.61 -0.07%) action was decidedly negative, but only just, as the space lost less than a point. Component NVIDIA (NVDA 104.41, +2.95 +2.91%) was strong today, after a defense at Goldman, which suggested investors buy the weakness. Other names in the space which closed lower with the sector today included INTU -1.69%, FIS -1.44%, XRX -1.33%, RHT -1.27%, MSI -1.23%, ORCL -1.09%, IBM -1.08%, APH -1.01%, PYPL -1.00%, VRSN -0.92%, FISV -0.62%, MSFT -0.60%.
Other notable news items among sector components:
On CNBC before the open, Warren Buffet discussed that he bought more Apple (AAPL) shares since his the December 31 13-F filing cut-off, and before the January 31 quarterly report. Clarified that he more than doubled his position to about 115 million shares.
Hewlett Packard Enterprise (HPE) announced it was selected by AT&T (T) to provide cloud-based subscriber data management solutions.
Comcast (CMCSA 37.53, -0.36 -0.95%) and Alphabet's (GOOG 829.28, +0.64 +0.08%) Google announced a deal that will launch the YouTube app on Xfinity X1 across the country later this year.
Square (SQ 17.93, +0.50 +2.87%) entered into a Warrant Cancellation and Payment Agreement relating to that certain warrant to purchase up to 9,456,955 shares of the Company's Class A common stock issued to Starbucks (SBUX 56.78, +0.70 +1.22%).
ServiceNow (NOW 87.75, -4.07 -4.43%) appointed former CEO of eBay (EBAY 34.28, +0.22 +0.65%) John Donahoe as President and CEO.
Samsung (SSNLF 1500.00, flat) announced it expanded its strategic partnership with Microsoft (MSFT 64.23, -0.39 -0.60%).
Santander (SAN 5.36, +0.05 +0.94%) and IBM (IBM 179.40, -1.95 -1.08%) announced a collaboration to design and develop a suite of IBM MobileFirst for iOS apps to support the banking group's digital transformation and give employees the tools to create deeper engagements with their customers.
Mastercard (MA 110.57, -0.43 -0.39%) announced a global partnership with Oracle (ORCL 42.70, -0.47 -1.09%) to streamline digital payment solutions in the retail and hospitality industries.
Ericsson (ERIC 6.44, -0.01 -0.16%) and Qualcomm Technologies, a subsidiary of Qualcomm (QCOM 56.73, +0.04 +0.07%), are working with Vodafone (VOD 25.41, -0.32 -1.24%) to test 5G interoperability and conduct an over-the-air field trial based on 5G New Radio (NR) specifications being developed in 3GPP.
Qualcomm (QCOM) through its Qualcomm Technologies subsidiary announced it is working with TomTom (TMOAY 4.15, flat) for the use of the Qualcomm Drive Data Platform for high-definition (HD) map crowdsourcing.
Ericsson (ERIC) and Batelco have partnered in a major network deal to transform the Bahrain mobile network.
Cisco (CSCO 34.26, -0.06 -0.17%) and Altice Group (ALLVF 20.85, flat) continue to strengthen their alliance to transform Altice's business operations with new network architectures to help grow revenue, lower costs and improve customer retention.
Cisco (CSCO) and Verizon (VZ 49.94, -0.66 -1.30%) collaborate on 5G network solutions.
In reaction to quarterly results:
Gogo (GOGO 10.49, +1.37 +15.02%) reported a better than expected Q4 loss per share of $0.34 on better than expected revenues of $160 million. For FY17, the company sees revenues ahead of expectations at $670-695 million.
JinkoSolar Holding (JKS 17.95, +0.80 +4.66%) reported better than expected Q4 EPS and revenues of $1.04 and $737.65 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: FTR KTOS NTRI PCLN RP SBAC WDAY/EXLS I ORBC PRFT SPNS
Analyst actions:
NVMI was downgraded to Hold from Buy at Stifel,
USM and TDS were downgraded to Mkt Perform at Raymond James,
LITE was downgraded to Neutral from Buy at MKM Partners;
ESIO was initiated with a Buy at Lake Street
InvestmentHouse - Is the Administration Listening to the Right People? (WeekendNewsletter)
http://www.investmenthouse.com/frblog.php
- Stocks start lower, continuing the Thursday weakness, then the indices
mostly recover.
- Sellers just cannot get the job done thus far.
- The recovery is good for the most part, but some leaders are problematic
at best.
- Economic recovery hope versus reality: is the administration listening to
the right people?
- Key leadership groups take a hit, some sport leader breakdowns.
- This week the rally attempts to hold against weak internals, rising
sentiment, some leaders breaking lower.
What a comeback. After a Thursday that saw stocks sell and recover in some
cases, Friday opened down with some 40+ point losses on NASDAQ. SP500 and
DJ30 were mostly fine on the session, but growth was way off the upside
pace.
Once again, however, the sellers did not have their way. From the open
stocks started to recover off the early weakness, moved into midmorning and
worked laterally to the last hour. Then a 'miraculous' recovery in the last
hour pushed all but RUTX and SOX positive.
SP500 3.53, 0.15%
NASDAQ 9.80, 0.17%
DJ30 11.44, 0.05%
SP400 0.13%
RUTX -0.01%
SOX -0.04%
Yes, once again the sellers tried but it was a half-hearted effort, and as
soon as they didn't press the move the buyers bought back in. The indices
bounced off the 10 or 20 day EMA, as the case may be, and recovered most of
the downside.
Can you trust that recovery? Not on a Friday on a short week when the
sellers give it a shot on the week. Thus we were not buying on the day.
But, there are still many leaders that, while they were boxed around some on
the week, held up well and indeed even have some pretty nice entry setups.
That means we are still looking at the upside predominantly as the trends
held, are still holding, and the leaders are, most of them that did test,
setting up some potential new entry points. It may be that Friday was just
a short covering move or a buy on the dip bounce to close the week. As
there are not that many shorts, covering seems to be a rather absurd
conclusion.
I have to say that that some leaders did break on the week. NVDA broke the
50 day MA's after the last rally attempt failed to take out the prior high
in December. But that is okay. Cramer Friday was talking his hedge fund
knowledge saying that there were momentum 'battleground stocks' and you just
don't get in until the battle is over.
That is true: let the fight between the buyers and sellers get resolved and
then move in. What gets me about every one of these TV pundits is that they
always say selling is okay, just buy it when the pullback is over. Well,
not everyone has a hedge fund using other people's money. Cramer was
touting NVDA up to the point it rolled over. Now he is saying buy it when
the battle is over. With what, the profits you don't have now that a stock
that was touted as a core holding a couple of weeks ago sells off? It is
always the same story when selling crops up: just buy it on the dip! They
always skip, however, that transition from strong buy to buy it after it
sells off. And, of course, no one says one thing about it. Fake news or
just a momentary lapse?
NEWS/ECONOMY
It was the best of times, it was the worst of times. New records on the
stock indices, sentiment reports surging, but the 'hard' economic data still
turning in disappointing results.
Gasoline demand fell 5.2% the past week, the second week of demand drop and
this after GS said the prior week's and general demand trend points to
recession. Happy spring! I would say the groundhog was wrong this year;
saw his shadow but it is spring everywhere you go.
The Fed's national activity Index in January turned negative. Counter that
with Small Business sentiment expecting the economy to grow jumping to 54%
from 29% in the summer of 2016. Lots of hope, not a lot of real activity.
One of the more disappointing, even disturbing, stories of the week was the
Trump meeting with CEO's. He wanted to discuss creating jobs and growing
the economy. Sound great. When the meeting was over, however, the CEO's
said that the main problem was not a lack of jobs but a lack of skilled
workers, pushing again for more of the H-1b visas to let more cheaper
foreign workers in.
If I was Trump I would have to ask, 'was that the problem at Disney?'
Recall management called much of the senior staff into a meeting and
abruptly told them they were going to be laid off. Moreover, they had to
train their replacements, and if they did not, no severance. Many of the
Disney employees told reporters that the people brought in from overseas to
replace them knew NOTHING about the jobs they were hired to fill. No
skills?
I would also have to ask about the tens upon tens of thousands of US
citizens, educated at US universities in STEM degrees (science, technology,
engineering, mathematics) who do not have jobs and are living with their
parents. What about them filling those jobs? Even if it is not a perfect
match, these are highly educated, and presumptively highly intelligent
people who could, with minimal training, do the job. I mean Disney had to
force terminated employees to train their clueless replacements. How hard
could it be to teach someone already in the country to do the job?
Beyond that, they need to get to the root of the problem as to why companies
feel compelled to choose America last for workers: the ability to compete
internationally thanks to our tax code. The US taxes citizens and
corporations no matter where they live in the world. You could live in
Spain for five years, never coming to the US during that time, and the US
would still say you owed the US taxes on what you earned in that country.
That applies to corporations as well. Talk about building in a massive
disadvantage and yes disincentive to for US companies.
Instead of importing a bunch of foreign workers, go ahead and lower the
taxes, change the foreign collection practices, and make it where US
companies are more competitive without feeling the need to cut out American
workers for cheaper foreign workers. Sure that is not a dollar for dollar
trade with a cheaper worker, but there are other ways to level the playing
field. 0% corporate rates would help the corporations and the consumer,
lowering prices all around.
That, of course, makes too much sense. Instead they are playing with a
border tax that only raises prices to US consumers and does not help US
exporters move goods to our NAFTA partners due to taxes that make end runs
around that trade agreement. Negotiate to get trade truly free between our
countries so US companies, small and large alike, can compete and sell their
goods across borders.
Trump needs to meet with a bunch of small business owners, several times, to
see what the real obstacles and the changes that would benefit all
businesses versus just the big corporations and their lobbying that gets
them the best deals.
THE MARKET
CHARTS
A bit volatile on the week, but in the end holding near support, either the
10 or the 20 day EMA. If that is the best the sellers can do . . . Of
course it is not and the internals and sentiment are at levels with a
negative bias for stocks. A bit of volatility with those indications adds
to some of the negatives, but then again, the trends refuse to give up at
this juncture.
NASDAQ: Looked a bit toppy starting Wednesday, but after a Thursday test of
the 10 day EMA and Friday opening back at that level, NASDAQ rebounded to
post a slightly higher week. Still moving up the 10 day EMA.
SP500: Same action as NASDAQ, putting in new highs then flattening out,
selling to the 10 day EMA, but recovering to hold the moves.
DJ30: Pretty much rising each session with no signs of topping out.
SOX: Surged to a new high Tuesday, stalled Wednesday, sold Thursday and on
the Friday open. Rebounded to flat Friday, holding the trend rising above
the 20 day EMA. Many chips struggled, but closed out the week looking
promising once again.
SP400: Same action as SOX, i.e. a new high Tuesday, fading back Wednesday
and Thursday and to start Friday. Bounced Friday off the 20 day EMA.
RUTX: Solid Tuesday move as well then a drop Wednesday to the Friday low,
but held the 20 day EMA Friday and rebounded to a nice tight doji with tail.
Tested the top of the lateral range from late 2016, early 2017 and held.
That looks quite solid.
LEADERSHIP
Metals: Breaking down late last week and didn't recover much Friday. AKS,
SCHN, STLD, FCX.
Materials: From great moves higher to rolling over. LPX gapped lower
Friday. CX is struggling but has set up an ABCD. EXP is trying to hold the
50 day MA's.
Industrial machinery: Weak Thursday, tried to recover Friday with not a lot
of success. CMI, CAT, TEX.
Chips: NVDA tried to recover some Friday and did a decent job but the
pattern is still damaged. MU, XLNX testing the 50 day MA's. Some solid
leaders struggled some late week but held up quite well: AMD, MCHP, SWKS,
SLAB. Others are in great position: MVIS.
China: Some remain solid: JD, YNDX, ATHM, BABA. Others had a tougher week,
e.g. SINA, BIDU, both on earnings. Some were weak but managed to recover,
e.g. SOHU.
FAANG: FB looks ready to start upside again. AAPL continues trending
upside. NFLX trying to hold the 20 day EMA and bounce. GOOG is trying to
take on the late January peak.
Financial: All tested late week on the bond rally and rate drop. All okay
in their patterns, just knocked around some.
MARKET STATS
DJ30
Stats: +11.44 points (+0.05%) to close at 20821.76
Nasdaq
Stats: +9.8 points (+0.17%) to close at 5845.31
Volume: 1.668B (-10.52%)
Up Volume: 858.89M (+94.45M)
Down Volume: 767.66M (-312.34M)
A/D and Hi/Lo: Decliners led 1.17 to 1
Previous Session: Decliners led 1.47 to 1
New Highs: 108 (-131)
New Lows: 51 (+15)
S&P
Stats: +3.53 points (+0.15%) to close at 2367.34
NYSE Volume: 890M (-0.89%)
A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Advancers led 1.16 to 1
New Highs: 119 (-99)
New Lows: 27 (+11)
SENTIMENT INDICATORS
VIX: 11.47; -0.24
VXN: 12.75; -0.54
VXO: 10.65; -0.07
Put/Call Ratio (CBOE): 0.83; 0
Bulls and Bears: Bulls backed off again but remain over 61%. 6 of 8 weeks
over 60%. Bears held steady at low levels.
Bulls: 61.2 versus 61.8
Bears: 17.5 versus 17.6
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: 61.2 versus 61.8
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 versus 44.6 versus 49.0 versus 52.5 versus 55.9
versus 56.7 versus 56.2 versus 54.3 versus 52.9% versus 53.9% versus 54.4%
versus 52.5% versus 47.1% versus 41.6% versus 47.5% versus 45.9% versus
47.3% versus 45.4% versus 35.4% versus 40.2 versus 39.2
Bears: 17.5 versus 17.6
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 versus 22.6 versus 22.8 versus 20.6
Versus 20.2 versus 20.0 versus 20.9% versus 21.2% versus 21.6% versus 23.3%
versus 24.7% versus 24.5% versus 23.8% versus 23.2% versus 23.5% versus
23.8% versus 23.7% versus 24.0% versus 21.7% versus 21.6% versus 21.7 versus
20.6% versus 21.7% versus 27.8% versus 27.8% versus 28.9% versus 27.8%
versus 30.3% versus 35.4%
OTHER MARKETS
Bonds (10 year): 2.31% versus 2.38%. Bonds gapped upside Friday, matching
the high from early February.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.38%
versus 2.42% versus 2.43% versus 2.42% versus 2.45% versus 2.50% versus
2.473% versus 2.43% versus 2.41% versus 2.398% versus 2.340% versus 2.393%
versus 2.41% versus 2.48% versus 2.474% versus 2.477% versus 2.44% versus
2.49% versus 2.48% versus 2.512% versus 2.52% versus 2.467% versus 2.40%
versus 2.47% versus 2.468% versus 2.422% versus 2.372% versus 2.393% versus
2.358% versus 2.365% versus 2.38% versus 2.962% versus 2.42% versus 2.357%
versus 2.45% versus 2.448% versus 2.42% versus 2.48% versus 2.51% versus
2.56% versus 2.54% versus 2.55% versus 2.54% versus 2.564% versus 2.544%
versus 2.59% versus 2.59% versus 2.52% versus 2.473%
EUR/USD: 1.05616 versus 1.05830
Historical: 1.05830 versus 1.0557 versus 1.05474 versus 1.06108 versus
1.06665 versus 1.06148 versus 1.05762 versus 1.06023 versus 1.06411 versus
1.06557 versus 1.06825 versus 1.06814 versus 1.07219 versus 1.07880 versus
1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus 1.06957 versus
1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus 1.0761 versus
1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus 1.06450 versus
1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus 1.05346 versus
105837 versus 1.0525 versus 1.03914 versus 1.05289 versus 1.05155 versus
1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus 1.04412 versus
1.0392
USD/JPY: 112.169 versus 112.745. Dollar weakened on the week, heading back
near the early February lows.
Historical: 112.745 versus 113.324 versus 113.399 versus 112.906 versus
113.356 versus 113.880 versus 114.306 versus 113.65 versus 113.856 versus
113.265 versus 113.401 versus 112.207 versus 112.332 versus 111.815 versus
112.567 versus 112.903 versus 112.68 versus 112.50 versus 114.493 versus
115.094 versus 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983
Oil: 53.99, -0.46. Tried the breakout again, struggled again at the top of
the range.
Gold: 1258.30, +6.90. Strong break higher Thursday and Friday, moving to
the 200 day SMA. As with bonds, surprising strength, based mostly on the Fed
not going to do anything and the notion Trump will not get his policies
moving.
MONDAY
A volatile week that started stronger, ended problematic, but the bids were
still ready on the dip and the indices recovered and held the trends. Thus,
a bit more testy, but holding the trends higher with bids returning when
some modest selling hit.
Yes, overall it was modest though some leaders did get hit. Chinese stocks
had some leaders really struggle. Chips had some issues, and though most
recovered, some big names did not and others are still problematic.
Basically the market started to see some leaders struggle: materials,
metals, industrial equipment, some chips, some China. If leaders cannot
hold the line and those struggling roll over, the market rally is in
jeopardy. Makes sense given the issues with internals and sentiment.
Leaders are the last peg and the past week's struggles have to keep everyone
on guard.
That said, the trends remain in place. There are still plenty of leading
stocks holding up well and more setting up or upside moves. Thus despite
the issues in the struggling leaders, others look ready to step into their
place. So, we have some good-looking upside plays still ready to go. We
will see how they move and how the others hold the line. If the new stocks
cannot break higher and if those hanging on fail, the rally likely tests
deeper.
Have a great evening!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5845.31
Resistance:
Support:
5661 is the late January upper gap point
The 50 day EMA at 5620
5601 is the January lower gap point
The 50 day SMA at 5599
The 2016 trendline at 5559
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
The 200 day SMA at 5242
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
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
S&P 500: Closed at 2367.34
Resistance:
Support:
The 2016 trendline at 2309
2301 is the late January 2017 high
The 50 day SMA at 2288
The 50 day EMA at 2289
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
The 200 day SMA at 2179
2175 is the June 2016 high
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the September 2016 low; February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
Dow: Closed at 20,821.76
Resistance:
Support:
20,126 is the January 2017 intraday high
20,101 is the late January closing high.
The 50 day SMA at 20,080
The 50 day EMA at 20,016
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
The 200 day SMA at 18,733
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
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
From Briefing.com: Despite spending the entirety of the session in the red, the broader market sprung to life in the final moments on Friday to end higher across the board. The leader, as it were, was the Nasdaq Composite which added 9.80 points (+0.17%) to 5845.31. The S&P 500 was up 3.53 points (+0.15%) to 2367.34, and the Dow Jones Industrial Average put up gains of 11.44 points (+0.05%) to 20821.76. These moves took the three major US indices to gains of +8.6%, +5.7% and +5.3% YTD, respectively.
Today's economic data included the New Home Sales report, which for January hit an annualized rate of 555,000, which was above the revised December rate of 535,000 (from 536,000). Additionally, the final reading of the University of Michigan Consumer Sentiment Index for February rose to 96.3 from 95.7 in the preliminary reading.
Despite spending the majority of the session below flat lines, the Technology (XLK 52.63, +0.12 +0.23%) sector, along with a handful of other S&P sectors, jolted higher in the final few moments of trading. Component Intuit (INTU 128.01, +7.31 +6.06%) was the best performer after reporting strong Q2 earnings and guiding Q3 better than expected despite what the company stated was a 'slow' start to the tax season. Other sectors as measured by the S&P closed XLU +1.52%, XLRE +0.50%, XLV +0.50%, XLY +0.46%, XLI +0.43%, XLP +0.34%, XLB +0.21%, XLF -0.77%, XLE -0.98%, IYZ -1.31%.
In the S&P 500 Information Technology (888.27, +1.75 +0.20%) space, trading turned higher following a session of mostly underperforming action. By contrast, component Hewlett Packard Enterprise (HPE 22.96, -1.70 -6.89%) was pressured all day following its mixed Q1 report and worse than expected Q2 earnings guidance. Other names in the space which closed higher with the sector today included PAYX +2.32%, FSLR +1.91%, EBAY +1.37%, ADP +1.34%, PYPL +1.27%, WU +1.26%, FISV +1.22%, GLW +1.19%, CA +1.18%, HRS +1.15%, MSI +1.15%.
Other notable news items among sector components:
Alphabet's (GOOG 828.64, -2.69 -0.32%) Waymo confirmed a lawsuit against Otto and Uber (pending: UBER).
In addition to reporting earnings, Universal Display (OLED 81.00, +13.55 +20.09%) initiated a dividend program with a $0.03 per share quarterly dividend.
Toshiba (TOSBF 1.98, +0.03 +1.96%) reported notice on conclusion of absorption-type company split agreement in respect of the memory business.
Vuzix (VUZI 6.30, +0.85 +15.60%) signed an agreement to build a customized pair of smart glasses for Toshiba (TOSBF).
Telephone & Data (TDS 29.87, -2.85 -8.74%) increased its quarterly dividend to $0.155from $0.148 per share.
MagnaChip Semiconductor's (MX 7.60, +0.35 +4.83%) Board of Directors approved a headcount reduction plan. The Plan is expected to result in estimated annual cost savings of $20 million to $27 million, depending upon the final size of the workforce reduction.
SoftBank (SFTBY 37.95, -0.27 -0.71%), Sprint (S 8.94, -0.02 -0.22%) and TBCASoft, Inc. agreed to aim for a technology partnership jointly developing blockchain technology for telecommunication carriers.
In reaction to quarterly results:
Baidu.com (BIDU 175.17, -9.47 -5.13%) reported Q4 EPS of $0.93 on worse than expected revenues of $2.62 billion. For Q1, the company guided revenues in the range of $2.374-2.453 billion.
Hewlett Packard Enterprise (HPE) reported better than expected Q1 EPS of $0.45 on worse than expected revenues of $11.41 billion. The company also guided Q2 EPS worse than expected at $0.41-0.45, and lowered FY17 EPS guidance to $1.88-1.98 from $2.00-2.10.
Intuit (INTU) reported better than expected Q2 EPS of $0.26 on revenues which rose about 10.1% compared to last year to $1.02 billion. For Q3, INTU sees better than expected EPS and revenues of $3.85-3.90 and $2.50-2.55 billion, respectively. For FY17, INTU reaffirmed guidance of EPS between $4.30-4.40 and revenues in the range of $5.00-5.10 billion.
Splunk (SPLK 62.80, -2.10 -3.24%) reported better than expected Q4 EPS and revenues of $0.25 and $306.5 million, respectively. For Q1, SPLK sees revenues between $231-233 million.
Universal Display (OLED) reported better than expected Q4 EPS and revenues of $0.55 and $74.6 million, respectively. For FY17, the company sees in-line revenues between $230-250 million.
Telephone & Data (TDS) reported a better than expected Q4 loss per share of $0.05 on worse than expected revenues of $1.28 billion. The company also guided FY17 revenues worse than expected between $5.015-5.265 billion.
GlobalStar (GSAT 1.39, +0.03 +2.57%) reported a worse than expected Q4 loss per share of $0.11 on better than expected revenues of $24.4 million.
Companies scheduled to report quarterly results Monday morning: GOGO, JKS
Analyst actions:
INTU was upgraded to Outperform from Neutral at Credit Suisse,
GSAT was upgraded to Buy from Neutral at Chardan Capital Markets,
WDAY was upgraded to Positive from Mixed at OTR Global,
CYOU was upgraded to Equal Weight from Underweight at Morgan Stanley,
CLGX was upgraded to Buy from Hold at SunTrust;
HPE was downgraded to Market Perform from Outperform at BMO Capital and to Hold from Buy at Needham,
YY was downgraded to Underweight from Equal Weight at Morgan Stanley,
TDS was downgraded to Hold from Buy at Drexel Hamilton;
SQ was initiated with a Positive at Susquehanna,
MYAN was initiated with a Buy at Maxim GRoup
From Briefing.com: 4:23 pm Closing Market Summary: Dow Posts 10th Consecutive Record Close (:WRAPX) :
Investors hurdled news headline after news headline on Thursday, but still drove the Dow (+0.2%) to its tenth consecutive record close, a feat that has not been achieved since 1987, when the price-weighted average recorded 12 consecutive record closes. The benchmark S&P 500 (unch) finished flat while the Nasdaq (-0.4%) and the small-cap Russell 2000 (-0.6%) couldn't keep pace.
Early on Thursday morning, Treasury Secretary Steven Mnuchin said that he anticipates the new administration's tax reform plan to to pass through congress before the August recess.
Mr. Mnuchin's timeline may have cooled the recent bullish sentiment surrounding President Trump's upcoming "phenomenal" tax-related announcement, a promise which sent the stock market on its most recent rally. However, the financial sector (+0.1%), which has led the post-election rally on promises of deregulation and tax reform, finished Thursday with a small gain.
On the earnings front, Tesla (TSLA 255.99, -17.52) disappointed investors with a wider than expected loss per share, but the automaker did announce that the mass-market electric Model 3 sedan is on track for initial production in July.
Similarly, L Brands (LB 48.94, -9.19) finished Thursday lower, plummeting 15.8%, after the company's below-consensus guidance overshadowed better than expected earnings. LB's slide weighed on the SPDR S&P 500 Retail ETF (XRT 43.10, -1.03), which ended lower by 2.3%, while the consumer discretionary sector (-0.7%) also underperformed.
Technology (-0.1%) was plagued by a poor showing from chipmakers, evidenced by the 1.6% decrease in the PHLX Semiconductor Index. The semiconductor industry was led lower by NVIDIA (NVDA 100.49, -10.27). The company plunged 9.3% after analysts from both BMO Capital and Instinet downgraded NVDA shares on Thursday morning. To be fair, NVDA shares skyrocketed 223.9% in 2016, so a pullback of this magnitude isn't really all that surprising.
However, a 8.6% jump in shares of HP (HPQ 17.60, +1.40) put a lid on the tech sector's loss. The company's spike followed its most recent earnings report, which showed better than expected top and bottom lines.
Industrials (-0.8%) finished Thursday at the bottom of the leaderboard amid growing speculation of a potential delay in the implementation of the Trump administration's infrastructure plan. Likewise, the materials sector closed lower by 0.6%.
On a positive note, the energy sector finished 0.5% higher thanks to crude oil's solid performance. The energy component finished up 1.6% at $54.47/bbl following Thursday's EIA crude inventory report, which showed a build of 0.6 million barrels while the consensus called for a build of about 3.475 million barrels. Today's EIA report confirmed yesterday's bullish API reading.
On the countercyclical side, health care (+0.7%) also closed in the green. Outside of the biotechnology industry, health care components showed broad strength. It is also worth pointing out that Former House Speaker John Boehner said a full repeal and replacement of the Affordable Care Act is "not going to happen." Considering that Mr. Boehner led Republican opposition to the Affordable Care Act for years, his comments are particularly notable.
The remaining sectors--consumer staples, utilities, telecom services, and real estate--all closed with gains between 0.3% and 1.1%.
U.S. Treasuries finished Thursday modestly higher. The benchmark 10-yr yield closed three basis points lower at 2.38%.
Today's economic data included Initial Claims and December FHFA Housing Price Index:
The latest weekly initial jobless claims count totaled 244,000 while the Briefing.com consensus expected a reading of 242,000. Today's tally was above the revised prior week count of 238,000 (from 239,000). As for continuing claims, they declined to 2.060 million from the revised count of 2.077 million (from 2.076 million).
The key takeaway from this report is that it covers the period in which the survey for the February Employment Situation report was conducted, and given the low level of claims, it will likely feed a belief that nonfarm payrolls are apt to increase by 200,000+ again.
The key takeaway from this report is that it covers the period in which the survey for the February Employment Situation report was conducted, and given the low level of claims, it will likely feed a belief that nonfarm payrolls are apt to increase by 200,000+ again.
The FHFA Housing Price Index for December rose 0.4%, which followed a revised increase of 0.7% in November (from 0.5%). The reading was in line with Briefing.com consensus (+0.4%).
On Friday, Investors will receive January New Home Sales (Briefing.com consensus 566,000) and the final reading of the University of Michigan Sentiment Index for February (Briefing.com consensus 95.8). Both reports will be releases at 10:00 am ET.
Nasdaq Composite +8.4% YTD
S&P 500 +5.6% YTD
Dow Jones Industrial Average +5.3% YTD
Russell 2000 +2.8% YTD
4:11 pm Hewlett Packard Enterprise beats by $0.01, misses on revs; guides Q2 EPS below consensus; lowers FY17 EPS, in-line (HPE) :
Reports Q1 (Jan) earnings of $0.45 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.44; revenues fell 10.4% year/year to $11.41 bln vs the $12.05 bln Capital IQ Consensus.
Enterprise Group revenue was $6.3 billion, down 12% year over year, down 6% when adjusted for divestitures and currency, with a 12.7% operating margin. Servers revenue was down 12%, down 11% when adjusted for divestitures and currency, Storage revenue was down 13%, down 12% when adjusted for divestitures and currency, Networking revenue was down 33%, up 6% when adjusted for divestitures and currency, and Technology Services revenue was down 2%, up 4% when adjusted for divestitures and currency.
Enterprise Services revenue was $4.0 billion, down 11% year over year, down 6% when adjusted for divestitures and currency, with a 7.0% operating margin. Infrastructure Technology Outsourcing revenue was down 8%, down 7% when adjusted for divestitures and currency, and Application and Business
Services revenue was down 17%, down 3% when adjusted for divestitures and currency.
Software revenue was $721 million, down 8% year over year, down 1% when adjusted for divestitures and currency, with a 21.4% operating margin. License revenue was down 9%, down 2% when adjusted for divestitures and currency, Support revenue was down 9%, down 2% when adjusted for divestitures and currency, Professional Services revenue was down 7%, down 5% when adjusted for divestitures and currency, and Software-as-a-service (SaaS) revenue was up 4%, up 6% when adjusted for divestitures and currency.
Financial Services revenue was $823 million, up 6% year over year, net portfolio assets were up 2%, and financing volume was down 10%. The business delivered an operating margin of 9.5%.
Enterprise Group revenue was $6.3 billion, down 12% year over year, down 6% when adjusted for divestitures and currency, with a 12.7% operating margin. Servers revenue was down 12%, down 11% when adjusted for divestitures and currency, Storage revenue was down 13%, down 12% when adjusted for divestitures and currency, Networking revenue was down 33%, up 6% when adjusted for divestitures and currency, and Technology Services revenue was down 2%, up 4% when adjusted for divestitures and currency.
Enterprise Services revenue was $4.0 billion, down 11% year over year, down 6% when adjusted for divestitures and currency, with a 7.0% operating margin. Infrastructure Technology Outsourcing revenue was down 8%, down 7% when adjusted for divestitures and currency, and Application and Business
Services revenue was down 17%, down 3% when adjusted for divestitures and currency.
Software revenue was $721 million, down 8% year over year, down 1% when adjusted for divestitures and currency, with a 21.4% operating margin. License revenue was down 9%, down 2% when adjusted for divestitures and currency, Support revenue was down 9%, down 2% when adjusted for divestitures and currency, Professional Services revenue was down 7%, down 5% when adjusted for divestitures and currency, and Software-as-a-service (SaaS) revenue was up 4%, up 6% when adjusted for divestitures and currency.
Financial Services revenue was $823 million, up 6% year over year, net portfolio assets were up 2%, and financing volume was down 10%. The business delivered an operating margin of 9.5%.
Co issues downside guidance for Q2, sees EPS of $0.41-0.45, excluding non-recurring items, vs. $0.45 Capital IQ Consensus Estimate.
Co issues in-line guidance for FY17, lowers EPS to $1.88-1.98 from $2.00-2.10, excluding non-recurring items, vs. $1.93 Capital IQ Consensus. Three significant headwinds have developed since Hewlett Packard Enterprise provided its original fiscal 2017 outlook at its Securities Analyst Meeting in October 2016: increased pressure from foreign exchange movements, higher commodities pricing, and some near-term execution issues. Given these challenges, the company is reducing its FY17 outlook by $0.12 in order to continue making the appropriate investments to secure the long-term success of the business.
InPlay from Briefing.com:
https://finance.yahoo.com/news/inplay-briefing-com-055139997.html
4:12 pm Ultra Clean Holdings beats by $0.09, reports revs in-line; guides Q1 EPS above consensus, revs above consensus (UCTT) :
Reports Q4 (Dec) earnings of $0.36 per share, excluding non-recurring items, $0.09 better than the Capital IQ Consensus of $0.27; revenues rose 68.8% year/year to $174.5 mln vs the $173.07 mln Capital IQ Consensus.
Co issues upside guidance for Q1, sees EPS of $0.40-0.45, excluding non-recurring items, vs. $0.27 Capital IQ Consensus Estimate; sees Q1 revs of $190-197 mln vs. $168.00 mln Capital IQ Consensus Estimate."By expanding our capabilities beyond gas panels and keeping pace with exceptional market demand, we are creating an even stronger link with our customers and have been able to capitalize on new opportunities. We are well positioned to reach our longer-term revenue and profitability goals."
4:11 pm HP beats by $0.01, beats on revs; guides Q2 EPS in-line (HPQ) :
Reports Q1 (Jan) earnings of $0.38 per share, $0.01 better than the Capital IQ Consensus of $0.37; revenues rose 3.6% year/year to $12.68 bln vs the $11.83 bln Capital IQ Consensus.
Personal Systems net revenue was up 10% year over year (up 11% in constant currency) with a 3.8% operating margin.
Commercial net revenue increased 7% and Consumer net revenue increased 15%. Total units were up 8% with Notebooks units up 12% and Desktops units flat.
Printing net revenue was down 3% year over year (down 2% in constant currency) with a 16.0% operating margin.
Total hardware units were up 6% with Commercial hardware units up 2% and Consumer hardware units up 7%.
Supplies net revenue was down 3% (down 2% in constant currency).
Personal Systems net revenue was up 10% year over year (up 11% in constant currency) with a 3.8% operating margin. Commercial net revenue increased 7% and Consumer net revenue increased 15%. Total units were up 8% with Notebooks units up 12% and Desktops units flat. Printing net revenue was down 3% year over year (down 2% in constant currency) with a 16.0% operating margin. Total hardware units were up 6% with Commercial hardware units up 2% and Consumer hardware units up 7%. Supplies net revenue was down 3% (down 2% in constant currency).Co issues in-line guidance for Q2, sees EPS of $0.37-0.40, excluding non-recurring items, vs. $0.38 Capital IQ Consensus Estimate. "We are confident in our ability to manage our business and deliver our FY17 financial commitments."
4:08 pm Tessera Tech misses by $0.11, misses on revs; guides Q1 EPS below consensus, revs below consensus; guides FY17 revs above consensus; Changes Name to Xperi, ticker symbol to "XPER" (TSRA) :
Reports Q4 (Dec) earnings of $0.45 per share, $0.11 worse than the Capital IQ Consensus of $0.56; revenues rose 13.4% year/year to $70.1 mln vs the $73.4 mln Capital IQ Consensus. Co issues downside guidance for Q1, sees EPS of ($0.15)-($0.09) vs. $0.40 Capital IQ Consensus Estimate; sees Q1 revs of $60-$63 mln vs. $74.03 mln Capital IQ Consensus Estimate.
Co issues upside guidance for FY17, sees FY17 revs of $370-$445 mln vs. $359.40 mln Capital IQ Consensus Estimate.Commentary: "2016 was a transformational year with the combination of Tessera and DTS, which today we are excited to have rebranded as Xperi, reflecting our new vision of bringing together digital and physical experiences in smart, connected and personalized ways. While the transaction and related accounting had a significant impact on the fourth quarter results, the effect is transitory and does not reflect the underlying cash flow strength of the business.
We are pleased to report the integration of DTS is on track and we are confident in our ability to realize the full benefits of the transaction."New Company Name & Stock Symbol: The company announced it has changed its name to Xperi Corporation. The company's common stock will officially begin trading under the new Nasdaq stock ticker symbol, XPER, effective at the market open on February 23, 2017.4:08 pm Omega Protein's Board initiates a strategic alternati
4:15 pm Closing Market Summary: Averages Close Wednesday Mixed (:WRAPX) :
Investors tapped the brakes on Wednesday, displaying slight caution amid a wave of potentially influential economic reports. The Nasdaq (-0.1%) closed in line with the S&P 500 (-0.1%) while the Dow outperformed (+0.2%), recording its ninth consecutive gain.
The major averages started today's session with modest losses, but they ticked up following Existing Home Sales for January. The report came in better than expected, showing an annualized rate of 5.69 million units while the Briefing.com consensus expected a reading of 5.57 million.
Equity indices then slid slowly into the next event on Wednesday's calendar, a speech from Fed Governor Jerome Powell. However, the speech turned out to be a non-event as Mr. Powell provided little to no new information, stating that a gradual tightening of policy is appropriate as long as the economy continues to behave roughly as expected.
Finally, the last major event on the calendar, the FOMC Minutes, was met with a muted response from investors. The minutes showed that many FOMC members see a rate hike "fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations."
And while recent hotter than expected ISM Index, Nonfarm Payrolls, PPI, CPI, Retail Sales, Housing Starts, and Existing Home Sales readings met the rate hike prerequisite, the statement's vague "fairly soon" clause gives little indication as to the timeline of said rate hike.
In summary, after all the noise, the fed funds futures market now points to May as the most likely time for the next rate hike to be announced with an implied probability of 52.1%, up from 45.9% yesterday. The implied probability of a March rate hike increased to 22.1% from yesterday's 17.7%.
On the earnings front, Toll Brothers (TOL 33.93, +1.94) spiked 6.1% after the luxury homebuilder reported better than expected top and bottom lines and issued upbeat delivery guidance. More notably, Toll Brothers' bullish disposition lifted the iShares U.S. Home Construction ETF (ITB 30.04, +0.12) to its highest level in over a decade. The consumer discretionary sector (unch) capitalized on hombuilders' solid showing, outperforming the benchmark index.
Financials (+0.1%) and telecom services (+0.1%) closed in line with the consumer discretionary sector while technology (+0.2%), materials (+0.3%), and utilities (+0.4%) performed a bit better.
Energy (-1.6%) led the five remaining sectors lower, succumbing to a 1.4% loss in crude oil. The energy component trades in the red for the week after squandering all of Tuesday's gain in Wednesday's session. WTI crude closed its trading day at $53.59/bbl.
Treasuries closed Wednesday's session slightly higher. The benchmark 10-yr yield finished one basis point lower at 2.42%.
Today's economic data included January Existing Home Sales and the MBA Mortgage Index:
Existing home sales for January increased 3.3% from December to an annualized rate of 5.69 million units while the Briefing.com consensus expected a reading of 5.57 million.
The key takeaway from the report is that high prices and limited inventory continue to compress the affordability factor for prospective buyers, and have prevented existing home sales from being even stronger.
The key takeaway from the report is that high prices and limited inventory continue to compress the affordability factor for prospective buyers, and have prevented existing home sales from being even stronger.The weekly MBA Mortgage Index decreased 2.0% to follow last week's 3.7% decline.Tomorrow's economic data will include Initial Claims (Briefing.com consensus 242,000) and December FHFA Housing Price Index (Briefing.com consensus 0.4%). The two reports will cross the wires at 8:30 am ET and 9:00 am ET, respectively.
Nasdaq Composite +8.9% YTDS&P 500 +5.5% YTDDow Jones Industrial Average +5.1% YTD Russell 2000 +3.4% YTD
9:21 am Advanced Micro announced the global launch of its Ryzen 7 desktop processors; pre-orders begin today (AMD) : Product demonstrations featured Ryzen 7 1800X outperforming a similarly configured 8-core, 16-thread Intel Core i7-6900K in Cinebench R15 multi-threaded and Handbrake-based video transcoding, as well as showing comparable 4K gaming performance.
9:02 am Samsung and Verizon (VZ) have completed deployment of 5G systems in five U.S. cities in preparation to begin customer trials of 5G technology in April 2017 (SSNLF) :
The 5G trials involve innovative network systems, including the use of 28GHz millimeter wave spectrum and advanced beam-forming antenna technology. Samsung's 5G Access Units, installed throughout a city's business and residential neighborhoods, will link radio signals to a virtualized core network that is set up within Verizon's data centers.
Samsung's next-generation core solution is software-driven and designed on a scalable platform to accommodate operator needs. In pre-commercial testing, which began in December 2016, the 5G system demonstrated multi-gigabit throughputs at radio distances of up to 1,500 feet (nearly 500 meters) across each of the different environments selected for the customer trials. The Samsung 5G system is designed to be upgradable to support 3GPP standards for New Radio and Next-Generation Core, once available.
9:01 am Tessera Tech will change its name to 'Xperi Corporation' and its Nasdaq ticker symbol to 'XPER', effective tomorrow (TSRA) :
From Briefing.com: 5:52 pm Cypress Semi founder/former CEO and largest individual stockholder nominates two candidates (J. Daniel McCranie and Camillo Martino) for Board of Directors (CY) :
T.J. Rodgers says "Cypress Semiconductor faces serious conflicts of interest and ethical deficiencies. Rather than address these, the Cypress Board has chosen to announce what they purport to be changes to strengthen corporate governance but which are in fact simply an attempt to prevent even extraordinarily qualified new directors from joining the Board. I deliberately chose to nominate for the Board two highly qualified industry veterans, because this isn't about T.J. Rodgers but about focusing the attention of all Cypress stockholders on these serious issues. The nominees I've proposed, Dan McCranie and Camillo Martino, both of whom are semiconductor experts, will better serve the Board than conflicted Executive Chairman Ray Bingham and Lead Director Eric Benhamou, who I believe has repeatedly failed to acknowledge or correct the conflicts of interest situation."
In light of his concerns about the conflicts and role of the Executive Chairman, Rodgers delivered a demand pursuant to Section 220 of the Delaware General Corporation Law for copies of Cypress's books and records relating to transactions that appear, on their face, to be breaches of the Board's fiduciary duties. In response to Cypress's refusal to supply the books and records, Rodgers has filed a lawsuit to compel production of these materials.
4:13 pm First Solar beats by $0.26, beats on revs; guides FY17 EPS in-line, revs in-line (FSLR) :
Reports Q4 (Dec) earnings of $1.24 per share, $0.26 better than the Capital IQ Consensus of $0.98; revenues fell 49.0% year/year to $480.43 mln vs the $394.65 mln Capital IQ Consensus.
Co issues in-line guidance for FY17, sees EPS of $0.00-0.50 (Unchanged) vs. $0.38 Capital IQ Consensus Estimate; sees FY17 revs of $2.8-2.9 bln vs. $2.53 bln Capital IQ Consensus Estimate.
Net Sales in the range of $2.8-2.9 bln (Prior $2.5-2.6 bln), Capital IQ consensus $2.53 bln;
Gross Margins between 11-13% (Prior 12.4-14.5%);
Operating Expense Non-GAAP $280-300 mln (Unchanged);
Operating Income Non-GAAP $40-80 mln (Unchanged);
Net Cash Balance $1.4-1.6 bln (Unchanged)
Operating Cash Flow $250-350 mln (Prior $550-650 mln);
CapEx $525-625 mln (Unchanged)
Shipments 2.4-2.6 GW (Unchanged)
4:07 pm first solar secures syndicated financing arranged by Mizuho Bank for utility-scale solar project in Ishikawa, Japan (FSLR) :
Co announced that it has obtained non-recourse project debt financing of approximately 27 billion yen (US$240 million) in a syndicated loan arranged by Mizuho Bank Ltd. for a utility-scale solar project in Ishikawa prefecture, Japan. The Ishikawa Sogo Solar Power Plant, with a generation capacity of 59.5 megawatt (:MW)AC, will be one of the largest mega solar projects in the Hokuriku region. The Ishikawa Sogo Solar Power Plant is scheduled to commence operation in late 2018.
4:06 pm Tessera Tech provides OmniVision with a license under its subsidiary Ziptronix's patents; dismisses outstanding litigation among the cos (TSRA) : In addition, the outstanding litigation among Ziptronix, OmniVision, Taiwan Semiconductor Manufacturing (TSM) and TSMC North America Corporation has been dismissed.
4:06 pm Luminex initiates quarterly dividend of $0.06/share (LMNX) :
4:05 pm Flex enters into a definitive agreement to acquire AGM Automotive; financial details not disclosed (FLEX) :
AGM is a leading global supplier of automotive interior components and systems, including overhead console systems, interior lighting, electronic components and textile flooring solutions. Providing high quality and innovative automotive interior solutions, AGM is a trusted design partner of major Original Equipment Manufacturers (OEMs) around the globe. AGM is headquartered in Troy, Michigan, with additional facilities in the US, Mexico, Costa Rica, Austria and China. The acquisition is expected to close in the second quarter of calendar year 2017.
4:16 pm Closing Market Summary: Another Record Close on Tuesday (:WRAPX) :
Last week's bullish sentiment carried over into the first session of the new week as investors decidedly pushed the stock market to new record highs on Tuesday. The S&P 500 (+0.6%) and the Dow (+0.6%) led the advance with the Nasdaq (+0.5%) closing just a step behind.
Equity indices came out of the gate strong this morning, rallying on an uptick in crude oil and the highest eurozone composite PMI reading in nearly six years. But the stock market hit a speed bump in front of the 12:00 pm ET speech from Philadelphia Fed President Patrick Harker who is a voter on this year's FOMC. The speech turned out to be a non-event as Mr. Harker didn't provide any new information, reiterating his belief that three rate hikes are appropriate for 2017.
After trending sideways in the wake of Mr. Harker's comments, the major averages regained their momentum late in the afternoon session to hit fresh session highs going into the close.
The lightly-weighted real estate sector (+1.3%) led the afternoon advance, stealing the top spot on the day's leaderboard from the energy space (+0.7%). The energy group's performance depended upon crude oil, which stunted the sector's advance after slipping from its session high. The energy component still closed with a solid gain, up 1.1% at $54.37/bbl, as strong OPEC supply cut compliance overshadowed record high U.S. inventories.
Consumer staples (+1.0%) finished just behind the real estate sector following Wal-Mart's (WMT 71.45, +2.08) upbeat earnings report. WMT shares jumped 3.0% after the company reported better than expected earnings per share and raised its dividend.
On the consumer discretionary (+0.6%) side, Home Depot (HD 145.02, +2.02) also had a solid showing after beating top and bottom line estimates. In addition, HD increased its quarterly dividend and authorized a $15.0 billion share repurchase program.
The remaining sectors finished in the green, posting gains between 0.4% (materials) and 1.1% (utilities). Health care's (+0.5%) advance was particularly notable given the underperformance in biotech names that sent the iShares Nasdaq Biotechnology ETF (IBB 293.04, -1.27) lower by 0.4%.
The Treasury market began Tuesday with a sizable loss, but dovish comments from Minneapolis Fed President Neel Kashkari (FOMC voter) brought Treasuries back to their flat lines. In the morning session, Mr. Kashkari stated that the U.S. labor market has "more room to run," suggesting that he believes there is no hurry for the Fed to raise rates.
The benchmark 10-yr yield finished the day one basis point higher at 2.43% after showing a four basis point gain earlier in the session.
Investors did not receive any notable economic data on Tuesday.
Wednesday will see several economic reports, including the MBA Mortgage Application Index at 7:00 am ET, January Existing Home Sales (Briefing.com consensus 5.57 million) at 10:00 am ET, and FOMC Minutes at 2:00 pm ET.
Nasdaq Composite +9.0% YTDS&P 500 +5.7% YTDDow Jones Industrial Average +5.0% YTD Russell 2000 +3.9% YTD Cree (CREE) announced that McLaren Health Care has selected Cree LED Lighting and Cree SmartCast Technology to modernize exterior and interior lighting across 11 hospitals. Cree's advanced LED solutions go beyond light with intelligence that automatically adapts to the environment to deliver greater energy savings and personalized environments that promote comfort, safety and security for McLaren patients, visitors and staff. 25,000 Cree outdoor and indoor LED fixtures, including over 12,000 Cree SmartCast intelligent lighting fixtures are installed throughout the facilities, enabling McLaren to reduce their energy costs by 66 percent and realize an estimated savings of over $1.6M annually in energy and operating expenses.
7:33 am Aehr Test Systems receives an order in excess of $4 mln from a subcontractor to its lead customer for the FOX-XP Test and Burn-in System (AEHR) :
This is the initial full production FOX-XP test cell order from this customer, which is configured with Aehr's new highly parallel singulated die/module test interface technology.
The order is an add-on to Aehr's recently announced order for FOX-XP products from this customer that fills out the customer's first full test cell. This new order includes a FOX-XP Test and Burn-in System, proprietary DiePak carriers, and a DiePak Autoloader and is expected to ship during the next calendar quarter.
InvestmentHouse - Expiration Fights Off Slow Open to Close Positive (WeekendNewsletter)
http://www.investmenthouse.com/frblog.php
- Expiration fights off a slow open to close positive.
- SOX perhaps coming back to life after a test.
- Few stocks breaking down but upside plays harder to find.
- Coming week very instructive as to how leaders finish their tests, whether
indices try a test.
The past week saw the stock indices push again to new highs, continuing the
round of new highs from the previous Friday. Thursday stocks hit the near
term upside saturation point and stalled. That stall bled over into Friday.
It was a down and up and down and up session, however, and the market ended
on the upswing. That closed the indices positive, if just barely so in most
cases.
SP500 3.94, -0.17%
NASDAQ 23.68, 0.41%
DJ30 4.28, 0.02%
SP400 0.09%
RUTX 0.05%
SOX 0.57%
VOLUME: NYSE +6%, NASDAQ -3%. NASDAQ trade was lower but remained above
average as it did all week but Monday. Indeed, NASDAQ trade has scored
above average trade 11 of the last 14 sessions. As those were most all
upside, that shows buying. NYSE trade moved above average for the first
time in 13 sessions, and of course it was on expiration where there is
elevated trade. For NYSE this move remains rather exceptionally weak in its
price/volume action, particularly when you consider volume is just about at
the levels from the long 9 week lateral consolidation range. Not tons of
upside power.
A/D: NYSE -1.1:1, NASDAQ +1.2:1. Breadth remains quite tepid as each day
the move is led by a few stocks even if the action does rotate around the
market.
Interestingly, SOX, after lagging all week, took the point Friday and moved
to a new closing high. It led the initial move so it started testing while
the others played catch up. Then it shot higher Friday as stocks such as
SWKS surged in big new breakouts.
NASDAQ continued its breakneck (almost) rally, gapping lower but reversing
to a new high as it put in its eighth new closing high in nine sessions.
SP500, DJ30, and SP400 basically tread water, managing to recover off a
lower open to hold the Wednesday and Thursday close.
No power of note, but indeed a continued upside bias as investors bought a
weaker morning session. Perhaps expiration had something to do with that as
many had to get out of positions or roll them over after a big run into that
expiration, but once again sellers had a chance to sell and did not. Heck,
even Thursday saw the stock indices recover off the session lows to close
basically flat.
The internal indicators remain weak. MACD is trying to follow the stock
indices, but is still lagging considerably behind the index prices except
for NASDAQ where MACD broke out with NASDAQ and continues to break higher
with the prices.
Sentiment is also at a more extreme level with Bullish advisor sentiment
logging another week of bulls over 60%, now 5 of 6 weeks over 60%.
Okay, it is no secret the internal market indicators as well as sentiment
suggest a top to the rally. Indeed, on Thursday and Friday we heard more of
the TV commentators talking about a near term top.
The issue is how the many, many stocks moving higher in solid trends hold
their moves, AND whether new stocks come to the fore and add to the
leadership. Thus far the leaders have indeed showed up, moved up, and held
the moves. A stock such as SWKS broke out of a big base in mid-January,
moved laterally for five weeks, then surged higher anew on Friday. NTES
gapped out of a classic cup with handle base on Thursday. YNDX moved in a
tight consolidation at prior highs for 5 weeks then blasted off as well.
RS, X and others broke sharply higher. Many other stocks continue holding
gains and moving higher or are currently testing moves but still look great.
The point: the internals and sentiment continue pointing toward a pullback
in the market, but leading stocks keep finding a way to rally or hold their
gains and support while waiting for money to rotate back their way so they
can rally once more. As long as the market has plenty of leaders setting up
to move higher and moving higher, the internals and sentiment take a back
seat. They tell you to be alert to leaders breaking down, but the move can
continue for quite some time after the internals start suggesting trouble
ahead.
I will say it was harder to find plays in good position for upside moves
this weekend, and that speaks to the rally with many stocks either having
broken higher recently or are in continuing moves that are not good entry
points. Or they are testing and do not yet look ripe to make the new break
higher. That does suggest that the upside is getting extended AND raises
questions as to how much fuel is still out there to burn to drive the
upside. So, another reason to be aware that the market could put in a peak.
As for our positions, virtually all are either moving higher still or are in
very good tests of very good moves or are set up in very good patterns. It
could be the stocks in pullbacks just don't bounce this time due to the
market bids drying up for now. They will show that by breaking near support
and being unable to recover by the close. That would be a pretty solid
signal, combined with the internals and sentiment, that the rally had run
its course.
Thus, this week's action after the NYSE indices started to slow, will be
hugely instructive. Unless there is a violent break lower, you usually have
to see where the leaders testing support close. A reach lower has been
bought in this market, and many testing leaders are at the point where they
often show one more dip then a reversal back upside sets in. Again, that
makes this week very instructive as to the rally's continued energy.
We have some really interesting upside plays to start the shortened week,
but remember, it was harder to find them. Some of the current plays look
great, e.g. SLAB, and you definitely want to keep them in mind as they are
really solid leaders in solid shape to make new solid moves. Solid.
So, let's see how those plays pan out and whether the market looks ready for
a pullback or a continued move. We know a pullback will come, and the
internals suggest it is in the making and has been in the making. We have
some downside plays in oil and gas as well as insurance along with IP thrown
in. Most sectors and particularly the indices, however, are still in solid
uptrends and have not started building tops. Thus, playing them downside is
really just a guessing game of when they crack, and if they do, how far that
crack takes them. We will definitely make some downside plays when they
show up, just was we are doing now, but many have not set up downside
patterns yet. As the different groups do, we can put some of that money to
work downside as we have done.
Have a great weekend and market day off on Monday!
THE MARKET
MARKET STATS
DJ30
Stats: +4.28 points (+0.02%) to close at 20624.05
Nasdaq
Stats: +23.68 points (+0.41%) to close at 5838.58
Volume: 1.85B (-2.63%)
Up Volume: 1.17B (+327.99M)
Down Volume: 637.19M (-422.81M)
A/D and Hi/Lo: Advancers led 1.26 to 1
Previous Session: Decliners led 1.29 to 1
New Highs: 173 (-75)
New Lows: 24 (-1)
S&P
Stats: +3.94 points (+0.17%) to close at 2351.16
NYSE Volume: 900M (+5.5%)
A/D and Hi/Lo: Decliners led 1.16 to 1
Previous Session: Decliners led 1.36 to 1
New Highs: 123 (-78)
New Lows: 11 (-1)
SENTIMENT INDICATORS
VIX: 11.49; -0.27. This past week saw the situation where volatility rose
with market gains. That is always worth noting in your bearish signals log,
though VIX overall remains very low. At this juncture, upside VIX sessions
are more an indication that yes there can be a nearer term
pullback/correction. This is contrasted with the situation where VIX is
trending higher as the market trends higher. A steady uptrend in VIX
accompanying a steady uptrend in the market indices is an indication of a
longer term, serious market top setting in.
VXN: 12.07; -0.67
VXO: 11.27; +0.73
Put/Call Ratio (CBOE): 0.93; +0.04
Bulls and Bears: Bulls backed off the cycle high but still held over 60%.
Bears remain unconvinced, jumping back up to levels three weeks back.
Bulls: 61.8 versus 62.7
Bears: 17.6 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: 61.8 versus 62.7
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 versus 44.6 versus 49.0 versus 52.5 versus 55.9 versus 56.7
versus 56.2 versus 54.3 versus 52.9% versus 53.9% versus 54.4% versus 52.5%
versus 47.1% versus 41.6% versus 47.5% versus 45.9% versus 47.3% versus
45.4% versus 35.4% versus 40.2 versus 39.2
Bears: 17.6 versus 16.7
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 versus 22.6 versus 22.8 versus 20.6 Versus 20.2
versus 20.0 versus 20.9% versus 21.2% versus 21.6% versus 23.3% versus 24.7%
versus 24.5% versus 23.8% versus 23.2% versus 23.5% versus 23.8% versus
23.7% versus 24.0% versus 21.7% versus 21.6% versus 21.7 versus 20.6% versus
21.7% versus 27.8% versus 27.8% versus 28.9% versus 27.8% versus 30.3%
versus 35.4%
OTHER MARKETS
Bonds (10 year): 2.42% versus 2.45%. Bonds rallied Thursday and Friday
after selling earlier on the Yellen congressional testimony. Still in the
more recent 7 week range as they try to continue a move off the lows, but
stuck at the 50 day EMA.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.45%
versus 2.50% versus 2.473% versus 2.43% versus 2.41% versus 2.398% versus
2.340% versus 2.393% versus 2.41% versus 2.48% versus 2.474% versus 2.477%
versus 2.44% versus 2.49% versus 2.48% versus 2.512% versus 2.52% versus
2.467% versus 2.40% versus 2.47% versus 2.468% versus 2.422% versus 2.372%
versus 2.393% versus 2.358% versus 2.365% versus 2.38% versus 2.962% versus
2.42% versus 2.357% versus 2.45% versus 2.448% versus 2.42% versus 2.48%
versus 2.51% versus 2.56% versus 2.54% versus 2.55% versus 2.54% versus
2.564% versus 2.544% versus 2.59% versus 2.59% versus 2.52% versus 2.473%
EUR/USD: 1.06108 versus 1.0665. Euro sold on the week but then bounced
Wednesday and Thursday to recover the 50 day MA's. Friday another weak
session coughed up those levels.
Historical: 1.06665 versus 1.06148 versus 1.05762 versus 1.06023 versus
1.06411 versus 1.06557 versus 1.06825 versus 1.06814 versus 1.07219 versus
1.07880 versus 1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus
1.06957 versus 1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus
1.0761 versus 1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus
1.06450 versus 1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus
1.05346 versus 105837 versus 1.0525 versus 1.03914 versus 1.05289 versus
1.05155 versus 1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus
1.04412 versus 1.0392
USD/JPY: 112.906 versus 113.356. Dollar first rallied into Yellen
testimony, but Wednesday tapped the 50 day SMA then faded into Friday. Still
working in the 7 week lateral range, trying to form a cup off the November
to December rally.
Historical: 113.356 versus 113.880 versus 114.306 versus 113.65 versus
113.856 versus 113.265 versus 113.401 versus 112.207 versus 112.332 versus
111.815 versus 112.567 versus 112.903 versus 112.68 versus 112.50 versus
114.493 versus 115.094 versus 114.469 versus 113.362 versus 113.850 versus
112.736 versus 114.39 versus 114.686 versus 114.538 versus 112.774 versus
114.473 versus 114.57 versus 114.70 versus 115.811 versus 116.023 versus
116.923 versus 115.93 versus 116.46 versus 117.983 versus 116.739 versus
116.456 versus 116.793 versus 117.41 versus 117.413 versus 117.32 versus
117.537 versus 117.544 versus 117.835 versus 117.453 versus 117.941 versus
118.257 versus 117.397 versus 115.038 versus 115.058 versus 115.20 versus
114.23 versus 113.325
Oil: 53.78, +0.03. And oil is still in the narrow 11 week lateral range
just over the 2016 highs.
Gold: 1239.10, -2.50. Testing the prior week's recovery highs off the
December low. Still trending higher off that low but bumping some resistance
and there is also the 200 day MA at 1265.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5838.58
Resistance:
Support:
5661 is the late January upper gap point
5601 is the January lower gap point
The 50 day EMA at 5580
The 50 day SMA at 5564
The 2016 trendline at 5559
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
The 200 day SMA at 5220
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
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
S&P 500: Closed at 2351.16
Resistance:
Support:
2301 is the late January 2017 high
The 2016 trendline at 2299
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The 50 day SMA at 2279
The 50 day EMA at 2276
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
The 200 day SMA at 2173
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the September 2016 low; February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
2020 is the September 2015 intraday high
2011 is the September prior all-time high
1995 is the September 2015 recovery peak
1991 is the July 2014 high
Dow: Closed at 20,624.05
Resistance:
Support:
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
The 50 day SMA at 19,971
The 50 day EMA at 19,885
19750 is the lows of the December/January range
The 200 day SMA at 18,673
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
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
ECONOMIC CALENDAR
February 22 - Wednesday
MBA Mortgage Applica, 02/18 (7:00): -3.7% prior
Existing Home Sales, January (10:00): 5.57M expected, 5.49M prior
FOMC Minutes, 02/01 (14:00)
February 23 - Thursday
Initial Claims, 02/18 (8:30): 242K expected, 239K prior
Continuing Claims, 02/11 (8:30): 2076K prior
FHFA Housing Price I, December (9:00): 0.4% expected, 0.5% prior
Natural Gas Inventor, 02/18 (10:30): -114 bcf prior
Crude Inventories, 02/18 (11:00): +9.5M prior
February 24 - Friday
Michigan Sentiment -, February (10:00): 95.8 expected, 95.7 prior
New Home Sales, January (10:00): 566K expected, 536K prior
From Briefing.com: 4:28 pm Closing Market Summary: Averages Close Friday at Record Highs (:WRAPX) :
Buyers showed up late to the party on Friday but were still able to recoup modest morning losses and push the major averages to fresh record highs. The uptick during the final hour prevented a mixed finish with the Nasdaq (+0.3%) and the S&P 500 adding 0.4% and 0.2%, respectively, while the Dow (unch) settled just above its flat line.
Today's pause wasn't a surprise given the equity market's recent seven session winning streak. However, below the surface, some uneasiness may be developing among investors as news out of Washington wraps tax reform in a blanket of uncertainty.
The final tax reform plan hangs in the balance as the GOP negotiates the Trump administration's proposed border tax, which has created a rift within the party. This is unfortunate news for investors who await the fulfillment of a tax reform promise that catalyzed the stock market's huge post-election run.
On the other hand, retailers have profited from the stalled implementation of the border tax, evidenced by the 0.9% uptick in the SPDR S&P 500 Retail ETF (XRT 43.82, +0.39). The news underpinned the consumer discretionary (+0.3%) and consumer staples (+0.7%) sectors, which largely depend on the free flow of goods and services to keep prices competitive.
Consumer staples also received a jolt from M&A news after Kraft Heinz (KHC 96.65, +9.37) revealed that it has proposed a merger with U.K. consumer products giant Unilever (UL 48.53, +5.96). Unilever rejected the initial bid, stating that the offer was fundamentally undervalued, but Kraft aims to keep pursuing the transaction.
In other M&A news, Softbank announced that it is once again entertaining the idea of a T- Mobile (TMUS 63.92, +3.31) and Sprint (S 9.30, +0.30) merger after the first attempt in 2014 was struck down by regulators. The announcement adds fire to a growing competitive battle within the telecom services space (+0.8%) and follows news from earlier in the week from Verizon (VZ 49.19, +0.73) and AT&T (T 41.48, +0.23). The two companies now offer unlimited data plans, a move that was seen as a response to growing competition in the wireless space as the smaller T-Mobile and Sprint have gained ground on the two wireless giants.
The telecom services sector jumped from the lower portion of today's standings to the top of the leaderboard following the news. Utilities (+0.1%), real estate (+0.3%), technology (+0.3%), health care (+0.1%), and industrials (+0.2%) also finished in the green, while the remaining sectors-financials (unch), materials (-0.3%), and energy (-0.5%)-closed with losses.
U.S. Treasuries added to Thursday's gains, closing solidly higher across the board. The benchmark 10-yr yield finished three basis points lower at 2.42%.
Intraday trading volume was below average, suggesting some participants took off early for the extended weekend; however, options expiration masked the reduced participation. By day's end, more than a billion shares changed hands at the NYSE floor.
Today's economic data was limited to January Leading Indicators:
The Conference Board's Leading Indicators report for January ticked up 0.6% (Briefing.com consensus +0.5%) after a 0.5% increase in December.
The key takeaway from the report is that the strengths among the leading indicators have become more widespread.
The stock market will be closed on Monday in observance of Presidents' Day.
Nasdaq Composite +8.5% YTD
S&P 500 +5.0% YTD
Dow Jones Industrial Average +4.4% YTD
Russell 2000 +3.2% YTD
Week in Review: Four in a Row
Another week, another round of gains for the major averages.The S&P 500 climbed 1.5% to record its fourth consecutive weekly advance. Thebenchmark index has now posted gains in five of the first seven weeks of 2017,rising 5.0%.
The past week was highlighted by Fed Chair Janet Yellen'ssemiannual testimony to Congress, which took place on Tuesday and Wednesday.The market handled the testimony well even though Chair Yellen's commentsshowed the Fed may need to adjust its rate hike outlook as the year goes on.Specifically, Senator Pat Toomey asked Ms. Yellen why the Fed didn't reallybump up its growth projections at all at the December meeting when many otherbodies, like the IMF, have bumped up their 2017 growth prospects based on abelief that the implementation of fiscal stimulus in the U.S. will have apositive effect on growth.
Ms. Yellen said most of her colleagues refrained from doingso because they wanted greater clarity on the time, scope, and composition ofany fiscal changes before making assumptions on the growth outlook. In sum, thecomments showed that the Fed will be required to raise rates faster than itcurrently expects if fiscal measures end up boosting economic growth-a notionthat has been bought fully by the stock market.
The market also saw continued support stemming from President Donald Trump's announcement that a "phenomenal" tax reform package was going to be announced in the next couple weeks.
The visions of tax reform and nothing but good things on thefiscal front kept a bid under the stock market, even though the latest round ofinflation data showed hotter than expected PPI (+0.6%; Briefing.com consensus0.3%) and CPI (+0.6%; Briefing.com consensus 0.3%) in January.
Last week's steady rise in the stock market took place eventhough rate hike expectations were pulled forward, briefly showing a 50.0%+likelihood of a rate hike in May. By the end of the week, the impliedlikelihood of a May hike was down to 44.1% while the probability of a June hikeended the week at 69.9%, up slightly from last Friday's 68.3%.
From Briefing.com: 4:31 pm Cree will terminate the definitive agreement to sell its Wolfspeed Power and RF division to Infineon Technologies AG (IFNNY) (CREE) :
"We are disappointed that the Wolfspeed sale to Infineon could not be completed," stated Chuck Swoboda, Cree chairman and CEO. "In light of this development, we are going to shift our focus back to growing the Wolfspeed business. The Wolfspeed business has performed well this year as our customers have further realized the value of our unique technology and is on a great path as a part of Cree. The strength of our balance sheet and improving operating cash flow gives us the ability to invest in Wolfspeed, while continuing to pursue our LED and Lighting growth plans. We believe investing to grow all three businesses will create the most value for our shareholders."
The termination of this transaction with Infineon will trigger a termination fee of $12.5 million being paid to Cree. As a result of the transaction termination and Cree's decision to focus on running the Wolfspeed business, Wolfspeed will now be reported as a separate segment of Cree's continuing operations.
The Company will provide a complete review of its fiscal 2017 third quarter results and fourth quarter outlook on its regularly scheduled financial results call on April 25th at 5:00pm ET.
4:10 pm Veeco Instruments beats by $0.02, reports revs in-line; guides Q1 EPS in-line, revs in-line (VECO) :
Reports Q4 (Dec) earnings of $0.09 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.07; revenues fell 12.1% year/year to $93.6 mln vs the $93.41 mln Capital IQ Consensus.
Co issues in-line guidance for Q1, sees EPS of $0.00-0.16, excluding non-recurring items, vs. $0.12 Capital IQ Consensus Estimate; sees Q1 revs of $85-100 mln vs. $96.71 mln Capital IQ Consensus Estimate.
"Entering 2017, we are seeing healthy LED industry dynamics and positive business momentum. We closed an exclusive, multi-year agreement with OSRAM Opto Semiconductors GmbH to supply Metal Organic Chemical Vapor Deposition and Precision Surface Processing) systems for their new high volume LED production facility in Kulim. We made significant progress in growing our Advanced Packaging business, increasing sales into the Advanced Packaging, MEMS & RF markets by ~10% year over year. In addition, our recently announced agreement to acquire Ultratech [UTEK] will establish Veeco as a leading equipment supplier to the Advanced Packaging industry. We are excited by this proposed combination, which is expected to increase our scale, diversify our revenue and provide a stable platform to drive long-term shareholder value. The transaction is subject to regulatory clearance and approval by Ultratech's stockholders and is expected to close in the second quarter."
4:10 pm Univ Elec reports EPS in-line, misses on revs; guides Q1 EPS in-line, revs in-line (UEIC) :
Reports Q4 (Dec) earnings of $0.70 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.70; revenues fell 1.2% year/year to $160.1 mln vs the $164.65 mln Capital IQ Consensus.
Co issues in-line guidance for Q1, sees EPS of $0.57-0.67 vs. $0.59 Capital IQ Consensus Estimate; sees Q1 revs of $155-163 mln vs. $156.65 mln Capital IQ Consensus Estimate. GAAP gross margins were 25.7%, compared to 28.5%. Adjusted Non-GAAP gross margins were 26.9%, compared to 28.8%.
4:06 pm Tessera Tech signs a technology transfer and license agreement for Direct Bond Interconnect technology (TSRA) : This agreement enables Teledyne (TDY) DALSA to leverage Invensas' revolutionary semiconductor wafer bonding and 3D interconnect technologies to deliver next-generation MEMS and image sensor solutions to customers in the automotive, IoT and consumer electronics markets.
4:03 pm Cohu beats by $0.15, beats on revs; guides Q1 revs above consensus, co guides on the earnings call (COHU) :
Reports Q4 (Dec) earnings of $0.24 per share, excluding non-recurring items, $0.15 better than the Capital IQ Consensus of $0.09; revenues rose 11.3% year/year to $70.7 mln vs the $65.12 mln Capital IQ Consensus.
Co issues upside guidance for Q1, sees Q1 revs of ~$78 mln vs. $69.00 mln Capital IQ Consensus Estimate.
Cohu's Board of Directors approved a quarterly cash dividend of $0.06 per share payable on April 14, 2017 to shareholders of record on February 28, 2017.
Co guides on the earnings call.
4:20 pm : Investors took a breather on Thursday, pulling the S&P 500 and Nasdaq away from their freshly-minted record highs after seven consecutive advances. The pullback was modest in scope, leaving the S&P 500 and the Nasdaq lower by 0.2% while the Dow (unch) resisted, eking out a slight gain.
The Treasury market, which had posted six consecutive losses coming into Thursday, also reversed its recent ways. Treasuries finished higher across the board with shorter-dated issues showing relative strength in a yield-curve steepening trade. The benchmark 10-yr yield closed five basis points lower at 2.45% while the 2-yr yield finished lower by seven basis points at 1.20%.
The recent losing streak aside, the Treasuries' uptick was somewhat surprising given today's strong economic data; Housing Starts (1246K; Briefing.com consensus 1220K), Initial Claims (239K; Briefing.com consensus 245K), and the Philadelphia Fed Index (43.3; Briefing.com consensus 17.5) all surpassed estimates.
However, the hotter than expected readings turned out to be a non-event, at least for now, considering the market's updated rate hike expectations. The fed funds futures market is once again pointing to June as the most likely time for the next hike to be announced. The implied probability of a June hike sits at 73.9%, down from yesterday's 76.2% while the implied likelihood of a hike in May is down to 47.1%.
Earnings news was relatively quiet today as nearly 80.0% of S&P 500 components have already reported their results. However, Cisco Systems (CSCO 33.60, +0.78) did make a splash with its latest report. CSCO shares jumped 2.4% after the company raised its dividend and reported better than expected earnings.
Cisco's upbeat performance supported a modest gain in the technology sector (+0.2%), which finished with industrials (unch) as the only cyclical spaces to close in the green.
Utilities (+1.0%) closed at the top of the leaderboard, thanks to the downtick in Treasury yields and a positive reaction to Duke Energy's (DUK 78.90, +2.12) latest earnings report. Shares of DUK climbed 2.8% despite the company's earnings per share miss.
Real estate (+0.4%), telecom services (+0.5%), and consumer staples (+0.1%) also finished higher, while health care (-0.1%) could not keep up with its countercyclical peers.
The remaining sectors-financials, consumer discretionary, materials, and energy-finished with losses between 0.1% (materials) and 1.4% (energy).
The energy space's slip came despite crude oil's 0.6% advance. The commodity closed at $53.41/bbl after news that OPEC is mulling a production cut extension & could potentially cut more than previously expected.
Today's economic data included January Housing Starts, Initial Claims, and the Philadelphia Fed Index for February:
Housing starts decreased to a seasonally adjusted annualized rate of 1.246 million units in January, down from a revised 1.279 million units in December (from 1.226 million). The Briefing.com consensus expected starts to decrease to 1.220 million units. Building permits increased to a seasonally adjusted 1.285 million in January from a revised 1.228 million (from 1.210 million) for December. The Briefing.com consensus expected a reading of 1.230 million.
The key takeaway is that, absent the December revision, starts would have increased month-over-month, which is to say the headline decline isn't as disappointing as it might sound at first blush.
The latest weekly initial jobless claims count totaled 239,000 while the Briefing.com consensus expected a reading of 245,000. Today's tally was above the unrevised prior week count of 234,000. As for continuing claims, they declined to 2.076 million from the revised count of 2.079 million (from 2.078 million).
The key takeaway from the report is that initial claims continue to be stuck at low levels historically, which is a good portent for nonfarm payroll growth.
The Philadelphia Fed Survey for February rose to 43.3 from an unrevised 23.6 in January while economists polled by Briefing.com had expected a reading of 17.5.
The key takeaway from the report is that manufacturing activity is proceeding at a healthy pace in the Philadelphia Fed region.
Friday's lone economic report, January Leading Indicators (Briefing.com consensus 0.5%), will be released at 10:00 am ET.
Nasdaq Composite +8.0% YTD
S&P 500 +4.8% YTD
Dow Jones Industrial Average +4.3% YTD
Russell 2000 +3.1% YTD
NASDAQ Adv/Vol/Dec 1239/1.79 bln/1593 NYSE Adv/Vol/Dec 1255/997.4/1670
3:30 pm :
Natural gas closed pit trading at a fresh 3-month low on a smaller-than-expected EIA inventory draw
Mar natural gas closed $0.07 lower (-2.4%) at $2.85/MMBtu
EIA natural gas highlights:
Natural gas inventory showed a draw of -114 bcf vs expectations for inventory to be a draw of approx. -124 bcf.
Working gas in storage was 2,445 Bcf as of Friday, Feb 10, 2017, according to EIA estimates.
Stocks were 303 Bcf less than last year at this time and 87 Bcf above the five-year average of 2,358 Bcf.
At 2,445 Bcf, total working gas is within the five-year historical range.
In precious metals, gold extended yesterday's gain & ended pit trading at a 1-week high on continued dollar index weakness
April gold ended today's session up $8.50 (+0.7%) to $1241.50/oz
Mar silver closed today's session $0.11 higher (+0.6%) at $18.08/oz
Crude oil closed a volatile pit trading session higher on headlines OPEC is mulling a production cut extension & could potentially cut more than previously expected
Mar crude oil futures rose $0.33 (+0.6%) to $53.41/barrel
Baker Hughes rig count data will be released tomorrow at 1 pm ET.
Last week, the total active U.S. rig count, which includes oil and natural gas rigs, rose by 12 to 741 rigs, following the prior week's increase of 17 rigs.
Of that total, the U.S. rigs drilling for oil rose by 8 to 591 rigs last week.
This marked the 4th consecutive weekly increase in the weekly oil rig count.
US drillers have added oil rigs for 14 out of the past 15 weeks.
The dollar index was -0.7% around the 100.45 level, provided support to precious metals
Commodities, as measured by the Bloomberg Commodity Index, were -0.6% around the 88.48 level
After a five-day winning streak, the broader market finally got a look at the other side of flat lines. That being said, the Dow Jones did manage to eke out modest gains on the session, despite pressure out of the gate. To that end, the Dow added 7.91 points (+0.04%) today to 20619.77. The S&P 500 shed 2.03 (-0.09%) to 2347.22, and the Nasdaq Composite lost about 4.54 points (-0.08%) to 5814.90.
Economic data today included the housing starts reading, which decreased to a seasonally adjusted annualized rate of 1.246 million units in January, down from a revised 1.279 million units in December (from 1.226 million). Also, building permits increased to a seasonally adjusted 1.285 million in January from a revised 1.228 million (from 1.210 million) for December. The latest weekly initial jobless claims count totaled 239,000, above the unrevised prior week count of 234,000. As for continuing claims, they declined to 2.076 million from the revised count of 2.079 million (from 2.078 million). Lastly, the Philadelphia Fed Survey for February rose to 43.3 from an unrevised 23.6 in January.
Despite the broader market pressure, the Technology (XLK 52.01, +0.12 +0.23%) sector traded modestly higher today. Component NetApp (NTAP 40.56, +1.63 +4.19%) was the best performer today following better than expected Q3 earnings. Other sectors as measured by the S&P closed XLU +1.00%, XLRE +0.42%, XLP +0.13%, XLI +0.03%, IYZ +0.00%, XLB +0.00%, XLV -0.14%, XLF -0.24%, XLY -0.51%, XLE -1.36% with Utilities out-performing.
In the S&P 500 Information Technology (879.29, +1.85 +0.21%) space, trading barely edged higher as a late sell-off took shares below flat lines. Component Cisco Systems (CSCO 33.60, +0.78 +2.38%) was a strong performer today after its Q2 report. Other names in the space which closed modestly higher included GLW +1.28%, HRS +1.24%, XLNX +1.17%, AVGO +1.06%, INTC +1.00%, KLAC +0.97%, ADSK +0.92%, TXN +0.77%, QCOM +0.69%, PYPL +0.67%.
Other notable news items among sector components:
Qualcomm's (QCOM 56.88, +0.39 +0.69%) Chief Accounting Officer John Murphy to resign effective March 17 to pursue other opportunities. Simultaneously, Adobe Systems (ADBE 118.93, +0.20 +0.17%) issued a press release stating John Murphy would begin his duties as CAO at the company on March 20.
Time Warner (TWX 96.35, +0.04 +0.04%) shareholders approved the proposed merger with AT&T Inc. (T 41.25, +0.13 +0.32%). The parties continue to expect the transaction to close before year-end 2017.
Tata Motors (TTM 33.04, +0.65 +2.01%) and Microsoft (MSFT 64.52, -0.01 -0.02%) India confirmed that the companies will collaborate on connected cars.
Microsoft (MSFT) and MGM Resorts (MGM 26.86, -2.74 -9.26%) came to a multi-year agreement
Equinix (EQIX 373.18, -7.58 -1.99%) increased its quarterly dividend to $2.00 per share from $1.75 per share.
CoreLogic (CLGX 39.20, +0.68 +1.78%) Board granted President and CEO Anand Nallathambi a temporary medical leave of absence.
Verizon (VZ 48.47, +0.39 +0.81%) acquired drone operations management firm Skyward. Financial terms of the deal were not disclosed.
Diebold Nixdorf (DBD 30.00, +0.05 +0.17%) appointed Juergen Wunram as COO. Additionally, President Eckard Heidloff resigned effective March 31.
Netease.com (NTES 298.73, +36.88 +14.08%) increased its dividend to $1.01 per ADS from $0.78 per ADS.
In reaction to quarterly results:
Cisco Systems (CSCO) reported better than expected Q2 EPS of $0.57 on revenues which fell about 2.9% versus last year to $11.58 billion. For Q3, the company sees EPS in the range of $0.57-0.59 on revenue growth of flat to up 2% to about $11.76-12.0 billion.
Netease.com (NTES) reported better than expected Q4 EPS and revenues of $4.30 per ADS and $1.74 billion, respectively.
Applied Materials (AMAT 35.18, -0.31 -0.87%) reported better than expected Q1 EPS of $0.67 on in-line revenues of $3.28 billion. For Q2, AMAT sees better than expected revenues and EPS of $3.450-3.600 billion and $0.72-0.80, respectively.
Equinix (EQIX) reported better than expected adjusted funds from operations of $4.08 on revenues which rose about 29.0% compared to last year to about $942.6 million. For Q1, EQIX sees revenues in the range of $940-946 million. For FY17, the company expects revenues of greater than $3.933 billion.
NetApp (NTAP) reported better than expected Q3 EPS of $0.82 on revenues which rose about 1.3% compared to last year to $1.4 billion. For Q4, NTAP sees EPS of $0.79-0.84 on revenues between $1.365-1.515 billion.
SS&C Techs (SSNC 35.35, +2.54 +7.74%) reported better than expected Q4 EPS and revenues of $0.46 and $400.92 million, respectively. For Q1, SSNC sees revenues of $402.5-408.5 million. For FY17, SSNC sees revenues in the range of $1.655-1.685 billion.
TripAdvisor (TRIP 46.92, -5.78 -10.97%) reported worse than expected Q4 EPS and revenues of $0.16 and $316 million, respectively.
GoDaddy (GDDY 35.88, -1.58 -4.22%) reported Q$ EPS of $0.02 on revenues which rose 14.2% compared to a year ago to $485.9 million. For Q1, GDDY sees worse than expected revenues in the range of $485-490 million. For FY17, GDDY sees better than expected revenues between $2.18-2.22 billion.
Companies scheduled to report quarterly results tonight/tomorrow morning: AIRG MDRX AMBR ANET BCOV CGNX COHU FIVN GLOB PI MCHX TTD TRUE VECO WBMD YUME/TYPE
Analyst actions:
NTAP was upgraded to Market Perform from Underperform at William Blair and to Buy from Hold at Lake Street,
CAVM was upgraded to Buy from Neutral at BofA/Merrill,
SPWR was upgraded to Outperform from Perform at Oppenheimer,
SSNC was upgraded to Outperform from Neutral at Macquarie;
GDDY was downgraded to Hold from Buy at Summit Redstone,
ADI was downgraded to Market Perform from Outperform at Wells Fargo,
GRPN was downgraded to Neutral from Outperform at Wedbush,
SONS was downgraded to Neutral from Buy at DA Davidson,
ANGI was downgraded to Sell from Neutral at Roth Capital,
IDTI was downgraded to Neutral from Buy at BofA/Merrill,
XXIA was downgraded to Hold from Buy at Stifel;
CRM was initiated with a Hold at Needham,
SAIC and CACI were initiated with Buy ratings at Seaport Global Securities,
OTEX was initiated with a Neutral at Citigroup
From Briefing.com: 4:13 pm Cisco Systems beats by $0.01, reports revs in-line; guides Q3 EPS in-line, revs in-line; raises dividend 12% (CSCO) :
Reports Q2 (Jan) earnings of $0.57 per share, $0.01 better than the Capital IQ Consensus of $0.56; revenues fell 2.9% year/year to $11.58 bln vs the $11.56 bln Capital IQ Consensus, with product revenue down 4% and service revenue up 5%.
Revenue by geographic segment was: Americas down 3%, EMEA flat, and APJC down 3%.
Product revenue performance was led by Security which increased 14%. Collaboration and Wireless product revenue increased by 4% and 3%, respectively. NGN Routing, Switching and Data Center product revenue decreased by 10%, 5% and 4%, respectively. Service Provider Video product revenue decreased by 41%.
Non-GAAP total gross margin and product gross margin were 64.1% (vs. 63-64% guidance) and 62.4%, respectively. The decrease in non-GAAP product gross margin compared with 63.3% in the second quarter of fiscal 2016 was primarily due to pricing and to a lesser extent product mix, partially offset by continued productivity improvements.
Co issues in-line guidance for Q3, sees EPS of $0.57-0.59, excluding non-recurring items, vs. $0.58 Capital IQ Consensus Estimate; sees Q3 revs down 0-2% to ~$11.76-12.0 bln vs. $11.87 bln Capital IQ Consensus; adj. gross margin 63-64%.
Increases quarterly cash dividend 12% to $0.29
4:09 pm SunPower misses by $0.18, beats on revs; guides Q1 revs below consensus; reaffirms FY17 revs guidance (SPWR) :
Reports Q4 (Dec) loss of $0.64 per share, excluding non-recurring items, $0.18 worse than the Capital IQ Consensus of ($0.46); revenues fell 19.5% year/year to $1.1 bln vs the $1.06 bln Capital IQ Consensus.
Co issues downside guidance for Q1, sees Q1 revs of $370-420 mln, excluding non-recurring items, vs. $459.23 mln Capital IQ Consensus Estimate.
Gross margin of 0 percent to 2 percent;
Adjusted EBITDA of ($45) million to ($20) million;
Megawatts deployed in the range of 150 MW to 180 MW.
Co reaffirms guidance for FY17, sees FY17 revs of $2.1-2.6 bln, excluding non-recurring items, vs. $2.35 bln Capital IQ Consensus Estimate.
Reaffirms the following:Non-GAAP operational expenses of less than $350 million;Capital expenditures of approximately $120 million;Gigawatts (:GW) deployed in the range of 1.3 GW to 1.6 GW. Expects to record GAAP restructuring charges totaling $50 million to $100 million in fiscal year 2017.Expects to generate positive operating cash flow through the end of fiscal year 2017 and exit the year with approximately $300 million in cash. Despite current industry conditions the company is forecasting positive Adjusted EBITDA for the full year 2017, weighted toward the second half of the year. The company believes that cash flow and liquidity are the key evaluation metrics for investors in the near term. 4:07 pm NetApp beats by $0.08, reports revs in-line; guides Q4 EPS above consensus, revs in-line (NTAP) :
Reports Q3 (Jan) earnings of $0.82 per share, $0.08 better than the Capital IQ Consensus of $0.74; revenues rose 1.3% year/year to $1.4 bln vs the $1.39 bln Capital IQ Consensus.
All-flash array annualized net revenue run rate almost $1.40 billion, up 160% year-over-year.
Nearly 300 petabytes of flash shipped.
Co issues guidance for Q4, sees EPS of $0.79-0.84 vs. $0.77 Capital IQ Consensus Estimate; sees Q4 revs of $1.365-1.515 bln vs. $1.4 bln Capital IQ Consensus Estimate.
"Q3 marked another quarter of strong execution by NetApp," said George Kurian, chief executive officer. "The transformation of NetApp is yielding solid results and has changed the trajectory of our business. With our industry-leading portfolio of solutions and Data Fabric strategy, NetApp is well positioned to lead in the next era of IT."
4:05 pm Lattice Semi beats by $0.04, misses on revs (LSCC) :
Reports Q4 (Dec) earnings of $0.10 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $0.06; revenues rose 16.7% year/year to $118.11 mln vs the $126.7 mln Capital IQ Consensus.
Gross margin of 53.7% on a GAAP basis and 53.9% on a non-GAAP basis.
On November 3, 2016, the Company announced that it had entered into a definitive agreement to be acquired by Canyon Bridge Capital Partners, Inc. The transaction with Canyon Bridge will allow Lattice to grow its operations in the U.S. and globally and better reach its target markets. The process of obtaining approval from the Committee on Foreign Investment in the United States (:CFIUS) is well underway, and the Company looks forward to continuing to have constructive discussions with the Committee in order to conclude the deal as soon as possible.
As a result of the acquisition announcement with Canyon Bridge, the Company will not hold a quarterly conference call and webcast, and will not provide an outlook for its future financial results. 4:04 pm Applied Materials beats by $0.01, reports revs in-line; guides Q2 EPS above consensus, revs above consensus (AMAT) :
Reports Q1 (Jan) earnings of $0.67 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.66; revenues rose 45.2% year/year to $3.28 bln vs the $3.27 bln Capital IQ Consensus.
Co issues upside guidance for Q2, sees EPS of $0.72-0.80, excluding non-recurring items, vs. $0.62 Capital IQ Consensus Estimate; sees Q2 revs of $3450-3600 vs. $3.21 bln Capital IQ Consensus Estimate.
4:20 pm : Equity indices marched through a stockpile of economic data to new record highs on Wednesday as the S&P 500 (+0.5%) posted its seventh consecutive advance. The Dow (+0.5%) finished in line with the benchmark index while the Nasdaq (+0.6%) closed a step ahead.
The day's record close appeared somewhat doubtful following this morning's release of January CPI. The report came in hotter than expected with total CPI increasing 0.6% (Briefing.com consensus +0.3%) and core CPI, which excludes food and energy, rising 0.3% (Briefing.com consensus +0.2%). While the Fed's preferred inflation gauge is the PCE Price Index, Wednesday's CPI reading confirms that consumer inflation pressures are rising, which in turn should increase the potential for a rate hike at the March meeting.
Sure enough, the fed funds futures market showed an increase in the implied probability of a March rate hike (to 31.0% today from 17.7% yesterday). Additionally, the fed funds futures market now points to the next FOMC rate hike taking place in May with the corresponding probability rising to 53.1% from yesterday's 40.6%.
U.S. Treasuries slipped immediately following the January CPI release and held the bulk of those losses into the close, finishing lower for the fifth consecutive session. The benchmark 10-yr yield finished three basis points higher at 2.50%.
After the morning's wave of economic data, which included much more than just CPI (see data review below), the stock market found its footing and began a slow but steady climb into the green. Financials (+0.7%) led the advance throughout the morning, but health care (+1.2%) took the reigns in the afternoon.
While the health care space showed broad strength, biotechnology and pharmaceutical names demonstrated notable vigor as a handful components were recently disclosed in new, increased, and/or maintained portfolio positions. The iShares Nasdaq Biotechnology ETF (IBB 294.95, +5.15) advanced 1.8% while pharmaceutical heavyweights like Pfizer (PFE 33.51, +0.76), AbbVie (ABBV 61.65, +0.83), and Eli Lilly (LLY 80.25, +1.44) finished higher between 1.4% and 2.3%.
The top-weighted technology sector (+0.4%) finished a step behind the broader market as Apple (AAPL 135.51, +0.49) resisted the sector's bullish disposition. However, chipmakers somewhat balanced the tech giant's underperformance, evidenced by the 0.8% uptick in the PHLX Semiconductor Index. Analog Devices (ADI 81.60, +3.76) led the chipmaker advance after beating top and bottom line estimates and increasing its quarterly dividend.
Consumer staples (+0.8%) finished just behind the health care space despite the negative response to PepsiCo's (PEP 106.73, -0.19) latest earnings report. The company slipped 0.2% after below-consensus guidance outweighed above-consensus earnings. Also of note, PEP decided to raise its dividend.
Utilities (-0.4%) finished the day at the bottom of the leaderboard, while energy (-0.4%) did only slightly better as crude oil closed 0.2% lower at $53.08/bbl. The energy component counter-intuitively ticked up into positive territory following the latest Energy Information Administration (EIA) inventory report, which dwarfed consensus estimates (+3.5 million) by showing a build of 9.5 million barrels. However, the uptick was short-lived as crude oil soon returned to negative territory.
Wednesday saw a slew of economic reports including January CPI, January Retail Sales, January Industrial Production and Capacity Utilization, February Empire Manufacturing, December Business Inventories, February NAHB Housing Market Index, and the MBA Mortgage Index:
Total CPI rose 0.6% (Briefing.com consensus +0.3%) in January while core CPI, which excludes food and energy, increased 0.3% (Briefing.com consensus +0.2%). On a year-over-year basis, total CPI is up 2.5% and core CPI has increased 2.3%.
While the Fed's preferred inflation gauge is the PCE Price Index, the key takeaway from the report is that consumer inflation pressures are rising, which in turn should increase the potential for a rate hike at the March meeting.
January retail sales increased 0.4%, which compares to the Briefing.com consensus of 0.1%. The prior month's reading was revised higher to 1.0% from 0.6%. Excluding autos, retail sales rose 0.8% while the consensus expected an uptick of 0.4%. The prior month's reading was revised higher to 0.4% from 0.2%.
The key takeaway from the report is that discretionary spending on goods picked up in January, which will compute into a positive input for first quarter GDP forecasts.
January Industrial Production decreased 0.3% (Briefing.com consensus 0.0%) while Capacity Utilization declined to 75.3% (Briefing.com consensus 75.5%) from a revised reading of 75.6% (from 75.5%) in December.
The key takeaway from the report is that the decline in industrial production stemmed entirely from a drop in utilities output, which is to say the headline number is not as bad as it appears.
Business Inventories rose 0.4% in December which is in line with the Briefing.com consensus. The prior month's reading was revised to 0.8% from 0.7%.
The key takeaway from the report is that the inventory-to-sales ratio is at its lowest point since December 2014. That's elevated from pre-financial crisis levels, when it was below 1.30, yet a further downtrend could restore some much needed pricing power.
Empire Manufacturing Survey for February rose to 18.7 from the prior month's reading of 6.5. The Briefing.com consensus estimate was pegged at 7.0.
The NAHB Housing Market Index for February fell to 65 (Briefing.com consensus 68) from an unrevised 67 in January.
The weekly MBA Mortgage Index decreased 3.7% to follow last week's 2.3% uptick.
Thursday will also see a batch of economic data with January Housing Starts (Briefing.com consensus 1.22 million), Initial Claims (Briefing.com consensus 245K), and the Philadelphia Fed Index for February (Briefing.com consensus 17.5) all crossing the wires at 8:30 am ET.
Nasdaq Composite +8.1% YTD
S&P 500 +4.9% YTD
Dow Jones Industrial Average +4.3% YTD
Russell 2000 +3.4% YTD
NASDAQ Adv/Vol/Dec 1822/1.91 bln/1019 NYSE Adv/Vol/Dec 1739/974.6 mln/1206
3:30 pm :
Crude oil ended a volatile pit trading session modestly lower after EIA reported notable builds above Consensus for both crude & gasoline stocks
Mar crude oil futures fell $0.13 (-0.2%) to $53.08/barrel
Rig count data will be released Friday at 1 pm ET
EIA highlights:
Crude oil inventories had a build of +9.5 mln barrels (consensus called for a build of about +3.513 mln barrels)
Gasoline inventories had a build of +2.8 mln barrels (consensus called for a draw of -0.752 mln barrels)
Distillate inventories had a draw of -0.7 mln barrels
Natural gas rallied off of this morning's 3-month low on headlines of a Texas pipeline explosion ahead of tomorrow's EIA data release
Mar natural gas closed $0.02 higher (+0.7%) at $2.92/MMBtu
EIA natural gas data will be released tomorrow at 10:30 am ET
In precious metals, gold rebounded from a 4-session decline on dollar index weakness
April gold ended today's session up $7.70 (+0.6%) to $1233.00/oz
March silver closed today's session $0.07 higher (+0.4%) at $17.97/oz
The dollar index turned negative and is now -0.2% around the 101.07 level, boosting precious metals
Commodities, as measured by the Bloomberg Commodity Index, were +0.4% around the 89.01 level
On the fifth day of cracking into new all-time high territory, the broader market closed with gains of better than half a percent across the board. Leading the advance, the tech-heavy Nasdaq Composite gained 36.87 points today (+0.64%) to 5819.44. The Dow Jones Industrial Average added 107.45 points (+0.52%) to 20611.86, and the S&P 500 was up 11.67 points (+0.50%) when the bell rang to 2349.25.
Wednesday was filled with economic data, including the Total CPI reading which rose 0.6% in January while core CPI, which excludes food and energy, increased 0.3%. On a year-over-year basis, total CPI is up 2.5% and core CPI has increased 2.3%. January retail sales increased 0.4%, compared to the prior month's reading was revised higher to 1.0% from 0.6%. Excluding autos, retail sales rose 0.8% while the consensus expected an uptick of 0.4%. The prior month's reading was revised higher to 0.4% from 0.2%. Also, January Industrial Production decreased 0.3% while Capacity Utilization declined to 75.3% from a revised reading of 75.6% (from 75.5%) in December. Further, Business Inventories rose 0.4% in December while the prior month's reading was revised to 0.8% from 0.7%. The Empire Manufacturing Survey for February rose to 18.7 from the prior month's reading of 6.5, the NAHB Housing Market Index for February fell to 65 from an unrevised 67 in January, and the weekly MBA Mortgage Index decreased 3.7% to follow last week's 2.3% uptick.
The Technology (XLK 51.89, +0.17 +0.33%) space reached levels today it has not seen since the fall of 2000. Component FLIR Systems (FLIR 36.93, +2.78 +8.14%) moved higher today, rebounding off post-earnings weakness. Other sectors as measured by the S&P closed XLV +1.08%, XLP +0.91%, XLF +0.78%, XLI +0.54%, XLY +0.52%, XLB -0.13%, XLU -0.24%, XLRE -0.29%, XLE -0.39%, IYZ -0.70% with Healthcare leading all others.
In the S&P 500 Information Technology (877.44, +3.46 +0.40%) space, trading again made a new high, moving the sector to +8.6% YTD. Component Analog Devices (ADI 81.60, +3.76 +4.83%) was one of the better performing names today after the company reported a better than expected January quarter. Other names in the space which out-performed today included FSLR +2.39%, EA +2.20%, QCOM +1.82%, MCHP +1.58%, CSCO +1.58%, CTXS +1.56%, FFIV +1.44%, YHOO +1.40%, CTSH +1.34%, LLTC +1.25%, CSRA +1.20%, RHT +1.20%, FIS +1.13%.
Other notable news items among sector components:
PayPal (PYPL 41.87, +0.25 +0.60%) to acquire TIO Networks for $233 million, and affirmed outlook.
Per Bloomberg, Yahoo! (YHOO 45.65, +0.63 +1.40%) and Verizon (VZ 48.08, -0.19 -0.39%) may be attempting to reach a revised agreement.
SoftBank (SFTBY 37.90, +0.16 +0.44%) confirmed plans to acquire Fortress Investment Group (FIG 7.99, +1.78 +28.66%) for $3.3 billion.
Analog Devices (ADI), in addition to reporting quarterly results, increased its quarterly dividend to $0.45 per share from $0.42.
KPMG International and Microsoft (MSFT 64.53, -0.04 -0.06%) launched joint Blockchain Nodes, which are designed to create and demonstrate use cases that apply blockchain technology to business propositions and processes.
Manpower (MPWR 86.02, +0.89 +1.05%) signed a purchase agreement with Ciber (CBR 0.38, +0.01 +3.54%) to acquire its biz in Spain. Financial details of the deal were not disclosed.
Intelsat (I 4.09, +0.07 +1.74%) announced the successful launch of the Intelsat 32e satellite aboard an Ariane 5 launch vehicle from French Guiana.
Luxoft Holding (LXFT 57.55, -2.90 -4.80%) CFO Roman Yakushkin to resign effective March 31.
The Communications Workers of America notified AT&T (T 41.12, +0.37 +0.91%) that former DIRECTV tech support employees in seven states voted to ratify an agreement.
SCANA Corp (SCG 67.47, +0.61 +0.91%) received reaffirmation from Westinghouse regarding completion of the V.C. Summer Nuclear Station project.
Twitter (TWTR 16.74, +0.22 +1.33%) CEO Jack Dorsey disclosed purchase of nearly 426K shares worth $7 million (transaction dates 2/13-2/14).
Sapiens Int'l (SPNS 14.68, +0.80 +5.76%) acquired privately held StoneRiver for about $102 million in cash. The company expects the transaction to be accretive to EPS starting in 3Q17.
Vectrus (VEC 23.67, +0.10 +0.42%) receives a $14 million firm-fixed-price installation services task order in support of the U.S. Air Force at Bagram Air Field in Afghanistan.
Synchronoss Tech (SNCR 34.00, +0.24 +0.71%) disclosed that CFO Karen Rosenberger will resign effective April 1 in order to pursue other opportunities.
Oracle (ORCL 41.41, +0.31 +0.75%) announced Oracle Tax Reporting Cloud Service.
In reaction to quarterly results:
Analog Devices (ADI) reported better than expected Q1 EPS and revenues of $0.94 and $984 million, respectively. For Q2, the company guided EPS in the range of $0.74-0.86 and revenues of $870-950 million.
Agilent (A 51.62, +1.23, +2.44%) reported better than expected Q1 EPS and revenues of $0.53 and $1.07 billion, respectively. For Q2, ADI sees EPS and revenues in-line of $0.47-0.49 and $1.04-1.06 billion, respectively. For FY17, the company sees EPS of $2.10-2.16 and revenues of $4.33-4.35 billion.
Shopify (SHOP 60.61, +4.56 +8.14%) reported better than expected Q4 EPS of net of breakeven and revenues which rose 85.8% compared to last year to $130.4 million. For Q1, the company sees revenues of $120-122 million. For FY17, the company sees revenues of $580-600 million.
Groupon (GRPN 4.64, +0.86 +22.75%) reported better than expected Q4 EPS and revenues of $0.07 and $934.9 million, respectively. For FY17, the company sees gross profit in the range of $1.30 billion and $1.35 billion, an increase of $40 to $90 million compared to full year 2016 results for the 15 countries in the company's go-forward footprint on an FX-neutral basis. GRPN also expects adjusted EBITDA to be in the range of $200 million and $240 million, an increase of $16 to $56 million compared to full year 2016 results for the 15 countries in the company's go-forward footprint on an FX-neutral basis.
Wix.com (WIX 61.50, +8.55 +16.15%) reported better than expected Q4 EPS and revenues of $0.06 and $84.2 million, respectively. For Q1, WIX sees revenues ahead of market expectations at $89-90 million. For FY!7, WIX sees revenues ahead of market expectations at $409-411 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: AMAT, CSLT, CSCO, ELNK, EQIX, GDDY, NTAP, NTES, QTWO, QUIK, SSNC, SPWR, SNPS, TIVO, TRIP/BCOR, EIGI, EPAM, HIMX, NICE, SYNT, YNDX
Analyst actions:
HPE was upgraded to Positive from Mixed at OTR Global,
HOLI was upgraded to Buy from Hold at Deutsche Bank,
IPGP was upgraded to Buy from Neutral at Dougherty,
INXN was upgraded to Buy from Neutral at Guggenheim;
HOLI was downgraded to Neutral from Buy at Citigroup,
CVG was downgraded to Hold from Buy at SunTrust,
CALX was downgraded to Market Perform from Outperform at Northland Capital;
KEYW was initiated with an Outperform at RBC Capital Mkts,
OLED was initiated with a Positive at Susquehanna,
COHR was initiated with a Neutral at Susquehanna,
V, MA and CSRA were initiated with a Buy ratings at Loop Capital,
COUP and EGOV were initiated with Hold ratings at Loop Capital
8:03 am Analog Devices beats by $0.20, beats on revs; guides Q2 EPS in-line, revs in-line; Increases dividend 7% (ADI) :
Reports Q1 (Jan) earnings of $0.94 per share, excluding non-recurring items, $0.20 better than the Capital IQ Consensus of $0.74; revenues rose 27.9% year/year to $984 mln vs the $871.79 mln Capital IQ Consensus.
Non-GAAP operating margin of 35% of revenue
Co issues in-line guidance for Q2, sees EPS of $0.74-0.86, excluding non-recurring items, vs. $0.76 Capital IQ Consensus Estimate; sees Q2 revs of $870-950 mln vs. $875.65 mln Capital IQ Consensus Estimate.
Non-GAAP gross margin expected to increase to between approximately 66.5% and approximately 67%
Non-GAAP operating expenses expected to be down approximately 3% to up approximately 1% sequentially
Non-GAAP interest and other expense expected to be approximately $30 million
Non-GAAP tax rate expected to be approximately 8%
ADI also announced that its Board of Directors has approved a 7% increase in its quarterly cash dividend to $0.45 from $0.42 per outstanding share of common stock, representing an annual dividend per share of $1.80.
From Briefing.com: 4:13 pm SolarEdge Technologies beats by $0.03, misses on revs; guides Q3 revs above consensus (SEDG) :
Reports Q2 (Dec) earnings of $0.32 per share, $0.03 better than the Capital IQ Consensus of $0.29; revenues fell 10.7% year/year to $111.5 mln vs the $114.91 mln Capital IQ Consensus.
GAAP gross margin reached 35.0% (Guidance 30-32%)
Co issues upside guidance for Q3, sees Q3 revs of $110-120 mln vs. $109.31 mln Capital IQ Consensus Estimate.
Sees Gross Margin in the range of 31-33%.
4:10 pm Agilent beats by $0.04, beats on revs; guides AprQ EPS in-line, revs in-line; reaffirms FY17 EPS guidance, guides FY17 revs in-line (A) :
Reports Q1 (Jan) earnings of $0.53 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $0.49 and above prior guidance of $0.48-0.50; revenues rose 3.8% year/year to $1.07 bln vs the $1.05 bln Capital IQ Consensus and vs prior guidance of $1.04-1.06 bln.
Co issues in-line guidance for Q2 (Apr), sees EPS of $0.47-0.49, excluding non-recurring items, vs. $0.49 Capital IQ Consensus Estimate; sees Q2 revs of $1.04-1.06 bln vs. $1.05 bln Capital IQ Consensus Estimate.
Co issues guidance for FY17, reaffirms EPS of $2.10-2.16, excluding non-recurring items, vs. $2.14 Capital IQ Consensus Estimate; sees FY17 revs of $4.33-4.35 bln vs. $4.34 bln Capital IQ Consensus Estimate.
"Our strong revenue results were driven by a return to growth in our Chemical & Energy business and higher-than-expected China growth. Overall, we are confident in the company's prospects, and we are raising our full-year core revenue growth expectations."
4:15 pm : Afternoon optimism outweighed morning caution on Tuesday as investors pushed the major averages to fresh record highs. The Dow (+0.5%) led the advance while the S&P 500 (+0.4%) and the the Nasdaq (+0.3%) closed just a tick behind.
Markets were in wait-and-see mode leading up to Fed Chair Yellen's semiannual monetary policy report. Ms. Yellen did not raise any eyebrows in her prepared statement, but she did provide some interesting insight during the Q&A session that followed.
Specifically, Senator Toomey asked Chair Yellen why the Fed didn't really bump up its growth projections at all at the December meeting when many other bodies, like the IMF, have bumped up their 2017 growth prospects based on a belief that the implementation of fiscal stimulus in the U.S. will have a positive effect on growth. Ms. Yellen responded by saying that most of her colleagues refrained from doing so because they wanted greater clarity on the timing, scope, and composition of any fiscal changes before making assumptions about the growth outlook.
That's an important revelation because the Fed, without the benefit of knowing what fiscal changes will look like, still projected three rate hikes in 2017 at the December meeting. That forecast, then, is based on its view of how the economy will evolve without -- at the Fed Chair's admission -- the benefit of any fiscal stimulus.
The fed funds future market still projects the next FOMC rate hike to occur in June with an implied probability of 70.7% (from 65.4% yesterday). The implied probability of a March rate hike has also ticked up following today's monetary policy report, but it remains relatively low at 17.7% (from 13.3% yesterday).
Treasuries retreated following the Fed Chair's testimony, while the stock market waited until after the Q&A session to make its expedition into the green. Financials (+1.2%) led the equity market's advance, profiting from the uptick in interest rates. The benchmark 10-yr yield finished its trading session four basis points higher at 2.47%.
The health care space (+0.7%) also finished Tuesday solidly higher following a couple of broken large-cap mergers. Aetna (AET 125.81, +3.76) and Humana (HUM 205.97, -0.73) announced a mutual agreement to terminate their proposed merger this morning. Then, in the afternoon session, Cigna (CI 146.68, +0.83) confirmed the termination of its agreement and plan of merger with Anthem (ANTM 163.32, -0.20). Additionally, CI announced that it has filed a lawsuit against ANTM.
Consumer discretionary (+0.6%) also outpaced the benchmark index, while technology (+0.3%) underperformed the broader market. The consumer discretionary sector received a nice bump from General Motors (GM 37.24, +1.72) after French automaker Peugeot confirmed that it is currently in talks with GM regarding a potential acquisition of GM's Opel brand. Shares of General Motors jumped 4.8% in the wake of the news.
Lightly-weighted sectors populated the bottom of today's leaderboard with utilities (-0.7%), real estate (-0.5%), and telecom services (-0.1%) all closing Tuesday lower. Rate-sensitive utilities' last place finish was secured by the uptick in interest rates following Fed Chair Yellen's testimony.
Today's economic data was limited to January PPI:
January producer prices increased 0.6%, which is above the Briefing.com consensus of 0.3%. The prior month's reading was revised to 0.2% (from 0.3%).
Core producer prices increased 0.4% while the Briefing.com consensus expected an increase of 0.2%. The prior month's reading was revised to 0.1% (from 0.2%).
The key takeaway from the report is that the headline shock for January has been overshadowed by the more restrained year-over-year readings. On a year-over-year basis, the index for final demand is up 1.6%, unchanged from December. The index for final demand, excluding food and energy prices, is up 1.2% year-over-year versus 1.6% for the 12-months ending in December.
Wednesday will see a slew of economic reports including MBA Mortgage Applications Index at 7:00 ET, January CPI (Briefing.com consensus 0.3%), January Retail Sales (Briefing.com consensus 0.1%), and February Empire Manufacturing (Briefing.com consensus 7.0) at 8:30 ET, January Industrial Production (Briefing.com consensus 0.0%) and Capacity Utilization (Briefing.com consensus 75.5%) at 9:15 ET, December Business Inventories (Briefing.com consensus 0.4%) and February NAHB Housing Market Index (Briefing.com consensus 68) at 10:00 ET, and December Net Long-Term TIC Flows at 16:00 ET.
Nasdaq Composite +7.4% YTD
S&P 500 +4.4% YTD
Dow Jones Industrial Average +3.8% YTD
Russell 2000 +2.9% YTD
NASDAQ Adv/Vol/Dec 1597/1.74 bln/1221 NYSE Adv/Vol/Dec 1529/948.1 mln/1392
3:30 pm :
Crude oil closed pit trading near the midpoint of today's session high ahead of this afternoon's API release
Mar crude oil futures rose $0.26 (+0.5%) to $53.21/barrel
Upcoming data reminders:
API data will be released today at 4:30 pm ET.
EIA petroleum data will be released tomorrow at 10:30 am ET.
Baker Hughes rig count data will be released Friday at 1 pm ET.
Natural gas futures extended yesterday's move below the $3.00/MMBtu support zone
Mar natural gas closed $0.05 lower (-1.7%) at $2.90/MMBtu
EIA natural gas storage data will be released Thursday at 10:30 am ET.
In precious metals, silver futures ended pit trading just shy of a 3-month high despite notable strength in the dollar index
April gold ended today's session down $0.50 (-0.1%) to $1225.30/oz
Mar silver closed today's session $0.08 higher (+0.5%) at $17.90/oz
The dollar index was +0.3% around the 101.24 level
Commodities, as measured by the Bloomberg Commodity Index, were -0.01% around the 88.63 level
Another record close was precluded by a soft start in the broader market today. Action began lower this morning, but turned higher after testimony Fed Chair Janet Yellen gave to the Senate Banking Committee. For the most part, Chair Yellen's testimony did not raise any eyebrows, but Ms. Yellen did provide some interesting insight into the Fed's growth forecast for the U.S.
All three major US indices ended at record highs, led by the Dow Jones Industrial Average which added 92.25 points (+0.45%) to 20504.41. The S&P 500 gained 9.33 points (+0.40%) today to 2337.58, and the Nasdaq Composite rounded out the trio up 18.62 points (+0.32%) to 5782.57.
Economic data today included January producer prices which increased 0.6% compared to the prior month's reading which was revised to 0.2% (from 0.3%). Additionally, investors learned that core producer prices increased 0.4% compared to last month's reading which was revised to 0.1% (from 0.2%).
Also opening the session in the red, the Technology (XLK 51.72, +0.17 +0.33%) sector reversed into positive territory lockstep with the broader market. Component FLIR Systems (FLIR 34.15, -2.25 -6.18%) was the worst performing name today after the company reported mixed Q4 results and guided FY17 revenues ahead of market expectations on top of dividend, share repurchase and CEO news. Other sectors as measured by the S&P closed XLF +1.16%, XLV +0.79%, XLY +0.57%, XLE +0.35%, IYZ +0.12%, XLI +0.05%, XLP +0.02%, XLB -0.02%, XLRE -0.51%, XLU -0.73%.
In the S&P 500 Information Technology (873.98, +2.48 +0.28%) sector, trading eked out another session of all-time highs. Components XRX +3.03%, GLW +1.91%, FSLR +1.77%, AAPL +1.29%, GPN +1.27%, ACN +1.19%, PYPL +1.09% and CSCO +1.03% helped push the sector into positive territory.
Other notable news items among sector components:
Amazon Web Services, an Amazon.com company (AMZN 836.39, -0.14 -0.02%), announced Amazon Chime.
Toshiba (TOSBF 2.05, -0.01 -0.49%) postponed its earnings release due to write-down in Nuclear unit. TOSBF also notified investors that the company's CEO will step down.
GigPeak (GIG 3.05, +0.34 +12.55%) to be acquired by Integrated Device Technology (IDTI 24.88, +0.15 +0.61%) for $3.08 per share, or about $250 million.
Windstream (WIN 7.13, -0.07 -0.97%) received all state and federal regulatory approvals required for its merger with EarthLink Holdings (ELNK 5.72, -0.07 -1.21%). The parties now expect the transaction to close in 1Q17.
Oracle's (ORCL 41.10, +0.01 +0.02) HCM Cloud Suite was selected by Ford (F 12.65, +0.09 +0.72%) to streamline digital view of HR product and services.
Oracle (ORCL) is expanding its Internet of Things portfolio with four new cloud solutions to help businesses fully utilize the benefits of digital supply chains.
FLIR Systems' (FLIR) CEO Andrew Teich to retire. The Board will conduct a search for a new CEO with the help of an executive search firm. The company also approved a quarterly cash dividend of $0.15 per share on FLIR common stock, an increase of 25% over the previous quarterly dividend of $0.12 per share. Further, management also announced that a new share repurchase program that authorizes the repurchase of up to 15 million shares over the next two years.
IBM (IBM 180.13, +0.77 +0.43%) and ServiceNow (NOW 92.89, +1.15 +1.25%) announced a collaboration. The parties agreed to a multi-year, strategic partnership to offer NOW's cloud-based service automation platform and IBM products and services.
In reaction to quarterly results:
T-Mobile US (TMUS 61.60, +0.70 +1.15%) reported better than expected Q4 EPS and revenues of $0.45 and $10.18 billion, respectively. For FY17, the company expects to add between 2.4 and 3.4 million branded postpaid net additions. While Net income is not available on a forward looking basis, the Company is targeting between $10.4 and $10.8 billion in Adjusted EBITDA, which excludes spectrum gains and includes leasing revenues of $0.8 to $0.9 billion (the impact from Data Stash is expected to be immaterial). Cash capital expenditures guidance is $4.8 to $5.1 billion, excluding capitalized interest. Net cash provided by operating activities three-year CAGR is expected to be between 15% and 18%. Free Cash Flow three-year CAGR is expected to be between 45% and 48%.
IPG Photonics (IPGP 117.02, +0.94 +0.81%) reported better than expected Q4 EPS and revenues of $1.39 and $280.1 million, respectively. For Q1, the company sees in-line EPS of $1.10-1.25 on better than expected revenues of $245-260 million.
FLIR Systems (FLIR) reported worse than expected Q4 EPS of $0.48 on better than expected revenues of $474.74 million. FLIR also guided FY17 EPS and revenues ahead of market expectations at $1.81-1.91 and $1.78-1.83 billion, respectively.
AU Optronics (AUO 3.65, -0.10 -2.67%) reported better than expected Q4 earnings of NT$0.93 per share on revenues which also beat market expectations at NT$91.85 billion.
Cornerstone OnDemand (CSOD 41.61, +1.59 +3.97%) reported better than expected Q4 EPS of net of breakeven and in-line revenues of $109 million. The company also guided Q1 and FY17 revenues slightly below market expectations of $109-111 million and $475-485 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: IOTS HIVE A CALX DIOD HOLI HUBS LXFT SEDG TTGT VDSI/ADI ANGI CRNT CBB GRPN PLAB SHOP SONS WIX
Analyst actions:
NTAP was upgraded to Overweight from Neutral at Piper Jaffray,
Z was upgraded to Buy from Hold at Stifel,
TERP was upgraded to Neutral from Sell at UBS;
FLIR and GIG were downgraded to Mkt Perform from Outperform at Raymond James,
SCG was downgraded to Neutral from Buy at Mizuho;
CYBR was initiated with a Buy at Stifel,
SYNC was initiated with a Buy at Lake Street
From Briefing.com: 4:08 pm Amkor beats by $0.15, misses on revs; guides Q1 EPS, revs below two analyst estimate (AMKR) :
Reports Q4 (Dec) earnings of $0.42 per share, $0.15 better than the Capital IQ Consensus of $0.27; revenues rose 52.3% year/year to $1.02 bln vs the $1.04 bln two analyst estimate.
Co issues downside guidance for Q1, sees EPS of ($0.11)-$0.05 vs. $0.11 Capital IQ Consensus Estimate; sees Q1 revs of $860-940 mln vs. $964.50 mln two analyst estimate; sees gross margin of 13% to 17%
"Although the smartphone market is going through a seasonal slowdown, demand in other markets is healthy."
First quarter 2017 outlook:
4:20 pm : Another day, another record close for the major averages. The key indices backed away from their best levels during afternoon action, but still kept the bulk of their gains. The Dow (+0.7%) led the day's advance while the S&P 500 and the Nasdaq both gained 0.5%.
President Trump's upcoming tax-related announcement was yet again the driver of today's bullish sentiment. Investors have pushed the stock market higher since last Thursday when Mr. Trump promised to deliver a "phenomenal" tax reform plan in the coming weeks. Without any specific details of said plan, it's clear that investors are seeing the gesture as symbolic, a sign of the new administration's resolve in keeping the pro-growth promises of Mr. Trump's presidential campaign.
Financials (+1.1%) provided strong sector leadership throughout the morning, but lost some of their momentum in the afternoon. Industrials (+1.0%) also had a solid showing, as Caterpillar (CAT 98.50, +2.19) rallied around a recent report from U.S. Department of Homeland Security which suggested Mr. Trump's proposed barrier along the U.S./Mexico boarder may cost more than it was originally estimated.
The top-weighted technology sector (+0.7%) finished just a step ahead of the benchmark index, thanks in large part to Apple's (AAPL 133.29, +1.17) strong performance. Apple, the largest company by market cap, has added over 10.0% since reporting record revenues, earnings, and iPhone sales on January 31st.
Energy (unch) was the worst performing cyclical space as crude oil broke its three session wining streak. The commodity finished lower by 1.7% at $52.95/bbl as an uptick in U.S. production overshadowed the release of an OPEC report, which showed high compliance with last year's agreed upon production cuts. This report confirms similar findings from the International Energy Agency.
The only group to finish behind energy was the lightly-weighted telecom services sector (-1.3%) thanks to heavy losses from Verizon (VZ 48.55, -0.43) and AT&T (T 40.65, -0.73). Verizon slipped 0.9% after unveiling a new unlimited data plan while AT&T's downtick of 1.8% was partly due to the company's ongoing dispute with the Communications Workers of America.
U.S. Treasuries also finished the day in the red, leaving the 10-yr note with its fourth consecutive loss. The benchmark 10-yr yield finished two basis points higher at 2.43%.
Investors did not receive economic data on Monday. Tomorrow's lone economic report, January PPI (Briefing.com consensus 0.3%) will cross the wires at 8:30 am ET.
In addition, Fed Chair Janet Yellen will be delivering her semiannual monetary policy report to the Senate Banking Committee on Tuesday. Investors will be tuned in, looking for indications regarding the timing of the next rate hike from the FOMC.
Nasdaq Composite +7.1% YTD
S&P 500 +4.0% YTD
Dow Jones Industrial Average +3.3% YTD
Russell 2000 +2.6% YTD
NASDAQ Adv/Vol/Dec 1650/1.65 bln/1178 NYSE Adv/Vol/Dec 1768/947.4 mln/1165
3:40 pm :
Commodities ended the day lower today
Energy was especially weak
Mar crude oil ended the day -1.7% at $52.95/barrel
Natural gas was the underperformer with the front-month (Mar) closing today's session -2.6% at $2.95/MMbtu
Mar copper had a modest gain of +0.4% to finish at $2.78/lb
Apr gold slipped -0.8% to $1225.80/oz, while Mar silver ended -0.6% at $17.82/oz
The three major averages held onto record highs to open the week, after a record session on Friday. Topping the charts, the Dow Jones Industrial Average added 142.79 points (+0.70%) to 20412.16. The S&P 500 gained 12.15 points (+0.52%) to 2318.25, and the Nasdaq Composite had an equally impressive session, up 29.83 points (+0.52%) at the bell to 5763.96.
General upward action didn't stop at the broader market though, as the Technology (XLK 51.55, +0.23 +0.45%) space, too, enjoyed healthy gains on Monday. Component Activision Blizzard (ATVI 45.70, -1.53 -3.24%) was pressured today, despite broader action higher, as the stock was downgraded to an Underperform rating in the premarket session at Hilliard Lyons. Other sectors as measured by the S&P closed Monday XLF +1.14%, XLI +1.00%, XLB +0.81%, XLV +0.61%, XLU +0.51%, XLRE +0.48%, XLE +0.19%, XLY +0.09%, XLP +0.00%, IYZ -0.18% with Financials leading all others and US Telecoms under-performing.
In the S&P 500 Information Technology (871.50, +5.62 +0.65%) space, trading touched another all-time high today about the $872 level, finishing modestly under that mark. Component Seagate Tech (STX 47.80, +1.34 +2.88%) was the best performing name today behind no major catalyst with other technology bellwethers ending TSM +3.19%, QCOM +1.72%, CSCO +1.46%, ASML +1.32%, NTES +1.31%, INTC +1.30%, MSFT +1.12%.
Other notable news items in the space:
During the weekend, Verizon (VZ 48.55, -0.43 -0.88%) announced the renewal of its Verizon Unlimited plan. Customers have the option to pay $80 for unlimited data, talk and text with certain conditions, or customers can pay $45 per line for four lines for unlimited data, talk and text with certain conditions.
IBM Security (IBM 179.36, +0.68 +0.38%) announced the availability of Watson for Cyber Security, the industry's first augmented intelligence technology designed to power cognitive security operations centers (SOCs).
ParkerVision's (PRKR 2.23, +0.04 +1.83%) wholly-owned German subsidiary, ParkerVision GmbH, has amended its complaint against Apple, Inc. (AAPL 133.29, +1.17 +0.89%), Apple Distribution International and Apple Retail Germany B.V. & Co. KG adding the infringement of the German part of European Patent 1 135 853. This amended complaint also expands the accused products to include the Apple iPhone 7 and iPhone 7 Plus which use Intel's PMB5750 transceiver chip, which is based on Intel's SMARTi architecture.
Nokia (NOK 4.96, +0.08 +1.64%) is to introduce technologies that leverage licensed, unlicensed and shared spectrum for the creation of robust, private end-to-end networks for vertical industries.
NOK also announced the introduction of its 4.9G technologies by the end of 2017.
NOK also successfully carried out the world's first connection based on the 5GTF 'pre-standard', marking a further milestone in Nokia's momentum to make 5G a commercial reality.
AT&T (T 40.65, -0.73 -1.76%) and Communications Workers of America have not reached settlement. Negotiations between the two parties continue.
Zillow (ZG 34.78, +0.69 +2.04%) provided an update on court case vs. VHT. The jury awarded VHT $79,875 in actual damages and $8.24 million in statutory damages.
Volkswagen AG (VLKAY 31.71, +0.55 +1.77%) confirmed an agreement with Mobileye (MBLY 45.48, +2.16 +4.99%).
In reaction to quarterly results:
First Data (FDC 16.14, +0.32 +2.02%) reported better than expected Q4 EPS of $0.39 on revenues which missed market expectations at $2.94 billion.
Tower Semi (TSEM 22.56, +0.49 +2.22%) reported better than expected Q4 earnings of $0.52 per share on in-line revenues of $340.4 million. For Q1, TSEM sees revenue growth of about 19% year-over-year to about $330 million with an upward or downward range of 5%.
WEX (WEX 113.52, -5.76 -4.83%) reported better than expected Q4 earnings of $1.28 per share on better than expected revenues of $290.8 million. For Q1, WEX sees in-line EPS and revenues of $1.16-1.24 and $275-285 million, respectively. For FY17, the company also sees in-line EPS and revenues of $5.10-5.50 and $1.15-1.19 billion, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: AMKR CSOD GUID PDFS QTNA RNG/AUO DBD FLIR IPGP MGI NVMI RDCM SQNS TMUS VG
Analyst actions:
MDRX was upgraded to Buy from Neutral at Dougherty,
NOK was upgraded to Mkt Perform from Mkt Underperform at Charter Equity,
AGYS was upgraded to Buy from Neutral at Sidoti;
ATVI was downgraded to Underperform from Long-Term Buy at Hilliard Lyons,
INOV was downgraded to Underperform at BofA/Merrill,
AUO was downgraded to Underweight from Neutral at JP Morgan;
WB and MOMO were initiated with a Buy at Instinet,
YY and CMCM were initiated with a Neutral at Instinet,
PMTS was initiated with a Mkt Perform at Barrington Research,
AXTI was initiated with a Buy at Dougherty
InvestmentHouse - The Art of the Phenomenal Market Rally - (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
- The Art of the rally.
- Stock indices continue their rally to higher highs on another promise of
something good to come.
- Some leaders faded as the NYSE indices broke higher. Rotation or some
leaders falling out.
- Market still has macro negatives as it continues what has been a macro
uptrend.
The Art of the Phenomenal Market Rally.
Quite a ride. From -700 points on election night to new highs by December.
All on the hope that positive economic changes were coming, changes from the
tax, regulate, and strangulate policies of the prior 10 years. The new
version of hope and change that is actually what US hope and change has
always been: the chance for everyone to be their best and reach their
American dream.
But something happened in mid-December. The market took a breather of
course and waited for the new administration. It waited, waited, and
waited, looking for policies that would turn their hope into reality.
Meetings with companies brought promises of more full-time US jobs and more
investment. Still, those were just promises. What were the policies going
to be?
Inauguration came and the market jumped. Them dumped back into the range.
Tweets, executive orders some did not like, protests, obstruction claims.
The market was mired. The hope for something better was perhaps questioned
as republican senators who are the antithesis of what the founders wanted as
they server term after term after term (and thus have lost touch with the
reality of what it takes to start and grow a business in the US) vowed to
block any real change. After all, they had their power and they don't want
to empower anyone else, particularly those that cast the votes. The rally
stalled.
Then last Thursday a new mood, a new breakout, a new high for the stock
market. Not just NASDAQ and SOX who led their groups to very narrow new
highs, but the NYSE indices as well. Friday another gain, not as grand as
Thursday, but the new break higher continued.
SP500 8.23, 0.36%
NASDAQ 18.95, 0.33%
DJ30 96.97, 0.48%
SP400 0.55%
RUTX 0.75%
SOX -0.08%
The cause?
Earnings? No. While earnings are helping (or hurting) individual stocks,
the overall outlook has not helped markets. Specifically, the top line
results have fallen back into a slump after a Q3 'breakout.' With all the
hope, flagging sales is not a good affirmation of good times ahead.
No, this was, whether people like to admit it or not, Trump doing what Trump
does best: the art of getting what he wants. He staked a claim to the stock
market rally and he was right about that first move. After that, however,
the market started to look at not just what was possible, but what could be
accomplished. It balked. It needed some prodding. It got it.
Thursday in a meeting with airline executives, Trump noted that over the
next 2 to 3 weeks he would announce something 'phenomenal in terms of tax.'
How Robert Rubin-like; Rubin was a master at timing when the markets needed
a jolt of confidence. You don't get to be where Rubin, Trump, and others
are if you don't understand timing.
The result was a stock market breakout. The NYSE indices were lagging
NASDAQ and SOX, unable to break from their 9 week ranges. Worse, they HAD
tried a breakout and that was rejected. Then the promise of something
'phenomenal.' As I noted Thursday night, it reminded me of the movie '2010'
when Dave Bowman told Dr. Floyd (Roy Scheider) something was going to
happen. When Dr. Floyd asks 'what? What's going to happen?,' the
metamorphosed Dave Bowman responds, 'something wonderful.'
Dave Bowman: 'It's all very clear to me now . . .'
In the movie, Dr. Floyd believed what he saw and acted on the promise that
something wonderful was going to happen. Okay, he also had the threat that
he HAD to leave before that wonderful event occurred. Many CEO's have the
'threat' of possible repercussions if they invest outside the US.
Similarities.
Thursday and Friday the stock market acted on the renewed promise of
economic growth via a reformed tax code. As I noted Thursday, it will have
to be real reform along the lines of a Steve Forbes flat tax of 11%ish and
low to no corporate tax to be put in the 'phenomenal' category. The market
may have a lot of hope for change, but I am highly skeptical the plans will
be 'phenomenal.'
That does not, however, mean I don't participate. Heck, all along I have
talked of stock patterns that keep showing up despite the macro issues for
the market. If the patterns show the moves, you make your play. We have
not caught all of them but have some excellent positions in progress.
Those macro issues: Bullish sentiment hitting a level that foretells
corrections, low breadth, low volume, low MACD on the breaks higher. Even
so, the force is strong in this rally (another name for momentum) and it
continues higher.
More importantly, there are no sellers yet. They showed up two weeks ago
when SP500 gapped to a new high, breaking from its range, then gapped lower
right back into the range. That is pretty much the alpha and omega of the
sellers on this move. They will most surely show up, but they have not
shown up yet. The promise of change, phenomenal change, is hard to compete
with, particularly with an investor class that really wants some real
economic growth.
When the sellers do show up, however, they will likely be like a thief in
the night, that time when the sentiment is so bullish everyone is in and
there is no big money that still wants to put more into the rally. The Dow
showed a lot of churn as it worked through its lateral range; that suggests
stocks were being sold. A new break higher could bring that money right
back in, however. Thursday and Friday money was coming into stocks, but
volume was still tepid and breadth just decent. Perhaps that is enough, but
still keep an eye on the leaders.
That brings up a point. Chips have nicely led the market to new highs but
are now some are struggling. Perhaps it is just another round of rotation
to other groups; some certainly jumped last week such as metals and
restaurants, the latter rather despised until perhaps now. If the chips and
others such as FAANG, China, materials start to break, that would be a
problem.
THE MARKET
CHARTS
SP500: New high Thursday, again Friday, moving off the 10 day EMA and 2016
trendline. Volume, less than impressive. No days above average on the
break higher. Indeed, only 2 above average volume days in over a month. At
least it should show some good volume on the breaks higher. Not the case
Thursday and Friday.
DJ30: Thursday and Friday new highs same as SP500. At least Dow volume
moved above average Thursday, showing more buyers in the mix.
NASDAQ: Added two more record sessions to end the week. 10% above its 200
day SMA, and for NASDAQ that is no major extension.
SOX: As the other indices hit new highs, SOX tested the move, back to the
20 day EMA on the Friday low before rebounding to hold that near support.
Some chips started to struggle and SOX with them. Nothing major at this
point but a key group to watch.
SP400: Finally punched to a new high Friday. I suppose they are lagging,
though just a bit behind the large cap NYSE indices.
RUTX: No new high yet for the small caps, one of the most telling
indications as to just how economically beneficial any new policies may be.
Perhaps investors are not totally sure and are waiting to see the policies,
in the interim buying more 'brand name' stocks. Perhaps, and the small caps
are not that far behind the rest of the indices.
LEADERSHIP: Day's Winners (some were actually leaders).
Materials: enjoyed another upside session as money is put into
infrastructure related stocks even though infrastructure is NOT 'phenomenal'
tax policy. Indeed, it is not tax policy at all. It is spending. Big
difference. But I digress.
Metals: Closely related to materials and a solid late week break higher
from bases by the industrial metals. RS, X, SID. Not across the board but
some solid patterns break higher.
Chips: Faded at the end of the week as new sectors received money. Some
sold more than others, some did not sell. The main thing to watch is how
the group performs after this test. SLAB fell to the 10 day EMA in its
first down day in awhile. Same from MU. AMAT, AMD, AVGO are all fine.
TXN, LSCC broke lower on the week.
Restaurants: CAKE is rallying into earnings. BWLD had a wild week on
earnings but closed higher. PNRA surged on its earnings as well. JACK
gapped upside. Unfortunately for many of these, earnings are just around
the corner.
China: As with chips, some were off their feed late week, e.g. NTES, BABA,
but they held the 10 day EMA in a test. BIDU, ATHM, JD all worked well into
the weekend. Still a very solid leadership group.
FAANG: Not all perfect patterns, but up on the week and of course a big
contributor to NASDAQ's new highs.
Financial: Still no breakouts here. Down early week, recovered late week,
still in their ranges (BAC, JPM) or patterns (GS). Not yet contributing.
Industrial Equipment/Machinery: Not the best patterns in all cases but some
very nice late week moves, e.g. TEX, CAT, DE, EMR.
MARKET STATS
DJ30
Stats: +96.97 points (+0.48%) to close at 20269.37
Nasdaq
Stats: +18.95 points (+0.33%) to close at 5734.13
Volume: 1.8B (-5.26%)
Up Volume: 1.15B (-70M)
Down Volume: 687.6M (-17.78M)
A/D and Hi/Lo: Advancers led 2.04 to 1
Previous Session: Advancers led 2.61 to 1
New Highs: 225 (+32)
New Lows: 22 (-6)
S&P
Stats: +8.23 points (+0.36%) to close at 2316.1
NYSE Volume: 786.6M (-6.86%)
A/D and Hi/Lo: Advancers led 2.51 to 1
Previous Session: Advancers led 1.92 to 1
New Highs: 222 (+58)
New Lows: 5 (-4)
SENTIMENT INDICATORS
VIX: 10.85; -0.03
VXN: 12.31; -0.34
VXO: 10.41; +0.01
Put/Call Ratio (CBOE): 0.98; +0.05. Still very high put/call ratio as the
market breaks higher, perhaps closing downside positions versus buying
protection. A market breakout does that.
Bulls and Bears: Bulls hit another cycle high, making it 4 of 6 weeks above
60.0. Bears fell sharply.
Bulls: 62.7 versus 61.8
Bears: 16.7 versus 17.6
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: 62.7 versus 61.8
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
versus 44.6 versus 49.0 versus 52.5 versus 55.9 versus 56.7 versus 56.2
versus 54.3 versus 52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1%
versus 41.6% versus 47.5% versus 45.9% versus 47.3% versus 45.4% versus
35.4% versus 40.2 versus 39.2
Bears: 16.7 versus 17.6
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 versus 22.6 versus 22.8 versus 20.6 Versus 20.2 versus 20.0
versus 20.9% versus 21.2% versus 21.6% versus 23.3% versus 24.7% versus
24.5% versus 23.8% versus 23.2% versus 23.5% versus 23.8% versus 23.7%
versus 24.0% versus 21.7% versus 21.6% versus 21.7 versus 20.6% versus 21.7%
versus 27.8% versus 27.8% versus 28.9% versus 27.8% versus 30.3% versus
35.4%
OTHER MARKETS
Bonds (10 year): 2.398% versus 2.398%. Gapped upside Wednesday, faded
Thursday and Friday to test the last leg upside. Not a bad setup to continue
the nascent recovery off the December low.
Historical: the last sub-2% rate was in November 2015. 2.340% versus 2.393%
versus 2.41% versus 2.48% versus 2.474% versus 2.477% versus 2.44% versus
2.49% versus 2.48% versus 2.512% versus 2.52% versus 2.467% versus 2.40%
versus 2.47% versus 2.468% versus 2.422% versus 2.372% versus 2.393% versus
2.358% versus 2.365% versus 2.38% versus 2.962% versus 2.42% versus 2.357%
versus 2.45% versus 2.448% versus 2.42% versus 2.48% versus 2.51% versus
2.56% versus 2.54% versus 2.55% versus 2.54% versus 2.564% versus 2.544%
versus 2.59% versus 2.59% versus 2.52% versus 2.473% versus 2.475% versus
2.471% versus 2.40% versus 2.349% versus 2.39% versus 2.396% versus 2.394%
versus 2.454% versus 2.388% versus 2.30% versus 2.31%. versus 2.36% versus
2.355% versus 2.317% versus 2.30% versus 2.34% versus 2.297% versus 2.219%
versus 2.22% versus 2.23% versus 2.14% versus 2.077% versus 1.867% versus
1.83% versus 1.778%
EUR/USD: 1.06411 versus 1.06557. After the December through January euro
rally, the common currency faded back to the 50 day SMA on the week. Pretty
decent test of the move from the look of it.
Historical: 1.06557 versus 1.06825 versus 1.06814 versus 1.07219 versus
1.07880 versus 1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus
1.06957 versus 1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus
1.0761 versus 1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus
1.06450 versus 1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus
1.05346 versus 105837 versus 1.0525 versus 1.03914 versus 1.05289 versus
1.05155 versus 1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus
1.04412 versus 1.0392 versus 1.0407 versus 1.0459 versus 1.0415 versus
1.05094 versus 1.0636 versus 1.06326 versus 1.05586 versus 1.06140 versus
1.07745 versus 1.07194 versus 1.07614 versus 1.06638 versus 1.06631 versus
1.0601 versus 1.0649 versus 1.05699 versus 1.066 versus 1.05910
USD/JPY: 113.265 versus 113.401. Nice move Thursday, off Friday, still in
the 8 week pullback from the election through December rally.
Historical: 113.401 versus 112.207 versus 112.332 versus 111.815 versus
112.567 versus 112.903 versus 112.68 versus 112.50 versus 114.493 versus
115.094 versus 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983 versus 116.739 versus 116.456 versus
116.793 versus 117.41 versus 117.413 versus 117.32 versus 117.537 versus
117.544 versus 117.835 versus 117.453 versus 117.941 versus 118.257 versus
117.397 versus 115.038 versus 115.058 versus 115.20 versus 114.23 versus
113.325 versus 113.993 versus 113.601 versus 113.52 versus 113.945 versus
114.19 versus 112.685 versus 112.44 versus 111.835 versus 113.14 versus
112.445 versus 111.129 versus 110.809
Oil: 53.86, +0.86. Oil is back to the top of its range as reports are that
OPEC is holding to its production quoatas. As noted before, someone check
whether hell froze over. Up off the 50 day MA's to the top of the 9 week
range and resistance at 54.
Gold: 1235.90, -0.90. Solid week, faded some Friday. Still looks solid in
the second leg of the rally off the mid-December low.
MONDAY
The market broke higher to new highs once more. The breakout that was
rejected is now a new breakout. Will there be a second rejection? Depends
on how the leaders hold up.
Semiconductors are in a soft spot, but that is presenting upside opportunity
in some good names. We are looking at some of those this weekend and will
look at more as next week progresses. There are also some good downside
setups that we are looking at as well as they have set up even with a market
breakout.
While there are macro challenges to the rally as discussed earlier, there is
also a dearth of sellers to capitalize on them. Thus the upside bias
continues holding in spite of the challenges.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5734.13
Resistance:
Support:
5601 is the January lower gap point
The 2016 trendline at 5542
The 50 day EMA at 5530
The 50 day SMA at 5513
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
The 200 day SMA at 5195
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
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
S&P 500: Closed at 2316.10
Resistance:
Support:
2301 is the late January 2017 high
The 2016 trendline at 2291
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The 50 day SMA at 2265
The 50 day EMA at 2261
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
The 200 day SMA at 2166
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the September 2016 low; February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
2020 is the September 2015 intraday high
2011 is the September prior all-time high
1995 is the September 2015 recovery peak
1991 is the July 2014 high
Dow: Closed at 20,269.37
Resistance:
Support:
20,126 is the January 2017 high
19,994 - 19,999 (early January high, upper gap point from late January
The 50 day SMA at 19,835
19750 is the lows of the December/January range
The 50 day EMA at 19,735
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
The 200 day SMA at 18,604
18,351 is the prior all-time high from May 2015
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
ECONOMIC CALENDAR
February 14 - Tuesday
PPI, January (8:30): 0.3% expected, 0.3% prior
Core PPI, January (8:30): 0.2% expected, 0.2% prior
February 15 - Wednesday
MBA Mortgage Applica, 02/11 (7:00): 2.3% prior
Core CPI, January (8:30): 0.2% expected, 0.2% prior
CPI, January (8:30): 0.3% expected, 0.3% prior
Empire Manufacturing, February (8:30): 7.0 expected, 6.5 prior
Retail Sales, January (8:30): 0.1% expected, 0.6% prior
Retail Sales ex-auto, January (8:30): 0.4% expected, 0.2% prior
Capacity Utilization, January (9:15): 75.5% expected, 75.5% prior
Industrial Productio, January (9:15): 0.0% expected, 0.8% prior
Business Inventories, December (10:00): 0.4% expected, 0.7% prior
NAHB Housing Market , February (10:00): 68 expected, 67 prior
Crude Inventories, 02/11 (10:30): +13.8M prior
Net Long-Term TIC Fl, December (16:00): $30.8B prior
February 16 - Thursday
Housing Starts, January (8:30): 1220K expected, 1226K prior
Building Permits, January (8:30): 1230K expected, 1210K prior
Initial Claims, 02/11 (8:30): 245K expected, 234K prior
Continuing Claims, 02/11 (8:30): 2078K prior
Philadelphia Fed, February (8:30): 17.5 expected, 23.6 prior
Natural Gas Inventor, 02/11 (10:30): -152 bcf prior
February 17 - Friday
Leading Indicators, January (10:00): 0.5% expected, 0.5% prior
From Briefing.com: The stock market secured its third consecutive weekly advance with the S&P 500 rising 0.8%. The benchmark index posted gains in four of the first six weeks of 2016 while the two down weeks in the middle of January shaved a whopping 0.25% off the index.
The first half of the week featured sideways action just below record highs from late January, but the market snapped out of that range on Thursday after comments from President Donald Trump reminded investors that tax reform remains a priority. Mr. Trump announced that something "phenomenal" on the tax front would be announced in the next two or three weeks. The comments, which did not include specific details, were enough to encourage investors, who were starting to worry that a major campaign promise may go unaddressed.
Market participants received another heavy dose of quarterly reports, but the earnings had more influence on individual stocks than the broader market. At the end of the week, more than 71.0% of S&P 500 components had reported their results, generating blended earnings growth of 4.9%, according to FactSet. This represented a modest shortfall relative to the estimate from the end of September, which called for growth of 5.2%.
The past week was quiet on the economic front, leaving investors with just a few second-tier reports to digest. The preliminary reading of the Michigan Sentiment index for February declined to 95.7 from 98.5, almost entirely due to a pullback in the Expectations Index. That index fell to 85.7 from 90.3 while the Current Economic Conditions Index ticked down to 111.2 from 111.3.
Rate hike expectations barely budged on a week-over-week basis. The fed funds futures market ended the week showing a 67.3% implied probability of a rate hike in June, up from last week's 63.5%, but down slightly from 69.2% two weeks ago.
Index Started Week Ended Week Change % Change YTD %
DJIA 20071.46 20269.37 197.91 1.0 2.6
Nasdaq 5666.77 5734.13 67.36 1.2 6.5
S&P 500 2297.42 2316.10 18.68 0.8 3.5
Russell 2000 1377.83 1388.44 10.61 0.8 2.3
4:22 pm Closing Market Summary: Another Record Close for Equities (:WRAPX) :
Equity indices closed the week on an upbeat note, climbing to fresh record highs for the second consecutive day. The Dow (+0.5%) led the advance while the Nasdaq (+0.3%) finished just behind the S&P 500 (+0.4%).
The optimism surrounding today's session had its roots in President Trump's upcoming tax-related announcement. On Thursday, the president promised the unveiling of a "phenomenal" tax plan in the coming weeks, but didn't provide any specific details on what the plan will include. Still, it was enough to push the stock market to record highs on Thursday and then again on Friday.
It is worth noting that Federal Reserve Governor Daniel Tarullo announced on Friday that he will be resigning from his position, effective April 5. As a result, President Trump will have the opportunity to fill three of the seven seats on the Federal Reserve Board of Governors.
On the earnings front, NVIDIA's (NVDA 113.62, -2.76) earnings report lived up to lofty expectations that accompanied the company's massive 55.8% gain in the fourth quarter. However, the stock fell 2.4% on Friday as better than expected top and bottom lines and above-consensus first quarter guidance was met with a sell-the-news response from investors. In addition to Apple's (AAPL 132.12, -0.30) lackluster performance, the response to NVIDIA's earnings report put a lid on the top-weighted technology sector's (+0.2%) gain.
Elsewhere on the earnings front, Skechers (SKX 27.78, +4.50) and Columbia Sportswear (COLM 59.83, +6.54) spiked 19.3% and 12.3%, respectively, following the release of their quarterly reports. SKX's jump can be attributed to its above-consensus revenues and upbeat Q1 revenue guidance, whereas COLM's surge was fueled by better than expected earnings.
However, Yelp (YELP 35.83, -5.66) didn't share the good fortune of its consumer discretionary peers. The company plunged 13.6% following worse than expected first quarter revenue guidance. The consumer discretionary space took in the positive and brushed off the negative to close 0.5% higher.
Energy (+0.8%) also finished Friday's session solidly higher thanks to the uptick in crude oil; the commodity finished its trading day up 0.9% at $53.85/bbl. WTI crude's third consecutive advance followed a bullish International Energy Agency report, which showed 90.0% OPEC compliance with agreed-upon production cuts and an increased oil demand growth forecast for 2017.
On the countercyclical side, consumer staples (-0.1%) finished at the bottom of the day's leaderboard, while the influential health care space (+0.1%) finished just a step ahead. Health care overcame weakness in biotech names with a 1.0% jump in the sector's largest component by market cap, Johnson & Johnson (JNJ 115.24, +1.16).
JNJ's uptick was the result of a positive development involving the European Medicines Agency. As a reminder, Johnson & Johnson agreed to acquire Actelion in late January for roughly $30 billion. The EMA stated that Actelion's Uptravi may continue to be used, after the agency reviewed the safety of the drug following the deaths of five patients in France who were taking it.
In the Treasury market, government-issued debt extended Thursday's downtick with minor losses on Friday. The benchmark 10-yr yield closed two basis points higher at 2.41%.
Today's economic data included January Export/Import Prices, the preliminary Michigan Sentiment Index for February, and the January Treasury Budget:
Import prices excluding oil declined 0.2% in January after ticking down 0.1% in December (revised from -0.2%). Export prices excluding agriculture increased 0.1% in January after rising 0.4% in December.
The key takeaway from the report is that nonfuel import prices remain in check, but nonetheless, inflation concerns could get dialed up just a bit on the notion of a potential pass-through effect should higher fuel prices persist.
The preliminary reading of the University of Michigan Consumer Sentiment Index for February declined to 95.7 (Briefing.com consensus 97.9) from 98.5 in the prior month.
While consumer sentiment faded, the key takeaway is that it is still high, as there have only been five higher readings in the past decade.
The Treasury Budget for January showed a deficit of $51.3 billion versus a deficit of $55.2 billion for January 2016. The Treasury Budget data is not seasonally adjusted, so the January deficit cannot be compared to the $27.5 billion deficit registered in December.
Investors will not receive any economic data on Monday.
Nasdaq Composite +6.5% YTD
S&P 500 +3.5% YTD
Dow Jones Industrial Average +2.6% YTD
Russell 2000 +2.3% YTD
Week in Review: Evergreen Trade Remains Alive
The stock market secured its third consecutive weeklyadvance with the S&P 500 rising 0.8%. The benchmark index postedgains in four of the first six weeks of 2016 while the two down weeks in themiddle of January shaved a whopping 0.25% off the index.
The first half of the week featured sideways action justbelow record highs from late January, but the market snapped out of that rangeon Thursday after comments from President Donald Trump reminded investors thattax reform remains a priority. Mr. Trump announced that something "phenomenal"on the tax front would be announced in the next two or three weeks. Thecomments, which did not include specific details, were enough to encourageinvestors, who were starting to worry that a major campaign promise may gounaddressed.
Market participants received another heavy dose of quarterlyreports, but the earnings had more influence on individual stocks than thebroader market. At the end of the week, more than 71.0% of S&P 500components had reported their results, generating blended earnings growth of4.9%, according to FactSet. This represented a modest shortfall relative to theestimate from the end of September, which called for growth of 5.2%.
The past week was quiet on the economic front, leavinginvestors with just a few second-tier reports to digest. The preliminaryreading of the Michigan Sentiment index for February declined to 95.7 from98.5, almost entirely due to a pullback in the Expectations Index. That indexfell to 85.7 from 90.3 while the Current Economic Conditions Index ticked downto 111.2 from 111.3.
Rate hike expectations barely budged on a week-over-weekbasis. The fed funds futures market ended the week showing a 67.3% impliedprobability of a rate hike in June, up from last week's 63.5%, but down slightlyfrom 69.2% two weeks ago.
Averages made all-time highs again today as the broader market showed no signs of slowing down from the Trump bump. The Dow Jones Industrial Average added 96.97 points (+0.48%) to 20269.37. The S&P 500 gained 8.23 points (+0.36%) today to end 2316.10, and the Nasdaq Composite was up 18.95 points (+0.33%) to 5743.13 when the bell rang. This week's moves take the three major US indices to +2.6%, +3.5% and +6.5% YTD, respectively.
Today's economic data included import prices excluding oil which declined 0.2% in January after ticking down 0.1% in December (revised from -0.2%). Export prices excluding agriculture increased 0.1% in January after rising 0.4% in December. Also, the preliminary reading of the University of Michigan Consumer Sentiment Index for February declined to 95.7 from 98.5 in the prior month.
The Technology (XLK 51.32, +0.15 +0.29%) sector closed out the week with modest gains, propelling higher off mid-morning lows. Gaming name Activision Blizzard (ATVI 47.23, +7.50 +18.88%) was the best performer today after reporting Q4 results last night. Other sectors as measured by the S&P closed Friday XLB +0.91%, XLI +0.81%, IYZ +0.79%, XLE +0.77%, XLRE +0.68%, XLU +0.63%, XLY +0.61%, XLF +0.30%, XLV +0.20%, XLP +0.06%.
In the S&P 500 Information Technology (865.88, +1.91 +0.22%) space, trading mounted a strong advance following mid-morning weakness, following the broader market to all-time highs. Component Western Union (WU 19.75, -0.63 -3.09%) was among some of the worst performers today after last night's Q4 print. Other names in the space which closed higher with the sector included EA +3.50%, QCOM +2.12%, FSLR +1.92%, EBAY +1.54%, CSRA +1.51%, ORCL +1.39%, INTU +1.24%, HRS +1.20%, JNPR +0.88%, IBM +0.83%.
Other notable news items among sector components:
SunPower (SPWR 7.16, +0.19 +2.73%) Chief Operating Officer Marty Neese notified the company of his intent to leave to accept a position with another company.
NXP Semi (NXPI 101.99, +0.39 +0.38%) announced its gross debt will be reduced to $6.5 billion from the $9.2 billion reported at the end of 4Q16.
In addition to reporting quarterly results, A10 Networks' (ATEN 9.51, +0.91 +10.58%) announced CFO Greg Straughn has stepped down.
In addition to reporting quarterly results, VeriSign's (VRSN 83.14, +0.62 +0.75%) Board of Directors announced the approval of an additional share repurchase authorization of about $641 million.
Volkswagen (VLKAY 31.15, +0.48 +1.59%) selected Sierra Wireless (SWIR 24.45, +5.80 +31.10%) AirPrime AR Series modules and the Legato platform for its next generation of connected cars.
ChannelAdvisor's (ECOM 10.85, -3.40 -23.86%) Chief Technology Officer, Aris Buinevicius, resigned effective March 17.
In reaction to quarterly results:
NVIDIA (NVDA 113.62, -2.76 -2.37%) reported better than expected Q4 EPS and revenues of $1.13 and $2.17 billion, respectively. For Q1, the company sees revenues ahead of expectations at $1.90 billion, plus or minus 2%.
Activision Blizzard (ATVI) reported Q4 earnings of $0.65 per share on revenues which beat market expectations at $2.45 billion. For Q1, the company sees EPS of $0.51 on revenues of $1.55 billion. For FY17, ATVI expects EPS of $1.70 and revenues of $6 billion.
Expedia (EXPE 122.65, -0.60 -0.49%) reported worse than expected Q4 EPS of $1.17 on better than expected revenues of $2.09 billion.
Western Union (WU) reported better than expected Q4 EPS of $0.47 on in-line revenues of $1.37 billion. For FY17, WU sees EPS and revenues in-line at $1.63-1.75 and revenue growth of flat to low single digits.
VeriSign (VRSN) reported better than expected Q4 EPS and revenues of $0.92 and $286.27 million, respectively.
A10 Networks (ATEN) reported better than expected Q4 EPS and revenues of $0.03 and $64.0 million.
Pandora Media (P 12.85, +0.23 +1.82%) reported a better than expected Q4 loss per share of $0.13 on revenues which also beat expectations at $392.6 million. For Q1, the company sees revenues below market expectations at $310-320 million. For FY17, the company sees in-line revenues of $1.55-1.70 billion.
Yelp (YELP 35.83, -5.66 -13.64%) reported better than expected Q4 EPS of $0.27 on in-line revenues of $194.8 million. The company also guided Q1 revenues worse than expected at $195-199 million, and guided FY17 revenues in-line at $880-900 million.
Infinera (INFN 11.96, +2.56 +27.23%) reported a better than expected Q4 loss per share of $0.12 on revenues which also beat expectations at $181.04 million. For Q1, the company guided a non-GAAP EPS loss of ($0.18)-($0.14) with revenues in the range of $167-177 million.
Sierra Wireless (SWIR) reported better than expected Q4 adjusted earnings of $0.27 on revenues which also beat expectations at $163 million. For Q1, the company sees EPS above market expectations at $0.13-0.20 on in-line revenues of $152-161 million.
Companies scheduled to report quarterly results Monday morning: FDC LIOX TSEM VSM WEX
Analyst actions:
INFN was upgraded to Buy from Neutral at Instinet,
SWIR was upgraded to Overweight from Equal Weight at First Analysis Sec,
VECO was upgraded to Buy at BofA/Merrill;
TWTR was downgraded at UBS, Citigroup, Deutsche Bank, Atlantic Equities and Loop Capital,
INTC was downgraded to Hold from Buy at Canaccord Genuity,
UBNT was downgraded to Underperform from Neutral at Credit Suisse,
MTSC was downgraded to Neutral from Overweight at JP Morgan,
ZAYO was downgraded to Underperform from Mkt Perform at FBR & Co.,
BLKB was downgraded to Hold from Buy at Wunderlich;
SYMC was initiated with an Equal weight at Barclays,
ENTG and VRNT were initiated with a Buy at Goldman,
NICE and VSM were initiated with Neutral ratings at Goldman
From Briefing.com: 4:24 pm NVIDIA beats by $0.15, beats on revs; guides Q1 revs above consensus (NVDA) :
Reports Q4 (Jan) earnings of $1.13 per share, $0.15 better than the Capital IQ Consensus of $0.98; revenues rose 54.9% year/year to $2.17 bln vs the $2.1 bln Capital IQ Consensus.
Co issues upside guidance for Q1, sees Q1 revs of $1.90 +/-2% (Approx $1.86-1.93 bln, excluding non-recurring items, vs. $1.87 bln Capital IQ Consensus Estimate.
For fiscal 2018, NVIDIA intends to return $1.25 billion to shareholders through ongoing quarterly cash dividends and share repurchases (Prior guidance was $1.2 bln)
4:50 pm Sierra Wireless also announced that Volkswagen (VLKAY) selected Sierra Wireless AirPrime AR Series modules and the Legato platform for its next generation of connected cars (SWIR) : Sierra Wireless' integrated 4G technology will reach the market beginning in 2018 in several Volkswagen models worldwide.
4:43 pm Sierra Wireless beats by $0.11, beats on revs; guides Q1 EPS above consensus, revs in-line (SWIR) :
Reports Q4 (Dec) adj. earnings of $0.27 per share, $0.11 better than the Capital IQ Consensus of $0.16; revenues rose 12.8% year/year to $163 mln vs the $161.06 mln Capital IQ Consensus.
Revenue from OEM Solutions was $135.2 million in the fourth quarter of 2016, up 11.2% compared to $121.5 million in the fourth quarter of 2015. Revenue from Enterprise Solutions was $21.0 million in the fourth quarter of 2016, up 27.1% compared to $16.5 million in the fourth quarter of 2015. Revenue from Cloud and Connectivity Services was $6.8 million in the fourth quarter of 2016, comparable to the fourth quarter of 2015.
Co issues guidance for Q1, sees EPS of $0.13-0.20, excluding non-recurring items, vs. $0.12 Capital IQ Consensus Estimate; sees Q1 revs of $152-161 mln vs. $155.51 mln Capital IQ Consensus Estimate.
4:19 pm Amtech Systems reports Q1 (Dec) results, beats on revs; guides Q2 revs below two analyst estimate (ASYS) :
Reports Q1 (Dec) GAAP net of breakeven, may not be comparable to the single analyst GAAP estimate of ($0.25); revenues rose 32.0% year/year to $29.14 mln vs the $26.01 mln two analyst estimate.
Customer orders in the first quarter of fiscal 2017 were $34.7 million ($15.9 million solar), compared to $27.7 million ($11.8 million solar) in the preceding quarter and $35.6 million ($23.0 million solar) in the first quarter of fiscal 2016. These orders do not include the large order announced in January 2017 for a turnkey project in China for a solar cell manufacturing line for n-type bi-facial cells, or the other January orders in that order announcement.
At December 31, 2016, the Company's total order backlog was $51.5 million ($35.8 solar) compared to total backlog of $48.6 million (solar $34.0 million) at September 30, 2016 and $42.9 million (solar $31.3 million) at December 31, 2015. Backlog includes deferred revenue and customer orders that are expected to ship within the next 12 months.
Co issues downside guidance for Q2, sees Q2 revs of $27-30 mln vs. $30.16 mln two analyst estimate. Gross margin for the quarter ending March 31, 2017, is expected to be in the mid 20s percent range, with operating margin negative. Due to the recent increase in orders, including the large turnkey order received in January 2017, revenue is expected to increase significantly in the second half of fiscal 2017 and is expected to lead to an improvement in the results of operations for the second half as compared to the first half of the fiscal year.
4:19 pm Infinera beats by $0.01, beats on revs (INFN) :
Reports Q4 (Dec) loss of $0.12 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of ($0.13) and at the high end of prior guidance of $(0.16)-(0.12); revenues fell 30.4% year/year to $181.04 mln vs the $175.37 mln Capital IQ Consensus and vs prior guidance of $165-185 mln.
"We executed well in the fourth quarter and delivered results at the high-end of our guidance," said Tom Fallon, Infinera's Chief Executive Officer. "As network infrastructures rapidly evolve, our objective remains to help our customers win by delivering the highest performing solutions at the Transport Layer. Though our product transition is currently holding back revenue growth and profitability, by introducing next generation ICE4 products, my belief is that we are well positioned to begin improving our business results over the course of 2017 and for significant opportunities in the future."
4:18 pm MagnaChip Semi misses by $0.07, reports revs in-line; guides Q1 revs below two analyst estimate (MX) :
Reports Q4 (Dec) earnings of $0.05 per share, $0.07 worse than the single analyst estimate of $0.12; revenues rose 18.4% year/year to $180.5 mln vs the $180 mln two analyst estimate.
Co issues downside guidance for Q1, sees Q1 revs of $157-163 mln vs. $166.05 mln two analyst estimate.
4:04 pm Monolithic Power beats by $0.02, reports revs in-line; guides Q1 revs in-line (MPWR) :
Reports Q4 (Dec) earnings of $0.65 per share, $0.02 better than the Capital IQ Consensus of $0.63; revenues rose 19.2% year/year to $103.62 mln vs the $103.09 mln Capital IQ Consensus.
Co issues in-line guidance for Q1, sees Q1 revs of $98-102 mln vs. $99.03 mln Capital IQ Consensus Estimate.
4:20 pm : Stagnant no more, the major averages finished Thursday's session at fresh record highs. The S&P 500, Nasdaq, and the Dow closed with gains of 0.6%, while the small-cap Russell 2000 (+1.4%) outperformed.
Visions of tax reform drove today's advance after President Trump promised to make a "phenomenal" tax-related announcement in the coming weeks. There are no details as of yet regarding what the plan will look like, so it is impossible to say for certain which stocks/industry groups will be winners and losers. The positive response today was grounded more in psychology than economics because, again, there were no details given.
Equity indices remained near their highs, shrugging off comments from Chicago Fed President Charles Evans, who reiterated that three rate hikes in 2017 may be reasonable. Mr. Evans is a voting member on this year's FOMC.
Treasuries didn't have a strong reaction to Mr. Evan's speech. However, the risk-on sentiment did help steepen the yield curve as long-term Treasuries fell under heavy selling pressure relative to shorter-dated issues. The benchmark 10-yr yield finished seven basis points higher at 2.40% while the 2-yr yield closed three basis points higher at 1.18%.
Capitalizing on the steeper yield curve, financials (+1.4%) provided strong sector leadership throughout Thursday's session. Financial components showed broad strength with JPMorgan Chase (JPM 87.20, +1.24), Goldman Sachs (GS 241.55, +3.82), MetLife (MET 52.58, +1.19), and Prudential (PRU 108.39, +3.17) gaining between 1.4% and 3.0%. Prudential's uptick took place in reaction to better than expected earnings.
The consumer staples space (+0.4%) was also represented on the earnings front with Coca-Cola (KO 41.25, -0.77), CVS Health (CVS 77.31, +0.28), and Kellogg (K 76.44, +2.95) reporting results before this morning's open. The results were mixed as KO finished 1.8% lower after below-consensus guidance overshadowed better than expected revenues. Separately, CVS and K posted respective gains of 0.3% and 4.0% after beating earnings estimates.
Energy (+0.9%) also outpaced the benchmark index thanks in part to an uptick in crude oil. The energy component closed 1.2% higher at $52.98/bbl following yesterday's surprising gains in the face of Energy Information Administration (EIA) data which showed a 13.8 million barrel build in oil inventories. Short positions being squeezed out most likely contributed to the counter-intuitive advance.
Utilities (-0.8%) and materials (unch) were the only two spaces to finish Thursday lower. Higher market rates weighed on the rate-sensitive utilities sector while Sealed Air (SEE 47.14, -3.08) had its hand in pushing the materials space lower. The company plunged 6.1% in reaction to the disappointing guidance and lower than expected revenues.
Nine of eleven spaces are higher for the week going into Friday's session with materials and energy showing week-to-date losses of 0.9% and 1.4%, respectively.
Today's economic data included Initial Claims and December Wholesale Inventories:
The latest weekly initial jobless claims count totaled 234,000 while the Briefing.com consensus expected a reading of 250,000. Today's tally was below the unrevised prior week count of 246,000. As for continuing claims, they rose to 2.078 million from the revised count of 2.063 million (from 2.064 million).
The key takeaway from the report is that employers appear reluctant to trim their payrolls, which is a reflection of the tightness in the labor market and the difficulty in finding new employees with the right skill set.
December Wholesale Inventories increased 1.0%, which was in line with the Briefing.com consensus. The prior month's reading was left unrevised at 1.0%.
December marked the second straight month that wholesale inventories increased 1.0%, helping to explain the positive contribution the change in inventories made to Q4 GDP growth.
Friday's economic data will include January Export/Import Prices at 8:30 am ET, February Michigan Sentiment Index (Briefing.com consensus 97.9), and January Treasury Budget at 2:00 pm ET.
Nasdaq Composite +6.2% YTD
S&P 500 +3.1% YTD
Dow Jones Industrial Average +2.1% YTD
Russell 2000 +1.6% YTD
NASDAQ Adv/Vol/Dec 2113/1.75 bln/803 NYSE Adv/Vol/Dec 1918/994.9 mln/997
3:30 pm :
Natural gas ended pit trading modestly higher for a 3rd consecutive session after EIA reported a draw in-line with Consensus
Mar natural gas closed $0.02 higher (+0.6%) at $3.14/MMBtu
EIA highlights:
Natural gas inventory showed a draw of -152 bcf vs expectations for inventory to be a draw of approx. -153 bcf.
Working gas in storage was 2,559 Bcf as of Friday, Feb 3, 2017, according to EIA estimates.
Stocks were 325 Bcf less than last year at this time and 45 Bcf above the five-year avg of 2,514 Bcf.
At 2,559 Bcf, total working gas is within the five-year historical range.
Crude oil extended yesterday's surprise post-EIA gains ahead of tomorrow's rig count
Mar crude oil futures rose $0.62 (+1.2%) to $52.98/barrel
Baker Hughes rig count data will be released tomorrow at 1 pm ET.
In precious metals, gold retreated from yesterday's 3-month high on renewed dollar index strength
April gold ended today's session down $2.70 (-0.2%) to $1236.80/oz
March silver closed today's session $0.03 higher (+0.2%) at $17.74/oz
The dollar index was +0.4% around the 100.65 level, weighed on gold futures
Commodities, as measured by the Bloomberg Commodity Index, were +0.1% around the 88.53 level
The broader market finished Thursday at record highs. The Dow Jones Industrial Average added 118.06 points (+0.59%) to 20172.40. The S&P 500 was up 13.20 points (+0.58%) to 2307.87, and the Nasdaq Composite gained 32.73 points (+0.58%) to 5715.18.
Today's economic data included the latest weekly initial jobless claims count totaled 234,000. Today's tally was below the unrevised prior week count of 246,000. As for continuing claims, they rose to 2.078 million from the revised count of 2.063 million (from 2.064 million). Also, December Wholesale Inventories increased 1.0%, which was in line with the Briefing.com consensus. The prior month's reading was left unrevised at 1.0%.
For its part, the Technology (XLK 51.17, +0.16 +0.31%) space also traded to some pretty impressive highs today, touching levels not seen since September of 2000. Component Teradata (TDC 32.74, +2.57 +8.52%) performed well today after reporting Q4 results and giving mixed Q1 guidance. Other sectors as measured by the S&P closed Thursday XLF +1.37%, XLE +1.13%, XLI +0.77%, IYZ +0.65%, XLY +0.63%, XLRE +0.42%, XLP +0.41%, XLV +0.36%, XLB -0.04%, XLU -0.85%.
In the S&P 500 Information Technology (863.97, +2.46 +0.29%) space, trading ended slightly off highs. Component Intel (INTC 35.46, -0.92 -2.53%) ended as one of the worst performers today after the company's Investor Day. Other names in the space which closed higher with the sector today included CTSH +2.75%, WU +2.36%, EA +2.18%, FSLR +2.16%, HPE +1.90%, FISV +1.57%, PAYX +1.46%, ATVI +1.38%, ACN +1.34%, SYMC +1.33%, ADS +1.28%.
Other notable news items among sector components:
Accenture (ACN 116.98, +1.55 +1.34%) to acquire the iDefense Security Intelligence Services business from VeriSign (VRSN 82.52, -0.05 -0.06%). Financial terms of the deal were not disclosed.
Take-Two (TTWO 56.02, +2.31 +4.30%) announced plans to launch an NBA 2K eLeague. Will debut in 2018.
First Solar (FSLR 32.23, +0.68 +2.16%) was awarded a module supply contract for the 140 megawatt DC Sun Metals Solar Farm in North Queensland (Australia's largest solar project).
Nokia (NOK 4.89, +0.01 +0.20%) to acquire Comptel for EUR 347 million.
Nokia (NOK) has signed a distributor agreement with Energia Communications to sell its G.fast fixed ultra-broadband access technology in Japan.
PayPal (PYPL 40.83, -0.05 -0.12%) in 10-K disclosed it received subpoenas from the DOJ seeking the production of certain information related to the company's historical anti-money laundering program.
Imperva (IMPV 46.75, +3.85 +8.97%) agreed to sell its Skyfence technology and service to Forcepoint. Also acquired the assets of Camouflage Software.
Paycom Software (PAYC 51.32, +6.06 +13.39%) announced an additional $50 million is available for repurchases through Jan 2019.
Microchip (MCHP 70.93, -2.87 -3.89%) to offer $1.5 billion of convertible senior subordinated notes due 2027 and $500 million of convertible junior subordinated notes due 2037 in private placement.
Genpact (G 25.20, +0.39 +1.57%) signed a four-year extension to Master Services Agreement to provide professional services across all GE businesses.
In reaction to quarterly results:
Fiserv (FISV 109.47, +1.69 +1.57%) reported in-line Q4 EPS of $1.16 on revenues which were below market expectations at $1.43 billion. For FY17, the company guided EPS above market expectations at $5.03-5.07.
Telus (TU 32.80, -0.70 -2.09%) reported worse than expected Q4 earnings of CAD$0.53 on in-line revenues of CAD$3.31 billion. For FY17, the company sees EPS below market expectations of CAD$2.49-2.64 on revenues of CAD$13.12-13.25 billion.
CenturyLink (CTL 24.42, -0.01 -0.04%) reported worse than expected Q4 earnings of $0.54 per share on revenues which fell 4.2% compared to a year ago to $4.29 billion. For Q1, the company sees EPS and revenues below market expectations at $0.51-0.57 and $4.23-4.29 billion, respectively. For FY17, the company sees in-line EPS and revenues of $2.10-2.30 and $17.05-17.30 billion.
Twitter (TWTR 16.41, -2.31 -12.34%) reported better than expected Q4 earnings of $0.16 per share on worse than expected revenues of $717 million. Guided Q1 adjusted EBITDA to be between $75 million and $95 million, well below expectations; Adjusted EBITDA margin to be between 17% and 17.5%, and SBC to be between $125 and $135 million.
Trimble (TRMB 31.70, +1.46 +4.83%) reported better than expected Q4 EPS and revenues of $0.31 and $585.6 million, respectively. For Q1, the company sees in-line EPS and revenues of $0.27-0.32 and $585-615 million, respectively.
Tyler Tech (TYL 160.66, +14.67 +10.05%) reported better than expected Q4 EPS of $0.90 on revenues which were worse than expected at $193.28 million. For FY17, the company sees EPS in the range of $3.83-3.91 on revenues between $845-855 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: ATEN ATVI ASYS APDN APTI CARB ECOM CPSI CYBR DTRM EGAN ELLI EXPE HDP INFN JCOM MX MIME MPWR NCR UEPS NVDA P RSYS RPD SWIR TLND UBNT VRSN VSAT WEB WU YELP ZAYO ZIXI ZNGA/G
Analyst actions:
MU was upgraded to Buy from Underperform at BofA/Merrill,
RMBS was upgraded to Overweight from Neutral at JP Morgan;
TWTR was downgraded to Underperform at Cowen and to Underperform at Raymond James,
CREE was downgraded to Mkt Perform from Mkt Outperform at JMP Securities,
GRUB was downgraded to Neutral from Buy at Mizuho,
VNTV was downgraded to Hold from Buy at Jefferies,
SNCR was downgraded to Hold from Buy at Deutsche Bank,
QLYS was downgraded to Equal Weight from Overweight at First Analysis Sec;
GTT was initiated with a Buy at BTIG Research,
CAFD was initiated with a Hold at Williams Capital Group,
VSM was initiated with a Hold at Argus
From Briefing.com: 4:11 pm FormFactor beats by $0.01, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY17 revs in-line (FORM) : Reports Q4 (Dec) earnings of $0.20 per share, $0.01 better than the Capital IQ Consensus of $0.19; revenues rose 72.6% year/year to $123.9 mln vs the $120.47 mln Capital IQ Consensus.
Co issues upside guidance for Q1, sees EPS of $0.17-0.23 vs. $0.15 Capital IQ Consensus Estimate; sees Q1 revs of $120-128 mln vs. $112.11 mln Capital IQ Consensus Estimate.
Co issues in-line guidance for FY17, sees FY17 revs of $480-500 mln vs. $482.57 mln Capital IQ Consensus Estimate.
"FormFactor delivered solid growth fueled by our transformative acquisition of Cascade Microtech, which provided significant product and market diversification, as well as growth in our core probe card business as we doubled capacity for our largest foundry and logic customer."
4:07 pm TTM Tech beats by $0.13, beats on revs; guides Q1 EPS above consensus, revs in-line (TTMI) :
Reports Q4 (Dec) earnings of $0.58 per share, $0.13 better than the Capital IQ Consensus of $0.45; revenues rose 5.6% year/year to $706.5 mln vs the $671.57 mln Capital IQ Consensus.
Co issues guidance for Q1, sees EPS of $0.25-0.31 vs. $0.24 Capital IQ Consensus Estimate; sees Q1 revs of $595-635 mln vs. $607.05 mln two analyst estimate.
4:03 pm Microchip announces its intention to offer, subject to market conditions and other factors, $1.5 billion aggregate principal amount of convertible senior subordinated notes due 2027 and $500 million aggregate principal amount of convertible junior subordinated notes due 2037 in a private placement (MCHP) : Microchip intends to use approximately $1.5 billion of the net proceeds from this offering to reduce borrowings under its amended credit facility. Microchip additionally plans to use a portion of the proceeds to enter into agreements with holders of up to $450 million of its 2.125% junior subordinated convertible debentures due 2037 to exchange such existing debentures for cash up to the principal amount of the debentures and shares of Microchip common stock in respect of the conversion value in excess of the principal amount, plus a cash premium to induce holders to exchange.
4:25 pm : The major averages finished Wednesday's session flat, but mixed as the S&P 500 (+0.1%) and the Nasdaq (+0.2%) closed with modest gains while the Dow (-0.2%) underperformed.
In a day short on economic data, earnings reports made the biggest splash with a slew of companies reporting their quarterly results between yesterday's close and today's open. Some of the biggest post-report movers came from the tech sector (+0.2%) with Cognizant Technology (CTSH 56.45, +2.66) and Microchip Technology (MCHP 73.80, +4.18) adding 5.0% and 6.0%, respectively. CTSH reported better than expected earnings and issued positive first quarter guidance, while MCHP beat on both top and bottom lines in addition to issuing upbeat guidance.
The consumer discretionary sector (+0.6%) was also well represented on the earnings front. Walt Disney (DIS 109.01, +0.01) finished flat after better than expected earnings were balanced with a miss on revenues. Meanwhile, mid-cap Panera Bread (PNRA 232.90, +18.63) spiked 8.7%, fueled by better than expected earnings as well as a 3.0% increase in fourth quarter comparable net bakery-cafe sales.
The energy space (-0.1%) finished just shy of its flat line as an uptick in crude oil pushed the sector up from a larger loss. The commodity finished 0.3% higher at $52.36/bbl after holding solid losses during the overnight session and into the morning. The Energy Information Administration (EIA) data showed a huge 13.8 million barrel build in oil inventories, which confirmed yesterday's bearish reading from the API. Crude oil climbed despite the inventory readings, likely due to some short positions being squeezed out.
On the countercyclical side, a 8.6% decline in Gilead Sciences (GILD 66.83, -6.30) held the health care space (-0.1%) below its flat line. Gilead reported better than expected results, but negative guidance for 2017 overshadowed the company's earnings. A positive earnings report and above-consensus guidance from Allergan (AGN 241.17, +8.56) helped alleviate some of health care's loss, but wasn't enough to prevent the space from being the only defensive sector to close in the red.
Lightly-weighted real estate (+0.9%) and utilities (+0.9%) closed at the top of the day's leaderboard, while financials (-0.8%) finished at the bottom. The financial space experienced broad pressure from its components as investors engaged in some profit taking in light of the space's huge fourth quarter advance and the stock market's recent stall.
The financial space also faced some headwinds in the Treasury market as the yield curve ended the day slightly flatter. U.S. Treasuries had a fairly volatile session, jumping to session highs amid a modest decrease in rate hike expectations. The fed funds futures market is still pointing to June as the most likely window for the next rate hike, but the implied likelihood of a June hike declined to 58.4% from 64.7%.
Treasuries squandered half of their gains following a poorly received $23 billion 10-yr auction. The benchmark 10-yr yield closed four basis points lower at 2.35% while the 2-yr yield finished down two basis points at 1.15%.
Today's lone economic report, the weekly MBA Mortgage Index, increased 2.3% to follow last week's 3.2% decline.
On Thursday, investors will receive Initial Claims (Briefing.com consensus 250,000) at 8:30 am ET and December Wholesale Inventories (Briefing.com consensus 1.0%) at 10:00 am ET.
Nasdaq Composite +5.6% YTD
S&P 500 +2.5% YTD
Dow Jones Industrial Average +1.5% YTD
Russell 2000 +0.1% YTD
DJ30 -35.95 NASDAQ +8.24 SP500 +1.59 NASDAQ Adv/Vol/Dec 1288/1.77 bln/1561 NYSE Adv/Vol/Dec 1657/1.01 bln/1282
3:30 pm :
Crude futures reversed initial post-API losses in afternoon pit trading to close in the green despite a decidedly bearish EIA report
Mar crude oil futures rose $0.18 (+0.3%) to $52.36/barrel
Baker Hughes rig count data will be released Friday at 1 pm ET.
EIA highlights:
Crude oil inventories had a build of +13.8 mln barrels (consensus called for a build of about +2.529 mln barrels).
Gasoline inventories had a draw of -0.9 mln barrels (consensus called for a build of +1.071 mln barrels).
Distillate inventories were unchanged.
Natural gas futures closed pit trading nearly flat ahead of tomorrow's inventory report
Mar natural gas closed $0.01 lower (-0.3%) at $3.12/MMBtu
EIA natural gas inventory data will be released tomorrow at 10:30 am ET.
In precious metals, gold ended at a 3-month high for the 3rd consecutive session
April gold ended today's session up $3.50 (+0.3%) to $1239.50/oz
March silver closed today's session $0.04 lower (-0.2%) at $17.71/oz
Commodities, as measured by the Bloomberg Commodity Index, were +0.6% around the 88.42
Despite the split close, the broader market was anything but flat today. Action began with decent losses as increased political uncertainty both domestically and abroad puts seeds of doubt into investors' minds. That being said, we did close split today as only the Dow Jones Industrial Average, which shed 35.95 points (-0.18%) to 20054.34 was unable to ramp higher into the close. In contrast, the Nasdaq Composite was the best performing index, adding 8.24 points (+0.15%) to 5682.45, and the S&P 500 also closed above flat lines, higher by 1.59 points (+0.07%) to 2294.67.
Action in the Technology (XLK 51.01, +0.09 +0.18%) took another leg higher today, spending only a few moments early in the session in the red. Component Microchip (MCHP 73.80, +4.18 +6.00%) was the best performer today after the company impressed investors with its latest quarterly report. Other sectors as measured by the S&P closed Wednesday XLU +0.98%, XLRE +0.85%, XLY +0.62%, XLP +0.41%, IYZ +0.24%, XLE +0.24%, XLB +0.23%, XLI -0.14%, XLV -0.15%, XLF -0.68% as Financials were the worst performing sector.
In the S&P 500 Information Technology (861.51, +1.43 +0.17%) space, trading closed another day in the green. Component Cognizant Tech (CTSH 56.45, +2.66 +4.95%) was one of the better performing names today after its better than expected Q4 earnings. Other names in the space which closed higher today included XRX +4.10%, FIS +3.29%, EBAY +2.53%, QRVO +2.24%, PYPL +2.15%, FB +1.79%, YHOO +1.58%, ADI +1.53%, FISV +1.28%, MSI +1.18%, APH +1.08%.
Other notable news items among sector components:
Trimble (TRMB 30.24, +0.19 +0.63%) acquired privately-held Beena Vision Systems. Financial terms of the deal were not disclosed.
Corning (GLW 26.48, -0.11 -0.41%) has collaborated with Micromax for its Vdeo smartphones, designed for the "value-segment" consumer. The recently launched devices are among the first across India's mobile phone entry segment to incorporate Corning Gorilla Glass to help protect against damage.
Intel (INTC 36.38, +0.03 +0.08%) confirmed a $7 billion investment in Arizona to complete Fab 42. Fab 42 will target 7 nm technology and create more than 10,000 jobs in AZ.
Accenture (ACN 115.43, -0.49 -0.42%) entered into an agreement to acquire the U.S. federal government services business of Endgame Inc., a privately held endpoint detection and response (EDR) cybersecurity software company based in Arlington, VA.
Priceline (PCLN 1601.19, +2.49 +0.16%) to acquire the Momondo Group for $550 million.
Symantec (SYMC 28.61, +0.17 +0.60%) announced the pricing of its senior unsecured notes in an aggregate principal amount of $1.1 billion, which reflects an increase of $0.1 billion from the aggregate principal amount previously announced. SYMC intends to use the net proceeds of this offering, after deducting underwriting discounts and offering expenses, together with cash on hand, to finance the about $2.3 billion aggregate purchase price of its proposed acquisition of LifeLock (LOCK).
Cognizant Tech (CTSH) entered into a cooperation agreement with Elliott Management.
Intuit (INTU 116.55, -0.93 -0.79%) announced that revenue and operating income, and diluted earnings per share from its second fiscal quarter were lower than expected due to the tax season forming more slowly than usual. The company expects consumer tax revenue to shift to the third fiscal quarter and therefore reiterated full fiscal-year guidance. For the second quarter, the company expects to report: Revenue of $1,010 million to $1,015 million; GAAP operating income of $15 million to $20 million; Non-GAAP operating income of $100 million to $105 million; GAAP diluted earnings per share of $0.04 to $0.05; Non-GAAP diluted earnings per share of $0.24 to $0.25.
In reaction to quarterly results:
Cognizant Tech (CTSH) reported better than expected Q4 EPS of $0.87 on revenues which were in-line at $3.46 billion. For Q1, the company sees EPS below market expectations at $0.83 on revenues which are slated to come in above market expectations at $3.51-3.55 billion. For FY17, CTSH sees EPS below market expectations at $3.63 on in-line revenues between $14.56-14.84 billion.
Fortive (FTV 56.18, +0.54 +0.97%) reported better than expected Q4 EPS of $0.68 on in-line revenues of $1.63 billion. For Q1, the company sees EPS of $0.54-0.58 with FY17 EPS expected in the range of $2.60-2.70.
Microchip (MCHP) reported better than expected Q3 EPS and revenues of $1.05 and $881.2 million, respectively. For Q4, MCHP sees EPS and revenues ahead of market expectations at $1.01-1.11 and $872-908 million, respectively.
Akamai Tech (AKAM 63.55, -7.57 -10.64%) reported better than expected Q4 EPS and revenues of $0.72 and $616 million, respectively. For Q1, AKAM sees non-GAAP EPS between $0.66-0.69 and revenues in the range of $596-610 million.
CSRA (CSRA 30.30, -2.25 -6.91%) reported better than expected Q3 EPS of $0.48 on in-line revenues of $1.22 billion. For FY17, CSRA sees EPS and revenues below market expectations at $1.98-2.02 and $4.96-5.01 billion, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: AOSL BLKB CTL CMP CRAY ECHO FISV FORM FORR GLUU IMPV NSIT KS LLNW LPSN MXL MB PAYC QLYS QNST SNCR TRMB TTMI TYL VRNS WSTL ZEN/APPS LQDT MMS TU TDC TZOO TRMR TWTR VRTU WILN
Analyst actions:
FIS was upgraded to Outperform from Neutral at Credit Suisse,
MCHP was upgraded to Strong Buy from Buy at Needham,
IPHI was upgraded to Outperform from Market Perform at Cowen,
TWTR was upgraded to Buy from Neutral at BTIG Research;
Memory Chip sector downgraded to Neutral at UBS,
SPSC was downgraded at William Blair, Pacific Crest and Canaccord Genuity,
NTGR was downgraded to Mkt Perform from Outperform at Raymond James,
YNDX was downgraded to Hold from Buy at Raiffeisen,
MBT was downgraded to Reduce from Hold at Raiffeisen;
RATE was initiated with an Outperform at Oppenheimer,
MOMO was initiated with a Buy at Jefferies,
From Briefing.com: 4:24 pm Microchip beats by $0.15, beats on revs; guides Q4 EPS above consensus, revs above consensus (MCHP) :
Reports Q3 (Dec) earnings of $1.05 per share, excluding non-recurring items, $0.15 better than the Capital IQ Consensus of $0.90; revenues rose 59.6% year/year to $881.2 mln vs the $849.11 mln Capital IQ Consensus.
Co issues upside guidance for Q4, sees EPS of $1.01-1.11 vs. $0.93 Capital IQ Consensus Estimate; sees Q4 revs of $872-908 mln vs. $863.95 mln Capital IQ Consensus Estimate.
4:17 pm Nanometrics beats by $0.06, beats on revs; guides Q1 EPS below consensus, revs in-line (NANO) :
Reports Q4 (Dec) earnings of $0.33 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $0.27; revenues rose 38.6% year/year to $59.2 mln vs the $57.18 mln Capital IQ Consensus.
Co issues guidance for Q1, sees EPS of $0.19-0.26, excluding non-recurring items, vs. $0.27 Capital IQ Consensus Estimate; sees Q1 revs of $56-61 mln vs. $58.05 mln Capital IQ Consensus Estimate.
4:13 pm Emcore beats by $0.01, beats on revs; guides Q2 revs above consensus (EMKR) :
Reports Q1 (Dec) earnings of $0.13 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.12; revenues rose 34.2% year/year to $30.2 mln vs the $29.03 mln Capital IQ Consensus.
Co said, "With our improvement in Non-GAAP operating margin to 11.5%, we're rapidly closing in on our target of 12.5% by the end of FY17."
Co issues upside guidance for Q2, sees Q2 revs of $29-31 mln vs. $26.20 mln Capital IQ Consensus Estimate.
4:11 pm Nuance Communications beats by $0.01, beats on revs; guides Q2 EPS & FY17 in-line (NUAN) :
Reports Q1 (Dec) earnings of $0.35 per share, $0.01 better than the Capital IQ Consensus of $0.34; revenues rose 0.2% year/year to $496 mln vs the $490.4 mln Capital IQ Consensus.
Co issues in-line guidance for Q2, sees EPS of $0.36-0.40 vs. $0.38 Capital IQ Consensus Estimate; sees Q2 revs of $493-507 mln vs. $500.05 mln Capital IQ Consensus Estimate.
Co issues in-line guidance for FY17, sees EPS of $1.53-1.63 vs. $1.59 Capital IQ Consensus Estimate; sees FY17 revs of $2.02-2.07 bln vs. $2.04 bln Capital IQ Consensus Estimate.
4:05 pm Coherent (halted) beats by $0.76, beats on revs (COHR) :
Reports Q1 (Dec) adj. earnings of $2.57 per share, $0.76 better than the Capital IQ Consensus of $1.81; revenues rose 81.9% year/year to $346.1 mln vs the $316.98 mln Capital IQ Consensus.
Ending backlog expected to ship in the next 12 months was $823.5 million at December 31, 2016, compared to a backlog of $605.3 million at October 1, 2016 and a backlog of $370.0 million at January 2, 2016.
"Coherent delivered record-setting performance and continues to enjoy a very strong demand environment across its end markets. The FPD business remains robust with an increasing number of opportunities in device packaging that complement our leadership position in ELA. Materials processing also performed well for components, lasers and tools including record orders in medical device manufacturing workstations. All other end markets met or exceeded our expectations and customer engagement is at record levels," said John Ambroseo, Coherent's President and Chief Executive Officer. "The integration of Coherent and Rofin is well underway and there have been few surprises. The project teams are making steady progress and we are on track to meet our synergy targets."
4:15 pm : Minimal movement on Monday set the tone for Tuesday's flat finish as the major averages closed the day relatively unchanged in what was a range-bound trading session. The Nasdaq (+0.2%) and the Dow (+0.2%) eked out small gains while the S&P 500 finished right at its flat line.
Countercyclical sectors had a slight advantage during Tuesday's session with four of the five posting gains. Consumer staples (+0.8%) finished atop the day's leaderboard with Church & Dwight (CHD 47.27, +1.82) adding 4.0% after reporting better than expected earnings and raising its dividend.
On the cyclical side, technology (+0.4%) outpaced the benchmark index on the back of another solid showing from Apple (AAPL 131.53, +1.24). Industrials (+0.2%) were the only other cyclical sector to finish the day higher, rallying around the 4.5% jump in shares of Emerson Electric (EMR 62.54, +2.68). The company beat top and bottom line estimates and issued upbeat guidance for 2017.
General Motors (GM 35.10, -1.73) also reported positive quarterly results before Tuesday's opening bell, beating earnings and revenue estimates. However, the earnings beat may have taken a back seat to the company's 3.8% year-over-year decline in January sales considering shares of GM finished the day lower by 4.7%. Fellow automaker Ford Motor (F 12.34, -0.18) also experienced some pressure, closing 1.4% lower.
The consumer discretionary sector (-0.1%) couldn't escape the automakers' selling pressure. Financials (-0.2%) and materials (-0.8%) also finished in the red, but none fell farther than energy (-1.4%). The energy space moved lower in tandem with crude oil, which was weighed down by myriad concerns. An uptick in U.S. production, signs of slowing demand growth, and a 0.5% climb in the U.S. Dollar Index (100.30, +0.46) left the energy component 1.6% lower at $52.18/bbl.
The U.S. dollar's movement was rooted in comments from Philadelphia Fed President Patrick Harker. On Monday evening, Mr. Harker, who is an FOMC voting member, stated that he would be open to a March rate hike. The news pushed the U.S. Dollar Index (100.25, +0.41) to its highest level of the month (100.66), but a dovish statement during Tuesday's session from Minneapolis Fed President Neel Kashkari, who is also an FOMC voting member, facilitated a pullback in the Dollar Index.
However, regardless of the headlines, the market remains confident that there will be no rate hike in March; the fed funds futures market shows an 8.9% implied probability of a March rate hike, which is unchanged from Monday's reading.
Economic data reported on Tuesday included December Trade Balance, December Job Openings and Labor Turnover Survey, and December Consumer Credit:
The December trade balance showed a deficit of $44.3 billion while the Briefing.com consensus expected the deficit to hit $45.0 billion. The previous month's deficit was revised to $45.7 billion from $45.2 billion.
The key takeaway from the report is that it could stir the political trade pot since there were trade deficits recorded with China, the European Union, Japan, Germany, and Mexico. That isn't new, yet there's a new administration that isn't too fond of that dynamic.
The December Job Openings and Labor Turnover Survey showed that job openings decreased to 5.501 million from a revised 5.505 million (from 5.522 million) in November.
The Consumer Credit report for December showed an increase of $14.2 billion while the Briefing.com consensus expected growth of $19.4 billion. The prior month's credit growth was revised to $25.2 billion from $24.5 billion.
Wednesday's lone economic report will be the 7:00 am ET release of the MBA Mortgage Applications Index.
Nasdaq Composite +5.4% YTD
S&P 500 +2.4% YTD
Dow Jones Industrial Average +1.7% YTD
Russell 2000 +0.3% YTD
DJ30 +37.87 NASDAQ +10.67 SP500 +0.52 NASDAQ Adv/Vol/Dec 1186/1.74 bln/1651 NYSE Adv/Vol/Dec 1331/977.5 mln/1595
3:30 pm :
In precious metals, gold closed at a 3-month high for the second consecutive session despite dollar index strength
April gold ended today's session up $3.70 (+0.3%) to $1236.00/oz March silver closed today's session $0.05 higher (+0.3%) at $17.75/oz
Crude oil extended yesterday's losses ahead of today's API data release- see yesterday's energy sector summary comment for color on oil
Mar crude oil futures fell $0.83 (-1.6%) to $52.18/barrel
Upcoming data reminders:
API petroleum data will be released tomorrow at 4:30 pm ET
EIA petroleum data will be released Wednesday at 10:30 am ET
Baker Hughes rig count data will be released Friday at 1 pm ET
Natural gas extended a prior 3-day rally, closed pit trading near session highs after taking a slight breather & closing modestly lower yesterday
Mar natural gas closed $0.08 higher (+2.6%) at $3.13/MMBtu
The dollar index was +0.4% around 100.30 level, did not appear to pressure precious metals
Commodities, as measured by the Bloomberg Commodity Index, were +0.04% around the 87.86 level
The broader market ended higher today despite limping into the close with flat action. As it were, both the Nasdaq and the Dow made fresh all-time highs intraday, ending as the best two performing indices at the close. The Nasdaq Composite led slightly, up 10.67 (+0.19%) at the close to 5674.22. The Dow Jones Industrial Average added 37.87 points (+0.19%) to 20090.29, and the S&P 500 was higher by less than a points (+0.02%) to 2293.08 when the bell rang.
Economic data on Tuesday included the December trade balance which showed a deficit of $44.3 billion compared to the previous month's deficit which was revised to $45.7 billion from $45.2 billion. Also, the December Job Openings and Labor Turnover Survey showed that job openings decreased to 5.501 million from a revised 5.505 million (from 5.522 million) in November. Lastly, the Consumer Credit report for December showed an increase of $14.2 billion compared to the prior month's credit growth which was revised to $25.2 billion from $24.5 billion.
Action in the Technology (XLK 50.92, +0.20 +0.39$) space was positive out of the gate, and never looked back. Component Autodesk (ADSK 84.50, +1.68 +2.03%) was one of the better performing names in the space today following news the CEO Carl Bass would step down from his role on February 8; the company also reaffirmed certain guidance. Other sectors as measured by the S&P closed split -- XLP +0.82% XLU +0.25% XLI +0.17% XLV +0.10% XLY -0.09% XLRE -0.20% XLF -0.25% IYZ -0.74% XLB -0.79% XLE -1.42% with Consumer Staples performing the best and Energy falling behind.
In the S&P 500 Information Technology (860.08, +3.53 +0.41%) space, trading made new all-time highs today, ending just shy of the top of the range. Component Motorola Solutions (MSI 77.34, -4.39 -5.37%) was the worst performing name today following a cautious report on the stock by Citron Research. Other names in the space which closed higher with the sector included AKAM +2.02%, CTSH +1.95%, CTXS +1.77%, NVDA +1.55%, ACN +1.52%, IBM +1.48%, STX +1.45%, FFIV +1.38%, EBAY +1.25%, NTAP +1.23%, TSS +1.17%, HPQ +1.11%.
Other notable news items among sector components:
CSRA Inc. (CSRA 32.55, +0.25 +0.77%) signed a three-year Enterprise Agreement with Microsoft (MSFT 63.43, -0.21 -0.33%) to enable CSRA to utilize Microsoft's products, such as Microsoft Office365, for the Microsoft Azure cloud platform.
Workday (WDAY 86.05, +0.68 +0.80%) announced that Amazon (AMZN 812.50, +4.86 +0.60%) has selected and is beginning to deploy Workday Human Capital Management (HCM), including Workday Payroll. The contract was signed in October 2016.
Autodesk (ADSK) announced that Carl Bass has decided to step down as CEO effective February 8. The company's board has instituted a CEO search to consider candidates inside and outside Autodesk and has formed an Interim Office of the Chief Executive to oversee the company's day-to-day operations. Bass will remain on staff as a special advisor to the company in support of the transition to a new CEO. He will continue to sit on the Autodesk board of directors and will be nominated for reelection at the 2017 annual meeting of shareholders. Crawford Beveridge will remain non-executive chairman of the board. Additionally, Autodesk reiterated its non-GAAP business outlook for Q$ and FY17 and expects revenue, earnings per share, and subscription additions to be at the high end of guidance disclosed on November 29, 2016.
IBM (IBM 178.46, +2.60 +1.48%) announced a blockchain initiative with Dubai Customs, Dubai Trade, advancing Dubai's government blockchain strategy. As part of the initiative, IBM is also working with leading businesses including Emirates NBD, du, Aramex, and Banco Santander.
eBay (EBAY 32.43, +0.40 +1.25%) filed a mixed securities shelf offering. The company also disclosed material weakness in its internal control regarding financial reporting.
FXCM (FXCM 3.45, -3.40 -49.64%) announced simultaneous regulatory settlements with the National Futures Association and the Commodity Futures Trading Commission against its U.S. subsidiary, Forex Capital Markets LLC, FXCM Holdings, LLC and certain of its principals. The named FXCM entities and principals neither admit nor deny the allegations associated with the settlements. The NFA settlement has no monetary fine, and the CFTC settlement includes a $7 million fine. Pursuant to the settlement agreements, the Company will be withdrawing from business in the United States.
GAIN Capital (GCAP 8.06, +0.41 +5.36%) signed a non-binding letter of intent to acquire the client base of
FXCM's (FXCM) U.S. operations.
Juniper Networks (JNPR 27.20, -0.08 -0.29%) and Pradeep Sindhu, current Chief Technology Officer and EVP, have agreed to redefine his duties and responsibilities so that he can reduce the time he spends at the company and devote a majority of his time to Fungible, Inc., a startup company that Dr. Sindhu co-founded in 2015. Dr. Sindhu will remain employed with JNPR as EVP and Chief Scientist, and will continue to serve as Chief Technology Officer in order to assist with the transition to his successor. The Company has commenced a search to identify a successor.
comScore (SCOR 22.86, -0.36 -1.55%) announced, as expected, it received notice from the Nasdaq Hearings Panel that the Panel had determined to delist the shares of SCOR common stock from the Nasdaq Global Select Market and suspend trading in SCOR shares effective at the open of business on February 8, 2017.
In reaction to quarterly results:
Fidelity Nat'l Info (FIS 77.30, -2.05 -2.58%) reported in-line Q4 EPS of $1.14 on revenues which missed market expectations at $2.44 billion. The company also issued downside guidance for FY17 EPS and revenues in the range of $4.15-4.30 and $9.333-9.426 billion, respectively.
Arrow Elec (ARW 70.52, -4.06 -5.44%) reported in-line Q4 earnings of $2.00 per share on revenues which missed expectations at $6.44 billion. For Q1, the company sees EPS of $1.37-1.49 on revenues of $5.38-5.78 billion.
Vishay (VSH 15.80, -0.75 -4.53%) reported worse than expected Q4 EPS and revenues of $0.18 and $570.8 million, respectively. For Q1, the company sees revenues ahead of expectations at $575-615 million.
Knowles (KN 18.75, +0.77 +4.28%) reported better than expected Q4 EPS and revenues of $0.35 and $240.6 million, respectively. For Q1, KN sees EPS and revenues worse than expected at $0.08-0.14 and $180-200 million, respectively.
Fabrinet (FN 43.04, +0.94 +2.23%) reported better than expected Q2 EPS and revenues of $0.91 and $351.2 million, respectively. For Q3, FN sees EPS and revenues ahead of market expectations at $0.87-0.89 and $360-364 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: AKAM CALD COHR CSRA EMKR EEFT FTV IPHI JKHY JIVE LITE MCHP MOBL NANO NTGR NEWR NUAN PDVW PRO SCSC SPSC TTWO TCX TWLO ULTI ZG/BR CTSH GRUB ORBK RDWR
Analyst actions:
CHKP was upgraded to Buy from Neutral at BTIG Research,
VMW was upgraded to Outperform at Daiwa,
VSAT was upgraded to Outperform from Mkt Perform at Raymond James,
NOK was upgraded to Overweight from Equal Weight at Morgan Stanley,
TU was upgraded to Outperform from Sector Perform at National Bank
7:33 am Vishay misses by $0.03, misses on revs; guides Q1 revs above consensus (VSH) :
Reports Q4 (Dec) earnings of $0.18 per share, excluding non-recurring items, $0.03 worse than the Capital IQ Consensus of $0.21; revenues rose 2.7% year/year to $570.8 mln vs the $581.37 mln Capital IQ Consensus.
"We are pleased to have delivered solid 11% growth in book value per share in 2016. Investment results reflect the benefits of our short-duration fixed-maturity portfolio in a rising interest rate environment and a decent lift from our allocation to risk assets. Underwriting results reflect the strong performance of our portfolio of specialty businesses. Going into 2017, we are positioned to continue delivering good underwriting results across our diverse portfolio of businesses."
Co issues upside guidance for Q1, sees Q1 revs of $575-615 mln vs. $585.02 mln Capital IQ Consensus Estimate. Co sees adj gross margins between 24-26% at constant exchange rates.
From Briefing.com: 4:10 pm : Monday's session ended roughly where it began as investors opted to play it safe, leaving the major averages just below their all-time highs. The Dow (-0.1%) and the Nasdaq (-0.1%) closed just ahead of the S&P 500 (-0.2%), while the small-cap Russell 2000 (-0.8%) underperformed.
An uptick in the Treasury market pointed to a risk-off sentiment among investors. The benchmark 10-yr yield closed five basis points lower at 2.41% as the Trump administration's timing of corporate tax reform and increased infrastructure spending, two factors that fueled the post-election rally, remains unclear.
On the earnings front, Tyson Foods (TSN 63.13, -2.26), Sysco (SYY 51.20, -1.34), Newell Brands (NWL 44.23, -2.66), and Hasbro (HAS 94.31, +11.68) all reported quarterly results before Monday's opening bell. Hasbro spiked 14.1%, while Tyson Foods, Sysco, and Newell Brands lost between 2.6% and 5.7%. However, the results had a limited impact on the broader market as the consumer discretionary (-0.3%) and consumer staples (-0.4%) sectors finished in line with the benchmark index.
The top-weighted information technology sector (+0.1%) closed ahead of its peers, underpinned by the strength of its largest component, Apple (AAPL 130.34, +1.26). Chipmakers also had a hand in limiting the bearish influence, pushing the PHLX Semiconductor Index higher by 0.4%. The industrial space (+0.1%) was the only other sector to finish in the green.
At the opposite end of the leaderboard was the energy space (-0.9%) amid a poor performance from crude oil. The energy component finished 1.5% lower at $53.01/bbl following Friday's Baker Hughes data, which showed U.S. oil rig additions in 13 of the past 14 weeks. Intraday dollar strength may have acted as an additional headwind for the commodity.
The U.S. Dollar Index (99.81, +0.12) finished Monday with a modest 0.1% gain after being up as much as 0.5%. Most of the greenback's gains came against the euro (1.0755) after far-right French presidential candidate Marine Le Pen vowed to take her country out of the eurozone.
The remaining sectors--financials, materials, health care, utilities, telecom services, and real estate--finished the day with losses between 0.1% and 0.8%.
Investors did not receive any economic data on Monday.
Tomorrow's economic data will include December Trade Balance (Briefing.com consensus -$45.0 billion) at 8:30 am ET, December Job Openings and Labor Turnover Survey at 10:00 am ET, and Consumer Credit (Briefing.com consensus $19.4 billion) at 3:00 pm ET.
Nasdaq Composite +5.2% YTD
S&P 500 +2.4% YTD
Dow Jones Industrial Average +1.5% YTD
Russell 2000 +0.7% YTD
DJ30 -19.04 NASDAQ -3.21 SP500 -4.86 NASDAQ Adv/Vol/Dec 1049/1.57 bln/1813 NYSE Adv/Vol/Dec 1116/935.5 mln/1810
3:30 pm :
In precious metals, gold ended pit trading at a fresh 3-month high as the dollar index gave up initial morning gains
April gold ended today's session up $11.70 (+1.0%) to $1232.30/oz
March silver closed today's session $0.21 higher (+1.2%) at $17.70/oz
Natural gas broke out of a 3-session uptrend, hovered just above the $3.00/MMBtu support zone; EIA on tap Thursday
Mar natural gas closed $0.01 lower (-0.3%) at $3.05/MMBtu
EIA natural gas data will be released Thursday at 10:30 am ET
Crude oil ended pit trading at its lowest level of the session on the heels of Friday's Baker Hughes data which showed US oil rigs were added for 13 out of the past 14 weeks
Mar crude oil futures fell $0.80 (-1.5%) to $53.01/barrel
Data reminders:
API petroleum data will be released tomorrow at 4:30 pm ET
EIA petroleum data will be released Wednesday at 10:30 am ET
Baker Hughes rig count data will be released Friday at 1 pm ET
The dollar index was nearly flat around the 99.88 level
Commodities, as measured by the Bloomberg Commodity Index, were -0.1% around the 87.83 level
The broader market began the week on a modestly lower trajectory. That's not to say there weren't some positive ticks in today's affair, a the Dow Jones spent a portion of the mid-morning above flat lines. The Nasdaq Composite also enjoyed a few brief moments above Friday's close, but ultimately all three major US indices closed in the red. The S&P 500 was the worst performer today, shedding 4.86 points (-0.21%) to 2292.56. The Dow Jones Industrial Average lost 19.04 points (-0.09%) to 20052.42, and the Nasdaq Composite was down 3.21 points (-0.06%) when the bell rang to 5663.55.
Displaying modest strength, the Technology (XLK 50.72, +0.03 +0.06%) space finished just ahead of flat lines despite carrying losses into the final moments of the close. Component NVIDIA (NVDA 117.31, +2.93 +2.56%) was higher after announcing its latest lineup of GPUs. Other sectors as measured by the S&P closed the session XLI +0.13%, XLV +0.11%, XLU -0.20%, XLB -0.27%, XLY -0.30%, XLF -0.46%, XLP -0.53%, XLRE -0.61%, XLE -0.84%, IYZ -1.74%.
In the S&P 500 Information Technology (856.55, +1.20 +0.14%) sector, trading also managed modest gains into the close. Bellwethers like YHOO +1.6%, AAPL +0.9%, FB +0.8%, GOOGL +0.2% all aided the advance.
Other notable news items among sector components:
Alphabet (GOOG 801.34, -0.15 -0.02%) to sell Terra Bella to Planet Labs. Financial terms of the deal were not disclosed.
Qualcomm's (QCOM 52.88, -0.10 -0.19%) Qualcomm River Holdings B.V. has extended the offering period of its previously announced cash tender offer to purchase all of the outstanding common shares of NXP
Semiconductors N.V. (NXPI 100.05, +0.59 +0.59%). The tender offer is now scheduled to expire at 5:00 p.m., New York City time, on March 7, 2017, unless extended or earlier terminated, in either case pursuant to the terms of the Purchase Agreement.
Disguise, Inc., the Halloween costume division of leading toy manufacturer, JAKKS Pacific, Inc. (JAKK 5.25, +0.15 +2.94%), has secured a worldwide licensing agreement with Mojang and Microsoft (MSFT 63.64, -0.04 -0.06%) to create children's Halloween costumes, Halloween accessories and everyday dress up based on Minecraft.
AudioCodes (AUDC +6.71, +0.35 +5.50%) signed an outbound license and distribution agreement with
Microsoft (MSFT) for Microsoft Cloud Connector Edition.
NVIDIA (NVDA) introduced some new Quadro products, all based on its Pascal architecture, that transform desktop workstations into supercomputers with breakthrough capabilities for professional workflows across many industries. The new GPUs include Quadro Pascal-based GPU models GP100, P4000, P2000, P1000, P600 and P400.
JetPay (JTPY 2.55, +0.05 +2.00%) entered into an agreement with the Office of the Illinois State Treasurer to become the payment processor for the State's E-Pay program. The agreement, which was awarded to the Company through its participation in a Request for Proposal process, is for an initial term of six years with four one-year renewal options. Revenues under the agreement are expected to begin in the fourth quarter of 2017.
Aerohive Networks (HIVE 5.12, -0.12 -2.29%) CFO John Ritchie assumed additional responsibilities as COO effective February 1.
Harris (HRS 105.13, +0.83 +0.80%) entered into a fixed dollar accelerated share repurchase transaction agreement with Morgan Stanley to repurchase shares of the Company's common stock for an initial payment of $350 million, as part of the common stock repurchase program.
Genpact (G 25.05, +0.03 +0.12%) acquired assets of Fiserv's (FISV 106.85, +0.13 +0.12%) Australia-based Item Processing Business. Financial terms of the deal were not disclosed.
SeaChange (SEAC 2.47, +0.03 +1.23%) to implement cost-savings actions. Also, the company has appointed Jonathan Rider as COO effective January 31, 2017.
SunPower (SPWR 6.99, -0.01 -0.14%) was awarded a $96,252,862 Defense Logistics Agency contract.
Ebix (EBIX 56.95, +0.25 +0.44%) announced a new $150 million share repurchase plan.
Analyst actions:
MSI was upgraded to Buy from Hold at Gabelli & Co.,
CHU and CHA were upgraded to Buy from Neutral at UBS,
GLUU was upgraded to Buy from Neutral at Roth Capital,
TRUE was upgraded to Outperform from Sector Perform at RBC Capital Mkts;
NVDA was downgraded to Neutral from Buy at Roth Capital,
HIVE was downgraded to Mkt Perform from Mkt Outperform at JMP Securities,
LPL was downgraded to Underweight from Equal Weight at Morgan Stanley,
HIMX was downgraded to Underweight from Equal Weight at Morgan Stanley,
AUO was downgraded to Underperform from Neutral at KGI Securities;
CUDA was initiated with a Buy at Needham,
QUIK was initiated with a Buy at Craig Hallum
InvestmentHouse - Jobs Reports Anticipating an ACA Repeal - Weekend Newsletter:
http://www.investmenthouse.com/frblog.php
- Market overcomes the gap lower as NASDAQ, SOX push to new highs.
- A few more negatives face stocks, but the upside bias is still winning
out.
- Not just typical stories are impacting stock movement, at least on a
temporary basis.
- Still plenty of good patterns. Plenty.
- Jobs Report shows a jump in full-time in January, anticipating ACA repeal.
- Earnings revert to a familiar pattern: lots of top line misses. Lots.
- Every day is an adventure as to what is coming from the administration and
how the market will take it. Even so, the market found support and moved
back up.
The past two weeks saw the stock indices break higher out of 6 week ranges
to new highs, give that move back 3 sessions later, then rally back to try
for new highs again. A breakout, a breakout rejection, then new bids.
Volume sluggish at best, unusual for a new year. Bullish advisor sentiment
hit a cycle high at 61.8%, making it 3 of 5 weeks over 60%. Historically,
that has marked a rally top and led to deeper corrections.
SP500 16.57, 0.73%
NASDAQ 30.57, 0.54%
DJ30 186.55, 0.94%
SP400 1.29%
RUTX 1.50%
SOX 0.52%
VOLUME: NYSE -3.5%, NASDAQ -9%. Okay it was Friday so if you are looking
for excuses you can use that one. Otherwise, it was another upside session
on lower volume.
A/D: NYSE 3.7:1, NASDAQ 2.8:1. Small and midcaps kicked back in and that
really helped to post some decent breadth for the first time in quite a
while.
Given the more negative issues arising, this weekend I expected to see
several downside setups in our review of stocks and sectors. Instead, I see
many upside setups for stocks that either made good moves and are ready to
resume, or are ready for new breaks. Oil has come back around likely thanks
to a weaker dollar. Semiconductors remain strong though many are not at new
buy points. Biotechs continue to set up patterns, particularly smaller
priced issues. Some areas of metals, and not just precious metals, show good
patterns. China stocks, transports -- large numbers of sectors are working
just fine.
So, was it just a momentary letdown with what the Trump administration was
accomplishing? Was there a sudden concern after the immigration EO that
Trump's growth agenda might be threatened, not so much by the democrats, but
by the real life Dumb and Dumber Lindsey Graham and John McCain?
Graham is still miffed his ideas were relegated to the sub-ticket in the
republican debates (and that should tell him where he stands with most of
America) while McCain's rants reveal he is still bitter about his 2008
defeat as he plays out the twilight of his career as a tin-plated dictator
with delusions of God-hood (that is a line from a Star Trek episode, 'The
Trouble with Tribbles'). Seriously, when your only response to economic,
social, foreign or any issues is 1) get the money out of politics (of which,
by the way, McCain has HUGE amounts in his war chest), and 2) massively
build up the military as some form of economic growth strategy
(demonstrating his economic wisdom could fit on a quarter of a 3 x 5 index
card), you are going to lose.
Okay, a bit of a digression, but it had to be said.
Whatever it was, the market went from breakout to rejected breakout, to
'well, maybe we should try again.' I don't like to see things in the
shadows that are not there. If a chart doesn't say 'buy' or 'sell,' then
you have to see what the stock is going to do. Don't try to divine meaning
beyond that because if the chart isn't saying it, then the decision is not
made. In that instance, if anything, look at the trend as the possible
overriding factor that could influence the way the stock breaks.
Right now the market is trending higher. Right now the NYSE indices are
again stuck in their range, having failed a breakout but also not collapsing
through the bottom of their late 2016 ranges. SOX and NASDAQ broke to
higher highs this past week, still clearly trending upside and thus leading
the market in terms of the upside.
With that, and not looking for things in the shadows, you would play stocks
in those indices upside and be ready to play the others as their components
follow their lead. We have positions in both. Basically we have positions
in the good sectors that are moving up, and we are looking at positions in
other areas in the event they make the move as well. Following leadership
tends to put you in that situation.
Thus the outlook is all roses given NASDAQ and SOX are trending higher and
the NYSE indices have not broken their ranges, right? Well, maybe not
roses, but they are trending higher for now. Not looking at shadows mind
you, but looking at facts, there is the 60+% sentiment reading in 3 of the
past 5 weeks, a reliable indicator of a market top forming. As for timing,
not so reliable. It is there, however, it is a fact, and it has
ramifications. As noted last week, it is a factor to put into the equation,
a factor that worsens the risk/reward probabilities a bit. It does not
trump good patterns making good moves, but it CAN and SHOULD factor into
your plan for a position and what size of move you anticipate.
So this coming week we have a lot of upside plays that have the potential to
make good money without needing a two month move to do so. The market is
not showing it is rolling over but it has shown signs the buyers are not as
lockstep solid as they were. After all, a breakout was rejected, and that
is one of the strongest market signals. Nonetheless, the stock indices did
not roll over and they are back at it again. Coupled with seeing a lot of
stocks in or setting up good potential entries, you look at the plays in
line with that situation.
When entering, however, set your parameters with the overlay of the negative
factors and don't assume that just because the trend is in place it must
remain in place. They say what does not kill you (or a trend) makes you
stronger. The thing is, you have to go through the rougher patches to find
out if you are going to survive. The key to being in the market at these
times is not assuming survival and thus entering at good entries and taking
gain at logical points, then letting the rest of the position work as long
as the play and the market behave.
NEWS/ECONOMY
Jobs and earnings dominated the news. Earnings, as noted earlier in the
week, are reverting back to the top line/revenues misses after a one-quarter
improvement in Q3. I heard one of the CNBC baristas parrot what her fund
manager sources (talking their book of course) regarding how the earnings
drought is over. Really? It looks more as if Q3 was an aberration, not a
reversion to the mean. Once again the market has sadly put forth an
impressive string of companies sporting top line misses:
Revenue misses: AMZN; GPRO; CLX; AN; HSY; DECK; FEYE; HBI; MRK; AZN; MET;
EL; SYMC; UA; HOG; XRX; UPS; HON; GD; CG; SBUX; GOOG; F; QCOM; MAT; CAT;
BIIB; TXT; COF; JNJ; DD; HAL; GE; C; BAC; BLK; WFC.
Do you see the pattern? Right, there is NO pattern. Companies from all
sectors are missing. A veritable who's who of corporate giants once again
suffering revenues declines.
Jobs Report
Non-Farm Jobs: 227K versus 235k expected versus 154K prior (from 156K)
Unemployment: 4.8%
Average Hourly Wages: 0.1% vs 0.3% expected versus 0.2% December (from
0.4%).
Yearly wages: +2.5%
Workweek: 34.4 hours vs 34.3 expected versus 34.4 prior (from 34.3)
Participation Rate: 62.9% versus 62.7%. Quite a jump.
Not in workforce: 94.3M versus 95.1M December. Down by 736,000.
Entering workforce: +580K
Part-time jobs: -490K
Full-time jobs: +457K
The January jobs report received some gushingly good reviews by some
commentators while others were more sanguine. Both are wrong.
It's 227K jobs people; it is sooooo mediocre. But, as I wrote years ago, we
were going to 'dumb down' our standards for what is good and not. Years of
barely mediocre results resulting from the structural changes in our economy
and jobs market, thanks to regulation and taxes, put governors on our
economic output. Remember when 500K was truly a great number and 300K was
decent? Do you? Many do not and it is a sad testament to how we have
fallen. Is it any wonder that the campaign slogan 'Make America Great Again'
caught on with millions of Americans who remember what it was like when
American economic activity was great?
Wages: Many focused on the wage growth in December as a great signal of
recovery. Well, that growth was cut in half with revisions. Even so, at
the time I pointed out that the wage growth was skewed to the very top, the
supervisory employees (and that does include the CEO's, CIO's, CFO's, etc.)
and not toward the non-supervisory employees. Given the non-supervisory
employees make up 85+% of the workforce, that makes a difference in the
outlook on the economy and the ability to participate in it.
The January wages disappointed but it was more than the financial stations
report.
Non-supervisory wage growth, January: 0.04%
Average weekly earnings: -1.9%, the worst reading in a year.
Minimum wage: These paltry wage gains, indeed wage losses on a weekly
basis, occurred even as several more states implemented minimum wage
standards for 2017. That tells you right there that the wage gains were not
in the lower end of the spectrum: even as wages went up a mandated rate in
some states, overall wages fell at the low end. Did anyone see the new San
Francisco (first in Hong Kong) automated coffee drink barista? 2 cups a
minute to customers with no employees. Maybe those 10,000 refugees
Starbucks talked about are going to clean up after the automated coffee
barista is done for the day? Heck, they probably even have automated
cleaners; the machine barista is self-cleaning I hear.
I find it fascinating that full-time jobs surged and part-time purged in
January. This is the market anticipating an ACA repeal retroactive to the
first of the year. It is a case in point that tells you the markets,
employment markets as well as financial, are hearing what the Trump
administration is saying and ARE taking it at its word. With the ACA and
its 29-hour death threshold gone, companies will like to hire full-time
again. Fewer workers, less repeated training of employees due to higher
turnover at lower wage jobs, higher wages.
I believe the sharp 400K drop in ACA enrollees to start 2017 demonstrates
this mindset as well: people know the ACA will be repealed and thus they are
not buying the insurance they do not want and cannot afford.
Again, it is fascinating how the economic micro-planners think they can
dictate what must be done and think they have it all figured out just to see
how when you squeeze one side of a balloon the other pops out. Fortunately,
it does not look as if they squeezed so hard the balloon popped, but we are
not out of the woods yet, not by a long shot.
MARKET
After the breakout to new highs was rejected (at least for all but RUTX),
the indices held in their ranges and rallied right back up. SOX and NASDAQ
punched in at new highs while the other indices look as if they want to head
that way. Talk about a continuing upside bias, that is it: a rejection of
the rejection so to speak.
CHARTS
NASDAQ: After gapping lower Monday from the breakout gap, NASDAQ caught
itself, gapped higher Wednesday and finished out the week with a new
all-time closing high. It is just below the intraday high from late
January, but MACD broke higher on that high and volume was not bad at all on
the Wednesday upside break.
SOX: After an early week 10 day EMA test, SOX climbed back up and moved to
a new recovery high Friday, gapping to a doji. The chips continue leading
even if they move through a rotation inside the sector.
SP500, DJ30: The same action, gapping lower form the new high, holding in
the prior 6 week range, recovering Friday back near the top of the range.
SP500 gapped back over its 2016 trenldine Friday and both indices are not
just below the prior week's all-time high. They came right back from having
the breakout rejected, in kind of a rejection of the rejections.
SP400, RUTX: Both of these smaller cap indices tested at or near the lows
of the 6-week range early week, then stumbled higher. Friday they posted
nice upside gaps and are set to challenge the recent highs.
LEADERSHIP
Chips: New high on SOX and of course strong moves in the chips. NVDA, MU,
TSEM strong all week along with QRVO, AVGO, SLAB. More look interesting
such as AMBA, ENPH.
FAANG: FB trying to hold at the 10 day EMA as it rallied over the October
high on its earnings but reversed sharply. As with AMZN, the possibility of
a double top. AMZN gapped lower on earnings after testing the October high,
possibly a double top. At a minimum these are worth watching. AAPL holding
the Wednesday earnings gap. NFLX tested on the week, holding the 10 day EMA
and still trending. GOOG gapped up Friday, but that after gapping down
Monday and dropping to the 50 day MA's. These all deserve watching.
Biotech: Some interesting smaller patterns: INFI, CNAT, CRMD, OREX.
Oil: With the dollar falling they suddenly look better, again. AXAS, CRK,
UNT, SPN, NE.
China: Still not bad. SOHU setting up. ATHM continues climbing up the 10
day EMA. Ditto NTES. BABA has a nice pennant.
Materials/Construction: Still looking good. CX working on a 2 week pennant
over the 10 day EMA. MDR posted a good move on the week.
Financial: Came right back to life on the Trump EO dropping the Obama EO
creating a fiduciary duty between investment advisors and clients. Frankly,
I don't really have a problem with a financial advisor having a fiduciary
relationship with a client. What this gets to is not allowing the advisor
to take positions on the opposite side of a client. An advisor should not
be a market maker or something of that sort; that creates conflicts of
interest. If you want to advise people and get your certification, you want
a level of trust. 'Trust me' carries more weight if you know your advisor is
not taking a position the opposite of yours for whatever reason. But, I
digress. GS jumped higher (of course after I killed the play), C looks to
have bounced off a double bottom of sorts, BAC is approaching the top of the
range. QIWI is in good shape to break higher.
Metals: Precious metals are still looking good, e.g. HMY. Other metals as
well, e.g. MUX, X.
MARKET STATS
DJ30
Stats: +186.55 points (+0.94%) to close at 20071.46
Nasdaq
Stats: +30.57 points (+0.54%) to close at 5666.77
Volume: 1.8B (-9.04%)
Up Volume: 1.24B (+246.02M)
Down Volume: 517.44M (-522.56M)
A/D and Hi/Lo: Advancers led 2.77 to 1
Previous Session: Decliners led 1.09 to 1
New Highs: 181 (+81)
New Lows: 33 (+9)
S&P
Stats: +16.57 points (+0.73%) to close at 2297.42
NYSE Volume: 850.5M (-3.35%)
A/D and Hi/Lo: Advancers led 3.68 to 1
Previous Session: Advancers led 1.23 to 1
New Highs: 186 (+75)
New Lows: 17 (-4)
SENTIMENT INDICATORS
VIX: 10.97; -0.96
VXN: 12.78; -0.85
VXO: 10.14; -0.78
Put/Call Ratio (CBOE): 0.76; -0.1
Bulls and Bears: Bulls made it 3 of 5 weeks over 60, this time hitting
61.8, a new high for this move. Starting to pile up the more extreme level.
Bulls: 61.8 versus 58.2
Bears: 17.6 versus 17.5
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: 61.8 versus 58.2
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 versus 44.6
versus 49.0 versus 52.5 versus 55.9 versus 56.7 versus 56.2 versus 54.3
versus 52.9% versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus
41.6% versus 47.5% versus 45.9% versus 47.3% versus 45.4% versus 35.4%
versus 40.2 versus 39.2
Bears: 17.6 versus 17.5
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
versus 22.6 versus 22.8 versus 20.6 Versus 20.2 versus 20.0 versus 20.9%
versus 21.2% versus 21.6% versus 23.3% versus 24.7% versus 24.5% versus
23.8% versus 23.2% versus 23.5% versus 23.8% versus 23.7% versus 24.0%
versus 21.7% versus 21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8%
versus 27.8% versus 28.9% versus 27.8% versus 30.3% versus 35.4%
OTHER MARKETS
Bonds (10 year): 2.48% versus 2.474%
Historical: 2.474% versus 2.477% versus 2.44% versus 2.49% versus 2.48%
versus 2.512% versus 2.52% versus 2.467% versus 2.40% versus 2.47% versus
2.468% versus 2.422% versus 2.372% versus 2.393% versus 2.358% versus 2.365%
versus 2.38% versus 2.962% versus 2.42% versus 2.357% versus 2.45% versus
2.448% versus 2.42% versus 2.48% versus 2.51% versus 2.56% versus 2.54%
versus 2.55% versus 2.54% versus 2.564% versus 2.544% versus 2.59% versus
2.59% versus 2.52% versus 2.473% versus 2.475% versus 2.471% versus 2.40%
versus 2.349% versus 2.39% versus 2.396% versus 2.394% versus 2.454% versus
2.388% versus 2.30% versus 2.31%. versus 2.36% versus 2.355% versus 2.317%
versus 2.30% versus 2.34% versus 2.297% versus 2.219% versus 2.22% versus
2.23% versus 2.14% versus 2.077% versus 1.867% versus 1.83% versus 1.778%
EUR/USD: 1.07880 versus 1.07605. Euro continues rising.
Historical: 1.07605 versus 1.07892 versus 1.0791 versus 1.07294 versus
1.06957 versus 1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus
1.0761 versus 1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus
1.06450 versus 1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus
1.05346 versus 105837 versus 1.0525 versus 1.03914 versus 1.05289 versus
1.05155 versus 1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus
1.04412 versus 1.0392 versus 1.0407 versus 1.0459 versus 1.0415 versus
1.05094 versus 1.0636 versus 1.06326 versus 1.05586 versus 1.06140 versus
1.07745 versus 1.07194 versus 1.07614 versus 1.06638 versus 1.06631 versus
1.0601 versus 1.0649 versus 1.05699 versus 1.066 versus 1.05910
USD/JPY: 112.567 versus 112.903. Dollar struggling to hang on at the recent
lows.
Historical: 112.903 versus 112.68 versus 112.50 versus 114.493 versus
115.094 versus 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983 versus 116.739 versus 116.456 versus
116.793 versus 117.41 versus 117.413 versus 117.32 versus 117.537 versus
117.544 versus 117.835 versus 117.453 versus 117.941 versus 118.257 versus
117.397 versus 115.038 versus 115.058 versus 115.20 versus 114.23 versus
113.325 versus 113.993 versus 113.601 versus 113.52 versus 113.945 versus
114.19 versus 112.685 versus 112.44 versus 111.835 versus 113.14 versus
112.445 versus 111.129 versus 110.809
Oil: 53.83, +0.29. Still bumping against 54.00 resistance.
Gold: 1220.80, +1.40. Good week, clearing the January recovery peaks and
double top.
MONDAY
NYSE indices are still in their ranges, unable to hold a breakout but the
sellers unable to break them down from their range. Thus they are at the
top of the range and trying to follow NASDAQ and SOX to higher highs. The
upside bias has not broken; faltered a bit, but it keeps recovering.
Immigration was an issue for some reason, and the market healed itself,
focusing on Trump getting rid of the fiduciary EO. Leaked, and I hear
exaggerated, versions of telephone calls with the Australian PM and Mexican
President worry some and cause curmudgeon McCain to make his own calls of
assurance to world leaders.
What will be the next problem and will it be a real problem? Immigration
caused the rending of garments on the east and west coast but the rest of
the US asked 'isn't that what he said he was going to do? Have not other
Presidents done the same thing? Is this not expressly a power Congress
granted to the Executive?' Then they went back to work to pay for all of
the benefits many of those protesting receive.
The point: The new administration is proceeding at a rapid clip, the
democrats were caught off guard with the loss and are scrambling to oppose
what they can. Having no plan in place they are getting help from some of
the less savory areas and the result is property destruction, limitation of
free speech, and in some cases some serious injuries to some people who just
happened to try and speak up for themselves. Not a good situation for
either side to be in.
Thus the market is still somewhat susceptible to the story of the day as we
saw the past couple of weeks. Ironically, earnings are not having that much
impact out of the individual stock involved. Outside influences are
exerting more near term pressure on stocks and causing selling then buying,
or at least a cessation of selling.
That does show the upside bias continues and thus we have quite a few upside
plays this weekend. We tried to filter them to the best ones with regard to
sector, pattern, earnings, but there are a LOT of stocks that have set up
where we like the patterns. That suggests (just suggests) that the market
is ready to make a new break higher, continuing the breakout that tried but
failed two Wednesdays back.
Again, that could be the last hurrah for the rally given the sentiment
readings, but sentiment is not a timing device, just a warning flag. If the
market wants to put in another run it will do so. It is up to us to
participate, and then watch to see if there is anything that truncates that
move prematurely given the more extreme bullish sentiment.
Have a great weekend.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5666.77
Resistance:
Support:
5601 is the January lower gap point
The 2016 trendline at 5516
The 50 day EMA at 5493
The 50 day SMA at 5482
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
The 200 day SMA at 5175
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
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
S&P 500: Closed at 2297.42
Resistance:
2301 is the late January 2017 high
Support:
The 2016 trendline at 2283
2282 - 2280 from January 2017
2277.53 is the December 2016 high
The 50 day SMA at 2255
The 50 day EMA at 2252
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
The 200 day SMA at 2161
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the September 2016 low; February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
2020 is the September 2015 intraday high
2011 is the September prior all-time high
1995 is the September 2015 recovery peak
1991 is the July 2014 high
Dow: Closed at 20,071.46
Resistance:
20,126 is the January 2017 high
Support:
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
The 50 day SMA at 19,731
The 50 day EMA at 19,647
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
The 200 day SMA at 18,550
18,351 is the prior all-time high from May 2015
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
ECONOMIC CALENDAR
February 3 - Friday
Nonfarm Payrolls, January (8:30): 227K actual versus 170K expected, 157K
prior (revised from 156K)
Nonfarm Private Payr, January (8:30): 237K actual versus 175K expected, 165K
prior (revised from 144K)
Unemployment Rate, January (8:30): 4.8% actual versus 4.7% expected, 4.7%
prior (no revisions)
Avg. Hourly Earnings, January (8:30): 0.1% actual versus 0.3% expected, 0.2%
prior (revised from 0.4%)
Average Workweek, January (8:30): 34.4 actual versus 34.3 expected, 34.4
prior (revised from 34.3)
Factory Orders, December (10:00): 1.3% actual versus 1.4% expected, -2.3%
prior (revised from -2.4%)
ISM Services, January (10:00): 56.5 actual versus 57.0 expected, 56.6 prior
(revised from 57.2)
February 7 - Tuesday
Trade Balance, December (8:30): -$45.0B expected, -$45.2B prior
JOLTS - Job Openings, - (10:00): 5.522M prior
Consumer Credit, December (15:00): $19.4B expected, $24.5B prior
February 8 - Wednesday
MBA Mortgage Applica, 02/04 (7:00): -3.2% prior
Crude Inventories, 02/04 (10:30): +6.500M prior
February 9 - Thursday
Initial Claims, 02/04 (8:30): 250K expected, 246K prior
Continuing Claims, 02/04 (8:30): 2064K prior
Wholesale Inventorie, December (10:00): 1.0% expected, 1.0% prior
Natural Gas Inventor, 02/04 (10:30): -87 bcf prior
February 10 - Friday
Export Prices ex-ag., January (8:30): 0.4% prior
Import Prices ex-oil, January (8:30): -0.2% prior
Mich Sentiment - Pre, February (10:00): 97.9 expected, 98.5 prior
Treasury Budget, January (14:00): $55.2B prior
From Briefing.com: Weekly Recap - Week ending 03-Feb-17
After enjoying a solid 1.0% gain two weeks ago, the stock market returned to its range-bound ways. The S&P 500 spent the week inside a 31-point range, ending the week higher by 0.1%.
The past week was rife with earnings, economic data, and commentary from two major central banks, but the market shrugged off the busy event calendar, remaining near record levels.
Most notably, the Federal Open Market Committee concluded its latest two-day meeting on Wednesday. The central bank maintained its policy stance and gave little indication that a rate hike could be announced at the next policy meeting in May.
Wednesday's FOMC announcement followed the release of a stronger than expected ADP Employment Report for January (246,000; Briefing.com consensus 165,000). Friday's release of the Employment Situation report also showed above-consensus headline growth (227,000; Briefing.com consensus 170,000), but average hourly earnings increased just 0.1% (Briefing.com consensus 0.3%) and last month's growth was revised down to 0.2% from 0.4%. As a result, the year-over-year average hourly earnings growth rate slowed to 2.5% from 2.8% in December.
The combination of solid job growth and lackluster wage growth was welcomed by the stock market, considering it did not foreshadow an inflationary spike that would prompt a hawkish response from the Fed.
Rate hike expectations saw a moderate downtick. On Friday afternoon, the fed funds futures market pointed to a 63.5% implied likelihood of a June hike, down from last week's 69.2%.
On the earnings front, investors received a set of results from heavyweights like Amazon (AMZN), Apple (AAPL), Facebook (FB), Visa (V), UPS (UPS), and others. Amazon and UPS missed estimates while Apple, Facebook, and Visa surpassed expectations. However, it is worth noting that while Apple reported above-consensus results, the company faced reduced competition during the quarter after the recall of Samsung's Note 7 in early October.
Index Started Week Ended Week Change % Change YTD %
DJIA 20093.78 20071.46 -22.32 -0.1 1.6
Nasdaq 5660.78 5666.77 5.99 0.1 5.3
S&P 500 2294.69 2297.42 2.73 0.1 2.6
Russell 2000 1370.15 1377.83 7.68 0.6 1.5
4:28 pm Closing Market Summary: Stock Market Finishes the Week Strong (:WRAPX) :
Friday's economic data gave investors the confidence to finally break the week's sideways trend and push the stock market higher. The major averages hit their session highs within an hour of the opening bell and maintained said levels into the close. The S&P 500 finished with a gain of 0.7%, while the Dow (+0.9%) did modestly better and the Nasdaq (+0.5%) did slightly worse.
The Employment Situation Report for January came in just right; strong enough to keep participants thinking good things about the economy, but not strong enough to convince the market that the Fed is now going to be in a hurry to raise the fed funds rate. The above-consensus 227,000 nonfarm payroll additions (Briefing.com consensus 170,000) and the lower than expected 0.1% increase in average hourly earnings (Briefing.com consensus +0.3%) were the two main metrics driving the optimistic sentiment.
U.S. Treasuries ticked up following the report's release, but squandered all of those gains in the afternoon following comments from the Federal Reserve Bank of San Francisco President John Williams. Mr. Williams reiterated the Fed's expectation of three rate hikes in 2017, but more notably, he expressed his belief that a rate hike in March is on the table. His comments were consistent with remarks made by Chicago Fed President Charles Evans, who said he would be comfortable with three hikes in 2017. Mr. Evans is a voting FOMC member this year while Mr. Williams is an alternate FOMC member.
Treasuries fell back to their flat lines in the wake of the comments from the two policymakers. The 2-yr yield, which is most susceptible to FOMC rate decisions, closed the day one basis point lower at 1.20% after posting a session low at 1.17%. The benchmark 10-yr yield ended flat at 2.48%.
Financials (+2.0%) provided strong sector leadership, leading Friday's session from the open to the close. The sector's tenacity took root before the market even opened after The Wall Street Journal reported that President Trump would reduce regulatory burdens on the financial sector through an executive order aimed at scaling back the Dodd-Frank Act and reversing the Fiduciary Rule. Mr. Trump did just that following a White House meeting with business executives led by Blackstone's (BX 30.74, -0.05) Steve Schwarzman.
At the opposite end of the day's leaderboard, consumer discretionary (-0.1%) was the only sector to finish the day lower. The space took several shots from the likes of Chipotle (CMG 404.08, -19.22), Hanesbrands (HBI 18.98, -3.73), and AutoNation (AN 49.77, -2.00) after investors reacted negatively to the latest earnings reports from the three companies.
The discretionary sector could not climb out of the red as top component Amazon (AMZN 810.20, -29.75) weighed. The internet retail giant retreated 3.5% after reporting worse than expected revenues, coupled with disappointing guidance on Thursday evening.
Technology (+0.7%) finished the day in line with the benchmark index. Visa (V 86.08, +3.78) was the sector's top performer thanks to better than expected earnings and revenue. However, lackluster performances from large-cap components like Apple (AAPL 129.08, +0.55), Facebook (FB 130.98, +0.14), and Alphabet (GOOGL 820.13, +1.87) held the sector's gains in check.
On the countercyclical side, the health care, consumer staples, telecom services, and real estate sectors gained between 0.4% and 0.6%, while utilities (+0.1%) closed just a step behind.
Defensive spaces dominated the week with four of the five logging weekly gains. Comparatively, the financial (+0.2%) and technology (unch) sectors were the only cyclical groups to close the week higher.
Today's economic data included January Employment Situation Report, January ISM Services, and December Factory Orders:
January Employment Situation Report
January nonfarm payrolls came in at 227,000 while the Briefing.com consensus expected a reading of 170,000. The prior month's reading was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 while the Briefing.com consensus expected an increase of 175,000. The unemployment rate increased to 4.8% (Briefing.com consensus 4.7%).
Average hourly earnings increased 0.1% (Briefing.com consensus +0.3%), while the previous month's reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 while the Briefing.com consensus expected a reading of 34.3. The previous month's reading was revised to 34.4 (from 34.3).
The key takeaway is that this is one of those so-called "Goldilocks" reports since it is strong enough to keep participants thinking good things about the economy, but not strong enough to convince the market to think it means the Fed is now going to be in a hurry to raise the fed funds rate. The tempered growth in average hourly earnings, which dialed back year-over-year growth to 2.5% from 2.8% in December, is the focal point as it relates to the market's perspective on the Fed.
The ISM Services Index for January decreased to 56.5 while the Briefing.com consensus expected a downtick to 57.0. The prior month's reading was revised down to 56.6 from 57.2.
The key takeaway from the report is that growth in the services sector, which accounts for a much bigger slice of economic activity than the manufacturing sector does, persisted for the 85th straight month.
The Factory Orders Report for December showed an increase of 1.3% while the Briefing.com consensus expected a increase of 1.4%. The November reading was revised up to -2.3% from -2.4%.
The key takeaway from the report is that the December increase was led entirely by orders for nondurable goods (+3.1%). Paced by a 2.5% decline in transportation equipment orders, durable goods orders fell 0.5% in December.
Investors will not receive any economic data on Monday.
Nasdaq Composite +5.3% YTD
S&P 500 +2.6% YTD
Dow Jones Industrial Average +1.6% YTD
Russell 2000 +1.5% YTD
Week in Review: Holding Steady
After enjoying a solid 1.0% gain two weeks ago, the stockmarket returned to its range-bound ways. The S&P 500 spent the week insidea 31-point range, ending the week higher by 0.1%.
The past week was rife with earnings, economic data, andcommentary from two major central banks, but the market shrugged off the busyevent calendar, remaining near record levels.
Most notably, the Federal Open Market Committee concludedits latest two-day meeting on Wednesday. The central bank maintained its policystance and gave little indication that a rate hike could be announced at the nextpolicy meeting in May.
Wednesday's FOMC announcement followed the release of astronger than expected ADP Employment Report for January (246,000; Briefing.comconsensus 165,000). Friday's release of the Employment Situation report alsoshowed above-consensus headline growth (227,000; Briefing.com consensus170,000), but average hourly earnings increased just 0.1% (Briefing.comconsensus 0.3%) and last month's growth was revised down to 0.2% from 0.4%. Asa result, the year-over-year average hourly earnings growth rate slowed to 2.5%from 2.8% in December.
The combination of solid job growth and lackluster wagegrowth was welcomed by the stock market, considering it did not foreshadow aninflationary spike that would prompt a hawkish response from the Fed.
Rate hike expectations saw a moderate downtick. On Friday afternoon, thefed funds futures market pointed to a 63.5% implied likelihood of a June hike,down from last week's 69.2%.
On the earnings front, investors received a set of resultsfrom heavyweights like Amazon (AMZN), Apple (AAPL), Facebook (FB), Visa (V),UPS (UPS), and others. Amazon and UPS missed estimates while Apple, Facebook,and Visa surpassed expectations. However, it is worth noting that while Applereported above-consensus results, the company faced reduced competition duringthe quarter after the recall of Samsung's Note 7 in early October.
Ending the week on a higher note, the broader market finished barely off highs. Action in the Dow Jones Industrial Average led all, up 186.55 points (+0.94%) to 20071.46. The S&P 500 added 16.57 points (+0.73%) to 2297.42, and the Nasdaq Composite gained 30.57 points (+0.54%) to 5666.77. This week's moves take the three major US indices +1.5%, +2.6% and +5.3% YTD, respectively.
Today's data included the January Employment Situation Report: January nonfarm payrolls came in at 227,000 compared to the prior month's reading which was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 and the unemployment rate increased to 4.8%. Also, average hourly earnings increased 0.1%, while the previous month's reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 compared to the previous month's reading was revised to 34.4 (from 34.3). Further, the ISM Services Index for January decreased to 56.5 and the prior month's reading was revised down to 56.6 from 57.2. Lastly, the Factory Orders Report for December showed an increase of 1.3% and the November reading was revised up to -2.3% from -2.4%.
Also ending higher today, the Technology (XLK 50.69, +0.33 +0.66%) space closed near highs. Component Visa (V 86.08, +3.78 +4.59%) was the best performing name today after a better than expected Q1 report. Other sectors as measured by the S&P closed XLF +2.02%, IYZ +0.91%, XLE +0.88%, XLI +0.74%, XLRE +0.65%, XLP +0.59%, XLV +0.46%, XLB +0.15%, XLU +0.12%, XLY -0.13% as only Consumer Discretionary finished in the red.
In the S&P 500 Information Technology (855.35, +5.79 +0.68%) space, trading sped higher at the open and never looked back. Component Motorola Solutions (MSI 81.58, +0.58 +0.72%) was another stock which outperformed after its quarterly report. Other names in the space which ended Friday higher included TSS +3.67%, HPE +3.57%, GPN +2.45%, SYMC +2.34%, CTXS +2.33%, STX +2.25%, ADSK +1.99%, ADBE +1.78%, FSLR +1.77%, CSRA +1.73%, FLIR +1.62%, CTSH +1.59%, TDC +1.44%.
Other notable news items among sector components:
Snap Inc., owner of the Snapchat messaging service, filed its Form S-1 prospectus to trade on the NYSE under the symbol 'SNAP.'
Imation's (IMN 0.81, +0.00 +0.01%) interim CEO Robert Fernander resigned.
Support.com's (SPRT 2.28, -0.04 -1.72%) CFO Roop Lakkaraju announced his resignation from the company to pursue another opportunity.
Wells Fargo (WFC 57.26, +1.51 +2.71%) has entered into an agreement with Intuit (INTU 118.37, +0.54 +0.46%), which allows Wells Fargo customers who use financial management tools such as QuickBooks Online, Mint, and TurboTax Online to use an innovative application-programming interface when importing their bank account information.
Qualcomm (QCOM 52.98, +0.32 +0.61%) and TDK Corporation (TTDKF) announced the completion of the previously announced joint venture under the name RF360 Holdings Singapore PTE. Ltd.
magicJack VocalTec (CALL 7.65, +0.35 +4.79%) reached an agreement with David Kanen and Kanen Wealth Management LLC in connection with the company's 2016 Annual Meeting of Shareholders. Pursuant to the agreement, Kanen has withdrawn its proposed slate of director nominees for election.
Viavi (VIAV 9.23, -0.05 -0.54%) was awarded about $26.4 million Defense Logistics Agency contracts.
In reaction to quarterly results:
Amazon (AMZN 810.20, -29.75 -3.54%) reported better than expected Q4 EPS and worse than expected revenues of $1.54 and $43.74 billion, respectively. For Q1, the company sees worse than expected revenues of $33.25-35.75 billion.
Visa (V) reported better than expected Q1 EPS and revenues of $0.86 and $4.46 billion, respectively.
Motorola Solutions (MSI) reported better than expected Q4 EPS and revenues of $2.03 and $1.88 billion, respectively. For Q1, the company sees EPS and revenues below market expectations at $0.52-0.57 and growth of 3-5% year-over-year to about $1.23-1.25 billion, respectively.
Mettler-Toledo (MTD 462.67, +29.03 +6.69%) reported better than expected Q4 EPS of $5.28 on in-line revenues of $709.7 million. For Q1, the company sees better than expected EPS of $3.05-3.10. For FY17, MTD also sees better than expected EPS of $16.55-16.75.
Computer Sciences (CSC 69.95, +7.00 +11.12%) reported better than expected Q3 EPS and revenues of $0.81 and $1.92 billion, respectively. For FY17, the company reaffirmed its prior outlook for EPS from continuing operations of $2.75-3.00 billion.
FireEye (FEYE 10.93, -2.04 -15.73%) reported a better than expected Q4 loss per share of $0.03 on revenues which came in below market expectations at $184.7 million. FEYE also guided Q1 EPS and revenues below market expectations at ($0.28)-($-0.26) and $160-166 million, respectively.
GoPro (GPRO 9.58, -1.39 -12.67%) reported better than expected Q4 EPS of $0.29 on revenues which missed expectations at $540.62 million. Also, GPRO guided Q1 revenues below expectations at $190-210 million.
Analyst actions:
FEYE was upgraded to Equal Weight from Underweight at First Analysis Sec,
AMTD was upgraded to Outperform from Neutral at Credit Suisse,
CDK was upgraded to Equal Weight from Underweight at Morgan Stanley,
FTNT was upgraded to Overweight from Neutral at Piper Jaffray,
PCTY was upgraded to Buy from Underperform at BofA/Merrill,
VECO was upgraded to Buy from Hold at Needham,
PXLW was upgraded to Buy from Hold at Lake Street;
GPRO was downgraded to Underperform from Neutral at Robert W. Baird and to Underperform from Mkt Perform at Raymond James,
FEYE was downgraded to Neutral from Overweight at Piper Jaffray,
TERP was downgraded to Neutral from Outperform at Macquarie,
UTEK was downgraded to Hold from Buy at The Benchmark Company,
BCE was downgraded to Hold from Buy at Canaccord Genuity;
NVDA was initiated with an Underperform at CLSA
From Briefing.com: 4:35 pm Ixys reports DecQ results, revenue increases 5.8% YoY (IXYS) : Reports Q3 (Dec) earnings of $0.16 per share; revenues rose 5.8% year/year to $79.48 mln. There are no analyst estimates.
Co guides to Q3 (Mar) revenue being up 3% sequentially which we compute as $81.9 mln. There are no analyst estimates.
"Political uncertainty materially held back growth in 2016 as customers were reticent to make forecasts, preferring to purchase as needed on short lead times. IXYS was able to adapt to these conditions, securing new customers and stabilizing revenue trends. With various governmental elections decided by the end of 2016, focus has returned to economic development worldwide. Bookings are up and our backlog remains strong...Therefore, we are cautiously optimistic about our prospects and expect revenues in [MarQ] to increase 3% from [DecQ]."
4:13 pm Motorola Solutions beats by $0.17, beats on revs; guides Q1 EPS below consensus, revs below consensus (MSI) :
Reports Q4 (Dec) earnings of $2.03 per share, excluding non-recurring items, $0.17 better than the Capital IQ Consensus of $1.86; revenues rose 12.0% year/year to $1.88 bln vs the $1.84 bln Capital IQ Consensus.
Co issues downside guidance for Q1, sees EPS of $0.52-0.57, excluding non-recurring items, vs. $0.67 Capital IQ Consensus Estimate; sees Q1 revs growth of 3-5% year/year, which calculates to ~$1.23-1.25 bln vs. $1.28 bln Capital IQ Consensus Estimate.
4:10 pm Cypress Semi beats by $0.01, reports revs in-line; guides Q1 EPS in-line, revs above consensus (CY) :
Reports Q4 (Dec) earnings of $0.15 per share, $0.01 better than the Capital IQ Consensus of $0.14; revenues were unchanged from the year-ago period at $530.17 mln.
Co issues guidance for Q1, sees EPS of $0.09-0.13 vs. $0.10 Capital IQ Consensus Estimate; sees Q1 revs of $495-525 mln vs. $495.81 mln Capital IQ Consensus Estimate.
4:10 pm Pixelworks beats by $0.03, beats on revs; guides Q1 revs above consensus -- co preannounced Q4 revs on 1/10 (PXLW) :
Reports Q4 (Dec) earnings of $0.04 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.01; revenues rose 17.1% year/year to $15.99 mln vs the $15.49 mln Capital IQ Consensus.
On a non-GAAP basis, fourth quarter 2016 gross profit margin was 53.6%, compared to 48.6% in the third quarter of 2016 and 50.9% in the fourth quarter of 2015. Fourth quarter 2016 gross profit margin increased compared to the prior periods due to a more favorable sales mix and lower direct material cost, primarily for products sold into the digital projector market.
Co issues upside guidance for Q1, sees Q1 revs of $22-23 mln vs. $18.52 mln Capital IQ Consensus Estimate.
"These results demonstrate the considerable progress we've made over the last few quarters to transform our operating model and strengthen the Company's fundamentals. Looking forward, we expect to achieve year-over-year revenue growth, excluding the anticipated EOL contribution, while also maintaining a goal of delivering profitability in 2017."
4:09 pm Rudolph Tech beats by $0.01, reports revs in-line; guides Q1 EPS below consensus, revs in-line (RTEC) :
Reports Q4 (Dec) earnings of $0.21 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.20; revenues rose 5.9% year/year to $54.1 mln vs the $54.17 mln Capital IQ Consensus.
Gross margins remained strong at 52 percent for the quarter.
Co issues guidance for Q1, sees EPS of $0.22-0.25, excluding non-recurring items, vs. $0.26 Capital IQ Consensus Estimate; sees Q1 revs of $57-60 mln vs. $58.23 mln Capital IQ Consensus Estimate.
4:08 pm Amazon beats by $0.12, misses on revs; guides Q1 below consensus (AMZN) :
Reports Q4 (Dec) earnings of $1.54 per share, $0.12 better than the Capital IQ Consensus of $1.42; revenues rose 22.4% year/year to $43.74 bln vs the $44.69 bln Capital IQ Consensus.
NA sales +22% to $26.24 bln; operating income +28% to $816 mln
AWS slaes +47% to $3.53 bln; operating income +60% to $926 mln.
Co issues downside guidance for Q1:
Sees Q1 revs of $33.25-35.75 bln vs. $36 bln Capital IQ Consensus, or to grow between 14% and 23% compared with first quarter 2016. This guidance anticipates an unfavorable impact of ~$730 million or 250 basis points from foreign exchange rates.
Operating income is expected to be between $250 million and $900 mln vs. ests near $, compared with $1.1 billion in first quarter 2016.
"Prime members can now choose from over 50 million items with free two-day shipping - up 73% since 2015. Prime Video is now available in more than 200 countries and territories. Prime Now added 18 new cities, which means millions more members now get one and two hour delivery. New benefits were also added to the list, like Prime Reading, Audible Channels for Prime, Twitch Prime and more. And customers noticed - tens of millions of new paid members joined the program in just this past year."4:10 pm : Investors held their ground again on Thursday, as the major averages failed to deviate from their flat lines in range-bound action. The S&P 500 (+0.1%) finished just above its flat line, while the Nasdaq (-0.1%) closed just a tick lower. The sideways action took place ahead of tomorrow's release of the Employment Situation report for January (Briefing.com consensus 170k).
On the political front, House Speaker Paul Ryan announced on Thursday that tax reform and infrastructure bills, two key policies that fueled the post-election rally, will have to wait until the spring due to budgetary restrictions. For now, the new administration's focus will be health care reform.
The news did not invite an immediate response from the market, but it could lead to some anxiety as it appears that traders will have to wait a little while longer for validation of the post-election rally.
Facebook (FB 130.84, -1.41) was the focal point of today's earnings news after the company reported above-consensus earnings and revenue after yesterday's close. However, the stock finished Thursday lower by 1.8% on possible concerns surrounding the company's lackluster year-over-year revenue growth, which slowed down for the third consecutive quarter. Additionally, the stock entered today's session with a 16.0% year-to-date gain, so a muted response to the report wasn't necessarily unexpected.
Apple (AAPL 128.52, -0.23) and Microsoft (MSFT 63.17, -0.41) also had a rough day, losing 0.2% and 0.6%, respectively. Unsurprisingly, the tech sector (+0.1%) never got going on Thursday, but still finished in line with the S&P 500. Elsewhere among influential groups, the financial struggled amid relative weakness in large cap names. The space closed the day 0.4% lower.
Merck (MRK 64.18, +2.08) was the only Dow component to report earnings results on Thursday. The company missed revenue estimates and issued below-consensus guidance before the opening bell. However Merck shares jumped 3.4% as investors appeared more focused on the upcoming milestones for KEYTRUDA, the company's experimental lung cancer treatment. In addition, President Trump's expressed desire to cut industry regulation and speed up the drug approval process has been viewed as a positive for the industry. Merck CEO Kenneth Frazier was among the executives who attended Tuesday's meeting with President Trump at the White House.
On the upside, consumer staples (+0.8%) finished near the top of the leaderboard. The sector profited from positive reactions to quarterly reports from Estee Lauder (EL 82.00, +2.08) and Philip Morris (PM 98.84, +2.89) in addition to a 21.4% spike in the shares of Mead Johnson Nutrition (MJN 84.38, +14.88). The company's huge day came after confirming discussions with Reckitt Benckiser (RBGLY 18.16, +0.64) with respect to its proposal to acquire MJN for $90 per share in cash.
The lightly-weighted utilities (+1.0%) and real estate (+1.3%) sectors neighbored consumer staples at the top of the day's standings. However, the two spaces will enter Friday as the only countercyclical sectors holding week-to-date losses.
U.S. Treasuries held solid gains on Thursday morning, only to squandered them all by the day's close. The benchmark 10-yr yield finished its trading session unchanged at 2.47%.
Today's economic data included Initial Claims and fourth quarter Productivity & Unit Labor:
The latest weekly initial jobless claims count totaled 246,000 while the Briefing.com consensus expected a reading of 250,000. Today's tally was below the revised prior week count of 260,000 (from 259,000). As for continuing claims, they declined to 2.064 million from the revised count of 2.103 million (from 2.100 million).
The key takeaway from this report is that initial claims continue to run at low levels, as employers appear reluctant to cut their payrolls.
Unit labor costs increased 1.7% during the fourth quarter, which was lower than the 1.9% increase that had been anticipated by the Briefing.com consensus. The preliminary productivity reading showed an increase of 1.3%. The Briefing.com consensus expected an increase of 1.0%.
The key takeaway from the report is that productivity is low, with the average annual rate of productivity growth from 2007 to 2016 being 1.1% versus the long-term rate of 2.1% from 1947 to 2016. For all of 2016, nonfarm business sector productivity increased 0.2%. Low productivity gets in the way of a rising standard of living.
Tomorrow's economic data will include the Employment Situation report for January (Briefing.com consensus 170k) at 8:30 am ET, while December Factory Orders (Briefing.com consensus 1.4%) and ISM Services (Briefing.com consensus 57.0) will cross the wires at 10:00 am ET.
Nasdaq Composite 4.7% YTD
S&P 500 1.9% YTD
Dow Jones Industrial Average +0.6% YTD
Russell 2000 UNCH YTD
DJ30 -6.03 NASDAQ -6.45 SP500 +1.30 NASDAQ Adv/Vol/Dec 1346/1.87 bln/1477 NYSE Adv/Vol/Dec 1593/1.04 bln/1287
3:30 pm :
Natural gas closed pit trading higher for the 3rd session in a row following EIA data that was in-line with expectations
Mar natural gas closed $0.01 higher (+0.3%) at $3.18/MMBtu.
EIA highlights:
Natural gas inventory showed a draw of -87 bcf vs expectations for inventory to be a draw of approximately -88 bcf.
Working gas in storage was 2,711 Bcf as of Friday, Jan 27, 2017, according to EIA estimates.
Stocks were 266 Bcf less than last year at this time and 59 Bcf above the five-year average of 2,652 Bcf.
At 2,711 Bcf, total working gas is within the five-year historical range.
Crude oil reversed its initial morning gains, snapped a 2-session streak, & closed lower ahead of tomorrow's rig count data
Mar crude oil futures fell $0.34 (-0.6%) to $53.54/barrel.
Baker Hughes rig count data will be released at 1 pm ET tomorrow
Reminder:
Last week, data showed that the number of active oil rigs increased for the second consecutive week, resuming a multi-month climb to highs not seen since Nov 2015.
15 oil rigs were added last week, bringing the total to 566 US oil rigs.
The number of gas rigs increased by 3 to 145 rigs. This brings the total number of active oil and gas rigs to 712, an increase of 18.
The total count is now higher by 93 rigs, compared to the same period last year.
In precious metals, gold closed pit trading near a 2-month high
April gold ended today's session up $11.20 (+0.9%) to $1219.60/oz.
Although this morning's dollar move wasn't commensurate to the rally in gold this morning, central bank comments on inflation and recent inflation readings lean positive for gold.
March silver closed today's session $0.04 lower (-0.2%) at $17.42/oz.
The dollar index was +0.2% around the 99.83 level
Commodities, as measured by the Bloomberg Commodity Index, -0.2% around the 88.40 level
Following yesterday's moderate reprieve from the broader losing streak, the broader market closed Thursday split. Action was led by the S&P 500 which added 1.30 points (+0.06%) to 2280.85. The Nasdaq Composite was the worst performer today, shedding 6.45 points (-0.11%) to 5636.20, and the Dow Jones Industrial Average lost 6.03 points (-0.03%) to 19884.91. Perhaps aiding the decline in the Nasdaq, top Nasdaq 100 component Facebook (FB 130.84, -2.39 -1.79%) turned in a weak affair today after its quarterly earnings came in ahead of expectations.
Economic data today included the latest weekly initial jobless claims count which totaled 246,000. Today's tally was below the revised prior week count of 260,000 (from 259,000). As for continuing claims, they declined to 2.064 million from the revised count of 2.103 million (from 2.100 million). Additionally, unit labor costs were up 1.7% during the fourth quarter, and the preliminary productivity reading showed an increase of 1.3%.
The Technology (XLK 50.36, -0.10 -0.20%) sector ended the session in the red following up and down action all day. Component Citrix Systems (CTXS 74.95, +3.71 +5.21%) was higher today, recouping yesterday's weakness related to the realization of the spin-off of GetGo. Also, component Symantec (SYMC 27.76, +0.51 +1.87%) was modestly higher today after its Q3 report and guidance. Other sectors as measured by the S&P closed XLRE +1.19%, XLU +1.06%, XLP +0.92%, XLE +0.57%, XLV -0.04%, XLY -0.09%, XLI -0.19%, XLF -0.39%, XLB -0.44%, IYZ -0.70%.
In the S&P 500 Information Technology (849.56, +0.21 +0.02%) space, trading edged modestly higher into the close after a back-and-forth session. Component Cisco Systems (CSCO 31.18, +0.68 +2.25%) was one of the better performing names in reaction to a morning upgrade of the stock to a 'Positive' rating at OTR Global. Other names in the space which out-performed today included HRS +3.09%, RHT +2.16%, CRM +1.97%, VRSN +1.83%, ADSK +1.82%, JNPR +1.60%, FFIV +1.59%, CA +1.55%, KLAC +1.53%, HPQ +1.47%.
Other notable news items among sector components:
Hewlett Packard Enterprise (HPE 22.68, +0.09 +0.40%) acquired Niara. Financial terms of the deal were not disclosed.
Micron's (MU 24.79, +0.04 +0.16%) CEO Mark Durcan announced retirement. The Board has formed a special committee to oversee the succession process and has initiated a search.
Ultratech (UTEK 28.20, +2.26 +8.71%) to be acquired by Veeco Instruments (VECO 24.85, -0.90 -3.50%) in a transaction valued at roughly $28.64 per share in cash & stock, or about $815 million.
Adobe Systems' (ADBE 113.16, -0.20 -0.18%) Board elected President and CEO Shantanu Narayen as Chairman of the Board.
Symantec (SYMC) announced its intention to offer $1.0 billion aggregate principal amount of senior unsecured notes due 2025.
Electronics For Imaging (EFII 44.96, -0.01 -0.02%) entered into transaction to acquire Xerox's (XRX 7.17, +0.10 +1.41%) FreeFlow Print Server Digital Front Ends business.
Amkor (AMKR 9.92, +0.29 +3.01%) to acquire NANIUM. Financial terms of the deal were not disclosed.
Spotify may push back its anticipated IPO until 2018, according to TechCrunch.
In reaction to quarterly results:
Facebook (FB) reported better than expected Q4 earnings of $1.41 per share on revenues which came in ahead of expectations at $8.809 billion.
BCE Inc (BCE 44.15, -0.59 -1.32%) reported worse than expected Q4 EPS of CAD$0.76 and revenues which were in-line at CAD$5.7 billion. For FY17, the company sees EPS and revenues below market expectations at CAD$3.42-3.52 and CAD$21.94-22.15 billion.
NXP Semi (NXPI 99.01, +1.26 +1.29%) reported better than expected Q4 EPS of $1.95 on revenues which grew 54.7% compared to a year ago to $2.44 billion.
Nokia (NOK 4.82, +0.25 +5.47%) reported better than expected Q4 earnings of EUR0.12 per share and revenues which fell 13.0% compared to last year to EUR6.71 billion.
Symantec (SYMC) reported better than expected Q3 EPS of $0.32 on revenues which were also ahead of expectations at $1.09 billion. For Q4, the company sees EPS of $0.27-0.29 on revenues which are expected to come in below market views at $1.07-1.09 billion.
Companies scheduled to report quarterly results tonight: AMZN CSC CY FEYE FTNT GIMO GPRO INVN IXYS MTD MSI OTEX PCTY PXLW RTEC DATA V
Analyst actions:
CSCO was upgraded to Positive from Mixed at OTR Global,
ACIA was upgraded to Overweight from Equal Weight at Morgan Stanley,
APTI was upgraded to Outperform from Sector Perform at RBC Capital Mkts,
IVAC was upgraded to Buy from Neutral at B. Riley & Co.,
TSS was upgraded to Buy from Hold at Stifel,
SLAB was upgraded to Buy from Hold at Needham,
AAPL was upgraded to Hold from Sell at BGC,
ATTU was upgraded to Buy from Hold at Craig Hallum;
FB was downgraded to Hold from Buy at Pivotal Research,
EGOV was downgraded to Mkt Underperform from Mkt Perform at Avondale,
QRVO was downgraded to Market Perform from Outperform at BMO Capital,
From Briefing.com: 7:11 am Entegris beats by $0.03, beats on revs; guides Q1 EPS above consensus, revs above consensus (ENTG) :
Reports Q4 (Dec) earnings of $0.24 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.21; revenues rose 15.6% year/year to $308.5 mln vs the $282.88 mln Capital IQ Consensus.
Co generated cash from operations less capital expenditures, or free cash flow, of $37.1 mln.
Co issues upside guidance for Q1, sees EPS of $0.23-0.27, excluding non-recurring items, vs. $0.21 Capital IQ Consensus Estimate; sees Q1 revs of $295-310 mln vs. $282.78 mln Capital IQ Consensus Estimate.
7:06 am DSP Group beats by $0.04, reports revs in-line; co expects a slowdown in Q1 revenue (DSPG) :
Reports Q4 (Dec) earnings of $0.13 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $0.09; revenues rose 4.4% year/year to $35.3 mln vs the $35 mln Capital IQ Consensus.
Co said, "In the first quarter of 2017, we expect a slowdown in revenues due to a seasonal decrease in demand for our cordless telephony products and a drop in demand for our HDClear products. Looking ahead, we remain very well positioned for long-term growth and profitability due to the strength of our new products strategy."
6:59 am Kulicke & Soffa beats by $0.10, beats on revs; guides Q2 revs above consensus (KLIC) :
Reports Q1 (Dec) earnings of $0.22 per share, $0.10 better than the Capital IQ Consensus of $0.12; revenues rose 37.9% year/year to $149.6 mln vs the $140.62 mln Capital IQ Consensus.
Ball bonder equipment net revenue increased by 5.1% over the September quarter.
Wedge bonder equipment net revenue increased by 35.7% over the September quarter.
Co issues upside guidance for Q2, sees Q2 revs of $185-195 mln vs. $156.53 mln Capital IQ Consensus Estimate.
Looking forward, CEO Dr. Fusen Chen commented, "After several lower semiconductor unit growth years, our near term outlook coupled with healthy ball bonding utilization rates provides further support to our business outlook. In addition to advanced packaging, we continue to be well positioned to benefit from many near-term opportunities throughout our core ball and wedge bonding solutions supporting automotive, memory and industrial applications."
2:26 am NXP Semi beats by $0.30, reports revs in-line (NXPI) :
Reports Q4 (Dec) earnings of $1.95 per share, $0.30 better than the Capital IQ Consensus of $1.65; revenues rose 54.7% year/year to $2.44 bln vs the $2.44 bln Capital IQ Consensus.
NXP combined wafer-fab utilization averaged 92%, as compared to 93% in the prior quarter.
Working capital metrics inclusive of assets and liabilities held for sale on the balance sheet were:
Days of inventory was 101 days, flat sequentially versus the third quarter
Days payable was 83 days, an increase from 74 days in the third quarter
Days sales was 39 days, a decline from 43 days in the third quarter
The cash conversion cycle was 57 days, a decline from the 70 days in the third quarter
Channel inventory held by NXP's distribution partners was 2.4 months as compared to 2.5 months in the third quarter.
As previously announced NXP will not hold an earnings call nor provide forward guidance for the first quarter of 2017 due to the pending acquisition of NXP by Qualcomm (QCOM)
From Briefing.com: 4:17 pm Cirrus Logic beats by $0.25, beats on revs; guides Q4 revs in-line (CRUS) :
Reports Q3 (Dec) earnings of $1.87 per share, excluding non-recurring items, $0.25 better than the Capital IQ Consensus of $1.62; revenues rose 50.3% year/year to $523 mln vs the $495.24 mln Capital IQ Consensus; adj. gross margin 48.8%.
Co issues in-line guidance for Q4, sees Q4 revs of $300-340 mln vs. $333.57 mln Capital IQ Consensus; GAAP GM 48-50%.
"Cirrus Logic delivered outstanding revenue, operating profit and earnings per share growth in the December quarter as demand for certain portable audio products accelerated," said Jason Rhode, president and chief executive officer. "The company is delighted to be on track to deliver our third consecutive year of more than 25 percent annual revenue growth. With a comprehensive portfolio of products and extensive roadmap we are well positioned for success in the coming years as demand for innovative audio and voice technology continues to increase."
4:15 pm Extreme Networks beats by $0.05, misses on revs; guides Q3 EPS above consensus, revs in-line (EXTR) :
Reports Q2 (Dec) earnings of $0.12 per share, $0.05 better than the Capital IQ Consensus of $0.07; revenues rose 6.3% year/year to $148.1 mln vs the $152.3 mln Capital IQ Consensus.
Non-GAAP Gross Margin 50.9%.
Non-GAAP gross margin is targeted between 55.5% and 56.5%.
Co issues guidance for Q3, sees EPS of $0.06-0.10, excluding non-recurring items, vs. $0.06 Capital IQ Consensus Estimate; sees Q3 revs of $151-161 mln vs. $155.77 mln Capital IQ Consensus Estimate.4:14 pm Cadence Design beats by $0.01, reports revs in-line; guides Q1 EPS in-line, revs above consensus; guides FY17 EPS in-line, revs in-line (CDNS) :
Reports Q4 (Dec) earnings of $0.34 per share, $0.01 better than the Capital IQ Consensus of $0.33; revenues rose 6.3% year/year to $469 mln vs the $468.81 mln Capital IQ Consensus.
Co issues guidance for Q1, sees EPS of $0.30-$0.32 vs. $0.31 Capital IQ Consensus Estimate; sees Q1 revs of $470-$480 mln vs. $464.40 mln Capital IQ Consensus Estimate.
Co issues in-line guidance for FY17, sees EPS of $1.32-$1.42 vs. $1.35 Capital IQ Consensus Estimate; sees FY17 revs of $1.9-$1.95 bln vs. $1.92 bln Capital IQ Consensus Estimate.
Co states: "...In the fourth quarter we completed our $1.2 billion stock repurchase program, cumulatively repurchasing 52 million shares representing approximately 18 percent of shares outstanding as of July 4, 2015. This week, we replaced our December 2012 senior credit facility, increasing our borrowing capacity and extending the term; and we maintain an investment grade rating for our outstanding public debt."
4:13 pm Mellanox Tech misses by $0.04, misses on revs; guides Q1 revs below consensus (MLNX) :
Reports Q4 (Dec) earnings of $0.82 per share, $0.04 worse than the Capital IQ Consensus of $0.86; revenues rose 25.3% year/year to $221.7 mln vs the $225.04 mln Capital IQ Consensus.
Co issues downside guidance for Q1, sees Q1 revs of $200-210 mln vs. $226.28 mln Capital IQ Consensus Estimate.
Sees Non-GAAP gross margins of 71 percent to 72 percent
Sees an increase in non-GAAP operating expenses of 3 percent to 5 percent
Share-based compensation expense of $15.8 million to $16.3 million
4:13 pm Exar reports EPS in-line, revs in-line; guides Q4 EPS in-line, revs below consensus (EXAR):
Reports Q3 (Dec) earnings of $0.07 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.07; revenues rose 7.5% year/year to $27.22 mln vs the $27.1 mln Capital IQ Consensus.
Non-GAAP gross margin of 53.4% increased from 51.9% reported in the previous quarter and the 46.1% reported in the third quarter last year.
Co issues guidance for Q4, sees EPS of $0.07-0.09, excluding non-recurring items, vs. $0.08 Capital IQ Consensus Estimate; sees Q4 revs of $27.2-28.2 mln vs. $28.77 mln Capital IQ Consensus Estimate.
4:10 pm Axcelis Tech beats by $0.03, reports revs in-line; guides Q1 EPS above consensus (ACLS) :
Reports Q4 (Dec) earnings of $0.13 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.10; revenues fell 1.6% year/year to $69.4 mln vs the $69.41 mln Capital IQ Consensus (Preannouced EPS above $0.04-0.08 guidance and rev at high end of $65-70 mln guidance on Jan 10)
Co issues upside guidance for Q1, sees EPS of $0.20-0.24 vs. $0.18 Capital IQ Consensus Estimate.
"We expect 2017 to be the start of a solid up cycle for the industry, with robust implant CAPEX spending, providing Axcelis with substantial opportunities for continued growth..I am pleased with our financial performance in 2016. We increased gross margins to 37.3%, up from 33.7% in 2015..."We expect to realize further improvements in gross margin in 2017 with continued focus on supply chain optimization, value engineering and lean programs."
4:10 pm Power Integrations beats by $0.05, reports revs in-line; guides Q1 revs in-line (POWI) :
Reports Q4 (Dec) earnings of $0.67 per share, $0.05 better than the Capital IQ Consensus of $0.62; revenues rose 15.8% year/year to $101.1 mln vs the $101.3 mln Capital IQ Consensus.
Cash flow from operations for the quarter was $27.7 mln.
Co issues in-line guidance for Q1, sees Q1 revs to be flat, plus or minus 3%, compared to recast Q4 revenue of $102.4 mln. That equates to revs of $99.3-$105.5 mln vs. $99.28 mln Capital IQ Consensus Estimate. GAAP gross margin is expected to be between 47.9-48.4%; non-GAAP gross margin is expected to be between 49-49.5%.
4:09 pm Intevac beats by $0.06, misses on revs (IVAC) :
Reports Q4 (Dec) earnings of $0.13 per share, $0.06 better than the Capital IQ Consensus of $0.07; revenues rose 76.8% year/year to $29 mln vs the $29.76 mln Capital IQ Consensus.
Order backlog totaled $68.5 million on December 31, 2016, compared to $72.9 million on October 1, 2016 and $51.2 million on January 2, 2016. Backlog at December 31, 2016 included four 200 Lean HDD systems, four INTEVAC VERTEX display cover panel coating systems, one INTEVAC MATRIX solar system, and two ENERGi solar ion implant systems. Backlog at October 1, 2016 included four 200 Lean
HDD systems, three INTEVAC VERTEX display cover panel coating systems, two INTEVAC MATRIX solar systems, and two ENERGi solar ion implant systems. Backlog at January 2, 2016 included three solar systems and one PVD display cover panel coating system.
The Company ended the year with $49.8 million of total cash, restricted cash and investments and $71.0 million in tangible book value.
4:07 pm Cavium Networks beats by $0.02, reports revs in-line; guides on the call (CAVM) :
Reports Q4 (Dec) earnings of $0.56 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.54; revenues rose 124.2% year/year to $226.2 mln vs the $224.46 mln Capital IQ Consensus. Non-GAAP gross margin was 65.0% and Non-GAAP operating margin (non-GAAP income from operations as a percentage of revenue) was 21.6%.
Guides on call
4:06 pm Adobe Systems' Board elects President and CEO Shantanu Narayen as Chairman of the Board (ADBE) : Narayen will continue in his role as President and CEO of Adobe and succeeds Co-Chairs and Co-Founders of the company, John Warnock and Chuck Geschke, who will remain on the Board.
4:06 pm Facebook beats by $0.10, beats on revs (FB) :
Reports Q4 (Dec) earnings of $1.41 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $1.31; revenues rose 53.1% year/year to $8.809 bln vs the $8.49 bln Capital IQ Consensus.Daily active users: DAUs were 1.23 billion on average for December 2016, an increase of 18% y/y; Expected to come in at approx 1.20 bln; Q3 was 1.18 bln, up 17% y/y(Expectations approx 1.16 bln); Q3 increased 17%, Q1 16%, Q4 17%. Mobile DAUs- Mobile DAUs were 1.15 billion on average for December 2016, an increase of 23% year-over-year. Monthly active users: MAUs were 1.86 billion as of December 31, 2016, an increase of 17% y/y; Expected to come in at approx 1.84 bln; Q3 was 1.79 bln, +16% y/y(Expectations approx 1.76 bln); Q2 increased 20%; Q1 21%. Mobile MAUs -- Mobile MAUs were 1.74 billion as of December 31, 2016, an increase of 21% year-over-year.Mobile advertising revenue represented approximately 84% of advertising revenue for the fourth quarter of 2016, up from approximately 80% of advertising revenue in the fourth quarter of 2015. Capital expenditures for the full year 2016 were $4.49 billion (Gudiance was $4.5 bln).
4:05 pm Qorvo beats by $0.10, reports revs in-line; guides Q4 EPS below consensus (QRVO) :
Reports Q3 (Dec) earnings of $1.35 per share, $0.10 better than the Capital IQ Consensus of $1.25; GAAP revenues rose 33.1% year/year to $826.3 mln vs the $821.42 mln Capital IQ Consensus.
Co issues guidance for Q4, sees EPS of $0.70-0.90, excluding non-recurring items, vs. $1.04 Capital IQ Consensus Estimate; sees Q4 non-GAAP revs of $610-650 mln, not comparable to $718.67 mln GAAP Capital IQ Consensus Estimate.
"In the March quarter, we're forecasting a greater than historical sequential decline as two of our leading customers in China and a tier-one customer in Korea delay flagship smartphone launches. In fiscal year 2018, we expect double-digit revenue growth, driven by continued broad-based growth in IDP and increasing demand for our mobile products, including multiplexers, diversity receive modules, WiFi, RF Fusion, and RF Flex. We are also forecasting year-over-year content gains in marquee smartphones, driven by low-band PADs, envelope trackers and tuners."
4:03 pm Brooks Automation beats by $0.05, reports revs in-line; guides Q2 EPS, revs above consensus (BRKS) :
Reports Q1 (Dec) earnings of $0.25 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.20; revenues rose 33.3% year/year to $159.96 mln vs the $160.03 mln Capital IQ Consensus.
Bookings for BSSG in the first quarter totaled $122.8 million, compared to $140.1 million in the fourth quarter. BLSS booked a total of $64.2 million of new contract value, compared to $32.0 million in the fourth quarter.
Non-GAAP gross margin, which excludes amortization expense, impact of purchase
price accounting adjustments and special charges described above, was 36.3% in
the first quarter, down 0.4 points from the prior quarter.
Co issues upside guidance for Q2, sees EPS of $0.24-0.27, excluding non-recurring items, vs. $0.21 Capital IQ Consensus Estimate; sees Q2 revs of $165-170 mln vs. $158.89 mln Capital IQ Consensus Estimate.
4:25 pm : Pockets of strength kept the S&P 500 near its flat line on Wednesday despite investors' lack of buying conviction. The S&P 500 finished flat while the Nasdaq (+0.5%) and Dow Jones industrial Average (+0.1%) ended modestly higher thanks to a huge move in shares of Apple (AAPL 129.92, +8.57, +7.1%) following its fiscal first quarter earnings report, which was replete with record revenues, earnings, and iPhone sales.
Wednesday's session opened with a lot of optimism as market participants reacted favorably to Apple's earnings results; however, investors soon lost conviction and the major indices soon relinquished most, if not all, of their opening gains.
The inability to maintain a bullish bias in the wake of Apple's report was regarded as a disappointing development that weighed on investor sentiment. At the same time, market participants were grappling with some inflation concerns and some rate-hike edginess in front of the FOMC policy decision at 2:00 p.m. ET after the ADP Employment Change and Manufacturing ISM Index reports for January checked in stronger than expected.
The aforementioned reports supported the notion that economic growth looks poised to accelerate in 2017 -- a view that in turn fueled a belief that higher inflation will accompany that growth. That outlook manifested itself in a weak Treasury market and a strengthening dollar, yet those respective moves were tempered following the release of the FOMC's policy directive.
The FOMC voted unanimously to maintain the current fed funds target range at 0.50%-0.75%, as expected. By and large, there was little change in the wording of the directive from the December meeting. There was some concern ahead of its release that it might have a hawkish-sounding angle to it, but the fact that it was little changed took a little of the rate-hike edge off the market.
That edge was rooted in the thinking that the directive's language might contain some signaling that the FOMC is leaning to a rate hike in March, which the fed funds futures market currently does not expect.
In any event, buying efforts in the dollar subsided and selling efforts in the Treasury market tapered off after the release of the directive. The 2-yr note yield, which is sensitive to changes in the fed funds rate, dropped from 1.25% to 1.21% after the FOMC decision. The benchmark 10-yr yield for its part closed relatively flat, up one basis point at 2.48%.
For sector standings, technology finished near the top of the day's leaderboard amid the spike in Apple's stock and a positive showing from chipmakers. The PHLX Semiconductor Index finished 1.7% higher following Advanced Micro Devices's (AMD 12.06, +1.69) upbeat earning report. The company closed Wednesday's session 16.3% higher.
The heavily-weighted financial sector (unch) also closed the day higher, along with materials (+0.6%), and health care (+0.7%). The health care space rallied on Anthem's (ANTM 160.79, +6.65) better than expected quarterly earnings report and an uptick from the biotechnology industry. The iShares Nasdaq Biotechnology ETF (IBB 280.42, +2.35) finished higher for the second day in a row, adding 0.9%.
At the bottom of the leaderboard was utilities (-1.7%), which suffered from the uptick in interest rates and the negative response to the earnings report from Dominion Resources (D 71.85, -4.43, -5.8%). The lightly-weighted telecom services (-0.7%) and real estate (-1.1%) sectors also finished lower, extending their losses for the week to 1.1% and 0.9%, respectively.
Today's economic data included the FOMC Rate Decision, January ISM Index, January ADP Employment Change, December Construction Spending, and the weekly MBA Mortgage Index:
The FOMC voted unanimously to maintain the fed funds target range at 0.50%-0.75%.
The ISM Index for January rose to 56.0 from a revised reading of 54.5 in December (from 54.7) while the Briefing.com consensus expected an uptick to 55.0.
The key takeaway from the report is that helps validates the market's upbeat assumptions about economic growth accelerating in 2017.
The ADP National Employment Report showed an increase of 246,000 in January (Briefing.com consensus 165,000) while the December reading was revised lower to 151,000 from 153,000.
The Construction Spending report for December showed a 0.2% decrease while the Briefing.com consensus expected an increase of 0.2%.
The key takeaway from the report is that private construction spending was up for the third straight month. The value of this report for the market, though, is negligible since it is a dated report, the output of which was already imputed in the fourth quarter GDP report last week.
The weekly MBA Mortgage Index declined 3.2% to follow last week's 4.0% increase.
Tomorrow's economic data will include January Challenger Job Cuts at 7:30 am ET, Initial Claims (Briefing.com consensus 250k) at 8:30 am ET, and fourth quarter Productivity (Briefing.com consensus 1.0%) also at 8:30 am.
Russell 2000 +0.2% YTD
Dow Jones Industrial Average +0.7% YTD
S&P 500 1.8% YTD
Nasdaq Composite 4.8% YTD
3:30 pm :
Crude oil shrugged off a slurry of bearish inventory data, closed at its highest level of the session, extended yesterday's gain; rig count data expected Friday
Mar 2017 crude oil futures rose $1.12 (+2.1%) to $53.88/barrel
Baker Hughes rig count data will be released Friday at 1 pm ET.
Color on price action in crude:
Crude oil futures for Mar 2017 delivery are on track to extend yesterday's gains despite EIA reporting builds on all fronts above expectations. Crude futures also shrugged off last night's bearish API reading (a 5.83 mln barrel build of oil vs. last week's build of 2.93 mln barrels, Gasoline showed a build of 2.86 mln barrels, and distillates showed a build of 2.27 mln barrels) earlier after Russia reported they have reduced output by 100k barrels/day out of the total expected 300k barrels/day cut agreed to late last year.
This latest data out of Russia comes after yesterday's news that OPEC has reduced collective output by over 1 mln barrels/day out of their expected portion of the collective output cut of 1.2 mln barrels/day.
Reminder: The total collective production cut agreed to late last year between OPEC/non-OPEC members is expected to be 1.6 mln barrels/day.
Lastly, its worth noting that crude caught a bid towards the end of the pit trading session following comments out of the White House from the National Security Adviser stating Iran's missile is in defiance of the UN & Iran is officially on notice.
EIA highlights:
Crude oil inventories had a build of +6.5 mln barrels (consensus called for a build of about +3.289 mln barrels).
Gasoline inventories had a build of +3.9 mln barrels (consensus called for a build of +0.982 mln barrels).
Distillate inventories had a build of +1.6 mln barrels.
Natural gas broke out of its 4-session downtrend ahead of tomorrow's EIA data release
Mar 2017 natural gas closed $0.05 higher (+1.6%) at $3.17/MMBtu
EIA natural gas data will be released tomorrow at 10:30 am ET.
In precious metals, gold snapped its 2-session streak on renewed dollar index strength
April 2017 gold ended today's session down $3.00 (-0.3%) to $1208.40/oz
Mar 2017 silver closed today's session $0.08 lower (-0.5%) at $17.46/oz
The dollar index was +0.2% around the 99.69 level, pressured precious metals
Commodities, as measured by the Bloomberg Commodity Index, were +1.1% around the 88.54 level
Beginning the week with two sessions of losses, the broader market posted a modestly higher Wednesday close. The Nasdaq Composite won the day, adding 27.86 points (+0.50%) to 5642.65. The Dow Jones Industrial Average gained 26.85 points (+0.14%) to 19890.94, and the S&P 500 was up less than a point (+0.03%) when the bell rang to 2279.55.
Market data today included the ISM Index for January which rose to 56.0 from a revised reading of 54.5 in December (from 54.7). Also, the ADP National Employment Report showed an increase of 246,000 in January while the December reading was revised lower to 151,000 from 153,000. Additionally, the Construction Spending report for December showed a 0.2% decrease. Lastly, the weekly MBA Mortgage Index was down 3.2% to follow last week's 4.0% increase.
Also on the Street today, the first Federal Open Market Committee (FOMC) of 2017 came to pass and the word to the market is that there was no change in the FOMC's policy. The target range for the federal funds rate was maintained at 0.50% to 0.75%, as expected, and that target range was agreed to by all voting members, four of whom -- Chicago Fed President Evans, Philadelphia Fed President Harker, Dallas Fed President Kaplan, and Minneapolis Fed President Kashkari -- were new voting members.
After back-to-back sessions of losses to open the week, the Technology (XLK 50.46, +0.38 +0.76%) space recouped a portion of that weakness. Component Apple (AAPL 128.79, +7.44 +6.13%) was the best performing name today following its quarterly report from last night. Other sectors as measured by the S&P closed XLV +0.75%, XLB +0.50%, XLF +0.13%, XLI -0.16%, XLY -0.19%, XLP -0.72%, XLE -0.74%, XLRE -1.11%, XLU -1.69%, IYZ -2.85% as gains in Tech were only outdone by Healthcare.
In the S&P 500 Information Technology (849.35, +6.32 +0.75%) space, trading ended Wednesday near highs. Component Automatic Data (ADP 95.25, -5.74 -5.68%) was the worst performer today following this morning's mixed Q2 print and FY17 outlook. Other names in the space which outperformed with the sector included NVDA +4.37%, MU +2.65%, LRCX +2.51%, AMAT +2.28%, FB +2.23%, AVGO +2.10%, XRX +2.02%, FSLR +1.92%, CSRA +1.71%, ADI +1.64%, MCHP +1.57%, EBAY +1.10%.
Other notable news items among sector components:
GoPro (GPRO 10.57, -0.18 -1.67%) confirmed its drone, Karma, is now on sale at GoPro.com and select U.S. retailers.
Seagate Tech (STX 44.78, -0.37 -0.82%) priced $750 million of senior notes due 2022 at 99.770% and $500 million of senior notes due 2024 at 99.328%.
Corning (GLW 26.20, -0.29 -1.09%) raised its quarterly dividend to $0.155 per share from $0.135 per share.
Take-Two (TTWO 54.36, +0.71 +1.32%) acquired Social Point S.L. for $250 million in cash and stock, plus earn-out potential.
Luxoft Holding (LXFT 58.75, -0.10 -0.17%) acquired IntroPro. Financial terms of the deal were not disclosed.
Amazon (AMZN 832.19, +8.71 +1.06%) confirmed air cargo hub details in Kentucky - will create 2,000 jobs.
Carbonite (CARB 19.15, +1.90 +11.01%) acquired Double-Take Software for $65.25 million and reported prelim Q4 results; EPS of $0.07-0.11, revenues of $47.1-52.1 million. The company issued FY17 guidance with Double-Take Software impact - EPS of $0.72-0.80 on revenues of $232.5-252.5 million.
DISH Network (DISH 61.14, +1.97 +3.33%) will transfer certain EchoStar (SATS 55.06, +4.13 +8.11%) assets and operations, including its EchoStar Technologies hardware and software development group to DISH in exchange for DISH's 80% interest in Hughes Retail Group.
Medidata Solutions (MDSO 49.44, -0.10 -0.20%) to acquire CHITA to create industry's first integrated, end-to-end system for all R&D content and document management needs. MDSO also announced a strategic partnership agreement with Box (BOX 17.21, +0.14 +0.82%).
Ericsson (ERIC 5.86, -0.03 -0.51%) and the Finnish telecommunications group DNA Plc have introduced the new 700 MHz spectrum for mobile broadband as of February 1, 2017, following the conditions of the radio license granted by the Finnish Communications Regulatory Authority. The spectrum previously used for digital television enables build-up of 4G capacity, particularly in sparsely populated areas.
In reaction to quarterly results:
Apple (AAPL) reported better than expected Q1 EPS and revenues of $3.36 and $78.35 billion, respectively. For Q2, the company sees revs of $51.5-53.5 billion on gross margins between 38-39%.
Automatic Data (ADP) reported better than expected Q2 EPS of $0.87 on revenues which came in-line with expectations at $2.99 billion. ADP now expects full year revenue growth of about 6% compared to prior forecast of 7% to 8% growth. This equates to roughly $12.37 billion. Also, ADP continues to expect full year diluted EPS from continuing operations to grow 15% to 17%, and adjusted diluted EPS growth of 11% to 13%, or roughly $3.62-3.68.
Electronic Arts (EA 83.00, -0.43 -0.52%) reported better than expected Q3 GAAP EPS of net breakeven. GAAP revenues for Q3 were up 7.4% year-over-year to $1.15 billion. For FY17, the company sees EPS of $2.91 from prior expectations of $2.69. FY17 revenues are now expected to be about $4.80 billion from prior $1.775 billion.
CGI Group (GIB 48.93, +0.84 +1.75%) reported worse than expected Q1 EPS and revenues of C$0.90 on revenues of C$2.68 billion.
Advanced Micro (AMD 12.06, +1.69 +16.30%) reported a better than expected Q4 non-GAAP loss per share of $0.01 on revenues which rose 15.4% compared to a year ago to $1.11 billion. AMD gave in-line Q1 revenues guidance of down 8-14% sequentially to about $951-1,018 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: DOX ACLS BKFS EPAY BRKS CACI CDNS CAVM CRUS CSGS ESIO EXAR EXTR FB IVAC MLNX EGOV NXPI CNXN POWI QRVO SYMC WSTC/BCE CDK DSPG ENTG IT HRS KEM KLIC MITK MKSI NOK
Analyst actions:
MRVL was upgraded to Buy from Sell at UBS,
TWLO was upgraded to Mkt Outperform from Mkt Perform at JMP Securities;
GLW was downgraded to Mkt Perform from Outperform at Bernstein,
MBLY was downgraded to Equal Weight from Overweight at Morgan Stanley,
AUDC was downgraded to Market Perform from Outperform at Northland Capital
From Briefing.com: 4:35 pm Apple beats by $0.14, beats on revs; guides Q2 revs below consensus (AAPL) :
Reports Q1 (Dec) earnings of $3.36 per share, $0.14 better than the Capital IQ Consensus of $3.22; revenues rose 3.3% year/year to $78.35 bln vs the $77.26 bln Capital IQ Consensus. Gross margin 38.5%, in-line with estimates vs. 40.5% last year.
iPhones 78.3 mln vs 77.3 mln ests and 74.8 mln last year.
iPads 13.1 mln vs 14.7 mln ests and 16.1 mln last year Macs 5.4 mln vs 5.2 mln ests versus 5.3 mln last year.
Co issues downside guidance for Q2, sees Q2 revs of $51.5-53.5 bln vs. $54.05 bln Capital IQ Consensus; gross margin between 38-39% vs 38.7% ests and 39.4% last year.; operating expenses between $6.5 billion and $6.6 billion; other income/(expense) of $400 million; tax rate of 26 percent
4:34 pm Apple shares +3% to $125 area on better-than-expected Q1 EPS and revenue, and upside iPhone units; however, Q2 rev guidance was below analyst estimates (AAPL) :
4:26 pm Seagate Tech prices $750 mln of senior notes due 2022 at 99.770% and $500 mln of senior notes due 2024 at 99.328% (STX) :
4:23 pm Advanced Micro beats by $0.01, beats on revs; guides Q1 revs in-line (AMD) :
Reports Q4 (Dec) non-GAAP loss of $0.01 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of ($0.02); revenues rose 15.4% year/year but fell 15.4 % sequentially to $1.11 bln vs the $1.07 bln Capital IQ Consensus.
Co issues in-line guidance for Q1, sees Q1 revenue down 8-14% sequentially which we compute as $951-1,018 mln vs. $964.3 mln Capital IQ Consensus Estimate.
Non-GAAP gross margin was 32%, up 2 percentage points YoY and up 1 percentage point sequentially primarily due to higher Computing and Graphics segment revenue.
Computing and Graphics segment revenue was $600 million, up 28% YoY and 27% sequentially. The YoY increase was primarily driven by higher GPU sales. The sequential increase was primarily due to higher GPU and client processor sales. Enterprise, Embedded and Semi-Custom segment revenue was $506 mln, up 4% YoY primarily driven by higher embedded and semi-custom SoC revenue.
4:25 pm : Investors continued hedging their investment risk on Tuesday, choosing to play it safe in the wake of last week's record high levels and amid a week full of influential reports on both the earnings and economic fronts. However, an afternoon rally helped the major averages finish at their highest levels of the day. The S&P 500 shed 0.1% after being down more than 0.5% in the early going.
The health care sector assumed a leadership position in today's market, underpinned by the outperformance of the drug and biotech stocks. Those issues rallied on the other side of a meeting President Trump had with industry executives. While the president pressed his case for lowering drug prices, market participants were heartened by his added belief that regulations should be reduced and that the drug approval process should be sped up. Those declarations lent some relief to investors, who appeared heartened by the notion that the meeting with the president was better than feared.
A host of health care names kicked off today's trading session by reporting quarterly results before the opening bell including Pfizer (PFE 31.73, +0.42), Eli Lilly (LLY 77.03, +2.33), Thermo Fisher Scientific (TMO 152.39, +9.10), and Aetna (AET 118.61, +1.90). The results were mixed, but the four names added between 1.3% and 6.4% after President Trump met with CEOs from top U.S. drugmakers on Tuesday morning. Biotechnology stood out with the iShares Nasdaq Biotechnology ETF (IBB 278.07, +7.68) spiking 2.8%.
On the cyclical side, Exxon Mobil (XOM 83.89, -0.97) also reported earnings this morning. The reaction to the report was negative, pushing the company and the energy space lower by 1.1% and 0.1%, respectively. However, the energy sector's loss was capped by crude oil, which finished its trading day 0.3% higher at $52.81/bbl. The energy component's gain came amid a downtick in the U.S. Dollar Index (99.60, -0.82), which finished Tuesday 0.8% lower.
The remaining cyclical sectors fell as cautious sentiment lingered throughout the day. Industrials (-0.9%) closed at the bottom of the leaderboard following United Parcel Service's (UPS 109.13, -7.90) disappointing fourth quarter earnings report and relative weakness in airline names. The top-weighted technology sector also underperformed the benchmark index, thanks in part to a poor showing from chipmakers. The PHLX Semiconductor Index finished Tuesday lower by 1.3%. In the broader tech sector, Apple (AAPL 121.29, -0.34) shed 0.3% ahead of its earnings report.
Conversely, countercyclical spaces and Treasuries thrived on wary investors' actions; all five defensive spaces finished higher while the benchmark 10-yr yield closed five basis points lower at 2.44%. The utilities sector (+1.6%) was the day's top performer, while telecom services (+0.1%) eked out a small gain.
Today's economic data included fourth quarter Employment Cost Index, November Case-Shiller Home Price Index, January Chicago PMI, and January Consumer Confidence:
The fourth quarter Employment Cost Index rose 0.5%, while the Briefing.com consensus expected an uptick of 0.6%.
The key takeaway from the report is that compensation costs did move higher in 2016, which creates some profit margin constraints while at the same time lending employees some increased spending potential.
The Case-Shiller 20-city Home Price Index for November rose 5.3%, which was above the Briefing.com consensus of 5.0%. This followed the previous month's unrevised reading of 5.1%.
Chicago PMI for January decreased to 50.3 from 54.6 in December while the Briefing.com consensus expected a reading of 55.0.
The key takeaway from this report is that it's a first quarter report, and with the pullback to a level that is just above a contraction reading, it will serve perhaps to temper some of the market's heightened optimism surrounding economic growth prospects.
The consumer confidence reading for January declined to 111.8 from the prior month's revised reading of 113.3 (from 113.7). The Briefing.com consensus expected the survey to hit 112.5.
The key takeaway from the report is that consumer confidence is still at relatively high levels, although consumers' outlook was reined in a bit following the post-election surge.
Tomorrow will see a full slate of economic reports including MBA Mortgage Applications Index at 7:00 am ET, January ADP Employment Change (Briefing.com consensus 165k) at 8:15 am ET, January ISM Index (Briefing.com consensus 55.0) at 10:00 am ET, December Construction Spending (Briefing.com consensus 0.2%), February FOMC Rate Decision (Briefing.com consensus 0.625%) at 2:00 pm ET, and January Auto & Truck Sales at 2:00 pm ET.
Russell 2000 +0.3% YTD
Dow Jones Industrial Average +0.5% YTD
S&P 500 1.8% YTD
Nasdaq Composite 4.3% YTD
DJ30 -107.04 NASDAQ +1.07 SP500 -2.03 NASDAQ Adv/Vol/Dec 1776/1.85 bln/1125 NYSE Adv/Vol/Dec 1858/1.48 bln/1058 3:30 pm :
Crude oil broke out of its 3-session downtrend ahead of tonight's API on headlines that OPEC has surpassed 1 mln barrels/day in output reductions
Mar crude oil futures rose $0.14 (+0.3%) to $52.76/barrel
Color on price action in oil:
Mar 2017 crude oil futures snapped out of a 3-session downtrend. Crude sharply reversed off of session lows after dropping as much as -0.7% initially, following headlines that OPEC has cut more than 1 mln barrels/day of the promised 1.2 mln barrels/day in planned oil production cuts (the OPEC portion).
Crude oil supply from the 11 OPEC members with targeted production reductions avged 30.01 mln barrels/day in Jan, compared to 31.17 mln in Dec.
Other factors to consider:
U.S. oil production has risen by ~6.3% since July last year to almost 9 mln bpd, according to EIA data.
Concerns these increases in US production will offset the coordinated OPEC/non-OPEC output reductions initially put pressure on crude futures in morning pit trading.
Also initially adding pressure on oil prices was this morning's statements from Goldman regarding an estimation that y/y U.S. oil production will rise by 290k barrels/day in 2017, if a backlog on rigs that are still to become operational is accounted for.
Note: The spread between Brent and WTI crude has been increasing, as market participants appear willing to pay a premium for Brent, as oil supply in the Middle East shrinks due to OPEC reductions, while US WTI crude oil is becoming increasingly plentiful.
Data reminders:
API data will be released today at 4:30 pm ET.
EIA data will be released tomorrow at 10:30 am ET.
Baker Hughes rig count data will be released Friday at 1 pm ET.
Natural gas closed pit trading lower for the third day in a row ahead of Thursday's inventory data on updated warmer weather forecasts across much of the US
Mar natural gas closed $0.11 lower (-3.4%) at $3.12/MMBtu
EIA natural gas inventory data will be released Thursday at 10:30 am ET
In precious metals, gold extended yesterday's gain, silver rallied on continued weakness in the dollar index
April gold ended today's session up $15.40 (+1.3%) to $1,211.40/oz
Gold futures have switched their front month to April from Feb, as indicated by the active amount of volume in the contracts
Mar silver closed today's session $0.39 higher (+2.3%) at $17.54/oz
The dollar index was -0.8% around the 99.62 level, boosted precious metals
Commodities, as measured by the Bloomberg Commodity Index, were +0.7% around the 87.59 level
After opening the week with losses on Monday, the broader market managed a split session on Tuesday. Action was only higher in the Nasdaq Composite, and in that case only just, as the index added 1.07 points (+0.02%) today to close 5614.79. The Dow Jones Industrial Average, on the other hand, closed 107.04 points (-0.54%) lower to 19864.09, and the S&P 500 lost 2.03 points (-0.09%) to 2278.87.
Market data today included the fourth quarter Employment Cost Index which rose 0.5%; also, Chicago PMI for January declined to 50.3 from 54.6 in December. The Case-Shiller 20-city Home Price Index for November rose 5.3%. This followed the previous month's unrevised reading of 5.1%. Lastly, the consumer confidence reading for January declined to 111.8 from the prior month's revised reading of 113.3 (from 113.7).
Also posting another down day, the Technology (XLK 50.08, -0.25 -0.50%) sector regained a portion of afternoon losses but still ended firmly in the red. Component MasterCard (MA 106.33, -2.97 -2.72%) was one of the weakest names today after the company reported mixed Q4 results this morning. Other sectors as measured by the S&P closed the session XLV +1.57%, XLU +1.55%, XLRE +0.82%, XLP +0.48%, IYZ +0.17%, XLE +0.00%, XLY -0.15%, XLB -0.59%, XLF -0.64%, XLI -0.88% as Healthcare led the charge.
In the S&P 500 Information Technology (843.03, -5.17 -0.61%) space, trading lower but well off daily lows. Component Apple (AAPL 121.29, -0.34 -0.28%) traded modestly lower ahead of earnings, while Xerox (XRX 6.93, -0.02 -0.29%) traded modestly lower following earnings. Other names in the space which underperformed included TXN -3.03%, MCHP -2.48%, CTSH -2.05%, AVGO -1.83%, ADI -1.76%, INTC -1.60%, XLNX -1.52%, KLAC -1.32%, MSI -1.21%, V -1.18%, TSS -1.15%, EBAY -1.06%.
Other notable news items among sector components:
Seagate Tech (STX 45.15, +0.25 +0.56%) to offer senior notes in a private placement. Terms of the placement were not disclosed.
F5 Networks (FFIV 134.03, -0.66 -0.49%) named Franois Locoh-Donou as President and CEO effective April 3.
GoPro (GPRO 10.72, -0.08 -0.74%) named Charles Prober as Chief Operating Officer.
Microsoft (MSFT 64.65, -0.48 -0.74%) priced $17 billion of debt offerings in 7 tranches.
Vonage (VG 7.08, +0.00 +0.07%) named Kenneth Wyatt Chief Revenue Officer.
Accenture (CAN 113.87, -0.76 -0.66%) to acquire InvestTech Systems Consulting. Financial terms of the deal were not disclosed.
Radware (RDWR 14.69, +0.22 +1.52%) acquired Seculert for undisclosed sum. The deal is expected to be immaterial to its 2017 revenues, but slightly dilutive to its fully diluted 2017 non-GAAP EPS.
Everbridge (EVBG 18.47, -0.30 -1.60%) acquired IDV Solutions for about $18.7 million in cash.
Broadcom (AVGO 199.50, -3.72 -1.83%) filed a prospectus supplement relating to the possible issuance of up to 22,804,591 ordinary shares in the capital of the company to the holders of exchangeable limited partnership units of Broadcom Cayman L.P.
In reaction to quarterly results:
MasterCard (MA) reported better than expected Q4 EPS of $0.86 on revenues which missed market expectations despite growing 9.5% compared to a year ago to $2.76 billion.
Sprint (S 9.23, +0.12 +1.32%) reported a worse than expected Q3 loss per share of $0.12 on revenues which beat market expectations at $8.55 billion.
Xerox (XRX) reported in-line Q4 EPS of $0.25 on revenues which came in below market expectations at $2.73 billion. For FY17, the company guided EPS in-line at $0.80-0.88.
Integrated Device (IDTI 25.19, -1.15 -4.38%) reported better than expected Q3 EPS of $0.35 on revenues which came in at $176.4 million. For Q4, the company sees EPS of $0.32-0.36 on revenues of $170-180 million, both in-line with market expectations.
Intersil (ISIL 22.43, +0.05 +0.22%) reported in-line Q4 EPS of $0.19 on revenues which beat market expectations at $139.81 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: ACXM AMD AAPL BBOX EA FICO MANH MTCH MSTR OCLR PLT TNAV VIAV/ADP CEVA GIB LFUS SLAB VNTV
Analyst actions:
VSAT was upgraded to Outperform from Market Perform at Wells Fargo,
XGTI was upgraded to Buy from Neutral at Roth Capital;
FIT was downgraded to Sell from Neutral at Citigroup,
CTSH was downgraded to Equal Weight from Overweight at Morgan Stanley,
IDTI was downgraded to Hold from Buy at Summit Redstone,
XXIA was downgraded to Hold from Buy at Gabelli & Co.,
NTCT was downgraded to Hold from Buy at Craig Hallum,
YNDX was downgraded to Equal Weight from Overweight at Alfa Bank;
T, S, VZ were initiated with Hold ratings at Evercore ISI,
TMUS was initiated with a Buy at Evercore ISI,
From Briefing.com: 4:09 pm Rambus reports EPS in-line, beats on revs; guides Q1 in-line (RMBS) : Reports Q4 (Dec) earnings of $0.16 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.16; revenues rose 27.1% year/year to $97.6 mln vs the $96 mln Capital IQ Consensus, primarily due to higher revenue from the security technology business, higher product revenue primarily from the memory and interfaces business, and higher royalty revenue. Rev rose 9% on a sequential basis primarily due to higher product revenue from the memory and interfaces business and higher royalty revenue.
Co issues in-line guidance for Q1, sees EPS of $0.13-0.17, excluding non-recurring items, vs. $0.15 Capital IQ Consensus Estimate; sees Q1 revs of $93-98 mln vs. $95.73 mln Capital IQ Consensus.
"Our activity throughout 2016 has prepared us well for profitable growth moving into 2017. Our memory and interfaces business continues to perform well with the ability to accelerate our customer engagements for the data center. We also have several avenues of exciting opportunities to extend beyond our historic business, particularly as we move closer to the consumer with offerings serving the mobile edge."
4:08 pm F5 Networks names Franois Locoh-Donou as President and CEO effective April 3 (FFIV) : Locoh-Donou succeeds current President and CEO, John McAdam, who will remain a Director on F5's Board upon his retirement on April 3, 2017. Locoh-Donou currently serves as Senior Vice President and Chief Operating Officer of Ciena (CIEN).
4:07 pm Advanced Energy beats by $0.25, beats on revs; guides Q1 EPS above consensus, revs above consensus (AEIS) :
Reports Q4 (Dec) earnings of $1.06 per share, $0.25 better than the Capital IQ Consensus of $0.81; revenues rose 55.7% year/year to $135.3 mln vs the $131.14 mln Capital IQ Consensus.
The company generated $44.4 million of operating cash from continuing operations.
Co issues upside guidance for Q1, sees EPS of $0.90-$1.00 vs. $0.80 Capital IQ Consensus Estimate; sees Q1 revs of $141-$151 mln vs. $129.05 mln Capital IQ Consensus Estimate.
Co states: "Our Semiconductor and Service revenues reached new highs, more than offsetting the fourth quarter decline in Industrial applications. We continue to expand our presence as a critical enabler by capitalizing on the build-out and expansion of important semiconductor technologies. We enter 2017 with a healthy outlook, a strong balance sheet and a variety of opportunities that we believe will take AE to the next level and move us closer to our new aspirational goals."
4:05 pm Integrated Device beats by $0.01, reports revs in-line; co guides on the earnings call (IDTI) :
Reports Q3 (Dec) earnings of $0.35 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.34; revenues fell 0.7% year/year to $176.4 mln vs the $176.2 mln Capital IQ Consensus.
"We have increasing momentum in multiple new growth areas, particularly automotive, industrial, and sensors, that will drive future growth. Additionally, we remain disciplined in managing our operating model, delivering best-in-class profitability and earnings leverage."
The co will provide guidance on its earnings call.4:05 pm Sanmina beats by $0.08, beats on revs; guides Q2 EPS above consensus, revs above consensus (SANM) :
Reports Q1 (Dec) earnings of $0.75 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus of $0.67; revenues rose 12.1% year/year to $1.72 bln vs the $1.69 bln Capital IQ Consensus.
Co issues upside guidance for Q2, sees EPS of $0.67-0.72, excluding non-recurring items, vs. $0.65 Capital IQ Consensus Estimate; sees Q2 revs of $1.68-1.73 bln vs. $1.65 bln Capital IQ Consensus Estimate. 4:25 pm : Investors decided to err on the side of caution to open a week full of earnings reports and influential economic data. The S&P 500 finished the day lower by 0.6%, while the Nasdaq (-0.8%) closed just a tick below the benchmark index.
Equity indices faced broad-based selling pressure from the start of Monday's session, with many fingers pointing to President Trump's executive order, which suspended the U.S. refugee program and temporarily restricted nationals of seven countries--Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen--from entering the United States, as the driver of the bearish tone.
It is a defensible position, as that order has engendered some concerns about protectionism taking root and has detracted from the market's preferred policy focus of corporate tax reform, but the market will face a full event calendar this week, so some caution is warranted.
The Federal Reserve will release its latest policy statement on Wednesday, which, combined with Friday's release of the January Employment Situation report (Briefing.com consensus 170K), could build a case for a rate hike at the subsequent FOMC meeting. In addition, a full slate of quarterly reports awaits with Apple (AAPL 121.63, -0.32) scheduled to release its results after Tuesday's closing bell.
Today's risk-off tone was most apparent in the stock market while Treasuries finished the day little changed with the benchmark 10-yr yield remaining at 2.48%. The U.S. Dollar Index finished just below its flat line with a loss of 0.1%, masking the dollar's 1.2% decline against the Japanese yen (113.73). It is worth noting the Bank of Japan will release its latest policy statement overnight.
Nine of eleven spaces finished the day in negative territory. Countercyclical sectors populated the upper half of Monday's leaderboard, with consumer staples (+0.1%) eking out a slim gain. The consumer discretionary sector (-0.1%) was the best performer on the cyclical side, finishing just a tick from its flat line. Walt Disney (DIS 110.94, +1.64) underpinned the sector's performance, adding 1.5%, after the company's stock was upgraded to 'Overweight' from 'Equal-Weight' at Morgan Stanley.
The energy sector occupied the bottom spot on the leaderboard, finishing 1.8% lower after pressure on multiple fronts. On the earnings side, Enterprise Products' (EPD 28.45, -0.64) mixed earnings report was met with a downbeat response, pushing the company's stock lower by 2.2%. Crude oil also hurt the energy space, closing its trading day 1.1% lower at $52.62/bbl.
The top-weighted technology sector (-0.8%) finished a tick lower than the benchmark index with top components like Alphabet (GOOGL 823.83, -21.20), Microsoft (MSFT 65.13, -0.65), and Facebook (FB 130.98, -1.20) falling between 0.9% and 2.5%.
Today's economic data included December Personal Income/Spending and December Pending Home Sales:
December personal income rose 0.3% while the Briefing.com consensus expected an increase of 0.4%. Meanwhile, December personal spending increased 0.5% while the Briefing.com consensus expected a reading of 0.4%. The November Personal Spending reading was left unrevised at 0.2% while November Personal Income was revised to 0.1% from 0.0%. Core PCE prices for December rose 0.1% (Briefing.com consensus 0.2%), while the November reading was left unrevised at 0.0%.
With spending rising faster than income, the drop in the personal savings rate suggests consumers were spending out of savings -- something that wouldn't typically be done unless it was out of necessity or consumers were feeling better about their income prospects.
Pending Home Sales for December rose 1.6% while the Briefing.com consensus expected an increase of 1.3%. Today's reading follows a 2.5% downtick in November.
Tomorrow's economic data will include the fourth quarter Employment Cost Index (Briefing.com consensus 0.6%) at 8:30 am ET, the November S&P Case Schiller Home Price Index (Briefing.com consensus 5.0%) at 9:00 am ET, January Chicago PMI (Briefing.com consensus 55.0) at 9:45 am ET, and January Consumer Confidence (Briefing.com consensus 112.5) at 10:00 am ET.
Russell 2000 -0.3% YTD
Dow Jones Industrial Average +1.1% YTD
S&P 500 1.9% YTD
Nasdaq Composite 4.3% YTD
DJ30 -122.65 NASDAQ -47.07 SP500 -13.79 NASDAQ Adv/Vol/Dec 682/1.61 bln/2275 NYSE Adv/Vol/Dec 890/1.03 bln/2082 3:30 pm :
Crude oil doubled Friday's post-rig count data losses ahead of tomorrow's API release
Mar crude oil futures fell $0.56 (-1.1%) to $52.62/barrel
Upcoming data reminders:
Weekly API data will be released tomorrow at 4:30 pm ET.
Weekly EIA petroleum data will released this Wednesday at 10:30 am ET
Weekly Baker Hughes rig count data will be released this Friday at 1 pm ET.
Recap of Friday's rig data:
On Friday, Baker Hughes reported the total US rig count increased by 18 to 712 rigs, following last week's increase of 35 rigs
The number of active U.S. rigs drilling for oil rose by 15 to 566 rigs this week
Last week, the U.S. oil rig count increased by 29 to 551 rigs.
In the week prior to Friday, the rig count declined, but that followed 10 consecutive weekly prior increases
The oil rig count is at its highest level in ~14 months
It is worth noting that this pick-up in US activity could potentially cap oil price gains in the future
Natural gas extended Friday's losses on updated warmer weather forecasts across the US ahead of Thursday's EIA data
Mar natural gas closed $0.12 lower (-3.6%) at $3.23/MMBtu
Weekly EIA natural gas data will be released Thursday at 10:30 am ET.
In precious metals, gold snapped its 4-session losing streak after data showed PCE rose the most in ~2 years, ahead of the 2-day Fed meeting
Feb 2017 gold ended today's session up $5.00 (+0.4%) to $1193.20/oz
The PCE Price Index was up 1.6% year-over-year versus a 1.4% increase seen in Nov. That is tracking toward the Fed's longer-run target of 2.0%, which is what Fed officials will want to see to justify further rate hikes. The core PCE Price Index, which increased 0.1% in Dec (Briefing.com consensus +0.2%), was up 1.7% year-over-year, unchanged from Nov.
Mar 2017 silver closed today's session $0.02 higher (+0.1%) at $17.15/oz
The dollar index was -0.1% around the 100.41 level
Commodities, as measured by the Bloomberg Commodity Index, were -1.1% around the 87.03 level
After a week which saw the broader market notch new highs on multiple sessions, this week in the markets began distinctly lower. Coming off last week's highs, the Nasdaq Composite shed 47.07 points (-0.83%) to 5613.71. The Dow Jones Industrial Average lost 122.65 points (-0.61%) to 19971.13, and the S&P 500 was down 13.79 points (-0.60%) to 2280.90 at the close.
Market data today included the December personal income reading, which rose 0.3%; meanwhile, December personal spending increased 0.5%. The November Personal Spending reading was left unrevised at 0.2% while November Personal Income was revised to 0.1% from 0.0%. Core PCE prices for December rose 0.1%, while the November reading was left unrevised at 0.0%. Pending Home Sales for December rose 1.6%. Today's reading follows a 2.5% downtick in November.
The Technology (XLK 50.33, 0.41 -0.81%) space suffered a minor set-back today as weakness permeated from top to bottom. Names like CTSH -4.42%, GOOG -2.55%, GOOGL -2.51%, AMAT -2.00%, LRCX -1.89%, CSRA -1.86%, HPE -1.77% held the sector lower. Other sectors as measured by the S&P closed Monday XLE -1.86%, XLB -1.02%, IYZ -0.87%, XLI -0.85%, XLF -0.80%, XLRE -0.56%, XLV -0.49%, XLY -0.11%, XLP -0.08%, XLU +0.08% as only Utilities were able to escape Monday with gains.
In the S&P 500 Information Technology (848.20, -7.01 -0.82%) space, trading was decidedly negative. Bellwethers in the space didn't help the sector's cause, finishing all lower -- AAPL -0.26%, MSFT -0.99%, FB -0.91%, V -0.08%, INTC -1.47%, IBM -0.85%, CSCO -0.48%, MA -0.49%, AVGO -1.22%, QCOM -1.16%.
Other notable news items among sector components:
Fitbit (FIT 6.05, -1.15 -16.0%) lowered its Q4 guidance to a loss per share of ($0.51-0.56) from $0.14-0.18. Additionally, revenue guidance was lowered to $572-580 million from $725-750 million. FIT also announced the reorganization of its business, including a reduction in force, that will impact about 110 employees, constituting about 6% of the company's global workforce, creating a more focused and efficient operating model. The cost of these reorganization efforts is expected to be about $4 million to be recorded in the first quarter of 2017. The company is targeting a reduction in the 2016 exit operating expense run rate of about $200 million, to about $850 million for 2017, which includes realigning sales and marketing spend and improved optimization of research and development investments.
The EU cleared the acquisition of Intel (INTC 37.42, -0.56 -1.47%) Security by TPG Capital.
Digital Ally (DGLY 5.75, +1.05 +22.34%) announced its largest commercial order ever received for the sale and installation of DVM-250 event recorder video systems to American Medical Response ("AMR") and ongoing FleetVu Manager cloud storage services. AMR's initial order for deployment during 2017 includes about 1,550 three-camera DVM-250 systems, installation and cloud storage services, representing 2017 revenues about $2 million. Shipments will begin immediately.
Ixia (XXIA 19.45, +1.25 +6.87%) confirmed it will be acquired by Keysight Technologies (KEYS 36.97, -0.04 -0.11%) for $19.65 per share in cash, or approximately $1.6 billion.
Vodafone (VOD 24.90, +0.32 +1.30%) confirmed it is in discussions with the Aditya Birla Group about an all share merger of Vodafone India.
Nokia (NOK 4.53, -0.10 -2.16%) and the Orange Group (ORAN 15.38, -0.09 -0.58%) are to collaborate on the development of services that will allow industries and consumers to take advantage of the unprecedented efficiencies and business models made possible by 5G.
In reaction to quarterly results:
Silicom Limited (SILC 37.31, -1.74 -4.46%) reported better than expected Q4 EPS and revenues of $0.66 and $28.33 million, respectively.
Booz Allen Hamilton (BAH 33.91, -2.35 -6.48%) reported worse than expected Q3 earnings of $0.38 on revenues which beat market expectations at about $1.4 billion. The company also guided FY17 EPS and revenues in-line at $1.70-1.74 from $1.68-1.75 and up 4-6% to about $5.62-5.73 billion, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: AEIS, IDTI, ISIL, RMBS, SANM/AXE, AUDC, MMYT, MA, NTCT, S, XRX
Analyst actions:
NTAP was upgraded to Buy from Neutral at Goldman,
WBMD was upgraded to Buy from Neutral at Citigroup,
HDP was upgraded to Buy from Neutral at Mizuho,
MELI was upgraded to Buy from Neutral at BofA/Merrill;
HIMX was downgraded to Neutral from Outperform at Robert W. Baird,
PAYC was downgraded to Sector Weight from Overweight at Pacific Crest,
TRMB was downgraded to Neutral from Buy at Dougherty,
MGI was downgraded to Hold from Buy at Feltl,
XXIA was downgraded to Neutral from Buy at DA Davidson;
CSLT was initiated with a Market Perform at Cowen,
NPTN was initiated with an Outperform at Cowen
InvestmentHouse - Obama Final GDP a Barking Dog - Weekend Update:
http://www.investmenthouse.com/frblog.php
In the 1980's McDonald's introduced the McDLT, a tomato and lettuce sandwich
served in a split Styrofoam container that had the burger and bun on one
side and the lettuce and tomato on the other side. That way it could "keep
the hot side hot and the cool side cool." How groundbreaking. A hamburger
with lettuce and tomato. As David Letterman noted at the time, "is America
ready for a hamburger with lettuce and tomato?" Hey, it gave Jason
Alexander his start as he danced his way down the street in a McDonald's
commercial, amazing people with, yes, a lettuce and tomato hamburger.
The 'revolutionary' McDonald's McD.L.T. And Jason Alexander WITH hair.
Well, the US and indeed the world now has a President with the audacity to
say what he wants to do and follows through with it with no subterfuge or
obfuscation. After 28 years of Presidents making promises they never
intended to keep or giving us the old bait and switch to get our votes and
then forget us and go about their agenda, the US has to survive a President
who tells you what his agenda is and then makes no apologies for doing it.
Is the US, the leader of republics and democracies for over two centuries
ready for such openness from an elected official?
Sounds like a preposterous question, but in a world where non-citizens
blocked from immigrating to the US file suit so they can enter, it is not
surprising. Yes, non-citizens, many who have never been in the US, filing
lawsuits because the President ordered a cessation of immigration while the
methods used to vet would be immigrants is reviewed. If there were ever
cases that should be tossed from the courts in a matter of seconds, these
are them. Where is the legal standing for a non-citizen to demand entry into
a country? Try making that demand to Egypt, Iran, Saudi Arabia, China or
basically any country in the world. Good luck with that.
THE POINT: After a solid rally Wednesday that saw all indices outside of
RUTX break to new highs, Thursday and Friday they waffled. The first week
of the Trump presidency saw a flurry of action I cannot recall witnessing in
any administration in the 11 I have seen in my lifetime. Some of the
actions the markets cheered. Some of the actions the markets just don't
know what to make of. The irony is that Trump is doing exactly what he said
he was going to do and the markets are having a hard time figuring out if it
is what they want or not.
Thus after a breakout Wednesday, the week ended with a mixed and overall
weak Thursday followed by the same kind of confused, spineless trade on
Friday. Not that the indices rolled over or otherwise spit out the Tuesday
advance and the Wednesday breakout, but they certainly were not powering
ahead to end the week.
SP500 -1.99, -0.09%
NASDAQ 5.6, 0.10%
DJ30 -7.13, -0.04%
SP400 -0.49%
RUTX -0.36%
SOX 1.26%
VOLUME: NYSE -11%, NASDAQ -15%. A mixed day in the indices and a fade in
volume is not a bad thing. The day was no conviction and the volume shows
that as well.
A/D: NYSE -1.3:1, NASDAQ -1.1:1.
That does not mean they won't. After six weeks moving laterally on top of
the post-election rally the indices broke higher. That is a base, one where
they refused to give up their gains, typically a good sign of continuing
underlying strength. Now they broke higher and have held the gains with a
2-day lateral test. This coming week you look for confirmation of the
breakout, i.e. another strong upside move on solid volume. That will show
the buyers are back in after a short post-breakout respite, and it gives the
move a lot more credence that the breakout holds and continues.
Remember, the offset out there is the Bullish Advisor sentiment coming in at
60+% two of the last four weeks. That has marked the top of rallies for
many, many years, with the market subsequently correcting to some degree.
Timing is not a direct correlation. The selling can happen even weeks after
the levels are hit, usually with the market starting to show signs the move
stumbling into a rollover. If for instance the current break higher is
thrown back on volume in the coming week, that is pretty strong evidence the
break didn't have the support it needed and the upside odds are scaled back
even more.
That makes this coming week important for the upside. The market needs to
confirm the break higher with another break higher on some good volume.
There are plenty of good stocks out there in position to move and that are
moving. A rally needs to keep bringing the up to the front, and with the
moves late the prior week with some early leaders and then the Tuesday and
Wednesday break higher, they were doing that. After this pause they need to
bring it on again.
NEWS/ECONOMY
Q4 GDP ends the Obama era as the first President ever to never have one year
of at least 3% GDP growth.
Q4, GDP: 1.9% versus 2.2% expected versus 3.5% Q3.
2016 annual: 1.6% GDP growth. Nice showing for another year of recovery --
European style.
What can you say about this? The worst stretch of GDP growth since the
Great Depression. The first 10-year stretch without a year of 3% average
growth. I know there are those who say that the depth of the financial
crisis was such that we should not have anticipated strong growth. That
belies history. We have had depressions outside of the Great Depression
(that was only 'great' because it was so long) that recovered in a year.
It is the policies implemented to recover that determine the recovery
period. The Great Depression and the 1970's should have taught us that
excessive government intervention and regulation post-economic upheaval
leads to longer, anemic recovery periods. Why? Because instead of going
where it is called for by the economic forces, government officials
substitute their beliefs (often political) as to where the money should go.
The result is an inefficient allocation of money and thus an inefficient and
unnecessarily slower recovery, just as this has been. You can go back in
history and review the periods of slow recoveries and tie them all back to
too much managing the recovery versus a market-driven recovery. The seminal
study and book on the Great Depression clearly details this.
History lesson taught yet again, but the lesson is never really learned or
by the time we get to the next crisis, forgotten.
MARKET
A second day of pausing after a break higher Tuesday and then new highs
Wednesday on all but RUTX. Nice price break higher but volume was still
relatively anemic and breadth rather pitiful. But, there are good stocks
moving well . . .
CHARTS
NASDAQ: Led the move early on, led the indices in the new move, hitting its
new high on Tuesday, paving the way for the others on Wednesday. Decent
volume Thursday; not blowout but decent. At a new high, holding the move as
it takes what should be a quick nap if the move is going to continue.
RUTX: The only index that did not hit a new high on the week, RUTX had a
farther way to go as it undercut its 6 week range on the low. Backed off to
test the 10 day EMA on the Friday low, bounced to cut some of the loss. In
good position to make a run at the prior high after this test to mid-range
in the 6 week lateral move.
DJ30: Solid Tuesday/Wednesday move, added some Thursday. Good break to a
higher high Wednesday and Thursday, tight finish Friday. Nice break from
the range on better volume, holding the move, looking for a follow through
this week.
SOX: Unlike the other indices, SOX pushed higher Friday to a new high.
Very solid action as the semis continue as a market leader overall.
SP500: Broke to a higher closing high Wednesday, added a nice big gain
Thursday to a clear new high, closed out the week with a lateral move. Nice
break but weak volume, majorly lagging MACD.
SP400: Gapped higher Wednesday to a new high, faded to fill the gap and
test the 10 day EMA Friday. Not bad getting the gap out of the way and
holding the breakout as well. Nice break, nice test, ready to move again.
LEADERSHIP
Semiconductors: Some big moves the past two weeks. SWKS gapped and rallied
into Wednesday. MLNX, QRVO, AVGO surged on the week. XLNX has issues
Thursday on earnings but found its footing Friday. MRVL, SMTC solid weeks.
MU up on Friday and we picked up some.
FAANG: Some nice moves, e.g. FB Monday to Thursday. AAPL put in a new
recovery high into Wednesday. AMZN rallied as well, moving to the October
high Thursday. NFLX broke higher again after a modest lateral test. GOOG
announced less than great results for GOOG and it fell, but still easily
held over the 10 day EMA.
China: NTES broke higher, tested to end the week but still solid. BABA
gapped on results and rallied into Wednesday, testing Thursday and Friday.
ATHM is solid with a steady move higher up the 10 day EMA. YNDX posted a
big move into Wednesday, did a good job of holding it. SINA in a great
1-2-3 test, looking good for an entry.
Industrial Machinery: Some nice breaks higher last week, e.g. CMI, CAT. TEX
solid as well.
Oil: Holding up, some good patterns still waiting to make a move. HOS
looks good, DNR still in a good pullback.
Software: Some earnings starting to move stocks, e.g. VMW. BLKB looks
pretty good coming in toward its results. CALD looks pretty good.
Materials/Construction: MDR testing a good initial break higher. USG
testing a strong move higher. CX in a modest test of a strong surge.
MARKET STATS
DJ30
Stats: -7.13 points (-0.04%) to close at 20093.78
Nasdaq
Stats: +5.61 points (+0.1%) to close at 5660.78
Volume: 1.522B (-15.46%)
Up Volume: 897.23M (+42.56M)
Down Volume: 715.6M (-232.4M)
A/D and Hi/Lo: Decliners led 1.13 to 1
Previous Session: Decliners led 1.55 to 1
New Highs: 147 (-77)
New Lows: 34 (+5)
S&P
Stats: -1.99 points (-0.09%) to close at 2294.69
NYSE Volume: 738.4M (-10.95%)
A/D and Hi/Lo: Decliners led 1.33 to 1
Previous Session: Decliners led 1.08 to 1
New Highs: 142 (-125)
New Lows: 22 (+9)
SENTIMENT INDICATORS
VIX: 10.58; -0.05
VXN: 12.3; -0.34
VXO: 9.87; +0.48
Put/Call Ratio (CBOE): 1; +0.13. Back up to 1 Friday on a bit of
protection buying after a week that saw the ratio dip into the 70's, the
lowest it has been in quite some time. Suggested not as much worry on the
week after weeks of elevated put buying.
Bulls and Bears: Bulls fell back below 60, making it 2 and 2 for the past
four weeks. It has logged the 60% level, however, and that typically
signals a move is working on its last leg before a larger correction.
Bulls: 58.2 versus 60.60
Bears: 17.5 versus 17.3
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: 58.2 versus 60.6
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 versus 44.6 versus 49.0
versus 52.5 versus 55.9 versus 56.7 versus 56.2 versus 54.3 versus 52.9%
versus 53.9% versus 54.4% versus 52.5% versus 47.1% versus 41.6% versus
47.5% versus 45.9% versus 47.3% versus 45.4% versus 35.4% versus 40.2 versus
39.2
Bears: 17.5 versus 17.3
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 versus 22.6
versus 22.8 versus 20.6 Versus 20.2 versus 20.0 versus 20.9% versus 21.2%
versus 21.6% versus 23.3% versus 24.7% versus 24.5% versus 23.8% versus
23.2% versus 23.5% versus 23.8% versus 23.7% versus 24.0% versus 21.7%
versus 21.6% versus 21.7 versus 20.6% versus 21.7% versus 27.8% versus 27.8%
versus 28.9% versus 27.8% versus 30.3% versus 35.4%
OTHER MARKETS
Bonds (10 year): 2.48% versus 2.512%. Gapped upside to the 50 day MA after
selling hard Wednesday.
Historical: 2.512% versus 2.52% versus 2.467% versus 2.40% versus 2.47%
versus 2.468% versus 2.422% versus 2.372% versus 2.393% versus 2.358% versus
2.365% versus 2.38% versus 2.962% versus 2.42% versus 2.357% versus 2.45%
versus 2.448% versus 2.42% versus 2.48% versus 2.51% versus 2.56% versus
2.54% versus 2.55% versus 2.54% versus 2.564% versus 2.544% versus 2.59%
versus 2.59% versus 2.52% versus 2.473% versus 2.475% versus 2.471% versus
2.40% versus 2.349% versus 2.39% versus 2.396% versus 2.394% versus 2.454%
versus 2.388% versus 2.30% versus 2.31%. versus 2.36% versus 2.355% versus
2.317% versus 2.30% versus 2.34% versus 2.297% versus 2.219% versus 2.22%
versus 2.23% versus 2.14% versus 2.077% versus 1.867% versus 1.83% versus
1.778%
EUR/USD: 1.06957 versus 1.06843. Euro testing the 50 day MA on a four week
run.
Historical: 1.06843 versus 1.0683 versus 1.0756 versus 1.07274 versus 1.0761
versus 1.07027 versus 1.06394 versus 1.06381 versus 1.07114 versus 1.06450
versus 1.0624 versus 1.05982 versus 1.0555 versus 1.0585 versus 1.05346
versus 105837 versus 1.0525 versus 1.03914 versus 1.05289 versus 1.05155
versus 1.04357 versus 1.04636 versus 1.0451 versus 1.04368 versus 1.04412
versus 1.0392 versus 1.0407 versus 1.0459 versus 1.0415 versus 1.05094
versus 1.0636 versus 1.06326 versus 1.05586 versus 1.06140 versus 1.07745
versus 1.07194 versus 1.07614 versus 1.06638 versus 1.06631 versus 1.0601
versus 1.0649 versus 1.05699 versus 1.066 versus 1.05910
USD/JPY: 115.094 versus 114.469
Historical: 114.469 versus 113.362 versus 113.850 versus 112.736 versus
114.39 versus 114.686 versus 114.538 versus 112.774 versus 114.473 versus
114.57 versus 114.70 versus 115.811 versus 116.023 versus 116.923 versus
115.93 versus 116.46 versus 117.983 versus 116.739 versus 116.456 versus
116.793 versus 117.41 versus 117.413 versus 117.32 versus 117.537 versus
117.544 versus 117.835 versus 117.453 versus 117.941 versus 118.257 versus
117.397 versus 115.038 versus 115.058 versus 115.20 versus 114.23 versus
113.325 versus 113.993 versus 113.601 versus 113.52 versus 113.945 versus
114.19 versus 112.685 versus 112.44 versus 111.835 versus 113.14 versus
112.445 versus 111.129 versus 110.809
Oil: 53.17, -0.61. Still, still cannot get away from the breakout point
over the 2016 highs.
Gold: 1188.40, -1.40. Excellent doji test of the 50 day SMA sets gold in
position to resume the run that started in mid-December.
MONDAY
Okay, the break higher, the test, now can the indices follow through on the
move and give another solid buy signal? Lots of activity from the Trump
administration probably keeps up its pace this week as earnings continue
flying. We can prognosticate one way or the other, but that is all just
talk. The market made a good move, is testing it, and it will show if it
can continue.
After the break higher naturally you look at plays that play a continuation
of the breakout as that is the dominant pattern.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5660.78
Resistance:
Support:
5601 is the January lower gap point
The 2016 trendline at 5500
The 50 day EMA at 5462
The 50 day SMA at 5450
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
The 200 day SMA at 5158
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
4999 is the October upper gap point
4980 is the June 2016 peak
4969 is the April 2016 recovery high
4960 is the September 2015 intraday high, an important reversal point for
NASDAQ.
4920 is the lower gap point from mid-October 2015, the January 2016 lower
gap point
4916 is the mid-November 2015 low
4899 - 4902 from the September 2015 peak, July 2015 low
4894 is the September 2015 closing high
S&P 500: Closed at 2294.69
Resistance:
2277.53 is the December 2016 high
Support:
2282 - 2280 from January 2017
The 2016 trendline at 2272
The 50 day EMA at 2245
The 50 day SMA at 2245
The November 2016 all-time high at 2213.25
2194 is the August 2016 prior all-time high
2175 is the June 2016 high
The 200 day SMA at 2156
2135 is the May 2015 all-time high
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the September 2016 low; February 2015 intraday high
2116 is the November 2015 high
2111 is the April 2016 recovery high
2104 is the December 2015 high
2094 is the December 2014 high
2079 is the intraday all-time high from November 2014
2062 is the January 2015 lower high
2046 is the July 2015 closing low
2040 is the March 2015 closing low
2026 is the May 2016 low
2023 is the November 2015 low
2020 is the September 2015 intraday high
2011 is the September prior all-time high
1995 is the September 2015 recovery peak
1991 is the July 2014 high
Dow: Closed at 20,093.78
Resistance:
Support:
19,994 - 19,999 (early January high, upper gap point from late January
19750 is the lows of the December/January range
The 50 day SMA at 19,628
The 50 day EMA at 19,583
18,669 is the August 2016 all-time high
18,595 is the July 2016 peak
The 200 day SMA at 18,502
18,351 is the prior all-time high from May 2015
18,288 from March 2015
18,262 is the upper gap point from the Monday gap lower.
18,247 is the August 2016 low
18,168 is the April 2016 recovery high
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,992 is the early September low
17,978 is the November 2015 peak
17,960 is the October intraday low
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
ECONOMIC CALENDAR
January 27 - Friday
GDP Deflator, Q4 (8:30): 2.1% actual versus 2.1% expected, 1.4% prior
GDP-Adv., Q4 (8:30): 1.9% actual versus 2.2% expected, 3.5% prior
Durable Orders, December (8:30): -0.4% actual versus 3.0% expected, -4.8%
prior (revised from -4.6%)
Durable Goods -ex tr, December (8:30): 0.5% actual versus 0.5% expected,
1.0% prior (revised from 0.5%)
Michigan Sentiment -, January (10:00): 98.5 actual versus 98.0 expected,
98.1 prior (no revisions)
January 30 - Monday
Personal Income, December (8:30): 0.4% expected, 0.0% prior
Personal Spending, December (8:30): 0.4% expected, 0.2% prior
PCE Prices - Core, December (8:30): 0.2% expected, 0.0% prior
Pending Home Sales, December (10:00): 1.3% expected, -2.5% prior
January 31 - Tuesday
Employment Cost Index, Q4 (8:30): 0.6% expected, 0.6% prior
S&P Case Shiller Homes, November (9:00): 5.0% expected, 5.1% prior
Chicago PMI, January (9:45): 55.0 expected, 54.6 prior
Consumer Confidence, January (10:00): 112.5 expected, 113.7 prior
February 1 - Wednesday
MBA Mortgage Applica, 01/28 (7:00): 4.0% prior
MBA Mortgage Purchas, 01/28 (7:00): 4.0% prior
ADP Employment Change, January (8:15): 165K expected, 153K prior
ISM Index, January (10:00): 55.0 expected, 54.7 prior
Construction Spending, December (10:00): 0.2% expected, 0.9% prior
Crude Inventories, 01/28 (10:30): +2.840M prior
FOMC Rate Decision, February (14:00): 0.625% expected, 0.625% prior
Auto Sales, January (14:00): 5.30M prior
Truck Sales, January (14:00): 9.25M prior
February 2 - Thursday
Challenger Job Cuts, January (7:30): 42.4% prior
Initial Claims, 01/28 (8:30): 250K expected, 259K prior
Continuing Claims, 01/28 (8:30): 2100K prior
Productivity-Prel, Q4 (8:30): 1.0% expected, 3.1% prior
Unit Labor Costs, Q4 (8:30): 1.9% expected, 0.7% prior
Natural Gas Inventor, 01/28 (10:30): -119 bcf prior
February 3 - Friday
Nonfarm Payrolls, January (8:30): 170K expected, 156K prior
Nonfarm Private Payr, January (8:30): 175K expected, 144K prior
Unemployment Rate, January (8:30): 4.7% expected, 4.7% prior
Avg. Hourly Earnings, January (8:30): 0.3% expected, 0.4% prior
Average Workweek, January (8:30): 34.3 expected, 34.3 prior
Factory Orders, December (10:00): 1.4% expected, -2.4% prior
ISM Services, January (10:00): 57.0 expected, 57.2 prior
From Briefing.com: Weekly Recap - Week ending 27-Jan-17
The stock market enjoyed a solid week, which saw the three major averages climb to fresh record highs. The S&P 500 gained 1.0% for the week while the Dow Jones Industrial Average (+1.3%) and Nasdaq Composite (+1.9%) outperformed. The Dow received added attention in the media during the second half of the week after making its first appearance above the 20000 level on Wednesday.
The past week was highlighted by a healthy dose of quarterly reports from influential market components like Alphabet (GOOGL), Boeing (BA), Microsoft (MSFT), McDonald's (MCD), Intel (INTC), Texas Instruments (TXN), and Qualcomm (QCOM) among others. In general, results from the tech sector were strong while earnings from other areas of the market were more mixed.
At the end of the week, roughly 34% of S&P 500 components had reported their results, showing a blended earnings growth rate of 4.0% versus market expectations for growth of 5.2%, according to FactSet.
The economic calendar also featured a fair share of reports, but the market did not appear particularly concerned with disappointing December Existing Home Sales (5.49 million; Briefing.com consensus 5.55 million), December New Home Sales (536,000; Briefing.com consensus 589,000), advance fourth quarter GDP (+1.9%; Briefing.com consensus 2.2%), nor December Durable Orders (-0.4%; Briefing.com consensus 3.0%).
Rate hike expectations held firm with the fed funds futures market pointing to a 71.9% implied likelihood of a rate hike in June.
Index Started Week Ended Week Change % Change YTD %
DJIA 19827.25 20093.78 266.53 1.3 1.7
Nasdaq 5555.33 5660.78 105.45 1.9 5.2
S&P 500 2271.31 2294.69 23.38 1.0 2.5
Russell 2000 1352.58 1370.15 17.57 1.3 1.0
Technology stocks finished a strong week with the Nasdaq 100(QQQ) closing up 0.2% at a new all-time high for the fourth day in a row.
Semiconductors (SMH +1.3%) were strong today, helped by abeat and raise report from Intel (INTC +1.1%). The stock hit a 16 year high andclosed at resistance near the $38 level. It trades at just under 14x 2017 earningsestimates.
Elsewhere in the space, Maxim (MXIM) rose 6% after beatingQ2 estimates while Synaptics (SNYA) fell 6.5% after beating Q2 estimates. Chip equipment company KLA-Tencor (KLAC) rose 3.5%to a seventeen year high following earnings.
Microsoft (MSFT +2.4%) closed at a new all-time high afterthe company beat Q2 estimates. CEO Satya Nadella has done a great job over thelast two years. The company has positioned itself as the clear #2 in the cloudbehind Amazon's AWS. Revenue from Azure,Microsoft's cloud platform launched almost seven years ago, surged 93.0% andusage more than doubled year-over-year. The tech behemoth has a $500 blnmarket cap and trades at ~22x earnings.
Google (GOOG, GOOGL) openedat an all-time but closed down 1.1% after missing earnings estimates. Theinternet search giant has a ~$580 billion market cap and trades at just over 20xearnings.
Cybersecurity stockProofpoint (PFPT) fell 6% despite a beating Q4 estimates and raising guidance.
Technology investorshave reason to be optimistic after Cisco (CSCO) acquired what was supposed tobe the first big tech IPO of the year AppDynamics at a lofty ~9x sales multiple this week.
Meanwhile,Snapchat is expected to IPO sometime in the first half of the year at avaluation near $20 billion despite having less than $1 billion in revenue lastyear. Applewill report Q1 results on Tuesday afternoon.
4:25 pm Closing Market Summary: Averages Finish Friday Relatively Unchanged (:WRAPX) :
It appears that investors ran out of ink after rewriting the record book during Wednesday's session as the major averages closed the week relatively unchanged from those record levels. The S&P 500 (-0.1%) finished Friday's session just below its flat line, while the Nasdaq (+0.1%) performed just slightly better.
To illustrate the minimal change numerically, the five heaviest weighted sectors--technology, financials, health care, consumer discretionary, and industrials-- changed only marginally since Wednesday's close, seeing gains/losses of no more than 0.1%. Sectors like consumer staples and energy saw more substantial movement due to a number of factors, but generally, the stock market appears to be in wait-and-see mode, eyeing President Trump and his ability to implement the pro-growth agenda he ran his presidential campaign on.
However, despite minimal movement in the key indices, earnings season remained alive and well on Friday with technology names headlining the action. The results were mixed with Alphabet (GOOGL 845.03, -11.95) ticking down 1.4% in reaction to below-consensus earnings, while Intel (INTC 37.98, +0.42) and Microsoft (MSFT 65.78, +1.51) climbed 1.1% and 2.4%, respectively, after beating top and bottom line estimates.
The positives outweighed the negatives in the technology sector (+0.3%), which left the sector as one of the few spaces to close the day higher. Health care and telecom services were fortunate enough to do the same, adding 0.8% and 0.7%, respectively.
On the flip side, real estate (-0.9%) and energy (-0.9%) finished at the bottom of the day's leaderboard, with the latter fighting a battle on multiple fronts. The first attack against the energy space's came from Chevron (CVX 113.79, -2.76) after the company disappointed investors with its quarterly earnings report. Crude oil also weighed, slipping 1.1% to $53.18/bbl, as increased U.S. production overshadowed supply cut efforts by OPEC and non-OPEC members.
Consumer staples (-0.6%) also finished near the bottom of the leaderboard following a negative reaction to Colgate-Palmolive's (CL 64.68, -3.56) quarterly report. The company slipped 5.2% after missing revenue estimates and forecasting a low-single digit net sales increase for 2017.
For the week, cyclical sectors had the upper hand as materials (+3.4%) led five of the six spaces higher. Conversely, each countercyclical sector closed the week lower, with telecom services (-1.7%) falling the farthest.
U.S. Treasuries also closed Friday's session with a week-to-date loss. However, the Treasury market did end the week on an upbeat note, closing in positive territory around its highest levels of the day. The 10-yr yield settled two basis points lower at 2.48%.
Friday's economic data included advance fourth quarter GDP, December Durable Orders, and the final reading of the University of Michigan Sentiment Index for January:
Advance fourth quarter GDP pointed to an expansion of 1.9%, while the Briefing.com consensus expected a reading of 2.2%. The fourth quarter GDP Deflator came in at 2.1%, which is what the Briefing.com consensus expected.
The key takeaway from this report is that fourth quarter activity revealed the strong third quarter growth was as an aberration, yet that point aside, the salient takeaway for many is that this is a backward-looking report and the markets have their sights set on a brighter economic outlook for 2017, which is expected to feature deregulation, tax reform, and infrastructure spending among other items.
December durable goods orders declined 0.4%, while the Briefing.com consensus expected a 3.0% increase. The prior month's reading was revised to -4.8% (from -4.6%). Excluding transportation, durable orders rose 0.5% (Briefing.com consensus +0.5%) to follow the prior month's revised gain of 1.0% (from 0.5%).
The key takeaway from this report is that business investment remained on a positive trajectory.
The final reading of the University of Michigan Consumer Sentiment Index for January rose to 98.5 (Briefing.com consensus 98.0) from 98.1 in the preliminary reading.
The key takeaway from the report is that consumer confidence is rising on the back of an improved outlook for economic growth, job growth, and personal finances in the year ahead
Monday's economic data will include December Personal Income at 8:30 am ET and December Pending Home Sales at 10:00 am ET.
Nasdaq Composite 5.2% YTD
S&P 500 2.5% YTD
Dow Jones Industrial Average +1.7% YTD
Russell 2000 +1.0% YTD
From Briefing.com: 5:35 pm Tower Semi: Audio Pixels fabrication partner Tower Semiconductor reached a 'critical milestone' with the initial delivery of half structure MEMS devices (TSEM) : Over the coming weeks a number of additional interim delivery milestones have been coordinated with Tower to further enable compliance testing without disrupting Tower's rapid advancement toward the production of fully functional MEMS devices. Audio Pixels and Tower personnel are making every effort to improve on the initial advised timelines for the delivery of fully functional MEMS devices by May 31st 2017; which would eclipse the latest advised delivery by our second MEMS vendor.
4:24 pm Juniper Networks beats by $0.03, beats on revs; guides Q1 EPS below consensus, revs in-line (JNPR) :
Reports Q4 (Dec) earnings of $0.66 per share, $0.03 better than the Capital IQ Consensus of $0.63; revenues rose 5.0% year/year to $1.39 bln vs the $1.36 bln Capital IQ Consensus.
Non-GAAP operating margin for the fourth quarter of 2016 was 26.5%, an increase from 26.0% in the fourth quarter of 2015, and an increase from 24.4% in the third quarter of 2016.
Co issues guidance for Q1, sees EPS of $0.38-0.44, excluding non-recurring items, vs. $0.45 Capital IQ Consensus Estimate; sees Q1 revs of $1.190-1.210 bln vs. $1.2 bln Capital IQ Consensus Estimate.
Non-GAAP gross margin will be approximately 62.5%, plus or minus 0.5%.
Non-GAAP operating expenses will be approximately $515 million, plus or minus $5 million.
Non-GAAP operating margin will be approximately 19.5% at the midpoint of revenue guidance.
4:20 pm Super Micro Computer beats by $0.02, beats on revs; guides Q3 EPS above consensus, revs above consensus (SMCI) :
Reports Q2 (Dec) earnings of $0.48 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.46; revenues rose 2.0% year/year to $651.9 mln vs the $609.2 mln Capital IQ Consensus and guidance of $570-640 mln.
Non-GAAP gross margin for the second quarter was 14.4% compared to 16.7% in the same period a year ago.
Co issues upside guidance for Q3, sees EPS of $0.34-0.42, excluding non-recurring items, vs. $0.32 Capital IQ Consensus Estimate; sees Q3 revs of $570-630 mln vs. $552.03 mln Capital IQ Consensus Estimate.
"We expect to continue the growth of last quarter and be reflected in the year-over-year revenue growth in the March quarter based on an increasing number of sizable customer engagements demanding the performance and advantages of our leading product lines. In addition, we are well positioned to benefit from technology transitions in 2017 and have upgraded our product lines to optimize these new technologies."
4:18 pm Celestica beats by $0.09, beats on revs; guides Q1 EPS in-line, revs in-line (CLS) :
Reports Q4 (Dec) earnings of $0.41 per share, $0.09 better than the Capital IQ Consensus of $0.32; revenues rose 7.2% year/year to $1.62 bln vs the $1.55 bln Capital IQ Consensus.
Co issues in-line guidance for Q1, sees EPS of $0.24-0.30 vs. $0.27 Capital IQ Consensus Estimate; sees Q1 revs of $1.4-1.5 bln vs. $1.41 bln Capital IQ Consensus Estimate.
"Celestica delivered a strong fourth quarter, with growth in revenue of 7% and growth in operating earnings of 16%, compared to the fourth quarter of 2015," said Rob Mionis, Celestica's President and Chief Executive Officer. "Celestica's strong close to the year helped deliver full-year 2016 revenue growth of 7%, 14% growth in operating earnings and over $100 million of free cash flow. Among the many highlights for 2016, we achieved our highest level of operating margins since 2001 and the highest revenue levels since 2012."
4:17 pm KLA-Tencor beats by $0.12, beats on revs (KLAC) :
Reports Q2 (Dec) earnings of $1.52 per share, $0.12 better than the Capital IQ Consensus of $1.40; revenues rose 23.5% year/year to $877 mln vs the $838.99 mln Capital IQ Consensus.
Co states: "In addition, new orders topped $1 billion for the first time in the December quarter, reflecting KLA-Tencor's market leadership and the critical role process control plays in enabling our customers' success at the leading edge. These outstanding results are against the backdrop of a healthy overall demand environment for wafer fab equipment in the marketplace today, and position KLA-Tencor with good momentum heading into calendar 2017."
4:16 pm Maxim Integrated beats by $0.03, beats on revs; guides Q3 EPS in-line with midpoint above consensus, revs in-line (MXIM) :
Reports Q2 (Dec) earnings of $0.46 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.43; revenues rose 7.9% year/year to $551 mln vs the $540.48 mln Capital IQ Consensus.
Co issues in-line guidance for Q3, sees EPS of $0.49-0.55, excluding non-recurring items, vs. $0.50 Capital IQ Consensus Estimate; sees Q3 revs of $555-595 vs. $568.33 mln Capital IQ Consensus Estimate. Backlog $388 mln.
"Our December quarter marked the beginning of our return to revenue growth, as Automotive, Core Industrial and diversification in Consumer all contributed gains from the same quarter last year." Mr. Doluca continued, "In the March quarter, we expect to build upon our growth momentum in our Automotive and Industrial businesses."
4:15 pm Microsoft beats by $0.04, beats on revs; guides on call (MSFT) :
Reports Q2 (Dec) earnings of $0.83 per share, $0.04 better than the Capital IQ Consensus of $0.79; revenues rose 1.5% year/year to $26.07 bln vs the $25.29 bln Capital IQ Consensus.
Revenue in Productivity and Business Processes was $7.4 billion and increased 10% (up 12% in constant currency),
Revenue in Intelligent Cloud was $6.9 billion and increased 8% (up 10% in constant currency),
Revenue in More Personal Computing was $11.8 billion and decreased 5% (down 4% in constant currency) driven primarily by lower phone revenue,
"I am pleased with our results this quarter. We see strong demand for our cloud-based services and are executing well on our long-term growth strategy,"
Microsoft will provide forward-looking guidance on its conference call at 5:30 pm ET
4:12 pm Flex beats by $0.01, misses on revs; guides Q4 EPS in-line, revs in-line (FLEX) :
Reports Q3 (Dec) earnings of $0.34 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.33; revenues fell 9.6% year/year to $6.12 bln vs the $6.21 bln Capital IQ Consensus.
Adjusted gross margin increased approximately 40 basis points on a year-over-year basis.
Co issues in-line guidance for Q4, sees EPS of $0.27-0.31, excluding non-recurring items, vs. $0.29 Capital IQ Consensus Estimate; sees Q4 revs of $5.5-5.9 bln vs. $5.72 bln Capital IQ Consensus Estimate.
4:10 pm Intel beats by $0.04, beats on revs; guides Q1 EPS above consensus, revs above consensus; guides FY17 EPS below consensus (INTC) :
Reports Q4 (Dec) earnings of $0.79 per share, $0.04 better than the Capital IQ Consensus of $0.75; revenues rose 10.1% year/year to $16.4 bln vs the $15.75 bln Capital IQ Consensus.
Client Computing Group revenue of $9.1 billion, up 4 percent year-over-year
Data Center Group revenue of $4.7 billion, up 8 percent year-over-year
Internet of Things Group revenue of $726 million, up 16 percent year-over-year
Co issues upside guidance for Q1, sees EPS of $0.65 vs. $0.61 Capital IQ Consensus Estimate; sees Q1 revs of $14.8 bln vs. $14.51 bln Capital IQ Consensus Estimate. Sees 63% gross margin.
Co issues guidance for FY17, sees EPS of $2.80 vs. $2.81 Capital IQ Consensus Estimate; sees FY17 revs flat, which would imply roughly $59.5 bln vs. $60.85 bln Capital IQ Consensus Estimate. Sees 63% gross margin.
"The fourth quarter was a terrific finish to a record-setting and transformative year for Intel. In 2016, we took important steps to accelerate our strategy and refocus our resources while also launching exciting new products, successfully integrating Altera, and investing in growth opportunities," said Brian Krzanich, Intel CEO. "I'm pleased with our 2016 performance and confident in our future."
4:10 pm Alphabet misses by $0.26, beats on revs (GOOG) :
Reports Q4 (Dec) earnings of $9.36 per share, excluding non-recurring items, $0.26 worse than the Capital IQ Consensus of $9.62; revenues rose 22.2% year/year to $26.06 bln vs the $25.14 bln Capital IQ Consensus.Other Bets revenue $262 mln compared to $150 mln in prior year; Loss of ($1.08 bln) compared to a Loss of ($1.213 bln) in prior year.Cost of Revenue- 41% compared to 38% in prior year.Operating Expense as % of revenue 34% compared to 36% in prior yearFree Cash Flow $6.335 blnEffective Tax Rate 22%Aggregate Paid Clicks-Q4- +36%, street expectations were +25%; Q3 +33%; Q2 +29%; Q1 +29%.
Paid Clicks on Google websites- Q4 +43%; Q3 +42%; Q2 +37%; Q1 +38%.
Paid clicks on member sites- Q4 +7%; Q3 +1%; Q2 0%; Q1 +2%.
Aggregate cost per click-
Q4- -15%, street expectations were for approx -15%; Q3 -11%; Q2 -7%; Q1 -9%.
CPC on Google sites- Q4- -16%; Q3 -13%; Q2 -9%; Q1 -12%.
CPC on member sites- Q4- -19%; Q3 -14%; Q2 -8%; -8%; Q1 -8%.
4:05 pm Microsemi reports EPS in-line, revs in-line; guides Q2 EPS above consensus, revs above consensus (MSCC) :
Reports Q1 (Dec) earnings of $0.86 per share, in-line with the Capital IQ Consensus of $0.86; revenues rose 32.3% year/year to $435.5 mln vs the $435.25 mln Capital IQ Consensus.
Co issues upside guidance for Q2, sees EPS of $0.86-0.96 vs. $0.89 Capital IQ Consensus Estimate; sees Q2 revs of $430-450 mln vs. $439.99 mln Capital IQ Consensus Estimate.
"During our first fiscal quarter of 2017, we continued to execute on our winning strategy," stated James J. Peterson, Microsemi's chairman and CEO. "Gross margins improved 90 basis points sequentially, benefiting from strong results in our data center and optical end markets as well as the realization of expected integration synergies. These efforts will enable us to outgrow the industry and outperform our peers to the benefit of our shareholders."4:10 pm : Investors were very selective of their pitches when they stepped up to the plate on Thursday, ultimately choosing to take ball four rather than risking a swing and miss. Despite news, earnings, and economic data, the major averages finished in the neighborhood of where they began, with the S&P 500 (-0.1%) closing just a tick lower.
Conversely, Donald Trump did take a swing today tweeting that Mexican President Enrique Pena Nieto should cancel his upcoming meeting with the U.S. President "if Mexico is unwilling to pay for the badly needed wall." The Mexican President responded by doing just that.
The market ticked down ever so slightly on Mr. Pena Nieto's response, but regardless, the incident does highlight some concerns about Mr. Trump's ability to play nice with foreign leaders. Only time will tell if President Trump's international agenda will be as friendly to the stock market as his domestically focused, pro-growth one has been so far.
Sector standings looked just as unenthusiastic as the market itself with some sectors green, some red, but no one space swinging too far from its flat line. Cyclical sectors had a slight edge over the defensive groups, with four of the six finishing higher. Technology (-0.2%) and energy (unch) bucked the trend, however, with the latter sector ignoring crude oil's 1.9% climb. The energy component closed its trading day at $53.75/bbl.
The downtick in technology stemmed from a downbeat response to Qualcomm's (QCOM 54.05, -2.85) quarterly report. The company finished 5.0% lower after missing on revenues, signaling a possible slowdown in demand for semiconductors, which are a component of nearly every modern technological device.
Industrials (+0.3%) finished near the top of the leaderboard, beside financials (+0.3%), as airlines willed the industrial sector to a modest gain. Southwest Airlines (LUV 53.92, +4.46) added 9.0% after reporting favorable earnings per share, however, the industrial sector's gains were capped by a lackluster earnings report from Caterpillar (CAT 97.22, -0.93) and continued weakness from United Technologies (UTX 110.36, -0.60), who reported quarterly results before yesterday's session. The two names finished down 1.0% and 0.5%, respectively.
On the countercyclical side, health care (-0.7%) finished in last place after Bristol-Myers Squibb (BMY 46.82, -2.73) missed earnings per share estimates and issued downbeat guidance. The company slipped 5.5%, putting pressure on its fellow health care components. Consumer staples (-0.4%) finished just a hair better than the health care sector, while the lightly-weighted telecom services, utilities, and real estate sectors finished near their flat lines.
U.S. Treasuries closed modestly higher, bouncing back in the afternoon after succumbing to morning selling pressure. The benchmark 10-yr yield finished one basis point lower at 2.50%.
Today's economic data included Initial Claims, International Trade in Goods, New Home Sales, and Leading Indicators:
The latest weekly initial jobless claims count totaled 259,000 while the Briefing.com consensus expected a reading of 246,000. Today's tally was above the revised prior week count of 237,000 (from 234,000). As for continuing claims, they rose to 2.100 million from the revised count of 2.059 million (from 2.046 million).
The headline for initial claims was a bit disappointing, yet the key takeaway is that there wasn't really any major deviation from the underlying trend considering how low the initial claims reading has been in recent weeks.
December International Trade in Goods decreased by $65.00 billion on the back of a unrevised $65.30 billion decline in November.
New Home Sales in December hit an annualized rate of 536,000, which was below the revised November rate of 598,000 (from 592k), and less than the 589,000 that was expected by the Briefing.com consensus.
The key takeaway from the report is that the combination of higher prices and higher mortgage rates appears to have squeezed the home-buying capability of lower-income consumers, evidenced by the drop in sales of new homes priced under $299,999.
The Conference Board's Leading Indicators report for December ticked up 0.5% (Briefing.com consensus +0.5%) after a 0.1% increase (from 0.0%) in November.
The key takeaway from the December report is that the component indexes suggest the economic expansion should continue and possibly increase in the near term.
Tomorrow's economic data will include advance fourth quarter GDP (Briefing.com consensus 2.2%) and December Durable Orders (Briefing.com consensus 3.0%) at 8:30 am ET, with the final reading of the Michigan Sentiment Index for January following at 10:00 am ET.
Russell 2000 +1.4% YTD
Dow Jones Industrial Average +1.7% YTD
S&P 500 +2.6% YTD
Nasdaq Composite +5.1% YTD
DJ30 +32.40 NASDAQ -1.16 SP500 -1.69 NASDAQ Adv/Vol/Dec 1170/1.66 bln/1796 NYSE Adv/Vol/Dec 1402/958.9 mln/1522 3:30 pm :
Crude oil erased all of yesterday's post-EIA losses & closed pit trading nearly +2% ahead of tomorrow's rig count data
Mar crude oil futures rose $0.99 (+1.9%) to $53.75/barrel
Baker Hughes rig count data will be released tomorrow at 1 pm ET.
Rig count data released last Friday showed the biggest single weekly oil rig count increase in 4 years.
The U.S. oil rig count increased by 29 to 551 rigs last week.
It is worth noting that this pick-up in US activity could potentially cap oil price gains in the future.
Natural gas closed higher for the 4th consecutive session on a bullish EIA reading; supported by a colder weather outlook released earlier in the week
Mar natural gas closed $0.05 higher (+1.5%) at $3.40/MMBtu
Color on 4-day rally in natural gas:
In addition to today's EIA data giving natural gas a boost, U.S. natural gas futures have been trading higher the past 4 sessions on forecasts for colder-than-normal weather and higher heating demand expected to last into the second week of Feb.
This rally came despite a warmer-than-normal outlook through Jan 27 and for much of the rest of Feb and Mar, ahead of tomorrow's EIA data.
In precious metals, gold closed pit trading near this morning's 2-week low on continued dollar index strength
Feb gold ended today's session down $8.10 (-0.7%) to $1,189.90/oz
Mar silver closed today's session $0.13 lower (-0.8%) at $16.85/oz
The dollar index was +0.4% around the 100.45 level, weighed on precious metals
Commodities, as measured by the Bloomberg Commodity Index, were -0.1% around the 88.27 level
After a record-setting day yesterday, the broader market closed flat, albeit mixed. Action in the Dow Jones Industrial Average made new all-time highs despite broad weakness in other areas, ultimately ending Thursday up 32.40 points (+0.16%) to 20100.91. The S&P 500 was the worst performing index, shedding 1.69 points (-0.07%) to 2296.68, and the Nasdaq Composite lost 1.16 points (-0.02%) to 5655.18.
Donald Trump made more news today after tweeting that Mexican President Enrique Pena Nieto should cancel his upcoming meeting with the U.S. President "if Mexico is unwilling to pay for the badly needed wall." The Mexican President responded by doing just that.
The market ticked down ever so slightly on Mr. Pena Nieto's response, but regardless, the incident does highlight some concerns about Mr. Trump's ability to play nice with foreign leaders. Only time will tell if President Trump's international agenda will be as friendly to the stock market as his domestically focused, pro-growth one has been so far.
Market data today included the latest weekly initial jobless claims count which totaled 259,000; for continuing claims, they rose to 2.100 million from the revised count of 2.059 million (from 2.046 million). Also, the December International Trade in Goods report came out today, declining by $65.00 billion on the back of an unrevised $65.30 billion decline in November. Further, New Home Sales in December hit an annualized rate of 536,000, which was below the revised November rate of 598,000 (from 592k). Lastly, the Conference Board's Leading Indicators report for December ticked up 0.5% after a 0.1% increase (from 0.0%) in November.
Following suit, the Technology (XLK 50.54, -0.14 -0.28%) space was pressured out of the gate by sellers. Component F5 Networks (FFIV 133.72, -12.03 -8.25%) was the worst performing name today after reporting what amounted to be a tepid quarter and forward guidance. Other sectors as measured by the S&P closed out the session IYZ +0.88%, XLB +0.26%, XLI +0.26%, XLF +0.25%, XLY +0.16%, XLE +0.08%, XLU +0.04%, XLRE -0.06%, XLP -0.43%, XLV -0.77%.
Media names, and Telecoms in general, were strong today on reports that Charter Comm (CHTR 333.15, +22.84 +7.36%) and Verizon (VZ 49.12, -0.65 -1.31%) had entered into merger talks. Reports circulated premarket about the potential transaction, with follow up reports by Reuters, the Wall Street Journal, Bloomberg and CNBC highlighting the details (or lack thereof) at the moment of the potential tie-up. Peers which also traded higher today included LBRDA +8.86%, LVNTA +5.38%, CABO +3.54%, CMCSA +2.81%, SNI +2.61%, FOXA +2.31%, VIAB +2.10%, LBTYA +1.96%, CBS +1.84%, SBGI +1.80%, MSGN +1.80%, DISCA +1.16%, AMCX +0.43%
The S&P 500 Information Technology (852.39, -1.78 -0.21%) space had an equally bad day, but even a 'bad day' in the space wasn't all that bad. Component eBay (EBAY 31.74, +1.51 +5.00%) helped the sector stay afloat while the rest of the broader market was tumbling as investors rewarded shares after a mixed quarter. Despite EBAY, the broader trend was lower today; stocks which ended today in the red included CTXS -6.50%, QCOM -5.01%, XLNX -3.68%, HPQ -2.63%, ADS -2.45%, WU -2.44%, MSI -2.26%, CTSH -2.22%, LRCX -2.22%, WDC -1.94%, GPN -1.89%, FSLR -1.88%.
Other notable news items among sector components:
Shares of Charter Comm (CHTR) spiked in the premarket session following reports that the company may be in merger talks with Verizon (VZ). After the open, a Wall Street Journal report was out suggesting VZ was in talks with CHTR. Then, CNBC's David Faber chimed in that not much had occurred between VZ and CHTR thus far. Reuters was then out on the deal, suggesting VZ had not yet proposed an acquisition, while the FT reported that both VZ and CHTR had hired advisors to evaluate the deal.
Moneygram (MGI 12.92, +1.04 +8.75%) agreed to be acquired by Alibaba's (BABA 102.75, -1.31 -1.26%) Ant Financial for $13.25 per share in cash, or about $880 million. This agreement confirmed a Wall Street Journal report which came out last night, suggesting the deal may occur.
Fidelity Nat'l Info (FIS 79.56, -0.32 -0.40%) increased its quarterly dividend to $0.29 from $0.26 per share.
LogMeIn (LOGM 102.60, -7.05 -6.43%) stockholders approved issuance of shares of its common stock to equity holders of Citrix Systems (CTXS 89.52, -6.22 -6.50%) in connection with its proposed merger with CTXS. The merger is expected to be completed on January 31, 2017.
Nuance Communications (NUAN 15.97, -0.03 -0.19%) shareholder Carl Icahn lowered passive stake to 4.43% (to about 12.91 million shares vs. about 19.68 million held at the end of Q3).
Quality Systems's (QSII 14.17, +0.39 +2.83%) Principal Accounting Officer John Stumpf announced resignation, effective February 10.
Cimpress (CMPR 86.57, -11.60 -11.82%) announced its intention to implement organizational changes aimed at decentralizing its operations.
In reaction to quarterly results:
AT&T (T 41.77, +0.39 +2.83%) reported in-line Q4 EPS and revenues of $0.66 and $41.84 billion, respectively. Also rees FY17 revenue growth in the low-single digits, adjusted EPS growth in the mid-single digit range, and adjusted operating margin expansion. Also expects capital expenditures in the $22 billion range and free cash flow near the $18 billion range.
Qualcomm (QCOM 54.05, -2.85 -5.01%) reported better than expected Q1 EPS of $1.19 on revenues which came in below expectations at $6 billion. The company also guided Q2 EPS and revenues in-line at $1.15-1.19 and $5.5-6.3 billion, respectively.
eBay (EBAY) reported better than expected Q4 EPS of $0.54 and revenues of $2.4 billion. For Q1, the company sees worse than expected EPS of $0.46-0.48 and worse than expected revenues of $2.17-2.21 billion. For FY17, EBAY expects EPS below market expectations at $1.98-2.03 on revenues of $9.3-9.5 billion.
Western Digital (WDC 78.47, -1.55 -1.94%) reported better than expected Q2 EPS and revenues of $2.30 and $4.89 billion, respectively. For Q3, sees EPS of $2.00-2.10 and revenues of about $4.55 billion.
Ericsson (ERIC 6.07, +0.18 +3.06%) reported Q4 EPS of SEK0.62 on revenues of SEK65.2 billion.
Lam Research (LRCX 114.33, -2.59 -2.22%) reported Q2 EPS and revenues which came in ahead of expectations at $2.24 and $1.88 billion, respectively. For Q3, the company sees EPS and revenues ahead of market expectations at $2.45-2.65 and $2.075-2.2 billion, respectively.
F5 Networks (FFIV) reported better than expected Q1 EPS of $1.98 and revenues of $516 million. For Q2, the company sees in-line EPS and revenues of $1.95-1.98 and $518-528 million, respectively.
Companies scheduled to report quarterly results tonight: MSFT GOOG INTC PYPL VMW KLAC MXIM JNPR ETFC FLEX MSCC AZPN NATI PFPT LITE SYNA CLS OSIS SMCI INVN AMCC UIS SHOR DGII GSIT
Analyst actions:
WDC was upgraded to Outperform from Sector Perform at FBN Securities;
MGI was downgraded to Market Perform from Outperform at William Blair,
ADS was downgraded to Mkt Perform from Outperform at Raymond James
From Briefing.com: 4:23 pm Xilinx beats by $0.03, beats on revs; guides Q4 revs in-line (XLNX) :
Reports Q3 (Dec) earnings of $0.52 per share, $0.03 better than the Capital IQ Consensus of $0.49; revenues rose 3.5% year/year to $586 mln vs the $579.63 mln Capital IQ Consensus.
Co issues in-line guidance for Q4, sees Q4 revs of $590-620 mln vs. $607.75 mln Capital IQ Consensus Estimate.
Co said, "Sales from our 16nm Ultrascale+, 20nm Ultrascale, and 28nm Zynq products contributed to significant market expansion. The growth from these products was driven by a broad base of markets such as data center, automotive, test & measurement, wired and wireless communications and space."
4:12 pm Western Digital beats by $0.18, beats on revs -- co will guide on cc at 17:00 ET (WDC) :
Reports Q2 (Dec) earnings of $2.30 per share, excluding non-recurring items, $0.18 better than the Capital IQ Consensus of $2.12; revenues rose 47.4% year/year to $4.89 bln vs the $4.76 bln Capital IQ Consensus.
The company generated $1.1 billion in cash from operations during the second fiscal quarter of 2017, ending with approximately $5.2 billion of total cash and cash equivalents, and available-for-sale securities.
4:11 pm Qualcomm beats by $0.01, misses on revs; guides Q2 EPS in-line, revs in-line (QCOM) :
Reports Q1 (Dec) earnings of $1.19 per share, $0.01 better than the Capital IQ Consensus of $1.18; revenues rose 3.9% year/year to $6 bln vs the $6.12 bln Capital IQ Consensus.
Co issues in-line guidance for Q2, sees EPS of $1.15-1.25 vs. $1.19 Capital IQ Consensus Estimate; sees Q2 revs of $5.5-6.3 bln vs. $5.93 bln Capital IQ Consensus Estimate.
Sees 165M - 185M MSM Chip shipments (decrease 2% - 13%); Total reported device sales of approx. $74.0B - $82.0B (increase 6%-17%)
"The recent legal and governmental actions against Qualcomm are at their core driven by commercial disputes. As we have done in the past, we will vigorously defend our business model and the value of a portfolio of technologies that has been so instrumental to the success of the mobile communications industry."
4:10 pm Lam Research beats by $0.05, beats on revs; guides Q3 EPS above consensus, revs above consensus (LRCX) :
Reports Q2 (Dec) earnings of $2.24 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $2.19; revenues rose 32.0% year/year to $1.88 bln vs the $1.84 bln Capital IQ Consensus. Shipments of $1.92 billion
Co issues upside guidance for Q3, sees EPS of $2.45-2.65, excluding non-recurring items, vs. $2.41 Capital IQ Consensus Estimate; sees Q3 revs of $2.075-2.2 billion vs. $1.97 bln Capital IQ Consensus Estimate.
For the December 2016 quarter, non-GAAP gross margin was $874 million or 46.4% of revenue, non-GAAP operating expenses were $384 million, non-GAAP operating margin was 26.0% of revenue, and non-GAAP net income was $405 million, or $2.24 per diluted share.
4:08 pm F5 Networks beats by $0.04, reports revs in-line; guides Q2 EPS in-line, revs in-line (FFIV) :
Reports Q1 (Dec) earnings of $1.98 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus of $1.94; revenues rose 5.4% year/year to $516 mln vs the $516.99 mln Capital IQ Consensus.
Co issues in-line guidance for Q2, sees EPS of $1.95-1.98, excluding non-recurring items, vs. $1.97 Capital IQ Consensus Estimate; sees Q2 revs of $518-528 mln vs. $523.97 mln Capital IQ Consensus Estimate.
"In addition to strong initial demand for the iSeries, software sales, including software modules that run on our purpose-built hardware and Virtual Editions designed to run on any standard hypervisor, continued to grow as a percentage of product revenue. We expect this trend to continue in the current quarter, driven by the release of our 40-Gigabit VEs, with throughput four times faster than previous versions, and by increasing uptake of iSeries appliances, designed to support more modules than their predecessors."
4:20 pm : Investors methodically pushed the major averages to record highs on Wednesday, with the Dow climbing past the 20k milestone along the way. All indices finished the day solidly higher, collectively signaling that the post-election rally isn't dead just yet. The S&P 500 closed up 0.8%.
The benchmark index jumped out of the gate this morning, as a handful of blue-chip companies reported positive earnings results between yesterday's close and today's open. Seagate Technology (STX 42.67, +5.23) spiked 14.0% after topping earnings and revenue estimates in addition to issuing upbeat guidance. Norfolk Southern (NSC 120.53, +3.91) also finished higher, increasing 3.4% to an all-time high after beating earnings per share estimates.
As far as Dow components, Boeing (BA 167.36, +6.81) also had an upbeat showing while United Technologies (UTX 110.96, -0.65) finished lower as the company's in-line earnings report was met with a sell-the-news response following a large fourth quarter gain.
However, the stock market didn't stop there, moving slowly but deliberately into the afternoon amid positive signals from the political front. President Trump signed two executive orders on Wednesday, one to build a physical barrier along the U.S.-Mexico border and another to strip federal grant money from states and cities that shelter illegal immigrants. And while these reports weren't unexpected, as border control was a staple of Mr. Trump's presidential campaign, they do serve as a reminder of said campaign and the pro-growth hopes attached to it.
Strong sector leadership was also an important factor in today's session as the financials (+1.7%) moved into the top spot on today's leaderboard early, building on a positive showing on Tuesday. With two solid wins under its belt, the financial sector is back near its high from early December, overcoming the sell-the-news response that was invited by earnings from the sector's top components.
The financial sector was followed by industrials (+1.0%) and technology (+1.1%) with the latter benefiting from a 1.5% increase in the PHLX Semiconductor Index. Chipmakers received a nice bump from Texas Instruments (TXN 78.58, +1.50) as the stock jumped 2.0% in reaction to above-consensus earnings.
Energy (+0.6%) underperformed its cyclical peers, as crude oil finished 0.7% lower at $52.76/bbl. The energy component had a somewhat volatile session, reacting to a downtick in the U.S. Dollar Index (99.94, -0.34) and an Energy Information Administration report that showed a build of 2.8 million barrels of crude and a big build in gasoline inventories.
On the countercyclical side, real estate (-0.6%), telecom services (-0.2%), and utilities (unch) all finished in the red, while health care (+0.9%) bucked the trend. The health care space remains slightly lower for the week after today's gain, showing a week-to-date loss of 0.2%.
U.S. Treasuries return to negative territory for the week after Wednesday's risk-on attitude resulted in selling pressure. The 10-yr yield finished five basis points higher at 2.52%.
Today's economic data included FHFA Housing Price Index and MBA Mortgage Index:
The FHFA Housing Price Index for November rose 0.5%, which followed a revised increase of 0.3% in October (from 0.4%).
The weekly MBA Mortgage Index rose 4.0% to follow last week's 0.8% increase
Tomorrow's economic data will include Advance International Trade in Goods (Briefing.com consensus -$65.0 million) and Initial Claims (Briefing.com consensus 246,000) at 8:30 am ET, while Leading Indicators (Briefing.com consensus 0.5%) and New Home Sales (Briefing.com consensus 589,000) will cross the wires at 10:00 am ET.
Russell 2000 +1.9% YTD
Dow Jones Industrial Average +1.6% YTD
S&P 500 +2.7% YTD
Nasdaq Composite +5.1% YTD
DJ30 +155.80 NASDAQ +55.38 SP500 +18.30 NASDAQ Adv/Vol/Dec 2185/1.76 bln/839 NYSE Adv/Vol/Dec 1908/1.02 bln/1044
3:30 pm :
Crude oil ended a volatile pit trading session near its initial post-EIA low, erased all of yesterday's gain
Mar 2017 crude oil futures fell $0.39 (-0.7%) to $52.76/barrel
Baker Hughes rig count data will be released Friday at 1 pm ET.
Natural gas rallied for the 3rd consecutive session on updated colder weather forecasts ahead of tomorrow's EIA data release
Mar 2017 natural gas closed $0.05 higher (+1.5%) at $3.35/MMBtu
Natural gas futures have switched their front months to Mar from Feb, as indicated by the active amount of volume in the contracts
Weekly EIA natural gas inventory data is due tomorrow at 10:30 am ET.
Color on the 3-day rally in natural gas:
U.S. natural gas futures have been trading higher the past 3 sessions on forecasts for colder-than-normal weather and higher heating demand expected to last into the second week of Feb.
This increase came despite a warmer-than-normal outlook through Jan 27 and for much of the rest of Feb and Mar.
In precious metals, gold extended yesterday's losses despite continued weakness in the dollar index as stocks saw a notable rally
Feb 2017 gold ended today's session down $12.80 (-1.1%) to $1,198.00/oz
Mar 2017 silver closed today's session $0.20 lower (-1.2%) at $16.98/oz
The dollar index was -0.4% around the 99.97 level, did not appear to support precious metals
Commodities, as measured by the Bloomberg Commodity Index, were -0.4% around the 88.37 level
Well, the wait is over. The wait for the Dow Jones to crack 20K, that is. The index cracked that level moments after the open as futures drifted higher overnight. Ultimately, the Nasdaq Composite was the best performer today, adding about 55.38 points (+0.99%) to 5656.34. The S&P 500 was up 18.30 (+0.80%) when the bell rang to 2298.37. The aforementioned move in the Dow Jones Industrial Average left the index up 155.80 points (+0.78%) to 20068.51 at the end of the day. In the end, today's moves took all three major indices to all-time highs.
Market data today included the FHFA Housing Price Index for November which rose 0.5% following a revised increase of 0.3% in October (from 0.4%). Also, investors received the weekly MBA Mortgage Index which rose 4.0% to follow last week's 0.8% increase.
Equally as strong, the Technology (XLK 50.68, +0.48 +0.96%) sector ended at a near 17-year high dating back to the fall of 2000. Component Seagate Tech (STX 42.67, +5.23 +13.97%) was the name that aided the advance today, after reporting a solid Q2 print last night after the close. Other sectors as measured by the S&P closed XLF +1.67%, XLI +1.05%, XLV +0.94%, XLB +0.67%, XLY +0.60%, XLE +0.52%, IYZ +0.17%, XLU +0.00%, XLP -0.02%, XLRE -0.61%.
In the S&P 500 Information Technology (854.17, +9.06 +1.07%) space, trading took off at the open and never looked back. Component TE Connectivity (TEL 75.17, +3.49 +4.87%) was one of the better performing names today after the company reported better than expected Q1 earnings and revenues this morning. Other names in the space which followed the broader action higher today included QCOM +3.45%, MU +3.11%, QRVO +2.46%, AVGO +2.39%, YHOO +2.37%, KLAC +2.26%, LRCX +1.99%, TXN +1.95%, GLW +1.91%, TDC +1.82%, CRM +1.76%, CTSH +1.66%, FB +1.63%, AAPL +1.57%.
Other notable news items among sector components:
Upcoming IPO AppDynamics (APPD) to be acquired by Cisco (CSCO 30.70, +0.10 +0.33%) for about $3.7 billion in cash and assumed equity awards.
Qualcomm (QCOM 56.90, +1.90 +3.45%) commented on Apple's (AAPL 121.85, +1.88 +1.57%) lawsuits in China; 'these filings by Apple's Chinese subsidiary are just part of Apple's efforts to find ways to pay less for Qualcomm's technology.'
Micron (MU 23.56, +0.71 +3.11%) said to be among parties interested in a stake in Toshiba's (TOSBF 2.28, -0.01 -0.78%) memory chip unit, according to the Nikkei Asian Review.
Accenture (CAN 117.59, +1.11 +0.95%) has acquired privately held German consulting and systems integration firm, solid servision.
Workday (WDAY 84.73, +2.10 +2.54%) announced that Royal Vopak, an independent tank storage company, has selected Workday Human Capital Management (HCM).
Activision Blizzard's (ATVI 39.56, +0.46 +1.18%) King to acquire Omniata, according to VentureBeat.
Oracle (ORCL 40.15, +0.05 +0.12%) announced the expansion of its Startup Cloud Accelerator program. The initiative will continue to fuel cloud-enabled innovation around the globe by opening new centers in Bristol, Delhi-NCR, Mumbai, Paris, So Paulo, Singapore and Tel Aviv.
Sprint (S 9.19, flat) named Nstor Cano as COO.
Amazon (AMZN 836.52, +14.08 +1.71%) plans expansion into ocean freight services, according to WSJ.
According to a Reuters report, Ixia (XXIA 17.75, +1.20 +7.25%) is in discussions to be acquired by
Keysight Technologies (KEYS 37.71, +0.76 +2.06%).
Booz Allen Hamilton (BAH 35.83, +0.04 +0.11%) closed its acquisition of Aquilent. The company now expects to add about $20 million of revenue through remainder of fiscal year 2017 (previously expected to add about $30-35 million).
magicJack VocalTec (CALL 7.40, flat) provided an update on its SMB business unit and its plans to leverage the product development investments made in 2016 by focusing on lowered pricing, streamlining its go-to-market strategy, driving sales primarily through digital media and retail, and product innovation. In addition to lower pricing, magicJack's SMB business will be introducing a new SMB ATA device during Q2 2017.
In reaction to quarterly results:
Texas Instruments (TXN 78.58, +1.50 +1.95%) reported better than expected Q4 EPS and revenues of $0.91 and $3.41 billion, respectively. For Q1, the company sees EPS of $0.78-0.88 on revenues of $3.17-3.43 billion.
TE Connectivity (TEL) reported better than expected Q1 EPS and revenues of $1.15 and $3.06 billion, respectively. For Q2, the company sees EPS and revenues in-line at $1.05-1.09 and $3.025-3.125 billion, respectively. For FY17, TEL expects EPS of $4.30-4.50 on revenues of about $12.2-12.6 billion.
Wipro (WIT 9.62, -0.15 -1.54%) reported better than expected Q3 earnings of INR8.70 on revenues of INR136.88 billion. For Q4, the company sees revenues from the IT Services business to be in the range of $ 1,922 million to $ 1,941 million.
Amphenol (APH 67.03, -1.73 -2.52%) reported better than expected Q4 EPS of $0.75 on revenues of $1.62 billion. For Q1, the company sees EPS of $0.65-0.67 with revenue guidance of $1.50-1.54 billion. For FY17, APH sees EPS of $2.84-2.92 on revenues of $6.34-6.50 billion.
CA Tech (CA 31.31, -1.64 -4.98%) reported better than expected Q3 earnings of $0.63 on revenues of $1.01 billion. For FY18, CA sees EPS and revenues worse than market expectations at $2.42-2.47 and $4.01-4.03 billion, respectively.
Seagate Tech (STX) reported better than expected Q2 EPS and revenues of $1.38 and $2.89 billion, respectively. On the call, guided Q1 revenues of about $2.7 billion on margins of approximately 30%.
Cree (CREE 28.83, +1.42 +5.18%) reported better than expected Q2 EPS and revenues of $0.20 and $347 million, respectively. For Q3, the company sees EPS of $0.01-0.09 and revenues of about $285-315 million.
Companies scheduled to report quarterly results tonight/tomorrow morning: T CMPR CTXS DLB EBAY EFII FFIV LRCX QCOM QSII QTM NOW TER WDC XLNX/ADS AVT CCMP CLFD DST ERIC RCI STM
Analyst actions:
STX was upgraded to Outperform from Sector Perform at FBN Securities, I was upgraded to Outperform from Underperform at RBC Capital Mkts,
CTL was upgraded to Hold from Underperform at Jefferies,
BT was upgraded to Neutral from Underperform at Macquarie;
VZ was downgraded to Mkt Perform from Outperform at FBR & Co., to Mkt Perform from Outperform at Raymond James, and to Sector Perform from Outperform at RBC Capital Mkts,
IMASY was downgraded to Sector Perform from Outperform at RBC Capital Mtks,
SBAC and JCOM were downgraded to Neutral from Buy at Citigroup,
NOK was downgraded to Sell from Hold at Danske Bank,
VOD was downgraded to Neutral from Buy at BofA/Merrill;
ANET was initiated with a Buy at DA Davidson,
VSAT was initiated with an Underperform at RBC Capital Mkts,
GOGO was initiated with a Buy at Guggenheim,
MIME was initiated with a Buy at Brean Capital