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From Briefing.com: 4:14 pm Rambus beats by $0.03, beats on revs; guides Q4 EPS in-line, revs in-line (RMBS) : Reports Q3 (Sep) earnings of $0.16 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.13; revenues rose 21.8% year/year to $89.9 mln vs the $86.6 mln Capital
IQ Consensus.As compared to the third quarter of 2015, revenue was up 22% primarily due to higher revenue from sales of memory products and security technology development projects, including revenue from the various acquisitions during the year.Co issues in-line guidance for Q4, sees EPS of $0.14-0.18, excluding non-recurring items, vs. $0.15 Capital IQ Consensus Estimate; sees Q4 revs of $94-98 mln vs. $94.44 mln Capital IQ Consensus Estimate.
4:11 pm Intersil beats by $0.03, beats on revs; not providing guidance due to previously announced acquisition by Renesas (RNECF) (ISIL) :
Reports Q3 (Sep) earnings of $0.22 per share, $0.03 better than the Capital IQ Consensus of $0.19; revenues rose 8.3% year/year to $139.05 mln vs the $137.62 mln Capital IQ Consensus.Given the pending acquisition by Renesas, Intersil will not be providing guidance for the fourth quarter and will not be holding a third quarter results conference call.
4:08 pm Cadence Design beats by $0.02, reports revs in-line; guides Q4 EPS below consensus, revs in-line (CDNS) :
Reports Q3 (Sep) earnings of $0.30 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.28; revenues rose 2.9% year/year to $446.2 mln vs the $446.47 mln Capital IQ
Consensus. Co issues downside EPS guidance for Q4, sees EPS of $0.32-0.34, excluding non-recurring items, vs. $0.35 Capital IQ Consensus Estimate; sees Q4 revs of $463-473 mln vs. $471.91 mln Capital IQ Consensus Estimate.
4:10 pm : The major averages began the week on an upbeat note as an upswing in M&A activity and sector leadership from the top-weighted technology (+1.1%) space bolstered the broader market. The Nasdaq Composite (+1.0%) finished ahead of both the S&P 500 (+0.5%) and the Dow Jones Industrial Average (+0.4%).
A recent wave of M&A chatter materialized this weekend when several high-profile deals were announced after Friday's close. AT&T (T 36.86, -0.63, -1.7%) and Time Warner (TWX 86.78, -2.70, -3.0%) made headlines on Saturday after the telecom giant agreed to pay $107.50 per share for Time Warner. The deal is valued at $85.4 billion and marks a premium of 20.1% over Friday's closing price. Meanwhile, Rockwell Collins (COL 79.21, -5.25, -6.2%) agreed to acquire BE Aerospace (BEAV 58.89, +8.28, +16.4%) for $62.00 per share, which will amount to $8.3 billion in total consideration. The size and scope of the deals stoked risk appetite as investors looked for further consolidation.
The benchmark index notched a high at the start of the session and inched off that level throughout the morning.
A downturn in crude oil futures contributed to the mid-morning pullback as investors assessed the state of OPEC's proposed supply freeze agreement. Iraq made headlines this morning after indicating that it will seek an exemption from the previously discussed agreement. However, selling remained in check after Iran stated that it would encourage other members to join the output freeze. Crude oil briefly broke below $50.00/bbl before settling at $50.52/bbl (-0.7%; -$0.33).
The Treasury complex pulled back today as an upswing in equities and above-consensus economic data weighed on the group. Bond prices extended their decline after U.S. Manufacturing PMI for October came in ahead of estimates. The yield on the 2-yr note finished higher by two basis point (0.84%) while the yield on the benchmark 10-yr note rose three basis points to 1.76%. The spread between the 2-yr and 10-yr yields expanded to 92 basis points from September's 83 basis point differential.
The benchmark index finished in the upper end of today's trading range, locking in the bulk of today's gain.
Eight sectors ended in the green with technology (+1.2%), consumer staples (+0.7%), and consumer discretionary (+0.7%) outperforming. On the other hand, telecom services (-0.8%) and energy (-0.2%) finished at the bottom of the board.
The heavyweight technology space (+1.2%) outperformed as participants continued to assess influential quarterly reports from the sector and looked ahead to a busy week on the earnings calendar. Dow component Microsoft (MSFT 61.00, +1.34) jumped 2.3%, extending its post-earnings gain to 6.6%. The name beat analysts' estimates last Thursday. Meanwhile, Alphabet (GOOG 813.11, +13.74) gained 1.7% ahead of releasing its quarterly results Thursday evening.
In the consumer discretionary sector (+0.7%) Amazon (AMZN 837.71, +18.72) gained 2.3% after Goldman Sachs raised its price target on the stock to $1050 from $920. The name is also scheduled to release its quarterly report this Thursday. Conversely, media company underperformed as investors looked ahead to potential regulatory hurdles that AT&T and Time Warner will face in their merger attempt.
Aerospace and defense names outperformed in the industrial sector (+0.3%) as the sub-group drafted higher alongside BE Aerospace (BEAV 58.89, +8.28). Dow component Boeing (BA 137.45, +1.82) finished ahead of the price-weighted average. Conversely, rail names underperformed as Union Pacific (UNP 89.88, -0.49) fell 0.5%.
Today's trading volume was below the average of 853 million as 779 million shares changed hands at the NYSE floor.
There was no economic data of note released today.
Tomorrow's economic data will include the 9:00 ET release of the Case-Shiller 20-city Index for August (Briefing.com consensus 5.1%) and the FHFA Housing Price Index for August. Separately, Consumer Confidence for October (Briefing.com consensus 100.8) will cross the wires at 10:00 ET.
Russell 2000: +8.0% YTD
Nasdaq Composite: +6.0% YTD
S&P 500: +5.3% YTD
Dow Jones: +4.6% YTD
DJ30 +77.32 NASDAQ +52.42 SP500 +10.17 NASDAQ Adv/Vol/Dec 1711/1.396 bln/1122 NYSE Adv/Vol/Dec 1777/779.5 mln/1158
3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, were +0.1% around the 86.15 level
Crude oil gave up all of Friday's gains after comments surfaced from Iraq's oil minister regarding choosing not to participate in the recently announced OPEC production cut
December crude oil futures fell $0.33 (-0.7%) to $50.52/barrel.
API data will be released tomorrow after the bell.
Weekly EIA petroleum storage data will be released this Wednesday at 10:30 am ET.
Baker Hughes rig count data will be released Friday at 1 pm ET.
Today's weakness in oil is being attributed to reports that Iraq's oil minister stating that Iraq will not be part of the previously announced OPEC production cut, discussing that its market share would be much higher if not for the wars it has been fighting since the 1980's. Iraq also added they could raise output slightly this month from Sept levels around 4.774 mln barrels/day.
Other factors to consider on oil:
After a Gulf Ministerial meeting in Riyadh on Sunday, the Saudi Oil minister held a joint press conference with Russia's oil minister & stated that the current down cycle in oil prices is nearing an end, noting that market fundamentals have begun to improve.
Qatar's energy minister also expressed that the difficult phase of the down cycle is now over.
As announced after the informal meeting in Istanbul, OPEC producers & Russia are expected to meet to discuss details on cooperating to stabilize oil prices.
OPEC & Russia will meet ahead of the OPEC technical meeting in Vienna on Oct 28-29 for further ongoing discussions.
Venezuelan president Maduro has recently been attempting to solicit the help of Iran, calling for increased cooperation on the proposed production cut. It is worth noting that Maduro has been visiting OPEC countries over the past few weeks & has been actively soliciting support for a collective OPEC production cut.
Reminder: Iran, Libya, & Nigeria are all exempt from the OPEC production cut.
The next official OPEC meeting will take place in Vienna, Austria on Nov 30, where details of the Sept 28 OPEC production cut are expected to be announced.
Natural gas traded lower for the fourth consecutive session, ended at session lows & solidified the breach of the $3.00/MMBtu support level
November natural gas closed $0.15 lower (-5.0%) at $2.84/MMBtu.
Weekly EIA natural gas storage data will be released Thursday at 10:30 am ET.
In precious metals, gold ended near session lows as silver saw a modest rally while the dollar index remained nearly flat; the gold:silver ratio dropped
December gold ended today's session down $4.20 (-0.3%) to $1263.50/oz.
December silver closed today's session $0.10 higher (+0.6%) at $17.60/oz.
The gold:silver ratio was ~71.8, compared to Friday's pit trading closing ratio of ~72.4.
The broader market closed out the Monday session at highs with the Nasdaq Composite up a clean +1.00%, up 52.43 points, to 5309.83. The S&P 500 added 10.17 points (+0.47%) to 2151.33, and the Dow Jones Industrial Average was higher by 77.32 points (+0.43%) to 18223.03. Aiding the Nasdaq advance, key Nasdaq 100 components AMZN +2.3%, COST +2.1%, MNST +1.9%, WBA +1.9% and CERN +1.5% provided a lift.
A downturn in crude oil futures contributed to the mid-morning pullback as investors assessed the state of OPEC's proposed supply freeze agreement. Iraq made headlines this morning after indicating that it will seek an exemption from the previously discussed agreement. However, selling remained in check after Iran stated that it would encourage other members to join the output freeze. Crude oil briefly broke below $50.00/bbl before settling at $50.52/bbl (-0.7%; -$0.33).
The Treasury complex pulled back today as an upswing in equities and above-consensus economic data weighed on the group. Bond prices extended their decline after U.S. Manufacturing PMI for October came in ahead of estimates. The yield on the 2-yr note finished higher by two basis point (0.84%) while the yield on the benchmark 10-yr note rose three basis points to 1.76%. The spread between the 2-yr and 10-yr yields expanded to 92 basis points from September's 83 basis point differential.
As the week began, trading in the Technology (XLK 47.99, +0.46 +0.97%) topped all other S&P sectors with gains closing out the day near highs. Component Qorvo (QRVO 57.29, +2.59 +4.73%) posted the best gains in the space today on the heels of a pre-market initiation at JP Morgan. Other sectors as measured by the S&P closed Monday XLY +0.72%, XLP +0.65%, XLFS +0.39%, XLU +0.37%, XLF +0.31%, XLB +0.23%, XLI +0.19%, XLRE +0.13%, XLV -0.19%, XLE -0.30% with only Energy and Healthcare resisting the positive broader market bias.
As a sub-sector, Telecoms (IYZ 31.74, +0.42 +1.34%) were especially strong today on the back of some M&A news and a few earnings reports. On the M&A front, shares of AT&T (T 36.86, -0.63 -1.68%) were modestly lower as the company announced a deal to acquire Time Warner (TWX 86.74, -2.74 -3.06%) for $107.50 per share during the weekend. As for earnings, T-Mobile US (TMUS 51.19, +4.44 +9.50%) and Sprint (S 6.92, +0.37 +5.65%) were higher today as the former reported a mixed Q3, beating market expectations on the bottom line, with strong total net adds; AT&T also reported earnings today. The latter reports earnings tonight after the market closes, and as a result, strength in the space among top names like VG +3.21%, SPOK +3.00%, USM +2.60%, CBB +1.77%, NIHD +1.69%, GNCMA +1.66%, SBAC +1.49%, TDS +1.17%, SHEN +1.15%, ATNI +0.82%, FTR +0.74% led to a higher close.
In the S&P 500 Information Technology (811.68, +9.75 +1.22%) sector, trading ventured further north of the $800-level today following a strong broader market session. Shares of both Alphabet (GOOG 813.11, +13.74 +1.72%) and Alphabet A (GOOGL 835.74, +11.68 +1.42%) made fresh all-time highs today less than a week after breaking into new all-time high territory as shares had been weighed down for most of the summer. Other names in the space which outperformed today included NVDA +4.69%, SYMC +3.41%, ADS +3.27%, AMAT +2.53%, TXN +2.44%, JNPR +2.29%, MSFT +2.25%, AVGO +2.10%, ATVI +2.09%, AKAM +2.03%, MCHP +1.92%.
Other notable news items among sector components:
On Friday, reports were out suggesting Time Warner (TWX) and AT&T (T) were near a deal for T to acquire TWX for $110 per share. Out over the weekend, T confirmed the deal to buy TWX in a stock-and-cash transaction valued at $107.50 per share. TWX shareholders will receive $107.50 per share under the terms of the merger, comprised of $53.75 per share in cash and $53.75 per share in AT&T stock. The stock portion will be subject to a collar such that TWX shareholders will receive 1.437 AT&T shares if AT&T's average stock price is below $37.411 at closing and 1.3 AT&T shares if AT&T's average stock price is above $41.349 at closing. This purchase price implies a total equity value of $85.4 billion and a total transaction value of $108.7 billion, including TWX's net debt. Post-transaction, TWX shareholders will own between 14.4% and 15.7% of AT&T shares on a fully-diluted basis based on the number of AT&T shares outstanding. AT&T expects the deal to be accretive in the first year after close on both an adjusted EPS and free cash flow per share basis. AT&T expects $1 billion in annual run rate cost synergies within 3 years of the deal closing. The expected cost synergies are primarily driven by corporate and procurement expenditures. In addition, over time, AT&T expects to achieve incremental revenue opportunities that neither company could obtain on a standalone basis. By the end of the first year after close, AT&T expects net debt to adjusted EBITDA to be in the 2.5x range.
Microsoft (MSFT 61.00, +1.34 +2.25%) confirmed it will be increasing British pound pricing for enterprise software and cloud services within the EU/EFTA region effective Jan 1 2017.
Rambus (RMBS 11.99, +0.37 +3.18%) licensed to NVIDIA (NVDA 70.71, +3.17 +4.69%) its Differential Power Analysis countermeasures to protect its visual computing products against side-channel attacks.
Visa (V 83.17, +0.82 +1.00%) and Intel (INTC 35.26, +0.11 +0.31%) announced a collaboration agreement to help bring world-class payment and data security technologies to the growing world of connected devices-from personal computers and mobile devices, to intelligent appliances and wearable technologies.
PTC (PTC 46.12, -0.27 -0.58%) and Hewlett Packard Enterprise (HPE 21.68, +0.05 +0.23%) announced a planned collaboration to facilitate the availability of the Converged IoT Solutions, based on PTC ThingWorx software and HPE Edgeline Systems.
Intuit (INTU 109.62, +1.17 +1.08%) and PayPal (PYPL 43.88, -0.27 -0.61%) announced the expansion of their partnership, helping small businesses and the self-employed get paid faster. The partnership will provide QuickBooks Online customers with a new way of accepting payments via PayPal, and automate the work traditionally associated with managing the books.
Alliance Data (ADS 206.49, +6.54 +3.27%) proposed to offer $400.0 million aggregate principal amount of senior notes due 2021.
Elsewhere in the tech space:
TD Ameritrade (AMTD 35.46, -1.62 -4.37%) confirmed a deal to acquire Scottrade in a cash and stock transaction valued at $4 billion. AMTD expects to realize about $450 million in combined annual expense synergies, and more than $300 million in additional longer-term opportunities. The first 25% of the expense synergies are expected to be realized in Year 1 post-close and the remainder realized in Year 2. Furthermore, the transaction is expected to generate double-digit EPS accretion post-conversion. Additionally, Toronto-Dominion Bank (TD 44.94, -0.09 -0.20%) confirmed it will acquire Scottrade Bank.
Netflix (NFLX 127.33, -0.17 -0.13%) intends to offer $800 million aggregate principal amount of senior notes through an offering.
Digital Ally (DGLY 6.40, +0.70 +12.28%) announced the receipt of notable orders from the Santa Fe, New Mexico Police Department for its FirstVu HD body-worn camera, DVM-800 in-car digital audio/video system, DVM-440 Motorcycle system and patented VuLink automatic activation system. Managment also stated, "The automatic activation technology included in our patented VuLink has quickly become a standard requirement in many requests for proposals and has drawn attention from our competitors, who have attempted to introduce their own automatic activation technology that we believe infringes on our patent. In that regard, the Company has initiated patent infringement lawsuits against two competitors: Taser International, Inc. (TASR 23.54, +0.34 +1.47%) and Enforcement Video, LLC d/b/a WatchGuard Video."
SS&C Tech (SSNC 32.66, +0.48 +1.49%) to acquire Salentica. Financial details of the deal were not disclosed.
Rackspace's (RAX 31.92, +0.06 +0.19%) acquisition by Apollo Global (APO 17.90, +0.15 +0.85%) was cleared by the European Union.
ITUS (ITUS 5.35, -0.35 -6.14%) named Mike Catelani as CFO effective November 1.
CACI Intl (CACI 101.25, +1.10 +1.10%) received a $93 million prime contract to provide tactical communications engineering and maintenance support services to the U.S. Immigration and Customs Enforcement.
In reaction to quarterly results:
After the TWX deal was announced AT&T (T) reported in-line EPS and revenues for Q3 at $0.74 and $40.89 billion, respectively. Further, the company commented that it remains on track to achieve or exceed its full-year guidance.
Siliconware Precision (SPIL 7.40, +0.06 +0.82%) reported worse than expected Q3 EPS and revenues of NT$0.64 and NT$21.96 billion, respectively.
T-Mobile US (TMUS) reported better than expected Q3 EPS of $0.27 on worse than expected revenues which rose 17.8% compared to a year ago to $9.25 billion. TMUS also reported 2.0 million total net adds on 851,000 branded postpaid phone net adds. The company also raised FY16 EBITDA guidance to $10.2-10.4 billion from $9.8-10.1 billion. Further, branded postpaid net customer additions for FY16 are now expected to be between 3.7-3.9 million, an increase from the previous guidance range of 3.4 to 3.8 million.
TD Ameritrade (AMTD) reported worse than expected Q4 EPS of $0.35 on n-line revenues of $829 million. The company also guided FY17 EPS of $1.50-1.80.
Companies scheduled to report tonight/tomorrow morning: CDNS, CMP, CLGX, EFII, ISIL, KN, RMBS, V/AXE, CVLT, GLW, CTG, S
Analyst actions:
VZ was upgraded to Buy from Hold at Drexel Hamilton,
BIDU was upgraded to Mixed from Negative at OTR Global,
VMW was upgraded to Outperform from Market Perform at William Blair,
TRUE was upgraded to Buy from Neutral at B. Riley & Co.;
TWX was downgraded at RBC Capital Markets, Credit Suisse, Pivotal Research Group, Goldman, MoffettNathanson, Macquarie, Atlantic Equities, Evercore ISI and MKM Partners,
T was downgraded to Market Perform from Outperform at Cowen and to Hold from Buy at Drexel Hamilton, FEYE was downgraded to Underweight from Equal Weight at First Analysis Sec,
SYNT was downgraded to Hold from Buy at SunTrust,
EA was downgraded to Neutral from Buy at BofA/Merrill,
WIT was downgraded to Reduce from Neutral at Nomura;
CYBR was initiated with an Overweight,
FTNT and SCXW were initiated with Equal Weight ratings at First Analysis Sec,
QRVO was initiated with an Overweight at JP Morgan,
SWKS was initiated with a Neutral at JP Morgan
From Briefing.com: Weekly Recap - Week ending 21-Oct-16The stock market meandered through a lazy week with the S&P 500 adding 0.4% after spending the week in a 24-point range. The benchmark index was outpaced by the Nasdaq Composite (+0.8%) while the Dow Jones Industrial Average (UNCH) settled little changed.
The week started on a quiet note as participants awaited a slew of earnings and Thursday's policy decision from the European Central Bank. However, range bound action continued through Friday.
The European Central Bank made no changes to its interest rate corridor and President Mario Draghi made sure to avoid any specific references to either tapering or extending the purchase program before March 2017. The euro climbed immediately after the policy announcement, but retreated during Mr. Draghi's press conference. The single currency continued declining on Friday, ending the week near 1.0875 against the dollar, near levels from early March.
To be fair, the decline in the euro was facilitated by all-around dollar strength as the greenback benefited from economic data and comments from FOMC Vice Chair William Dudley, who said a rate hike before the end of 2016 makes sense to him. The implied probability of rate hike in December stands at 69.9%, according to the fed funds futures market. For its part, the Dollar Index registered its third consecutive weekly gain, climbing 0.7% to levels not seen since late January.
The strength in the dollar prevented crude oil from making big strides. The energy component settled at $50.85/bbl, just above its closing level from last week.
Market participants received another batch of quarterly results with the reporting season set to hit full stride next week. Investors did receive above-consensus results from a large share of Dow components like American Express (AXP), General Electric (GE), Goldman Sachs (GS), IBM (IBM), Johnson & Johnson (JNJ), Microsoft (MSFT), McDonald's (MCD), UnitedHealth (UNH), and Verizon (VZ). Interestingly, the batch of beats did not spark a buying frenzy. On the whole, tech earnings were received with the warmest reception, evidenced by the outperformance in the Nasdaq Composite.
Index Started Week Ended Week Change % Change YTD %
DJIA 18138.38 18145.71 7.33 0.0 4.1
Nasdaq 5214.16 5257.40 43.24 0.8 5.0
S&P 500 2132.98 2141.16 8.18 0.4 4.8
Russell 2000 1212.41 1218.11 5.70 0.5 7.2
The stock market closed out the week split as the Nasdaq Composite was the lone index in positive territory today, adding 15.57 points (+0.30%) to 5257.40. The Dow Jones Industrial Average, by contrast, was the worst performer today, albeit only ending down 16.64 points (-0.09%) to 18145.71. The S&P 500 posted a tame session, ending down less than one point (-0.01%) to 2141.16. This week's moves take the three major US indices +5.0%, +4.1%, and +4.8% YTD, respectively.
The major averages began the day under pressure as strengthening in the dollar and the latest batch of quarterly earnings contributed to opening hour weakness.
The U.S. Dollar Index (98.64, +0.33, +0.33%) extended its winning streak last evening as the pound and the euro each lost ground to the greenback. The buck continued to receive support from an improved U.S. rate hike picture and recent safe-haven flows. Furthermore, the move lower in European currencies came ahead of this weekend's EU Economic Summit, which may provide some Brexit-related headline volatility. The euro and the pound finished down a respective 0.4% (1.0882) and 0.2% (1.2226) against the dollar.
A stronger dollar served as a headwind for dollar-denominated commodities and the earnings prospects of multinational companies. This was on display when General Electric (GE 28.98, -0.09 -0.31%) beat bottom-line estimates for the quarter, but narrowed its guidance range. Meanwhile, Honeywell (HON 108.96, +0.82) gained 0.8% after reporting bottom-line results that fell in-line with the company's earnings warning.
The broader market reversed course after the first hour as a fresh dose of M&A chatter helped boost investor sentiment.The Wall Street Journal reported that AT&T (T 37.49, -1.16 -3.00%) is in advanced talks to acquire Time Warner (TWX 89.48, +6.49 +7.82%). The headline came on the heels of a similar report from Bloomberg in the prior session. Separate rumors indicated that Softbank (SFTBY 31.68, -0.29 -0.92%) could be interested in acquiring Twitter (TWTR 18.09, +1.19 +7.04%). The social media name finished higher by 7.0%.
Technology (XLK 47.53, +0.13 +0.27%) turned in a modest, albeit positive session to close out the week. Component PayPal (PYPL 44.15, +4.06 +10.13%) was the best performer following the company's mostly in-line Q3, as growing TPV and guidance clarity took shares higher. Other sectors as measured by the S&P closed Friday XLY +0.80%, XLP +0.54%, XLB -0.04%, XLF -0.05%, XLRE -0.06%, XLI -0.14%, XLFS -0.16%, IYZ -0.32%, XLU -0.58%, XLE -0.65%, XLV -0.83% as Consumer Staples and Consumer Discretionary were the only other sectors to join Tech in positive territory.
In the S&P 500 Information Technology (801.93, +4.58 +0.57%) sector, trading closed above the $800-level for the first time since October 10. Component Microsoft (MSFT 59.69, +2.44 +4.26%) broke out to fresh all-time highs today after a strong Q1 showing. Other names in the space which were modestly higher today included CRM +1.94%, JNPR +1.67%, AKAM +1.66%, FB +1.59%, QCOM +0.88%, LRCX +0.69%, INTU +0.51%, ATVI +0.50%, EA +0.42%, CA +0.41%, FSLR +0.40%, TXN +0.32%, GOOG +0.30%, MA +0.29%.
Other notable news items among sector components:
VeriSign (VRSN 81.56, +5.00 +6.53%) disclosed amendments to the company's Cooperative Agreement with the U.S. Department of Commerce, and an amendment to the Registry Agreement with ICANN.
The YouTube app, a product of Alphabet (GOOG 799.37, +2.40 +0.30%), debuted on DISH's (DISH 57.40, -1.78 -3.01%) Hopper 3 DVR.
According to CNBC's David Faber, NXP Semi (NXPI 101.71, -2.78 -2.66%) and Qualcomm (QCOM 67.93, +0.59 +0.88%) have agreed to a $110 per share price but that the deal was not done yet. (reportedly in cash and stock)
Elsewhere in the tech space:
According to the Wall Street Journal (and later numerous other sources), AT&T (T 37.49, -1.16 -3.00%) and Time Warner (TWX 89.48, +6.49 +7.82%) are in advanced talks about a deal. Apparently, Reuters was out later in the day suggesting 21st Century Fox (FOXA 25.83, +0.56 +2.22%) was not interested in making a bid for TWX; Bloomberg also chimed in, suggesting Apple (AAPL 116.60, -0.46 -0.39%) wasn't likely interested in TWX.
Everyday Health (EVDY 10.45, +1.05 +11.17%) to be acquired by j2 Global (JCOM 67.44, +4.75 +7.58%) for $10.50 per share in cash, or about $465 million.
Infoblox (BLOX 26.42, +0.01 +0.04%) and Vista Equity received approval from the German Federal Cartel Office for proposed $26.50 per share in cash transaction. The deal is expected to close in the second quarter of fiscal 2017.
In addition to reporting quarterly results, Proofpoint (PFPT 77.39, +7.61 +10.91%) to acquire FireLayers for about $55 million in cash and stock.
Allscripts Healthcare (MDRX 12.48, -0.35 -2.77%) acquired CarePort. Financial terms of the deal were not disclosed.
VTech (VTKLY 11.83, +0.02 +0.21%) to acquire Snom Technology AG. Financial terms of the deal were not disclosed.
In reaction to quarterly results:
Microsoft (MSFT) reported better than expected Q1 EPS and revenues of $0.76 and $22.33 billion, respectively. Guided Q2 productivity and business revenues of $6.9-$7.1 billion; also sees personal computing revenues of $11.2-11.6 billion and cloud revenues of $6.55-6.75 billion.
SAP AG (SAP 88.82, +1.54 +1.76%) reported worse than expected Q3 EPS of EUR0.91 and better than expected revenues of EUR5.38 billion. Also, raised FY16 guidance for full year 2016 non-IFRS cloud subscriptions and support revenue to be in a range of EUR3.00-3.05 billion at constant currencies (2015: EUR2.30 billion), from prior guidance of EUR2.95-3.05 billion at constant currencies. SAP added it expects full year 2016 non-IFRS cloud and software revenue to increase by 6.5-8.5% at constant currencies (2015: EUR17.23 billion), compared to prior guidance of increase by 6-8%. Lastly, the company now expects full-year 2016 non-IFRS operating profit to be in a range of EUR6.5-EUR6.7 billion at constant currencies (2015: EUR6.35 bln), compared to prior guided range of EUR6.4-6.7 billion.
PayPal (PYPL) reported in-line Q3 EPS and revenues of $0.35 and $2.67 billion, respectively. Processed $87 billion in TPV, up 25%, or 28% on an FX-neutral basis. Also guided Q4 EPS of $0.40-0.42 on revenues of $2.920-2.990 billion.
Wipro (WIT 9.78, -0.14 -1.41%) reported better than expected Q2 EPS and revenues of INR8.52 and INR137.66 billion.
Ericsson (ERIC 5.10, -0.27 -5.03%) reported worse than expected Q3 EPS of $0.34 on revenues which fell 13.7% compared to last year to $51.1 billion.
KLA-Tencor (KLAC 73.64, +1.65 +2.29%) reported better than expected Q1 EPS and revenues of $1.16 and $751 million. Also, guided Q2 revenue growth of about 11% sequentially at the midpoint to $805-865 million. Additionally, sees EPS in the range of $1.28-1.48 for Q2.
Proofpoint (PFPT) reported better than expected Q3 EPS and revenues of $0.19 and $99.8 million, respectively. Also, sees Q4 EPS and revenues ahead of market expectations at $0.10-0.14 and $103-105 million, respectively.
Advanced Micro (AMD 6.52, -0.44 -6.32%) reported better than expected Q3 EPS and revenues of $0.03 and $1.31 billion, respectively. AMD also guided Q4 revenues at $1.03-1.11 billion (or down 21-15%).
Companies scheduled to report Monday morning: CYOU, SOHU, TMUS
Analyst actions:
MSFT was upgraded to Outperform from Market Perform at William Blair and to Buy from Hold at Wunderlich,
PYPL was upgraded to Buy from Hold at Stifel,
EBAY was upgraded to Buy from Long-Term Buy at Hilliard Lyons,
AVT was upgraded to Buy from Neutral at Longbow,
UBNT was upgraded to Mkt Perform from Mkt Underperform at JMP Securities;
YHOO was downgraded to Hold from Buy at Jefferies,
DATA was downgraded to Mixed from Positive at OTR Global,
BHE was downgraded to Sell from Hold at Cross Research;
OTEX was initiated with an Overweight at Mitsubishi UFJ,
ASUR was initiated with a Buy at Roth Capital
From Briefing.com: 4:22 pm Advanced Micro beats by $0.02, beats on revs; guides Q4 revs in-line (AMD) :
Reports Q3 (Sep) earnings of $0.03 per share, $0.02 better than the Capital IQ Consensus of $0.01; revenues rose 23.2% year/year to $1.31 bln vs the $1.21 bln Capital IQ Consensus.
Gross margin was 5 percent, down from 31 percent from the previous quarter due to a $340 million charge related to the 6th amendment to the Wafer Supply Agreement with GLOBALFOUNDRIES. Non-GAAP gross margin of 31 percent was flat quarter-over-quarter.
Co issues in-line guidance for Q4, sees Q4 revs of $1.03-1.11bln (Down 21-15%) vs. $1.06 bln Capital IQ Consensus Estimate; expects non-GAAP gross margin to be approximately 32%; expects inventory to decline to approximately $660 million
4:21 pm Celestica beats by $0.13, beats on revs; guides Q4 EPS in-line, revs in-line (CLS) :
Reports Q3 (Sep) earnings of $0.43 per share, excluding a net benefit of $0.11 per share related to income taxes, $0.13 better than the Capital IQ Consensus of $0.30; revenues rose 10.0% year/year to $1.55 bln vs the $1.52 bln Capital IQ Consensus.
Operating margin of 3.8%, above the previously provided mid-point of expectations of 3.6%, and consistent with the third quarter of 2015.Co issues in-line guidance for Q4, sees EPS of $0.29-0.35, excluding non-recurring items, vs. $0.32 Capital IQ Consensus Estimate; sees Q4 revs of $1.5-1.6 bln vs. $1.55 bln Capital IQ Consensus Estimate.Co expects a negative $0.09 to $0.14 per share (pre-tax) aggregate impact on net earnings on an IFRS basis for employee stock-based compensation expense, amortization of intangible assets (excluding computer software) and restructuring charges.
4:17 pm KLA-Tencor beats by $0.12, beats on revs (KLAC) :
Reports Q1 (Sep) earnings of $1.16 per share, $0.12 better than the Capital IQ Consensus of $1.04; revenues rose 16.8% year/year to $751 mln vs the $734.59 mln Capital IQ Consensus.Co will guide shortly.
4:16 pm Microsoft flirting with all time/late 1999 highs at the 60 level in the after hours after convincingly beating Q1 estimates (MSFT) : QQQ
4:12 pm Microsoft beats by $0.08, beats on revs; co will guide on the call (MSFT) :
Reports Q1 (Sep) earnings of $0.76 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus of $0.68; adj. revenues rose 3.1% year/year to $22.33 bln vs the $21.69 bln Capital IQ Consensus. Revenue in Productivity and Business Processes grew 6% (up 8% in constant currency) to $6.7 bln vs. $6.4-6.6 bln guidance, with the following business highlights: Office commercial products and cloud services revenue grew 5% (up 8% in constant currency) driven by Office 365 commercial revenue growth of 51% (up 54% in constant currency) Office consumer products and cloud services revenue grew 8% (up 8% in constant currency) and Office 365 consumer subscribers increased to 24.0 mln Dynamics products and cloud services revenue grew 11% (up 13% in constant currency) driven by Dynamics online revenue growth Revenue in Intelligent Cloud grew 8% (up 10% in constant currency) to $6.4 bln vs. $6.1-6.3 bln guidance, with the following business highlights: Server products and cloud services revenue increased 11% (up 13% in constant currency) driven by double-digit annuity revenue growth Azure revenue grew 116% (up 121% in constant currency) with Azure compute usage more than doubling year-over-year
Enterprise Services revenue increased 1% (up 2% in constant currency) with growth in Premier Support Services and consulting offset by declines in custom support agreements
Revenue in More Personal Computing declined 2% (down 1% in constant currency) to $9.3 bln vs. $8.7-9.0 bln guidance, with the following business highlights: Windows OEM revenue was flat year-over-year (flat in constant currency), slightly ahead of the PC market
Windows commercial products and cloud services revenue was flat year-over-year (up 2% in constant currency) driven by annuity revenue
Phone revenue declined 72% (down 71% in constant currency)
Gaming revenue declined 5% (down 4% in constant currency) driven by lower Xbox console revenue offset by higher Xbox software and services revenue
Search advertising revenue excluding traffic acquisition costs grew 9% (up 10% in constant currency) driven by increased revenue per search and search volume
During the quarter, the company announced an 8% increase in its quarterly dividend to $0.39 per share, a new share repurchase program authorizing up to $40 bln in share repurchases, and reaffirmed it is on track to complete its current $40 bln share repurchase program by December 31, 2016.
Microsoft expects to close the acquisition of LinkedIn (LNKD) and the sale of our entry-level feature phone business in the second quarter of fiscal year 2017, subject to regulatory approvals and other closing conditions. Co will guide on the call.
4:09 pm Violin Memory notified by the NYSE that it is below the NYSE's continued listing standard; plans to timely notify the NYSE that it intends to cure the $1.00 per share deficiency (VMEM) :
4:06 pm Maxim Integrated beats by $0.01, reports revs in-line; guides Q2 EPS in-line, revs in-line (MXIM) :
Reports Q1 (Sep) earnings of $0.48 per share, $0.01 better than the Capital IQ Consensus of $0.47; revenues fell 0.2% year/year to $561.4 mln vs the $560.39 mln Capital IQ Consensus.
Cash flow from operations was $123 mln.
The company's 90-day backlog at the beginning of the December 2016 quarter was $371 mln.
Co issues in-line guidance for Q2, sees EPS of $0.40-$0.46 vs. $0.45 Capital IQ Consensus Estimate; sees Q2 revs of $520-$560 mln vs. $540.65 mln Capital IQ Consensus Estimate. Sees gross margin of 63-65%.
4:15 pm : The stock market ended the Thursday affair on a flat note as the latest round of quarterly reports prompted mixed reactions from investors. Global monetary policy was also in focus as participants digested the October policy decision from the European Central Bank and some somewhat hawkish commentary from a Federal Reserve official. The Dow Jones Industrial Average (-0.2%) settled slightly behind the S&P 500 (-0.1%) and the Nasdaq Composite (-0.1%).
It was a busy day on the earning front as the third-quarter earnings reporting season continued hitting its stride. Influential names such as Verizon (VZ 49.14, -1.24), American Express (AXP 66.78, +5.53), Travelers (TRV 109.52, -6.71), Walgreens Boot Alliance (WBA 81.02, +3.84) and Union Pacific (UNP 90.64, -6.48) each reported their quarterly results, resulting in some varied assessments.
Equity indices struggled for direction at the start of the session as choppy trade in Europe increased volatility during the early portion of the U.S. session. The European Central Bank released its latest policy statement this morning, opting to maintain its key interest rates and its asset purchase levels. ECB President Mario Draghi followed up the policy inaction with noncommittal remarks. Mr. Draghi indicated that neither extending nor tapering the central bank's asset purchase program were discussed at this month's meeting, but that the board would conduct further policy review in December.
The decision took some steam out of the euro, which in turn, provided another tailwind to the greenback. The U.S. Dollar Index (98.30, +0.38, +0.39%) extended its recent winning streak as policy inaction from the ECB, an improving US rate hike picture, and largely positive economic data boosted the currency. Strengthening in the dollar weighed on the broader market as participants eyed headwinds for dollar-denominated commodities and earnings prospects of multinational companies.
The broader market overcame selling interest near midday, but the major averages were unable to make a meaningful move above their flat lines.
The S&P 500 finished off its best level of the day as ten sectors settled in the red. The lightly-weighted telecom services (-2.0%) sector finished at the bottom of the leaderboard with industrials (-0.5%) and consumer discretionary (-0.2%) also underperforming notably. On the flipside, heavily-weighted health care (+0.5%) finished in positive territory.
The PHLX Semiconductor Index finished higher by 0.8% after takeover rumors signaled that Qualcomm (QCOM 67.34, +1.55) is close to acquiring NXP Semi (NXPI 104.49, +3.46).
The health care sector (+0.5%) demonstrated relative strength as biotechnology and generic drug names outperformed. The iShares Nasdaq Biotechnology ETF (IBB 270.04, +2.56) finished higher by 1.0%, narrowing its month-to-date loss to 6.7%. In the ETF, Gilead Sciences (GILD 74.31, +0.97) jumped 1.3% after announcing top-line results from several drug studies.
In the financial sector (UNCH), Dow component American Express (AXP 66.78, +5.53) outperformed after beating bottom-line estimates for the quarter and issuing upbeat full-year earnings guidance. The name finished at the top of the price-weighted average. On the flip side, Travelers (TRV 109.52, -6.71) rounded out the index despite beating estimates. The stock fell 5.8%.
The industrial sector (-0.5%) underperformed after Union Pacific (UNP 90.64, -6.48) missed bottom-line estimates for the quarter. The stock was also downgraded to "Market Perform" from "Outperform" at Cowen.
Specialty retail names underperformed in the consumer discretionary sector (-0.1%) as eBay (EBAY 29.02, -3.50) plunged 10.8%. The company issued some disappointing guidance, which overshadowed a quarterly beat.
Treasuries finished on a mixed note as the short end of the curve underperformed. The yield on the 2-yr note settled higher by two basis points (0.82%) while the yield on the benchmark 10-yr note finished higher by one basis point at 1.75%.
Today's trading volume fell below the average of 853 million as 773 million shares changed hands at the NYSE floor.
Today's economic data included weekly initial claims, the Philadelphia Fed Survey, Existing Home Sales, and September Leading Indicators:
Initial jobless claims jumped 13,000 to 260,000 (Briefing.com consensus 249,000) for the week ending October 15.
Continuing claims for the week ending October 8 rose by 7,000 to 2.057 million.
The Philadelphia Fed Index dipped from 12.8 in September to 9.7 in October (Briefing.com consensus 5.5).
That reflects a slowing of activity, yet any number above 0.0 still points to an expansion in regional manufacturing activity.
Existing home sales increased 3.2% to a seasonally adjusted annual rate of 5.47 million in September from a downwardly revised 5.30 million (from 5.33 million) in August.
The uptick in September broke a string of monthly sales declines registered in July and August.
The Conference Board's Leading Economic Index (LEI) increased 0.2% in September, as expected, rebounding from an unrevised 0.2% decline in August.
There is no economic data of note scheduled to be released tomorrow.
Russell 2000: +7.4% YTD
S&P 500: +4.8% YTD
Nasdaq Composite: +4.7% YTD
Dow Jones: +4.2% YTD
DJ30 -40.27 NASDAQ -4.58 SP500 -2.95 NASDAQ Adv/Vol/Dec 1288/1.593 bln/1501 NYSE Adv/Vol/Dec 1224/773.0 mln/1671 3:30 pm :
The dollar index was +0.4% around the 98.31 level, hit 7-month highs earlier, weighed on commodities, especially precious metals
Commodities, as measured by the Bloomberg Commodity Index, were -1.0% around the 86.02 level
Crude oil retreated from yesterday's 15-month high ahead of tomorrow's rig count data
December crude oil futures fell $1.15 (-2.2%) to $50.65/barrel
The next OPEC meeting will take place in Vienna, Austria on November 30.
Baker Hughes rig count data will be released tomorrow at 1 pm ET.
The oil rig count has increased for the past 16 consecutive weeks.
Natural gas extended yesterday's losses after EIA data showed a larger-than-expected build compared to Consensus
November natural gas closed $0.03 lower (-1.0%) at $3.14/MMBtu
EIA highlights:
Natural gas inventory showed a build of +77 bcf vs expectations for inventory to be a build of approximately +73 bcf.
Working gas in storage was 3,836 Bcf as of Friday, October 14, 2016, according to EIA estimates.
Stocks were 46 Bcf higher than last year at this time and 185 Bcf above the five-year average of 3,651 Bcf.
At 3,836 Bcf, total working gas is above the five-year historical range.
In precious metals, gold's decline was outpaced by the losses in silver as the dollar index broke out to 7-month highs earlier in the session
December gold ended today's session down $2.40 (-0.2%) to $1267.70/oz
December silver closed today's session $0.10 lower (-0.6%) at $17.56/oz
The gold:silver ratio was at ~72.2%, compared to last Thursday's pit trading closing ratio of ~72.1.
The broader market erased yesterday's modest advance as the Dow Jones Industrial Average led all others lower, shedding 40.27 points (-0.22%) today to end 18162.35. The S&P 500 lost 2.95 points (-0.14%) to 2141.34, and the Nasdaq Composite was lower by 4.58 points (-0.09%) to 5241.83 when the session was over. Notable Nasdaq 100 components which resisted the broader market selling today included WBA +5.0%, NXPI +3.4%, QCOM +2.4%, ALXN +1.8% and BIIB +1.5%.
Equity indices began the day under modest pressure as participants pored over the latest policy statement from the ECB and remarks from President Draghi. The central bank voted to leave its monetary policy stance unchanged, holding its key interest rates steady and maintaining its bond purchase levels at EUR80 billion per month. Mr. Draghi also noted that the board did not discuss either extending or tapering its asset purchase program at this meeting. However, he did signal that the ECB would review policy further in December and also voiced some optimism regarding the potential for an improved inflation trend.
The commentary exacerbated strength in the U.S. Dollar Index (98.31, +0.46 +0.47%) as the euro extended its losing streak against the greenback. An improved US rate hike picture and some positive economic data also contributed to strength in the dollar.
The major averages pulled back amid firming in the buck as participants assessed headwinds on dollar-denominated commodities and the earnings prospects of multinational companies.
Market data that crossed desks today included the initial jobless claims reading which jumped 13,000 to 260,000 for the week ending October 15. Also, the Philadelphia Fed Index dipped from 12.8 in September to 9.7 in October. Further, existing home sales increased 3.2% to a seasonally adjusted annual rate of 5.47 million in September from a downwardly revised 5.30 million (from 5.33 million) in August. Lastly, the Conference Board's Leading Economic Index (LEI) increased 0.2% in September, as expected, rebounding from an unrevised 0.2% decline in August.
Among S&P sectors in negative territory today, the Technology (XLK 47.40, -0.22 -0.46%) sector could not rebound off morning weakness, erasing yesterday's modest gains. Component eBay (EBAY 29.02, -3.50 -10.76%) was the worst performing stock in the sector today despite a better than expected Q3 print. Other sectors as measured by the S&P closed Thursday XLV +0.47%, XLFS +0.16%, XLP -0.06%, XLU -0.06%, XLB -0.06%, XLF -0.10%, XLE -0.11%, XLY -0.16%, XLRE -0.35%, XLI -0.54%, IYZ -1.23% as Healthcare and Financial Services were the lone out-performers.
In the S&P 500 Information Technology (797.35, -1.86 -0.23%) sector, trading could not manage to climb out of the red. Component Alliance Data (ADS 204.77, -10.01 4.66%) was a drag on the space after the company reported a mostly better than expected Q3, but guided FY17 worse than market expectations. Other names in the space which were lower today included FIS -1.35%, TDC -1.33%, GPN -1.05%, XRX -0.93%, RHT -0.88%, JNPR -0.87%, YHOO -0.82%, TSS -0.77%, ORCL -0.68%.
Other notable news items among sector components:
IBM (IBM 151.52, +0.26 +0.17%) announced that TPV Technology Ltd., the manufacturer of Philips-branded televisions, has adopted IBM Cloud and IoT services to more quickly and easily build new smart features and apps, such as video-on-demand and instant playback, directly into its TVs.
Reportedly, Tesla (TSLA 199.10, -4.46 -2.19%) will use NVIDIA's (NVDA 67.73, +1.26 +1.90%) Titan GPU (over MBLY) to give cars produced by TSLA autonomous driving options.
CSRA (CSRA 26.20, -0.13 -0.49%) won a task order through the Department of Defense Joint Service Provider program. The $114 million task order was awarded under the CIO-SP3 contract vehicle, and has a period of performance over four and a half years.
Analog Devices (ADI 63.47, +1.56 +2.52%) and Linear Tech (LLTC 60.15, +0.84 +1.42%) announced that on October 19, 2016 the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for the proposed combination of Analog Devices and Linear Technology expired. As a result, the transaction has been cleared for U.S. antitrust purposes. In addition, Analog Devices and Linear Technology received clearance for the transaction from the German Federal Cartel Office on October 11, 2016.
Intel (INTC 35.43, -0.08 -0.23%) won support from an European Union Court of Justice for its appeal of the EU's previously announced anti-trust fine.
Alliance Data (ADS) declared an initial quarterly dividend of $0.52 per share.
Elsewhere in the tech space:
Nintendo (NTDOY 32.36, +0.77 +2.45%) unveiled its newest gaming console, the Nintendo Switch. The console is expected to be available March 2017.
DragonWave (DRWI 4.29, +2.08 +94.12%) announced Sprint (S 6.72, -0.16 -2.33%) selected its microwave backhaul equipment for network deployment as part of the company's densification and optimization strategy.
Actua (ACTA 11.55, +0.20 +1.76%) announced the consummation of the sale of GovDelivery to an investor group led by Vista Equity Partners for $153 million in cash, subject to adjustment for working capital, cash, debt and other items. Actua will realize about $133 million in cash in connection with the transaction.
xG Technology (XGTI 0.43, +0.02 +5.12%) to acquire Vislink Communication Systems for $16 million.
InterCloud Systems (ICLD 0.06, +0.00 +0.44%) was recently awarded more than $2.1 million in new contracts. A majority of the work is expected to begin immediately.
HealthEquity (HQY 35.90, -0.84 -2.29%) announced and priced a 2.5 million common stock offering at $35.85 per share.
Wipro (WIT 9.92, -0.14 -1.39%) confirmed a deal to acquire Appirio for $500 million.
In reaction to quarterly results:
Verizon (VZ 49.14, -1.24 -2.46%) reported better than expected Q3 EPS of $1.01 on revenues which fell 6.7% compared to last year to $30.94 billion. VZ also reaffirmed certain guidance.
eBay (EBAY) reported better than expected Q3 EPS of $0.45 on better than expected revenues of $2.22 billion. Also, gross merchandise volume was up 3% to $20.1 billion.
Lam Research (LRCX 96.94, -2.78 -2.79%) reported better than expected Q1 EPS of $1.81 on revenues of $1.63 billion. Gross margins were 45.2% and deferred revenues were $704 million compared to $566 last quarter. LRCX also guided Q2 EPS of $2.08-2.28 on revenues of $1.765-1.915 billion.
Citrix Systems (CTXS 86.34, +0.04 +0.05%) reported better than expected Q3 EPS and revenues of $1.32 and $841 million, respectively. CTXS also guided FY16 EPS and revenues above expectations at $5.18-5.20 and $3.40-3.41 billion, respectively.
Xilinx (XLNX 50.09, +0.48 +0.97%) reported better than expected Q2 EPS of $0.61 on revenues of $579 million. XLNX also gave guidance for Q3 revenues of flat sequentially from $579 million.
Alliance Data (ADS) reported better than expected Q3 EPS and revenues of $4.74 and $1.81 billion, respectively. For FY16, ADS raised its EPS guidance to $16.90 from $16.85 and now sees revenues for FY16 of $7.2 billion from $7.15 billion. Additionally, the company guided FY17 lower than expected at EPS growth of about 10% to about $18.60 on revenue growth of about 10% to about $7.92 billion.
Companies scheduled to report tonight/tomorrow morning: AMD, BHE, CLS, ETFC, KLAC, MXIM, MSFT, PYPL, PFPT/ERIC, EEFT, MWW, SAP, WIT
Analyst actions:
EXPE was upgraded to Overweight from Sector Weight at Pacific Crest,
EPAM was upgraded to Buy from Neutral at Monness Crespi & Hardt,
RST was upgraded to Outperform from Market Perform at Barrington Research,
DRWI was upgraded to Hold from Sell at Desjardins;
CNSL was downgraded to Underweight at a boutique firm;
TEF was initiated with an Underperform at RBC Capital Mkts,
EMKR was initiated with a Buy at Dougherty,
EXPE and PCLN were initiated with a Positive at Susquehanna,
ADI was initiated with an Outperform at CLSA,
NTNX was initiated with a Neutral at BTIG Research,
TRIP was initiated with a Neutral at Susquehanna
From Briefing.com: 4:36 pm Xilinx beats by $0.07, reports revs in-line; guides Q3 revs flat sequnetially (XLNX) : Reports Q2 (Sep) earnings of $0.61 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $0.54; revenues rose 9.7% year/year to $579 mln vs the $574.95 mln Capital IQ Consensus.
Co issues guidance for Q3, sees Q3 revs flat sequentially (~$579 mln) vs. $584.95 mln Capital IQ Consensus Estimate.
Gross margin is expected to be approximately 69%.
Operating expenses are expected to be approximately $245 million including $1 million of amortization of acquisition-related intangibles.
4:13 pm Lam Research beats by $0.03, reports revs in-line; guides Q2 above consensus (LRCX) :
Reports Q1 (Sep) earnings of $1.81 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $1.78; revenues rose 2.0% year/year to $1.63 bln vs the $1.63 bln Capital IQ Consensus.
Non-GAAP gross margin of 45.2%, non-GAAP operating margin of 22.4%, and non-GAAP diluted EPS of $1.81.
Deferred revenue at the end of the September 2016 quarter increased to $704 million as compared to $566 million at the end of the June 2016 quarter. Deferred profit at the end of the September 2016 quarter increased to $418 million as compared to $349 million at the end of the June 2016 quarter.
Co issues guidance for Q2, sees EPS of $2.08-2.28, may not be comparable to $1.80 Capital IQ
Consensus Estimate; sees Q2 revs of $1.765-1.915 bln vs. $1.65 bln Capital IQ Consensus Estimate; sees shipments of $1.85 bln +/- $75 mln
4:11 pm Lam Research reschedules investor meeting to Friday, November 18 from November 16 (meeting will serve as a general update for investors and analysts on Lam's strategy and operations) (LRCX) :
4:15 pm : The stock market ended the midweek affair on a flat note as investors responded to a fresh batch of quarterly earnings reports and a rally in crude oil futures. The Dow Jones Industrial Average (+0.2%) settled in-line with the S&P 500 (+0.2%) and slightly ahead of the Nasdaq Composite (+0.1%).
The broader market inched higher at the start of the session as better-than-expected quarterly results from members of the energy (+1.4%) and financial (+0.8%) sectors helped boost risk appetite in the broader market.
Commercial banking name U.S. Bancorp (USB 43.58, +0.57) helped rally the industry group after reporting a bottom-line beat and estimating that net interest income will increase next quarter. Morgan Stanley (MS 32.93, +0.61) finished higher by 1.9% after beating top- and bottom-line estimates for the quarter. Meanwhile, oilfield service name Halliburton (HAL 49.07, +2.00) rallied 4.3% after topping earnings estimates and noting that rig count activity has been picking up.
Equity indices extended their gains after the opening hour as investors assessed the latest inventory data from the Department of Energy. The EIA reported that crude oil stockpiles declined by 5.24 million barrels (consensus: +2.70 million) while gasoline stockpiles rose by 2.46 million barrels (consensus: -1.31 million). The energy component jumped on the news, settling higher by 2.6% ($51.59/bbl; +$1.30).
The benchmark index gained lockstep with crude oil, briefly clearing technical resistance near the 2144 price level. However, the S&P 500 moved lower in the final hour as participants eyed potentially market-moving events out of the US and Europe. On that note, the European Central Bank will hold its October policy meeting tomorrow morning.
Eight sectors ended in positive territory with energy (+1.4%), financials (+0.8%), materials (+0.7%), and consumer discretionary (+0.5%) leading the pack.
The economically-sensitive financial sector (+0.8%) outperformed as participants eyed above-consensus quarterly results and largely positive economic data. Dow component American Express (AXP 61.25, +1.17) finished at the top of the price-weighted average ahead of this evening's quarterly report. The broader financial sector extended its October gain to 1.7%, leading the remaining sectors over that period.
In the consumer discretionary sector (+0.5%), Netflix (NFLX 121.87, +3.08) extended its post-earnings winning streak, spiking 22.1% since reporting upbeat quarterly results on Monday evening. Tesla Motors (TSLA 203.56, +4.46) was also making waves after CEO Elon Musk confirmed that a product announcement will take place at 20:00 ET.
Chipmakers finished behind the broader technology sector (UNCH) as the PHLX Semiconductor Index slipped 0.5%. Intel (INTC 35.51, -2.24) weighed on the group after issuing disappointing fourth-quarter revenue and gross margin guidance. However, the company did beat top- and bottom-line estimates for the quarter. Shares of Intel finished lower by 5.9%.
Health care equipment names lagged in the health care space (-0.3%) with Intuitive Surgical (ISRG 681.58, -40.15) declining 5.6%. The downturn came despite the company reporting better-than-expected quarterly results. Separately, Abbott Labs (ABT 40.01, -1.16) declined 2.8% as some weakness in its nutrition sales masked largely in-line quarterly results.
Treasuries finished on a flat note as yields finished little changed across the curve. The yield on the 2-yr note settled at 0.80% while the yield on the benchmark 10-yr note finished at 1.74%.
Today's trading volume fell below the average of 853 million as 798 million shares changed hands at the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index and Housing Starts/Building Permits for September:
The MBA Mortgage Index indicated that mortgage applications rose 0.6% in the week ending October 15. This followed a 6.0% decrease in the prior week.
Housing starts declined 9.0% in September to a seasonally adjusted annual rate of 1.047 million units (Briefing.com consensus 1.168 million) while permits -- a leading indicator -- increased 6.3% to a seasonally adjusted annual rate of 1.225 million (Briefing.com consensus 1.164 million).
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Thursday's economic data will include the 8:30 ET release of weekly initial claims (Briefing.com consensus 249k) and the Philadelphia Fed Survey for October (Briefing.com consensus 5.5). Separately, the September Existing Home Sales Report (Briefing.com consensus 5.30 million) and September Leading Indicators (Briefing.com consensus 0.2%) will be released at 10:00 ET.
Russell 2000: +7.7% YTD
S&P 500: +4.9% YTD
Nasdaq Composite: +4.8% YTD
Dow Jones: +4.5% YTD
DJ30 +40.68 NASDAQ +2.58 SP500 +4.69 NASDAQ Adv/Vol/Dec 1667/1.411 bln/1095 NYSE Adv/Vol/Dec 2092/778.2 mln/867
3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, were +0.4% around the 86.89
Crude oil broke out to fresh 52-week highs after EIA data showed an unexpected draw compared to Consensus
November crude oil futures rose $1.30 (+2.6%) to $51.59/barrel
EIA highlights:
Crude oil inventories had a draw of -5.247 mln (consensus called for a build of about +2.71 mln barrels)
Gasoline inventories had a build of +2.469 mln (consensus called for a draw of about -1.32 mln barrels)
Distillate inventories had a draw of -1.240 mln
Natural gas erased all of yesterday's gains ahead of tomorrow's inventory data
November natural gas closed $0.09 lower (-2.8%) at $3.17/MMBtu
Weekly EIA natural gas inventory data will be released at 10:30 am ET.
In precious metals, gold extended yesterday's gains, silver ended nearly flat as the dollar index remained directionless
December gold ended today's session up $7.10 (+0.6%) to $1270.10/oz
December silver closed today's session $0.02 higher (+0.1%) at $17.66/oz
Base metal copper inched lower after 2 consecutive days of closing flat
December copper closed $0.01 lower (-0.5%) at $2.10/lb
The broader market added modest gains on Wednesday, with the best index, the Dow Jones Industrial Average adding 40.68 points (+0.22%) to 18202.62. The S&P 500 was up 4.69 points (+0.22%) to 2144.29, and the Nasdaq Composite gained 2.58 points (+0.05%) to 5246.41.
Commercial banking name U.S. Bancorp (USB 43.58, +0.57 +1.33%) helped rally the industry group after reporting a bottom-line beat and estimating that net interest income will increase next quarter. Morgan Stanley (MS 32.93, +0.61) finished higher by 1.9% after beating top- and bottom-line estimates for the quarter. Meanwhile, oilfield service name Halliburton (HAL 49.07, +2.00) rallied 4.3% after topping earnings estimates and noting that rig count activity has been picking up.
Equity indices extended their gains after the opening hour as investors assessed the latest inventory data from the Department of Energy. The EIA reported that crude oil stockpiles declined by 5.24 million barrels while gasoline stockpiles rose by 2.46 million barrels. The energy component jumped on the news, settling higher by 2.6% ($51.59/bbl; +$1.30).
Today's market data included the MBA Mortgage Index reading which indicated that mortgage applications rose 0.6% in the week ending October 15. This followed a 6.0% decrease in the prior week. Also, housing starts were down 9.0% in September to a seasonally adjusted annual rate of 1.047 million units while permits -- a leading indicator -- increased 6.3% to a seasonally adjusted annual rate of 1.225 million. Additionally, the Fed's Beige Book was released at 2:00 p.m. ET and noted most districts saw modest to moderate growth with expectations for the pace of growth to continue at slight to moderate pace.
The Technology (XLK 47.62, +0.09 +0.19%) was up only modestly today but finished near highs of the session. Component Intel (INTC 35.51, -2.24 -5.93%) was the worst performer in the sector today following results which topped Q3 expectations but fell short of investors' hopes for Q4 guidance. Other sectors as measured by the S&P closed Wednesday XLE +1.38%, XLF +0.87%, XLFS +0.81%, XLB +0.73%, IYZ +0.54%, XLY +0.44%, XLRE +0.38%, XLI +0.31%, XLU -0.23% XLV -0.37% XLP -0.57% with Energy and Financials leading the positive bias.
In the S&P 500 Information Technology (799.21, +0.13 +0.02%) sector, trading ended barely above flat lines as sellers attempted to drive the space back into the red. Component Seagate Tech (STX 34.32, -1.02 -2.89%) was weak today despite reporting results which beat market expectations. Other names in the space which could not manage to climb out of negative territory included STX -2.89%, EA -1.49%, MU -1.12%, XLNX -1.04%, ATVI -0.88%, WDC -0.72%, HPQ -0.63%, QCOM -0.47%.
Other notable news items among sector components:
Hewlett Packard Enterprise (HPE 21.73, +0.26 +1.21%) reaffirmed its FY16 guidance and issued three views of FY17 financial outlook. HPE reaffirmed guidance for FY16 (Oct) EPS of $1.90-1.95 on revenue growth of +1-2% y/y when adjusted for recent divestitures and currency. As communicated on HPE's Q3 call, HPE expects to deliver free cash flow of $1.7 -1.9 billion in FY16, and to return over $3 billion of cash to shareholders this year, in the form of share repurchases and dividends. Also, given two pending transactions -- the spin-merge of Enterprise Services with CSC in early April and the spin-merge of Software with Micro Focus in 2H FY17 - HPE provided three different views of its FY17 financial outlook. As a combined company, HPE expects revenue to be flat to down 1% when adjusted for divestitures and currency. HPE expects non-GAAP EPS to be $2.00 to $2.10. As reported, HPE sees non-GAAP EPS to be ~$1.45 to $1.55. The future HPE expects to see modest revenue growth in FY17 with non-GAAP EPS of ~$1.25 -1.35 in FY17.
According to reports, Alphabet (GOOG 801.56, +6.30 +0.79%) is in talks with Disney (DIS 91.93, +0.76 +0.83%) and Fox (FOXA 25.12, +0.16 +0.64%) regarding a potential internet TV service. Reportedly has reached a similar agreement with CBS (CBS 55.53, +0.43 +0.78%).
Red Hat (RHT 78.27, +0.77 +0.99%) and Ericsson (ERIC 5.40, -0.07 -1.28%) announced a broad alliance to deliver fully open source and production-ready cloud infrastructure, spanning OpenStack, software-defined networking (SDN) and software-defined infrastructure (SDI).
Linear Tech (LLTC 59.31, +0.37 +0.63%) announced that, based on a preliminary vote tally from LLTC's Annual Meeting of Stockholders, stockholders approved the merger agreement under which Analog Devices (ADI 61.91, -0.23 -0.37%) will acquire LLTC.
Juniper Networks (JNPR 22.95, +0.10 +0.44%) announced that the United Arab Emirates' (U.A.E.) Advanced Military Maintenance, Repair and Overhaul Center (AMMROC) has built a mission-critical network infrastructure based on JNPR's switching, security and network management technology.
DarkMatter, an international cyber security firm headquartered in the UAE, and NetApp (NTAP 33.68, +0.03 +0.09%) announced a partnership to jointly develop and deliver secure data storage and big data analytics solutions.
NTAP also announced the appointment of Bill Miller as chief information officer (CIO).
Visa (V 82.81, +1.23 +1.51%) increased its quarterly dividend to $0.165 per share from $0.14 per share.
Elsewhere in the tech space:
Synopsys (SNPS 59.76, +0.14 +0.23%) confirmed a federal appellate court has ruled in favor of Mentor Graphics (MENT 28.69, -0.12 -0.42%). SNPS said the ruling will have no impact on ZeBu sales or support.
Vectrus (VEC 16.52, +0.38 +2.35%) to eliminate an additional 64 positions at its Colorado Springs headquarters; will result in an about $2 million severance expense in the fourth quarter of 2016.
Science Applications (SAIC 67.48, -0.12 -0.18%) received SSC pacific contract to support cyberspace operations systems; potential value of more than $142 million.
In reaction to quarterly results:
Intel (INTC) reported Q3 results which beat raised guidance. Q3 EPS was $0.80 on revenues which rose 9.1% compared to last year to $15.78 billion. Guided Q4 revenues in the range of $15.2-16.2 billion on gross margins of 63%, plus or minus a couple percent.
Yahoo! (YHOO 42.73, +1.05 +2.52%) reported better than expected Q3 EPS of $0.20 on revenues which fell 14.6% compared to a year ago to $857 million. YHOO also issued downside guidance for Q4 revenues of $880-920 million. YHOO also updated their FY16 revenue guidance to $3.440-3.480 billion, ex tac, from $3.4-3.6 billion.
Seagate Tech (STX) reported better than expected Q1 EPS of $0.99 on revenues which fell 4.4% versus last year to $2.80 billion.
Cree (CREE 22.41, -2.79 -11.07%) reported worse than expected Q1 EPS of $0.09 on revenues which fell 15.8% compared to last year to $321.3 million. The company also issued downside guidance for Q2 EPS in the range of $0.04-0.10 on revenues of $310-330 million.
Linear Tech (LLTC) reported worse than expected Q1 EPS of $0.53 on revenues which rose 9.4% compared to a year ago to $373.9 million.
Amphenol (APH 64.71, +1.50 +2.37%) reported better than expected Q3 EPS and revenues of $0.73 and $1.64 billion, respectively. For Q4, APH sees in-line EPS and revenues of $0.71-0.73 and $1.59-1.63 billion, respectively.
ASML (ASML 104.07, +1.74 +1.70%) reported worse than expected EPS of EUR0.03 on better than expected revenues of EUR1.82 billion. For Q4, ASML sees revenues of EUR1.7-1.8 billion.
Companies scheduled to report tonight/tomorrow morning: CTXS, EBAY, LRCX, XLNX/CTXS, EBAY, LRCX
Analyst actions:
TWTR was upgraded to Hold from Sell at Loop Capital,
INTC was upgraded to Buy from Mkt Perform at Charter Equity,
DSGX was upgraded to Sector Outperform from Sector Perform at CIBC,
MOMO was upgraded to Overweight from Equal Weight at Morgan Stanley;
VDSI was downgraded to Neutral from Buy at Dougherty,
CREE was downgraded to Equal Weight from Overweight at Stephens;
SQ and CDNS were initiated with Neutral ratings at Credit Suisse,
MENT and SNPS were initiated with Outperform ratings at Credit Suisse,
WEB and EIGI were initiated with Hold ratings at Cantor Fitzgerald,
GDDY and WIX were initiated with Buy ratings at Cantor Fitzgerald,
IPAS was initiated with a Buy at Maxim Group,
SHOP was initiated with a Buy at Rosenblatt,
RP was initiated with an Overweight at Stephens
From Briefing.com: 4:47 pm Linear Tech misses by $0.01, reports revs in-line (LLTC) : Reports Q1 (Sep) earnings of $0.53 per share, $0.01 worse than the Capital IQ Consensus of $0.54; revenues rose 9.4% year/year to $373.9 mln vs the $377.22 mln Capital IQ Consensus.
Outlook:
"Looking forward, the December quarter is typically a seasonally weaker quarter due to a slower European market and in particular a weaker Industrial market that historically often results in a sequential quarterly revenue decline. Given a slightly positive first quarter book-to-bill ratio and based upon our current bookings rate, we are anticipating relatively flat sequential revenue in our fiscal second quarter representing growth in the 7% to 8.5% range on a year-over-year basis."
Current estimates call for Q2 revs of $365.64 mln, -3.1% Q/Q
As a result of the pending transaction with Analog Devices (ADI), the Company will not hold a quarterly earnings conference call.
4:21 pm Yahoo! beats by $0.06, reports revs in-line; guides Q4 revs below consensus (YHOO) :
Reports Q3 (Sep) earnings of $0.20 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $0.14; revenues fell 14.6% year/year to $857 mln vs the $860.82 mln Capital IQ Consensus.Q3 Maven (Mobile, Video, Native and Social)
Revenue +24% y/y; Q2 +26% y/y
Q3 Mobile revenue represented 32% y/y of traffic-driven revenue; Q2 +46% y/y
Q1 Search Revenue:
Gross search revenue -14% y/y; Q2 -13% y/y
Number of Paid Clicks -22% y/y; Q2 -22% y/y
Price-per-Click +9% y/y; Q1 +8% y/y Q1
Display Revenue:
GAAP display revenue -7% y/y; Q2 -7% y/y
Number of Ads Sold -5% y/y; Q2 +9% y/y
Price-per-Ad +1% y/y; Q2 -15% y/yCo issues downside guidance for Q4, sees Q4 revs of $880-920 vs. $939.30 mln Capital IQ Consensus Estimate; ; Adjusted EBITDA in the range of $260-300 mln.Tightens FY16 revenue guidance to $3.440-3.480 bln ex tac (Prior$3.4-3.6 bln); Raises adjusted EBITDA to $810-850 mln (Prior adj. EBITDA $700-800 mln).
4:12 pm Intel beats Q3 estimates after raising revenue, gross margin guidance on Sept 16; guides Q4 revs in-line, gross margin lower Q/Q at midpoint (INTC) :
Reports Q3 (Sep) earnings of $0.80 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus of $0.72; revenues rose 9.1% year/year to $15.78 bln vs the $15.61 bln Capital IQ Consensus; adj. gross margin 64.8%. GAAP EPS $0.69 vs. $0.67 consensus.
On September 16, co raised Q3 rev guidance to $15.3-15.9 bln from $14.4-15.4 bln; raised non-GAAP gross margin to 63% from 62%.
Q3 results by segment:
Client Computing Group revenue of $8.9 bln, up 21 percent sequentially and up 5 percent yearover-year
Data Center Group revenue of $4.5 bln, up 13 percent sequentially and up 10 percent yearover-year
Internet of Things Group revenue of $689 mln, up 20 percent sequentially and up 19% Y/Y
Non-Volatile Memory Solutions Group revenue of $649 mln, up 17 percent sequentially and down 1% Y/Y
Intel Security Group revenue of $537 mln, flat sequentially and up 6% Y/Y
Programmable Solutions Group revenue of $425 mln, down 9 percent sequentially
Co issues in-line guidance for Q4, sees Q4 revs of $15.2-16.2 bln vs. $15.88 bln Capital IQ Consensus; gross margin 63% +/- a couple percent. This revenue forecast is lower than the average seasonal increase for the fourth quarter.
4:09 pm Cree misses by $0.01, reports revs in-line; guides Q2 EPS below consensus, revs below consensus (numbers excluding sale of WolfSpeed) (CREE) :
Reports Q1 (Sep) earnings of $0.09 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus of $0.10; revenues fell 15.8% year/year to $321.3 mln vs the $322.77 mln Capital IQ Consensus. Co issues downside guidance for Q2, sees EPS of $0.04-0.10 vs. $0.13 Capital IQ Consensus Estimate; sees Q2 revs of $310-330 mln vs. $336.73 mln Capital IQ Consensus Estimate. Gross margin from continuing operations increased from 26.4% in Q4 of fiscal 2016 to 26.9% on a GAAP basis and decreased from 28.2% to 27.7% on a non-GAAP basis.Wolfspeed Sale Update: As previously announced, Cree reached an agreement to sell the Wolfspeed business to Infineon Technologies (IFNNY). The parties are continuing to work together to obtain the customarily required regulatory approvals in various jurisdictions, including foreign and domestic antitrust approvals, as well as CFIUS approval. The parties received a second request for additional information from the United States Federal Trade Commission in late September. Cree and Infineon continue to target closing the transaction around the end of calendar 2016.
4:15 pm : The stock market ended the Tuesday affair on a higher note as positive quarterly results from Netflix (NFLX 118.79, +18.99) and a few other bellwethers stoked risk appetite in the broader market. The tech-heavy Nasdaq (+0.9%) finished ahead of both the S&P 500 (+0.6%) and the Dow Jones Industrial Average (+0.4%).
The third-quarter earnings reporting season picked up in earnest this morning as participants pored over reports from the likes of Netflix (NFLX 118.79, +18.99), UnitedHealth (UNH 143.39, +9.26), Goldman Sachs (GS 172.63, +3.63), IBM (IBM 150.72, -4.05) and Johnson & Johnson (JNJ 115.41, -3.08). All five names topped bottom-line estimates for the quarter, but the results were met with mixed reactions.
A positive bias in global markets and some mixed inflation data also contributed to today's upbeat demeanor.
European markets outperformed on the heels of an above-consensus inflation reading out of the UK. The UK's September Consumer Price Index (CPI) increased to a two-year high of 1.0% year-over-year (expected: +0.9%). However, CPI data from the US came in slightly mixed relative to consensus estimates. Total CPI rose 0.3% in September (Briefing.com consensus +0.3%) while core CPI, which excludes food and energy, rose by 0.1% (Briefing.com consensus +0.2%).
The latest domestic inflation data led to some minute adjustments to U.S. rate hike expectations, but they were largely walked back by the end of the day. The response was fairly muted as participants assessed progress towards the Fed's long-run inflation target of 2.0%. Total CPI and core CPI are up a respective 1.5% and 2.2% year-over-year.
The Tuesday advance lost some steam in the final hour as the S&P 500 (+0.6%) narrowed its gain into the close.
All eleven S&P 500 sectors finished in the green with health care (+1.1%), materials (+0.9%), utilities (+0.8%), financials (+0.8%), and technology (+0.7%) leading the pack.
The health care space (+1.1%) paced the advance as managed health names drafted higher alongside Dow component UnitedHealth (UNH 143.39, +9.26). The stock finished atop the price-weighted average after beating analysts' estimates for the quarter and issuing above consensus full-year guidance. Conversely, Johnson & Johnson (JNJ 115.41, -3.08) declined by 2.6% despite beating bottom-line estimates for the quarter.
Biotechnology names finished slightly ahead of the broader health care sector as the iShares Nasdaq Biotechnology ETF (IBB 269.43, +3.71) gained 1.4%, The ETF narrowed its October loss to 6.9%.
In the consumer discretionary space (+0.6%), Netflix (NFLX 118.79, +18.99) spiked 19.0% after handily beating earnings and net subscriber growth estimates.
Fellow F.A.N.G. members gained following the upbeat report as Facebook (FB 128.57, +1.03), Amazon (AMZN 817.65, +4.70), and Alphabet (GOOG 795.26, +15.30) advanced between 0.6% and 2.0%.
The influential technology sector (+0.7%) finished slightly ahead of the broader market as chipmakers outperformed. Intel (INTC 37.75, +0.46) gained 1.2% ahead of this evening's quarterly earnings report. On the flipside, IBM (IBM 150.72, -4.05) lost 2.6% despite beating estimates.
Treasuries finished on a higher note as yields pulled back across the curve. The yield on the 2-yr note declined one basis point to 0.81% while the yield on the benchmark 10-yr note settled lower by two basis points (1.74%).
Today's trading volume fell below the average of 858 million as 742 million shares changed hands at the NYSE floor.
Today's economic data included the CPI Report for September and the NAHB Housing Market Index for October:
The all items index was up 0.3% in September, which was in-line with expectations, while the all items index, excluding food and energy, was up 0.1% (Briefing.com consensus +0.2%).
The NAHB Housing Market Index for October came in at 63 (Briefing.com consensus 59.0) from an unrevised 65 in September.
Tomorrow's economic data will include the 7:00 ET release of the the weekly MBA Mortgage Index. Separably, Housing Starts (Briefing.com consensus 1168k) and Building Permits (Briefing.com consensus 1164k) for September will each cross the wires at 8:30 ET. The day's data will be capped off with the release of the Fed's Beige Book for October at 14:00 ET.
Russell 2000: +7.2% YTD
Nasdaq Composite: +4.7% YTD
S&P 500: +4.7% YTD
Dow Jones: +4.2% YTD
DJ30 +75.54 NASDAQ +44.01 SP500 +13.10 NASDAQ Adv/Vol/Dec 1812/1.331 bln/1000 NYSE Adv/Vol/Dec 2284/722.9 mln/707 3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, were +0.2% around the 86.55 level
Crude oil reclaimed the $50.00/barrel level, closed near multi-month highs, snapped its 2-session loss streak ahead of tonight's API data
November crude oil futures rose $0.32 (+0.6%) to $50.29/barrel
The next OPEC meeting will take place in Vienna, Austria on November 30.
Baker Hughes rig count data will be released this Friday at 1 pm ET.
Weekly EIA petroleum inventory data will be released tomorrow at 10:30 am ET.
Chinese import/export data will be released this Friday.
Natural gas snapped its 2-session loss streak, closed near session highs ahead of Thursday's inventory number
November natural gas closed $0.02 higher (+0.6%) at $3.26/MMBtu
Weekly EIA natural gas data will be released Thursday at 10:30 am ET
In precious metals, gold & silver ended modestly higher after 2 previous sessions of nearly directionless trading
December gold ended today's session up $0.80 (+0.1%) to $1256.50/oz
December silver closed today's session $0.01 higher (+0.1%) at $17.47/oz
The broader market closed Tuesday higher, yet lost steam into the bell. Trading in the Nasdaq Composite led the three major US indices with gains of 44.01 points (+0.85%) to 5243.84. The S&P 500 was next, higher by 13.10 points (+0.62%) to 2139.60, and the Dow Jones Industrial Average shaved about 64 points off the highs of the day when the session ended, albeit still closing out the day higher by 75.54 points (+0.42%) to 18161.94.
The stock market ended the Tuesday affair on a higher note as positive quarterly results from Netflix (NFLX 118.79, +18.99 +19.03%) and a few other bellwethers stoked risk appetite in the broader market.
A positive bias in global markets and some mixed inflation data also contributed to today's upbeat demeanor.
European markets outperformed on the heels of an above-consensus inflation reading out of the UK. The UK's September Consumer Price Index (CPI) increased to a two-year high of 1.0% year-over-year. However, CPI data from the US came in slightly mixed relative to consensus estimates. Total CPI rose 0.3% in September while core CPI, which excludes food and energy, rose by 0.1%.
The latest domestic inflation data led to some minute adjustments to U.S. rate hike expectations, but they were largely walked back by the end of the day. The response was fairly muted as participants assessed progress towards the Fed's long-run inflation target of 2.0%. Total CPI and core CPI are up a respective 1.5% and 2.2% year-over-year.
Market data today included the all items index which was up 0.3% in September, while the all items index, excluding food and energy was up 0.1%. Also, the NAHB Housing Market Index for October came in at 63 from an unrevised 65 in September.
All 12 S&P sectors were in the green today with Technology (XLK 47.53, +0.26 +0.55%) about middle of the pack as the index ultimately finished higher but limped into the close on modest volume. Component IBM (IBM 150.72, -4.05 -2.62%) was the worst performer today following last night's quarterly results. Other S&P sectors finished Tuesday XLV +1.20% XLB +0.91% XLU +0.85% XLF +0.83% XLFS +0.82% IYZ +0.73% XLY +0.64% XLRE +0.51% XLE +0.40% XLP +0.31% XLI +0.21% with Healthcare and Materials leading the positive bias.
In the S&P 500 Information Technology (799.08, +5.18 +0.65%) sector, trading finished firmly in the green yet lost steam into the bell. Component Intel (INTC 37.75, +0.46 +1.23%) was modestly higher today ahead of earnings as the shares were upgraded in the pre-market session to an Overweight rating from an Equal Weight at Barclays. Also worth noting today, shares of GOOG (801.61) and GOOGL (828.81) both made fresh all-time highs, but ended modestly down off those highs though as the broader sector tailed off into the bell. Other names in the space which out-performed today included TSS +2.77%, CTXS +2.59%, MU +2.47%, ADS +2.24%, EA +2.05%, GOOG +1.96%, AVGO +1.95%, JNPR +1.87%, ADSK +1.86%, GOOGL +1.82%, QRVO +1.79%.
Other notable news items among sector components:
Visa (V 81.58, -0.57 -0.69%) announced that Charlie Scharf is resigning as CEO effective December 1, 2016, and the board of directors has unanimously voted to appoint Alfred Kelly, Jr. as his successor. Mr. Kelly, a current Visa board member, is the president and CEO of Intersection Co. and the former president of American Express (AXP 60.08, +0.18 +0.30%).
Qualcomm (QCOM 66.10, +0.91 +1.40%) announced that its subsidiary, Qualcomm Technologies, Inc., has worked closely with Telstra (TLSYY 19.30, +0.12 +0.63%), Ericsson (ERIC 5.47, +0.04 +0.74%) and
NETGEAR (NTGR 52.70, +0.35 +0.67%) on the world's first Gigabit Class LTE mobile device, and the first Gigabit Class LTE commercially ready network.
Qualcomm (QCOM) announced that its subsidiary, Qualcomm Technologies, Inc., introduced three new Qualcomm Snapdragon processors.
QuickBooks Online will be one of the first small business platforms enabling merchants to get paid quickly and easily on outstanding invoices via newly launched Apple (AAPL 117.47, -0.08 -0.07%) Pay on the web, Intuit (INTU 107.15, +0.27 +0.25%) announced.
CBS (CBS 55.10, -0.29 -0.52%) has ordered CANDY CRUSH, a new one-hour, live action game show series based on the globally renowned mobile game franchise. CBS, Lionsgate (LGF 18.72, +0.14 +0.75%) and Activision Blizzard's (ATVI 44.17, +0.64 +1.47%) King will join together on the new format created and executive produced by Matt Kunitz that will be distributed domestically by CBS Television Distribution and internationally by LGF.
Broadcom (AVGO 172.17, +3.29 +1.95%) announced a new 4x4 802.11ac Wave2 solution which enables significantly better range performance in addition to video over Wi-Fi acceleration capability.
Texas Instruments (TXN 69.25, +0.83 +1.21%) introduced the dual-port quad deserializer hub that is compliant with the MIPI Camera Serial Interface 2 (CSI-2) specification.
Microsoft (MSFT 57.66, +0.44 +0.77%) announced an expanded partnership with SAP (SAP 87.66, +1.31 +1.52%) to provide public cloud services for the SAP SuccessFactors HCM Suite. SAP will make its cloud-based human capital management solutions available on Microsoft Azure over the next five years.
IBM Watson Health (IBM 150.72, -4.05 -2.62%) and Quest Diagnostics (DGX 83.70, +0.66 +0.79%) announced the launch of IBM Watson Genomics from Quest Diagnostics, a service that helps advance precision medicine by combining cognitive computing with genomic tumor sequencing.
Elsewhere in the tech space:
According to Bloomberg, Verizon (VZ 50.27, -0.16 -0.32%) is getting anxious about Yahoo! (YHOO 41.68, -0.11 -0.26%) data breach as it relates to the acquisition.
Sprint (S 6.86, -0.06 -0.87%) sees Q2 operating revenues of $8.25 billion, worse than market expectations. Sees a net loss of $142 million in the quarter compared to a net loss of $585 million a year ago. Sees adjusted EBITDA of $2.35 billion compared to $2.01 billion last year. Expects total platform net additions of 740,000 on postpaid net adds of 344,000 and prepaid net losses of 427,000 with wholesale and affiliate net adds of 823,000. Lastly, S sees platform postpaid churn of 1.52%, up two basis points versus last year on postpaid phone churn of 1.37%.
Vivint Solar (VSLR 3.15, flat) named Chance Allred as chief sales officer, Paul Dickson as chief revenue officer and Bryan Christiansen as chief operations officer.
MakeMyTrip (MMYT 29.45, +9.05 +44.36%) and Naspers' (NPSNY 16.38, +0.26 +1.62%) ibibo Group agreed to combine their Indian travel businesses. Upon closing of the transaction, MMYT will own 100% of ibibo Group. Naspers and Tencent (TCEHY 27.32, +0.36 +1.34%) will become the single largest shareholder in MMYT, owning a 40% stake, and will contribute proportionate working capital upon closing.
Shenandoah Telecom (SHEN 26.55, +0.95 +3.71%) increased its annual dividend to $0.25 per share from $0.24 per share.
In reaction to quarterly results:
IBM (IBM) reported better than expected Q3 EPS of $3.29 on better than expected revenues of $19.23 billion. Further, management reaffirmed their outlook for FY16 EPS of 'at least $13.50.'
Netflix (NFLX) reported better than expected Q3 EPS of $0.12 on revenues which rose 31.7% compared to last year to $2.29 billion. Also in Q3, NFLX reported better than expected domestic net adds of 0.370 million and international net adds of 3.20 million. For Q4, NFLX sees domestic net adds of 1.45 million on international net adds of 3.75 million. Lastly, for Q4, NFLX sees better than expected EPS of $0.13.
Companies scheduled to report tonight/tomorrow morning: ADNT, CREE, INTC, LLTC, MANH, YHOO/APH, ASML, STX
Analyst actions:
INTC was upgraded to Overweight from Equal Weight at Barclays;
YHOO was downgraded to Hold from Buy at Needham,
CY was downgraded to Equal Weight from Overweight at Barclays;
CRTO was initiated with a Buy at Berenberg,
APTI was initiated at Goldman, Jefferies, Barclays, RBC Capital Mkts, JP Morgan, BofA/Merrill, and Pacific Crest,
GSUM was initiated at Goldman and Stifel,
LVLT was initiated with an Overweight at Barclays,
PSTG was initiated with a Neutral at JP Morgan,
NTNX was initiated with a Mkt Outperform at JMP Securities,
SYNC was initiated with a Buy at Ladenburg Thalmann,
CRM was initiated with a Buy at Rosenblatt
From Briefing.com: 4:15 pm : The major averages began the week on a modestly lower note as participants preferred a risk-off approach ahead of key economic data and a barrage of corporate earnings reports. The Dow Jones Industrial Average (-0.3%) settled in-line with the S&P 500 (-0.3%) and the Nasdaq Composite (-0.3%). Equity indices and U.S. Treasury yields ticked lower at the beginning of the week as below-consensus economic data and a mixed set of corporate earnings came into focus. Treasuries were in demand following worse than expected readings of the Empire Manufacturing Survey for October and the Industrial Production/Capacity Utilization Report for September.
Treasuries continued inching higher throughout the session, leading to a flattening in the yield curve. The yield on the 2-yr note settled lower by two basis points (0.82%) while the yield on the benchmark 10-yr note finished lower by four basis points (1.77%). The yield spread between the 2-yr and 10-yr narrowed to 95 basis points after finishing last week at 97 basis points.
The downturn in yields offered support to beleaguered "yield play" sectors -- utilities (+0.6%), telecom services (+0.2%), and real estate (+0.1%) -- but also weighed on the heavily-weighted financial group (-0.4%).
Headwinds from a flattening yield curve and weaker-than-expected economic data masked above-consensus results from Charles Schwab (SCHW 31.69, -0.28) and Bank of America (BAC 16.05, +0.05). Meanwhile, Dow component Goldman Sachs (GS 169.00, -1.52) finished behind the price-weighted average ahead of tomorrow morning's quarterly report.
Seven sectors ended in the red with consumer discretionary (-0.8%), energy (-0.4%), consumer staples (-0.4%), and financials (-0.4%) acting as the largest laggards.
In the consumer discretionary space (-0.8%), restaurant names underperformed as Chipotle Mexican Grill (CMG 394.35, -9.79) declined by 2.4%. The stock was under pressure after having its price target lowered to $372 from $405 at Nomura. Meanwhile, Netflix (NFLX 99.80, -1.67) fell 1.7% ahead of this evening's quarterly report. Fellow F.A.N.G. member Amazon (AMZN 812.97, -9.99) also weighed despite receiving a price target increase at Credit Suisse.
The Dow Jones Transportation Average (-0.4%) finished behind the broader market as J.B. Hunt Transport Services (JBHT 78.45, -1.57) displayed relative weakness. The stock fell 2.0% after missing bottom-line estimates for the quarter. Meanwhile, United Continental (UAL 53.03, -0.17) ended lower by 0.3% ahead of this evening's quarterly report.
Health care plan providers underperformed in the health care space (-0.2%) as Anthem (ANTM 118.28, -2.81) fell 2.3%. The stock was downgraded to "Neutral" from "Overweight" at JP Morgan. Biotechnology finished ahead of the broader market, but the iShares Nasdaq Biotechnology ETF (IBB 265.72, -0.36) extended its monthly loss to 8.1%
Today's trading volume fell below the recent average of 859 million as 693 million shares changed hands at the NYSE floor.
Today's economic data included October Empire Manufacturing and the Industrial Production and Capacity Utilization Report for September:
Industrial production increased just 0.1% in September (Briefing.com consensus +0.2%) after declining a downwardly revised 0.5% (from -0.4%) in August.
The capacity utilization rate increased to 75.4% (Briefing.com consensus 75.6%) from a downwardly revised 75.3% (from 75.5%).
The Empire State Manufacturing Survey fell to -6.8 in October (Briefing.com consensus +2.0) from -2.0 in September.
Tomorrow's economic data will include CPI for September (Briefing.com consensus 0.3%) and the NAHB Housing Market Index for October (Briefing.com consensus 59.0), which will cross the wires at 8:30 ET and 10:00 ET, respectively. The day's data will be capped off with the 16:00 ET release of Net Long-Term TIC Flows for August.
Russell 2000: +6.6% YTS
S&P 500: +4.0% YTD
Nasdaq Composite : +3.8% YTD
Dow Jones: +3.8% YTD
DJ30 -51.98 NASDAQ -14.34 SP500 -6.48 NASDAQ Adv/Vol/Dec 1136/1.297 bln/1688 NYSE Adv/Vol/Dec 1188/688.9 mln/1772 3:30 pm :
The dollar index turned negative after a brief re-test of Friday's 7-month high, was -0.2% around the 97.87 level
Commodities, as measured by the Bloomberg Commodity Index, were nearly flat, around the 86.39 level
Crude oil extended Friday's post-rig count slide, ended just shy of $50.00/barrel support ahead of tomorrow's API data
November crude oil futures fell $0.35 (-0.7%) to $49.97/barrel
Reminder: Friday's Baker Hughes rig count data showed that the US oil rig count increased by 4 to 432 rigs, marking the 16th consecutive week the oil rig count has increased.
Data reminders:
Baker Hughes will report weekly rig count data this Friday at 1 pm ET.
The next OPEC meeting will take place in Vienna, Austria on November 30.
Chinese customs is expected to report oil imports & exports from China for September this Friday.
Weekly EIA petroleum data will be released Wed at 10:30 am ET.
API data will be released tomorrow after the bell.
Natural gas doubled Friday's losses, ended near session highs after staging a modest mid-afternoon rally off the $3.21/MMBtu level
November natural gas closed $0.05 lower (-1.5%) at $3.24/MMBtu
Weekly EIA natural gas data will be released Thursday at 10:30 am ET
In precious metals, gold & silver ended nearly flat for the second consecutive session, as the dollar index reversed initial morning gains
December gold ended today's session up $0.80 (+0.1%) to $1256.50/oz
December silver closed today's session $0.01 higher (+0.1%) at $17.47/oz
On very light volume, the broader market turned lower after Friday's modestly higher affair. Leading the way to the downside today, the S&P 500 shed 6.48 points (-0.30%) to 2126.50. The Dow Jones Industrial Average lost 51.98 points (-0.29%) to 18086.40, and the tech-heavy Nasdaq Composite was down 14.34 points (-0.27%) to 5199.82. Heavily weighted S&P components AMZN -1.22%, HD -1.01%, MRK -1.00%, PG -0.68%, JPM -0.52%, PFE -0.49%, WFC -0.47%, V -0.36%, MSFT -0.35% held the index lower today. Today on the NYSE floor, abut 688.9 million shares were exchanged versus an average near 839.8 million. On the NASDAQ floor, about 1,297.4 million shares traded hands compared to an average near 1,589.9 million.
Equity indices and U.S. Treasury yields ticked lower at the beginning of the week as below-consensus economic data and a mixed set of corporate earnings came into focus. Treasuries were in demand following worse than expected readings of the Empire Manufacturing Survey for October and the Industrial Production/Capacity Utilization Report for September.
Treasuries continued inching higher throughout the session, leading to a flattening in the yield curve. The yield on the 2-yr note settled lower by two basis points (0.82%) while the yield on the benchmark 10-yr note finished lower by four basis points (1.77%). The yield spread between the 2-yr and 10-yr narrowed to 95 basis points after finishing last week at 97 basis points.
In terms of economic data announced today, industrial production was up only 0.1% in September after declining a downwardly revised 0.5% (from -0.4%) in August. Also, the capacity utilization rate was up to 75.4% from a downwardly revised 75.3% (from 75.5%). Lastly, the Empire State Manufacturing Survey fell to -6.8 in October from -2.0 in September.
Ending the session near lows, the Technology (XLK 47.27, -0.10 -0.21%) sector was only positive for a brief moment in morning action and tailed off as the session progressed. Component Broadcom (AVGO 168.88, -1.21 -0.71%) was lower today following news out this morning that CFO Anthony Maslowski's employment with AVGO was terminated on October 14; succeeding Maslowski, Thomas Krause became CFO effective October 17. Other sectors as measured by the S&P closed Monday XLY -0.82%, XLFS -0.72%, XLE -0.49%, XLP -0.48%, XLF -0.41%, XLV -0.30%, IYZ -0.25%, XLI -0.24%,XLB +0.09%, XLRE +0.10%, XLU +0.54%.
In the S&P 500 Information Technology (793.90, -2.17 -0.27%) sector, trading finished just off lows. Component IBM (IBM 154.77, +0.32 +0.21%) traded higher into its quarterly print. Other names in the space which ended lower with the sector included HPQ -3.11%, WDC -3.03%, CRM -1.94%, ADS -1.58%, JNPR -1.41%, WU -1.39%, RHT -1.31%, HPE -1.21%, SWKS -1.20%, ACN -1.18%, CSRA -1.15%, FLIR -1.02%.
Other notable news items among sector components:
According to Apple Insider, Apple (AAPL) plans to move $9 billion of iTunes intellectual property to Ireland.
Qualcomm (QCOM) filed actions against Meizu in the United States, Germany and France.
Xilinx (XLNX) announced that Baidu (BIDU) is utilizing Xilinx FPGAs to accelerate machine learning applications in their data centers in China. The two companies are collaborating to further expand volume deployment of FPGA-based accelerated platforms.
Accenture (ACN) has been chosen by Hess (HES) to help realize its As-a-Service vision that is part of the Hess IT transformation strategy.
Following a report from Fortune, shares of Netflix (NFLX) were weak as it was rumored that French lawmakers may support a tax on streaming videos.
Qualcomm's (QCOM) Qualcomm Technologies, Inc., successfully made the world's first over-the-air connection via MulteFire using listen-before-talk (LBT). As part of the test, QCOM demonstrated that
MulteFire can provide LTE-like performance while fairly co-existing with Wi-Fi on the same 5 GHz channel in unlicensed spectrum.
Broadcom's (AVGO) CFO and SVP, Anthony Maslowski's, employment with AVGO was terminated effective October 14, 2016. To that end, the company has appointed Thomas Krause as CFO and VP effective October 17, 2016.
Broadcom (AVGO) introduced the industry's first commercially-available PON OLT devices with support for the recently ratified ITU G.9807.1 XGS-PON and G.989 NGPON-2 protocols.
Hewlett Packard Enterprise (HPE) introduced the HPE Adaptive Backup and Recovery Suite, an integrated suite that uses operational and file analytics to automate and streamline data protection.
Cisco Systems (CSCO) announced the acquisition of Worklife. Financial terms of the deal were not disclosed.
eBay (EBAY) launched eBay Collective, an elevated shopping experience to provide interior designers and consumers with curated inventory of furniture, antiques, contemporary design and fine art.
Elsewhere in the tech space:
In addition to reporting quarterly results, Rogers Comms (RCI) announced the departure of CEO Guy Laurence. Laurence will eventually be replaced by Joseph Natale, but RCI plans to have current Chairman of the Board, Alan Horn, serve in an interim capacity as President and CEO until Natale is able to join RCI.
According to Reuters, Mentor Graphics (MENT) hired an advisor to explore strategic alternatives.
Tesla Motors (TSLA) and Panasonic (PCRFY) to collaborate on photovoltaic cell and module production in Buffalo, New York. Also, TSLA's Elon Musk postponed a Tesla announcement to Wednesday from today, commented it needs a few more days of refinement.
According to reports out during the weekend, Take-Two's (TTWO) Rockstar Games arm teased a possible Red Dead Redemption sequel.
In reaction to quarterly results:
Rogers Comms (RCI) reported worse than expected adjusted EPS of CAD$0.83 on revenues which were ahead of expectations and grew 3.2% compared to last year to CAD$3.49 billion.
Analyst actions:
AMD was upgraded to Perform from Underperform at Oppenheimer,
GRPN was upgraded to Outperform from Neutral at Wedbush,
QLYS was upgraded to Buy from Neutral at DA Davidson;
LLTC was downgraded to Perform from Outperform at Oppenheimer,
P was downgraded to Underperform from Neutral at BofA/Merrill,
DHX was downgraded to Market Perform from Outperform at Avondale;
TTD was initiated at RBC Capital Mkts, Citigroup, Jefferies, Needham, and Raymond James,
TNAV was initiated with an Outperform at FBR & Co.,
ELNK was initiated with an Outperform at Cowen,
CNSL was initiated with a Market Perform at Cowen,
PAY was initiated with a Buy at Craig Hallum,
SHOP was initiated with a Neutral at Dundee,
HCKT was initiated with an Outperform at Barrington Research,
ASUR was initiated with a Buy at Lake Steet
InvestmentHouse Weekend Market Analysis:
http://www.investmenthouse.com/frblog.php
- Chinese data this time tries to help the market.
- Did the Friends of Janet try to save the market from losses ahead of the
election?
- Budget deficit soars explodes despite record taxes.
- Atlanta Fed takes down Q3 GDP yet again.
- Does the Fed really think anyone believes it?
- Volatility strikes back, leaves the indices technically bearish overall,
though in this market they could bounce near term first. Of course, then
there is the Fed.
Did the friends of Janet just stick save the market again?
It was a week that returned to old themes, one being China. Another is
volatility with day to day and intraday tennis match swings. Another is Fed
action in times of market stress. Not market crisis, but simple market
stress. The economy is, after all, recovering right? After all, the
Atlanta Fed just reduced its Q3 GDP to half its original estimate. It would
be very untoward just ahead of a presidential election if stocks rolled over
and tumbled, belying the purported economic prosperity that everyone talks
about but very few feel. All three were at work during the week, and the
market action suggests they are not done.
On Thursday China reported exports fell 10%. Stocks fell hard, but just as
several indices breached the early September lows hit on that sharp plunge,
they reversed. No positive close but they went a long way in cutting the
losses.
Friday there was more Chinese economic news but this time it was viewed as a
positive. Its PPI rose (0.1% versus -0.3% expected) for the first time
since March 2012 and helped bolster stocks and continue the Thursday
rebound. September retail sales snapped back to 0.6% from -0.2% in August,
adding to the upside impetus.
Stocks started higher but unfortunately hit their high at 10:20ET. That put
NASDAQ at its 50 day SMA, SP500, RUTX and DJ30 at their 50 day EMA, and SOX
and SP400 at their 10 day EMA. In short, they bounced, but bounced right
into resistance. And, resistance held. A sharp drop to midday ensued, and
then the indices range traded into the close.
SP500 0.43, 0.02%
NASDAQ 0.83, 0.02%
DJ30 39.44, 0.22%
SP400 0.01%
RUTX -0.27%
SOX 0.79%
VOLUME: NYSE -8%, NASDAQ -9%. Trade at least faded on the reversal, but it
is because of a lack of volume that helped the reversal along given the
early buying was not strong. Thus trade faded farther below average.
A/D: NYSE flat, NASDAQ flat.
The chart action on the week is bearish. The big Tuesday drop, the pause,
then the Thursday gap and selloff. The rebound was modestly encouraging as
it looked as if the Fed stepped in on SP500 and company and bought the dip,
driving those indices back up inside the early September lows hit on that
massive plunge 6 Fridays back.
The Friday action kept the indices above the early September low but that is
about all it did. The indices moved up to tap resistance either from the 50
day EMA or the 10 day EMA and then reversed to give up nearly all the
session gains. Indeed, RUTX did give up its gains and closed lower.
So, in a nutshell, after a quiet period where volatility died down and the
NYSE indices looked as if they might try to follow NASDAQ and SOX' strength,
the big V returned with gusto this week. A new selloff to new lows on this
pullback for some of the indices, followed by a bounce that looks all but
dead and over with.
That reopens the downside door and again leaves you asking the question,
will the Fed try to stop any selling given the election is less than a month
away? I am inclined to answer that 'yes.' It likely tried it on Thursday
as the indices rolled over to undercut the September low. Will the Fed be
successful? In the short run the Fed can pull that off. It did so in
February and pushed a very solid rebound. Friday Yellen was more dovish,
"steering to the left of the Minutes" as a JPM analyst described it,
indicating that she, of course, will take actions she deems necessary. So,
it appears she will try, but will she overcome the market's bearish
patterns.
NEWS/ECONOMY
Budget Deficit soars even as tax receipts hit a record.
Spending rose 5% to 3.9T as the US borrows $0.15 of every dollar spent.
For fiscal year 2016 the US government's budget deficit surged 34% to $587B.
As a percentage of GDP the deficit climbed to 3.2% from 2.5% the prior year.
Tax receipts hit a record of $3.27T, yet our deficit surges.
As is often stated, there is no revenue problem, there is a spending
problem. Despite raising taxes and taking in more taxes from higher and
newer taxes, the deficit grows. Economists always say you cannot tax your
way out of the kind of deficit the US runs, and this past year provides a
textbook example of that.
Q3 GDP estimates are slashed further. Who would have thought?
Friday the Atlanta Fed, after a rosy 3.8% projection for Q3 initially, made
yet another cut to that forecast. 3%, 2.6%, now just 1.9%. As the data
comes in, the numbers shrink. We have seen this movie too many times, the
one where hope springs eternal that things will get better in the second
half, that the economy is just about to take off. Then, nothing. The same
old stumbling, bumbling economy.
So, here's to a 1.4% 2016 GDP if Q4 can come in with the 1.6% currently
forecast and if the 1.9% Q3 revision is not revised even lower.
Lines of BS Part 2
As noted Thursday, you cannot watch news today and come away with any
semblance of the truth. I am not talking about the reporters per se, though
their inability to grasp the concepts and ask germane, meaningful questions
exposes the failures of journalism schools in addition to the viewpoints
where they work. Today I am talking about the guest experts on television
or the radio, invited to share their wisdom with all of us. They appear on
these stations with their titles, they spout their viewpoints and talking
points, then they leave their short segment, unchallenged as to what was
just stated.
A real time example: Another Federal Reserve bank president interview
Fed bank president Harker appeared on Fox Business Thursday morning to give
his take on rates and the economy. Mr. Harker was asked about the jobs
market and how some aspects looked promising, but others such as
participation rates, were not. As a reminder, the participation rate as
defined by the BLS is the percentage of the civilian non-institutional (i.e.
no prisoners) population aged 16 or over in the labor force (working or
actively seeking work). The participation rate in September stood at 62.9%,
just off lows hit back in the early 1970's and those wonderful economic
times. At that percentage, that tells you 94.1M working age US citizens not
only out of work, but out of the workforce.
Harker confidently stated that the participation rate was low and was going
to stay low for one simple reason: baby boomers are retiring. That is it.
That is his explanation.
Here is the problem with that, and a problem we have with just about all
conclusions the Fed reaches: it is direct conflict with the data that the
BLS compiles.
The participation rate tumbled at the time of the financial crisis from 66.4
to 62.4 in late 2015. There was no mass retirement at the time of the
financial crisis. People simply lost their jobs and could not find jobs to
replace them. As the 'recovery' progressed, they were able to find work,
but many work part time at more than one job or work 'full time' at a job
that pays far less than they full-time salary earned pre-crisis. Moreover,
per the September BLS jobs report, just 48% of all workers hold a full-time
job right now.
But here is the kicker. As I have reported each month for years, more
months than not have shown that it is the elderly, those 55 and over, who
are taking the bulk of the low wage hourly jobs this economy creates. They
are forced back into work because they simply cannot afford to live with 1)
the Fed holding interest rates near 0%, rendering traditional income
producing assets dead assets, 2) surging costs of healthcare (the ACA), 3)
surging rents, 4) food inflation.
Thus the elderly are not retiring but being forced back into the workforce.
Then why is the participation rate stagnant, and in Harker's words, going to
remain depressed?
Look at the other end of the spectrum. We pay people not to work in the US.
Several studies show that a single, non-working mother with 3 to 4 children
who participates in all federal programs has more disposable income than the
same person working a $70K per year job who pays her taxes and is not
eligible for those same benefits because of her income. Again, we pay
people not work in the US.
It is not because they are lazy or stupid. To the contrary, they are quite
smart, taking advantage of what is offered. Whether conscious or not, they
are making rational economic decisions about their lives. That is why I
always ask this simple question to any politician who comes to me for a
donation: do you believe if you pay someone to do something they will do it,
or if you pay someone not to do something they won't do it? If they cannot
answer a clear 'yes' to that question I know they do not understand
economics and accordingly will not make good decisions under pressure.
Thus, we PAY a large percentage of citizens not to work, to stay out of the
workforce. Oh that doesn't mean they just sit and take benefits. No, they
also work jobs here and there for cash and again, make an economic decision
not to report it. The odds of their being caught are low while the benefits
of tax free money are high. Thus they don't work in the system, participate
in the government benefits, work side jobs for cash, and pay no taxes. Oh
yes, and they are out of the workforce.
The Fed connection
But the Fed is not just talking, it is part of the problem. Capital
investment came up in the interview and Harker said that the businesses he
talked with all say it is the uncertainty of the times that keeps them from
making capital investment.
Sure uncertainty always plays a role. Harker is being disingenuous,
however, in ignoring the Fed's role. The Fed has held interest rates near
0% for over a decade. When there is uncertainty there is less inclination
for businesses to risk capital investment. When you have an alternative,
there is no reason to take on the risk of capital investment.
Large corporations can access cash for virtually no cost in the current
extremely low rate environment. They can then turn around and invest in
guaranteed returns such as bonds. Money for nothing, guaranteed return, no
risk, no brainer. They make money with no risk, can use the money to buy
back stock or block competition from entering their domain, further
increasing profitability. They can take the extra profits and buy back more
stock. They reduce the float, automatically increase earnings per share,
trigger their clauses in their compensation packages, take home great
bounuses.
This is the SAME thing the Wells Fargo management was just hauled in front
of Congress for. The same issues that led to the Wells Fargo CEO to resign
Thursday. The management set up a system that rewarded certain behavior and
to what should have been no one's surprise, the employees acted according to
the way the system was set up. To stand up and proclaim ignorance and
innocence as to what your employees do under the system you set up is
despicable.
For the Fed to arrogantly talk of the causes of the lack of capital
investment in the US and gloss over its effects on the citizenry while
wholly ignoring its primary role in the causation is either the height of
arrogance or the epitome of educational ignorance where theory blurs out all
reality or effects of implementing that theory.
The most shocking aspect of this to me (because I am aware of all of the
other statistics stated) is that the Fed members pontificate on policy and
CONTROL OUR FINANCIAL LIVES, yet base their actions regarding our financial
lives on erroneous assumptions. Thus we have a Fed that thinks the economy
is in recovery because the unemployment rate is low even with 94.1M people
out of the workforce. It isn't retirement that has them out, it is the
incentive to not work, and that incentive is not at the higher ages but at
people in their prime earning years. Is it any wonder, outside of the low
wage hour jobs that now predominate this economy, why average wages are so
low?
THE MARKET
The indices look weak once again from a technical standpoint. From a Fed
stand point . . .
CHARTS
SP500: Gapped upside, rallied through the 10 day EMA and near the 50 day
EMA but then faded the entire move. Still above the early September lows on
that sharp selloff, but on the week SP500 renewed the downside with that
sharp Tuesday fall, and the Thursday reversal and Friday fizzled rally are
not encouraging that technically it can hold up. Then there is the Fed . .
.
DJ30: Gapped and rallied to the 50 day EMA on the high, then reversed to
close at the session low. Held a gain; moral victory because the failure at
resistance shows that what buyers there were early fled the scene. DJ30 is
still in the 5 week lateral range following that sharp drop in early
September, but also a technically weak pattern.
NASDAQ: Gapped upside, moved through the 50 day SMA, then faded almost the
entire move, closing back below the 50 day EMA where it started. Not the
most auspicious rebound from selling though NASDAQ does hold one of its
uptrends from early 2016, and NASDAQ's pattern is not as toppy as the other
two large cap indices. It can hold here and continue as if nothing
happened -- but it has to hold over 5165.
RUTX: Rallied off the Thursday selling, moving up near the 50 day EMA but
never touching it before rolling over and closing at the session low. Still
just over the early September low, pretty much RUTX' last line of defense to
hold the current rally off the June low.
SP400: Gapped and rallied to the 10 day EMA then reversed the move to just
a modest gain. Broke the up trendline from January on Tuesday, posted a
lower low undercutting the early September low, then tried a rebound.
Friday SP400 gapped upside, made that 10 day EMA test, then faded the move.
Still over the September low but quite weak.
SOX: SOX showed a nice doji with tail Thursday as SOX made a full test back
to the 50 day MA's that it has used as support on this move. Friday a gap
higher to at tombstone doji that tapped the 10 day EMA on the high and
faded. SOX is still in a nice uptrend but it will have to show it can hold
what might be another quick test of this level.
LEADERSHIP
Big Names: AAPL gapped to a decent gain. AMZN tried to gap off its 20 day
EMA test but faded the entire move. FB struggled and failed to hold a move
back over the 20 day EMA. NFLX gapped over resistance in a recovery move.
GOOG tried higher again, but settled back to the 20 day EMA again on the
close.
Chips: SWKS looks fine testing its 20 day EMA. SLAB is testing its 50 day
MA's. MRVL holding up fine after a quick 50 day EMA test Thursday. AMAT
broke the 50 day MA's on the week. AMD still in a decent recovery. MU
tested the 50 day MA's on the week. Mostly in good enough shape, but
definitely testing.
Industrial equipment: Solid action with CAT bouncing off the 20 day EMA.
CMI is holding the 20 day EMA.
Oil: Still some very good tests, e.g. APA, CRK. Others have run a long way
and may be a bit tired but have not broken, e.g. CWEI, APC. HAL has surged,
needs a breather.
Financial: A mixed bag Friday but decent enough n the week. BAC tested but
held. C surged but purged though its pattern is still fine. TCBI is
holding the 20 day EMA but it is struggling.
Retail: Some downgrades in the sector department stores and that hurt M,
KSS and DDS though JWN fared just fine. BBY faded just a bit of its move.
Apparel makers are still weak, e.g. NKE, LULU. UA is down but is in an
interesting pattern.
Tech: Some of the recent leaders fell on the week, e.g. STX, WDC. MSFT
continues to hang in its lateral range as does VMW.
MARKET STATS
NASDAQ
Stats: +0.83 points (+0.02%) to close at 5214.16
Volume: 1.573B (-9.11%)
Up Volume: 824.63M (+275.99M)
Down Volume: 737.23M (-372.77M)
A/D and Hi/Lo: Decliners led 1.05 to 1
Previous Session: Decliners led 2.57 to 1
New Highs: 38 (+16)
New Lows: 79 (-20)
S&P
Stats: +0.43 points (+0.02%) to close at 2132.98
NYSE Volume: 808.1M (-7.85%)
A/D and Hi/Lo: Advancers led 1.01 to 1
Previous Session: Decliners led 1.97 to 1
New Highs: 49 (+13)
New Lows: 22 (-20)
DJ30
Stats: +39.44 points (+0.22%) to close at 18138.38
SENTIMENT INDICATORS
VIX: 16.12; -0.57
VXN: 17.4; -0.25
VXO: 15.99; -0.56
Put/Call Ratio (CBOE): 0.94; -0.03
Nineteen 1.0+ Readings in 5 weeks, 15 of the last 26 sessions over 1.0.
Lots of pessimism.
Bulls and Bears: Both bulls and bears slipped a bit. Both are off their
highs and lows respectively, though bulls have lost more ground than bears
have gained.
Bulls: 46.1 versus 46.7
Bears: 23.1 versus 22.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 46.1 versus 46.7
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: 23.1 versus 22.8
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): 1.80% versus 1.746%. After a gap higher off the 200 day
SMA Thursday, TLT gapped sharply lower to a lower low on this selloff.
Bonds have cracked.
Historical: 1.746% versus 1.78% versus 1.723% versus 1.72% versus 1.74%
versus 1.72% versus 1.69% versus 1.622% versus 1.60% versus 1.56% versus
1.569% versus 1.56% versus 1.584% versus 1.62% versus 1.625% versus 1.656%
versus 1.693% versus 1.705% versus 1.698% versus 1.70% versus 1.698% versus
1.718% versus 1.671% versus 1.67% versus 1.61% versus 1.53% versus 1.54%
versus 1.601% versus 1.57% versus 1.58% versus 1.57% versus 1.57% versus
1.62% versus 1.58% versus 1.56% versus 1.54% versus 1.58% versus 1.53%
versus 1.55% versus 1.57% versus 1.558% versus 1.51%
EUR/USD: 1.0966 versus 1.10536. The euro continued its weeklong tumble
from the now failed August/September consolidation, closing in on the June
and July lows.
Historical: 1.10536 versus 1.1032 versus 1.10598 versus 1.1233 versus 1.1183
versus 1.1147 versus 1.12052 versus 1.12091 versus 1.12066 versus 1.1239
versus 1.1218 versus 1.1228 versus 1.2148 versus 1.1254 versus 1.1248 versus
1.12259 versus 1.12061 versus 1.11898 versus 1.1151 versus 1.1177 versus
1.1155 versus 1.12444 versus 1.1245 versus 1.12196 versus 1.12335 versus
1.12318 versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545 versus
1.11943 versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949 versus
1.12894 versus 1.1300 versus 1.13045 versus 1.3254 versus 1.13251
USD/JPY: 104.201 versus 103.634. The dollar continues a trend upside,
breaking through the early September high Friday. Not a huge blast off but a
break of the last recovery high.
Historical: 103.634 versus 103.690 versus 103.698 versus 103.95 versus
103.159 versus 103.984 versus 103.381 versus 102.807 versus 102.035 versus
101.326 versus 101.143 versus 101.322 versus 100.55 versus 100.75 versus
101.034 versus 101.045 versus 100.386 versus 101.714 versus 101.956 versus
102.280 versus 102.086 versus 102.172 versus 102.155 versus 102.814 versus
101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus
101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus
102.160 versus 101.808 versus 100.485 versus 100.306 versus 100.27 versus
100.297 versus 100.21 versus 99.843
Oil: 50.35, -0.09. After surging to the June high early week, oil backed
off, but it appears to be just a test of the rally, holding at the 10 day
EMA Thursday with a nice doji, trading flat Friday. Higher inventories,
higher rig counts could not deter oil's advance.
Gold: 1255.50, -2.10. Gold is still licking its wounds after the massive
drop 2 weeks back. It broke the 200 day SMA and worked laterally just below
that level all week. It may still try to bounce a bit first, but it still
looks bearish. We want to enter GLD or other mining stocks (e.g. ABX) after
a modest bounce in gold prices stalls and starts to roll back over.
MONDAY
Volatility strikes back. After going dormant for more than a week as the
indices narrowed their ranges, suddenly the triple digit intraday moves
erupted again. That failed test of the resistance Monday followed by the
Tuesday sharp drop, and now the market is gyrating in the aftershocks again.
Just aftershocks that will settle down again or was Tuesday simply another
in a series of market quakes that started six Fridays back?
Earnings go full monty the coming week and we start to see just what Q3
really looked like itself and in the macro picture of the profits trend
lower. The start of the season was woeful but Friday looked much better
with a trio of good bank results from JPM, WFC, C. Heck, they should look
good as they are still getting money for nothing. Doesn't everyone wish
they could borrow from the Fed for next to nothing then use the money to buy
guaranteed return assets thus ensuring a profit? You have to ask the
question if they can why can't we? About the only thing the consumer has
going for him is a strengthening dollar. That is nice but thus far it has
not had an impact on rising oil prices, the usual effect of a higher dollar.
But, I digress.
Earnings season will be in full swing and we were wanting a pre-earnings
run. Not exactly a success at this stage. AAPL is more or less going to
plan but the rest of the market is hesitant, and looking at the index
patterns that is no mystery why. DJ30, SP500, SP400, RUTX have the rollover
look, and NASDAQ is not far from that more homely appearance. Can SOX hold
them up? More germane, can the Fed and the friend's of Janet (BOE, ECB)
hold them up? My goodness, man, an election depends upon it! How can the
US citizens decide to do what Wall Street wants them to do if there is
market turmoil? How did we ever get by before there was a Fed?
We picked up some downside positions last week, a few upside, cut some plays
that were problematic, but did not get too heavy into more buying as the
indices fought between themselves as to what trend would take control. As
of Friday that is still an open question though the downside looks stronger
technically, but the upside has SOX and the Fed on its side.
As for this week we are looking at some more upside and downside and still
have to be patient on getting really involved until one trend dominates.
There could be a bounce off of the lows in the range as defined by that
initial September selloff. A rebound back up to the top of the range is
playable, but until something changes, each move has to be viewed as more of
a trade on a bounce versus a new strong run. Moreover, with earnings
cranking up to full speed plays are somewhat truncated anyway.
Thus we here are looking at the new week as one of more downside opportunity
than upside after the late week action, though with this market it may take
a bounce off support back up into the range to set the next downside.
Overall, prognosis negative with the outlier of the Federal reserve and its
band of central banks ready to buy equities.
It is always interesting to hear the explanations for why the market does
one thing or another as if there is one story that catalyzes market moves.
Oh sure sometimes a major story explodes and markets do likewise. Other
times there is no major story so the speculation turns pretty creative. Last
week it was the notion on CNBC that not only did a Clinton win look more
certain but that it might lead to a sweep in the Congress as well. Thus the
market was selling because it wanted gridlock. Of course another financial
station argued that the more likely a Clinton victory appeared, the less
likely a Congressional sweep would occur because those who crossed over to
vote Clinton would still vote republican for the congressional races. It is
no wonder I am reading stories about people suffering from election related
ailments. It is enough to make your head hurt.
The key is going to be which direction DJ30, SP500, SP400 and RUTX take out
of this 6 week lateral move. When they break higher or lower, that is the
move we really get deeply involved with. Until then we make a few trades
with a little bit of money. We can make some great money with them if we
don't try for the long ball. If you do, this up and down action can grind
up your accounts. Just play for singles (to use baseball terminology since
it is the playoffs), take the gain, and be patient as we wait for the
indices to make their definitive break.
It is also fall, so go out and enjoy some of the better weather that most
are experiencing. Washington DC people may do what they can to louse it up,
but why not the rest of us do what we can to keep it at least a nice place
to be by being neighborly, friendly, and helpful. Oh yes, and use what they
are doing in DC to make us money in the market!
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5213.33
Resistance:
The 50 day EMA at 5221
5231.94 is the 2015 all-time high
5271.36 is the August 2016 intraday prior all-time high
5287.61 is the all-time high from September 2016
5340 is the recent all-time closing high.
Support:
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
The 200 day SMA at 4900
4894 is the September 2015 closing high
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
4684 is the May 2016 test low
4637 is the February intraday high
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August
2015 low.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2132.55
Resistance:
2135 is the May 2015 all-time high
The 50 day SMA at 2165
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
2130 is the June 2015 peak
2126 was the April 2015 prior all-time high
2120 is the June 2016 peak
2119 is the 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
The 200 day SMA at 2068
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 18,102.53
Resistance:
18,168 is the April 2016 recovery high
18,247 is the August 2016 low
18,262 is the upper gap point from the Monday gap lower.
18,288 from March 2015
18,351 is the prior all-time high from May 2015
The 50 day SMA at 18,357
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
Support:
18,100 to 18,181: interim peaks in the December 2014 to July 2015 range
18,016 is the June 2016 peak
17,978 is the November 2015 peak
The 200 day SMA at 17,640
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
17,265 is a December 2015 closing low
17,245 is the November 2015 closing low
17,152 is the mid-July 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
ECONOMIC CALENDAR
October 12 - Wednesday
MBA Mortgage Index, 10/08 (7:00): -6.0% actual versus 2.9% prior
JOLTS - Job Openings, August (10:00): 5.443M actual versus 5.831M prior
(revised from 5.871M)
Crude Inventories, 10/08 (10:30): -2.976M prior
Crude Inventories, 10/08 (11:00): -2.976M prior
FOMC Minutes, September 21 (14:00)
October 13 - Thursday
Crude Inventories, 10/08 (12:00): -2.976M prior
Initial Claims, 10/08 (8:30): 246K actual versus 255K expected, 246K prior
(revised from 249K)
Continuing Claims, 10/01 (8:30): 2046K actual versus 2062K prior (revised
from 2058K)
Export Prices ex-ag., September (8:30): 0.4% actual versus -0.6% prior
(revised from -0.4%)
Import Prices ex-oil, September (8:30): 0.0% actual versus -0.1% prior
(revised from 0.0%)
Natural Gas Inventor, 10/08 (10:30): 79 bcf actual versus 80 bcf prior
Crude Inventories, 10/08 (11:00): 4.900M actual versus -2.976M prior
Treasury Budget, September (14:00): $90.9B prior
October 14 - Friday
PPI, September (8:30): 0.2% expected, 0.0% prior
Core PPI, September (8:30): 0.1% expected, 0.1% prior
Retail Sales, September (8:30): 0.6% expected, -0.3% prior
Retail Sales ex-auto, September (8:30): 0.5% expected, -0.1% prior
Business Inventories, August (10:00): 0.1% expected, 0.0% prior
Mich Sentiment, October (10:00): 92.4 expected, 91.2 prior
Leavitt Brothers Weekly Update:
http://www.leavittbrothers.com/pdfs/lb%20weekly%2020161016.pdf
The market remains in range, but beneath the surface, warnings are brewing. If left alone, the market would correct, rest and then figure out what it wants to do next. But we're three weeks from an election, and I don't think the government is going to let it happen.
This puts us in a situation where the market will either have some time to sort out its short comings or bearish pressure will continue to grow, eventually leading to an explosion at a future date.
And if the dollar breaks out, it'll be Katie bar the door. I would not want to be long.
Things are going to get much more interesting in the coming months.
Be conservative. This is not a time to swing for the fences.
Have a great week.
Jason Leavitt
Jason@leavittbrothers.com
Leavitt Brothers Weekly Update:
http://www.leavittbrothers.com/pdfs/lb%20weekly%2020161016.pdf
The market remains in range, but beneath the surface, warnings are brewing. If left alone, the market would correct, rest and then figure out what it wants to do next. But we're three weeks from an election, and I don't think the government is going to let it happen.
This puts us in a situation where the market will either have some time to sort out its short comings or bearish pressure will continue to grow, eventually leading to an explosion at a future date.
And if the dollar breaks out, it'll be Katie bar the door. I would not want to be long.
Things are going to get much more interesting in the coming months.
Be conservative. This is not a time to swing for the fences.
Have a great week.
Jason Leavitt
Jason@leavittbrothers.com
From Briefing.com: Weekly Recap - Week ending 14-Oct-16The month of October has gotten off to a rough start for the stock market. This week produced another losing week for the major indices. The Russell 2000 fared the worst with a 2.0% decline while the Dow Jones Industrial Average fared the best, relatively speaking, with a 0.6% decline. The S&P 500 was down 1.0%.
There was a familiar undercurrent driving things, too, as the losses flowed in the face of a strengthening dollar and rising long-term rates.
The US Dollar Index increased 1.5% this week to 98.09, benefiting mostly at the expense of a weaker euro, a weaker yen, and a weaker British pound. The greenback's strength was partly a function of safe-haven flows and partly a function of interest-rate differentials.
The latter stemmed from ongoing musings from Federal Reserve officials that a rate hike is likely to happen sooner rather than later (i.e. before the end of the year) and a trade balance report out of China that included a 10% year-over-year decline in exports in September.
The release of the minutes from the September 20-21 FOMC did nothing to dispel the rate-hike notion and neither did a batch of economic data out of the U.S. this week that featured the lowest four-week moving average for initial claims since November 3, 1973, reassuring retail sales activity for September, and an improving trend in producer price inflation.
Strikingly, the yield on the 10-yr note climbed six basis points this week to 1.80% and has now risen 20 basis points since the end of September.
The strength in the dollar and the increase in long-term rates had the combined effect of raising earnings concerns for U.S. multinational companies and triggering general valuation concerns for a market trading already with a stretched valuation.
At the same time, it has been regarded as problematic for emerging market economies as a stronger dollar makes it more challenging to repay dollar-denominated debt and higher rates in the U.S. encourage capital flight. The iShares MSCI Emerging Markets ETF (EEM 36.86) fell 2.2% this week.
Other areas that one might have thought would have fallen with the jump in rates did not. Specifically, this week's best-performing sectors were the utilities (+1.3%), real estate (+1.2%), telecom services (+0.7%), and consumer staples (+0.04%) sectors -- all of which have benefited in the past as long-term rates have come down on the basis that they offer more attractive dividend yields.
This week, however, it appeared that the so-called "yield play" took a backseat to some traditional defensive positioning in the stock market as most of these areas tend to exhibit relative strength in trying times due to their earnings dependability and relatively low volatility.
It would be remiss not to add that, even with this week's gains, all four sectors are among the market's worst performers this month, sporting losses that range from 1.7% to 4.1% versus a 1.6% decline for the S&P 500.
The health care sector, also known as a defensive outlet, didn't enjoy any such accolades this week. In fact, it was the worst-performing sector for the week with a loss of 3.3%, which left it down 3.5% in October.
Its underperformance was driven by a weak biotechnology group, which was sent reeling by a disconcerting revenue warning for the third and fourth quarters from Illumina (ILMN 138.00), a company that provides sequencing and array-based solutions for genetic analysis.
Shares of Illumina plunged 25% this week and acted as a major drag on the iShares Nasdaq Biotechnology ETF (IBB 266.08), which declined 6.3%.
There was some chatter during the week that the health care sector's difficulties were also a byproduct of political concerns. Those concerns emanated from polls showing Hillary Clinton as the presidential frontrunner following last weekend's debate and GOP infighting that fostered a belief Democrats could have a shot at winning a majority in both Houses of Congress.
Mrs. Clinton has been very vocal about reining in unjustified drug price increases, and presumably she would have a better chance of doing so with Democrats controlling a majority in both the Senate and House of Representatives.
There will be another presidential debate this coming Wednesday.
Something that won't be coming next Wednesday -- or any day now -- is Samsung's Galaxy Note 7. The South Korean company announced this week that it is permanently discontinuing production and sales of the smartphone due to safety issues surrounding overheating and battery fires.
That news undercut a number of suppliers, which showed up in part in the 3.3% decline in the Philadelphia Semiconductor Index. Samsung's pain, though, was quite clearly seen as Apple's (AAPL 117.63) likely market share gain. In a down week for the market, Apple's stock rose 3.1%, meaning things could have been worse for the broader market had its most heavily-weighted stock not outperformed in the manner that it did.
The week that just concluded also marked the official start to the third quarter earnings reporting period. Reports from Alcoa (AA 26.44), JPMorgan Chase (JPM 67.52), Citigroup (C 48.61), and Wells Fargo (WFC 44.71) were the featured reports of the week.
None of those companies missed consensus earnings estimates; in fact, the banks all beat expectations while Alcoa was in-line. Nonetheless, they failed to produce a bullish response.
The main issue with Alcoa is that it provided disappointing revenue guidance for each of its Arconic segments. The aforementioned banks, meanwhile, saw enthusiasm for their reasonably good quarterly results tempered by the understanding that each reported a year-over-year decline in net income and concerns about a potential slowdown in commercial lending activity.
Bank of America (BAC ) will get the reporting activity started next week, which will also featured results from Dow components IBM (IBM 154.45), Goldman Sachs (GS 170.52), Johnson & Johnson (JNJ 117.56), UnitedHealth (UNH 133.92), Intel (INTC 37.45), American Express (AXP 60.15), Travelers (TRV 115.08), Verizon (VZ 50.28), Microsoft (MSFT 57.42), General Electric (GE 28.89), and McDonald's (MCD 114.09).
It's going to be a busy week indeed. The earnings news, and particularly the guidance, will be watched closely along with the trading mannerisms of the U.S. dollar and long-term rates, which led to a somewhat ill-mannered stock market this week.
Index Started Week Ended Week Change % Change YTD %
DJIA 18240.49 18138.38 -102.11 -0.6 4.1
Nasdaq 5292.40 5214.16 -78.24 -1.5 4.1
S&P 500 2153.74 2132.98 -20.76 -1.0 4.4
Russell 2000 1236.56 1212.41 -24.15 -2.0 6.7
5:01 pm Qualcomm files actions against Meizu in the United States, Germany and France (QCOM) : These actions include filing a complaint with the United States International Trade Commission (ITC), filing a patent infringement action in Germany with the Mannheim Regional Court, and initiating an infringement-seizure action in France to obtain evidence for a possible future infringement action there. Previously, in June 2016, Qualcomm filed multiple actions against Meizu in China related to licensing terms and patent infringement.
4:17 pm Closing Market Summary: Indices Walk Back Gains Despite Upbeat Bank Earnings (:WRAPX) :
The stock market ended a downbeat week on a tepid note as an opening rally on Friday ultimately fizzled out. The Dow Jones Industrial Average (+0.2%) finished ahead of the S&P 500 (+0.02) and the Nasdaq Composite (+0.02). The three indices finished the week lower between 0.6% and 1.5%.
Equity indices rallied at the start of the session as positive inflation data out of China, a string of better-than-expected expected quarterly reports, and upbeat domestic data boosted investor sentiment.
The three catalysts also helped solidify the rate hike picture as above-consensus inflation data stood in contrast to persistently low inflation readings. The Producer Price Index (:PPI) came in slightly ahead of estimates as PPI rose 0.3% in September (Briefing.com consensus +0.2%). Meanwhile, core PPI ticked higher by 0.2% (Briefing.com consensus +0.1%). The two readings are up a respective 0.7% and 1.2% on a year-over-year basis.
According to the CME's Fed Watch Tool, the probability of a rate hike at the December meeting has increased to 69.2% from 61.7% at the end of September. The firming rate hike picture also helped move the dollar and long-term rates higher.
The U.S. Dollar Index (98.11, +0.59, +0.60%) strengthened throughout today's session, which in turn weighed on dollar-denominated oil prices ($50.32/bbl, -$0.08, -0.2%).
The early rally reversed stating around 10:20 a.m. ET and coincided with some strengthening in the dollar, a reversal in oil, and fading gains in the financial sector (+0.5%), which had been up as much as 1.5% following some better than expected earnings results from JPMorgan Chase (JPM 67.52, -0.22), Citigroup (C 48.61, +0.14), and Wells Fargo (WFC 44.71, -0.04).
Rising treasury yields also worked to thwart the early rally. Higher-yielding sectors -- utilities (-0.6%), real estate (-0.3%), and telecom services (-0.2%) -- found it difficult to make any headway and general valuation concerns percolated with the jump in rates.
The yield on the benchmark 10-yr note rose six basis points to 1.80% as the boost in producer price inflation, the stronger than expected inflation report out of China, and waning price momentum unsettled investors.
The S&P 500 (+0.02%) finished basically flat, surrendering just about all of an initial 0.8% gain.
Five sectors finished in the green with financials (+0.5%), technology (+0.5%), and materials (+0.4%) staging the largest moves on a percentage basis.
The financial sector (+0.5%) outperformed in the wake of positive economic data, a steepening in the yield curve, and a string of above consensus quarterly reports.
Citigroup (C 48.61, +0.14, +0.3%), Well Fargo (WFC 44.71, -0.04), and JPMorgan Chase (JPM 67.52, -0.22, -0.3%) each beat analysts' estimates for the quarter. The three were up between 1.7% and 3.1% at the onset, but were unable to hold onto the bulk of those early gains as concerns about a potential slowdown in commercial lending reportedly tempered investors' enthusiasm.
In the technology sector (+0.5%), Salesforce.com (CRM 74.27, +3.64) finished higher by 5.2% after the Financial Times reported that the company is no longer interested in acquiring Twitter (TWTR 16.88, -0.91). Chipmakers also outperformed in the group as the PHLX Semiconductor Index (+0.8%) narrowed its weekly loss to 3.3%.
Department store names underperformed in the discretionary sector (UNCHF) after JPMorgan cut quarterly estimates for Macy's (M 35.57, -1.27, 3.3%) and Kohl's (KSS 43.64, -1.44, -3.2%). The broader SPDR S&P Retail ETF (XRT 43.12, -0.09) also finished on a negative note.
Today's trading volume fell came in below the recent average of 862 million as 785 million shares changed hands at the NYSE floor.
Today's economic data included the PPI Report for September, the Retail Sales Report for September, Business Inventories for August, and the initial reading of the University of Michigan Consumer Sentiment Index for October:
The Producer Price Index (:PPI) for September showed a 0.3% increase in final demand prices (Briefing.com consensus +0.2%), led by a 0.7% jump in the index for final demand goods.
Excluding food and energy, the index for final demand was up 0.2% (Briefing.com consensus +0.1%).
Total retail sales increased 0.6% in September while sales, excluding autos, rose 0.5%. Both results were in-line with the Briefing.com consensus estimates.
Total business inventories increased 0.2% in August (Briefing.com consensus +0.1%) after being unchanged in July.
Sales were also up 0.2% after declining a downwardly revised 0.3% (from -0.2%) in July.
The University of Michigan's Index of Consumer Sentiment dropped to 87.9 in the preliminary reading for October (Briefing.com consensus 92.4) from the final reading of 91.2 for September. The October reading is the second lowest level in the past two years.For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Monday's economic data will include the 8:30 a.m. ET release of October Empire Manufacturing (Briefing.com consensus 2.0). The Industrial Production (Briefing.com consensus 0.2%) and Capacity Utilization (Briefing.com consensus 75.6%) report for September will be released at 9:15 a.m. ET.
Stocks closed out the week with modest gains, as all three major US indices pared opening advances to ultimately end modestly above flat lines. Leading the advance, the Dow Jones Industrial Average added 39.44 points (+0.22%) to 18138.38. The S&P 500 was up less than a point (+0.02%) to 2132.98, and the Nasdaq Composite also gained less than a point (+0.02%) to 5214.16. This week's moves take the three indices +4.1%, +4.4% and +4.2% YTD, respectively.
Equity indices rallied at the start of the session as positive inflation data out of China, a string of better-than-expected expected quarterly reports, and upbeat domestic data boosted investor sentiment.
The three catalysts also helped solidify the rate hike picture as above-consensus inflation data stood in contrast to persistently low inflation readings. The Producer Price Index (PPI) came in slightly ahead of estimates as PPI rose 0.3% in September. Meanwhile, core PPI ticked higher by 0.2%. The two readings are up a respective 0.7% and 1.2% on a year-over-year basis.
According to the CME's Fed Watch Tool, the probability of a rate hike at the December meeting has increased to 69.2% from 61.7% at the end of September. The firming rate hike picture also helped move the dollar and long-term rates higher.
The U.S. Dollar Index (98.11, +0.59, +0.60%) strengthened throughout today's session, which in turn weighed on dollar-denominated oil prices ($50.32/bbl, -$0.08, -0.2%).
The early rally reversed stating around 10:20 a.m. ET and coincided with some strengthening in the dollar, a reversal in oil, and fading gains in the financial sector (+0.5%), which had been up as much as 1.5% following some better than expected earnings results from JPMorgan Chase (JPM 67.52, -0.22 -0.32%), Citigroup (C 48.61, +0.14 +0.29%), and Wells Fargo (WFC 44.71, -0.04 -0.09%).
As it were, the Technology (XLK 47.37, +0.18 +0.38%) sector was one of the better performers today, edged out only by Financials. Component HP (HPQ 14.48, -0.67 -4.42%) was the weakest name today following the announcement of FY17 guidance and a restructuring plan in addition to certain shareholder return programs. Other sectors as measured by the S&P closed Friday XLFS +0.82%, XLF +0.52%, XLB +0.32%, XLI +0.21%, IYZ +0.03%, XLP +0.02%, XLRE -0.06%, XLY -0.11%, XLE -0.43%, XLU -0.65%, XLV -0.67% with Healthcare posting the worst losses and Financials edging out Tech for the top spot.
In the S&P 500 Information Technology (796.07, +3.68 +0.46%) sector, trading was in positive territory, yet failed to clear the $800-level. Component Salesforce.com (CRM 74.27, +3.64 +5.15%) was the best performer today as the stock was the subject of a Financial Times report which suggested the company has ruled out making a bid for Twitter (TWTR 16.88, -0.91 -5.12%). Other names in the space which edged higher today included xxx.
Other notable news items among sector components:
HP (HPQ) announced a restructuring plan and FY17 guidance. The company sees FY17 adjusted EPS of $1.55-1.65 with cash flow from operations of about $2.8 to $3.1 billion in fiscal 2017. Also, with about $0.5 billion in net capital expenditures, HPQ sees free cash flow in the range of $2.3 to $2.6 billion for fiscal 2017. The company also raised the quarterly dividend to $0.1327 from $0.124 per share, and increased the share repurchase program by $3 billion. HPQ further announced the exit of about 3,000-4,000 employees between fiscal 2017 and fiscal 2019. The restructuring plan is expected to generate gross annual run rate savings of about $200-300 million beginning in fiscal 2020. In connection with said plan, HPQ anticipates incurring about $350-500 million in restructuring and other charges related to labor and non-labor actions.
Twitter (TWTR) shares fell today as the Financial Times reported that possible suitor Salesforce.com (CRM) had ruled out making a bid for the company.
Arbor Networks Inc., the security division of NETSCOUT (NTCT 28.55, +0.36 +1.28%), in conjunction with Jigsaw, an incubator within Alphabet (GOOG 778.53, +0.34 +0.04%), Google's parent company, announced an enhanced version of the Digital Attack Map.
According to Reuters, Microsoft (MSFT 57.42, +0.50 +0.88%) has filed for EU approval of its pending merger with LinkedIn (LNKD 190.74, +0.18 +0.09%).
First Solar (FSLR 39.47, +0.79 +2.04%) named Alexander Bradley as full-time CFO effective October 24.
MercadoLibre (MELI 167.04, -1.42 -0.84%) priced its upsized offering of 7.1 million shares of its common stock offered by existing stockholder eBay (EBAY 31.89, +0.38 +1.21%) at $168 per share.
Elsewhere in the tech space:
Aerohive Networks (HIVE 5.54, -0.09 -1.60%) guided Q3 revenue of $40 million, below stated guidance of $46-50 million. Expects net loss per share of $0.07-0.06 compared to previous guidance of a loss between $0.07-0.01.
Advanced Micro (AMD 6.75, +0.26 +4.01%) announced a collaboration with Alibaba Group (BABA 101.85, -0.30 -0.29%).
TerraForm Global (GLBL 3.75, +0.08 +2.18%) elected two independent directors, Mark Lerdal and Fred Boyle, to the Board of Directors effective immediately.
Digital Ally (DGLY 5.67, +0.26 +4.81%) announces 'favorable' ruling in lawsuit against Taser (TASR 22.77, +0.68 +3.08%) who has filed a motion to dismiss the antitrust claims in the lawsuit that is still pending.
Samsung (SSNLF 1425.00, flat) updated guidance due to Galaxy Note7 discontinuation: estimates mid-3 trillion won negative impact for Q4 2016 and Q1 2017 related to discontinuation.
VMware (VMW 72.98, -0.05 -0.07%) and Amazon.com's (AMZN 823.06, -6.22 -0.75%) cloud computing arm, Amazon Web Services, confirmed a strategic alliance.
MGT Capital Investments (MGT 2.40, +0.29 +14.01%) announced the commercial release of its first network security product, Sentinel.
In reaction to quarterly results:
Infosys (INFY 15.66, -0.99 -5.95%) reported better than expected Q2 EPS of INR15.77 per share. Revenues were up 10.7% compared to a year ago to INR173.1 billion. INFY lowered FY17 revenue guidance to +8-9% in USD terms, prior guidance translated to +10.0-11.5% growth.
Analyst actions:
LVLT was upgraded to Overweight from Neutral at JP Morgan,
NTDOY was upgraded to Buy from Neutral at Nomura,
TSM was upgraded to Sector Weight at Pacific Crest,
PHI was upgraded to Buy from Hold at HSBC;
HIVE was downgraded to Neutral from Buy at Buckingham Research and to Hold from Buy at Wunderlich; ATVI and TTWO were initiated with Outperform ratings at Oppenheimer,
IPHI was initiated with a Market Perform at Cowen,
HPE was initiated with an Underperform at CLSA,
TASR was initiated with an Outperform at Imperial Capital,
RPD was initiated with an Outperform at RBC Capital Mkts,
MIME was initiated with an Overweight at JP Morgan,
JD was initiated with a Buy at Stifel,
SEDG was initiated with a Sell at Axiom Capital,
NTNX was initiated with a Sell at Summit Redstone
From Briefing.com: 4:15 pm : The stock market ended a roller-coaster Thursday on a modestly lower note as the major averages battled back from steep opening losses. The S&P 500 finished lower by 0.3% after stumbling 1.1% at the start of the session. The Nasdaq Composite (-0.5%) finished the day slightly behind both the S&P 500 and the Dow Jones Industrial Average (-0.3%). Global markets tilted to the downside overnight as a weaker-than-expected Trade Balance Report for September out of China startled investors. The report featured a 10.0% year-over-year decline in exports (expected: -3.3%) and a 1.9% year-over-year decline in imports (expected: +0.7%). The negative economic data resuscitated concerns regarding the health of the global economy.
It also led to speculation that China may tacitly embrace a competitive devaluation of the yuan to bolster beleaguered export demand.
Equity indices moved due south through the opening half hour as the heavily-weighted financials (-1.1%), technology (-0.6%), and consumer discretionary (-0.3%) sectors pressured the benchmark index. The S&P 500 briefly violated technical support levels at 2128/2130, 2127, and 2120/2119 before bottoming just below 2115.
The broader market staged a reversal shortly thereafter as just about every area bounced back from initial selling efforts. The higher-yielding sectors -- utilities (+1.3%), real estate (+0.5%), telecom services (UNCH), and consumer staples (UNCH)-- led the rebound effort, enjoying a break from rising bond yields.
Bond prices increased today (and yields went down) after reports indicated that the ECB may discuss modifications to its asset purchase program at next week's meeting with an aim to find a way to keep purchasing EUR 80 billion per month of bonds should the ECB elect to extend its asset purchase program beyond March 2017. Rates have been on the rise recently on concerns about central banks reaching policy limits with their asset purchase plans.
Treasuries finished higher across the board with yields pulling back throughout the complex. The yield on the 10-yr note slipped three basis points to 1.74%.
Equities finished off their best level of the day as the S&P 500 ran into resistance near its 100-day simple moving average (2140.29) in the final hour.
The financial sector ended off its low, but still finished at the bottom of the sector leaderboard. The economically-sensitive sector underperformed as headwinds from China's negative trade data and a flattening yield curve weighed.
Banking names displayed relative weakness as the S&P Bank ETF (KBE 33.22, -0.75) fell 2.2%. The industry group was under pressure ahead of tomorrow's quarterly reports from JPMorgan Chase (JPM 67.74, -0.39), Citigroup (C 48.47, -0.23), PNC (PNC 87.94, -1.89), and Wells Fargo (WFC 44.75, -0.57).
Wells Fargo was also a story stock today after the company confirmed that Chairman and CEO John Stumpf will retire from the Company and the Board of Directors, effective immediately. That decision follows on the heels of a ruinous scandal for the bank that included the fraudulent opening of two million bank and credit card accounts to meet aggressive sales goals.
The high-beta chipmakers underperformed in the technology space, evidenced by the 1.2% decline in the PHLX Semiconductor Index. The group continues to see selling interest after Samsung Electronics (SSNLF) opted to permanently suspended the production and sale of its Galaxy Note 7 device. Samsung supplier Integrated Device (IDTI 19.73, -0.50) has plunged 13.3% this week.
The energy sector (-0.7%) finished off its low amid an uptick in crude oil. WTI crude settled higher by 0.5% ($50.40/bbl; +$0.25) despite some mixed inventory data. The Department of Energy reported that crude oil inventories rose by 4.9 million barrels (consensus: +0.65 million) while gasoline stockpiles declined by 1.90 million barrels (consensus: -1.49 million).
Biotechnology outperformed the broader health care sector (+0.1%), as the iShares Nasdaq Biotechnology ETF (IBB 271.11, +0.98) rose 0.4%. The ETF narrowed its weekly loss to 4.6%. In the ETF, Mylan (MYL 37.88, +0.81) displayed relative strength, rising 2.2%.
Today's trading volume fell came in below the recent average of 930 million as 879 million shares changed hands at the NYSE floor.
Today's economic data included weekly initial claims and the Import/Export Price report for September:
Initial claims for the week ending October 8 were unchanged at 246,000 (Briefing.com consensus 255,000) from last week's downardly revised reading.
Continuing claims for the week ending October 1 declined to 2.046 million from 2.062 million.
Aided by a 1.1% increase in import fuel prices, U.S. import prices rose 0.1% in September following a 0.2% decline in August.
Export prices, meanwhile, increased 0.3% after a 0.6% decline in August, helped by a 0.4% rise in nonagricultural prices.
Tomorrow's economic data will include the 8:30 a.m. ET release of the PPI Report for September (Briefing.com consensus +0.2%) and the Retail Sales Report for September (Briefing.com consensus +0.6%). Separately, Business Inventories for August (Briefing.com consensus +0.1%) and the initial reading of the University of Michigan Consumer Sentiment Index for October (Briefing.com consensus 92.4) will both cross the wires at 10:00 ET.
Russell 2000: +7.2% YTD
S&P 500: +4.3% YTD
Nasdaq Composite: +4.1% YTD
Dow Jones: +3.9% YTD
DJ30 -45.26 NASDAQ -25.69 SP500 -6.63 NASDAQ Adv/Vol/Dec 811/1.586 bln/2160 NYSE Adv/Vol/Dec 985/854.1 mln/1996 3:30 pm :
The dollar index was -0.4% around the 97.55 level after hitting 7-month highs for the second day in a row earlier
Commodities, as measured by the Bloomberg Commodity Index, were +0.7% around the 86.28 level
Crude oil recovered initial morning losses to close near its highest level since mid-June following EIA data, which showed larger-than-expected draws in both gasoline & distillates
November crude oil futures rose $0.25 (+0.5%) to $50.40/barrel
Baker Hughes rig count data will be released tomorrow at 1 pm ET
The next official OPEC meeting will take place in Vienna, Austria on November 30.
EIA highlights:
Crude oil inventories had a build of + 4.9 mln (consensus called for a build of about +0.65 mln barrels)
Gasoline inventories had a draw of -1.9 mln (consensus called for a draw of about -1.49 barrels)
Distillate inventories had a draw of -3.7 mln
Natural gas erased the previous 2 sessions of losses following EIA data which showed a smaller-than-expected build compared to Consensus
November natural gas closed $0.13 higher (+4.1%) at $3.34/MMBtu
EIA highlights:
Natural gas inventory showed a build of +79 bcf vs expectations for inventory to be a build of approximately +87 bcf.
Working gas in storage was 3,759 Bcf as of Friday, Oct 7, 2016, according to EIA estimates.
Stocks were 56 Bcf higher than last year at this time and 192 Bcf above the five-year avg of 3,567 Bcf.
At 3,759 Bcf, total working gas is above the five-year historical range.
In precious metals, gold extended yesterday's gains as the dollar index took a tumble after briefly hitting 7-month highs this morning
December gold ended today's session up $3.80 (+0.3%) to $1257.30/oz
December silver closed today's session $0.05 lower (-0.3%) at $17.45/oz
Base metal copper saw a notable decline after weak Chinese trade data, ended near session lows
December copper closed $0.06 lower (-2.8%) at $2.12/lb
Trading ended Thursday with losses, albeit well off lows of the session. The Nasdaq Composite ended lower by 25.69 points (-0.49%) to 5213.33. The S&P 500 shed 6.63 points (-0.31%) to 2132.55, and the Dow Jones Industrial Average lost only 45.26 points (-0.25%) to 18098.94 after being down at one point today by more than 184 points.
Global markets tilted to the downside overnight as a weaker-than-expected Trade Balance Report for September out of China startled investors. The report featured a 10.0% year-over-year decline in exports and a 1.9% year-over-year decline in imports. The negative economic data resuscitated concerns regarding the health of the global economy.
It also led to speculation that China may tacitly embrace a competitive devaluation of the yuan to bolster beleaguered export demand.
Equity indices moved due south through the opening half hour as the heavily-weighted financials, technology, and consumer discretionary sectors pressured the benchmark index. The S&P 500 briefly violated technical support levels at 2128/2130, 2127, and 2120/2119 before bottoming just below 2115.
Today in market data, the initial claims reading for the week ending October 8 was unchanged at 246,000 from last week's downwardly revised reading. Also, aided by a 1.1% increase in import fuel prices, U.S. import prices rose 0.1% in September following a 0.2% decline in August. Lastly, export prices increased 0.3% after a 0.6% decline in August, helped by a 0.4% rise in non-agricultural prices.
Technology (XLK 47.19, -0.30 -0.63%) ended the session closer to the bottom of the list as far as sector performance goes. Component Xerox (XRX 9.55 -0.25 -2.55%) closed with some decent losses following a Wall Street Journal report that a shareholder sued the company in an attempt to block the pending split of the company. Other sectors as measured by the S&P closed XLU +1.24%, XLRE +0.48%, XLV +0.04%, XLP +0.02%, XLI -0.04%, XLY -0.37%, IYZ -0.41%, XLB -0.52%, XLE -0.55%, XLF -0.97%, XLFS -1.14% with Utilities posting the best performance and Financials lagging.
In the S&P 500 Information Technology (792.39, -4.92 -0.62%) sector, trading ended well off daily lows but still firmly in the red. Component Western Digital (WDC 55.28, -1.15 -2.04%) reported more than 10 million helium-filled hard disk drives have been shipped since the inception of the product, but shares succumbed to the selling pressure today. Other names in the space which were weaker today included QRVO -4.17%, AMAT -2.72%, SYMC -2.65%, TDC -2.30%, CRM -2.22%, SWKS -1.79%, TSS -1.78%, YHOO -1.75%, NVDA -1.63%.
Other notable news items among sector components:
CSRA (CSRA 25.93, -0.01 -0.04%) was awarded a $116 million task order to streamline, maintain and upgrade the IT systems of seven offices and bureaus operating under the U.S. Department of Justice's (DOJ), Office of Justice Programs (OJP). The task order was administered through the NIH NITAAC CIO-SP3 indefinite-delivery, indefinite-quantity contract vehicle. The period of performance for the task order is five years.
Alliance Data (ADS 206.84, -1.43 -0.69%) announced its Columbus, Ohio-based card services business has signed a long-term renewal agreement to provide private label credit card services for RH, Restoration
Hardware (RH 31.15, -0.57 -1.80%).
According to the Wall Street Journal, Xerox (XRX) shareholder Darwin Deason has sued the company in an attempt to block the pending split of the business.
Western Digital (WDC) has shipped more than 10 million helium-filled hard disk drives (HDDs) since the company first introduced the HelioSeal platform four years ago.
Shareholder Rimini Street issued statement on Oracle (ORCL 38.03, -0.02 -0.05%) v. Rimini Street. The firm plans to pursue an appeal of aspects of the judgment.
MercadoLibre (MELI 168.46, -14.75 -8.05%) commenced a 5.5 million share follow-on underwritten public offering of common stock by selling stockholders eBay (EBAY 31.51, +0.01 +0.03%) and subsidiary eBay International Treasury Center.
Intuit (INTU 106.80, -0.73 -0.68%) and American Express (AXP 60.41, -0.28 -0.46%) announced a partnership that will give qualified QuickBooks Online small business customers who are also American Express OPEN Business Card Members access to short-term, low-cost financing from American Express.
Pure Storage (PSTG 13.17, -0.45 -3.30%) expanding its FlashStack Converged Infrastructure Solution with Cisco (CSCO 30.17, -0.17 -0.56%).
Elsewhere in the tech space:
GoPro (GPRO 13.84, -0.46 -3.22%) responded to Piper Jaffray's commentary from this morning, stating it expects Hero 5 to be sold on Amazon (AMZN 829.28, -4.81 -0.58%) 'soon.'
Samsung (SSNLF 1425.00, +75.00 +5.56%) expanded its recall of its Galaxy Note7 device to include original and replacement devices. The company offered a refund and exchange program.
SunEdison (SUNEQ 0.07, -0.00 -9.62%) received a notice that the SEC is conducting a non-public, fact-finding investigation.
NXP Semi (NXPI 101.84, -0.90 -0.88%) announced that the EC has approved the company's Standard Products divestiture. NXPI continues to expect to close the transaction in 1Q17.
Descartes (DSGX 20.81, +0.42 +2.06%) acquired US-based provider of cloud-based B2B supply chain integration solutions, Appterra, for up-front consideration of $5.8 million plus potential performance-based consideration.
Perficient (PRFT 18.96, -0.22 -1.15%) acquired Bluetube for an undisclosed amount. PRFT expects the deal to be accretive to adjusted EPS immediately.
Amazon (AMZN) will create more than 120,000 seasonal positions across its U.S. network for the holiday season.
Analyst actions:
SYNA was upgraded to Buy from Neutral at Mizuho,
TLND was upgraded to Buy from Neutral at Goldman,
GRUB, AMTD and GIMO were upgraded to Buy from Neutral at BofA/Merrill,
CSC was upgraded to Buy from Neutral at Citigroup,
MTSC was upgraded to Buy from Neutral at Sidoti;
HDP was downgraded to Sell from Buy at Goldman,
ETFC was downgraded to Neutral from Buy at BofA/Merrill,
ERIC was downgraded to Neutral from Buy at Natixis Bleichroeder,
NTDOY was downgraded to Neutral from Outperform at Macquarie,
TSM was downgraded to Hold from Buy at HSBC;
ACN was initiated with a Buy at Berenberg,
WIN was initiated with a Market Perform at Cowen,
BLKB was initiated with a Market Outperform at JMP Securities,
VEEV was initiated with a Market Perform at JMP Securities,
SYMC was initiated with an Outperform at FBN Securities,
MARK was initiated with a Buy at Roth Capital
From Briefing.com: 4:15 pm : The stock market ended Wednesday on a flat, and relatively mixed, note as the minutes from the FOMC's September policy meeting failed to disturb an otherwise quiet trading session. The S&P 500 (+0.1%) settled a hair below its 100-day simple moving average (2139.44) while the Nasdaq Composite (-0.2%) finished on a slightly lower note.
Rising bond yields and a strengthening dollar remained focal points in today's action as investors looked to substantiate their rate hike outlook with the minutes from the FOMC's September 20-21 meeting.
Bond yields and the greenback rose through the first half of trade as a solidifying rate hike outlook provided support. Market participants continued to discount the possibility of a November rate hike while betting on a policy shift at the December meeting. According to the CME's Fed Watch Tool, the probability of a rate hike at the November meeting is just 9.3% while the probability of a hike at the December meeting sits at 69.9%.
The minutes from the FOMC's September policy meeting indicated that there were a number of arguments for raising rates in September, but that the committee opted to wait for further data. All in all, there wasn't really any "new" news in the minutes, which essentially reinforced preconceived policy notions held by the market ahead of their release.
Those notions revolved around a belief that the next hike in the target range for the fed funds rate will most likely occur at the December 13-14 FOMC meeting, barring any big economic potholes hit along the way.
The U.S. Dollar Index (97.92, +0.23, +0.24%) tested, but failed to clear the psychological 98.00 price level while the yield on the 10-yr note finished higher by one basis point at 1.77%.
Although long-term rates rose again today, the real estate (+1.3%), utilities (+1.0%), telecom services (+0.6%), and consumer staples (+0.5%) sectors -- so-called "yield plays" -- all outperformed on Wednesday in a move that had the semblance of being a bounce from short-term oversold conditions. For instance, entering Wednesday's trade, the S&P 500 utilities sector had fallen 9.4% over the last three months.
The S&P 500 (+0.1%) finished the session off its high, having failed earlier in the day to clear technical resistance in the 2144/2146 area.
Eight sectors finished in positive territory while three -- health care (-0.6%), energy (-0.4%), and materials (-0.2%) -- ended the day with a loss.
Retail names outperformed in the consumer discretionary space (+0.4%), evidenced by the 0.8% gain in the SPDR S&P Retail ETF (XRT 43.68, +0.33). Separately, Amazon (AMZN 834.09, +3.09) finished ahead of the broader market after Cantor Fitzgerald raised its price target on the stock to $1,000 from $835.
The financial sector (+0.2%) displayed relative strength on a slight steepening in the yield curve and extended its gain for the month to 1.1%, helped also by insurers and asset managers.
Biotechnology underperformed once again in the health care sector (-0.6%), evidenced by the 2.5% decline in the iShares Nasdaq Biotechnology ETF (IBB 270.13, -6.87), which closed below its 200-day moving average -- a move that will be regarded as a negative technical development. Mylan (MYL 37.07, -1.24) fell 3.2% as it pulled back from an 8.2% gain on Monday.
Health care providers also weighed as Humana (HUM 168.44, -9.09) tumbled 5.5%. The stock fell after the managed care provider announced that the number of 4-star plan members declined to 1.17 million from 2.15 million in the prior year. The company also raised its full-year earnings guidance.
The energy sector (-0.4%) underperformed amid a 1.1% decline in crude oil futures ($50.15/bbl, -$0.56). As a reminder, the American Petroleum Institute will release its weekly inventory report after today's close. Meanwhile, the Department of Energy will release its more influential inventory report tomorrow morning at 11:00 a.m. ET.
Today's trading volume fell came in below the recent averages of 926 million as 655 million shares changed hands at the NYSE floor. Today's low volume was partly attributed to the Jewish holiday of Yom Kippur, which began at sunset on Tuesday and will continue until nightfall today.
Today's economic data included the weekly MBA Mortgage Index and the Job Openings and Labor Turnover Survey for August:
The MBA Mortgage Index indicated that mortgage applications fell 6.0% in the week ending October 8. This followed a 2.9% increase in the prior week.
The August Job Openings and Labor Turnover Survey showed that job openings came in at 5.443 million from a revised 5.831 million (from 5.871 million) in July.
Tomorrow's economic data will include weekly initial claims report (Briefing.com consensus 255k) and the Import/Export Price report for September, both of which will cross the wires at 8:30 a.m. ET. Separately, the Treasury Budget for September will be released at 2:00 p.m. ET.
Russell 2000: +12.4% YTD
S&P 500: +4.7% YTD
Nasdaq: +4.6% YTD
Dow Jones: +4.1% YTD
DJ30 +15.54 NASDAQ -7.77 SP500 +2.44 NASDAQ Adv/Vol/Dec 1372/1.442 bln/1513 NYSE Adv/Vol/Dec 1528/672.6 mln/1390
3:30 pm :
The dollar index extended yesterday's surge to a 7-month high
Commodities, as measured by the Bloomberg Commodity Index, were -0.6% around the 85.65 level
Crude oil extended yesterday's post-IEA slide after OPEC released their monthly oil market report, raised FY17 non-OPEC global supply growth estimate
November crude oil futures fell $0.56 (-1.1%) to $50.15/barrel
Weekly EIA inventory data will be released tomorrow 30 min after natural gas EIA data due to Monday's holiday
Rig count data will be released this Friday at 1 pm ET
Contributing factors affecting the price of oil include:
The informal meeting in Istanbul with energy ministers from Qatar, the United Arab Emirates, Algeria, Venezuela, and Russia is taking place today, details of the recently announced OPEC production cut are expected to be discussed on the sidelines of the World Energy Congress; no decision is expected at this meeting
Comments from Russian President Vladimir Putin today referencing a production freeze as opposed to a production cut he mentioned on Monday, following comments from Igor Sechin, head of state-controlled Rosneft (OJSCY, 0%), responsible for 40% of Russia's oil production. Sechin stated Rosneft would not be part of any production cut. Rosneft plans to increase its production above the 4.1 mln barrels/day it produced in 2015
Strength in the dollar index puts pressure on the price of oil, the dollar index extended yesterday's gains and was at 7-month highs
Reminder: Iran, Nigeria, & Libya are all exempt from the recently announced OPEC production cut
The next official OPEC meeting will be held in Vienna, Austria on November 30
OPEC data highlights:
OPEC raised its FY17 non-OPEC oil supply growth estimates to +240k barrels/day, a 40k barrel/day increase from last month's estimate
OPEC pumped 33.4 mln barrels/day in Sept, up about 220k barrels/day compared to the prior month, an 8-year high
Natural gas extended yesterday's decline ahead of tomorrow's regularly scheduled inventory data
November natural gas closed $0.03 lower (-0.9%) at $3.21/MMBtu
Weekly EIA natural gas storage data will be released at its normal time tomorrow at 10:30 am ET
In precious metals, gold & silver closed nearly unchanged for the day
December gold ended today's session down $2.30 (-0.2%) to $1253.50/oz
December silver futures closed flat
Today's action closed a split, albeit mostly modest, affair. Stocks hovered near flat lines for most of the day, as the S&P 500 led all others higher today by 2.45 points (+0.11%) to 2139.18. The Dow Jones Industrial Average was also higher, finishing the session up 15.54 points (+0.09%) to 18144.20, and the Nasdaq Composite was the lone under-performer, shedding 7.77 points (-0.15%) to 5239.02. Heavily weighted Nasdaq 100 components BMRN -4.1%, REGN -3.3%, MYL -3.2%, ALXN -2.5% and BIIB -2.2% aided both the Nasdaq's decline and the losses in the broader Healthcare sector.
Rising bond yields and a strengthening dollar remained focal points in today's action as investors looked to substantiate their rate hike outlook with the minutes from the FOMC's September 20-21 meeting.
Bond yields and the greenback rose through the first half of trade as a solidifying rate hike outlook provided support. Market participants continued to discount the possibility of a November rate hike while betting on a policy shift at the December meeting. According to the CME's Fed Watch Tool, the probability of a rate hike at the November meeting is just 9.3% while the probability of a hike at the December meeting sits at 69.9%.
The minutes from the FOMC's September policy meeting indicated that there were a number of arguments for raising rates in September, but that the committee opted to wait for further data. All in all, there wasn't really any "new" news in the minutes, which essentially reinforced preconceived policy notions held by the market ahead of their release.
Those notions revolved around a belief that the next hike in the target range for the fed funds rate will most likely occur at the December 13-14 FOMC meeting, barring any big economic potholes hit along the way.
The U.S. Dollar Index (97.92, +0.23, +0.24%) tested, but failed to clear the psychological 98.00 price level while the yield on the 10-yr note finished higher by one basis point at 1.77%.
Again finishing the session toward the middle of the pack, Technology (XLK 47.49, +0.08 +0.17%) turned early weakness around and ended slightly above flat lines. Component Apple (AAPL 117.34, +1.04 +0.89%) was one of the better performers in the space today following a premarket upgraded to Positive from Negative at OTR Global. Other sectors as measured by the S&P closed Wednesday XLRE +1.42%, XLU +0.98%, XLP +0.56%, XLY +0.47%, XLI +0.19%, IYZ +0.09%, XLFS +0.07%, XLF -0.10%, XLB -0.19%, XLE -0.42%, XLV -0.47%.
In the S&P 500 Information Technology (797.31, +0.48 +0.06%) sector, trading returned to positive territory in the waning moments of the session. Component Xilinx (XLNX 50.08, -0.91 -1.78%) did not follow the broader sector higher today as the company announced a production milestone for its 16nm UltraScale portfolio ahead of schedule, but was downgraded in the premarket session to Neutral from Outperform at Robert W. Baird. Other names in the space which moderately outperformed included TSS +1.64%, VRSN +1.03%, ATVI +1.00%, FISV +0.97%, FIS +0.92%, ADP +0.91%, PYPL +0.87%, TDC +0.70%, WU +0.70%, ADBE +0.63%.
Other notable news items among sector components:
Accenture (ACN 117.62, +0.65 +0.56%) was approved to provide human capital strategy, training and development, and performance-improvement services to U.S. federal agencies under an $11.5 billion Human Capital and Training Solutions Contracts award vehicle.
Microsoft (MSFT 57.11, -0.08 -0.14%) announced that Microsoft HoloLens is now available for preorder in Australia, France, Germany, Ireland, New Zealand and the United Kingdom, with devices starting to ship in late November.
Xilinx (XLNX) reached a production milestone for its 16nm UltraScale portfolio ahead of schedule. Less than a year after first ship of all devices, open order entry for production devices is available this quarter.
Alphabet (GOOG 786.14, +3.07 +0.39%) acquired technology platform company FameBit.
Symantec (SYMC 24.94, -0.12 -0.48%) filed for an offering of common stock on behalf of selling shareholders, the size of which was not disclosed.
Elsewhere in the tech space:
IEC Electronics (IEC 4.15, -0.95 -18.63%) confirmed a workforce reduction at its Newark, NY facility of about 73 full-time employees.
Fortinet (FTNT 30.66, -3.43 -10.06%) lowered its Q3 revenue outlook to $311-316 million from $319-324 million, and lowered its EPS expectations to $0.15-0.16 from $0.17-0.18. FTNT also authorized a $100 million increase to its existing share repurchase program.
Ericsson (ERIC 5.55, -1.46 -20.83%) issued downside Q3 guidance of revenues of SEK 51.1 billion. Additionally, the company announced sales declined by 14% compared to a year ago. Gross margins were down 28% following lower volumes in Segment Networks, lower mobile broadband capacity sales, and higher share of services sales.
Tesla Motors (TSLA 201.51, +1.41 +0.70%) issued an update on the pending combination with SolarCity (SCTY 19.99, +0.61 +3.15%). The companies expect to unveil a solar roof product on October 28. TSLA also established November 17 as the date for its special meeting of stockholders to vote on the proposed SCTY merger.
NCR Corp (NCR 30.88, -0.02 -0.06%) authorized and approved an amendment and restatement of its bylaws to implement proxy access effective immediately.
Amazon (AMZN 834.09, +3.09 +0.37%) introduced Amazon Music Unlimited, its $9.99 per month ($7.99 per month for Prime users) on-demand music service. Additionally, according to Handelsblatt, AMZN is considering the creation of physical store locations in Germany.
Sprint (S 6.78, flat) announced three special purpose subsidiaries have commenced an offer of up to $3.5 billion of wireless spectrum-backed notes in 3 series with varying maturities in a private transaction.
Connection (CNXN 26.49, +0.59 +2.28%) acquired privately held GlobalServe. Financial details were not disclosed.
Resonant (RESN 5.06, -0.01 -0.20%) appointed Jeff Killian as new CFO effective October 24 succeeding interim CFO Ross Goolsby.
According to Reuters, Vivendi (VIVHY 20.08, flat) said it is not planning a hostile bid for Ubisoft (UBSFY 7.06, -0.37 -4.98%).
In reaction to quarterly results:
Barracuda Networks (CUDA 25.47, +2.14 +9.17%) reported better than expected Q2 EPS of $0.21 on revenues which rose 12.1% compared to last year and beat market expectations at $87.9 million. The company also guided Q3 slightly ahead of market expectations at non-GAAP EPS of $0.14-0.15 on $85-87 million in revenues. For FY17, CUDA raised EPS and revenues guidance to $0.66-0.69 (from $0.54-0.59) and $345-349 million (from $340-345 million), respectively.
Analyst actions:
MRVL was upgraded to Outperform from Neutral at Credit Suisse,
AMD was upgraded to Neutral from Underperform at Credit Suisse,
BRKS was upgraded to Buy from Neutral at Citigroup,
CUDA was upgraded to Overweight from Neutral at Piper Jaffray,
MSI was upgraded to Outperform from Market Perform at BMO Capital,
NMBL was upgraded to Outperform at Wells Fargo,
AAPL was upgraded to Positive from Negative at OTR Global;
LRCX and NANO were downgraded to Sector Weight from Overweight at Pacific Crest,
XLNX was downgraded to Neutral from Outperform at Robert W. Baird,
FTNT was downgraded to Equal Weight from Overweight at Stephens,
NOW was downgraded to Mixed from Positive at OTR Global;
MU was initiated with a Buy at Cowen,
EEFT was initiated with a Buy at SunTrust,
AEIS was initiated with a Neutral at Citigroup,
MKSI was initiated with a Buy at Citigroup,
CDK was initiated with a Market Perform at William Blair,
GRUB was initiated with a Buy at Argus
From Briefing.com: 4:25 pm : The stock market ended Tuesday's session on a sharply lower note as equities endured a broad-based selloff, paced by technical selling and residual concerns related to a strengthening dollar, rising long-term rates, and valuations entering the third-quarter earnings reporting season. The Russell 2000 dropped 1.9% while the Nasdaq Composite finished lower by 1.5% and the S&P 500 ended down 1.2%.
The major averages stumbled out of the gate as buyers remained sidelined by some disappointing news on the earnings front.
Alcoa (AA 27.91, -3.60) came under pressure as a weaker-than-expected revenue outlook for its Arconic segments overshadowed an in-line earnings result for its third quarter. Illumina (ILMN 138.99, -45.86) was also in focus after issuing a warning after Monday's close that third quarter and fourth quarter revenue will be below analysts' consensus estimates.
In turn, the U.S. dollar showed some noticeable strength today, which came largely at the expense of the euro and the British pound, which declined 0.8% and 2.3%, respectively, against the greenback. The unnerving action there served as another deterrent for buyers.
At the same time, the dollar's strength created some angst about earnings prospects for U.S. multinational companies and the economic prospects for emerging markets. The iShares MSCI Emerging Markets ETF (EEM 37.22, -0.88) declined 2.3%, dragged lower by its exposure to Samsung Electronics (SSNLF), which is the second largest holding in the ETF, and worries that a stronger dollar, among other things, will make it more expensive for companies in emerging markets to repay dollar-denominated debt.
Samsung Electronics shocked its investors Tuesday with an announcement that it will be discontinuing production and sales of its Galaxy Note 7, which has been plagued by overheating issues and battery fires that have created safety concerns and a PR mess for the company.
Long-term interest rates were also on the rise as the U.S. Treasury market opened for trading again after the Columbus Day holiday. The long end of the curve underperformed at the start as the yield on the benchmark 10-yr note jumped to 1.78% (+6 bps). The 10-yr yield would pull back slightly, settling the day higher by four basis points (1.76%).
The Tuesday retreat continued up to the final hour as the S&P 500 (-1.2%) struggled to find its bearings. The benchmark index violated technical support at 2150 and 2144 before testing and breaching its 100-day simple moving average (2138.51). Prospective buyers were thought to be a bit skittish after the S&P 500 (-1.2%) tested, but failed to hold above its 50-day simple moving average (2166.18) on Monday.
A downturn in crude oil futures also dampened risk appetite. The energy component finished its day modestly lower after the head of Rosneft, Russia's largest oil producer, walked back expectations for the country to freeze or cut oil production. The International Energy Agency further added to selling interest when it reported that the global oil supply increased by 0.6 million barrels per day in September. WTI crude finished the day lower by 1.2% ($50.71/bbl, -$0.61).
All 11 S&P 500 sectors finished in the red with health care (-2.5%), materials (-1.3%), utilities (-1.2%), technology (-1.2%), and consumer discretionary (-1.1%) leading the retreat.
Biotechnology underperformed and the iShares Nasdaq Biotechnology ETF (IBB 277.00, -11.07) fell 3.8%. The sub-group moved lower in response to the revenue warning from Illumina (ILMN 138.99, -45.86).
In the broader health care sector (-2.5%), medical equipment names underperformed after St. Jude Medical (STJ 78.41, -2.87) issued a medical device advisory for its ICD and CRT-D devices. Abbott Labs (ABT 41.16, -2.34), which is in the process of acquiring St. Jude Medical, finished lower by 5.4%.
The high-beta chipmakers displayed relative weakness after the aforementioned Samsung (SSNLF) announcement. Samsung supplier Integrated Device (IDTI 21.05,-1.00) finished at the bottom of the PHLX Semiconductor Index (-2.1%), falling 4.6%.
In the influential technology sector (-1.2%), top-weighted Apple (APPL 116.30, +0.25) outperformed as Samsung's troubles are seen as an opening for Apple to pick up market share in the smartphone market. Salesforce.com (CRM 72.42, -2.68) for its part declined 3.6% after reports indicated the company may still bid on Twitter (TWTR 18.00, +0.44).
Today's participation was below the recent average as more than 811 million shares changed hands at the NYSE floor.
Investors did not receive any economic data of note today.
Tomorrow's economic data will include the 7:00 a.m. ET release of the weekly MBA Mortgage Index. Separately, the Department of Energy will release its latest inventory report at 10:30 a.m. ET while the Federal Reserve will release the minutes from its September 20-21 FOMC meeting at 2:00 p.m. ET.
Russell 2000: +8.1% YTD
Nasdaq Composite: +4.8% YTD
S&P 500: +4.5% YTD
Dow Jones: +4.0% YTD
DJ30 -200.38 NASDAQ -81.89 SP500 -26.93 NASDAQ Adv/Vol/Dec 469/1.662 bln/2423 NYSE Adv/Vol/Dec 381/810.6 mln/2606 3:30 pm :
The dollar index extended this morning's gains, was +0.8% around the 97.68 level, weighed on precious metals
Commodities, as measured by the Bloomberg Commodity Index, -0.7% around the 86.18 level
Crude oil retreated from yesterday's 1-year highs following the IEA's monthly report which showed a lowered demand growth forecast for the second consecutive month
November crude oil futures fell $0.61 (-1.2%) to $50.71/barrel
IEA data highlights:
IEA lowered their FY16 global oil demand growth forecast for the second consecutive month to +1.2 mln barrels/day, compared to last month's forecast for +1.3 mln barrels/day.
The FY17 demand growth estimate remains unchanged from the previous monthly report at +1.2 mln barrels/day.
IEA sees the oil market re-balancing sooner than after the first half of 2017, if OPEC follows through with the proposed production cuts announced in Algiers,Algeria.
OPEC pumped a record high of about 33.64 mln barrels/day in Sept as Iran, Nigeria, & Libya increased production; all three countries are exempt from the recently announced OPEC production cut.
IEA noted as a result, that larger production cuts would have to be made by other OPEC members to meet the desired overall OPEC production level.
Data reminders:
Weekly EIA petroleum data will be released tomorrow at 10:30 am ET.
Rig count data will be released Friday at 1 pm ET.
API data will be released today after the bell.
Natural gas ended near session lows ahead of Thursday's inventory number
November natural gas closed $0.03 lower (-0.9%) at $3.24/MMBtu
Weekly EIA natural gas data will be released Thursday at 10:30 am ET.
In precious metals, gold's decline is outpaced by the drop in silver; the gold:silver ratio snapped its 2-session loss-streak
December gold ended today's session down $4.50 (-0.4%) to $1255.80/oz
December silver closed today's session $0.17 lower (-1.0%) at $17.50/oz
The gold:silver ratio was ~71.8 compared to yesterday's pit trading close price of ~71.3
The major averages slipped at the start of the session as Alcoa's (AA 27.91, -3.60 -11.42%) disappointing revenue outlook for its Arconic division overshadowed a bottom-line beat. Meanwhile, Illumina (ILMN 138.99, -45.86 -24.81%) also soured investor sentiment by warning that third quarter and fourth quarter sales will fall short of consensus estimates. This was the latest warning in a string of warnings from the company.
A downturn in crude oil futures has also helped keep buying interest in check. The International Energy Agency's monthly report indicated that the global oil supply increased by 0.6 million barrels per day in September. A bearish note from Goldman Sachs has also pressured the energy component through the first half of the day. The firm expressed some skepticism regarding Russia's desire to freeze or cut production. On a related note, the head of Rosneft, Russia's largest oil producer, reportedly said today that Rosneft will not be part of an agreement to cut production.
The U.S. Dollar Index (97.66, +0.77 +0.79%) strengthened on a firming in the U.S. rate hike picture. The fed funds futures market currently indicates there is a 70.2% probability of a rate hike at the December FOMC meeting, up from 61.7% at the end of September. The uptick has come on the heels of the Employment Situation Report for September. Investors will continue to asses the rate hike picture when the FOMC releases the minutes from its September 21 meeting tomorrow at 2:00 p.m. ET.
The broader market finished Tuesday trading with losses across the board. The market stepped lower with each moment that passed, eventually ending with the Nasdaq Composite posting the worst affair, lower by 81.89 points (-1.54%) to 5246.79. The S&P 500 lost 26.93 points (-1.24%) to 2136.73, and the Dow Jones Industrial Average shed 200.38 points (-1.09%) to 18128.66. Losses among heavily weighted Nasdaq 100 components INTC -2.0%, MSFT -1.5%, AMZN -1.3%, CMCSA -1.3% and FB -1.0% gave credence to today's decline.
Technology (XLK 47.41, -0.54 -1.13%) was toward the bottom of S&P sectors today, but managed to meander back to the middle of the pack as losses were more steep elsewhere. Component Seagate Tech (STX 35.10, -2.87 -7.56%) was the worst performer following pre-market guidance. Other sectors as measured by the S&P ended Tuesday XLV -2.51%, XLB -1.36%, XLY -1.20%, XLE -1.19%, XLU -1.14%, XLI -1.04%, XLF -1.01%, XLFS -0.96%, IYZ -0.82%, XLRE -0.77%, XLP -0.52%.
In the S&P 500 Information Technology sector (796.83, -9.48 -1.18%), trading returned to the sub-800 mark as broader market weakness pressured the sector. Despite this weakness, component Apple (AAPL 116.35, +0.30 +0.26%) was able to manage modest gains as competitor Samsung's (SSNLF 1350, flat) Galaxy Note 7 smartphone was rumored to be close to a production halt and permanent discontinuation. Names which followed the broader sector, and broader market lower, however, included WDC -4.45%, MU -3.66%, CRM -3.57%, ADSK -2.83%, TDC -2.74%, MCHP -2.64%, JNPR -2.56%, AMAT -2.52%, GPN -2.51%.
Other notable news items among sector components:
Seagate Tech (STX) raised Q1 revenues guidance to $2.8 billion from at least $2.7 billion, and raised non-GAAP gross margin to about 29% from at least 27%. Management noted, the strength in STX's revenue and gross margin for the quarter was driven primarily by better than expected demand for its high capacity enterprise HDD product portfolio.
Yahoo! (YHOO 42.68, -1.24 -2.82%) ticked higher in the after-hours session last night due to Verizon's (VZ 49.90, -0.29 -0.58%) CEO, Lowell McAdam, in CNBC interview commented that NYPost report that it was looking to have its purchase price for YHOO reduced by $1 billion was completely inaccurate. McAdam said the company continues to still see real value in YHOO and that the logic of the merger still makes 'ton of sense'.
Samsung (SSNLF) said it will ask all global partners to stop sales and exchanges of Galaxy Note7 while further investigation takes place. The Wall Street Journal later reported that SSNLF will discontinue the Galaxy Note 7 devices permanently.
Cognizant (CTSH 49.89, -0.56 -1.11%) announced it helped Standard Life, with its 4.5 million customers, implement next-generation IT infrastructure to support business expansion in its Investments and Pensions, and Savings businesses.
Alliance Data Systems (ADS 208.25, -0.53 -0.25%) announced that its LoyaltyOne European-based BrandLoyalty business signed an agreement with Lowes Foods, a major U.S. regional supermarket chain owned by privately-held Alex Lee, Inc.
IBM (IBM 154.79, -2.23 -1.42%) and Siemens Healthineers (SIEGY 115.71, -1.98 -1.68%) announced a five year, global strategic alliance in Population Health Management (PHM). The alliance aims to help hospitals, health systems, integrated delivery networks, and other providers deliver value-based care to patients with complex, chronic and costly conditions such as heart disease and cancer.
FloSports announced new apps available on the Roku and Apple TV (AAPL) platforms. Using the Cisco (CSCO 31.04, -0.43 -1.37%) Infinite Video Platform, FloSports now offers a complete multi-screen experience for the millions of sports fans it serves each month.
3M Health Information Systems, a business of 3M (MMM 169.68, -1.46 -0.85%), and Verily Life Sciences (formerly Google Life Sciences), an Alphabet (GOOG 783.07, -2.87 -0.37%) company, entered into a strategic agreement to develop new population health measurement technology for managing clinical and financial performance.
The U.S. Department of Agriculture has awarded Xerox (XRX 9.76, -0.20 -2.01%) a 10-year, $110M contract for managed print services (MPS) across all USDA agencies. As part of the agreement, Xerox will install and support up to 16,000 Xerox ConnectKey-enabled printers and multifunction devices at more than 3,000 USDA sites around the globe.
Accenture (ACN 116.97, -0.49 -0.42%) announced a collaboration with SAP SE (SAP 88.61, -1.48 -1.64%) to develop the next generation of predictive analytics solutions for asset management in the utilities industry to enable condition-based maintenance.
Elsewhere in the tech space:
MGT Capital Investments (MGT 2.50, +0.71 +39.66%) updated shareholders on its pending acquisition of D-Vasive and Demonsaw. As previously disclosed on September 20, 2016, the NYSE MKT informed the company that it would not approve for listing on the Exchange the 43.8 million shares required to be issued to complete the closing of the D-Vasive merger. Since that time, the company has had discussions and negotiations with all parties involved, in an effort to reach a revised agreement on acceptable terms. Specifically, MGT plans to terminate the current Asset Purchase Agreement with D-Vasive. However, it has reached tentative agreements with John McAfee and Eric Anderson to execute employment agreements as CEO and Chief Technology Officer, respectively. In addition, MGT reached a tentative agreement to exclusively license or acquire the Demonsaw source code and technology platform from D-Vasive. MGT believes that such a revised deal structure would be acceptable under NYSE MKT rules.
Progress Software's (PRGS 27.37, -0.33 -1.19%) CEO, Phil Pead, is retiring. The company appointed Yogesh Gupta to replace him, and also reaffirmed Q4 guidance of adjusted revenues of $123-126 million and adjusted EPS of $0.55-0.58 per share.
JinkoSolar Holding (JKS 16.55, -0.24 -1.43%) to sell its Jinko Power downstream business in China for $250 million in cash.
CGI Group (GIB 47.00, -0.98 -2.04%) received a task order contract worth up to $824 million through 10 years for financial management shared services across the U.S Federal Government.
Analyst actions:
TWTR was upgraded to Hold from Sell at Evercore ISI,
STX was upgraded to Neutral from Underweight at JP Morgan and to Buy from Hold at The Benchmark Company,
VIAV was upgraded to Overweight from Neutral at JP Morgan,
FNSR was upgraded to Buy from Neutral at Goldman,
CARB was upgraded to Outperform from Perform at Oppenheimer;
LITE was downgraded to Sell from Neutral at Goldman,
APPS was downgraded to Hold from Buy at Craig Hallum;
GRUB was initiated with a Neutral,
AMSC with a Buy at Roth Capital,
EVBG was initiated with an Outperform at Credit Suisse, a Buy at Stifel, BofA/Merrill and Canaccord Genuity, an Outperform at William Blair, and an Overweight at Pacific Crest
I think this recall helps out the suppliers for Samsung. Even discontinuing the Note 7 is not too big a negative as Samsung will still have many buyers of other products. I have a Note 5 and love it but really I use the stylus next to never. I like the big screen and usually find I can get answers from the phone faster than from my computer. RtS
From Briefing.com: 4:15 pm : The major averages began the week on a higher note, aided by a rebound in European markets, a rally in crude oil futures, and the outperformance of market heavyweight Apple (AAPL 116.06, +2.00). The Nasdaq Composite (+0.7%) settled ahead of both the Dow Jones Industrial Average (+0.5%) and the S&P 500 (+0.5%).
Long-term interest rate concerns shifted out of focus slightly as thin trading conditions and a holiday closure for the U.S. bond market kept a lid on recent rate angst. Today's action was largely headline driven as positive commentary from oil figures and specific company catalysts led to a higher start to the week. Investors also looked ahead to the start of the third quarter earnings reporting season. Alcoa (AA 31.51, +0.14) will kick things off when the company reports quarterly results ahead of Tuesday's open.
Crude oil extended its recent winning streak after Russian President Vladimir Putin signaled that he supports freezing or even cutting Russian oil production. The commentary comes on the heels of OPEC's recently-proposed output cap. Elsewhere, Saudi Arabia's oil minister also contributed to the positive bias when he suggested that oil prices could reach $60.00/bbl before the end of the year. WTI crude finished the day higher by 3.1% ($51.32/bbl, +$1.56).
The major averages carved out session highs in the first hour of trade, yet buying interest tapered off in a slow, steady fashion during the remainder of the session.
All 11 sectors finished with a gain. The energy (+1.5%), utilities (+0.8%), and technology (+0.7%) sectors led the advance. The industrials sector (+0.02%) brought up the rear, held back by an earnings warning from Dover (DOV 66.69, -5.55), which followed on the heels of Honeywell's (HON 106.80, -0.14) profit warning on Friday.
In the technology space (+0.8%), Apple (AAPL 116.06, +2.00) outperformed after Samsung opted to provisionally adjust its Galaxy 7 smartphone production schedule. The company is seeking to better control quality and safety standards. Meanwhile, Twitter (TWTR 17.56, -2.29) was a story stock throughout the day as various reports highlighted waning takeover interest in the company. The social media name tumbled 11.5% on the news, but finished off its session low. Late headlines indicated Twitter could still be acquired, but most likely only at a lower price level.
The economically-sensitive financial sector (+0.5%) outperformed as the fed funds futures market continued to price in a higher probability (now 70%) of a rate hike at the December FOMC meeting. Participants will look for further clues regarding the rate hike picture when the FOMC Minutes from the September 21 meeting cross the wires at 2:00 p.m. ET on Wednesday.
Biotechnology ended ahead of the broader health care space (+0.4%), evidenced by the 1.4% gain in the iShares Nasdaq Biotechnology ETF (IBB 288.07, +3.97). Mylan (MYL 38.87, +2.93) surged 8.2% after announcing that it settled claims related to the misclassification of its EpiPen device under the Medicaid rebate program. Mylan agreed to pay $465 million to resolve all potential liability claims by federal and state governments. Separately, Bristol Myers (BMY 49.81, -5.62) plunged 10.1% after Merck's (MRK 63.90, +1.13) Keytruda medication beat out its competing treatment.
The PHLX Semiconductor Index (-0.5%) erased an early gain as Qualcomm (QCOM 67.25, -0.94) ended lower by 1.4%.
The U.S. bond market was closed in observance of Columbus Day. The 10-yr yield settled at 1.72% last Friday.
Today's participation was below the recent average as fewer than 667 million shares changed hands at the NYSE floor.
With the bond market closed today, there were no economic releases. There aren't any major economic releases on Tuesday's economic calendar either.
Russell 2000: +10.1% YTD
Nasdaq Composite: +6.4% YTD
S&P 500: +5.9% YTD
Dow Jones +5.2% YTD
DJ30 +88.55 NASDAQ +36.27 SP500 +9.92 NASDAQ Adv/Vol/Dec 1987/1.252 bln/838 NYSE Adv/Vol/Dec 2104/666.4 mln/823
3:30 pm :
The dollar index was +0.4% around the 96.93 level, did not appear to affect precious metals
Commodities, as measured by the Bloomberg Commodity Index, were +1.3% around the 86.76 level
Crude oil erased all of Friday's losses, ended near 1-year highs after comments surface from Saudi Arabia & Russia ahead of this week's informal meeting in Istanbul
November crude oil futures rose $1.56 (+3.1%) to $51.32/barrel
Contributing factors affecting the price of oil include:
Today's strength in oil can be largely attributed to comments from Saudi Arabia's energy minister Khalid Al Falih, who suggested oil could rise to $60/barrel by the end of the year. Al Falih also made comments that were optimistic about the potential for a production cut by November.
Note that Al Falih has made similar comments in the past. Back in June he said $60 oil was "very possible" by the end of the year.
Oil initially weakened overnight as it became apparent that neither Iran nor Iraq would be attending the informal meeting, but oil has since recovered all of these losses and crude oil surged to close near 1-year highs today.
It is also worth noting that Russia's oil minister has expressed they will not be committing to a production cut at this meeting in Istanbul.
The next official OPEC meeting is scheduled to take place in Vienna, Austria on November 30.
Data reminders:
Monthly IEA data will be released tomorrow.
API data will be released tomorrow after the bell.
Weekly EIA petroleum data will be released Wed at 10:30 am ET.
Baker Hughes rig count data will be released this Friday at 1 pm ET.
Natural gas saw gains for the third consecutive session ahead of Thursday's EIA data
November natural gas closed $0.07 higher (+2.2%) at $3.27/MMBtu
Weekly EIA natural gas data will be released Thursday at 10:30 am ET.
In precious metals, gold & silver rallied despite continued strength in the dollar index, the gold:silver ratio extended Friday's decline
December gold ended today's session up $7.90 (+0.6%) to $1260.30/oz
December silver closed today's session $0.27 higher (+1.6%) at $17.67/oz
The gold:silver ratio was ~71.3 compared to Friday's pit trading close ratio of ~72.0
Base metal copper finished pit trading near session highs after 3 previous sessions of nearly directionless trading
December copper closed $0.04 higher (+1.9%) at $2.20/lb
Equity indices charged out of the gate, building off a positive bias in global markets. China's Shanghai Composite (+1.5%) outperformed as the index resumed trading following last week's holiday closure. Across the pond, banking names remained in focus as a rebound in shares of Deutsche Bank (DB 13.90, +0.26 +1.91%) aided a similar recovery in regional bourses. Participants initially expressed misgivings after the German lender failed to reach a settlement with the U.S. Department of Justice over the weekend.
An upswing in the commodity complex has also buttressed today's move higher. Crude oil futures have jumped 2.9% ($51.25/bbl; +$1.45) after headlines indicated that Russian President Vladimir Putin supports joining OPEC in a production cap agreement. The Russian leader also indicated that the country may be willing to cut production. Separately, Saudi Arabia's oil minister signaled that oil prices may reach $60.00/bbl before the end of the year. At the end of trading, November crude oil futures were up $1.56 (+3.1%) to $51.32/barrel.
The first half of trade quieted down after the opening hour, which is not too surprising considering banks and the bond market are closed in observation of Columbus Day.
The market closed Monday higher, rebounding off Friday's weakness. The Nasdaq Composite led all others, up 36.27 points (+0.69%) to 5328.67 as Nasdaq 100 components like MYL +8.2%, AAL +3.1%, CTRP +2.3%, TSLA +2.2% and TMUS +1.9% were all strong. The Dow Jones Industrial Average added 88.55 points (+0.49%) to 18329.04, and the S&P 500 was also strong, higher by 9.92 points (+0.46%) when the day was finished to 2163.66.
Technology (XLK 47.95 +0.33 +0.69%) was one of the better performing S&P sectors today. Component Salesforce.com (CRM 75.10, +4.19 +5.91%) was again tossed around as still holding interest in a deal to acquire Twitter (TWTR 17.56, -2.29 -11.54%), but no definitive deal has been announced. Other sectors as measured by the S&P closed Monday XLE +1.54%, IYZ +1.08%, XLU +0.83%, XLB +0.60%, XLRE +0.55%, XLFS +0.52%, XLF +0.51%, XLV +0.46%, XLY +0.15%, XLI +0.10%, XLP +0.00% as Energy led.
In the S&P 500 Information Technology (806.31, +5.51 +0.69%) sector, trading ended just off highs. Component First Solar (FSLR 38.58, +1.00 +2.66%) was also strong today following news out that the company had commissioned the 52.5 megawatt (MW) AC Shams Ma'an project in the Hashemite Kingdom of Jordan, on schedule. Other names in the space which closed higher today included LRCX +1.79%, AAPL +1.75%, GOOGL +1.68%, YHOO +1.62%, GOOG +1.40%, ACN +1.26%, KLAC +1.20%, TDC +1.12%, EA +1.11%, EBAY +1.04%.
Other notable news items among sector components:
Adobe Systems' (ADBE 109.24, +0.60 +0.55%) Chief Accounting Officer, Richard Rowley, notified ADBE of his intention to resign. Rowley expects to remain in his role until January 31.
First Solar (FSLR) commissioned the 52.5 megawatt (MW) AC Shams Ma'an project in the Hashemite Kingdom of Jordan, on schedule.
AudioEye (AEYE 0.13, flat) announced a collaboration with ADP (ADP 87.77, +0.40 +0.46%) to further enrich the user experience of ADP's human capital management solution by making it digitally accessible to clients with employees with disabilities.
According to Reuters, EU officials will not investigate Alphabet's (GOOG 785.94, +10.86 +1.40%) tax deals in Europe.
According to Bloomberg, potential bidders (Disney, Alphabet's Google, Salesforce.com) have lost interest in acquiring Twitter (TWTR).
According to The Information, Salesforce.com (CRM) tried to get lobbying efforts to impact regulators' decision regarding Microsoft (MSFT 58.04, +0.24 +0.42%) / LinkedIn (LNKD 190.71, -0.47 -0.25%) M&A deal.
Elsewhere in the tech space:
Twilio (TWLO 52.02, -8.56 -14.13%) filed for a $400 million offering of common stock by it and various selling shareholders.
MobileIron (MOBL 3.57, +0.88 +32.71%) raised its Q3 revenue guidance to $41-42 million from $39-41 million and billings guidance to $46.5-47.5 million, up from $43-45 million.
Twitter (TWTR) in late trade made highs after Fox Business contributor, Charlie Gasparino, suggested there still may be some interest for TWTR, but that the 'magic number' will be between $14-15 per share. TWTR also reported live streaming results of week 5 of Thursday Night Football were up 19% compared to last week.
Mentor Graphics (MENT 27.17, +0.70 +2.64%) acquired Galaxy Semiconductor. Financial terms of the deal were not disclosed.
NICE (NICE 66.98, +0.41 +0.62%) promoted Beth Gaspich to Chief Financial Officer.
Radware (RDWR 12.59, -0.56 -4.26%) lowered its Q3 EPS and revenue guidance to $0.04 and about $47 million, respectively.
Implant Sciences (IMSC 0.11, -0.23 -67.39%) sold the explosives trace detection assets to L-3
Communications (LLL 151.05, -0.55 -0.36%) for $117.5 million in cash, plus the assumption of specified liabilities, and announces filing voluntary petitions under Chapter 11.
Trimble (TRMB 28.60, +0.13 +0.46%) sold its unmanned aircraft system business to Delair-tech. Financial terms of the deal were not disclosed. The company subsequently entered into alliances for Delair-Tech and Microdrones to become preferred providers of fixed-wing and multiroter UAS solutions.
Analyst actions:
STM was upgraded to Outperform from Neutral at Robert W. Baird,
MENT and CDNS were upgraded to Buy from Neutral at DA Davidson;
APIC was downgraded to Mkt Perform from Mkt Outperform at JMP Securities;
NFLX was initiated with a Sell at Deutsche Bank,
FSLR was initiated with a Neutral at Piper Jaffray,
AEHR was initiated with a Buy at Craig Hallum
InvestmentHouse - Jobs Show the Same Issues - (Weekend Newsletter)
http://www.investmenthouse.com/frblog.php
- Jobs show the same issues, stocks treat the report the same.
- Stocks hold up, sell, then recover to cut the losses.
- Same relative index positions though SP400 is struggling.
- Stretching the move laterally helps the upside as the harsh flop fades in
intensity, gives an opportunity to recover.
Friday was about jobs but jobs didn't really change a thing. Not surprising
because the jobs report didn't change a thing except perhaps showing a loss
of full-time jobs as part-time jobs spiked. Even that, however, is not
really a change as it simply continues the trend.
The stock indices held up after the jobs release. Then they sold. Then
they recovered much of the lost ground. We laughed, we cried, and in the
end we did little because there was nothing to do on the session. The
indices held their ground as the jobs report was a net nonevent, though
SP400 and RUTX were a bit wobbly even after the market overall recovered
lost ground.
SP500 -7.03, -0.33%
NASDAQ -14.45, -0.27%
DJ30 -28.01, -0.15%
SP400 -0.67%
RUTX -0.78%
SOX -0.19%
That was pretty much what we expected though I would have gladly welcomed a
change either upside or downside. As it is the stocks indices remained the
same with the trio SOX, NASDAQ and RUTX holding nice trends while DJ30,
SP400, and SP500 struggle to recover after breaking their near term trends
on that big Friday drop 5 Fridays back.
That said, the volatility immediately following that selloff has died down
to some intraday back and forth each session but not the dramatic session to
session swings. The longer it doesn't die, the less chance of it doing so,
i.e. the more chance DJ30 and company fall in line and maybe don't lead but
at least tag along behind the leaders.
Thus even though the Fed says it is going to raise rates and bonds and gold
have sold while the dollar strengthens in apparent agreement, stocks and
stock investors appear to be sanguine with it. Could it be that investors
have adopted the very moral hazard position the Fed did not want, i.e. while
the Fed may want to raise rates because its rather dubious hiking criteria
are met, it will be faster to panic and reverse a tightening course versus
let markets fall?
Sure seems that way, and if so, then yet another attempt to sell the market
may just fizzle out. Of course the market still has to show DJ30 and the
other laggards will turn back up from their near term bearish patterns.
Friday saw SP400 and RUTX struggle and they really did not recover much of
the lost ground. They definitely require watching early in the week to see
if the Friday struggles were just a Friday thing. Overall, the longer the
laggard indices stretch out the move without rolling over, the more a
continued trend higher becomes a possibility given NASDAQ and SOX are still
working their trends.
NEWS/ECONOMY
The jobs report was a miss, but the story was the same with low pay, hourly
jobs hugely dominating the report.
156K vs 176K exp vs 167K prior (from 151K August). July revised to 252K
from 275K
3 month average: 192K/mo
Unemployment: 5.0% vs 4.9% exp vs 4.9% prior
Earnings: 0.2% vs 0.2% exp vs 0.1% prior. +2.6% year/year. Thank goodness
for the increased minimum wage -- just before the companies go full robotic.
But hey, wages will rise then right? Just as with unemployment, if you
reduce the number earning lower wages from the equation, wages rise.
Perhaps that is already happening . . .
Workweek: 34.4 vs 34.4 exp vs 34.3. A 'surge' of 0.1. It moved up to this
level four months ago. Didn't take.
Participation rate: 62.9% versus 62.8%. More moved into the workforce. The
high was 63.0% in March. That didn't take either.
Number employed: +354K
Number unemployed: +90K
Not in labor force: -207K
Same sad story with the jobs mix:
Professional & business services: +67K (Secretaries and clerical staff
35k)
Healthcare: +33K
Bar tenders, waiters: +30K
Retail: +22K (+317K over 12 mos)
Mining: 0
Manufacturing: -13K
Transportation/Warehousing: -9K
Financial activities: +6K
Over half of the jobs created were minimum wage jobs.
Manufacturing: After a historically slow rise in manufacturing jobs in the
recovery, that sector has leveled out and in 2016 is rolling over. Indeed,
a shocking 58K manufacturing jobs have been lost in 2016, a year that
supposedly continues the recovery of the US economy. Apparently that
recovery is limited to part-time, low wage jobs.
Full time jobs versus part-time jobs.
Full-time: -5,000
Part-time: +430,000
Unadjusted, i.e. the ACTUAL job losses and gains without the BLS coming in
and 'smoothing out' the data with its subjective revisions (the "geez,
things CAN'T be THAT bad and we better fix it before the election" data
rewrites):
Full-time: -1.2M
Part-time: +1.3M
Multiple job holders (needed because of insufficient wages): +301K to
7.863M, highest since 2008.
Stay the course . . .
But all is well. Cleveland Fed President Mester on CNBC said it was a 'solid
labor market report' because it only takes '75K to 100K' jobs to maintain
employment. But the economy supposedly produced twice the 75K amount and
unemployment is still stagnant! Oh, that is because we are at 'FULL
EMPLOYMENT' according to Mester. Okay, sorry 94+M out of the workforce; you
are at your full employment level, your highest and best use achieved. Oh,
don't forget about those full-time workers who are working at half the pay
of their prior full time job. No problem there; you have a job so shut up,
right?
Odds of November rate hike: 15% versus 30% before the number. Odds in
reality: a snowball's chance in hell. Yellen would never, ever, ever hike
rates in November in an election year. Ever. Yes, even though Mester said
the Fed was populated by apolitical technocrats. Her nose grew 5 inches in
the interview.
THE MARKET
CHARTS
NASDAQ: Gapped modestly higher, sold through the 20 day EMA, but then
recovered to a more modest loss. All week moving in a tightening range over
the 20 day EMA. Waited on the jobs report, got it, could not do much with
it. NASDAQ remains in its uptrend but is moving laterally the past two
weeks, seeking that next upside break. Perhaps earnings will lend some help
one way or the other, perhaps in the form of a pre-earnings rally.
Definitely a market leading index important for the next upside break.
SOX: Chips edged out a slight gain on the week but really it was more of a
consolidation week as SOX worked laterally after the gap higher the prior
Friday. The 10 day EMA has caught up now and SOX is in very good position
to make the next break higher.
RUTX: Still trending higher after the 50 day EMA the first half of
September, but had to recover Friday to hold the 50 day SMA and salvage a
0.78% loss. Holding the trend higher but fighting it a bit.
SP400: Started well enough Friday with a gap higher but then fell through
the 50 day EMA and then closed below the 2016 up trendline off the January
low. SP400 is having trouble getting off that trendline, having tested it
on Tuesday, bounced, then flopped back on Friday. Midcaps are struggling to
hang on and small caps are having some issues of their own.
DJ30: The Dow looked like such a dog Tuesday and the Wednesday the prior
week, but it hung in and has worked laterally along the 50 day EMA for 1.5
weeks. That has kept it in check but it has not broken it lower. Still
overall bearish, but the pattern is tightening on the lateral move. Can
still break lower as the pattern is still bearish, but it is not for now.
Many of its components, however, still sport bearish patterns and if those
break of course DJ30 would be back under pressure.
SP500: Gapped higher to just below the 50 day SMA but then could not
advance and indeed closed just below the 50 day EMA. As with DJ30, also in
a lateral range the past 1.5 weeks, bouncing off the same intraday lows, but
looked heavier Friday than DJ30.
LEADERSHIP
Financial: Excellent week as financial stocks price in some possibility of
a rate hike at some point in the future. TCBI tested late week, bouncing
sharply off the 10 day EMA Friday. C, JPM continued higher, BAC still looks
solid. GS surged Wednesday and Friday.
Big Names: AAPL moved higher on the week, modest but steady. AMZN rallied
to more higher highs but started a modest late week fade. FB still working
laterally over the 20 day EMA. NFLX enjoyed a great week upside. GOOG
spent the entire week moving laterally along the 50 day SMA on the low.
MSFT working laterally all week. EBAY tested the 50 day MA's on the Friday
low. A bit wobbly last week.
Chips: SLAB moved higher on the week, new high. XLNX gave up the prior
week's break higher. AVGO bounced off the 50 day EMA. SWKS posted a higher
rally high with a strong move for the week. LSCC moved laterally all week
along the 10 day EMA. MRVL testing its move to a higher high the prior week.
Still a solid group. NPTN looks to be setting up for another upside run
while QRVO has done a good job of setting up for a break higher.
Industrial machinery: After a great move for over a week, starting a modest
test Friday, e.g. CMI, CAT.
Tech: Took a breather and tested late week but not bad, e.g. PANW, WDC, STX.
Oil: Some of the leaders are a bit winded and taking a breather, e.g. CWEI,
APC. Others are prepping for a move higher, e.g. NE, HOS.
Retail: Some excellent moves as department stores rallied: JWN, KSS, DDS.
Biotech: A group that was again attempting to show leadership but has some
issues again. ARNA is fine, AGEN is still trending up the 10 day EMA, CRMD
putting in a good test. Others not so great, e.g. IDRA, XLRN, CELG.
MARKET STATS
NASDAQ
Stats: -14.45 points (-0.27%) to close at 5292.4
Volume: 1.612B (-1.28%)
Up Volume: 584.94M (-126M)
Down Volume: 1.04B (+141.38M)
A/D and Hi/Lo: Decliners led 1.86 to 1
Previous Session: Decliners led 1.52 to 1
New Highs: 70 (-10)
New Lows: 50 (+16)
S&P
Stats: -7.03 points (-0.33%) to close at 2153.74
NYSE Volume: 900M (+10.78%)
A/D and Hi/Lo: Decliners led 2.27 to 1
Previous Session: Decliners led 1.24 to 1
New Highs: 79 (-29)
New Lows: 29 (-4)
DJ30
Stats: -28.01 points (-0.15%) to close at 18240.49
SENTIMENT INDICATORS
VIX: 13.48; +0.64
VXN: 15.66; -0.04
VXO: 14.08; +0.58
Put/Call Ratio (CBOE): 1.18; +0.18
Seventeen 1.0+ Readings in 5 weeks, 13 of the last 21 sessions over 1.0.
Still plenty of pessimism.
Bulls and Bears: With the volatility subsiding, bulls continued to recover
and bears continued to fall.
Bulls: 46.7 versus 45.2
Bears: 22.8 versus 23.1
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: 46.7 versus 45.2
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 versus 40.2% versus 44.3% versus 47.4% versus
41.2% versus 45.4% versus 43.3% versus 47.4% versus 44.4% versus 39.4%
versus 36.4% versus 34.7% versus 26.5%
Bears: 2.28 versus 23.1
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% versus 34.3% versus 35.7% versus 39.8% versus 39.2% versus 38.1%
versus 35.4% versus 36.1%
OTHER MARKETS
Bonds (10 year): 1.72% versus 1.74% versus. Big doji with tail Friday at
the early September low. May want to bounce off a double bottom attempt.
Historical: 1.74% versus 1.72% versus 1.69% versus 1.622% versus 1.60%
versus 1.56% versus 1.569% versus 1.56% versus 1.584% versus 1.62% versus
1.625% versus 1.656% versus 1.693% versus 1.705% versus 1.698% versus 1.70%
versus 1.698% versus 1.718% versus 1.671% versus 1.67% versus 1.61% versus
1.53% versus 1.54% versus 1.601% versus 1.57% versus 1.58% versus 1.57%
versus 1.57% versus 1.62% versus 1.58% versus 1.56% versus 1.54% versus
1.58% versus 1.53% versus 1.55% versus 1.57% versus 1.558% versus 1.51%
EUR/USD: 1.1183 versus 1.1147. Euro sold Wednesday, rebounded Thursday,
closed out Friday just below the 200 day SMA. That leaves euro still in a
lateral move.
Historical: 1.1147 versus 1.12052 versus 1.12091 versus 1.12066 versus
1.1239 versus 1.1218 versus 1.1228 versus 1.2148 versus 1.1254 versus 1.1248
versus 1.12259 versus 1.12061 versus 1.11898 versus 1.1151 versus 1.1177
versus 1.1155 versus 1.12444 versus 1.1245 versus 1.12196 versus 1.12335
versus 1.12318 versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545
versus 1.11943 versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949
versus 1.12894 versus 1.1300 versus 1.13045 versus 1.3254 versus 1.13251
versus 1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus 1.11636
versus 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus 1.10882
USD/JPY: 103.159 versus 103.984. Dollar surged into October, faded
Thursday (hard), then a modest Friday bounce.
Historical: 103.984 versus 103.381 versus 102.807 versus 102.035 versus
101.326 versus 101.143 versus 101.322 versus 100.55 versus 100.75 versus
101.034 versus 101.045 versus 100.386 versus 101.714 versus 101.956 versus
102.280 versus 102.086 versus 102.172 versus 102.155 versus 102.814 versus
101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus
101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus
102.160 versus 101.808 versus 100.485 versus 100.306 versus 100.27 versus
100.297 versus 100.21 versus 99.843
Oil: 49.81, -0.63. What a run last week and the week before, taking oil to
50+ and just below the June high at 51.50. Faded Friday but just taking a
breather from the look of it.
Gold: 1251.90, -1.10. Bombed lower Tuesday, sold below the 200 day SMA
Thursday, could not hold a bounce attempt Friday. Massive break lower
wholly suggesting rates go higher.
MONDAY
Jobs report is out and now the market looks to matters of real import,
earnings. The forecast is for a sixth straight quarter of declining
profits. Sure they can beat the expectations, but expectations keep getting
pushed lower and lower, kind of like second half GDP forecasts.
Be that as it may, the Fed is still there and has not hiked and won't hike
until December if then. A lot of time until December and the economy,
despite the headlines, is not ramping up, particularly based upon our
surveys with small businesses. Many saw things slow starting in July and
then really falling off in August and September. That does not sound like a
second half you are all excited to get to.
The indices are hanging in and perhaps the large cap NYSE looked better, at
least DJ30, to end the week. Still, there are some massive drops taking
place even as some sectors continue to rally and support great leaders.
HON, TSN, PPG all bombed lower Friday. Not all is well as evidenced by some
of these stocks, and we will know more this coming week as some warnings
could be coming even as earnings start rolling in.
Thus far the indices are hanging on, refusing to go ahead and break, e.g.
DJ30, SP500, SP400. With the stretch laterally we are looking at some
choice upside plays this week, but there are also some stocks that are
struggling and more than a few Dow stocks have the look of weakness, setting
up near term double tops and other bearish looks.
Still looking for the trends to merge, and if those weaker index patterns
don't break rather soon the odds of doing so drop considerably unless the
stronger indices start to falter. RUTX is not a bouquet of roses after its
Friday move, and both it and RUTX charts will be at the top of one of our
screens as we watch how they trade, if they can find buyers tou bounce them
back.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5292.40
Resistance:
5340 is the recent all-time closing high.
Support:
5287.61 is the all-time high from September 2016
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
The 50 day EMA at 5215
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
The 200 day SMA at 4896
4894 is the September 2015 closing high
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
4684 is the May 2016 test low
4637 is the February intraday high
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August
2015 low.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2153.74
Resistance:
The 50 day SMA at 2167
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
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 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
The 200 day SMA at 2067
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 18,240.49
Resistance:
18,247 is the August 2016 low
18,262 is the upper gap point from the Monday gap lower.
18,288 from March 2015
18,351 is the prior all-time high from May 2015
The 50 day SMA at 18,373
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
Support:
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
17,978 is the November 2015 peak
The 200 day SMA at 17,629
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
17,265 is a December 2015 closing low
17,245 is the November 2015 closing low
17,152 is the mid-July 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
ECONOMIC CALENDAR
October 7 - Friday
Nonfarm Payrolls, September (8:30): 156K actual versus 176K expected, 167K
prior (revised from 151K)
Nonfarm Private Payr, September (8:30): 167K actual versus 171K expected,
144K prior (revised from 126K)
Unemployment Rate, September (8:30): 5.0% actual versus 4.9% expected, 4.9%
prior (no revisions)
Hourly Earnings, September (8:30): 0.2% actual versus 0.2% expected, 0.1%
prior (no revisions)
Average Workweek, September (8:30): 34.4 actual versus 34.4 expected, 34.3
prior (no revisions)
Wholesale Inventorie, August (10:00): -0.2% actual versus -0.1%
expected, -0.1% prior (revised from 0.0%)
Consumer Credit, August (15:00): $25.8B actual versus $18.0B expected,
$17.8B prior (revised from $17.7B)
October 12 - Wednesday
MBA Mortgage Index, 10/08 (7:00): 2.9% prior
Crude Inventories, 10/08 (10:30): -2.976M prior
FOMC Minutes, September 21 (14:00)
October 13 - Thursday
Initial Claims, 10/08 (8:30): 255K expected, 249K prior
Continuing Claims, 10/01 (8:30): 2058K prior
Export Prices ex-ag., September (8:30): -0.4% prior
Import Prices ex-oil, September (8:30): 0.0% prior
Natural Gas Inventor, 10/08 (10:30): 80 bcf prior
Treasury Budget, September (14:00): $90.9B prior
October 14 - Friday
PPI, September (8:30): 0.2% expected, 0.0% prior
Core PPI, September (8:30): 0.1% expected, 0.1% prior
Retail Sales, September (8:30): 0.6% expected, -0.3% prior
Retail Sales ex-auto, September (8:30): 0.5% expected, -0.1% prior
Business Inventories, August (10:00): 0.1% expected, 0.0% prior
Mich Sentiment, October (10:00): 92.4 expected, 91.2 prior
Leavitt Brothers Weekly Update:
http://leavittbrothers.com/pdfs/LB%20weekly%2020161009.pdf
From Briefing.com: Weekly Recap - Week ending 07-Oct-16A lot happened in the last week, yet one thing that didn't happen was the S&P 500 breaking out of its trading range. That will have to wait for another time.
When that time comes is anyone's best guess. For the time being, the market seems to be finding it difficult to know what to think. That is leading to some erratic trading behavior, which is sapping investor conviction and leading to the tight trading range.
The week that just concluded featured three down days for the S&P 500 and two up days. The net change was a loss of approximately 15 points or 0.7%.
Notably, the biggest losers for the week were sectors that had previously been big winners. That included the utilities, telecom services, and real estate sectors. Those areas, popularly known as "yield plays" in a low-yielding world, were down between 3.0% and 5.0% for the week, as some crowded positioning in those names got a little less crowded with long-term interest rates pushing higher.
The yield on the benchmark 10-yr note climbed as high as 1.76% from last Friday's settlement of 1.60% before ending the week at 1.72%. That move mirrored moves seen in other sovereign bond markets as investors once again butted up against the view that central banks are hitting their policy limits in terms of their asset purchase programs.
That angst was fed by a Bloomberg report earlier in the week that suggested an unofficial consensus among ECB officials has been reached for discussing how, and when, to taper the bank's asset purchase program. That report, which was refuted later in the week to no avail by ECB Vice President Constancio, created a tizzy on Tuesday that upset the capital markets along with rate-hike talk from Fed officials.
There was already a nervous tone that had carried over from Monday when it was learned the UK plans to invoke Article 50 by the end of March 2017. Doing so will get the ball rolling on its divorce from the European Union.
That news catalyzed a drop in the British pound to a 31-year low, which looked like chump change by the time Friday rolled around and the pound dropped as much as 6% in a move that some considered to be a "flash crash" amid illiquid market conditions. A good portion of that loss was recouped in almost no time, yet the inability of the pound to reclaim all that was lost left the impression that there was some true selling that took place related to concern about the Brexit, which was heightened by some tough talk on the matter from French President Hollande.
If not for the September employment report, the trading action in the British pound would have dominated the market conversation on Friday. Instead, it was the employment data that took command as it seemed to solidify the case for a rate hike from the Fed by the end of the year.
That notion was underpinned by an understanding that nonfarm payrolls increased by 156,000, average hourly earnings growth was up 2.6% year-over-year (and near a seven-year high), and a bump in the unemployment rate to 5.0% was fueled by a jump in the labor force participation rate (a reflection of budding confidence in job prospects).
According to the CME's FedWatch Tool, the probability of a rate hike at the December FOMC meeting increased to 69.5% on Friday from 63.4% on Thursday.
The economic data this week overall generally supported the view of Fed officials calling for a rate hike sooner rather than later. The ISM Index on Monday tipped backed into expansion territory, jumping from 49.4 in August to 51.5 in September, the ISM Non-Manufacturing reading of 51.7 was the highest since last October, and the four-week moving average of 253,500 for weekly initial claims was the lowest since December 8, 1973.
Fittingly, a curve steepening trade took root, with the back end of the Treasury curve bearing the brunt of selling interest. That steepening, which bodes well for the earnings prospects for banks, contributed to a noticeable measure of relative strength in the bank stocks.
The SPDR S&P Bank ETF (KBE) increased 2.5% for the week, trading right through the headline volatility pertaining to Deutsche Bank's (DB) capital position and Wells Fargo's (WFC) fraudulent account openings. The S&P 500 financial sector for its part ended the week 1.5% higher.
The next best-performing sector was the energy sector, which was basically unchanged for the week despite oil prices eclipsing $50.00 per barrel at one point before settling the week up 2.7% at $49.55 per barrel.
A strengthening dollar acted as a headwind on the dollar-denominated commodity space, which featured a sharp sell-off in precious metal prices that was also a byproduct of crowded long positions being unwound and rising interest rates. For the week, gold prices fell 4.4% to $1258.60/troy ounce while silver prices declined 8.5% to $17.58/troy ounce.
Speaking of headwinds, Hurricane Matthew made headlines all week as it barreled toward the east coast of Florida as a Category 4 hurricane. It lost some steam fortunately as it moved northward, yet as a downgraded Category 2 storm it is still causing havoc for coastal areas in the southeast as of this writing and is expected to continue to do so through the weekend.
The next presidential debate on Sunday will certainly be a talking point -- and maybe a trading point -- come Monday morning. However, the path of long-term rates, the behavior of currency markets, and the third quarter earnings reporting period, which kicks up next week, should create plenty of trading interest on their own account.
As a reminder, the Treasury market will be closed Monday for Columbus Day while the stock market will be open for a full day of trading.
Index Started Week Ended Week Change % Change YTD %
DJIA 18308.15 18240.49 -67.66 -0.4 4.7
Nasdaq 5312.00 5292.40 -19.60 -0.4 5.7
S&P 500 2168.27 2153.74 -14.53 -0.7 5.4
Russell 2000 1251.65 1236.56 -15.09 -1.2 8.9
4:16 pm Closing Market Summary: Stocks End Flat with Rates and Employment Data in Focus (:WRAPX) :
The stock market finished a range bound week on a relatively flat note as investors pored over the Employment Situation Report for September. Interest rate volatility remained at the forefront as participants assessed an evolving fed funds rate hike picture and further Brexit shocks from across the pond. The Nasdaq Composite (-0.3%) settled in-line with the S&P 500 (-0.3%) and slightly behind the Dow Jones Industrial Average (-0.2%).
Long-term interest rates struggled for direction as a mixed reading from the September employment report shifted the U.S. rate hike outlook. Headline nonfarm payrolls increased by 156,000 (Briefing.com consensus 176k) while August's reading was revised to 167,000 from 151,000. Furthermore, average hourly earnings increased by 0.2% (Briefing.com consensus +0.2%), which could pave the way to an increase in inflation expectations. Average hourly earnings growth also registered the largest year-over-year increase in several years.
The fed funds futures market responded by discounting the odds of a November rate hike and improving the outlook for a December hike. The implied probability of an interest rate hike at the December meeting increased to 69.5% from 63.4% in the prior session. Rate hike odds also improved as participants assessed remarks from Cleveland Fed President Mester (an FOMC voter) and Fed Vice Chair Fischer. President Mester stated that the employment report appeared consistent with her expectations while Mr. Fischer called the reading a "Goldilocks number."
The benchmark index finished in the middle of its trading range, testing technical resistance near the 2155 price level. Nine sectors ended in the red with materials (-1.8%), industrials (-1.2%), and consumer discretionary (-0.4%) acting as notable laggards. On the flipside, financials (+0.1%) and health care (+0.1%) settled in positive territory.
In the heavyweight industrials sector (-1.2%), Honeywell (HON 106.94, -8.67) tumbled 7.5% after projections for its third and fourth quarter fell short of analyst estimates. Meanwhile, Dow component United Technologies (UTX 100.58, -1.50) finished at the bottom of the price-weighted average as it moved lower in sympathy with the name. The broader sector declined 1.4% this week, which compares to a loss of 0.7% in the benchmark index.
The Dow Jones Transportation Average (-0.9%) displayed relative weakness as airlines trimmed their weekly advance. The U.S. Global Jets ETF (JETS 23.09, -0.35) declined by 1.5%, erasing its weekly gain.
In the consumer discretionary space (-0.4%), retail names outperformed, evidenced by the 0.1% loss in the SPDR S&P Retail ETF (XRT 43.85, -0.03). In the ETF, Gap (GPS 26.25, +3.47) displayed relative strength after comparable store sales for September came in better than feared. The stock was also upgraded to "Hold" from "Sell" at Deutsche Bank. The discretionary space finished the week lower by 0.4%.
Property and casualty insurers led in the financial sector (+0.1%) as Dow component Travelers (TRV 114.53, +1.35) jumped 1.2%. The sub-group rebounded after Hurricane Matthew avoided a direct hit to Florida's east coast last evening. Banking names also continued their recent winning streak as the SPDR S&P Bank ETF (KBE 34.22, +0.03) extended its weekly gain to 2.1%. The broader sector advanced 1.5% this week.
Treasuries ended on a mostly higher note as the long end of the curve underperformed. The yield on the 2-yr note slipped two basis points (0.83%) while the yield on the 10-yr note declined one basis point (1.73%). The spread between the 2-yr and 10-yr note has expanded to 90 basis points from 83 basis points last Friday.
Today's participation was above the recent average as more than 929 million shares changed hands at the NYSE floor.
Today's economic data included the Employment Situation Report for September, the Wholesale Inventory Report for August, and Consumer Credit for August:
Nonfarm payrolls increased by 156,000 (Briefing.com consensus 176,000). Job gains have averaged 178,000 per month so far this year versus an average of 229,000 per month in 2015. August nonfarm payrolls revised to 167,000 from 151,000 July nonfarm payrolls revised to 252,000 from 275,000 Private sector payrolls increased by 167,000 (Briefing.com consensus 171,000) August private sector payrolls revised to 144,000 from 126,000
July private sector payrolls revised to 221,000 from 225,000
Unemployment rate was 5.0% (Briefing.com consensus 4.9%) versus 4.9% in August
Persons unemployed for 27 weeks or more accounted for 24.9% of the unemployed versus 26.1% in August
September average hourly earnings were up 0.2% (Briefing.com consensus +0.2%) after being up 0.1% in August Over the last 12 months, average hourly earnings have risen 2.6% versus 2.4% for the 12-month period ending in August
The average workweek was up 0.1 to 34.4 hours (Briefing.com consensus 34.4)
September manufacturing workweek was up 0.1 hour to 40.7 hours
Factory overtime was unchanged at 3.3 hours
The labor force participation rate was 62.9% versus 62.8% in AugustWholesale inventories declined 0.2% month-over-month in August (Briefing.com consensus -0.1%) following a downwardly revised 0.1% decline (from 0.0%) in June.
Wholesale sales were up 0.7% on the heels of a downwardly revised 0.6% decline (from -0.4%) in July.
Total outstanding consumer credit increased by $25.8 billion in August (Briefing.com consensus $18.0 billion) after increasing an upwardly revised $17.8 billion (from $17.7 billion) in July.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
There is no economic data of note scheduled to be released on Monday.
The stock market was on the defensive today as participants evaluated an Employment Situation Report for September that seemed likely to have the Federal Reserve on track for a December rate hike. Other factors impacting today's trade included rising long-term rates and relative weakness in the heavily-weighted materials (-1.9%) sector.
Equities stumbled at the start of the session as participants weighed the potential rate hike implications of the September employment report. The report showed solid job growth and also contained some encouraging news on average hourly earnings growth. Headline nonfarm payrolls rose by 156,000 while average hourly earnings increased by 0.2%. The Fed will be particularly interested in average hourly earnings as the 2.6% year-over-year increase is close to the highest it has been over the last seven years.
The fed funds futures market responded by further discounting the odds of an interest rate hike at the November meeting and increasing the probability of a hike in December. The implied probability of an interest rate hike in December has increased to 65.9% from 63.4% in the prior session. Fed funds futures have also enjoyed some jawboning from Cleveland Fed President Mester (an FOMC voter) and Fed Vice Chair Fischer. President Mester indicated that the September employment report was consistent with her expectations while Mr. Fischer called the reading a "Goldilocks number."
Market data today included the consumer credit report which shower total outstanding consumer credit increased by $25.8 billion in August after increasing an upwardly revised $17.8 billion (from $17.7 billion) in July. The key takeaway from the report is that consumer credit -- both revolving and nonrevolving -- continues to expand, which is a supportive element for the U.S. economy. In addition to nonfarm payrolls, private sector payrolls increased by 167,000 and the unemployment rate was 5.0% versus 4.9% in August. Also, the labor force participation rate was 62.9% versus 62.8% in August, and wholesale inventories declined 0.2% month-over-month in August following a downwardly revised 0.1% decline (from 0.0%) in June.
The first week of October, and the fourth quarter, ended lower, but off intraday lows. Weakness following the jobs report took the Dow Jones Industrial Average 113 points down at one point, but the index recovered to close the day -28.01 points (-0.15%) to 18240.49. The worst performing index today was the S&P 500, which lost 7.03 points (-0.33%) to 2153.74, and the Nasdaq Composite finished in between the two, shedding 14.45 points (-0.27%) to 5292.40. This week's moves take the three major US indices +4.7%, +5.4% and +5.7% YTD, respectively.
Middle of the pack as far as S&P sectors go, once again, was the Technology (XLK 47.62, -0.13 -0.27%) sector. Component First Solar (FSLR 37.58, -2.17 -5.46%) was the worst performer today as the stock was downgraded in the premarket session to a Neutral rating from a Buy at Goldman. Other sectors as measured by the S&P ended Friday XLFS +0.06%, XLV -0.07%, XLF -0.10%, XLU -0.13%, XLRE -0.26%, XLP -0.27%, IYZ -0.41%, XLY -0.45%, XLE -0.58%, XLI -1.29%, XLB -1.86% as all but Financial Services lagged.
In the S&P 500 Information Technology (800.80, -1.87 -0.23%) sector, trading was lower all session, but ended off intraday lows and held above the $800-level. Component Oracle (ORCL 38.71, -0.01 -0.03%) ended just lower as the stock was volatile today following the extension of the tender offer for the acquisition of NetSuite (N 105.19, -4.10 -3.75%). Other names in the space which held onto modest weakness through the close included GPN -3.76%, ADS -2.39%, ACN -2.13%, CTSH -1.68%, EBAY -1.59%, TSS -1.50%, CSRA -1.47%, TEL -1.34%, INTU -1.28%.
Other notable news items among sector components:
Oracle (ORCL) extended the expiration of its tender offer for the acquisition of NetSuite (N) to Friday, November 4, 2016. This will be the final extension that ORCL is obligated to make under the merger agreement. In the event that a majority of N's unaffiliated shareholders do not tender sufficient shares to reach the minimum tender condition, ORCL will respect the will of N's unaffiliated shareholders and terminate its proposed acquisition. American Stock Transfer & Trust Company LLC, the depositary for the tender offer, has indicated that as of 12:00 Midnight, Eastern time, at the end of October 6, 2016, about 4,568,498 unaffiliated Shares, or 11.2% of the total unaffiliated Shares, and 45,084,266 total Shares, or 55.3% of the total Shares issued and outstanding, have been tendered into and not properly withdrawn from the tender offer. Both figures include 293,328 Shares tendered pursuant to the guaranteed delivery procedures set forth in the Offer to Purchase.
Yahoo! (YHOO 43.22, -0.46 -1.05%) ticked lower in following a NYPost report that Verizon (VZ 49.92, -0.34 -0.68%) was seeking to have its purchase price for YHOO lowered amid its recent privacy hiccups.
Parkervision (PRKR 4.27, +0.07 +1.67%) filed a patent infringement complaint against Apple (AAPL 114.06, +0.17 +0.15%) in Germany; the accused products include the iPhone 6, iPhone 6s, and the iPad Air 2.
Elsewhere in the tech space:
The FCC released new reforms for data centers to promote investment in the business data services market. Specifically, Chairman Tom Wheeler announced small business would pay lower prices for high-capacity data and voice connections regarded as special access lines.
GoDaddy's (GDDY 35.48, +0.38 +1.08%) Chief Accounting Officer Matthew Kelpy resigned effective Sept. 30, and will serve as principal accounting office through Dec. 31, 2016.
Arris (ARRS 29.65, +1.88 +6.77%) entered into a Warrant and Registration Rights Agreement with Charter Communications (CHTR 266.97, -1.20 -0.45%) pursuant to which Charter may purchase up to 6 million of ARRS's ordinary shares.
Acacia Communications (ACIA 100.00, -9.42 -8.61%) priced a public offering of 4.5 million shares of its common stock at $100 per share.
Angie's List (ANGI 9.15, -0.42 -4.39%) announced that, effective yesterday, Thomas Evans was elected Chairman of the Board, replacing John Chuang, who resigned from his position as director and Chairman, effective October 3, 2016. In addition, ANGI announced Steven Kapner, director, has stepped down from the Board, also effective on October 3, 2016. In connection with the resignations, the Board has been reduced in size to 10 members from 12.
Vodafone (VOD 28.21, -0.34 -1.19%) India has acquired spectrum in all its key telecom circles in the spectrum auction for a total cost of INR 202.8 billion (2.74 billion). The new spectrum significantly enhances the coverage, capacity and speed of Vodafone India's 4G data services in its key circles, complementing existing high-quality 2G and 3G voice and data capabilities.
Avnet's (AVT 42.59, +0.01 +0.02%) deal to acquire Premier Farnell was cleared by the EU.
Analyst actions:
RUN was upgraded to Buy from Neutral at Goldman,
VSLR was upgraded to Neutral from Sell at Goldman,
KLAC was upgraded to Buy from Hold at Needham;
SEDG was downgraded to Sell from Neutral at Goldman,
FSLR was downgraded to Neutral from Buy at Goldman;
AMD was initiated with an Equal Weight at Barclays,
ZG was initiated with a Buy at Needham,
FISV was initiated with a Hold at Cantor Fitzgerald,
FIS was initiated with a Buy at Cantor Fitzgerald,
TERP was initiated with a Hold at Deutsche Bank,
FLIR was initiated with a Buy at Seaport Global Securities,
PTC was initiated with a Buy at Brean Capital
From Briefing.com: 4:15 pm : The stock market ended Thursday relatively flat as some interest rate volatility and some caution ahead of the September employment report on Friday kept a lid on things. The Dow Jones Industrial Average (-0.1%) and the Nasdaq Composite (-0.2%) settled slightly behind the S&P 500 (+0.05%). Long-term interest rates continued their recent climb despite some dovish-sounding minutes from the European Central Bank's (ECB) September meeting and accommodative jawboning from ECB Vice President Vitor Constancio.
Mr. Constancio briefly rallied global bond markets when he denied reports from earlier in the week that suggested the central bank has held discussions about tapering its asset purchase program. That headline boost proved to be short-lived, however, as Treasury prices soon started to fade again, pushing yields back up.
The yield on the benchmark 10-yr note, which slipped back to 1.71% after the Constancio headline first hit, finished higher by four basis points at 1.74%.
The stock market took the afternoon boost in long-term rates in stride. While there weren't any big gains (or losses) from a sector standpoint, the real estate (+0.2%), consumer staples (+0.1%), utilities (unch), and telecom services (-0.1%) sectors, otherwise known as "yield plays," held up reasonably well and finished off their worst levels of the day. Those four groups have lost between 1.6% and 3.7% this week, with the 10-yr note yield climbing 14 basis points since last Friday's close.
Stock market participants, by and large, showed limited conviction ahead of Friday's employment report.
The Employment Situation Report for September is in focus as participants try to assess the fed funds rate hike picture for the remainder of the year. The Briefing.com consensus expects the jobs report to show that 176,000 positions were added to nonfarm payrolls and that average hourly earnings increased 0.2%. The report is slated to cross the wires on Friday at 8:30 a.m. ET, which is when the media should also be busy reporting on Hurricane Matthew, a Category 4 storm that is expected to hit Florida's east coast Thursday night.
Six sectors ended in the green today with materials (+0.8%) and technology (+0.2%) leading the advance. Today's trade also featured an uptick in crude oil ($50.44/bbl; +$0.68; +1.4%) and weakness in the heavily-weighted health care (-0.4%) space.
Biotechnology underperformed inside the health care sector (-0.4%) as the iShares Nasdaq Biotechnology ETF (IBB 284.16, -6.64) fell 2.3%. Alnylam Pharmaceuticals (ALNY 36.21, -34.09) pressured the group after it announced that it was discontinuing Revusiran developments. The stock plunged 48.5% on the news. Mylan (MYL 36.84, -1.19) underperformed amid continued scrutiny of its EpiPen. Reports indicated that the company misclassified the device under the Medicaid Drug Rebate program.
The financial sector (+0.1%) outperformed as a steepening in the yield curve was seen as improving the earnings potential for the group. The SPDR S&P Bank ETF (KBE 34.20, +0.03) rose 0.1%, extending its weekly gain to 2.4%. MetLife (MET 47.15, +1.16) jumped 2.5% after confirming that Brighthouse Financial filed forms with the SEC to distribute common stock to MetLife shareholders. This is a crucial step in MetLife's plan to separate into two publicly traded companies.
In the technology space (+0.2%), top-weighed Apple (AAPL 113.89, +0.84) gained 0.7% after Canaccord Genuity issued a bullish note on iPhone sales. On the flipside, Twitter (TWTR 19.87, -5.00) tumbled 20.2% after reports signaled that Apple (AAPL 113.89, +0.84), Alphabet (GOOG 776.86, +0.39), and Disney (DIS 92.83, +0.38) are unlikely to pursue bids for Twitter.
Today's participation was below the recent average as more than 796 million shares changed hands at the NYSE floor.
Today's economic data was limited to Challenger Job Cuts for September and weekly initial claims:
September Challenger Job Cuts reported in at 44,300, which compares to the prior month's reading of 32,200.
For the week ending October 1, initial claims decreased by 5,000 to 249,000 (Briefing.com consensus 258,000).
Continuing claims for the week ending September 24 fell by 6,000 to 2.058 million.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include the 8:30 a.m. ET release of the Employment Situation Report for September. The Briefing.com consensus expects the report to show an increase of 176,000 in nonfarm payrolls. Meanwhile, August Wholesale Inventories (Briefing.com consensus -0.1%) and August Consumer Credit (Briefing.com consensus$18.0 billion) will cross the wires at 10:00 a.m ET and 3:00 p.m. ET, respectively. DJ30 -12.53 NASDAQ -9.17 SP500 +1.04 NASDAQ Adv/Vol/Dec 1110/1.520 bln/1712 NYSE Adv/Vol/Dec 1297/795.5 mln/1632
3:30 pm :
The dollar index was +0.6% around the 96.71 level, weighed on precious metals
Commodities, as measured by the Bloomberg Commodity Index, were -0.2% around the 85.51 level
Crude oil extended yesterday's post-EIA rally and ended above the $50.00/barrel resistance zone ahead of tomorrow's rig count data
November crude oil futures rose $0.68 (+1.4%) to $50.44/barrel
Baker Hughes rig count data will be released tomorrow at 10:30 am ET
Crude oil futures extended their rally after headlines crossed about oil ministers from OPEC and non-OPEC producers gathering in Istanbul to discuss details of last week's OPEC production cut to 32.5 mln barrels/day, compared to July production levels around 33.1 mln barrels/day.
The next official OPEC meeting will take place in Vienna, Austria on November 30
Natural gas ended nearly unchanged after an initial drop below the $3.00/MMBtu support level after EIA data showed a larger-than-expected build compared to Consensus
November Natural gas closed $0.01 higher (+0.3%) at $3.05/MMBtu
EIA highlights:
Working gas in storage was 3,680 Bcf as of Friday, September 30, 2016, according to EIA estimates.
Natural gas inventory showed a build of +80 bcf vs expectations for inventory to be a build of approximately +70 bcf.
Stocks were 74 Bcf higher than last year at this time and 205 Bcf above the five-year average of 3,475 Bcf.
At 3,680 Bcf, total working gas is above the five-year historical range.
In precious metals, gold dropped to multi-month lows, outpaced by the losses in silver, the gold:silver ratio increased for the third consecutive session
December gold ended today's session down $15.10 (-1.2%) to $1253.10/oz
As noted earlier, there aren't any direct headlines moving precious metals or the underlying Gold Miners (GDX, GDXJ). Continued strength in the US Dollar and Treasury Yields plays a role, which fueled this week's breakdown in gold prices to 3-month lows.
The 200-day simple moving average is challenged, along with the bullish gap zone from mid-June, bringing some buyers off the sidelines to play a bounce. The headlines that ECB Vice President Constancio has refuted the reports from earlier in the week that the ECB is looking at tapering its asset purchases also helped. Whether they can maintain this strength off morning lows for a bigger retracement remains to be seen.
The gold:silver ratio was ~72.3, compared to yesterday's pit trading close ratio of ~71.7
December silver closed today's session $0.35 lower (-2.0%) at $17.34/oz
Equity indices began the day under modest selling pressure as rising global interest rates continued to weigh. The latest round of selling pressure came despite some dovish-sounding minutes from the September 8 ECB meeting. The minutes did not mention a potential tapering of the bank's asset purchase program. However, participants evidently remained concerned about the notion that ECB officials might have begun discussing potential tapering measures after the meeting.
The stock market reversed course in a precipitous manner, though, shortly before midday following reports that ECB Vice President Constncio denied the earlier reports suggesting ECB officials have held discussions.
Market data today included the September Challenger Job Cuts report, which came in at 44,300 compared to the prior month's reading of 32,200. Additionally, for the week ending October 1, initial claims decreased by 5,000 to 249,000.
When Thursday came to a close, the stock market had traded at a stable, albeit split clip for the majority of the session. Thus was the design of the close, as only the S&P 500 managed gains, up 1.04 points (+0.05%) to 2160.77. The Nasdaq Composite was pressured the most, shedding 9.17 points (-0.17%) to 5306.85, and the Dow Jones Industrial Average lost 12.53 points (-0.07%) to 18268.50. Top weighted S&P 500 components XOM +0.05%, FB +0.21%, JPM +0.27%, PG +0.42%, GOOGL +0.23% and WFC +0.42% helped the index escape the clutches of negative territory.
Technology (XLK 47.75, +0.11 +0.23%) finished the Thursday affair modestly in the green, but was bested only by Materials among S&P sectors. Component Lam Research (LRCX 100.19 +4.02 +4.18%) was the best performing component today on the back of news out last night after the close which confirmed that LRCX and KLA-Tencor (KLAC 71.79, +0.58 +0.81%) had terminated their merger agreement. Other sectors as measured by the S&P ended the session XLB +0.82%, XLRE +0.19%, XLP +0.19%, XLE +0.14%, XLY +0.07%, XLFS +0.06%, XLI +0.05%, XLF +0.05%, XLU -0.04%, IYZ -0.35%, XLV -0.44% with Healthcare, Telecoms and Utilities lagging.
In the S&P 500 Information Technology (802.67, +1.80 +0.22%) sector, the Thursday session ended on a plateaued positive tick. Component Salesforce.com (CRM 71.26, +2.84 +4.15%) was another hot name today as the rumor mill was again warm with speculation that CRM was the lone remaining bidder for Twitter (TWTR 19.87, -5.00 -20.10%) after Disney (DIS 92.83, +0.38 +0.41%) and Alphabet's (GOOG 776.86, +0.39 +0.05%) Google reportedly ducked out of the running. Other names in the space which performed well today included SWKS +2.05%, FIS +1.83%, QRVO +1.54%, FISV +1.12%, QCOM +1.05%, APH +0.96%, AAPL +0.74%.
Other notable news items among sector components:
KLA-Tencor (KLAC) and Lam Research (LRCX) have agreed to terminate their proposed merger agreement. The parties decided to it was not in the best interests of their respective stakeholders to continue pursuing the merger after the U.S. DoJ advised KLAC and LRCX that it would not continue with a consent decree that the parties had been negotiating. No termination fees will be payable by either company in connection with the termination of the Merger Agreement.
Twitter (TWTR) had a volatile session following a Re/Code report that Alphabet's (GOOG) Google will not move forward with an offer for the company and that Apple (AAPL 113.89, +0.84 +0.74%) is unlikely to be a possible bidder. Re/Code further reported that Disney (DIS) has decided not to make a formal offer for TWTR as well.
Alliance Data's (ADS 214.05, -2.23 -1.03%) Epsilon signed a new multi-year agreement with Red Roof for email marketing services. Financial terms of the deal were not disclosed.
The Western Union Company (WU 20.40, +0.10 +0.49%) rolled out Western Union Money Transfer services across OXXO, Mexico's largest convenience store chain geographically.
Monotype (TYPE 21.33, +0.12 +0.57%) partnered with Alphabet's (GOOG) Google to create a typography project -- Google Noto. Google Noto now covers more than 800 languages and 100 writing scripts, which includes letters in multiple serif and sans serif styles across up to eight weights, as well as numbers, emoji, symbols and musical notations.
eBay (EBAY 32.14, -0.01 -0.03%) to acquire image recognition technology company Corrigon Ltd. Financial terms of the deal were not disclosed.
Cognizant (CTSH 51.21, +0.31 +0.61%) has been selected by Future Group as a strategic partner for Future Consumer.
Microsoft (MSFT 57.74, +0.10 +0.17%) and Powel AS announced a pilot project that will help create a more efficient, flexible and intelligent grid of the future.
Elsewhere in the tech space:
Semtech (SMTC 27.66, -0.08 -0.29%) confirmed an agreement with Comcast (CMCSA 65.41, -0.39 -0.59%) to deploy trial LoRaWAN network in the United States. The deal provides warrant for CMCSA to acquire up to $30 million of common stock. As such, updated its GAAP outlook for Q3 of fiscal year 2017 and now expects GAAP net sales to be in the range of $130-138 million compared to the prior range of $134-142 million. GAAP earnings per diluted share are now expected to be in the range of $0.43-0.47 compared to prior range of $0.49-0.53.
AT&T (T 39.11, -0.05 -0.13%) announced a new multi-year relationship with Amazon (AMZN 841.66, -2.70 -0.32%) Web Services to integrate cloud and networking capabilities. Financial details were not disclosed.
Samsung (SSNLF 1600.00, flat) agreed to acquire Viv Labs for an undisclosed amount.
Science Applications (SAIC 69.05, +0.42 +0.61%) was awarded a $575 million contract by the U.S. Army Corps.
ATRM Holdings (ATRM 1.85, +0.35 +23.33%) acquired certain assets of Edgebuilder Wall Panels and Glenbrook Lumber & Supply. Consideration for the acquisition includes $4 million in cash (including $3 million paid at closing and $1 million in deferred payments to be made in quarterly installments over the next year), and 100,000 shares of ATRM common stock.
Consolidated Comms Illinois (CNSL 24.82, +0.08 +0.32%) completed refinancing of secured term debt resulting in extension of maturities, significant interest savings and an increase to its revolving loan facility.
DTS (DTSI 42.43, +0.02 +0.05%) acquired Arctic Palm Technology for an undisclosed amount.
Gogo (GOGO 10.91, -0.36 -3.19%) shares were active today following an update from Verizon (VZ 50.26, -0.01 -0.02%) on its commercial connectivity trials. VZ has deemed its 4G LTE 700 MHz network safe for in-flight wireless connectivity.
According to Bloomberg, NXP Semi (NXPI 103.49, +0.99 +0.97%) and Qualcomm (QCOM 67.54, +0.70 +1.05%) could be less than 10% apart regarding value of an M&A deal.
Analyst actions:
KLAC was upgraded to Buy from Neutral at B. Riley & Co.,
BAH was upgraded to Outperform from Mkt Perform at Raymond James,
CBB was upgraded to Buy from Hold at Gabelli & Co,
JASO, YGE and TSL were upgraded to Buy from Sell at Axiom Capital,
SCTY was upgraded to Hold from Sell at Axiom Capital;
IMPV was downgraded to Neutral from Buy at DA Davidson;
TTD was initiated with a Buy at Cantor Fitzgerald,
TUBE was initiated with a Buy at B. Riley & Co.,
GIMO was initiated with a Mkt Perform at JMP Securities,
SQ was initiated with a Mkt Perform at Keefe Bruyette
From Briefing.com: 4:53 pm Dialog Semi. reports prelim Q3 revenue above guidance of approx $345 mln vs $309 mln estimate (DLGNF) :
Co reports preliminary Q3 2016 revenue of ~$345 mln, 13% above the mid-point of the July Q3 2016 outlook range and 5% above Q3 2015. On 28 July 2016, Dialog indicated that it expected revenue in Q3 2016 to be in the range of $290 to $320 million. The higher than expected preliminary revenue reported today is partially the result of delivery dates for certain Q4 Mobile Systems orders being pulled forward into Q3 to accommodate a public holiday in China during the first week of October. Dialog will review its Q4 2016 and full year guidance during the coming weeks. The company is currently finalising the financial accounts for Q3 2016 and will publish full results on Thursday, 3 November 2016.
Upside sales guidance is boosting AAPL, AVGO, QCOM in after hours
4:13 pm Alcoa completes 1:3 reverse stock split, shares to begin trading on split-adjusted basis tomorrow morning (AA) :
4:10 pm Semtech confirms agreement with Comcast (CMCSA) to deploy trial LoRaWAN network in the United States, deal provides warrant for Comcast to acquire up to $30 mln of common stock; co updates Q3 guidance as a result (shares halted) (SMTC) :
The co confirmed that it has entered into an agreement with Comcast (CMCSA) regarding the intended trial deployment by Comcast of a low-power wide-area network in the United States, based on Semtech LoRa Wireless Radio Frequency Technology. The LoRaWAN-based network trial deployment is expected to commence in the calendar fourth quarter of 2016 in Philadelphia and San Francisco, and target "smart" enterprise, government and consumer Internet of Things (IoT) applications such as metering, asset tracking, building and public venue management, security, food safety, vending, and waste management. Upon successful completion of the trials, the network could be expanded to up to 30 U.S. cities within a period of 30 months.
To facilitate an accelerated build-out of the network in at least 30 major cities across the country, Semtech has agreed to grant Comcast a Warrant to purchase 1,086,957 shares of Semtech's common stock at a purchase price per share equal to $0.01. This Warrant will vest in several phases based upon successful completion of milestones which are generally tied to regional coverage targets as follows:
10% will vest on the Warrant issue date; 10% will vest once at least 50% of the population of two target cities have LoRaWAN coverage; 26% will vest once at least 50% of the population of 10 target cities have LoRaWAN coverage; 27% will vest once at least 50% of the population of 20 target cities have LoRaWAN coverage; 27% will vest once at least 50% of the population of 30 target cities have LoRaWAN coverage
This Warrant is expected to vest over a period of 30 months and is valued at approximately $30 mln based on the average closing price of Semtech's common stock over the 10-trading day period ending Oct. 4, 2016. In accordance with U.S. generally accepted accounting principles ("GAAP"), any expense related to this Warrant is expected to be recorded as a reduction to net sales since it is being granted to a customer.
Accordingly, Semtech expects to record a reduction to its GAAP net sales of approximately $3.8 mln in the third quarter of fiscal year 2017 which is expected to reduce GAAP earnings per diluted share for this same period by approximately $0.06. As a result of these items, Semtech is updating its GAAP outlook for the third quarter of fiscal year 2017 and now expects GAAP net sales to be in the range of $130-138 mln compared to the prior range of $134-142 mln (vs $138.48 mln Capital IQ Consensus Estimate). GAAP earnings per diluted share are now expected to be in the range of $0.43-0.47 compared to prior range of $0.49-0.53.
4:03 pm Semtech: Comcast (CMCSA) announces machineQ, will use Semtech's LoRa Wireless Radio Frequency Technology to deploy network trials in Philadelphia and San Francisco later this year (shares halted) (SMTC) :
Comcast (CMCSA) announced machineQ, a new business trial venture focused on building business-to-business solutions and a platform for the Internet of Things. As a part of machineQ, Comcast will work with select commercial partners in proof of concepts to use its network to enable partners to gather, transmit, and analyze data from connected devices distributed throughout their organizations.
Comcast will use Semtech Corporation's globally-proven LoRa Wireless Radio Frequency Technology to deploy network trials in Philadelphia and San Francisco later this year. These trials will focus on enabling use cases such as utility metering, environmental monitoring (e.g., temperature, pollution, noise), and asset tracking through LoRa Technology-enabled devices and network services.
4:15 pm : The stock market ended the midweek affair on a higher note as a rally in crude oil futures and financials (+1.5%) outweighed some lingering rate jitters. The Dow Jones Industrial Average (+0.6%) finished ahead of the Nasdaq Composite (+0.5%) and the S&P 500 (+0.4%).
Index futures climbed in pre-market action, receiving a boost after the release of a weaker-than-expected reading of the ADP National Employment Report for September. The report indicated the addition of 154,000 (Briefing.com consensus 171k) private sector payrolls in September, but it is worth remembering that the Employment Situation Report, which will be released on Friday, carries a lot more influence. The September Employment Situation Report will be released on Friday at 8:30 ET (Briefing.com consensus 176,000). The hiring landscape remains in focus as participants continue refining their rate hike expectations.
Interest rates edged higher, keeping a lid on the market after the ISM Services Index for September handily beat expectations. The index jumped to 57.1 (Briefing.com consensus 52.8) from 51.4 in August. The Treasury complex sold off in response as yields moved higher across the curve. The increase in interest rates pressured defensively-oriented real estate (-1.9%), telecom services (-1.8%), utilities (-0.3%), and consumer staples (-0.2%) for a second straight session.
A rally in crude oil also contributed to strength in growth-sensitive sectors. The energy component extended an early lead after the Department of Energy confirmed a positive reading from the American Petroleum Institute. The EIA reported that crude oil stockpiles declined by 2.97 million barrels (consensus: +2.56 million) while gasoline inventories rose by 0.22 million barrels (consensus: +0.70 million). WTI crude finished the day higher by 2.2% ($49.76/bbl; +$1.08).
The benchmark index finished off its session high, testing technical resistance near the 2160 price level. Seven sectors settled in the green with financials (+1.5%), energy (+1.4%), and materials (+0.7%) leading the advance.
The heavily-weighted financial (+1.5%) sector topped the leaderboard as steepening in the yield curve improved the earnings potential for the group. The spread between the 2-yr yield and 10-yr yield expanded to 89 basis points. Money center banks and life insurance names outperformed as MetLife (MET 45.74, +0.87) and Wells Fargo (WFC 44.76, +1.01) gained 2.7% and 2.9%, respectively. The broader group has gained 1.5% this week, leading the remaining sectors on the weekly leaderboard.
The high-beta chipmakers outperformed in the technology sector (+0.4%), evidenced by the 0.8% gain in the PHLX Semiconductor Index. Broadcom (AVGO 173.97, +4.92) gained 2.6% after receiving an "Outperform" designation at Bernstein. Micron (MU 17.77 -0.02) settled modestly lower as a disappointing gross interest margin masked a bottom-line beat. Separately, Twitter (TWTR 24.75, +1.23) gained 5.6% after reports indicated that the company could receive takeover bids as early as this week. Recall that Alphabet (GOOG 780.44, +4.01), Microsoft (MSFT 57.85, +0.61), Disney (DIS 93.08, +0.49), and Salesforce.com (CRM 67.72, -4.91) have previously been cited as potential suitors.
Retail names displayed relative strength in the consumer discretionary space (+0.4%) as the SPDR S&P Retail ETF (XRT 44.05, +0.64) gained 1.3%. In the group, apparel retailers led as Nordstrom (JWN 52.83, +1.18) and Gap (GPS 22.50, +0.72) moved higher by 2.4% and 3.5%, respectively. Conversely, discount retailers underperformed for a second session as Dollar Tree (DLTR 76.43, -3.10) weighed on the group.
Treasuries finished near their worst levels as yields rose through the curve. The yield on the 2-yr note increased one basis point (0.83%) while the yield on the benchmark 10-yr note rose three basis points (1.72%).
Today's participation was above the recent average as more than xxx million shares changed hands on the NYSE floor.
Today's economic data included weekly MBA Mortgage Index, ADP Employment Report for September, August Trade Balance, Factory Orders for August, and ISM Services for September:
The MBA Mortgage Index indicated that mortgage applications rose 2.9% in the week ending October 1. This followed a 0.7% decline in the prior week.
ADP said an estimated 154,000 positions (Briefing.com consensus 171,000) were added to private sector payrolls in September, almost all of which came from the Service-providing sector (151,000).
Small businesses added 34,000 jobs, midsized businesses increased their payrolls by 56,000 positions, and large businesses added 64,000 jobs.
The Trade balance report for August showed a widening in the deficit to $40.7 billion (Briefing.com consensus -$39.1 billion) from $39.5 billion in July.
Factory orders increased 0.2% in August (Briefing.com consensus +0.1%) following a downwardly revised 1.4% increase (from 1.9%) in July. Total manufacturing shipments were unchanged after declining 0.4% in July.
The ISM Non-Manufacturing PMI increased to 57.1 in September (Briefing.com consensus 52.8) from 51.4 in August.
September marked the highest reading for the index since October 2015.
Tomorrow's economic data will be limited to September Challenger Job Cuts and weekly initial claims (Briefing.com consensus 258k), which will be released at 7:30 ET and 8:30 ET, respectively.
Russell 2000: +9.9% YTD
Nasdaq: +6.2% YTD
S&P 500: +5.7% YTD
Dow Jones: +4.9% YTD
DJ30 +112.58 NASDAQ +26.36 SP500 +9.24 NASDAQ Adv/Vol/Dec 1953/1.614 bln/889 NYSE Adv/Vol/Dec 1804/962.1 mln/1162
3:45 pm :
WTI crude oil ends the day strong following API/EIA weekly oil storage data
Nov WTI crude oil finished today's session +2.2% at $49.76/barrel
Nov natural gas futures rose back above the $3/MMBtu level again today, closing +2.7% at $3.04/MMBtu
Moving over to the metals...
Dec gold closed out today's session -0.1% at $1268.20/oz, while Dec silver ended -0.5% at $17.69/oz
Dec copper slipped one cent to $2.16/lb
Interest rates remained in focus as investors pored over a mixed set of economic data. The ADP National Employment Report for September came in below consensus, indicating that 154,000 jobs were added in September. Conversely, the ISM Services Index for September topped expectations, rising to 57.1 from 51.4. This was the highest reading since October 2015.
The fed funds futures market ticked higher following the mixed data, but the needle remains little changed ahead of Friday's Employment Situation Report for September. The government employment report is expected to show that 176,000 nonfarm payrolls were added. The fed funds futures market indicates that the implied probability of a rate hike at the November meeting is 16.6%, rising from 14.5% in the prior session. The odds of a rate hike in December have increased to 64.3% from 63.4% yesterday.
An extended rally in crude oil has also contributed to early strength. The energy component gained ground overnight after the American Petroleum Institute reported its weekly inventory data. Oil added to its winning streak after the Department of Energy confirmed the reading with its more influential inventory data. The EIA reported that crude oil stockpiles declined by 2.97 million barrels while gasoline inventories rose by 0.22 million barrels. At the end of the session, November WTI crude oil futures were +2.2% at $49.76/barrel.
Market data today included the MBA Mortgage Index which indicated that mortgage applications rose 2.9% in the week ending October 1. This followed a 0.7% decline in the prior week. As mentioned, the ADP said an estimated 154,000 positions were added to private sector payrolls in September, almost all of which came from the Service-providing sector (151,000). Also, the trade balance report for August showed a widening in the deficit to $40.7 billion from $39.5 billion in July. Additionally, factory orders increased 0.2% in August following a downwardly revised 1.4% increase (from 1.9%) in July. Total manufacturing shipments were unchanged after declining 0.4% in July. Lastly, as mentioned, the ISM Non-Manufacturing PMI increased to 57.1 in September from 51.4 in August.
The stock market ended on a higher note but modestly off highs of the day. The session was led higher by the Dow Jones Industrial Average which added 112.58 points (+0.62%) to 18281.03. The Nasdaq Composite was up 26.36 points (+0.50%) to 5316.02, and the S&P 500 rounded out the trio higher by 9.24 points (+0.43%) to 2159.73. Large cap Dow components which held the sector higher included XOM +0.9%, JNJ +0.3%, JPM +1.6%, PG +0.6% and PFE +0.5%.
Technology (XLK 47.64, +0.17 +0.36%) continued the recent trend, finishing middle of the pack among other S&P sectors but ending positive for the first time in October. Component Salesforce.com (CRM 68.42, -4.21 -5.80%) was the worst performer today on the back of continued, and unconfirmed, speculation that the company would make a bid for Twitter (TWTR 24.87, +1.35 +5.74%). Other sectors as measured by the S&P closed the day XLF +1.61%, XLE +1.53%, XLFS +1.51%, XLB +0.70%, XLI +0.64%, XLY +0.44%, XLV +0.38%, XLP -0.10%, XLU -0.21%, IYZ -0.59%, XLRE -1.86%.
In the S&P 500 Information Technology (800.87, +3.53 +0.44%) sector, Wednesday ended above the 800-level for the first time in October. Component Micron (MU 17.70, -0.10 -0.56%) turned in a modestly lower session following mostly better than expected earnings. Other names in the space which closed higher included FSLR +4.00%, GPN +3.40%, TSS +3.09%, AVGO +2.62%, ADSK +2.51%, AKAM +2.46%, JNPR +2.43%, TDC +2.06%, HPE +1.83%, HPQ +1.76%, ADS +1.68%.
Other notable news items among sector components:
Shares of both Twitter (TWTR) and Salesforce.com (CRM) were active today amid the latest round of speculation that CRM would make an attempt at purchasing TWTR. CRM's CEO Mark Benioff appeared on CNBC, not acknowledging, but not refuting the merger talks as he said the company looks at everything, and passes on most things (when asked about M&A).
NVIDIA (NVDA 68.23, -0.07 -0.10%) and FANUC Corporation announced a collaboration to implement artificial intelligence on the FANUC Intelligent Edge Link and Drive system to increase robotics productivity and bring new capabilities to automated factories worldwide.
Harris (HRS 91.79, +0.53 +0.58%) announced the U.S. Army has placed an initial order of about $10 million for the company's Falcon III AN/VRC-118 Mid-tier Networking Vehicular Radios.
Accenture (ACN 118.21, -0.03 -0.03%) to acquire Defense Point Security. Financial terms were not disclosed. Also, startup incubator 1776 selected ACN to provide guidance and insights to its roster of digital health startups. Financial terms of the deal were not disclosed. The company also announced it has teamed with Adobe (ADBE 108.80, +0.41 +0.38%) to launch new digital marketing solutions for financial services organizations in North America and Europe. The newly released solutions are designed to help financial services clients attract, engage and retain high-value customers by creating relevant digital experiences that grow sales and revenue while improving retention and loyalty.
CSRA (CSRA 26.61, -0.32 -1.19%) announced it was one of seven companies to win a new indefinite-delivery, indefinite-quantity award to modernize the application, database and infrastructure used to administer and pay contracts issued to defense companies. The contract has a $142 million ceiling over a 10 year period.
The Safariland Group, the parent company of VIEVU, a leading provider of body worn video cameras used by thousands of law enforcement agencies in 17 countries, announces it has satisfied its contract to provide body worn cameras to the Miami-Dade Police Department, enabling the MDPD to achieve its goal of deploying more than 1,000 body worn cameras by the end of September 2016. The video data collected from the body worn cameras provided to the MDPD officers equipped with the body worn cameras will be uploaded, stored, and managed on VIEVU Solution, the industry's most flexible and mobile-friendly evidence management system built on the Microsoft (MSFT 57.64, +0.40 +0.70%) Azure Government Cloud.
Elsewhere in the tech space:
Twilio's (TWLO 61.47, +0.53 +0.87%) Chief Operating Officer Roy Ng transitioned to Senior Vice President of Commercial Operations effective immediately.
AT&T (T 39.16, -0.26 -0.66%) and Communications Workers of America reached a tentative agreement in national internet contract negotiations (covers nearly 1,200 employees in 16 states).
Network-1 (NTIP 2.74, -0.00 -0.10%) announced the settlement of patent litigation with Polycom (PLCM) which agreed to license NTIP's Remote Power Patent for Power over Ethernet products through March 2020.
QTS Realty Trust (QTS 50.27, -0.39 -0.77%) acquired the sole rights to VMware vCloud Government Service from VMware (VMW 74.00, +1.55 +2.14%). Financial terms of the deal were not disclosed.
Nokia (NOK 5.71, -0.07 -1.21%) has acquired Eta Devices, a US-based start-up specializing in power amplifier efficiency solutions for base stations, access points and devices. Eta Devices will bolster Nokia's push to enhance base station energy efficiency, an increasingly important area for operators on the path to 4.9G and 5G.
Acacia Communications (ACIA 113.54, +11.54 +11.31%) filed an amended S-1 for offering of 4.5 million shares and raised Q3 guidance to EPS of $0.83-0.90 on revenues of $130-133 million; ACIA recently raised guidance on 9/26 for EPS of $0.72-0.81 on revs of $127-131 million.
According to The Verge, a Samsung (SSNLF 1600.00, +50.00 +3.23%) replacement smartphone caught fire while on a Southwest Airlines (LUV 39.10, -0.06 -0.15%) flight.
In reaction to quarterly results:
Micron (MU) reported a better than expected Q4 loss per share of $0.05 on revenues which fell 10.6% compared to last year to $3.22 billion. The company also guided Q1 EPS in the range of $0.13-0.21 on revenues of $3.55-3.85 billion.
Global Payments (GPN 79.04, +2.60 +3.40%) reported better than expected Q1 EPS of $0.86 on revenues which increased 52.5% compared to last year to $817.3 million. The company also raised FY17 EPS guidance to $3.45-3.55 from $3.40-3.50.
Analyst actions:
GIMO was downgraded to Neutral from Buy at DA Davidson and to Mkt Perform from Outperform at Raymond James,
ATEN was downgraded to Neutral from Buy at DA Davidson,
IDCC was downgraded to Neutral from Buy at Dougherty;
NFLX was initiated with a Buy at Loop Capital,
AVGO was initiated with an Outperform at Bernstein,
ADS was initiated with an Overweight at Atlantic Equities,
TEAM was initiated with an Outperform at Cowen
From Briefing.com: 4:06 pm Micron beats by $0.06, reports revs in-line (MU) : Reports Q4 (Aug) loss of $0.05 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of ($0.11); revenues fell 10.6% year/year to $3.22 bln vs the $3.19 bln Capital IQ Consensus.
"We are seeing improving market conditions in terms of both slowing supply growth and improving demand across a number of key segments," said Micron CEO Mark Durcan.
Revenues for the fourth quarter of fiscal 2016 were 11 percent higher compared to the third quarter of fiscal 2016.
DRAM sales volumes were up approximately 20 percent, while NAND sales volumes were up approximately 12 percent.
DRAM average selling prices declined approximately 6 percent, while NAND average selling prices were relatively unchanged.
The company's overall consolidated gross margin of 18 percent for the fourth quarter of fiscal 2016 was slightly higher compared to the third quarter due to increases in gross margin of DRAM products.
4:01 pm Aehr Test Systems regains compliance with the Nasdaq $2.5 mln minimum stockholders' equity requirement for continued listing (AEHR) :
4:15 pm : The stock market ended the Tuesday affair on a lower note as rising interest rates and a stronger dollar pressured the major averages. The S&P 500 (-0.5%) finished in-line with the Dow Jones Industrial Average (-0.5%) and behind the Nasdaq Composite (-0.2%).
Equity indices began the day on a choppy note as renewed Brexit concerns continued to plague the foreign exchange market. Sterling fell 0.9% against the greenback (1.2726) after UK Prime Minister Theresa May reminded investors that the UK remains on course to invoke Article 50 of the Lisbon Treaty by the end of March 2017. The pound notched a new 31-year low (1.2720) against the dollar, which in turn helped support the UK's FTSE (+1.2%). Weakness in cable also led to an early downturn in the euro, which contributed to gains in European bourses.
The single currency reversed course near midday when reports indicated that the European Central Bank is nearing a consensus on tapering its quantitative easing program ahead of its planned conclusion. Recall that the ECB contributed to rate jitters in September when President Mario Draghi indicated that an extension of the asset purchase program past March 2017 was not discussed at the most recent policy meeting. The euro/dollar pair rallied to the 1.1240 price level before erasing its gain. The single currency ended lower by 0.1% against the dollar (1.1202).
The news of potential tapering on the horizon led to a downturn in sovereign bonds, which boosted rates globally. Defensively-oriented sectors extended early losses as participants unwound some crowded trades in real estate (-1.6%), telecom services (-1.7%), and utilities (-2.2%). The benchmark index rallied in the final hour of trade, narrowing its loss to 0.5%. Heavily-weighted financials (+0.3%) finished with the only gain.
The financial sector (+0.3%) led the advance as steepening in the yield curve boosted earnings prospects for the group. Richmond Fed President Jeffrey Lacker, who is not an FOMC voter, kept the rate hike conversation alive, saying that the fed funds rate should be higher given current inflation and unemployment rates. Mr. Lacker also advocated pre-emptive rate hikes in order to sustain economic stability. The SPDR S&P Bank ETF (KBE 33.54, +0.31) finished higher by 0.9%. Conversely, Wells Fargo (WFC 43.75, -0.08) ended behind the group after reports indicated that fraudulent account activity may have impacted small business owners in addition to consumer banking customers.
In the technology sector (-0.2%), Dow component Apple (AAPL 113.00, +0.48) displayed relative strength, advancing 0.4%. Fellow heavyweight Alphabet (GOOG 776.43, +3.87) also outperformed after its recent hardware launch event. The tech giant unveiled a number of devices including new smartphones and a smart home hub. The high-beta chipmakers finished slightly behind the broader sector, evidenced by the 0.3% loss in the PHLX Semiconductor Index. Micron (MU 17.80, +0.07) finished ahead of the price-weighted index as participants looked forward to the company's earnings release this evening.
The consumer staples sector (-0.9%) underperformed as defensively-oriented groups remained pressured by rising rates. Dollar Tree (DLTR 76.43, -3.10) declined 3.9% after being downgraded to "Neutral" from "Buy" at Cleveland Research. Meanwhile, Dr Pepper Snapple (DPS 86.86, -3.90) fell 4.3% after being downgraded to "Hold" from "Buy" at Evercore ISI. The broader sector extended its weekly loss to 1.5%.
Treasuries finished near their worst levels as yields rose through the curve. The yield on the 2-yr note increased two basis points (0.82%) while the yield on the benchmark 10-yr note rose six basis points (1.69%).
Today's participation was above the recent average as more than 876 million shares changed hands on the NYSE floor.
There was no economic data of note released today.
Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index. Meanwhile, the ADP Employment Change Report for September (Briefing.com consensus 171k) and the August Trade Balance (Briefing.com consensus -39.1 billion) will be released at 8:15 ET and 8:30 ET, respectively. The day's data will be capped off with Factory Orders for August (Briefing.com consensus 0.1%) and ISM Services for September (Briefing.com consensus 52.8), which will cross the wires at 10:00 ET.
Russell 2000: +9.1% YTD
Nasdaq: +5.6% YTD
S&P 500: +5.2% YTD
Dow Jones: +4.3% YTD
DJ30 -85.40 NASDAQ -11.22 SP500 -10.71 NASDAQ Adv/Vol/Dec 1093/1.563 bln/1761 NYSE Adv/Vol/Dec 834/876.1 mln/2142 3:30 pm :
The dollar index surged +0.4% around the 96.11 level, weighing on precious metals in particular
Commodities, as measured by the Bloomberg Commodity Index, were -0.5% around the 85.14 level
Crude oil snapped its 4-day OPEC-fueled streak & retreated from fresh 1-month highs hit earlier in the session ahead of a slurry of data including API and EIA
November crude oil futures fell $0.13 (-0.3%) to $48.68/barrel
Crude took a hit this morning after headlines crossed about Iran & Lybia increasing production. These two countries are exempt from last week's OPEC production cut and are seeking to further ramp up production in the near future.
Reminder: Last week in Algiers on the sidelines of the International Energy Forum, OPEC unexpectedly announced they would reduce output to 32.5 mln barrels/day, compared to July's production levels of around 33.1 mln barrels/day.
The next official OPEC meeting will take place in Vienna, Austria on November 30, where details of the recently annouced production cut are expected to be released.
Weekly EIA data will be released tomorrow at 10:30 am ET
API data will be released after the bell today
Baker Hughes rig count data will be released Friday at 1 pm ET
Monthly IEA data will be released on Oct 11
Natural gas extended yesterday's modest rally ahead of Thursday's inventory data
November natural gas closed $0.04 higher (+1.4%) at $2.96/MMBtu
Weekly EIA inventory data is scheduled to be released this Thursday at 10:30 am ET
In precious metals, gold dropped to its lowest level since mid-June, saw its losses outpaced by the decline in silver; The gold:silver ratio extended yesterday's gains
December gold ended today's session down $42.80 (-3.3%) to $1269.90/oz
December silver closed today's session $1.05 lower (-5.6%) at $17.78/oz
The gold:silver ratio was at ~71.4, compared to yesterday's pit trading closing ratio of ~69.7
Base metal copper inched lower in afternoon pit trading
December copper closed $0.02 lower (-0.9%) at $2.17/lb
Equity indices began the day on a choppy note, shrugging off a positive bias in global markets. Japan's Nikkei (+0.8%) extended its winning streak amid softening in the yen and upbeat commentary from Bank of Japan Governor Haruhiko Kuroda. Meanwhile, the UK's FTSE (+1.2%) paced the advance in Europe as the pound extended its recent loss. Sterling slipped to a 31-year low (1.2720) against the dollar overnight after UK Prime Minister Theresa May stated yesterday that the country will trigger Article 50 of the Lisbon Treaty by the end of March 2017.
The benchmark index maintained a narrow 12-point trading range through the first half as rising rates, a stronger dollar, and developments in Europe restricted risk appetite. The U.S. Dollar Index (96.11, +0.37 +0.38%) floated off its session high after the euro narrowed its loss against the greenback. The move was prompted by reports that the European Central Bank is nearing a consensus on tapering its quantitative easing program before the anticipated end. ECB President Draghi stated during his most recent press conference that there was no discussion of extending the asset purchase program beyond March 2017. Furthermore, it makes sense to taper purchases in a way similar to what the Federal Reserve did in 2014.
While there was no economic data announced today, the World Trade Organization recently cut its global trade forecast for 2016, citing in part a reduced level of imports to the U.S. On Wednesday market participants will catch a glimpse of how U.S. trade fared in August with the release of the Trade Balance report.
When the day was done, the three major US indices were lower again. Starting the week off with back to back losing sessions, the S&P 500 shed 10.71 points (-0.50%) to 2150.49. The Dow Jones Industrial Average lost 85.40 points (-0.47%) to 18168.45, and the Nasdaq Composite was down 11.22 (-0.21%) to 5289.66. The highlight of the day was Alphabet (GOOGL 802.79, +2.41 +0.30%) company Google's live streamed smartphone unveiling event. The company announced a $649 phone called Pixel, along with a Wifi solution and VR headset. Only time will tell if the Pixel can break into the historically Apple-centric (AAPL 113.00, +0.48 +0.43%) smartphone market.
Technology (XLK 47.47, -0.17 -0.36%) again finished middle of the ladder among other S&P sectors, and was modestly off lows. Component Akamai Tech (AKAM 54.64, +0.93 +1.73%) was among the best performers today in a weaker sector as the company announced the acquisition of Soha Systems for an undisclosed sum. Other sectors as measured by the S&P closed Tuesday XLU -2.09%, XLRE -1.52%, XLB -1.36%, XLE -1.02%, XLP -0.85%, XLI -0.84%, IYZ -0.78%, XLY -0.34%, XLV -0.19%, XLFS +0.40%, XLF +0.42%.
In the S&P 500 Information Technology (797.34, -1.30 -0.16%) sector, ended just below flat lines as midday weakness took the sector off gains. Component Salesforce.com (CRM 72.63, +2.11 +2.99%) was the best performing name across the space as the company's Investor Day got underway today and will run through the week; additionally, the company announced the acquisition of data management platform Krux. Names in the space which underperformed today included XRX -2.77%, FLIR -2.53%, ACN -2.17%, ADS -1.93%, HPQ -1.85%, XLNX -1.61%, NTAP -1.44%, WU -1.36%, TSS -1.32%.
Other notable news items among sector components:
At the company's live streaming event today, Alphabet (GOOGL 802.79, +2.41 +0.30%) announced its new smartphone, Pixel, which will be available for pre-order starting at $649 in two sizes, 5' and 5.5' exclusively from Verizon (VZ 51.26, -0.62 -1.20%). The company also announced the new Daydream VR headset starting at $79. Lastly, the company unveiled its new Google Wifi system, the next step after the OnHub platform from a year ago; built to enable easy, no-lag streaming throughout the home, Google Wifi will be available for pre-order in November for $129 for a single pack or $229 for a three-pack at select retail stores.
Salesforce.com (CRM) to acquire data management platform Krux. CRM expects the deal to close in the fourth fiscal quarter ending January 31, 2017.
Xactly (XTLY 15.73, +0.07 +0.45%) announces pre-built integrations with Salesforce (CRM) through the Xactly Connect Open Platform. Enabling a seamless flow of data and extending functionality between Salesforce and Xactly, customers can get the intelligence they need to power better selling.
Daimler (DDAIF 71.40, +1.75 +2.51%) announces AT&T (T 39.90, -0.87 -2.13%) will provide cellular service for the new Detroit Connect Truck Data Center. Co will also collaborate with Microsoft (MSFT 57.24, -0.18 -0.31%) to establish a new cloud-based back office environment for all Detroit Connect services, including new features, such as Detroit Connect Remote Updates.
ABB (ABB 22.57, +0.05 +0.22%) and Microsoft (MSFT) announced a strategic partnership to help industrial customers create new value with digital solutions. Customers will benefit from the unique combination of the Microsoft Azure intelligent cloud and ABB's deep domain knowledge and extensive portfolio of industrial solutions.
Jack Henry & Associates (JKHY 83.95, -1.45 -1.70%) Payment Solutions group has partnered with Visa (V 82.73, -0.13 -0.16%) to deliver faster P2P (person-to-person) payments to a recipient's Visa debit card.
ZAGG (ZAGG 8.12, +0.11 +1.37%) introduces the Slim Book Pro and Rugged Book Pro keyboard cases for the 9.7-inch Apple (AAPL) iPad Pro.
Veeva Systems (VEEV 40.31, -0.91 -2.21%) announces the integration of Veeva Vault with Microsoft Office Online (MSFT) delivering real-time, collaborative authoring in a compliant way.
Akamai Tech (AKAM) acquired Soha Systems. Financial terms of the deal were not disclosed.
Intel Security (INTC 37.54, -0.12 -0..32%) launched its 2017 consumer security lineup featuring security innovations to better protect the devices people use every day against the latest threats. The centerpiece of the new portfolio is a next-generation anti-malware engine that offers more efficient and effective detection by offloading analysis to the cloud.
IBM (IBM 156.46, -1.15 -0.73%) unveiled a $200 million investment in the new global headquarters for its Watson Internet of Things business in Munich, new IoT capabilities around Blockchain and security and an array of clients that are driving real outcomes by using Watson IoT technologies to draw insights from billions of sensors embedded in machines, cars, drones, ball bearings, pieces of equipment and even hospitals.
Western Union (WU 20.33, -0.28 -1.36%) filed a debt securities shelf offering for an undisclosed amount.
Elsewhere in the tech space:
Ericsson (ERIC 7.16, -0.01 -0.14%) confirmed changes to operations in Sweden, including the intentions to reduce 3,000 positions in production, research and development and sales and administration.
Criteo (CRTO 36.63, +0.87 +2.43%) provided additional information on its acquisition of HookLogic. The purchase price was $250 million, and the company sees positive financial impact from said deal in midterm.
Cypress Semi (CY 11.88, -0.12 -1.00%) adopted a restructuring plan on September 27 and expects to eliminate about 500 positions from its global workforce. The company will take charges related to the restructuring plan in the range of about $40-50 million, primarily in the third and fourth quarters of 2016.
FORM Holdings (FH 3.00, -0.07 -2.28%) partnered with Digital Ally (DGLY 5.74, -0.07 -1.20%) as the exclusive third party supplier of DGLY's Fleet Vu solution. Financial terms of the deal were not disclosed.
Elephant Talk (ETAK 0.16, +0.00 +3.24%) announced the divestiture of its ValidSoft subsidiary.
Marchex's (MCHX 2.59, -0.16 -5.82%) CEO Pete Christothoulou resigned effective immediately and Anne Devereux-Mills assumed responsibilities as Chairman. The company also reaffirmed Q3 revenue guidance.
Monotype Imaging (TYPE 20.69, -1.12 -5.14%) updated guidance following acquisition of Olapic.
Analyst actions:
FISV was upgraded to Buy from Neutral at Monness Crespi & Hardt,
SWKS was upgraded to Buy from Mkt Perform at Charter Equity,
TSM was upgraded to Neutral from Negative at Susquehanna,
AVT was upgraded to Strong Buy at Raymond James;
GRUB was downgraded to Hold from Buy at Stifel,
CUDA was downgraded to Underperform from In-Line at Imperial Capital,
PHI was downgraded to Sell from Neutral at Citigroup,
SPLK was downgraded to Neutral from Buy at Guggenheim;
BRCD and HUBS were initiated with Buy ratings at DA Davidson,
PFPT was initiated with a Neutral at DA Davidson,
GWRE, HUBS and VEEV were initiated with Neutral ratings at Goldman,
SHOP was initiated with a Buy at Goldman,
IQNT was initiated with a Buy at Drexel Hamilton
From Briefing.com: 4:47 pm SunEdison responds to TerraForm Power (TERP) and TerraForm Global (GLBL) press release from yesterday (SUNEQ) : SunEdison states, " While SunEdison disagrees with many of the statements, claims and allegations made by the Yieldcos in their press releases, SunEdison confirms that settlement discussions with the Yieldcos have commenced, and adds that such settlement discussions relate both to alleged claims asserted by the Yieldcos against SunEdison, as well as meaningful claims that the SunEdison estate is reviewing and may assert against the Yieldcos. Like any similar situation with any other creditor in their Chapter 11 cases, SunEdison will actively pursue the dismissal or settlement of proofs of claims in the bankruptcy cases -- although no date has been established yet in the bankruptcy cases for objecting to proofs of claims. In addition, as the Yieldcos disclosed in their press releases, SunEdison and the Yieldcos are engaged in a collaborative sale process to sell either SunEdison's ownership interests and other rights in the Yieldcos or the entirety of the equity in the Yieldcos."
4:10 pm : The stock market began the week on a modestly lower note as the major averages pulled back following last Friday's relief rally. Factors impacting today's trade included weakness in European financial names, an uptick in interest rates, and relative weakness from the heavily-weighted technology (-0.4%) and financial (-0.4%) sectors. The S&P 500 (-0.3%) settled in-line with the Dow Jones Industrial Average (-0.3%) and slightly behind the Nasdaq Composite (-0.2%).
Equity indices began the day under pressure as a mixed performance from European bourses weighed on the broader market. Shares of Deutsche Bank (DB 12.98, -0.11) continued to be in focus after the German lender failed to confirm whether or not it had reached a revised settlement with the U.S. Department of Justice. Recall that the stock rallied 14.0% on Friday after AFP reported that the bank was close to reducing its fine to $5.4 billion from $14 billion.
UK Prime Minister Theresa May also contributed to early selling interest after she confirmed that the UK will invoke Article 50 of the Lisbon Treaty by the end of March 2017. The decision resuscitated fears regarding the terms and/or restrictions the UK will face in accessing the common market. Sterling declined 1.0% against the dollar in response, finishing the day near the 1.2850 price level. The UK's FTSE (+1.2%) outperformed amid strength from exporters.
The ISM Manufacturing Index for September spurred a downturn in the Treasury market as the better-than-expected economic data boosted rate hike odds. The September ISM Index rose to 51.5 (Briefing.com consensus 50.4) after registering at 49.4 in August. The data led to some early positioning in the fed funds futures market, but the implied probability of a rate hike at the December meeting finished at 62.1%, rising from the prior session's reading of 61.7%.
The benchmark index finished in the middle of today's trading range, bouncing off support near its 20-day simple moving average (2155.81) in the final hour. Eight sectors settled in the red with financials (-0.4%), consumer staples (-0.6%), utilities (-1.4%), and real estate (-1.8%) acting as the largest laggards.
In the financial sector (-0.4%), Wells Fargo (WFC 43.83, -0.45) underperformed after U.S. Presidential candidate Hillary Clinton argued that the lender bullied employees into committing fraud. Mrs. Clinton also contended that the Consumer Financial Protection Bureau should be afforded new powers in order to deal with "bad corporate actors." The banking name tumbled 12.8% in September after it was reported that two million credit and deposit accounts were opened illegally.
Health care providers underperformed in the health care space (-0.2%) as Cigna (CI 128.01, -2.31) and Anthem (ANTM 122.90, -2.41) declined by 1.8% and 1.9%, respectively. The names continued to show weakness after last week's speculation that a judge who is presiding over their merger hearing may break the hearing up into two separate phases. Separately, biotechnology erased an early loss as the iShares Nasdaq Biotechnology ETF (IBB 290.00, +0.54) finished ahead of the broader market.
In the consumer discretionary space (-0.1%), auto names ended on a mixed note after reporting auto and truck sales for September. General Motors (GM 32.04, +0.27) ended higher by 0.9% after reporting a smaller-than-expected decline in monthly U.S. sales. Meanwhile, Toyota Motor (TM 115.26, -0.80) declined by 0.7% even though the company reported that U.S. sales rose 1.5% year-over-year while a decline was expected.
Treasuries finished near their worst levels as yields rose through the curve. The yield on the 2-yr note increased three basis points (0.90%) while the yield on the benchmark 10-yr note rose two basis points (1.62%).
Today's participation was below the recent average as fewer than 800 million shares changed hands on the NYSE floor.
Today's economic data was limited to August Construction Spending and the September ISM Index:
The ISM Manufacturing Index for September checked in at 51.5 (Briefing.com consensus 50.4). The September reading was better than expected and up from 49.4 in August.
The dividing line between expansion and contraction for this measure of national manufacturing activity is 50.0.
Total construction spending declined 0.7% in August (Briefing.com consensus +0.2%) following a downwardly revised 0.3% decline (from 0.0%) for July.
On a year-over-year basis, total construction spending is down 0.3%.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
There is no economic data of note scheduled to be released tomorrow.
Russell 2000: +9.6% YTD
Nasdaq: +5.9% YTD
S&P 500: +5.7% YTD
Dow Jones: +4.8% YTD
DJ30 -54.30 NASDAQ -11.13 SP500 -7.07 NASDAQ Adv/Vol/Dec 1177/1.461 bln/1663 NYSE Adv/Vol/Dec 1243/798.0 mln/1725
3:30 pm :
The dollar index was +0.2% around the 95.69 level, weighing on precious metals
Commodities, as measured by the Bloomberg Commodity Index, were +0.3% around the 85.60 level
Crude oil reversed its initial morning losses, ending higher for the fourth consecutive session & breaking out to fresh 1-month highs on the heels of last week's unexpected OPEC production cut
November crude oil futures rose $0.70 (+1.5%) to $48.81/barrel
The next OPEC meeting will take place in Vienna, Austria on November 30
Weekly EIA petroleum storage data will be released Wed at 10:30 am ET
Monthly IEA data will be released Oct 11
Baker Hughes rig count data will be released Friday at 1 pm ET
API data will be released tomorrow after the bell
Reminder: Last week in Algiers on the sidelines of the International Energy Forum, OPEC unexpectedly announced they would reduce output to 32.5 mln barrels/day, compared to July's production levels of around 33.1 mln barrels/day.
Natural gas ended nearly unchanged ahead of Thursday's inventory data
November natural gas closed $0.01 higher (+0.3%) at $2.92/MMBtu
In precious metals, gold's decline was outpaced by the drop in silver; the gold:silver ratio increased
December gold ended today's session down $4.30 (-0.3%) to $1312.70/oz
December silver closed today's session $0.40 lower (-2.1%) at $18.83/oz
The gold:silver ratio was at ~69.7, compared to Friday's pit trading closing ratio of ~68.5
Base metal copper erased all of Friday's gains in afternoon pit trading
December copper closed $0.02 lower (-0.9%) at $2.19/lb
Equity indices slipped at the start of the session as developments in Europe continued to weigh on risk appetite here at home. Deutsche Bank (DB 12.98, -0.11 -0.84%) remains in focus as the German lender has yet to confirm last week's report that it is close to reaching an agreement to settle claims related to the mortgage-backed securities (MBS) crisis. AFP reported last week that the bank's MBS settlement with the Department of Justice could be reduced to $5.4 billion from $14 billion. Meanwhile, Brexit fears resurfaced after UK Prime Minister Theresa May confirmed that the country will invoke Article 50 of the Lisbon Treaty by the end of March 2017.
The ISM Manufacturing Index for September signaled that manufacturing moved back to expansionary territory, registering at 51.5. Recall that a reading of 50.0 marks the dividing line between expansion and contraction. The positive economic data has also spurred some selling interest in Treasuries as participants adjust their rate hike expectations ahead of this Friday's Employment Situation Report for September. Other data today included the total construction spending reading, which showed a 0.7% decline in August following a downwardly revised 0.3% decline (from 0.0%) for July.
To that end, the broader market began the fourth quarter with modest losses across the board, retreating off Friday's strength as the three major US indices closed the day near their respective midpoints of the daily trading range. The declines were led by the S&P 500 which lost 7.07 points (-0.33%) today to end 2161.20. The Dow Jones Industrial Average shed 54.30 points (-0.30%) to 18253.85, and the Nasdaq Composite was down 11.13 points (-0.21%) to 5300.87. Helping the Nasdaq stay out of too much trouble today, Nasdaq 100 components like TSLA +4.7%, NFLX +4.1%, AAL +3.0%, FOXA +2.1% and BMRN +2.0% all staged healthy sessions with the backdrop of a soft session in the broader market.
As sectors go, Technology (XLK 47.64, -0.14 -0.29%) ended Monday about the middle of the daily range as the space never recovered from opening losses. Component Cognizant Tech (CTSH 50.40, +2.69 +5.64%) was the best performer today following the acquisition of Akastor's (AKKVY 0.71, flat) Frontica IT business for NOK1.025 billion. Other sectors as measured by the S&P closed out the day XLRE -1.92%, XLU -1.37%, XLP -0.62%, XLF -0.47%, XLFS -0.39%, XLE -0.08%, XLB -0.08%, XLV -0.08%, XLY -0.06%, IYZ -0.06%, XLI +0.09%.
In the S&P 500 Information Technology (798.63, -3.09 -0.39%) sector, the fourth quarter began with modest losses despite starting the session near flat lines. Component Teradata (TDC 29.44, -1.56 -5.03%) was the worst performing name in the sector as UBS downgraded the stock to a Sell rating in the premarket. Other names in the space which displayed weakness included QRVO -2.85%, FSLR -2.33%, QCOM -2.03%, ADSK -1.59%, AVGO -1.42%, MSI -1.35%, NTAP -1.28%, CTXS -1.24%, TEL -1.23%, CRM -1.14%, ACN -1.07%.
Other notable news items among sector components:
Twitter (TWTR 24.00, +0.95 +4.12%) was higher today in reaction to a Bloomberg report out Friday evening suggesting Alphabet's (GOOGL 800.38, -3.68 -0.46%) Google hired adviser to consider a bid for the company.
According to a Bloomberg report, NXP Semi (NXPI 102.76, +0.75 +0.74%) hired bankers which would suggest the pursuit of a sale amid interest from Qualcomm (QCOM 67.11, -1.39 -2.03%) and others.
VirnetX Holding (VHC 4.10, +1.04 +33.99%) received a $302.4 million verdict against Apple (AAPL 112.52, -0.53 -0.47%) for infringing on 4 patents.
Microsoft (MSFT 57.42, -0.18 -0.31%) confirmed lower pricing for Azure effective October 1. General Purpose Instances: Prices of Dv2 series VMs will be reduced by up to 15%. Also lowering prices of our A1 and A2 Basic VMs by up to 50%. Compute Optimized Instances: Prices of F series will be reduced up to 11%. Av2 series: In November 2016, will introduce new A series virtual machines (Av2), with prices up to 36% lower than the A series Standard VM prices available today.
F5 Networks' (FFIV 124.38, -0.26 -0.21%) CTO Karl Triebes, who previously announced plans to resign, will continue his employment to provide consulting services to the company through a separation date of January 1, 2017.
IBM (IBM 157.61, -1.24 -0.78%) announced a five-year partnership with Majesco, a global provider of core insurance software, consulting and services for insurance business transformation, to jointly offer a new cognitive, cloud-based platform to help insurance carriers worldwide create new services on IBM Cloud.
Facebook (FB 128.77, +0.50 +0.39%) unveiled its new 'Marketplace' to connect buyers and sellers.
FLIR Systems (FLIR 31.59, +0.17 +0.54%) reached a definitive asset purchase agreement to acquire the business of Point Grey Research, Inc. for about $253 million in cash. The transaction is expected to be completed in the fourth quarter of 2016, and the company anticipates the business and related transaction costs will be about $0.01 dilutive to its 2016 EPS and accretive for 2017.
Amazon's (AMZN 836.74 -0.57 -0.07%) live streaming video platform Twitch launched Twitch Prime.
TE Connectivity (TEL 63.59, -0.79 -1.23%) appointed current President Terrence Curtin as the successor of Tom Lynch as CEO effective March 9, 2017.
Cognizant Tech (CTSH) acquired Akastor's (AKKVY) Frontica IT business for NOK1.025 billion.
Following the separation of Xerox (XRX 10.12, -0.01 -0.10%) into two companies, Conduent Incorporated, the new business process services company, will trade on the New York Stock Exchange (NYSE) under the symbol CNDT. Xerox will continue to trade on the NYSE as XRX.
Rambus Inc. (RMBS 12.43, -0.07 -0.56%) signed a license agreement with Xilinx (XLNX 53.93, -0.41 -0.75%). In addition, the two companies will evaluate potential collaboration on the use of Rambus' CryptoManager platform, and Rambus will also explore the use of Xilinx FPGAs in the Rambus Smart Data Acceleration (SDA) research program. Specific terms of the agreement are confidential.
The Western Union Company (WU 20.61, -0.21 -1.01%) announced the launch of its mobile platform in Canada for domestic and cross-border money transfers, available for iOS and Android.
Elsewhere in the tech space:
First Data (FDC 13.29, +0.13 +0.99%) to sell all its Australian retail ATM and managed services ATM portfolio for about $55 mln to DirectCash Payments.
Kulicke & Soffa (KLIC 12.96, +0.03 +0.23%) named Fusen Chen President and CEO effective October 31, 2016.
Plantronics (PLT 51.58, -0.38 -0.73%) named Joe Burton as CEO, effective Oct 2.
Shopify (SHOP 43.03, +0.11 +0.26%) acquired privately held Boltmade. Financial terms were not disclosed.
Marvell (MRVL 13.02, -0.25 -1.88%) announced the appointment of Dave Caron as corporate controller & Chief Accounting Officer effective today.
TriNet Group's (TNET 21.85, +0.22 +1.02%) Vice President and CFO Bill Porter plans to retire.
Plexus (PLXS 46.76, -0.02 -0.04%) promoted Steve Frisch to COO.
Analyst actions:
LOGM was upgraded to Overweight from Underweight at Barclays,
NTES was upgraded to Outperform from Underperform at CLSA;
ORAN was downgraded to Hold from Buy at HSBC,
CTXS and TDC were downgraded to Sell from Hold at UBS,
IMPV was downgraded to Neutral from Buy at BTIG Research,
NTGR was downgraded to Hold from Buy at BWS Financial,
CAMP was downgraded to Hold from Buy at Aegis Capital;
OCLR was initiated with a Buy at Jefferies,
GDDY was initiated with a Buy at Summit Redstone,
ALRM was initiated with a Buy at Roth Capital,
VSM was initiated with an Outperform at Credit Suisse, an Equal Weight at Morgan Stanley and a Buy at Seaport Global Securities
InvestmentHouse - Stocks Rebound as Volatility Continues ( Weekend Newsletter )
http://www.investmenthouse.com/frblog.php
- DB to get a reduced DOJ fine. All must be well.
- Stocks rebound as the volatility continues.
- Fed, Central banks now appear to want to avoid any kind of market selloff
as Yellen talks of direct equity buys.
- Still leaders emerging, but prefer a resolution of the volatility to a
trend to get really deeply involved.
Prolog
I almost did not send out a market summary this weekend. I sat down and
wrote what transpired and why. I took it to its logical end. I realized it
was just too gloomy to send out and got up and left it. I thought about it
and decided to send it even if I am accused of being a gloom spreader. Not
one where the market crashes, but one telling that the market no longer
prices in real value of companies, but instead what value the monetary
policy planners put on the financial assets (stocks) related to those
companies and the logical results of that. So, be forewarned.
The Action, the Friday theme
Thursday's angst surrounding DB was all forgotten Friday. Things did not
look so bad on the day and indeed got better. A rumor hit shortly after the
open that DB was going to strike a deal with the US DOJ for less than the
$14+B the DOJ needed for 'justice.' About a third of the full amount
($5.4B). Not long after a French news outlet claimed to confirm the report.
Stock markets rejoiced. Surely the $8.5B drop in one fine is going to make
all the difference for DB.
Okay, it doesn't hurt, but it is not the cure for it, for Commerze Bank, or
for The Netherlands' ING bank that Friday was reported set to announce
massive layoffs at its Monday shareholders' meeting. DB's near term CDS
protection rates are still increasing. No one we have heard of is ready to
return funds they just removed for safety. Friday was a reprieve, and we
will see how much of one in the week(s) ahead. It may already be starting
as Saturday Italy charged DB with market manipulation and, taking a lead
from Wells Fargo perhaps, creating false accounts.
The reprieve helped the US markets. Stocks loved it and rallied nicely,
spurting to the upside on the rumor and the 'confirmation.'
SP500 17.14, 0.80%
NASDAQ 42.85, 0.81%
DJ30 164.70, 0.91%
SP400 0.82%
RUTX 1.12%
SOX 1.58%
VOLUME: NYSE 21.33%; NASDAQ 5%. Volume increased sharply on the session,
but that likely had more to do with the end of the quarter versus any new
surge in buying.
A/D: NYSE 2.4:1, NASDAQ 2.6:1
Financial stocks recovered the Thursday flop. Many same leaders continued
to lead. Many that fell Thursday did not recover. SOX powered to a new
post-2000 high. NASDAQ recovered the 10 day EMA and is continuing its trend
though it still has not recovered to post-FOMC high. SP500, DJ30, SP400
recovered to where they were Wednesday, for the most part, but that isn't
saying much for those indices.
Indeed, they are still in bearish patterns. Back and forth volatility after
breaking lower three Fridays back. DJ30 broke lower from those three tops
and has recovered to a bear flag. SP400 broke its July/September trend but
managed to hold a longer term trendline as it sold. It has recovered some
lost ground but is still below the 50 day MA's. SP500 has recovered the gap
lower three Fridays back, at least on the post-FOMC rally, but it gave it up
and in this week's recovery it is still below its 50 day SMA.
The New Normal: Central Bank market management
These are not great patterns, but this is an insane market because . . . the
Fed and central banks are steadily and unrepentantly overstepping their
limits prescribed by law. Can you imagine the Federal Reserve going into
the open stock market and buying equities as Janet Yellen said it could if
there was another crisis? Do these people not realize they are not mandated
to take any action on earth to forestall natural market declines?
Oh perhaps they do realize this, but they also realize that they have built
new market highs on no capital investment, no growth in real business, and a
plethora of low paying jobs that have dropped the US standard of living,
driving the middle class to below 50% with only 48% of workers in the US
holding full time jobs. And the really tough pill to swallow is that many
of those full time employees are working for wages much less than they made
at their full time jobs they lost in the last recession. Thus spending and
investing power is way down. The Fed knows this; that is why it has hacked
down its long-term growth forecasts for GDP and says 100K jobs per month is
all that is needed to absorb new workers.
With that track record they know there is a bubble in asset valuations
vis- -vis the actual output created. If the market starts to price in the
real output then prices have to head much, much lower. It strains credulity
that after Q3 results are in we will know that corporate profits have
declined for 6 quarters and yet the stock market is hitting new all-time
highs. That does not happen. That is the hands of the central banks.
The markets were rolling over in August and September 2015, but the Fed
entered, setting up a perfect double bottom. We saw it and there was a lot
of money made. Then the January and February 2016 selloff to lower lows
after failing to reach the prior highs from the late 2015 selling. The
market was in a death roll but Yellen called the BOE and the selling stopped
for that day and rebounded. The next morning she called Draghi at the ECB
and the market shot higher that day as well, a mere 30 minutes after the
phone call ended. Magic.
This was not even a full-blown crisis, just a market making a natural
correction from a long run. It is the same progression as always: a crisis
leads to extraordinary means, but then the extraordinary means remain and
are used when there is not even a crisis situation. The Fed and central
banks start believing the markets need them to work properly. Once you go
down that slippery slope of logic it is incredibly hard to change course.
That is why the thought of a new Fed chairman is very appealing, and even
more appealing is clipping the Fed's authority as discussed earlier in the
week: specific actions it can take, specific time limits, audits/oversight
to make sure old habits don't return.
For surely the 'magic' will end some day. Who knows when; it could take
years still. By that point the middle class will be wholly gone. Those
remaining, already suffering, will be driven into deeper suffering as those
lower salary full-time jobs they got after they lost their good jobs will
disappear as well. The more the Fed tinkers with inflating assets simply by
printing money, the harder the ultimate fall will be. They are running on a
treadmill at such a speed they cannot get off. If they fall, the result is
ugly. In theory they could keep this going for years, particularly if they
buy equities. That will ultimately complete the job of the complete asset
shift from the middle class to the upper class and the lower class, the
latter of which will be the new home for tens of millions of former middle
class citizens.
Sorry for the gloomy images, but the madness grows every month with every
new FOMC meeting. The United States no longer has real markets that
accurately price earnings. They price in whether the Fed will or won't act
on rates, and eventually when the Fed will start buying equities, how much
will it buy, etc. The real price of assets will be based upon how many
assets the Fed buys with phony money, not output.
Unless this madness ends, the US markets and likely economy will rupture and
collapse at some event in the future when it is revealed that an economy
built on nothing cannot continue producing weapons of war to even protect
itself. It can be cataclysmic or gradual. Remember the USSR? One night
everyone just left their posts and it was over. Fortunately for them, there
was no enemy at the gates waiting for that moment or it would have been
overrun. Now they have rebuilt and are a real threat given the failed
'reset' of relations, Syria negotiations breakdown, etc. Not a good
scenario ahead as things are.
Where from here near term?
What this means for us and the markets, however, is that the Fed and other
central banks will do what they can to prevent declines. The amazing thing
is, after the near rollover in February it appears the Fed is unwilling to
tolerate ANY selling as that could lead fragile markets to collapse.
The problem is, the indices are bucking right now with a lot of back and
forth volatility that shows a fight between sellers and buyers. Don't kid
yourself as some of the guest commentators on the financial stations do that
all of this is just normal market pricing in value in an improving economy
that they hope will continue to move higher when it gets through October and
the election. There is serious strain right now to re-price assets lower,
but the Fed is going to try and prevent any pre-election selling,
post-election selling, ANY selling. Selling, after all, does not fit its
plan for wealth effects and other such notions that have yet to spur the US
economy to its former levels.
It is as if the Fed has admitted to itself the US simply cannot grow as fast
as it used to. People, that was the talk in the 1970's, that the US had run
its course, a nice try that failed. Then we saw the 1980's and the 1990's,
the power of the US when its people were unleashed with tax cuts, investment
incentives, and reduced regulation. A 20 year boom that saw the US far
outpace all other nations.
With this environment some stocks are surging, some are falling, a lot are
going nowhere. Moreover, day to day a lot of these are changing direction.
Given the action, we have pared back positions, have both upside and
downside plays open, and frankly are uncomfortable with the action. The
market appears that it should break but the Fed is standing at the door to
try and block the exit. That is a market in conflict, i.e. with traditional
market forces pushing on it but also policy makers trying to prevent a
selloff. I would prefer to see the outcome and get the new trend in place
before I do a lot more buying on either side. As it is, the market is led
around by the nose each session by each news story or Fed speech. Until one
side takes firm control, the action is treacherous.
THE MARKET
After the DB worries Thursday, Friday the indices bounced right back up.
SOX posted another new high while the rest of the indices recovered much of
what they lost Thursday. Another day of the back and forth volatility as
bulls and bears are in a fight. Even so, the Fed is still present, as noted
before, trying to block the exits.
CHARTS
SOX: Added another new post-2000 high, gapping and rallying. Oh, that high
is up over 1350 (closed at 835.60). SOX is strong but is getting ahead of
itself near term.
NASDAQ: Sold to the 20 day EMA Thursday, gapped higher Friday and closed
where the indices opened the prior session. That keeps NASDAQ trending up
the near term moving averages after the 50 day MA test, pretty much textbook
action for continuing a move higher. With AMZN continuing to new highs all
week, NASDAQ had a leader to follow.
RUTX: Similar action to NASDAQ, coming off the 50 day EMA test, testing
back to the 10 and 20 day EMA, holding. Thursday was shaky but it rebounded
upside Friday, keeping the trend in place.
DJ30: Thursday DJ30 rolled over after testing the 2015 prior all-time high.
Friday it recovered most of what it lost, but on the high it touched the
Thursday intraday high and backed off, still unable to close escrow on the
2015 high. Still a negative overall pattern.
SP500: Recovered most of what was lost as well, closing just below the 50
day SMA. Below the post-FOMC rally high. Volume stronger than the Thursday
selling, but again, this was more quarter end positioning versus a flood of
buying.
SP400: Same action as the large cap NYSE indices, bouncing back Friday from
the Thursday loss, closing below the Wednesday high, the 50 day SMA, and the
2015 prior all-time high. Overall a bearish pattern where SP400 broke lower,
recovered some ground to a lower high at the lower gap point, and has
wandered laterally.
LEADERSHIP
Big Names: AMZN the clear leader, others doing okay to nothing. FB still
not surging, showing a doji at the 20 day EMA. AAPL looks good to move
higher after a 2 week test. AMZN continued its 2.5 week rally to higher and
higher highs. NFLX breaks through the 200 day SMA in perhaps a turn of
fortune. GOOG spent the week testing, holding the 20 day EMA after it was
unable to break to and hold a higher high. MSFT surged early week, held the
50 day SMA on the Friday close. EBAY is holding a break to a higher high.
Tech: STX enjoyed a solid week to a higher rally high. Software is mixed
with not a lot of great patterns: BLKB, CRM, ORCL, MSFT. WDC still looks
very good.
Chips: Of course moving well as a group, just not all in great position to
enter. LSCC still solid at the 10 day EMA. MU trending up the 10 day as
well but the move has slowed. AVGO is up on the week but problematic. SWKS
jumped higher Friday off a Thursday 50 day EMA test on the low. XLNX surged
Friday off a 50 day EMA test. SLAB surged to a higher high Friday.
Oil: Still surging even on higher inventories, more drills churning. APC,
CWEI, HAL, AXAS, SPN -- lots of gains.
Industrial Equipment: Surging again on Friday, e.g. CMI, CAT.
Financial: Recovered from the Thursday rattle, moving back into the
patterns built before the shakeup around DB. C, BAC. TCBI broke to a new
rally high.
Retail: Some good moves in some groups. Box stores saw KSS break nicely
higher along with DDS, RH. JWN was a laggard. LOW and HD have bounced from
the ugly selling but are still struggling. NKE bounced just modestly,
ditto, DECK.
Biotech: BIIB still is holding up. CELG who knows. IDRA looks good to
enter. EXAS, CEMP recovered modestly but did not change the Thursday
selling. AGEN recovered nicely enough. Still some very promising areas but
some stocks were hit hard last week.
Metals: Some still good patterns, e.g. SID, FCX as others have broken
higher, e.g. SCHN.
NEWS/ECONOMY
Personal Y, August: 0.2% vs 0.2% exp vs 0.4% July
Personal Spending, Aug: 0.0% vs 0.2% exp vs 0.4% July (from 0.3%)
Consumption: 0.0% vs 0.1% expected
Income breakdown: $13.3B from wages, $10B from transfer payments (welfare,
Medicaid, etc.)
Spending down mostly on auto sales.
MARKET STATS
NASDAQ
Stats: +42.85 points (+0.81%) to close at 5312
Volume: 2.003B (+5.04%)
Up Volume: 1.55B (+950.2M)
Down Volume: 488.15M (-841.85M)
A/D and Hi/Lo: Advancers led 2.64 to 1
Previous Session: Decliners led 3.05 to 1
New Highs: 111 (+14)
New Lows: 39 (-1)
S&P
Stats: +17.14 points (+0.8%) to close at 2168.27
NYSE Volume: 1.2B (+21.33%)
A/D and Hi/Lo: Advancers led 2.41 to 1
Previous Session: Decliners led 3.75 to 1
New Highs: 124 (+9)
New Lows: 25 (-5)
DJ30
Stats: +164.7 points (+0.91%) to close at 18308.15
SENTIMENT INDICATORS
VIX: 13.29; -0.73
VXN: 15.45; -0.78
VXO: 13.3; -1.52
Put/Call Ratio (CBOE): 1.01; -0.03
Fourteen 1.0+ Readings in 5 weeks, 10 of the last 16 sessions over 1.0.
Still plenty of pessimism to keep some upside pressure on.
Bulls and Bears: Bulls bounced and bears faded post-FOMC with all the 'do
nothing, harm nothing' feelings. Perhaps not as the market is struggling to
hold that post-FOMC happy time.
Bulls: 45.2 versus 44.6
Bears: 23.1 versus 24.3
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: 45.2 versus 44.6
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 versus 40.2% versus 44.3% versus 47.4% versus 41.2%
versus 45.4% versus 43.3% versus 47.4% versus 44.4% versus 39.4% versus
36.4% versus 34.7% versus 26.5%
Bears: 23.1 versus 24.3
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%
versus 34.3% versus 35.7% versus 39.8% versus 39.2% versus 38.1% versus
35.4% versus 36.1%
OTHER MARKETS
Bonds (10 year): 1.60% versus 1.56%. Faded to the 50 day EMA Friday,
testing a 2 week move off the selloff to the September low.
Historical: 1.56% versus 1.569% versus 1.56% versus 1.584% versus 1.62%
versus 1.625% versus 1.656% versus 1.693% versus 1.705% versus 1.698% versus
1.70% versus 1.698% versus 1.718% versus 1.671% versus 1.67% versus 1.61%
versus 1.53% versus 1.54% versus 1.601% versus 1.57% versus 1.58% versus
1.57% versus 1.57% versus 1.62% versus 1.58% versus 1.56% versus 1.54%
versus 1.58% versus 1.53% versus 1.55% versus 1.57% versus 1.558% versus
1.51% versus 1.56% versus 1.51% versus 1.54% versus 1.59% versus 1.585%
versus 1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46% versus
1.50%
EUR/USD: 1.1239 versus 1.1218. All week hugged the 200 day SMA in a
lateral move.
Historical: 1.1218 versus 1.1228 versus 1.2148 versus 1.1254 versus 1.1248
versus 1.12259 versus 1.12061 versus 1.11898 versus 1.1151 versus 1.1177
versus 1.1155 versus 1.12444 versus 1.1245 versus 1.12196 versus 1.12335
versus 1.12318 versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545
versus 1.11943 versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949
versus 1.12894 versus 1.1300 versus 1.13045 versus 1.3254 versus 1.13251
versus 1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus 1.11636
versus 1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus 1.10882
USD/JPY: 101.326 versus 101.143. Bounced into late week but still not yet
able to break through and hold the 50 day MA's. Trying to work into a
lateral consolidation but ha to show it has some strength.
Historical: 101.143 versus 101.322 versus 100.55 versus 100.75 versus
101.034 versus 101.045 versus 100.386 versus 101.714 versus 101.956 versus
102.280 versus 102.086 versus 102.172 versus 102.155 versus 102.814 versus
101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus
101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus
102.160 versus 101.808 versus 100.485 versus 100.306 versus 100.27 versus
100.297 versus 100.21 versus 99.843 versus 100.529 versus 100.953 versus
101.308 versus 101.864
Oil: 48.24, +0.41. Solid 3-day bounce off its 50 day SMA has oil moving up
toward the August peak. Nice double bottom with handle break.
Gold: 1317.10, -8.90. Sold back Tuesday to Friday, now near the 3 week
lateral range.
MONDAY
Another week with plenty of data, starting with the ISM Monday, Factory
Orders Wednesday, and the September jobs report Friday. Remember, at 176K
expected, jobs far exceed what the Fed says is needed to sop up the
additional workers. My how times have changed, how a less than 2% GDP
economy does not need to create that many jobs, even the crappy, low wage
hourly ones this one creates.
As discussed earlier, the day to day back and forth volatility continues
with the NYSE indices mostly struggling in bearish patterns while SOX,
NASDAQ and even RUTX hold decently. The buyers and sellers are still
fighting, the Fed is still trying to prevent any serious selloff, the latest
evidence being Yellen's jawboning on the week that the Fed can directly buy
equities during a crisis. Of course we know the Fed doesn't have to wait
for a crisis as seen in February. At least at that time it looks as if the
Fed used other central banks, but the idea is the same.
There are still some great patterns, upside and downside, in the market. We
will look at those as possible entries if per chance the volatility
subsides. We would prefer moving in once a new trend emerges from the
volatility. You could anticipate an upside trend if the Fed has its way,
but even the Fed cannot control all moves. Again, we can enter some plays
here and there, but would prefer seeing a trend established out of this
volatility, or at least a really clear break upside or break downside.
Leaders will emerge ahead of the pack and maybe that is already the case
with the chips and others, e.g. industrial machinery making its run. The
market remains split, however, and very volatile even with their moves.
Again, we can play some new entries but want to see the trend emerge or
stabilize to pick up a lot of new positions.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5312.00
Resistance:
5340 is the recent all-time closing high.
Support:
5287.61 is the all-time high from September 2016
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
The 50 day EMA at 5196
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
The 200 day SMA at 4888
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
4684 is the May 2016 test low
4637 is the February intraday high
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August
2015 low.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2168.27
Resistance:
The 50 day SMA at 2168.33
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
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 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
The 200 day SMA at 2063
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 18,308.15
Resistance:
18,351 is the prior all-time high from May 2015
The 50 day SMA at 18,398
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
Support:
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
17,978 is the November 2015 peak
The 200 day SMA at 17,608
17,600 is the rough bottom of the April to June range.
17,351 is the September 2014 all-time high.
17,265 is a December 2015 closing low
17,245 is the November 2015 closing low
17,152 is the mid-July 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
ECONOMIC CALENDAR
September 30 - Friday
Personal Income, August (8:30): 0.2% actual versus 0.2% expected, 0.4% prior
(no revisions)
Personal Spending, August (8:30): 0.0% actual versus 0.2% expected, 0.4%
prior (revised from 0.3%)
Core PCE Prices, August (8:30): 0.2% actual versus 0.2% expected, 0.1% prior
(no revisions)
Chicago PMI, September (9:45): 54.2 actual versus 52.0 expected, 51.5 prior
(no revisions)
Michigan Sentiment -, September (10:00): 91.2 actual versus 90.0 expected,
89.8 prior (no revisions)
October 3 - Monday
ISM Index, September (10:00): 50.4 expected, 49.4 prior
Construction Spendin, August (10:00): 0.2% expected, 0.0% prior
Auto Sales, September (14:00): 4.91M prior
Truck Sales, September (14:00): 8.52M prior
October 5 - Wednesday
MBA Mortgage Index, 10/01 (7:00): -0.7% prior
ADP Employment Chang, September (8:15): 171K expected, 177K prior
Trade Balance, August (8:30): -$39.1B expected, -$39.5B prior
Factory Orders, August (10:00): 0.1% expected, 1.9% prior
ISM Services, September (10:00): 52.8 expected, 51.4 prior
Crude Inventories, 10/01 (10:30): -1.882M prior
October 6 - Thursday
Challenger Job Cuts, September (7:30): -21.8% prior
Initial Claims, 10/01 (8:30): 258K expected, 254K prior
Continuing Claims, 09/24 (8:30): 2062K prior
Natural Gas Inventor, 10/01 (10:30): 49 bcf prior
October 7 - Friday
Nonfarm Payrolls, September (8:30): 176K expected, 151K prior
Nonfarm Private Payr, September (8:30): 171K expected, 126K prior
Unemployment Rate, September (8:30): 4.9% expected, 4.9% prior
Hourly Earnings, September (8:30): 0.2% expected, 0.1% prior
Average Workweek, September (8:30): 34.4 expected, 34.3 prior
Wholesale Inventorie, August (10:00): -0.1% expected, 0.0% prior
Consumer Credit, August (15:00): $18.0B expected, $17.7B prior
From Briefing.com: Weekly Recap - Week ending 30-Sep-16The stock market saw some volatility during the past week, which could be easy to overlook, considering the S&P 500 added 0.2% for the week.
The trading week began with a decline that was driven by renewed concerns about Deutsche Bank's capital standing. German Chancellor Angela Merkel said that the bank would not be eligible for state aid if it were to experience a capital shortfall. This drove up concerns that something may indeed be wrong at Deutsche Bank. The stock remained in focus throughout the week, leading another market-wide swoon on Thursday amid reports that some funds who clear trades with Deutsche Bank have reduced their positions and withdrawn some excess cash. The stock ended Thursday with a 6.7% decline, weighing on sentiment in the broader market.
A turnaround in Deutsche Bank and the market developed on Friday when bank CEO John Cryan sent a letter to employees, assuring them of the bank's health. The stock rallied out of the gate on Friday, receiving another boost after AFP reported that the bank is nearing a $5.40 billion settlement with the Justice Department, down from the $14 billion that was originally sought by the DoJ.
As for rate hike expectations, they ended the week higher, but dipped briefly after Friday's economic data introduced another confounding element into the discussion. Specifically, August Core PCE Prices declined 0.1% (Briefing.com consensus +0.2%) even though other inflation measures trended up in August. The implied probability of a rate hike at the December meeting fell to 53.1% intraday, but climbed to 61.7% by the end of the day, up from last week's 54.2%, according to the fed funds futures market.
Index Started Week Ended Week Change % Change YTD %
DJIA 18261.45 18308.15 46.70 0.3 5.1
Nasdaq 5305.75 5312.00 6.25 0.1 6.1
S&P 500 2164.69 2168.27 3.58 0.2 6.1
Russell 2000 1254.62 1251.65 -2.97 -0.2 10.2
4:19 pm Closing Market Summary: Stocks Climb Amid Rebound in Financials (:WRAPX) :
The stock market ended a bumpy week on a higher note with all three major averages climbing near 0.8%. The S&P 500 (+0.8%) rallied into the late afternoon, but selling during the final minutes of the session drove the index just below its 50-day moving average (2168.4), which acted as resistance throughout the month. The S&P 500 gained 0.2% for the week, but shed 0.1% for the month. The benchmark index advanced 3.3% during the third quarter, underperforming the Nasdaq (+0.8%), which climbed 9.7% in Q3 and gained 1.9% in September.
Deutsche Bank (DB 13.09, +1.61) dominated headlines for the second day in a row, but today's focus was on a rebound in the stock amid reassurances from the bank's Chief Executive Officer John Cryan. Mr. Cryan sent a letter to employees, in which he described the bank's capital position as solid, noting that liquid reserves are well above pre-crisis levels from 2007. The stock doubled its late-morning gain, ending higher by 14.0%, after AFP reported the bank's MBS settlement with the Department of Justice will be reduced to $5.4 billion from $14.0 billion. The report was not confirmed by Deutsche Bank and it is worth noting that markets in Germany will be closed on Monday in observance of Unification Day.
The rebound in Deutsche Bank boosted sentiment in the financial sector (+1.4%), which narrowed its September loss to 2.9%, but still ended the month well behind the other ten sectors. Friday's sector-wide rally did not stop Wells Fargo (WFC 44.55, +0.18) from ending in the red as the stock set a fresh low for the year (44.10). The stock spent the entire month in a sharp decline, falling 12.5%, amid fallout from the discovery of more than two million illegally-opened credit card and deposit accounts.
The financial sector was followed by energy (+1.3%), which locked in a market-leading 3.0% gain for the month. The growth-sensitive sector outpaced crude oil, which climbed 0.8% to $48.11/bbl. The energy component gained 7.6% in September, but slipped 0.5% for the quarter.
Consumer staples (+1.0%) and health care (+1.0%) also spent the day among the leaders while other defensively-oriented sectors like utilities (-0.7%), telecom services (-0.3%), and real estate (-0.5%) lagged.
Elsewhere, the top-weighted technology sector (+0.6%) finished in the middle of the pack, masking relative strength among chipmakers as interest surrounding Qualcomm's (QCOM 68.50, +1.05) rumored acquisition of NXP Semiconductor (NXPI 102.02, +5.89) grew. NXP Semiconductor surged nearly 25.0% after Thursday's Wall Street Journal report brought the potential acquisition to light. The PHLX Semiconductor index advanced 1.6% on Friday.
Today's rally in stocks lured some money out of the Treasury market, sending the 10-yr yield higher by four basis points to 1.60%.
Quarter-end flows resulted in increased participation as more than 1.2 billion shares changed hands at the NYSE floor.
Economic data included Personal Income, Personal Spending, Core PCE Prices, Chicago PMI, and Michigan Sentiment:
Personal income increased 0.2% month-over-month in August, as expected, while personal spending was unchanged (Briefing.com consensus +0.2%). Real personal spending ("real PCE"), though, was down 0.1% The decline in real PCE will weigh on Q3 GDP growth forecasts and leave the market in a confused state on the timing of the next rate hike since real PCE was weak in August while the inflation measures trended up
The MNI Chicago Business Barometer jumped to 54.2 in September (Briefing.com consensus 52.0) from 51.5 in August. In the same period a year ago, the barometer stood at 47.8
The final reading for the September Index of Consumer Sentiment checked in at 91.2. That was above the Briefing.com consensus estimate of 90.0 and up from the final reading of 89.8 for August Monday's economic data will include the 10:00 ET release of August Construction Spending (Briefing.com consensus 0.2%) and September ISM Index (Briefing.com consensus 50.4) while auto and truck sales for September will be reported throughout the day.
Russell 2000 +10.2% YTDNasdaq Composite +6.1% YTDS&P 500 +6.1% YTDDow Jones Industrial Average +5.1% YTDWeek in Review: Bank Shares Wobble, But Market Holds
The stock market saw some volatility during the past week, which could be easy to overlook, considering the S&P 500 added 0.2% for the week.
The trading week began with a decline that was driven by renewed concerns about Deutsche Bank's capital standing. German Chancellor Angela Merkel said that the bank would not be eligible for state aid if it were to experience a capital shortfall. This drove up concerns that something may indeed be wrong at Deutsche Bank. The stock remained in focus throughout the week, leading another market-wide swoon on Thursday amid reports that some funds who clear trades with Deutsche Bank have reduced their positions and withdrawn some excess cash. The stock ended Thursday with a 6.7% decline, weighing on sentiment in the broader market.
A turnaround in Deutsche Bank and the market developed on Friday when bank CEO John Cryan sent a letter to employees, assuring them of the bank's health. The stock rallied out of the gate on Friday, receiving another boost after AFP reported that the bank is nearing a $5.40 billion settlement with the Justice Department, down from the $14 billion that was originally sought by the DoJ.
As for rate hike expectations, they ended the week higher, but dipped briefly after Friday's economic data introduced another confounding element into the discussion. Specifically, August Core PCE Prices declined 0.1% (Briefing.com consensus +0.2%) even though other inflation measures trended up in August. The implied probability of a rate hike at the December meeting fell to 53.1% intraday, but climbed to 61.7% by the end of the day, up from last week's 54.2%, according to the fed funds futures market.
Equity indices charged out of the gate, boosted by improved sentiment surrounding Deutsche Bank (DB 13.09, +1.61 +14.02%). Shares of the German banking giant have erased yesterday's losses after two positively-framed reports made the rounds. Chief Executive Officer John Cryan sent a letter to employees, in which he assured them of the bank's capital position, and pointed out that liquid reserves are well above levels from 2007
The news propelled a rebound in European trade, which carried into the opening hours of the New York session. Deutsche Bank stock has received another boost, extending its gain to 14.4% after AFP reported that the bank is nearing an agreement with the Department of Justice to reduce the mortgage-backed securities settlement to $5.40 billion from $14.00 billion. The focus is likely to remain on Deutsche Bank in the coming days, but markets in Germany will be closed on Monday in observance of Unification Day.
To wind down the month, market data today included the personal income reading, which showed a 0.2% month-over-month increase in August, as expected, while personal spending was unchanged. Real personal spending ("real PCE"), though, was down 0.1%. Additionally, the MNI Chicago Business Barometer jumped to 54.2 in September from 51.5 in August. In the same period a year ago, the barometer stood at 47.8. Lastly, the final reading for the September Index of Consumer Sentiment checked in at 91.2; that reading was up from the final reading of 89.8 for August.
September, and the third quarter, came to a close with some decent gains. The Friday session was capped off with the Dow Jones Industrial Average up 164.70 points (+0.91%) to 18308.15. The Nasdaq Composite added 42.85 points (+0.81%) to 5312.00, and the S&P 500 gained 17.14 points (+0.80%) to 2168.27. This week's moves took the three major US indices +5.1%, +6.1% and +6.1% YTD, respectively. The third quarter moves were +2.1%, +9.7% and +3.3%, respectively.
Technology (XLK 47.78, +0.25 +0.53%) ended the month with strong gains as the sector was in the green for the entirety of the day. Component Cognizant Tech (CTSH 47.63, -7.37 -13.40%) was the worst performing name in the space today following the resignation of President Gordon Coburn. Other sectors as measured by the S&P closed XLE +1.45%, XLFS +1.40%, XLF +1.37%, XLV +1.02%, XLP +1.01%, XLI +0.90%, XLY +0.81%, XLB +0.74%, XLRE -0.46%, IYZ -0.62%, XLU -0.69%.
In the S&P 500 Information Technology (801.72, +4.44 +0.56%) sector, action closed out the quarter near highs of the day. Component Qualcomm (QCOM 68.50, +1.05 +1.56%) had another strong session following a premarket upgrade at Mizuho primarily driven by rumors from yesterday that the company would buy NXP Semi (NXPI 102.01, +5.89 +6.13%). Other names in the space which out-performed today included SWKS +3.93%, QRVO +3.84%, NTAP +3.14%, TDC +2.96%, STX +2.01%, AMAT +1.93%, EBAY +1.86%, TEL +1.69%, NVDA +1.66%, LRCX +1.62%, WU +1.61%, XLNX +1.59%, QCOM +1.56%, JNPR +1.48%, PYPL +1.44%.
Other notable news items among sector components:
Shape Security announced a strategic investment from Hewlett Packard Enterprise (HPE 22.75, -0.15 -0.66%) Pathfinder to close a $40 million Series D round of funding.
MasterCard (MA 101.77, +1.16 +1.15%) amended its By-Laws to add proxy access procedures for qualifying stockholders.
Cognizant Tech (CTSH) appointed Rajeev (Raj) Mehta as President of the company; replaces Gordon Coburn who resigned.
According to Reuters, Qualcomm (QCOM) plans to battle against EU antitrust charges in November.
Elsewhere in the tech space:
Ultimate Software (ULTI 204.39, -1.09 -0.53%) acquired cloud workforce intelligence provider Kanjoya. Financial terms of the deal were not disclosed.
Comtech Telecom (CMTL 12.81, -0.32 -2.44%) announced Chairman Fred Kornberg will immediately resume his role as CEO and President and that its current CEO and President Stanton Sloane will depart CMTL.
Zynga (ZNGA 2.91, +0.10 +3.56%) appointed Gerard Griffin as CFO effective immediately.
FXCM (FXCM 8.77, +0.16 +1.86%) sold its DailyFX website for $40 million.
Renren (RENN 2.06, +0.15 +7.85%) announced intentions to spin off a newly formed subsidiary that will hold the social video platform woxiu.com and most of the investments in minority stakes in privately held companies.
Lexmark (LXK 39.96, +4.83 +13.75%) and Apex Consortium received clearance from CFIUS to proceed with the proposed transaction. The transaction is still expected to close in 2016.
In reaction to quarterly results:
CalAmp (CAMP 13.95, -2.46 -14.99%) reported in-line Q2 EPS of $0.27 on worse than expected revenues which rose 29.6% compared to last year to $90.5 million. The company also gave Q3 guidance, excluding the satellite business that ceased operations at the end of Q2 of EPS of $0.24-0.30 on revenues of $81-87 million.
Analyst actions:
QCOM was upgraded to Buy from Neutral at Mizuho,
NTAP was upgraded to Buy from Hold at Summit Redstone;
CAMP was downgraded to Equal Weight from Overweight at First Analysis Sec,
CTSH was downgraded to Neutral from Buy at Citigroup, and was downgraded to Hold from Buy at Argus, NTAP was downgraded to Hold from Buy at Standpoint Research;
MCHP was initiated with a Neutral at Mizuho,
EPAY, PCTY and PAYC were initiated with a Sector Perform at RBC Capital Mkts,
CTSH was initiated with a Buy at HSBC,
SPSC was initiated with an Overweight at Pacific Crest,
INFN and CIEN were initiated with a Hold at Stifel,
FSLR and AYI were initiated with Buy ratings at Williams Capital,
SPWR and CREE were initiated with Hold ratings at Williams Capital,
NLST was initiated with a Speculative Buy at The Benchmark Company,
RUBI was initiated with a Market Perform at Albert Fried,
NTNX was initiated with a Buy at Maxim Group
From Briefing.com: 4:15 pm : The stock market ended the Thursday affair on a lower note as concerns regarding Deutsche Bank's (DB 11.48, -0.82) capital position weighed on the major averages. The Dow Jones Industrial Average (-1.1%) finished slightly behind the Nasdaq Composite (-0.9%) and the S&P 500 (-0.9%).
Equity indices began the day on a quiet note, looking to consolidate after yesterday's oil-fueled risk rally. The benchmark index occupied a narrow nine-point trading range through the first half of trade as participants mulled over a recently-minted production cap agreement. OPEC surprised participants yesterday by announcing that it would limit production to between 32.5 million and 33.0 million barrels per day. However, specific terms of the agreement will not be released or put into effect until the oil collective meets on November 30.
The broader market broke lower near midday as reports indicated that approximately ten hedge funds have reduced their exposure to Deutsche Bank in recent days. The stock was down as much as 9.1%, ending lower by 6.7%. The German lender issued a statement in the afternoon, asserting that there had been recent outflows from its hedge fund business, but that Deutsche Bank's prime brokerage division remains profitable. Recall that capital concerns increased after the U.S. Department of Justice requested that the bank pay $14 billion to settle civil claims associated with the residential mortgage-backed securities crisis. The major averages notched session lows shortly after midday as heavily-weighted financials (-1.5%) and health care (-1.8%) led to the downside. The S&P 500 settled lower by 0.9%, testing technical support near the 2153/2151 price level. All eleven sectors finished in the red with utilities (-1.5%), financials (-1.5%), and health care (-1.8%) underperforming while energy (-0.1%) led to the upside.
The economically-sensitive financial sector (-1.5%) moved lower in sympathy with Deutsche Bank (DB 11.48, -0.82) as participants expressed concerns over the global banking landscape. Meanwhile, Wells Fargo (WFC 44.37, -0.94) declined 2.1% after CEO John Stumpf testified before the House Financial Services Committee. The congressional hearing was again heated as lawmakers questioned the sales tactics that led to the creation of more than two million fake deposit and credit-card accounts. The broader space extended its monthly loss to 4.2%, trailing the remaining sectors.
In the health care sector (-1.8%), biotechnology underperformed, evidenced by the 3.1% decline in the iShares Nasdaq Biotechnology ETF (IBB 285.87, -9.21). Mylan (MYL 38.47, -1.75) fell 4.4% after the CMS indicated that it had previously informed the company that it had misclassified its EpiPen device under the Medicaid Drug Rebate program. Recall that a group of U.S. lawmakers have recently pushed for the DoJ to investigate Mylan for this misclassification.
In the technology sector (-0.6%), the high-beta chipmakers outperformed, evidenced by the 1.3% gain in the PHLX Semiconductor Index. NXP Semiconductor (NXPI 96.12, +13.88) rallied 16.9% after reports indicated that Qualcomm (QCOM 67.45, +4.00) could be looking to acquire the company. Conversely, Apple (AAPL 112.17, -1.78) underperformed after it was removed from Barclay's Top Pick list. The firm also lowered its 2016 smartphone revenue and unit growth estimates for Apple.
The commodity-sensitive energy sector (-0.1%) finished at the top of the board as crude oil extended its rally. WTI crude finished higher by 1.4% ($47.73/bbl; +$0.66), showing marked resilience to the downturn in the broader market.
Treasuries ended on a higher note with yields slipping through the curve. The yield on the 10-yr note finished lower by one basis point at 1.56%.
Today's participation was above the recent average as more than 971 million shares changed hands on the NYSE floor.
Today's economic data included the third estimate of second quarter GDP, weekly initial claims, International Trade in Goods for August, and Pending Home Sales for August:
The third estimate for second quarter GDP checked in at 1.4% (Briefing.com consensus 1.3%), up from the second estimate of 1.1%. The GDP Deflator was unchanged at 2.3%.
Initial claims for the week ending September 24 increased by 3,000 to 254,000 (Briefing.com consensus 259,000), marking the 82nd straight week they have been below 300,000.
Continuing claims for the week ending September 17 decreased by 46,000 to 2.062 million.
The Advance International Trade in Goods report for August showed a narrowing in the goods deficit to $58.4 billion from an upwardly revised $58.8 billion (from -$59.3 billion) in July.
Pending Home Sales for August fell by 2.4% while the Briefing.com consensus expected an increase of 1.0%. Separately, the July reading was revised to 1.2% from 1.3%.
Tomorrow's economic data will include Personal Income (Briefing.com consensus +0.2%), Personal Spending (Briefing.com consensus +0.2%), and Core PCE Prices (Briefing.com consensus +0.2%) for August, which will each be released at 8:30 ET. Separately, Chicago PMI (Briefing.com consensus 52.0) and the final reading of the University of Michigan Sentiment Index for September (Briefing.com consensus 90.0) will cross the wires at 9:45 ET and 10:00 ET, respectively.
Russell 2000: +9.2% YTD
S&P 500: +5.2% YTD
Nasdaq: +5.2% YTD
Dow Jones: +4.1% YTD
DJ30 -195.79 NASDAQ -49.39 SP500 -20.24 NASDAQ Adv/Vol/Dec 700/1.777 bln/2196 NYSE Adv/Vol/Dec 925/971.3 mln/2377 3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, were +0.1% around the 85.22 level
Crude oil extended yesterday's notable +5.4% surge, closing at 3-week highs for the second consecutive session after yesterday's OPEC announcement to cut production
November crude oil futures rose $0.66 (+1.4%) to $47.73/barrel
Baker Hughes rig count data will be released tomorrow at 1 pm ET
Monthly IEA data will be released on Oct 11
Reminder: OPEC announced yesterday that they would reduce output by 32.5 mln barrels/day, compared to July's production levels of around 33.1 mln barrels/day. Details will be announced at the next official OPEC meeting on November 30 in Vienna, Austria.
Natural gas ended lower after EIA data showed a smaller-than-expected build compared to Consensus
November natural gas closed $0.04 lower (-1.3%) at $2.96/MMBtu
EIA highlights:
Natural gas inventory showed a build of +49 bcf vs expectations for inventory to be a build of approximately +55 bcf.
Working gas in storage was 3,600 Bcf as of Friday, September 23, 2016, according to EIA estimates.
Stocks were 90 Bcf higher than last year at this time and 220 Bcf above the five-year average of 3,380 Bcf.
At 3,600 Bcf, total working gas is above the five-year historical range.
In precious metals, gold's gains are outpaced by the rally in silver, the gold:silver ratio ended near parity with the previous sesson's close
December gold ended today's session up $2.20 (+0.2%) to $1326.10/oz
December silver closed today's session $0.07 higher (+0.4%) at $19.20/oz
The gold:silver ratio was at ~69.1, compared to yesterday's pit trading close ratio of ~69.1
Today's session began on a choppy note as equity indices found it difficult to build on yesterday's post-OPEC rally. The oil cartel announced yesterday afternoon that it would limit production to between 32.5 million and 33.0 million barrels per day. However, the official terms of the agreement will not be released or implemented until OPEC members meet on November 30. The clandestine nature of the agreement has understandably bred some concerns regarding whether the collective will honor this accord. Today, November crude oil futures were up $0.66 (+1.4%) to $47.73/barrel.
A number of Federal Reserve officials also contributed to early weakness, indicating that a rate hike might soon be appropriate. Philadelphia Fed President Patrick Harker (FOMC voting member in 2017) stated ahead of the session that the Fed should raise rates sooner rather than later while Kansas City Fed President Esther George (an FOMC voter) continues to favor the removal of policy accommodation. Odds of an interest rate hike before the end of the year improved with the implied probability of a rate hike at the December meeting rising to 57.4% from yesterday's estimate of 53.1%.
There were a few points of market data today, headlined by the third estimate for second quarter GDP checked in at 1.4%, up from the second estimate of 1.1%. The GDP Deflator was unchanged at 2.3%. Also, initial claims for the week ending September 24 increased by 3,000 to 254,000, marking the 82nd straight week they have been below 300,000. Additionally, the Advance International Trade in Goods report for August showed a narrowing in the goods deficit to $58.4 billion from an upwardly revised $58.8 billion (from -$59.3 billion) in July. Lastly, Pending Home Sales for August fell 2.4%. Separately, the July reading was revised to 1.2% from 1.3%.
Following yesterday's strength which was tied to Reuters reporting that OPEC had reached a production agreement, the broader market ended the Thursday affair on a lower note as concerns regarding Deutsche Bank's (DB 11.48, -0.82 -6.67%) capital position weighed on the major averages. The Dow Jones Industrial Average was the worst performer today, shedding 195.79 points (-1.07%) to 18143.45. The S&P 500 was down 20.24 points (-0.93%) to 2151.13, and the Nasdaq Composite lost 49.39 points (-0.93%) to 5269.15.
Technology (XLK 47.53, -0.29 -0.61%) finished among sectors with modest losses today as the session held onto flat lines for the majority of the morning but lost momentum into the close. Component Qualcomm (QCOM 67.45, +4.00 +6.30%) was higher today on speculation that the company may make a bid for NXP Semi (NXPI 96.12, +13.88 +16.88%). Other sectors as measured by the S&P closed the session XLV -1.76% XLU -1.48% XLFS -1.44% XLF -1.40% XLRE -1.23% XLP -0.98% XLI -0.81% XLB -0.77% IYZ -0.77% XLY -0.51% XLE -0.17% as Healthcare and Utilities weighed.
In the S&P 500 Information Technology (797.28, -4.51 -0.56%) sector, trading edged lower today, modestly off lows of the session. Component eBay (EBAY 32.30, +0.45 +1.41%) was among the best performers today on the back of a premarket upgrade to Buy at Deutsche Bank. Other names in the space which underperformed today included TDC -2.75%, YHOO -2.56%, TSS -2.14%, QRVO -1.72%, AAPL -1.56%, TEL -1.55%, KLAC -1.55%, ADBE -1.54%, VRSN -1.52%, CA -1.50%.
Other notable news items among sector components:
According to the Wall Street Journal, Qualcomm (QCOM) may be in discussions with NXP Semi (NXPI) to acquire the company for more than $30 billion.
Qualcomm (QCOM) announced that its subsidiary, Qualcomm Technologies, Inc. (QTI), and SK Telecom (SKM 22.60, +0.05 +0.22%) announced the first over-the-air technology demonstration of eLAA (Enhanced Licensed Assisted Access) and LAA (Licensed Assisted Access) that utilizes both licensed and unlicensed spectrum at SK Telecom's Corporate R&D Center in Bundang, Korea.
Analog Devices (ADI 63.74, -0.19 -0.30%) entered into a new term loan facility and an amended and restated revolving credit agreement. The company's new term loan facility will consist of a 3-year unsecured term loan facility in the principal amount of $2.5 billion and a 5-year unsecured term loan facility in the principal amount of $2.5 billion.
IBM (IBM 158.11, -0.18 -0.11%) to acquire Promontory Financial Group, a global market-leading risk management and regulatory compliance consulting firm. Financial terms of the deal were not disclosed.
CSRA (CSRA 27.06, -0.03 -0.11%) was awarded a contract by the U.S. Department of Health and Human Services (HHS) to upgrade the agency's PeopleSoft Human Capital Management system. The new, single-award contract is valued at $38.9 million including a one-year base period and four, one-year extension options.
Green Dot (GDOT 22.91, -0.12 -0.52%) announced the launch of the Green Dot Platinum Visa (V 81.92, -1.05 -1.27%) Secured Credit Card, a secured credit card that is designed to help people with no prior credit history or those with poor credit scores build a positive credit history.
Microsoft (MSFT 57.40, -0.63 -1.09%) announced it has formed the Microsoft AI and Research Group, bringing together Microsoft's world-class research organization with more than 5,000 computer scientists and engineers focused on the company's AI product efforts.
Epsilon, an Alliance Data (ADS 212.95, -1.26 -0.59%) company, has signed a new, multi-year agreement with CNO Financial (CNO 15.55, -0.31 -1.95%), a national holding company to insurance brands Bankers Life, Washington National and Colonial Penn.
Samsung Electronics (SSNLF 1550.00, flat) and SAP SE (SAP 89.54, -2.54 -2.76%) held the opening ceremony for a joint research center where engineers will conduct R&D for memory solutions to be used in next-generation in-memory computing.
NetSuite (N 109.85, -0.32 -0.29%) announced a host of product enhancements to NetSuite OneWorld, delivering deep global financial capabilities designed for Australia and New Zealand-headquartered businesses and multinational companies in both countries. Additionally, co announced that Paycorp, a leading Australian provider of enterprise payment processing solutions, has joined the NetSuite SuitePayments program.
Elsewhere in the tech space:
Compass Minerals (CMP 73.73, -0.29 -0.39%) issued a new $450 million senior secured term loan, which matures July 1, 2021, and carries an interest rate of LIBOR plus 2%.
WEX Inc. (WEX 107.24, -0.22 -0.20%) announced that WEX Australia has entered into a multi-year fuel card system processing contract with Caltex (CTXAY 46.60, flat). Financial terms of the deal were not disclosed.
Mimecast (MIME 1910, +1.81 +10.47%) priced a secondary public offering by selling shareholders of 4 million ordinary shares at $16.50 per share.
Canadian Solar (CSIQ 14.12, +0.51 +3.75%) announced commercial operation of the 60 MWac/78 MWp Barren Ridge solar photovoltaic (PV) project developed by the company's wholly owned subsidiary Recurrent Energy.
In reaction to quarterly results:
Accenture (ACN 121.64, +4.99 +4.28%) reported better than expected Q4 EPS of $1.31 on revenues which were up 7.6% compared to a year ago to $8.49 billion. The company also guided Q1 revenues of $8.40-8.65 billion. For FY17, the company sees GAAP EPS of $5.75-5.98 on revenue growth of 5-8% to about $34.53-35.51 billion.
Progress Software (PRGS 27.21, -1.19 -4.19%) reported worse than expected Q3 EPS of $0.44 on worse than expected revenues of $102.4 million. For Q4, the company sees EPS of $0.55-0.58 on revenues of $123-126 million.
Analyst actions:
EBAY was upgraded to Buy from Hold at Deutsche Bank,
BBRY was upgraded to Neutral from Underperform at Macquarie,
NMBL was upgraded to Outperform from Market Perform at Wells Fargo;
FIT was downgraded to Underweight from Sector Weight at Pacific Crest,
MANT was downgraded to Underperform from Neutral at Credit Suisse,
IMPV was downgraded to Neutral from Buy at Buckingham Research,
SONS was downgraded to Underperform from Market Perform at Cowen;
SIMO, SLAB, MX, IDTI, HIMX, KN, AMBA and CEVA were initiated with Buy ratings at Roth Capital,
FTV was initiated with a Neutral at Goldman,
GRPN was initiated with a Neutral at Boenning & Scattergood,
NTES was initiated with a Hold at Jefferies
4:25 pm CalAmp reports EPS in-line, misses on revs; guides Q3 below consensus excluding the satellite business (CAMP) :
Reports Q2 (Aug) earnings of $0.27 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.27; revenues rose 29.6% year/year to $90.5 mln vs the $92.26 mln Capital IQ Consensus. Revenue in the second quarter of fiscal 2017 included $31.9 million from LoJack products and services and $6.7 million from the Satellite segment. Co issues downside guidance for Q3 excluding the satellite segment that ceased operations at the end of Q2, sees EPS of $0.24-0.30, excluding non-recurring items, vs. $0.32 Capital IQ Consensus Estimate; sees Q3 revs of $81-87 mln vs. $95.01 mln Capital IQ Consensus Estimate.The Company remains cautious in the very near-term as macro conditions in North America have continued to result in softer-than-expected demand from key customers for MRM telematics products. Though CalAmp has experienced weakness through the first half of this year, the company is seeing some firming of demand and is optimistic that the company will see MRM product revenues begin to improve later this fiscal year and into fiscal 2018.One of the largest telematics service providers in North America has chosen various CalAmp LMU and TTU telematics device lines for its range of fleet and asset management solutions. This recent development follows another significant customer win in the first quarter with Omnitracs.
From Briefing.com: 4:10 pm : The major averages ended the midweek affair on a higher note as a leg higher in crude oil boosted risk appetite in the broader market. The energy component rallied in afternoon trade amid reports that OPEC reached a production cap agreement. The Dow Jones Industrial Average (+0.6%) finished ahead of the S&P 500 (+0.5%) and the Nasdaq Composite (+0.2%). Equity indices began the day on a choppy note as volatility from the oil pit weighed on the broader market. Crude oil was in focus as a negative reading of the Department of Energy's weekly inventory report weighed on the energy component. The EIA reported that crude oil stockpiles fell by 1.88 million barrels (consensus: +2.99 million) while gasoline inventories rose by 2.02 million barrels (consensus: +0.17 million). Oil ticked lower following the data, falling to the $44.50/bbl price level.
The energy component staged a reversal shortly after midday as Reuters reported that OPEC agreed to lower its production to 32.5 million barrels per day from approximately 33.2 million barrels. However, the reduction will not go into effect until OPEC meets on November 30. Nevertheless, WTI crude rallied into its pit close, finishing higher by 5.4% ($47.07/bbl; +$2.40).
The rebound in oil boosted risk appetite as heavily-weighted consumer discretionary (+0.3%), technology (+0.3%), and financials (+0.5%) each erased modest losses. The benchmark index finished at its best level of the day, testing technical resistance near the 2168/2173 price level. Eight sectors ended in the green with industrials (+0.7%), materials (+1.0%), and energy (+4.3%) leading the pack. Conversely, countercyclical health care (-0.1%), utilities (-0.3%), and telecom services (-1.0%) lagged.
The heavily-weighted financial sector (+0.5%) finished behind the broader market as participants responded to commentary from Federal Reserve Chair Janet Yellen. Chair Yellen testified before the House Financial Services Committee today, keeping the majority of her remarks centered on regulatory policies. Ms. Yellen indicated that the Fed is exploring stricter capital requirements for Global Systemically Important Banks (GSIBs) while also looking to lower regulatory requirements for community banks. The commentary initially spurred some risk aversion among GSIBs, but the group recovered before the close. JPMorgan Chase (JPM 66.71, +0.35) and Citigroup (C 46.87, 0.50) finished higher by 0.5% and 1.1%, respectively. Separately, Wells Fargo (WFC 45.31, +0.22) finished in-line with the sector despite reports that the California State Treasurer sanctioned the bank for prior sales practices.
Biotechnology underperformed in the health care space (-0.1%), evidenced by the 0.8% decline in the iShares Nasdaq Biotechnology ETF (IBB 295.08, -2.40). In the ETF, Mylan Labs (MYL 40.22, -1.09) fel 2.6% after the company indicated in the prior session that that there may be discrepancies between EpiPen profit data and previous information provided to Congress on the profitability of the device. The EpiPen manufacturer remains in the spotlight following the recent drug pricing controversy. The biotechnology ETF narrowed its monthly gain to 5.1%, which compares to a gain of 0.2% in the broader sector.
In the consumer discretionary space (+0.3%), media names outperformed after reports indicated that Sumner Redstone's National Amusements is pushing for Viacom (VIAB 36.56, +1.09) and CBS (CBS 54.15, +2.10) to hold merger talks. Conversely, retail names underperform as the SPDR S&P Retail ETF (XRT 43.31, -0.28) ended lower by 0.6%. Dow component Nike (NKE 53.25, -2.09) finished lower by 3.8% after the company's futures orders and gross margins came in below consensus.
Treasuries ended on a lower note with yields rising through the curve. The yield on the 10-yr note finished higher by one basis point at 1.57%.
Today's participation was above the recent average as more than 903 million shares changed hands on the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index and the Durable Goods Orders report for August:
The MBA Mortgage Index indicated that mortgage applications declined 0.7% in the week ending September 24. This followed a 7.3% decline in the prior week.
Total durable goods orders were unchanged in August (Briefing.com consensus -1.9%), which was better than expected, while orders excluding transportation were down 0.4%, as expected.
Total orders growth for July was revised down to 3.6% from 4.4% while growth in orders excluding transportation was also revised down to 1.1% from 1.5%.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include the third estimate of second quarter GDP (Briefing.com consensus 1.3%), the third estimate for the second quarter GDP deflator (Briefing.com consensus 2.3%), weekly initial claims (Briefing.com consensus 259k), and International Trade in Goods for August, which will each cross the wires at 8:30 ET. Separately, Pending Home Sales for August (Briefing.com consensus 1.0%) will be released at 10:00 ET.
Russell 2000: +10.5% YTD
S&P 500: +6.2% YTD
Nasdaq: +6.2% YTD
Dow Jones: +5.3% YTD
DJ30 +110.94 NASDAQ +12.84 SP500 +11.44 NASDAQ Adv/Vol/Dec 1714/1.672 bln/1142 NYSE Adv/Vol/Dec 2273/903.9 mln/727 3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, were +1.2% around the 85.14 level
Crude oil surged near 3-week highs after OPEC reached a deal to cut production in Nov to 32.5 mln barrels/day, compared to July production levels around 33.1 mln barrels/day
November crude oil futures rose $2.40 (+5.4%) to $47.07/barrel
OPEC meeting highlights:
OPEC members announced a deal to cut production to 32.5 mln barrels/day, about 600k less than July production levels of 33.1 mln barrels.
Details will be announced at the official OPEC meeting to be held in Vienna, Austria on November 30.
Earlier this morning, Qatar president stated market rebalancing is taking longer than expected, may not happen until the second half of 2017, now more urgency to ensure a quick rebalancing.
The next OPEC meeting will take place in Vienna, Austria on November 30.
EIA highlights:
Crude oil inventories had a draw of -1.882 mln (consensus called for a build of about +3.00 mln barrels)
Gasoline inventories had a build of +2.027 mln (consensus called for a build of about +0.18 mln barrels)
Distillate inventories had a draw of -1.915 mln
Natural gas extended yesterday's losses ahead of tomorrow's inventory data
November natural gas closed $0.05 lower (-1.6%) at $3.00/MMBtu
Weekly EIA natural gas inventory data will be released tomorrow at 10:30 am ET
In precious metals, gold's decline outpaced the drop in silver, the gold:silver ratio snapped its 3-day streak
December gold ended today's session down $6.30 (-0.5%) to $1323.90/oz
December silver closed today's session $0.04 lower (-0.2%) at $19.13/oz
The gold:silver ratio is ~69.2, compared to yesterday's level of ~69.4
Base metal copper inched notably higher in afternoon pit trading
December copper closed $0.02 higher (+0.9%) at $2.19/lb
Equity indices began the day on a choppy note as participants eyed a mixed performance from global markets and an upswing in crude oil. The energy component rebounded overnight as investors responded to a better-than-expected reading of the American Petroleum Institute's weekly inventory report. However, crude oil futures briefly erased their gain after the Department of Energy's more influential inventory data failed to confirm the reading.
The energy component staged a reversal shortly after midday as Reuters reported that OPEC agreed to lower its production to 32.5 million barrels per day from about 33.2 million barrels. However, the reduction will not go into effect until OPEC meets on November 30. Nevertheless, WTI crude rallied into its pit close, finishing higher by 5.4% ($47.07/bbl; +$2.40).
The economically-sensitive financial sector (XLF 19.31, +0.09 +0.47%) was also in focus today as participants mull over recent commentary from Fed Chair Janet Yellen. Ms. Yellen addressed the House Financial Services Committee today, keeping the majority of her remarks centered on regulatory policies. Chair Yellen stated that the Federal Reserve is exploring stricter capital buffers for Global Systemically Important Banks (GSIBs) while looking to lower regulatory hurdles for community banks. The policies are just ideas, but appear to have created some risk aversion in the sector and the broader market.
Additionally, market data today included the MBA Mortgage Index which indicated that mortgage applications declined 0.7% in the week ending September 24. This followed a 7.3% decline in the prior week. Also, total durable goods orders were unchanged in August, which was better than expected, while orders excluding transportation were down 0.4%, as expected.
Today's action began in the green and quickly turned lower as the market started to fall into a relative lull. Midday losses were quickly turned around, however, on the aforementioned Reuters headlines regarding the OPEC agreement. These headlines drove stocks into the green once again, as all three major US indices ended the session with gains, led by the Dow Jones Industrial Average which added 110.94 points (+0.61%) to 18339.24. The S&P 500 was higher by 11.44 points (+0.53%) to 2171.37, and the Nasdaq Composite edged up 12.84 points (+0.24%) to 5318.55.
Technology (XLK 47.80, +0.07 +0.16%) escaped Wednesday with gains as the sector spent the majority of the session in the red, but climbed out of negative territory in the final moments of action. Component Paychex (PAYX 57.50, -2.77 -4.60%) was the worst performer in the sector today on the back of a FY17 guidance cut and mostly in-line Q1 results. Other sectors as measured by the S&P ended the session XLE +4.34%, XLB +1.14%, XLI +0.78%, IYZ +0.77%, XLRE +0.69%, XLF +0.57%, XLFS +0.43%, XLY +0.30%, XLP +0.17%, XLV -0.15%, XLU -0.18%.
In the S&P 500 Information Technology (801.79, +2.53 +0.32%) sector, trading was weaker during midday, but finished in the green. Component Alphabet A (GOOGL 810.06, -0.67 -0.08%) were modestly weaker today as the stock was downgraded to an Underperform rating at Wedbush. Other names in the space which outperformed today included CRM +2.24%, CA +2.02%, TDC +1.84%, RHT +1.83%, GLW +1.29%, XRX +1.28%, WU +1.18%, ADSK +1.03%.
Other notable news items among sector components:
Motorola Solutions (MSI 76.79, +0.47 +0.62%) was awarded a $70 million firm-fixed-price, indefinite delivery/indefinite quantity contract for the Europe Enterprise Land Mobile Radio system.
Harris (HRS 91.95, +0.37 +0.40%) was awarded a $92.8 million single award, indefinite-delivery/indefinite-quantity contract for Harris Radio Communication Systems.
Harris (HRS) and Boeing (BA 132.23, +0.91 +0.69%) are developing next-generation avionics technology for current and future military aircraft to improve and protect aviators' missions.
NVIDIA (NVDA 66.78, +0.24 +0.36%) and TomTom (TMOAY 4.33, flat), the Dutch mapping and navigation group, announced they are partnering to develop artificial intelligence to create a cloud-to-car mapping system for self-driving cars.
Super Micro Computer (SMCI 23.59, +0.8 +0.34%) announced the general availability of its SuperServer solutions optimized for NVIDIA (NVDA 66.78, +0.24 +0.36%) Tesla P100 accelerators with the new Pascal GPU architecture.
Akamai Tech (AKAM 52.28, -0.37 -0.70%) acquired Concord Systems, Inc., a provider of technology for the high performance processing of data at scale, in an all cash transaction. Financial details of the deal were not disclosed.
Samsung Electronics (SSNLF 1550.00, flat) and Hewlett Packard Enterprise (HPE 23.04, +0.12 +0.52%) announced a partnership that will provide carriers with integrated network functions virtualization (NFV) infrastructure and virtual network functions (VNF) solutions.
IBM (IBM 158.29, +1.52 +0.97%) announced that Bank Sohar selected IBM Cloud and mobile to accelerate its digital transformation.
IBM (IBM) announced that Clarient Global LLC has selected VMware (VMW 73.85, +0.25 +0.34%) Cloud Foundation on IBM Cloud to continue to enhance its existing SoftLayer private cloud implementation for its Clarient Entity Hub platform.
Mastercard (MA 101.51, +0.06 +0.06%) launches Mastercard Developers, a solution that enables Mastercard partners to access a diverse range of Application Programming Interfaces (APIs) across payments, data and security.
Elsewhere in the tech space:
In addition to reporting quarterly results, BlackBerry (BBRY 8.33, +0.45 +5.71%) appointed Steven Capelli as CFO. The company also announced a newly formed joint venture PT BB Merah Putih to license BlackBerry software and services for the production of handsets for the Indonesian market.
SolarCity (SCTY 20.48, +0.49 +2.45%) partnered with Citi (C 46.87, +0.50 +1.08%) to create two separate funds to finance more than $347 million in solar projects. The company also promoted EVP of Global Capital Markets Radford Small to the role of CFO, reporting to CEO Lyndon Rive.
Harmonic (HLIT 5.83, +1.17 +25.11%) entered into a warrant agreement with Comcast (CMCSA 66.68, +0.51 +0.77%) which provides Comcast with the opportunity to acquire shares of common stock of Harmonic based on specific CableOS and other Harmonic product sales.
TerraForm Global (GLBL 4.05, -0.05 -1.22%) reached an agreement with subsidiaries of SunEdison (SUNEQ 0.05, -0.00 -0.92%) to buy certain assets from a third party buyer.
TerraForm Power (TERP 14.01, -0.02 -0.14%) settled litigation with Appaloosa.
Straight Path Comms (STRP 25.65, -0.37 -1.42%) received an FCC letter requesting additional documents and information regarding the 39 GHz and 28 GHz spectrum licenses.
In reaction to quarterly results:
BlackBerry (BBRY) reported better than expected Q2 net of breakeven on revenues which fell 28.2% compared to a year ago to $352 million. BBRY also issued upside guidance for FY17, sees EPS of ($0.05)-0.00, excluding non-recurring items.
Paychex (PAYX) reported better than expected Q1 EPS of $0.60 on revenues which were modestly ahead of market expectations and grew 8.6% compared to last year to $785.5 million. Management also lowered payroll service revenue growth expectations to 3-4% from 4%. PAYX also lowered net income growth guidance to about 7% from growth of 8-9% to reflect the impact of the discrete tax items recognized in the respective first quarter of fiscal years 2017 and 2016.
Analyst actions:
WDAY was upgraded to Neutral from Underperform at Wedbush;
GOOGL was downgraded to Underperform from Neutral at Wedbush,
TWTR was downgraded to Sell from Hold at Loop Capital,
TWTR was downgraded to Underperform from Neutral at Mizuho,
T was downgraded to Neutral from Buy at UBS,
BIDU was downgraded to Hold from Buy at Deutsche Bank,
SHOP was downgraded to Equal Weight from Overweight at Morgan Stanley;
CHKP was initiated with an Overweight at Piper Jaffray,
VSM was initiated with an Overweight at KeyBanc Capital Mkts
From Briefing.com: 4:15 pm : The stock market ended the Tuesday affair on a higher note as a reversal in the economically-sensitive financial (+0.9%) sector fostered a rebound in the broader market. Other factors impacting today's trade included regrouping after last evening's U.S. presidential debate and strong sector leadership from heavily-weighted consumer discretionary (+1.0%) and technology (+1.2%). The Nasdaq Composite (+0.9%) led the Dow Jones Industrial Average (+0.7%) and the S&P 500 (+0.6%).
Equity indices rose at the start of the session as investors eyed a rebound in the financial space (+0.9%). The group fell 1.5% on Monday as a downturn in European banking names weighed. Deutsche Bank (DB 11.92, +0.07) plunged 7.1% in the prior session after German Chancellor Angela Merkel indicated that the bank would not be eligible for state aid in the event of a capital shortfall. The news continued to weigh on the stock during the overnight session, but shares erased today's losses by afternoon trade. U.S.-listed issues of Deutsche Bank finished higher by 0.6%.
The turnaround in beleaguered financials helped boost risk appetite in the broader market while heavily-weighted industrials (+0.8%), consumer discretionary (+1.0%), and technology (+1.2%) also displayed strength. The broader market was in rally mode after the first U.S. presidential debate went off without major surprises. The CBOE Volatility Index (VIX 13.11, -1.39, -1.23%) declined more than one point after carving out a session high of 14.63% on Monday.
Oil prices remained a weak spot for the second day in a row as the energy component was pressured by developments from Algiers, Algeria. Reports from the International Energy Forum indicated that OPEC and non-OPEC producers were unable to reach a supply control agreement. Furthermore, Saudi Energy Minister Khalid al-Falih stated that he does not expect to reach an agreement during tomorrow's meeting. The energy minister did indicate that the topic could be revived in time for the oil cartel's November 30 meeting. WTI crude finished the day lower by 2.6% ($44.67/bbl; -$1.18).
The benchmark index narrowed its week-to-date loss to 0.2% as eight sectors finished in the green with consumer discretionary (+1.0%) and technology (+1.2%) leading the pack. Conversely, defensively-oriented utilities (-1.3%) and real estate (-0.8%) trailed energy (-0.5%) on the bottom of the leaderboard.
In the technology sector (+1.2%), Alphabet (GOOG 783.01, +8.80) and Microsoft (MSFT 57.95, +1.05) finished higher by 1.1% and 1.9%, respectively. The two names rose following recent speculation that they are mulling takeover offers for Twitter (TWTR 23.72, +0.35). Recall that Salesforce.com (CRM 70.05, -0.14) and Disney (DIS 91.72, -0.24) have also been identified as parties expressing interest in Twitter. Separately, the PHLX Semiconductor Index ended higher by 1.7%, erasing a modest monthly loss.
The consumer discretionary space (+1.0%) also displayed relative strength as F.A.N.G. members Amazon (AMZN 816.11, +16.95) and Netflix (NFLX 97.07, +2.51) outperformed after receiving target price increases from JP Morgan. Separately, Dow component Nike (NKE 55.34, +0.94) rallied 1.7% ahead of this evening's quarterly earnings report.
Domestic banking names paced the advance in the financial sector (+0.9%) as Citigroup (C 46.37, +0.48) and Bank of America (BAC 15.29, +0.20) rebounded 1.1% and 1.3%, respectively. Meanwhile, Wells Fargo (WFC 45.09, +0.21) inched higher by 0.5% after multiple sources signaled that the company is considering executive compensation clawbacks. On a related note, CEO John Stumpf is slated to appear before the House Financial Services Committee on Thursday.
Treasuries ended on a higher note with the long end of the curve outperforming. The yield on the 2-yr note finished flat (0.75%) while the yield on the 10-yr note finished lower by two basis points (1.56%).
Today's participation was below the recent average as fewer than 827 million shares changed hands on the NYSE floor.
Today's economic data included the Case-Shiller 20-city Index for July and Consumer Confidence for September:
The Case-Shiller 20-city Home Price Index for July rose 5.0%, which was below the Briefing.com consensus of 5.1%. This followed the previous month's unrevised reading of 5.1%.
The Conference Board's Consumer Confidence Index for September checked in at 104.1 (Briefing.com consensus 98.0) after an upwardly revised 101.8 reading (from 101.1) for August.
The September number is the highest since August 2007.
Tomorrow's economic data will include the weekly MBA Mortgage Index and Durable Orders for August (Briefing.com consensus -1.9%), which will cross the wires at 7:00 ET and 8:30 ET, respectively. The Department of Energy will release its weekly inventory report tomorrow at 10:30 ET.
Russell 2000: +9.6% YTD
Nasdaq: +6.0% YTD
S&P 500: +5.7% YTD
Dow Jones: +4.6% YTD
DJ30 +133.47 NASDAQ +48.22 SP500 +13.83 NASDAQ Adv/Vol/Dec 1886/1.601 bln/977 NYSE Adv/Vol/Dec 1752/826.8 mln/1232
3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, were -0.9% around the 84.14 level
Crude oil ended near 1-week lows after comments from the joint conference in Algiers squashed hopes for a production freeze/cut at this particular meeting
November crude oil futures fell $1.18 (-2.6%) to $44.67/barrel
This morning, Goldman Sachs lowered their 4Q16 oil forecast to $43/bbl from $50/bbl previously.
Highlights of the joint conference in Algiers:
The Saudi Energy minister stated he does not expect an agreement to be reached during tomorrow's talks, notes agreement possible by November
Notes the gap in views between OPEC nations is narrowing
Saudi Arabia can withstand the current oil environment with oil at current price levels
Doesn't think there is a need for a significant adjustment or cut
Russia & Saudi Arabia will meet again in October to discuss the oil markets and any potential actions needed
Saudi Energy minister commented that once Consensus is reached between production in Iran, Lybia, & Nigeria then a freeze can happen
Russian oil supply to remain flat
Data reminders:
The next OPEC meeting will take place in Vienna, Austria on November 30
Weekly EIA data will be released tomorrow at 10:30 am ET
Baker Hughes rig count data will be released Friday at 1 pm ET
API data will be released tonight after the bell
Monthly IEA data will be released Oct 11
Natural gas ended nearly unchanged ahead of Thursday's inventory number
November natural gas closed $0.01 lower (-0.3%) at $3.05/MMBtu
Weekly EIA natural gas storage data will be released Thursday at 10:30 am ET
In precious metals, silver's decline outpaced gold, the gold:silver ratio increased for the third consecutive session
December gold ended today's session down $14.00 (-1.0%) to $1330.20/oz
December silver closed today's session $0.42 lower (-2.1%) at $19.17/oz
The gold:silver ratio is ~69.4 vs. yesterday's ~68.6 level
Base metal copper extended its early morning decline, closed at fresh session lows
December copper closed $0.03 lower (-1.4%) at $2.17/lb
The major averages advanced at the start of the session, shrugging off weakness from the oil pit. The energy component has been under pressure as participants reassess expectations for a potential supply control deal at the International Energy Forum. Officials from both Iran and Saudi Arabia have downplayed the forum today, characterizing the event as a "consultative" meeting. However, the energy forum will run through tomorrow and volatility in the energy complex is expected to remain elevated. To that end, when the bell rang, November crude oil futures were down by $1.18 (-2.6%) to $44.67/barrel
Economic data today included the Case-Shiller 20-city Home Price Index for July, which rose 5.0%. This followed the previous month's unrevised reading of 5.1%. The Conference Board's Consumer Confidence Index for September checked in at 104.1 after an upwardly revised 101.8 reading (from 101.1) for August.
The broader market rebounded today off recent weakness, driven by the Tech sector. The Nasdaq Composite was the best performer today, adding 48.22 points (+0.92%) to 5305.71. The Dow Jones Industrial Average was up 133.47 points (+0.74%) to 18228.30, and the S&P 500 gained 13.83 points (+0.64%) to 2159.93.
Leading all S&P sectors today, Technology (XLK 47.73, +0.52 +1.10%) finished the session near highs as the space stepped higher as the day progressed. Component Cisco Systems (CSCO 31.48, +0.41 +1.32%) was the subject of a Bloomberg report which detailed the possible $4 billion investment by the company in Mexico. Other sectors as measured by the S&P ended Tuesday XLY +1.02%, XLFS +0.93%, XLF +0.79%, XLV +0.72%, XLI +0.70%, XLP +0.42%, IYZ +0.37%, XLB +0.30%, XLE -0.65%, XLRE -0.87%, XLU -1.30% with Utilities losing big in an overall up session.
In the S&P 500 Information Technology (799.26, +9.08 +1.15%) sector, the session was higher for the entirety. Components FSLR +4.94% MU +3.69% NVDA +3.42% STX +3.28% WDC +3.25% FFIV +2.85% YHOO +2.55% AVGO +2.50% ADI +2.46% ADBE +2.27% trended higher today.
Other notable news items among sector components:
Oracle (ORCL 39.30, +0.27 +0.69%) received clearance from the Department of Justice to acquire NetSuite (N 109.83, +0.94 +0.86%).
Activision Blizzard's (ATVI 44.21, +0.23 +0.52%) Blizzard Entertainment, Inc. and NetEase (NTES 244.15, +2.94 +1.22%) jointly announced the extension of their collaboration in mainland China to January 2020. The renewed operation agreement includes Blizzard's World of Warcraft, StarCraft II, Diablo III, Hearthstone, Heroes of the Storm, and Overwatch, as well as new content for these games during the agreement period.
Cognizant (CTSH 54.40, +0.25 +0.46%) will establish a Cognizant Digital Works Collaboratory in Melbourne, Australia.
The European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA) has selected Accenture (ACN 116.13, +2.40 +2.11%), Safran Identity & Security and Atos to provide application and infrastructure services for the E.U. Visa information System (VIS) and for the Biometric Matching System (BMS) underpinning VIS.
Fiserv (FISV 100.61, +0.36 +0.36%) partnered with FCTI Inc., a nationwide ATM network company, to provide transaction processing for nearly 8,000 ATM terminals at franchise- and corporate-owned 7-Eleven stores across the United States.
Microsoft (MSFT 57.95, +1.05 +1.85%) and Bank of America (BAC 15.29, +0.20 +1.33%) will collaborate on blockchain technology.
Workday (WDAY 89.79, +1.47 +1.66%) and Microsoft (MSFT) announced a partnership between Office 365 and WDAY's finance and HR applications.
Visa (V 82.16, +0.35 +0.43%) in partnership with Oracle (ORCL), introduced Visa Advertising Solutions, a new suite of products to help merchants understand whether their digital advertising efforts are influencing consumer purchase decisions online and in-stores.
Salesforce (CRM 70.05, -0.14 -0.20%) announced that Eli Lilly (LLY 80.88, +1.36 +1.71%) has expanded its use of the Salesforce Platform to develop more innovative and intuitive apps that are designed to personalize patient support programs, unite care teams and ultimately improve patient outcomes.
Hewlett Packard Enterprise (HPE 22.92, +0.13 +0.57%) unveiled details of its upcoming HPE | Microsoft (MSFT) Azure Stack solution, which is expected to become available in mid-2017.
According to Bloomberg, Cisco Systems (CSCO) plans a $4 billion investment in Mexico.
Elsewhere in the tech space:
WebMD Health (WBMD 50.25, -0.15 -0.30%) announced that the Board of Directors has appointed Blake DeSimone, its SVP of Finance, as its CFO. Mr. DeSimone succeeds Peter Anevski who is leaving the company. WebMD also announced that it expects its financial results for Q3 and full year of 2016 to be around the high end of its financial guidance issued on August 8, 2016.
Turtle Beach (HEAR 1.42, +0.03 +2.16%) announced plans to restructure the Hypersound business to substantially lower operating costs.
Ubisoft (UBSFY 7.50, +0.04 +0.54%) acquired mobile publisher Ketchapp. Financial terms of the deal were not disclosed.
Expedia's (EXPE 113.10, +4.01 +3.68%) HomeAway brand issued a press release announcing that John Kim will become president of HomeAway while its co-founder and current CEO, Brian Sharples, will move into the role of Chairman through January 2017.
In relation to the CBOE (CBOE 66.91, +0.32 +0.48%) and Bats Global Markets (BATS 30.28, -0.07 -0.23%) merger agreement, a wholly-owned subsidiary of KCG Holdings (KCG 15.44, -0.02 -0.13%) holds 13,233,742 shares of BATS Common Stock (or approximately 13.8% of the total outstanding shares of Bats Common Stock based on 95,679,427 shares outstanding as of the April 15, 2016 initial public offering). In connection with its sale of shares in the initial public offering of BATS in April 2016, KCG agreed to a lock-up agreement that restricts KCG's ability to transfer shares of BATS Common Stock for a period of time following the initial public offering. Pursuant to the terms of the lock-up agreement, about 4.4 million shares of BATS Common Stock held by KCG will be released from the lock-up on October 13, 2016.
Sonus Networks (SONS 8.75, +0.29 +3.43%) announced its acquisition of Taqua, LLC in an all-cash transaction for an initial cash consideration of $20 million with the potential for additional cash payments if certain annual revenue thresholds are exceeded. SONS also reconfirmed certain Q3 guidance. For Q3, the company sees EPS of $0.08-0.09 on revenues of $63-65 million.
Perion Network (PERI 1.24, -0.01 -0.80%) announced that Josef Mandelbaum will be leaving his position as CEO after a transition period of up to several months. The Board of Directors has begun a search for the company's next CEO and the Board and Josef are committed to a seamless transition. The Board of Directors has begun a search for the next CEO and the Board and Josef are committed to a seamless transition.
In reaction to quarterly results:
FactSet (FDS) reported worse than expected Q4 EPS of $1.69 on revenues which were in-line with market expectations and rose 9.7% compared to a year ago to $287.3 million. FDS also guided Q1 EPS of $1.68-1.72 and revenues of $286-292 million.
Synnex (SNX) reported better than expected Q3 EPS and revenues of $1.73 and $3.67 billion, respectively. For Q4, SNX sees better than expected EPS and revenues of $2.06-2.11 and $3.83-3.93 billion, respectively.
Analyst actions:
SSNC was upgraded to Overweight from Equal Weight at Morgan Stanley,
BATS was upgraded to Sector Perform from Underperform at RBC Capital Markets,
ORAN was upgraded to Outperform from Neutral at Credit Suisse,
SKYAY was upgraded to Buy from Hold at Kepler;
CBOE was downgraded to Sector Perform from Outperform at RBC Capital Markets,
FDS was downgraded to Underperform from Mkt Perform at Raymond James;
EFII was initiated with a Buy at Needham,
NNDM was initiated with a Buy at Lake Street,
GIB was initiated with a Neutral at Macquarie
4:19 pm TerraForm Global reaches agreement with subsidiaries of SunEdison (SUNEQ) to buy certain assets from a third party buyer (GLBL) :
The third party sale transaction is being conducted in connection with SunEdison's (SUNEQ) bankruptcy process and includes the 425 MW India portfolio of solar energy projects for which the Company made a prepayment to SunEdison in the fourth quarter of 2015.
The Third Party Sale Transaction also includes the Bora Bora project in India and certain assets in Uruguay that were previously committed to be transferred to the Company by SunEdison but were not transferred prior to SunEdison's filing for bankruptcy protection. The Company has agreed not to pursue claims against a third-party buyer relating in any way to the assets included in the Third Party Sale Transaction.
However, the Company has retained all of its claims against SunEdison and its affiliated persons. As a condition to the Company's consent to the Third Party Sale Transaction, the Company and certain subsidiaries of SunEdison that directly or indirectly own the assets to be subject to the Third Party Sale Transaction have entered into a proceeds sharing arrangement pursuant to which the Company is entitled to receive a portion of the cash proceeds received by the SunEdison parties in the Third Party Sale Transaction. The amount of cash proceeds the Company will receive from this arrangement is dependent on various factors and is limited; the Company does not expect the proceeds to exceed $10 million.
From Briefing.com: 4:10 pm : The major averages began the week on a lower note as a downturn in the heavily-weighted financial sector (-1.5%) pressured the broader market. Participants also looked to move to the sidelines ahead of an oil producers meeting and the first U.S. presidential debate. The Dow Jones Industrial Average (-0.9%) finished in-line with both the Nasdaq Composite (-0.9%) and the S&P 500 (-0.9%).
The major averages began the day under pressure as European indices led to the downside. Deutsche Bank (DB 11.85, -0.90) weighed on financial names after German Chancellor Angela Merkel indicated that the bank would not be eligible for state aid in the event of a capital shortfall. Recall that the bank has been under pressure after the U.S. Department of Justice asked Deutsche Bank to settle its mortgage-backed securities probe for $14 billion. The stock tumbled 7.1% and ended at a fresh all-time low.
Participants favored a risk-off stance throughout the session, bidding Treasuries, gold, and safe-haven currencies. The CBOE Volatility Index (VIX 14.49, +2.20) jumped more than two points as investors sought some portfolio insurance ahead of some key macro events. On that note, oil producers arrived in Algiers, Algeria today to kick off the International Energy Forum. The meeting is in focus as participants look for potential supply control measures from OPEC and non-OPEC members. The forum will run through September 28. WTI crude settled higher by 3.0% ($45.85/bbl; +$1.32).
The benchmark index notched a session low in the final hour of trade. Ten sectors ended in the red with consumer discretionary (-1.1%), health care (-1.2%), and financials (-1.5%) acting as the largest laggards. Conversely, defensively-oriented real estate (+0.2%) finished with the only gain.
The economically-sensitive financial sector (-1.5%) rounded out the leaderboard as the group moved lower in sympathy with European banking names. The space was also under pressure amid some flattening in the yield curve and the proposal of some stricter capital requirements for global systemically important banks. JPMorgan Chase (JPM 65.78, -1.47), Citigroup (C 45.89, -1.26), and Bank of America (BAC 15.09, -0.43) fell between 2.2% and 2.8%. The broader sector extended its 2016 loss to 1.5%, trailing the remaining sectors.
In the health care sector (-1.2%), Dow component Pfizer (PFE 33.64, -0.62) declined by 1.8% after announcing that it will not separate its Innovative Health & Essential Health divisions. Mylan Labs (MYL 41.18, -0.88) ended lower by 2.1% after reports indicated that there may be discrepancies between EpiPen profit data and previous information provided to Congress on the profitability of the device. The group also saw some selling interest ahead of this evening's debate.
Apparel name Nike (NKE 54.40, -0.75) weighed on the consumer discretionary space (-1.1%) after being removed from JP Morgan's Focus List. Meanwhile, Dow component Disney (DIS 91.96, -1.31) fell by 1.4% after headlines indicated that the company is debating making an offer to acquire Twitter (TWTR 23.37, +0.75).
The PHLX Semiconductor Index (-1.0%) finished behind the broader technology sector (-0.7%) as iPhone suppliers underperformed. Cirrus Logic (CRUS 51.32, -1.07) and Skyworks (SWKS 72.82, -1.95) finished lower by 2.0% and 2.6%, respectively.
Treasuries ended on a higher note with the long end of the curve outperforming. The yield on the 2-yr note finished lower by three basis points (0.73%) while the yield on the 10-yr note finished lower by four basis points (1.58%).
Today's participation was below the recent average as fewer than 775 million shares changed hands on the NYSE floor.
Today's economic data was limited to the New Home Sales Report for August:
New home sales declined 7.6% month-over-month in August to a seasonally adjusted annual rate of 609,000 (Briefing.com consensus 585,000), but remained 20.6% higher than the estimate for the same period a year ago.
The annual sales pace in August was the highest since January 2008.
For more on this economic release, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include the Case-Shiller 20-city Index for July (Briefing.com consensus 5.1%) and Consumer Confidence for September (Briefing.com consensus 98.0), which will be released at 9:00 ET and 10:00 ET, respectively.
Russell 2000: +9.3% YTD
S&P 500: +5.0% YTD
Nasdaq: +5.0% YTD
Dow Jones +3.8% YTD
DJ30 -166.62 NASDAQ -48.26 SP500 -18.59 NASDAQ Adv/Vol/Dec 689/1.544 bln/2191 NYSE Adv/Vol/Dec 854/774.7 mln/2169
3:30 pm :
The dollar index was -0.2% around the 95.28 level
Commodities, as measured by the Bloomberg Commodity Index, +0.6% around the 84.86 level
Crude oil erased the majority of Friday's post-rig count decline as the International Energy Forum is underway, where the informal OPEC meeting is expected to be held on the sidelines this Wed
November crude oil futures rose $1.32 (+3.0%) to $45.85/barrel
The informal OPEC meeting is scheduled to take place this Wed on the sidelines of the International Energy Forum in Algiers, Algeria, the Forum itself is taking place from Sept 26-28
API data will be released tomorrow after the bell
Weekly EIA data will be released Wed at 10:30 am ET
Baker Hughes rig count data will be released Friday at 1 pm ET
Natural gas closed near 1.5 year highs, erasing all of Friday's losses ahead of Thursday's EIA data
November natural gas closed $0.04 higher (+1.3%) at $3.06/MMBtu
EIA weekly natural gas data will be released this Thursday at 10:30 am ET
In precious metals, gold inched higher as silver dropped, increasing the gold:silver ratio as the dollar traded nearly flat
December gold ended today's session up $2.30 (+0.2%) to $1344.20/oz
December silver closed today's session $0.23 lower (-1.2%) at $19.59/oz
The gold:silver ratio is at ~68.6, at close of pit trading on Friday the ratio was at ~67.7
Today's session began on a lower note as equities moved lower lockstep with global bourses. Japan's Nikkei (-1.3%) underperformed overnight amid continued strengthening in the yen. The move higher in the safe-haven currency came on the heels of last week's policy decisions from the Bank of Japan and recent accommodative remarks from BoJ Governor Kuroda. Separately, a downturn in Deutsche Bank (DB 11.85, -0.90 -7.06%) pressured European banking names. The stock underperforms after German Chancellor Angela Merkel stated that the bank would not receive a bailout if it faced capital concerns.
The broader market extended its loss after the first hour of trade. There was a higher expectation for volatility in today's action as participants look to developments in Algiers, Algeria and keep an eye on the potential impact of this evening's U.S. presidential debate. Oil producers are meeting on the sidelines of the International Energy Forum to discuss a possible output deal, but expectations for a deal remain in flux. At the end of the day, November crude oil futures were up by $1.32 (+3.0%) to $45.85/barrel.
The lone piece of economic data today was the new home sales reading, which showed a 7.6% decline month-over-month in August to a seasonally adjusted annual rate of 609,000, but remained 20.6% higher than the estimate for the same period a year ago.
Trading capped off Monday lower as the Dow Jones Industrial Average shed triple digits for the second session in a row, losing 166.62 points (-0.91%) today to 18094.83. The Nasdaq Composite lost 48.26 points (-0.91%) today to end 5257.49, and the S&P 500 was down 18.59 points (-0.86%) to 2146.10. .
Technology (XLK 47.21, -0.28 -0.59%) as a whole ended lower, but was not the worst performing sector in the S&P. Components Seagate Tech (STX 37.20, +0.74 +2.03%) and Western Digital (WDC 57.01, +1.08 +1.93%) resisted the broader selling, however, as favorable commentary out of Cleveland Research propped the two up. Other sectors as measured by the S&P closed XLF -1.65%, XLFS -1.60%, IYZ -1.31%, XLV -1.16%, XLY -1.10%, XLP -0.84%, XLE -0.53%, XLI -0.50%, XLB -0.47%, XLU -0.26%, XLRE +0.21%.
In the S&P 500 Information Technology (790.18, -5.17 -0.65%) sector, trading ended modestly off lows, albeit still in a losing effort. Component Alliance Data (ADS 211.44, -5.55 -2.56%) was among the worst performers in the space today following a premarket downgrade to Sector Weight from Overweight at Pacific Crest. Other names in the space which under-performed today included GOOG -1.61%, QRVO -1.60%, GOOGL -1.51%, ADI -1.50%, INTC -1.45%, CSRA -1.36%, NTAP -1.35%, EBAY -1.25%, YHOO -1.19%.
Other notable news items among sector components:
According to reports, Disney (DIS 91.96, -1.31 -1.40%) is working with an adviser to pursue a potential bid for Twitter (TWTR 23.37, +0.75 +3.32%). In later trade, Microsoft (MSFT 56.90, -0.53 -0.92%) was floated as a potential acquirer of TWTR.
LogMeIn (LOGM 89.80, +0.09 +0.10%) announced the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) for its proposed merger with Citrix Systems' (CTXS 84.56, -0.35 -0.41%) GetGo subsidiary, a wholly owned subsidiary consisting of Citrix's GoTo family of products.
Adobe (ADBE 107.26, -0.21 -0.20%) and Microsoft (MSFT) announced plans for a strategic partnership to help enterprise companies embrace digital transformation and deliver compelling, personalized experiences through every phase of their customer relationships.
Accenture (ACN 113.73, +0.64 +0.57%) has entered into an agreement to acquire DayNine. Financial terms of the deal were not disclosed.
Accenture (ACN) and Brandtone announced a next generation trade promotion solution to help consumer packaged goods (CPG) companies have access to enhanced visibility, management and control of their promotional campaigns as they seek to capitalize on the significant growth in Asia Pacific.
Elsewhere in the tech sector:
CBOE Holdings (CBOE 66.59, -3.71 -5.28%) and Bats Global (BATS 30.35, -1.45 -4.56%) announced that they have entered into a definitive agreement, which has been approved by the Board of Directors of each company by unanimous votes of the members of the boards present, under which CBOE Holdings has agreed to acquire Bats in a cash and stock transaction valued at about $32.50 per Bats share, or a total of about $3.2 billion, consisting of 31% cash and 69% CBOE Holdings stock, based on CBOE Holdings' closing stock price of $70.30 per share on September 23, 2016. The transaction is expected to be accretive to CBOE's adjusted EPS in the first year following the completion of the transaction and deliver attractive returns on invested capital.
Ericsson (ERIC 6.90, -0.03 -0.43%) and Liberty Global (LBTYA 33.25, -1.18 -3.43%) confirmed a new two-year deal between VTR in Chile and Liberty Cablevision of Puerto Rico, both part of LiLAC Group (LILA 28.05, -0.19 -0.67%). Financial terms of the agreement were not disclosed.
Actua (ACTA 12.20, +1.93 +18.79%) entered into an agreement with an investor group led by Vista Equity Partners under which it will sell GovDelivery for $153 million in cash, subject to certain adjustments, including working capital, cash, debt and other items.
Pandora (P 13.99, -0.10 -0.71%) announced that Nick Bartle will join P as Chief Marketing Officer, effective October 3, 2016.
ON Semiconductor (ON 11.61, -0.10 -0.85%) approved the implementation of a cost-reduction plan, which is expected to result in a charge of about $21 -24 million.
TerraForm Global (GLBL 4.16, -0.04 -0.95%) and TerraForm Power (TERP 13.73, -0.75 -5.18%) made information available concerning claims against SunEdison (SUNEQ 0.05, -0.00 -2.31%). TerraForm Global previously announced that it would have to file its proofs of claim in the SunEdison bankruptcy and that it intended to begin settlement discussions to resolve claims consensually, in part to facilitate the exploration of strategic alternatives for TerraForm Global.
Analyst actions:
T was upgraded to Hold from Reduce at HSBC,
DBD was upgraded to Overweight from Neutral at JP Morgan,
ERIC was upgraded to Neutral from Underperform at Credit Suisse,
NTAP was upgraded to Buy at Cross Research,
ACN was upgraded to Buy from Hold at Societe Generale,
IBM was upgraded to Hold from Sell at Societe Generale;
NTAP was downgraded to Sell from Hold at Deutsche Bank,
BATS was downgraded to Mkt Perform from Outperform at Keefe Bruyette,
IDCC was downgraded to Neutral from Buy at B. Riley & Co.,
ADS was downgraded to Sector Weight from Overweight at Pacific Crest,
TWTR was downgraded to Underperform from Perform at Oppenheimer, and to Reduce from Buy at Standpoint Research,
APPS was downgraded to Neutral from Buy at Roth Capital,
IMPV and HIMX were downgraded to Neutral from Buy at Nomura;
CYBR was initiated with a Market Perform at Cowen,
ETFC and AMTD were initiated with Equal Weight ratings at Morgan Stanley,
BOX and TLND were initiated with Buy ratings at Rosenblatt,
CTSH was initiated with a Buy at Societe Generale
Leavitt Brothers Weekly Update:
http://leavittbrothers.com/pdfs/LB%20weekly%2020160925.pdf
TThe Bottom Line
The market is doing just fine. The Nas, Nas 100 and Russell 2000 are at new highs; the other indexes are not far behind.
The indicators support the strength, and a few of them, which had cycled down, are now bouncing.
And the market has absorbed several potential big announcements.
Things look good right now. There isn't much to say.
Bias remains to the upside. I continue to think 2300 - 2400 is in the cards for the S&P 500.
Have a great week.
Jason Leavitt
Jason@leavittbrothers.com
InvestmentHouse - AAPL, FB Have a Few Issues - Weekend Newsletter:
http://www.investmenthouse.com/frblog.php
- Two good post-FOMC upside sessions and a Friday test.
- AAPL, FB have a few issues, market takes a break.
- A day off on Friday, but the test of the FOMC rally is the key to the
continuing trend.
- Market rotation has kept the market rallying, thus far it is still
working.
- Tons of data next week as market moves toward next earnings season.
After 2 days higher following the FOMC 'stay the do nothing course' and
higher highs from NASDAQ, SOX, and RUTX, stock indices took a breather, some
more than others. Stocks started a bit lower, sold into early afternoon,
bounced, but then slid back near session lows to close.
SP500 -12.49, -0.57%
NASDAQ -33.77, -0.63%
DJ30 -131.01, -0.71%
RUTX -0.78%
RUTX -0.70%
SOX -1.10%
VOLUME: NYSE -5%, NASDAQ -8%. Lower volume on a decline means no heavy
selling, so no distribution damage done.
A/D: NYSE -1.7:1, NASDAQ -1.7:1
Pretty much even selling across the board outside of SOX, but that index is
more volatile. In short, after all stocks rose fairly evenly after the Fed,
all pulled back rather evenly Friday. The difference, of course, is in
their patterns and there relative position after the rally and pullback.
DJ30, SP500 and SP400 clearly lagged the FOMC induced bounce with DJ30 the
weakest link. NASDAQ, SOX and RUTX are the stronger and best positioned
after Friday, but SOX and RUTX did not make clear breakouts and indeed slid
back below their early September highs at the Friday close. Not sharp
reversals but something to watch as those indices tested the prior highs,
moved to higher highs, but have slipped back below the prior highs. That
leaves AAPL as the sold index holding a higher high. Hey, leadership has to
come from somewhere.
This coming week we see just what the post-FOMC move really gave the market.
Before the FOMC, the indices were less than inspirational, particularly
DJ30, SP500, SP400. That means this rather normal test heading into the
weekend after two solid surges needs to hold next week and not let those
indices slip back into the neutral to negative near term patterns shown
immediately ahead of the FOMC decision to once again cheese up and do
nothing. You almost have to laugh at the statement "for the time being" as
it implies the Fed really considered acting or will consider acting in the
future.
In any event, laughing or not at the Fed's invertebrate classification, the
market reaction this coming week after the surge on the news and then the
pullback. In some cases it is a normal test. In other cases such as DJ30,
SP500, they are quickly reverting to their weak upside position ahead of the
FOMC. If they fall back into that pattern, that is a sign of weakness.
There is a lot of Fed-speak next week with Fischer on Tuesday and Yellen
twice later in the week as she heads to Congress. The debate Monday is
considered an important event. As discussed Thursday, there is the notion a
good Trump performance is bad for stocks as it might mean he can win and of
course we cannot have an outsider enter Washington, DC and even talk about
changing up the power structure. Frankly, all of that talk is more
political BS. The politics are full bore, full press into every area they
feel they can achieve an advantage for their side. The market is a pawn in
that fight. It can have short term swings based on any event, political or
otherwise, but the utter nonsense about crashes if one candidate or the
other is elected is nonsensical (e.g. Mark Cuban). After all, there is the
Fed backstop, right?
Again, as the play in 'Hamlet' was the thing to catch the conscience of the
king, the test will be the thing to prove . . . the strength of the
FOMC-driven move.
We were confident enough of some moves to initiate positions on CEMP and
TCBI and to let our other positions work, upside and down. Remember, this
market has worked higher by rotation from sector to sector. That has
provided upside and downside plays even as the market rises as money leaves
one sector and moves to another. The test of the FOMC move will tell a lot
more about the market's ability to continue making higher highs. Thus far
the market has overcome near term selling, using the FOMC decision as the
upside catalyst. This coming week will tell the strength of the move
post-Fed.
THE MARKET
CHARTS
NASDAQ: The week's leader, NASDAQ hit two new all-time highs Wednesday then
Thursday. Friday it tested and likely fills the Thursday upside gap. With
AMZN at new highs, GOOG surging into Thursday, NASDAQ had the horsepower.
It does not look bad at all and should put in a rather normal test of this
move. Rallied up the 10 day EMA, tested back to the 50 day MA the second
week of September, now back over the 10 day EMA and punching out new highs.
Classic breakout, rally, test, resumption of the breakout move.
SOX: The other index punching out new highs on the week, though SOX is just
a post-2000 high. Still, impressive strength as it too put in the rally up
the 10 day EMA, the 50 day MA test, then the resumption of the rally.
Still, it looks a bit heavy here with some sluggish action and lower MACD on
the higher high. Not the kiss of death, but as noted earlier, the test is
the key.
RUTX: The same action, testing off a rally up the 10 and 20 day EMA,
holding the 50 day MA, rebounding back to a higher high Thursday. Looks as
if RUTX is resuming the uptrend over the 10 day EMA as well, though MACD is
lagging a bit, perhaps not as much as on SOX.
SP400: The midcaps did well enough, but now how they test is key. Gapped
back over the 50 day MA Thursday after selling to and holding the up
trendline from way back in January. Tested Friday, holding the 50 day MA.
No higher highs for SP400 yet and it only made it to the lower gap point
from where it gapped lower in early September. MACD is lagging as on the
other indices. Yes, the test will tell the story, but holding that
trendline was important. Now if it sells and breaks that TL, that of course
is a negative story.
SP500: Similar to SP400, gapped over the 50 day SMA Thursday then slipped
Friday, closing below that level. Just missed filling the early September
gap lower but was a point from it; close. MACD lagging, volume stronger on
the selling than the previous upside volume and the subsequent recovery
volume the past 2 weeks. Still trending higher, really not bad at all, but
the test this week tells the tale.
DJ30: You could say DJ30 struggled the most of the indices. It did
recovery, it did gap higher Thursday, but after hitting the 50 day SMA on
the high it faded to a doji. Friday DJ30 sold to fill the Thursday upside
gap. After recapturing the prior all-time high from 2015 Thursday, DJ30 gave
it up Friday. MACD lags, volume favored the stronger early September
selling. Not to be too repetitious, but the test this week is the real
story.
LEADERSHIP
Big Names: AMZN edged out a new all-time high after a strong Wednesday and
Thursday surge. GOOG took a breather after a strong Thursday gap and run.
FB gapped lower but remains in the trend after revealing for 2 years it
overstated its video ad views by as much as 80%. AAPL sold to the 10 day
EMA on volume after a private company reported that iPhone 7 sales might not
be that good. NFLX is struggling to hold the 50 day MA. MSFT faded some of
the move but holding over the 20 day EMA. MMM dropped on strong volume off
a Thursday tombstone doji.
Biotech: Good week, not much Friday, e.g. BIIB, CELG. IDRA enjoyed a
strong week as did AGIO, OVAS. BCRX still looks good as does NVIV. ACAD
moved up early week, tested nicely to Friday. Looks as if CEMP is starting
up a move as of Friday. ENDP surged Friday; could be interesting.
Chips/Electronics: Mixed, some looking heavy. LSCC posted a good move
Thursday. UNXL surged Friday. HIMX is still rending up the 10 day EMA.
AVGO and SWKS, however, suffered a weak Friday on that AAPL iPhone 7 report.
SLAB, XLNX look heavy but are holding on for now.
Financial: Picked up some TCBI options as it broke higher on strong volume.
C, BAC still look good in their 3 week flag tests. MS is holding, but going
nowhere. GS broke harder to the downside Friday, selling to the 50 day MA.
Utilities: A strong week but testing late week, and that means some
possibilities perhaps setting up. Others continued higher, e.g. AES, AEE.
Oil: After a good week in some issues, e.g. AXAS, CWEI, APC, Friday was a
downer. Still some very strong moves but as with the indices, the test this
week tells more of the tale.
Retail: Getting more interesting. JWN is starting to move and if it
continues we will enter. FL worked up off the 20 day EMA test. RL is
interesting at the 200 day SMA. ROST continued higher.
MARKET STATS
NASDAQ
Stats: -33.78 points (-0.63%) to close at 5305.75
Volume: 1.719B (-7.86%)
A/D and Hi/Lo: Decliners led 1.65 to 1
Previous Session: Advancers led 2.52 to 1
New Highs: 109 (-98)
New Lows: 19 (-2)
S&P
Stats: -12.49 points (-0.57%) to close at 2164.69
NYSE Volume: 810.4M (-4.8%)
A/D and Hi/Lo: Decliners led 1.71 to 1
Previous Session: Advancers led 4.67 to 1
New Highs: 54 (-112)
New Lows: 6 (+1)
DJ30
Stats: +98.76 points (+0.54%) to close at 18392.46
SENTIMENT INDICATORS
VIX: 12.29; +0.27
VXN: 13.98; +0.32
VXO: 12.24; +0.4
Put/Call Ratio (CBOE): 1.05; +0.08
Eleven 1.0+ Readings in 4 weeks, 7 of the last 12 sessions over 1.0.
Bulls and Bears: Of course bulls tumbled and bears jumped just as the
market bottomed.
Bulls: 44.6 versus 49.0
Bears: 24.3 versus 22.6
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: 44.6 versus 49.0
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 versus 40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4%
versus 43.3% versus 47.4% versus 44.4% versus 39.4% versus 36.4% versus
34.7% versus 26.5%
Bears: 24.3 versus 22.6
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% versus 34.3%
versus 35.7% versus 39.8% versus 39.2% versus 38.1% versus 35.4% versus
36.1%
OTHER MARKETS
Bonds (10 year): 1.62% versus 1.625%. Big gap Thursday post-FOMC, Friday
TLT stalled at the 50 day EMA and just below the July through August range.
That makes bonds look a bit weak post-FOMC.
Historical: 1.625% versus 1.656% versus 1.693% versus 1.705% versus 1.698%
versus 1.70% versus 1.698% versus 1.718% versus 1.671% versus 1.67% versus
1.61% versus 1.53% versus 1.54% versus 1.601% versus 1.57% versus 1.58%
versus 1.57% versus 1.57% versus 1.62% versus 1.58% versus 1.56% versus
1.54% versus 1.58% versus 1.53% versus 1.55% versus 1.57% versus 1.558%
versus 1.51% versus 1.56% versus 1.51% versus 1.54% versus 1.59% versus
1.585% versus 1.503% versus 1.54% versus 1.558% versus 1.51% versus 1.46%
versus 1.50%
EUR/USD: 1.12259 versus 1.12061. Euro looks ready to move higher after
recovering the 200 day SMA and the 50 day MA's. Big inverted head and
shoulders pattern.
Historical: 1.12061 versus 1.11898 versus 1.1151 versus 1.1177 versus 1.1155
versus 1.12444 versus 1.1245 versus 1.12196 versus 1.12335 versus 1.12318
versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545 versus 1.11943
versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949 versus 1.12894
versus 1.1300 versus 1.13045 versus 1.3254 versus 1.13251 versus 1.1342
versus 1.13036 versus 1.12773 versus 1.11824 versus 1.11636 versus 1.11372
versus 1.11803 versus 1.1115 versus 1.1080 versus 1.10882
USD/JPY: 101.034 versus 101.045. Dollar broke down hard Wednesday below
the 50 day MA's, back into the downtrend. Overall, however, USD could be
bottoming in a 3 month range with a low at 99.50 to 100.
Historical: 101.045 versus 100.386 versus 101.714 versus 101.956 versus
102.280 versus 102.086 versus 102.172 versus 102.155 versus 102.814 versus
101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus
101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus
102.160 versus 101.808 versus 100.485 versus 100.306 versus 100.27 versus
100.297 versus 100.21 versus 99.843 versus 100.529 versus 100.953 versus
101.308 versus 101.864
Oil: 44.48, -1.84. Dropped like a rock after rallying Monday to Thursday.
Rig count jumped in the US, Iran told Saudi Arabia to take its production
freeze idea and . . .
Gold: 1341.70, -3.00. Goldl jumped Wednesday and Thursday on the FOMC,
then faded just modestly Friday, holding at the 50 day SMA. In the 2.5 month
range and will see if it can put in a higher low at the 50 day and move
higher.
MONDAY
The Fed decision is out, arguably the most important data point. Hell, you
know it is. Continuing virtually free money for the banks and big
corporations has done SO much for the economy as a whole. Okay, so
financial assets are up, but as is evident talking to a lot of FORMER
investors, people who used to have money to invest but now need it all just
to try and hang onto what they have. To add to the Fed's 'no action'
action, this week the market gets some Fed-speak from Fischer and then
Yellen at Congress. Who knows how many others chime in?
Lots of data as well. New home sales, consumer confidence, durable orders,
GDP Q2 final, income and spending, Chicago PMI. Data heavy.
Okay, here comes the repeat: how the market tests from the Wednesday
Thursday FOMC-induced surge tells the tale. Friday some stocks took some
pretty serious hits to their gains, e.g. MMM selling hard from a tombstone
doji at the top of the July through August range.
A pullback gives opportunity in overbought leaders, IF the market holds the
test and resumes. With the Fed still all in the market should hold and
continue higher. If not, then the market has hit the saturation point of
the Fed just doing nothing. Of course if the market dives lower, not to
fear as the Fed and other central banks will step in as they did in
February. But here's the rub (still in Shakespeare mode, right?): of course
the market has to dive first.
Still many good sectors and stocks in good position to move. Picked up some
this past week, looking at more of course this week. How they test and hold
is the important aspect. Those that don't care and move higher anyway, well
they are likely to be very solid movers.
For downside plays, on an further test how they move tells their fate. If
the market sells and they don't, they likely don't sell much more and we
jettison. I have to say MMM still looks ready to drop and it is not alone.
TEX broke lower hard Friday and CMI still looks ready to blow an engine.
Despite all of the upside Fed euphoria (of sorts), there are issues out
there in the economy, market, and well, I just don't want to go into the
long list of extra-market issues facing the country because it is simply too
depressing to dwell upon.
Overall, the indices are in uptrends. There is still leadership, and there
are still good stocks forming good patterns and moving higher as money
rotates through different sectors. Of course we want to take advantage of
the trend and those stocks as long as they work.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5305.75
Resistance:
Support:
5287.61 is the all-time high from September 2016
5271.36 is the August 2016 intraday prior all-time high
5231.94 is the 2015 all-time high
The 50 day EMA at 5175
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
The 200 day SMA at 4881
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
4684 is the May 2016 test low
4637 is the February intraday high
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August
2015 low.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2164.69
Resistance:
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
The 50 day EMA at 2154
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 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
The 200 day SMA at 2060
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 18,285.92
Resistance:
18,288 from March 2015
18,351 is the all-time high from May 2015
The 50 day SMA at 18,431
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
Support:
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
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,589
17,351 is the September 2014 all-time high.
17,265 is a December 2015 closing low
17,245 is the November 2015 closing low
17,152 is the mid-July 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
ECONOMIC CALENDAR
September 26 - Monday
New Home Sales, August (10:00): 585K expected, 654K prior
September 27 - Tuesday
Case-Shiller 20-city, July (9:00): 5.1% expected, 5.1% prior
Consumer Confidence, September (10:00): 98.0 expected, 101.1 prior (revised
from 99.8)
September 28 - Wednesday
MBA Mortgage Index, 09/24 (7:00): -7.3% prior
Durable Orders, August (8:30): -1.9% expected, 4.4% prior
Durable Orders, Ex-T, August (8:30): -0.4% expected, 1.5% prior
Crude Inventories, 09/24 (10:30): -6.200M prior
September 29 - Thursday
GDP - Third Estimate, Q2 (8:30): 1.3% expected, 1.1% prior
GDP Deflator - Third, Q2 (8:30): 2.3% expected, 2.3% prior
Initial Claims, 09/24 (8:30): 259K expected, 252K prior
Continuing Claims, 09/17 (8:30): 2113K prior
International Trade , August (8:30): -$59.3B prior
Pending Home Sales, August (10:00): 1.0% expected, 1.3% prior
Natural Gas Inventor, 09/24 (10:30): 52 bcf prior
September 30 - Friday
Personal Income, August (8:30): 0.2% expected, 0.4% prior
Personal Spending, August (8:30): 0.2% expected, 0.3% prior
Core PCE Prices, August (8:30): 0.2% expected, 0.1% prior
Chicago PMI, September (9:45): 52.0 expected, 51.5 prior
Michigan Sentiment -, September (10:00): 90.0 expected, 89.8 prior
From Briefing.com: Weekly Recap - Week ending 23-Sep-16The stock market registered its second consecutive weekly gain with the S&P 500 climbing 1.2%. Thanks to the rally, the index is back to little changed for the month of September (-0.3%).
The advance in the market was broad-based as most sectors gained at least 0.4% for the week. Rate-sensitive sectors like real estate and utilities both advanced more than 3.0% for the week while energy (+0.1%) and technology (+0.4%) were the only two that failed to climb more than 1.0%. The underperformance in the technology sector masked a 20.0%+ spike in the shares of Twitter (TWTR) after CNBC reported that Salesforce (CRM) and Alphabet (GOOG) have expressed interest in the social media site.
Equity indices retreated early in the week, but buyers piled back into stocks after Wednesday's FOMC announcement called for no change to monetary policy once again. In addition to holding off on the next hike, the FOMC lowered its median policy rate projections for 2016, 2017, and 2018. However, the Fed statement was not unequivocally dovish, revealing three dissenting votes at the September meeting.
Federal Reserve Chair Janet Yellen discussed the FOMC decision, suggesting that a rate hike could take place in December. However, rate hike expectations, as expressed by the fed funds futures market, did not change much from last week. In fact, they receded a bit as the implied likelihood of a December hike ticked down to 54.2% from 55.5% at the end of last week.
Index Started Week Ended Week Change % Change YTD %
DJIA 18123.18 18261.65 138.47 0.8 4.8
Nasdaq 5244.57 5305.75 61.18 1.2 6.0
S&P 500 2139.11 2164.71 25.60 1.2 5.9
Russell 2000 1223.10 1255.11 32.01 2.6 10.5
4:11 pm Closing Market Summary: Averages Settle Lower as Apple and Oil Weigh (:WRAPX) :
The stock market ended an upbeat week on a lower note as the major averages pulled back from their recent risk rally. Other factors impacting today's trade included a downturn in crude oil futures and the underperformance of the heavyweight industrial (-0.6%), financial (-0.7%), and technology (-1.0%) sectors. The Dow Jones Industrial Average (-0.7%) finished behind both the S&P 500 (-0.6%) and the Nasdaq Composite (-0.6%). The three indices added between 0.8% and 1.2% for the week.
Equity indices stumbled at the start of the session as investors looked to lock in some profits in the wake of the recent Fed-induced rally. The Federal Reserve spurred risk appetite on Wednesday by voting to leave its key policy rate unchanged. The central bank also lowered the median projection for the fed funds rate for the years ahead. Diminished rate hike expectations eased market concerns over the potential sooner-than-expected removal of policy accommodations.
The broader market extended its loss near midday as the commodity complex came under pressure. Commodities were in focus as participants pored over proposed rule changes designed to limit the physical commodity activities of financial holding companies. Specifically, the Federal Reserve proposed strengthening existing capital requirements and quantitative limits on such companies.
Participants also expressed some misgivings about next week's OPEC meeting. Reports indicated that Saudi Arabia does not expect to make a production decision at this meeting. Separately, Russia indicated that it would not join plans with other oil producers until OPEC agreed on a supply agreement between its own members. The oil collective is scheduled to meet in Algiers, Algeria between September 26 and September 28. WTI crude ended the day lower by 3.9% ($44.53/bbl; -$1.80), but still finished the week up 3.5%.
The benchmark index settled near its session low after failing to reclaim technical support in the area of its 50-day simple moving average (2169). Nine sectors ended in the red with industrials (-0.6%), financials (-0.7%), technology (-1.0%), and energy (-1.3%) rounding out the board. On the flipside, defensively-oriented real estate (+0.3%) and telecom services (+0.4%) finished with the only gains.
The heavily-weighted technology sector (-1.0%) underperformed as large cap components Facebook (FB 127.96, -2.12) and Apple (AAPL 112.71, -1.91) weighed. Facebook was under pressure after reports indicated that the company overstated video ad view times to advertisers. Meanwhile, top-weighted Apple fell 1.6% after GfK stated that launch weekend iPhone sales fell approximately 25.0% year-over-year. Recall that the Dow component rallied 11.4% in the prior week on the heels of some bullish revisions to iPhone sales estimates. Separately, Salesforce.com (CRM 70.39, -4.20) fell 5.6% after reports speculated that the company may attempt to acquire Twitter (TWTR 22.62, +3.99). Alphabet (GOOG 786.90, -0.31) was also mentioned as a potential suitor in the CNBC report.
In the financial sector (-0.7%), investment brokerages and asset management names underperformed after the Federal Reserve released the proposed changes for holding companies. BlackRock (BLK 365.65, -8.22) and Franklin Resources (BEN 35.19, -0.87) ended lower by 2.2% and 2.4%, respectively. The broader sector gained 0.8% this week, but sports a month-to-date loss of 2.6%. This compares to a loss of 0.3% in the benchmark index.
Retail names demonstrated relative strength in the consumer discretionary space (-0.2%). Gap (GPS 22.62, +0.04) and L Brands (LB 75.20, +0.92) finished higher by 0.2% and 1.2%, respectively. On the flipside, athletic retailer Finish Line (FINL 22.75, -1.24) weighed as in-line earnings and a reaffirmed full-year outlook failed to impress investors.
Treasuries ended on a mostly higher note with the short end of the curve outperforming. The yield on the 2-yr note finished lower by two basis points (0.76%) while the yield on the 10-yr note finished flat (1.62%).
Today's participation was below the recent average as fewer than 804 million shares changed hands on the NYSE floor.
There was no economic data of note released today.
Monday's economic data will be limited to the New Home Sales Report for August (Briefing.com consensus 585k), which will be released at 10:00 ET.
Russell 2000: +10.6% YTD
Nasdaq: +6.0% YTDS&P 500: +5.9% YTD
Dow Jones: +4.8% YTD
Week in Review: Stocks Climb After Fed Holds
The stock market registered its second consecutive weeklygain with the S&P 500 climbing 1.2%. Thanks to the rally, the index isback to little changed for the month of September (-0.3%).
The advance in the market was broad-based as most sectorsgained at least 0.4% for the week. Rate-sensitive sectors like real estate andutilities both advanced more than 3.0% for the week while energy (+0.1%) and technology(+0.4%) were the only two that failed to climb more than 1.0%. Theunderperformance in the technology sector masked a 20.0%+ spike in the sharesof Twitter (TWTR) after CNBC reported that Salesforce (CRM) and Alphabet (GOOG) have expressed interest in the social media site.
Equity indices retreated early in the week, but buyers piledback into stocks after Wednesday's FOMC announcement called for no change tomonetary policy once again. In addition to holding off on the next hike, theFOMC lowered its median policy rate projections for 2016, 2017, and 2018.However, the Fed statement was not unequivocally dovish, revealing threedissenting votes at the September meeting.
Federal Reserve Chair Janet Yellen discussed the FOMCdecision, suggesting that a rate hike could take place in December. However, ratehike expectations, as expressed by the fed funds futures market, did not changemuch from last week. In fact, they receded a bit as the implied likelihood of a December hike ticked down to 54.2%from 55.5% at the end of last week.
2:55 pm Floor Talk: Cooling Off (:TALKX) :
The major indices started today's session on a defensive note, paced mostly by a profit-taking bid after the mini-bender the stock market went on following the latest FOMC meeting. The ability to bounce back from that initial selling pressure, however, has been impeded by several factors today that have led to a cooling-off period for the market:
A sharp reversal in oil prices ($44.48, -$1.84, -4.0%)Reports indicated that Saudi Arabia pooh-poohed the idea of any production cap agreement happening at next week's OPEC meeting. New rules proposed by the Federal Reserve, which would strengthen existing requirements and limitations on the physical commodities activities of financial holding companies, were also deemed a negative developmentWeakness in shares of Apple (AAPL 112.87, -1.75, -1.5%) following a market research report suggesting iPhone 7 sales have been weak. That report has run counter to other reports last week from mobile carriers highlighting record pre-orders.Facebook (FB 127.96, -2.12, -1.6%) has been a high-profile, large-cap laggard throughout the day following the news that the company overestimated video average viewing timeRenewed frustration over the seesaw communication from Fed officialsBoston Fed President Rosengren, who cast a dissenting vote at this week's meeting, reiterated his belief that the time is now for a rate hike to get in front of the economy and asset prices overheating
Dallas Fed President Kaplan (an FOMC voter in 2017) said the economy is not overheating and that the Fed can afford to be patient in raising rates
It probably hasn't been lost on today's participants either that the first presidential debate is on Monday. It should be entertaining -- and perhaps not in a good way -- but some political angst ahead of that debate has likely tempered the interest level of buy-the-dip proponents today.
12:53 pm Earnings Calendar for the week of September 26th (:SUMRX) :
Confirmed companies reporting earnings next week include:
Monday (September 26)Pre-Market: CCL, CALM, MTNAfter-Hours: SNX, THOTuesday (September 27)Pre-Market: FDS, INFO, NEOGAfter-Hours: NKE, CTAS, LNDC Wednesday (September 28)Pre-Market: PAYX, FGP, BBRY, ATUAfter-Hours: PIR, PRGSThursday (September 29) Pre-Market: PEP, ACN, CAG, CMNAfter-Hours: CAMP, COST Friday (September 30)Pre-Market: MKC
From Briefing.com: 4:15 pm : The stock market ended the Thursday affair on a higher note as participants continued to mull over yesterday's policy decision and guidance from the Federal Reserve. The broader market maintained its risk-on posture for a second session as the Nasdaq Composite (+0.8%) finished ahead of both the S&P 500 (+0.7%) and the Dow Jones Industrial Average (+0.5%). The Federal Reserve sparked a risk rally in global markets after voting to leave the target range of the fed funds rate unchanged (0.25% to 0.50%) at yesterday's policy meeting. Investors shook off persisting concerns regarding a potential September rate hike and also adjusted their rate hike expectations for the years ahead. The FOMC lowered its median projections for the fed funds rate to 0.6% for 2016, 1.1% for 2017, and 1.9% for 2018.
It is also worth noting that the committee reported that the case tightening has strengthened in recent months as three members supported a hike at yesterday's meeting. This leaves the door open for a potential rate hike before the end of the year. The implied probability of a rate hike at the December meeting registers at 58.4% after beginning the week at 55.0%.
The benchmark index notched a session high in the opening hour of trade, testing but failing to clear technical resistance near the 2180 price level. The broader market pulled back shortly thereafter as market leadership shifted away from commodity-sensitive energy (+0.2%) and materials (+0.3%) and towards defensively-oriented consumer staples (+0.9%), telecom services (+1.1%), and real estate (+1.9%). This also corresponded with a slight recovery in the U.S. Dollar Index (95.41, -0.25, -0.27%). Dollar-denominated commodities finished mostly higher with WTI crude ending up 2.2% ($46.33/bbl; +$0.99) on the day.
The broader market finished in the upper end of today's trading range as all eleven sectors settled in the green. The heavily-weighted industrial (+0.8%), consumer discretionary (+0.8%), and health care (+0.8%) sectors finished behind consumer staples (+0.9%), telecom services (+1.1%), and real estate (+1.9%). On the flipside, the financial sector (+0.3%) rounded out the leaderboard.
The consumer discretionary space (+0.8%) finished ahead of the broader market as heavily-weighted Amazon (AMZN 804.70, +14.96) displayed relative strength. The name jumped 1.9% after being upgraded to "Buy" from "Hold" at Argus. Meanwhile, Carnival (CCL 46.84, +1.02) and Royal Caribbean (RCL 70.99, +3.13) outperformed after the European Commission proposed a Political Dialogue and Cooperation Agreement with Cuba. Recall that Carnival opened new routes to Cuba earlier in the year.
In the health care space (+0.8%), Mylan Labs (MYL 42.59, +0.68) rallied 1.6% after CEO Heather Bresch testified before the House Oversight and Government Reform Committee yesterday. Ms. Bresch addressed the ongoing controversy regarding Mylan's EpiPen pricing. Mylan has gained 0.5% in September after falling 9.5% in the prior month. The broader iShares Nasdaq Biotechnology ETF (IBB 300.08, +2.55) finished slightly ahead of the health care sector, ticking higher by 0.9%.
The financial sector (+0.3%) underperformed as investors eyed a downturn in long term Treasury yields and diminished rate hike expectations. Wells Fargo (WFC 45.72, -0.11) declined 0.2% after a group of U.S. Senators asked the Labor Department to investigate the bank. Wells Fargo has lost 10.0% in September amid ongoing concerns over prior sales practices. Conversely, the real estate sector (+1.9%) outperforms as rate-sensitive real estate investment trusts have displayed relative strength so far this month.
Treasuries ended on a mixed note with the long end of the curve outperforming. The yield on the 2-yr note finished flat (0.77%) while the yield on the 10-yr note declined three basis points (1.62%).
Today's participation was roughly in-line with the recent average as more than 833 million shares changed hands on the NYSE floor.
Today's economic data included weekly initial claims, the FHFA Housing Price Index for July, Existing Home Sales for August, and Leading Indicators for August:
Initial jobless claims for the week ending September 17 decreased by 8,000 to 252,000 (Briefing.com consensus 262,000).
Continuing claims for the week ending September 10 decreased by 36,000 to 2.113 million.
The FHFA Housing Price Index for July rose 0.5%, which followed an increase of 0.2% in June.
Existing home sales decreased 0.9% month-over-month in August to a seasonally adjusted annual rate of 5.33 million (Briefing.com consensus 5.50 million), up 0.8% from last year.
Existing home sales in July were revised down to 5.38 million from 5.39 million.
The Conference Board's Leading Economic Index declined 0.2% in August (Briefing.com consensus +0.1%) on the back of an upwardly revised 0.5% increase (from 0.4%) for July.
This was the second time over the last four months that the index has been negative.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
There is no economic data scheduled to be released tomorrow.
Russell 2000: +11.2% YTD
Nasdaq Composite: +6.6% YTD
S&P 500: +6.5% YTD
Dow Jones: +5.6% YTD
4:04 pm Novatel Wireless to sell mobile broadband business for $50 mln in cash to T.C.L. Industries Holdings, to restructure into public holding company (shares halted; will resume 4:30 p.m. ET) (MIFI) :
Co entered into an agreement with T.C.L. Industries Holdings, a Hong Kong company, whereby MIFI will sell to TCL its mobile broadband business for a cash payment of $50 mln payable at closing. The closing of the transaction is subject to the receipt of various regulatory authority approvals, as well as the approval of MIFI's stockholders and convertible noteholders. The closing of the transaction is expected to occur in the first quarter of 2017.
MIFI then intends to undertake a holding company restructuring, which will result in Newco, a newly-formed wholly-owned subsidiary of MIFI, owning all of the capital stock of MIFI. Pursuant to the proposed
Restructuring, a newly-formed, direct, wholly-owned subsidiary of Newco and an indirect wholly-owned subsidiary of MIFI will be merged with and into MIFI, with MIFI surviving as a direct wholly-owned subsidiary of Newco. Each share of the common stock of MIFI issued and outstanding immediately prior to the merger of MIFI with Merger Sub will automatically convert into an equivalent corresponding share of the common stock of Newco, having the same designations, rights, privileges, qualifications and limitations as the corresponding share of MIFI common stock being converted. Accordingly, upon consummation of the
Restructuring, MIFI's current stockholders will become stockholders of Newco, and the current directors and senior executive management team of MIFI will be the directors and senior executive management team of
Newco.
Shares are slated to resume at 4:30 p.m. ET
Techstocks: Equities began the day on a higher note as global markets reveled in diminished fed funds rate hike expectations. The Federal Reserve voted 7-3 to maintain the target range of the fed funds rate (0.25%-0.50%) while also lowering rate hike expectations for the years ahead. However, the three dissenting members of the committee signaled that there still remains a chance for a rate hike before the end of the year. The implied probability of a rate hike at the December meeting registers at 63.4% after beginning the week at 55.0%.
Market data today included initial jobless claims, which for the week ending September 17 decreased by 8,000 to 252,000. Also, the FHFA Housing Price Index for July rose 0.5%, which followed an increase of 0.2% in June. Existing home sales were down 0.9% month-over-month in August to a seasonally adjusted annual rate of 5.33 million, up 0.8% from last year. Lastly, the Conference Board's Leading Economic Index declined 0.2% in August on the back of an upwardly revised 0.5% increase (from 0.4%) for July.
Stocks extended their Fed Statement rally today, ending with decent gains all around. Leading the rally today, the Nasdaq Composite added 44.34 points (+0.84%) to 5339.52. The S&P 500 was up 14.06 points (+0.65%) to 2177.18, and the Dow Jones Industrial Average was higher by 98.76 (+0.54%) to 18392.46.
All 11 S&P sectors were in the green today with Technology (XLK 47.91, +0.29 +0.61%) ending somewhere in the middle of the pack as a subsector of tech, Telecom (IYZ) was the best performer. Component Red Hat (RHT 80.02, +2.98 +3.87%) was one of the better performing names today as the company's Q2 report beat market expectations on the top and bottom lines. Other sectors as measured by the S&P closed the session IYZ +1.97%, XLRE +1.97%, XLP +0.88%, XLV +0.76%, XLY +0.73%, XLI +0.71%, XLU +0.61%, XLB +0.32%, XLFS +0.29%, XLF +0.21%, XLE +0.12%.
In the S&P 500 Information Technology (803.07, +4.42 +0.55%) sector, trading was higher for most of the day, ending just off highs of the session. Component Alphabet (GOOG) held onto some decent gains on no particular catalyst, as the broader sector surged on the back of the broader market. Other names in the space which outperformed today included FSLR +4.08%, ACN +1.75%, FFIV +1.60%, CTSH +1.42%, APH +1.20%, PAYX +1.16%, ADS +1.13%.
Other notable news items among sector components:
Cisco (CSCO 31.66, +0.30 +0.96%) and Salesforce (CRM 74.59, +0.41 +0.55%) announced a strategic alliance to enable business users to be more productive than ever before. The two companies will jointly develop and market solutions that join Cisco's collaboration, IoT and contact center platforms with Salesforce Sales Cloud, IoT Cloud and Service Cloud.
Accenture (ACN 113.66, +1.96 +1.75%) entered into an agreement to acquire Kurt Salmon. The acquisition will expand Accenture Strategy's capabilities in delivering end-to-end strategy consulting services to top retailers and private equity firms in a world disrupted by digital.
According to Reuters, Facebook's (FB 130.08, +0.14 +0.11%) Instagram has an advertising base of more than 500,000 in seven months.
Neustar (NSR 27.47, +0.76 +2.85%) announced a new advanced marketing analytics partnership with Facebook.
According to TechCrunch, Apple (AAPL 114.62, +1.07 +0.94%) acquired Tuplejump, a 'machine learning company.'
Oracle (ORCL 39.51, flat) announced the US District Court granted the company a permanent injunction against continued copyright infringement by Rimini Street.
Elsewhere in the tech space:
In addition to reporting quarterly results, Jabil Circuit (JBL 22.40, -1.33 -5.60%) announced a restructuring plan which would result in about $195 million in total charges over a two-year period. It is currently estimated that $120 million to $150 million will be recorded in fiscal year 2017 and the balance during fiscal year 2018. Jabil estimates that the cash component of these actions is $50 million of which $25 million will be incurred in fiscal year 2017.
Hutchinson Tech. (HTCH 3.97, +2.48 +166.44%) announced that the FTC granted early termination under the HSR Act for the pending acquisition by TDK Corporation. The merger was expected to close no later than October 5.
Scripps Networks Interactive (SNI 61.51, +1.69 +2.83%) and AT&T (T 41.11, +0.54 +1.33%) reached a multi-year, multi-platform agreement for continued distribution of SNI channels both live and on-demand for DIRECTV and AT&T U-verse customers. Financial terms of the deal were not disclosed.
Inovalon (INOV 15.58, -0.12 -0.76%) to acquire Creehan & Company for about $105 million plus additional contingent payments of up to $25 million.
Interdigital Comm (IDCC 79.61, +1.88 +2.42%) increased its quarterly dividend to $0.30 per share from $0.20 per share.
Starz (STRZA 31.69, +0.11 +0.35%) agreed in principle to multi-year extensions of its affiliation agreements with both DIRECTV and AT&T Services (T), subject to the entry into definitive agreements with each of
DIRECTV and AT&T. In addition, in connection with and as a condition to these extensions, Lions Gate Entertainment (LGF 20.99, +0.02 +0.10%) has agreed in principle to issue to AT&T three $16.67 million annual installments of equity following the completion of the proposed merger between Starz and Lions Gate, subject to the entry into a definitive agreement with AT&T. Starz has been advised that Lions Gate is expected to treat the annual issuance or payment as a reduction of Starz Networks' revenue. Starz has further been advised that Lions Gate signed a new multi-year agreement covering transactional video-on-demand, pay-per-view and electronic-sell-through with DIRECTV and AT&T simultaneously with the entrance into the agreement in principle described above.
In reaction to quarterly results:
Red Hat (RHT) reported better than expected Q2 EPS of $0.55 on better than expected revenues of $599.8 million; billings were about $573 million. For Q3, RHT guided EPS of $0.58 on revenues of $613-623 million. For the FY17 period, the company sees EPS of $2.23-2.25 on revenues of $2.415-2.535 billion.
Jabil Circuit (JBL) reported better than expected Q4 EPS of $0.28 on better than expected revenues of $4.4 billion. The company also guided for Q1 EPS of $0.54-0.74 on revenues of $4.8-5.8 billion.
Analyst actions:
ON was upgraded to Equal Weight from Underweight at Morgan Stanley,
AMZN was upgraded to Buy from Hold at Argus;
CBS was downgraded to Market Perform from Outperform at Telsey Advisory Group,
SYNT was downgraded to Mkt Perform from Outperform at Barrington Research,
JBL was downgraded to Hold from Buy at Needham and to Hold from Buy at Standpoint Research;
NLST was initiated with a Buy at B. Riley & Co., IL was initiated with a Mkt Perform at JMP Securities, FORM was initiated with a Buy at Craig Hallum
From Briefing.com: 4:21 pm Floor Talk: A Sigh of Rate-Hike Relief (:TALKX) : The Federal Reserve might still raise the target range for the fed funds rate before the year is done, but it didn't do that today and the market breathed a sigh of relief over it.
That may sound strange given the understanding ahead of time that the fed funds futures market placed only a 15% probability on a rate hike at today's meeting; nonetheless, there was still some tension in the market pertaining to the possibility of the Fed springing a rate-hike surprise on the market.
That didn't occur and a non-rate hike rally ensued with intermarket dynamics suggesting as much:
Stock marketEvery sector ended the day higher, with the utilities sector (+2.1%) leading the way and the financials sector (+0.7%), which stands to benefit from a rate hike and a steeper yield curve, trailing the action.Bond marketThe yield on the 2-yr note, which hit 0.80% just before the Fed announcement, traded back down to 0.77%. The yield on the 10-yr note, which stood at 1.68% just before the Fed announcement, traded back down to 1.66% in a curve-flattening tradeCurrency marketThe U.S. Dollar Index declined 0.5% to 95.50. It stood at 95.85 just before the Fed announcement, but a pop in the euro after the decision reined it back in. That pop was presumably driven an unwinding of some policy divergence trades as the Fed was perceived to be less hawkish than feared
Commodity market
Riding the strength of oil (+2.9% to $45.34/bbl) and bolstered by the weaker dollar, commodity indexes pushed higher
The CBOE Volatility IndexThe index hit an intraday peak of 15.65 shortly before 1:00 p.m. ET, but cratered to 13.18 by the time the stock market closedTomorrow is a new day and new attitudes could prevail, yet the action in the capital markets on Wednesday after the Fed decision revolved around an understanding that the fed funds rate is going to remain unchanged for the time being.
4:20 pm Red Hat beats by $0.01, beats on revs and billings; guides Q3 and FY17 EPS and revs above consensus (RHT) :
Reports Q2 (Aug) earnings of $0.55 per share, $0.01 better than the Capital IQ Consensus of $0.54; revenues rose 19.0% year/year to $599.8 mln vs the $589.97 mln Capital IQ Consensus. Billings were approximately $573 mln vs. expectations for around $558 mln.Co issues upside guidance for Q3, sees EPS of $0.58 vs. $0.57 Capital IQ Consensus Estimate; sees Q3 revs of $613-623 mln vs. $611.48 mln Capital IQ Consensus Estimate. Co issues upside guidance for FY17, sees EPS of $2.23-2.25 vs. $2.21 Capital IQ Consensus Estimate; sees FY17 revs of $2.415-2.535 bln vs. $2.4 bln Capital IQ Consensus Estimate."We continued to close a record number of deals over $1 million in our second quarter, which are up more than 60% year over year. This further demonstrates our customers' commitment to Red Hat and the broad demand for our expanding technology portfolio as enterprises embrace digital transformation and the hybrid cloud."
4:06 pm Jabil Circuit beats by $0.03, beats on revs; guides Q1 EPS in-line, revs in-line; discloses restructuring plan (JBL) :
Reports Q4 (Aug) earnings of $0.28 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.25; revenues fell 6.0% year/year to $4.4 bln vs the $4.26 bln Capital IQ Consensus.
Co issues in-line guidance for Q1, sees EPS of $0.54-0.74 vs. $0.61 Capital IQ Consensus Estimate; sees Q1 revs of 4.8-5.8 bln vs. $4.88 bln Capital IQ Consensus Estimate.
"In fiscal 2017, we'll continue to deliver upon our recently communicated capital return framework, ensure our global operations are efficiently managed to support our customers and continue to aggressively grow key areas of our business," added Mondello.
In addition, Jabil announced its intention to realign the Company's global capacity and administrative support infrastructure in order to optimize organizational effectiveness in a more moderate growth environment. The company estimates that the realignment shall result in approximately $195 million in total charges over a two year period. It is currently estimated that $120 million to $150 million will be recorded in fiscal year 2017 and the balance during fiscal year 2018. Jabil estimates that the cash component of these actions is $50 million of which $25 million will be incurred in fiscal year 2017.
4:15 pm : The stock market ended the midweek affair broadly higher as participants responded to the latest policy statements from the Federal Reserve and Bank of Japan. The S&P 500 (+1.1%) finished slightly ahead of the Nasdaq Composite (+1.0%) and the Dow Jones Industrial Average (+0.9%).
The broader market began the day on a higher note as a leg higher in crude oil and an accommodative policy decision from the Bank of Japan boosted risk appetite. The central banked opted to maintain its key policy rate (-0.10%) while shifting away from a monetary base target. Instead the central bank will establish interest rate controls designed to steepen the yield curve through quantitative and qualitative easing flows. The foreign exchange market appeared disappointed with the plan as the yen strengthened throughout the session. The dollar/yen pair finished lower by 1.2% (100.52).
Equity indices extended their gains in the opening hour as participants pored over weekly inventory data from the Department of Energy. The EIA reported that crude oil stockpiles declined by 6.20 million barrels (consensus: +3.35 million) while gasoline stockpiles fell by 3.20 million barrels (consensus: -0.57 million). The benchmark index gained lockstep with crude oil, but was unable to clear technical resistance near the 2150/2153 price level. The broader market retraced the bulk of its opening gain by midday. The energy component settled higher by 2.6% ($45.22/bbl; +$1.17).
The major averages recovered in the final hour of trade, notching new session highs as participants mulled over the latest policy statement from the FOMC and commentary from Fed Chair Janet Yellen. The FOMC opted to leave the target range for the fed funds rate unchanged at 0.25% to 0.50%. However, three committee members dissented, indicating that they supported an interest rate hike at the September meeting. Additionally, the committee lowered rate hike expectations going forward, estimating one rate hike in 2016, two to three in 2017, and three in 2018.
The benchmark index finished near its best level of the day, climbing above technical resistance near the 2160 price level. All eleven sectors ended in the green with telecom services (+1.3%), materials (+1.5%), utilities (+2.1%), and energy (+2.1%) leading the advance.
The Dow Jones Transportation Average (+1.8%) finished ahead of the broader market as FedEx (FDX 173.86, +11.21) led the index. The stock jumped 6.9% after reporting a top- and bottom-line beat and increasing its full-year earnings outlook. On the flipside, airline names rounded out the group after American Airlines (AAL 34.67, -0.48) was downgraded to "Market Perform" from "Outperform" at Raymond James. The broader U.S. Global Jets ETF (JETS 22.38, +0.02) inched higher by 0.1%.
In the influential technology sector (+1.1%), the high-beta chipmakers outperformed, evidenced by the 1.4% gain in the PHLX Semiconductor Index. Meanwhile, Adobe Systems (ADBE 107.78, +7.16) notched a new all-time high (108.22) after beating top- and bottom-line estimates for the quarter and issuing above-consensus fourth-quarter guidance. Conversely, top-weighted Apple (AAPL 113.55, -0.02) finished behind the broader sector.
Health care providers outperformed in the health care sector (+1.0%) as Anthem (ANTM 128.59, +2.83) rallied 2.3%. The stock rebounded after being removed from the US 1 List at Bank of America/Merrill Lynch in the prior session. Separately, biotechnology extended its recent winning streak as the iShares Nasdaq Biotechnology ETF (IBB 297.53, +1.83) advanced 0.6%. This follows yesterday's 1.4% gain.
The financial space (+0.7%) finished behind the broader market as participants continued to adjust rate hike expectations for the year. The fed funds futures market indicates that the implied probability of a rate hike at the November meeting has declined to 14.5% (from 22.0%) while the probability of a rate hike at the December meeting rose to 63.4% (from 59.2%). In the group, Wells Fargo (WFC 45.83, -0.73) fell 1.6% after being downgraded to "Neutral" from "Overweight" at JP Morgan.
Treasuries ended on a mixed note with the long end of the curve outperforming. The yield on the 2-yr note finished flat (0.77%) while the yield on the 10-yr note declined four basis points (1.65%).
Today's participation was roughly in-line with the recent average as more than 873 million shares changed hands on the NYSE floor.
Today's economic data was limited to the weekly MBA Mortgage Index:
The MBA Mortgage Index indicated that mortgage applications declined 7.3% in the week ending September 17. This followed a 4.2% gain in the prior week.
Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 262k) and the FHFA Housing Price Index for July, which will cross the wires at 8:30 ET and 9:00 ET, respectively. Separately, Existing Home Sales for August (Briefing.com consensus 5.50 million) will be released at 10:00 ET.
Russell 2000: +9.6% YTD
S&P 500: +5.8% YTD
Nasdaq: +5.8% YTD
Dow Jones +5.0% YTD
DJ30 +163.74 NASDAQ +53.83 SP500 +23.36 NASDAQ Adv/Vol/Dec 2063/1.836 bln/792 NYSE Adv/Vol/Dec 2600/873.7 mln/416
3:30 pm :
The dollar index was -0.4% around the 95.64 level after the FOMC announced the FFR will be unchanged as expected, aided commodities
Commodities, as measured by the Bloomberg Commodity Index, were +0.7% around the 84.91 level
Crude oil extended yesterday's rally, broke above & closed over the $45.00/barrel resistance zone post-EIA
November crude oil futures rose $1.26 (+2.9%) to $45.34/barrel
The next OPEC meeting will take place in Algiers, Algeria from Sept 26-28
Baker Hughes rig count data will be released Friday at 1 pm ET.
Contributing factors affecting the price of oil include:
Last night's API data showed API data showed a surprise draw of -7.5 mln barrels of oil for the week ended Sept 16, compared to last week's build of +1.438 mln barrels.
Oil service worker strike in Oslo, Norway potentially threatening production.
Yesterday's statements from Russia's OPEC envoy discussing they are willing to cooperate on a potential 1-year deal to stabilize oil prices.
EIA inventory data showed surprise draws for both crude oil & gasoline inventories, crude oil inventories showed a draw of -6.20 mln (consensus called for a build of about +3.35 mln barrels) & gasoline inventories showed a draw of -3.20 mln (consensus called for a draw of about -0.57 mln barrels).
A weakening dollar after the FOMC announcement, -0.4% around the 95.64
Natural gas futures closed at 1.5-year highs for the second consecutive session ahead of tomorrow's inventory number
October natural gas closed $0.01 higher (+0.3%) at $3.06/MMBtu
EIA natural gas inventory data will be released tomorrow at 10:30 am ET
Contributing factors affecting the price of natural gas include:
Yesterday, EVA released its Aug coal stockpile report showing a decline of utility stocks by over 9 mln to 164 mln tons on continued strong summer coal burn of 75 mln tons vs shipments of 66 mln tons. The Aug drawdown was above the historical five-year avg stockpile decline of over 5 mln tons
Coal stocks showing notable gains include: ADES, +1.3%; ARLP, +3%; BHP, +3%; CNX, +5%; HW, +1%; CLD, +20%; TCK, +2%; YZC, +1%
In precious metals, gold's gains were outpaced by silver as the dollar collapsed after the FOMC announced the Fed Funds Rate will be unchanged
December gold ended today's session up $13.50 (+1.0%) to $1331.50/oz
December silver closed today's session $0.49 higher (+2.5%) at $19.76/oz
Base metal copper inched lower in afternoon pit trading
December copper closed $0.01 lower (-0.5%) at $2.15/lb
Equity indices began the day on a higher note as an accommodative policy statement from the Bank of Japan stoked risk appetite. The central bank voted to maintain its key lending rate (-0.10%), but also announced changes to its monetary policy framework. The central bank will shift away from its monetary base target, moving toward interest rate controls. The policy includes plans to keep the yield on Japan's 10-yr note near 0.00%, which should result in some steepening in the yield curve. The Bank of Japan also indicated that it is committed to maintaining easing measures until inflation is above the target rate, in a sustainable fashion. However, the response in the currency market was the opposite of what the Bank of Japan hoped to see.
An upswing in crude oil futures also contributed to early strength. The energy component was bid overnight as investors responded to a better-than-expected reading of the American Petroleum Institute's weekly inventory report. Oil extended its winning streak after the Department of Energy confirmed the bullish reading with its more influential inventory report. The EIA reported that crude oil stockpiles fell by 6.20 million barrels while gasoline inventories declined by 3.20 million barrels. The session ended with November crude oil futures up $1.26 (+2.9%) to $45.34/barrel.
The lone piece of market data today came in the form of the MBA Mortgage Index which indicated that mortgage applications declined 7.3% in the week ending September 17. This followed a 4.2% gain in the prior week.
Stocks ended Wednesday near highs as the Federal Reserve policy statement launched stocks, and action never looked back. Leading the way higher today, the S&P 500 added 23.36 points (+1.09%) to 2163.12. The Nasdaq Composite closed at a new all-time high today, ultimately higher by 53.83 points (+1.03%) to 5295.18, and the Dow Jones Industrial Average gained 163.74 points (+0.90%) to 18293.70.
Following the Fed, Technology (XLK 47.62, +0.53 +1.13%) surged to highs as modest gains were turned into a +1% session. Component Adobe Systems (ADBE 107.78, +7.16 +7.12%) was the best performer today in the sector on the back of the company's better than expected Q3 report. All 11 S&P sectors closed higher today, landing with XLE +2.36%, XLU +2.03%, XLB +1.52%, XLI +1.30%, XLRE +1.15%, XLV +1.00%, XLY +0.97%, XLF +0.67%, IYZ +0.66%, XLFS +0.59%, XLP +0.55% higher at the bell.
In the S&P 500 Information Technology (798.65, +8.64 +1.09%) sector, trading surged higher with the broader market and closed at highs. Component Apple (AAPL 113.55, -0.02 -0.02%) was the lone underperformer among sector components today following unconfirmed chatter than the company might purchase McLaren Technology Group and LIT Motors. Other names in the space which outperformed today included JNPR +5.26%, MU +4.37%, ADSK +4.22%, CSRA +3.78%, STX +3.26%, YHOO +3.15%, WDC +3.14%, HPQ +3.09%, NVDA +2.81%, GPN +2.55%.
Other notable news items among sector components:
Microsoft (MSFT 57.76, +0.95 +1.67%) announced a $40 billion share buyback and increased its dividend to $0.39 from $0.36 per share.
Intuit (INTU 110.78, +1.81 +1.66%) reaffirmed guidance for Q1 (Oct), sees EPS of $0.01-0.03 on revenues of $740-760 million. Further, INTU sees QuickBooks Online subscribers of about 1.6 million in the period. The company also reaffirmed guidance for FY17 (Jul) with expectations for EPS of $4.30-4.40 on revenues of $5.0-5.1 billion. The company also sees QuickBooks Online subscribers of 2.0 million to 2.2 million for the period.
CA Tech (CA 32.72, +0.40 +1.24%) to acquire BlazeMeter. Financial terms of the deal were not disclosed.
Samsung (SSNLF 1250, flat) announced that over 500,000 new Galaxy Note7 replacement devices have arrived in the U.S. and have been shipped to carrier and retail stores.
IBM (IBM 115.53, +1.08 +0.70%) announced the opening of a new cloud data center in Fetsund, 30 km outside Oslo, Norway, the industry's first cloud data center in the region.
According to an FT article, Apple (AAPL) might acquire McLaren Technology Group. Also, the NY Times later suggested AAPL might also buy LIT Motors.
Elsewhere in the tech space:
Commscope (COMM 30.64, -0.19 -0.62%) announced the sale of 10 million shares of common stock by affiliate of The Carlyle Group (CG 15.65, +0.13 +0.84%).
Booz Allen Hamilton (BAH 30.89, +0.55 +1.81%) was awarded a five-year time and materials task order with a maximum ceiling value of $268,000,000 if all options are exercised.
Inteliquent (IQNT 15.79, +0.45 +2.93%) appointed Eric Carlson as interim Principal Financial Officer and interim Principal Accounting Officer effective Sept 24. The company stated it is in the process of identifying a candidate to serve as CFO.
In reaction to quarterly results:
Adobe Systems (ADBE) reported better than expected Q3 EPS and revenues of $0.75 and $1.46 billion, respectively. For Q4, the company sees EPS of $0.83-0.89 on revenues of $1.55-1.60 billion. This raises FY16 EPS expectations to $2.94-3.00 from $2.80, and revenue expectations to $5.80-5.85 billion from $5.8 billion.
Airgain (AIRG 16.05, -0.07 -0.43%) reported Q2 EPS of $0.15 on revenues of $9.86 million.
Stocks slated to report quarterly results tonight: JBL, RHT
Analyst actions:
JBL was upgraded to Buy from Neutral at UBS,
NTES was upgraded to Buy at Daiwa;
DTSI was downgraded to Neutral from Buy at Dougherty & Company, and to Neutral from Buy at B. Riley & Co.,
WIX was downgraded to Neutral from Overweight at JP Morgan,
FICO was downgraded to Equal Weight from Overweight at Barclays,
AIRG was downgraded to Hold from Buy at Wunderlich;
SPLK was initiated with a Neutral at Mizuho
From Briefing.com: 4:40 pm Samsung announces that over 500k new Galaxy Note7 replacement devices have arrived in the U.S. and have been shipped to carrier and retail stores (SSNLF) : New Galaxy Note7 devices will be available for exchange at retail locations nationwide tomorrow.
4:24 pm FedEx beats by $0.12, beats on revs; raises FY17 EPS guidance (FDX) :
Reports Q1 (Aug) earnings of $2.90 per share, excluding non-recurring items, $0.12 better than the Capital IQ Consensus of $2.78; revenues rose 19.5% year/year to $14.7 bln vs the $14.44 bln Capital IQ Consensus.Express revenue increased slightly as improved base yields, higher package volume and increased freight pounds more than offset lower fuel surcharges and unfavorable currency exchange rates.
U.S. domestic package volume increased 1% due to growth in overnight box and envelope volumes. FedEx International Economy volume grew 1%, while FedEx International Priority volume decreased 1%. Average daily freight pounds increased 8% due to higher U.S. Postal Service volume.
Freight revenue increased as less-than-truckload average daily shipment growth of 8% more than offset the impact of lower fuel surcharges and weight per shipment.
Ground revenue increased due to higher volume and revenue per package. FedEx Ground average daily volume grew 10% in the first quarter, driven by e--commerce and commercial package growth. FedEx Ground yield increased 2% due to higher base yields partially offset by lower fuel surcharges.
Co raises guidance for FY17, raises EPS to $11.85-12.35 from $11.75-12.25, excluding non-recurring items, vs. $11.88 Capital IQ Consensus Estimate; guideance calls for EPS of $10.85-11.35 including TNT Express.The capital spending forecast for the fiscal year, which includes TNT Express, remains $5.6 bln
"The integration of TNT Express is proceeding smoothly, and the level of team members' engagement is outstanding," said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. "Managing our operating companies as a portfolio of customer solutions helped FedEx achieve strong financial and operating results in the quarter, especially given the global economy's continued low growth."
4:24 pm Microsoft announces $40 bln share buyback; increases dividend 8% to $0.39 (MSFT) :
Co announced that its board of directors declared a quarterly dividend of $0.39 per share, reflecting a 3 cent or 8 percent increase over the previous quarter's dividend. The board of directors also approved a new share repurchase program authorizing up to $40 billion in share repurchases. The new share repurchase program, which has no expiration date, may be terminated at any time. The company reaffirmed that it is on track to complete its current $40 billion stock repurchase program by December 31, 2016.
4:15 pm Adobe Systems beats by $0.03, beats on revs; guides Q4 EPS above consensus, revs in-line; reaffirms digital media, marketing cloud targets (ADBE) :
Reports Q3 (Aug) earnings of $0.75 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.72; revenues rose 20.2% year/year to $1.46 bln vs the $1.45 bln Capital IQ Consensus. Digital Media segment revenue was a record $990 million, with Creative revenue growing 39 percent year-over-year to a record $803 million. Strong Creative Cloud and Document Cloud adoption drove Digital Media Annualized Recurring Revenue to $3.70 billion exiting the quarter, a quarter-over-quarter increase of $285 million, in-line with guidance. Adobe Marketing Cloud achieved record revenue of $404 million.Co issues guidance for Q4, sees EPS of $0.83-0.89, excluding non-recurring items, vs. $0.78 Capital IQ Consensus; sees Q4 revs of $1.55-1.60 bln vs. $1.58 bln Capital IQ Consensus Estimate. Raises FY16 EPS to $2.94-3.00 from $2.80 vs. $2.87 consensus; raises rev to $5.80-5.85 bln from $5.8 bln.
Expect to add slightly more than $300 million of net new Digital Media ARR during Q4 to achieve full year target of ~$4 billion of Digital Media ARR exiting the year.
Expect to achieve Adobe Marketing Cloud year-over-year revenue growth of ~30% in Q4 to achieve Adobe Marketing Cloud annual growth target of ~20% for the year.Reaffirms FY16 marketing cloud rev +20% bookings +30%
4:15 pm : The stock market ended the Tuesday affair on a flat note as investors favored a cautious approach ahead of policy statements from the Federal Reserve and Bank of Japan. The Nasdaq Composite (+0.1%) settled in-line with the Dow Jones Industrial Average (+0.1%) and slightly ahead of the S&P 500 (UNCH).
Equity indices advanced at the start of the session as investors mulled the potential rate hike implications of some weaker-than-expected housing data. Housing starts for August came in at a seasonally adjusted rate of 1.142 million (Briefing.com consensus 1.186 million) while building permits fell to 1.139 million (Briefing.com consensus 1.160 million). The data follows yesterday's above-consensus reading of the NAHB Housing Market Index for September (65; Briefing.com consensus 59).
The fed funds futures market ticked higher following the negative data, however, the move was likely related to some last-minute positioning. The implied probability of a rate hike at the September meeting rose to 18.0% from 12.0% in the prior session. Participants have heavily discounted the potential for a rate hike at this meeting, hoping to hear clues about the path of interest rate normalization in the central bank's guidance. Looking down the road, the odds of a rate hike at the December meeting rose to 60.7% from 53.9% on Monday.
The U.S. Dollar Index (96.00, +0.16, +0.17%) also enjoyed a modest bid as participants eyed the potential for a policy divergence trade. The Bank of Japan is scheduled to release its latest policy decision and a comprehensive assessment of its monetary policy this evening. It remains unclear how the central bank will proceed, but reports indicated earlier in the week that the BoJ may favor expanding its negative interest rate policy. The central bank will release its policy decision around 23:00 ET.
The benchmark index settled near the bottom of today's trading range after failing to clear resistance near the 2150/2153 price level. Five sectors finished in the green with financials (+0.1%), consumer staples (+0.2%), and health care (+0.4%) leading the advance. On the flipside, defensively-oriented real estate (-0.2%), telecom services (-0.2%) and utilities (-0.2%) led energy (-0.8%) on the bottom of the board.
The health care sector (+0.4%) outperformed as drug manufacturers and biotechnology names displayed relative strength. Biotechnology rallied after Allergan (AGN 238.67, -6.62) agreed to acquire Tobira Therapeutics (TBRA 38.91, +34.17) for an upfront payment of $28.35 per share. This constitutes a 498.0% premium from Tobira's prior closing price. The agreement also contains Contingent Value Rights that could increase total considerations up to $49.84 per share.
In the financial sector (+0.1%), banking names outperformed as Wells Fargo (WFC 46.56, +0.55) jumped 1.2%. The stock rallied after being upgraded to "Overweight" from "Equal-Weight" at Morgan Stanley. However, Wells Fargo finished off its best level of the day (47.20) as participants weighed heated commentary from the Senate Banking Committee. Senator Elizabeth Warren called for a more stringent investigation into the bank's sales practices.
Crude oil finished the session modestly higher after shaking early weakness. The energy component erased an early loss after reports indicated that Russia may back a one-year agreement to stabilize oil prices. WTI crude settled higher by 0.4% ($44.08/bbl; +$0.18). On a side note, the American Petroleum Institute is scheduled to release its weekly inventory report this evening while the Department of Energy will release its more influential inventory report tomorrow morning at 10:30 ET.
Treasuries ended on a higher note with the long end of the curve outperforming. The yield on the 2-yr note fell one basis point (0.77%) while the yield on the 10-yr note declined three basis points (1.69%).
Today's participation was below the recent average as fewer than 741 million shares changed hands on the NYSE floor.
Today's economic data was limited to Housing Starts and Building Permits for August:
Housing starts in August declined 5.8% from July to a seasonally adjusted annual rate of 1.142 million (Briefing.com consensus 1.186 million).
Building permits fell 0.4% from July to a seasonally adjusted annual rate of 1.139 million (Briefing.com consensus 1.160 million) due entirely to a 7.2% decline in permits for multi-unit dwellings.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will be limited to the weekly MBA Mortgage Index, which will be released at 7:00 ET. Meanwhile, the FOMC will release its September policy statement and rate decision at 14:00 ET.
Russell 2000: +8.2% YTD
S&P 500: +4.7% YTD
Nasdaq: +4.7% YTD
Dow Jones +4.1% YTD
DJ30 +9.79 NASDAQ +6.33 SP500 +0.64 NASDAQ Adv/Vol/Dec 1347/1.548 bln/1494 NYSE Adv/Vol/Dec 1296/740.9 mln/1668
3:30 pm :
The dollar index was +0.2% around the 95.98 level ahead of tomorrow's FOMC meeting
Commodities, as measured by the Bloomberg Commodity Index, +0.8% around the 84.29 level
Crude oil reversed initial morning losses to end near session highs ahead of tonight's API data
November crude oil futures rose $0.18 (+0.4%) to $44.08/barrel
Factors affecting the price of oil include:
Shipments originally expected to resume at the ports of Ras Lanuf & Sidra last week in Libya have now been delayed by ongoing conflict in the region.
Statements from Venezuelan president Nicolas Maduro that OPEC & non-OPEC members are nearing a potential deal to restrict output.
However, comments from OPEC Secretary General Mohammed Barkindo over the weekend conflict with what was said by Maduro, as Barkindo suggested that no deal to freeze output will be reached at next week's meeting as the talks are informal and will not be a decision-making meeting.
Data reminders:
The next OPEC meeting will take place in Algiers, Algeria from Sept 26-28
API data will be released today after the bell
Weekly EIA data will be released tomorrow at 10:30 am ET
China will release oil trade data tomorrow
Rig count data will be released Friday at 1 pm ET
Natural gas futures closed at 1.5-year highs ahead of Thursday's inventory data
October natural gas closed $0.12 higher (+4.1%) at $3.05/MMBtu
EIA natural gas storage data will be released Thursday at 10:30 am ET
In precious metals, gold & silver ended nearly flat as the dollar index remained directionless ahead of tomorrow's FOMC meeting
December gold ended today's session up $0.30 (+0.1%) to $1318.00/oz
December silver closed today's session $0.01 lower (-0.1%) at $19.27/oz
The major averages began the day on a higher note as some weaker-than-expected housing data further diminished expectations for a rate hike at tomorrow's FOMC policy meeting. Housing starts for August came in at a seasonally adjusted rate of 1.142 million in August while building permits fell to 1.139 million.
The broader market collapsed into the close ahead of tonight's Bank of Japan meeting and statements from the Federal Reserve. The bank stated in its July meeting that it was undertaking an in-depth review of its policy decision making. The BoJ is slated to release a comprehensive assessment of its monetary policy which could entail changes to overnight lending rates and/or its asset purchase program. Markets fell from a would-be strong session to only modest gains with the Nasdaq Composite narrowly edging higher by 6.33 points (+0.12%) to 5241.35. The Dow Jones Industrial Average also barely managed to stave off the selling pressure, ending up 9.79 points (+0.05%) to 18129.96, and the S&P 500 added less than a point (+0.03%) to 2139.76.
Again posting a modest decline yesterday, the Technology (XLK 47.09, -0.03 -0.06%) sector was higher into the close when a last minute sell-off took the heavily weighted sector from green to red. Component Broadcom (AVGO 168.23, -2.50 -1.46%) was weaker today despite a premarket initiation at Susquehanna with a Positive rating. Other sectors as measured by the S&P ended Tuesday IYZ -1.15%, XLE -0.80%, XLB -0.30%, XLU -0.22%, XLRE -0.19%, XLF +0.05%, XLY +0.08%, XLI +0.11%, XLFS +0.17%, XLP +0.27%, XLV +0.35%.
In the S&P 500 Information Technology (790.01, -0.14 -0.02%) sector, trading collapsed into the close as the broader market sold off. Component Autodesk (ADSK 68.79, +0.66 +0.97%) resisted the selling pressure in the broader market today following the authorization of a share repurchase program of up to 30 million shares of common stock. Other names in the space which slightly under-performed today included QRVO -2.80%, NTAP -1.85%, AVGO -1.46%, JNPR -1.32%, FSLR -1.22%, STX -1.17%, ADS -1.06%, XLNX -1.05%, CSRA -0.95%.
Other notable news items among sector components:
Intel (INTC 37.14, -0.02 -0.05%) appointed Robert Swan as EVP and CFO effective October 10, 2016.
Autodesk (ADSK) authorized a share repurchase program of up to 30 million shares of common stock.
Hortonworks (HDP 8.04, +0.35 +4.55%) and IBM (IBM 154.45, -0.42 -0.27%) announced the planned availability of Hortonworks Data Platform for IBM Power Systems enabling POWER8 clients.
IBM also announced an extended Red Hat (RHT 75.78, -0.16 -0.21%) collaboration for next-generation cloud platforms and plans for new facility in Boston expected to open in mid-2017.
Epsilon, an Alliance Data (ADS 213.74, -2.30 -1.06%) company, signed a new multi-year agreement with Amica Mutual Insurance Company, a national writer of auto, home, marine and umbrella insurance.
Alphabet's (GOOG 771.41, +5.71 +0.75%) Google acquired speech recognition startup company Api.ai.
Analog Devices (ADI 62.34, -0.12 -0.19%) voluntarily withdraws, then resubmits filing under the HSR Act relating to its proposed acquisition of Linear (LLTC 58.48, -0.18 -0.31%) in order to provide the FTC with additional time to review the proposed deal.
Xilinx (XLNX 52.93, -0.56 -1.05%) was awarded a single phase $9,000,000 technology investment agreement for the Analog Mixed Signal (AMS) Field Programmable Gate Array (FPGA) System on Chip (SoC) program.
T-Mobile US (TMUS 44.50, -1.43 -3.11%) reiterated its current financial guidance and full year outlook and announced 'the strongest iPhone pre-order in Company history'.
Accenture (ACN 110.70, +0.20 +0.18%) was awarded a contract from the U.S. Department of Veterans Affairs (VA) to support the National Service Desk (NSD) -- a key component of the Department's MyVA strategy for improving VA employee experience across the enterprise. The contract has a nine-month, $36.5 million base period with three, one-year options. The contract value is capped at $286 million.
ACN also created a prototype of a new capability that enables blockchain technology to be edited under extraordinary circumstances to resolve human errors, accommodate legal and regulatory requirements, and address mischief and other issues, while preserving key cryptographic features. The prototype represents a significant breakthrough for enterprise uses of blockchain technology particularly in banking, insurance and capital markets.
Computer Sciences' (CSC 49.31, -0.48 -0.96%) pending acquisition of Hewlett Packard Enterprise
Services (HPE 22.62, -0.06 -0.26%) was cleared by the EU.
Elsewhere in the tech space:
Broadridge Financial (BR 68.72, +0.13 +0.19%) acquired tech and assets of Inveshare for about $95 million plus a deferred payment of $40 million upon delivery of blockchain applications.
DTS (DTSI 42.24, +7.91 +23.04%) to be acquired by Tessera Technologies (TSRA 35.28, +1.80 +5.38%) for $42.50 per share in cash, or about $850 million.
Inteliquent (IQNT 15.34, -1.37 -8.20%) announced that Kurt Abkemeier has resigned as CFO to pursue another career opportunity, effective Sept 23.
Oclaro (OCLR 8.62, -0.48 -5.27%) announced a 13 million share underwritten public offering of common stock.
SunPower (SPWR 8.17, +0.34 +4.34%) acquired AUO's (AUO) stake in Malaysian JV for $170 million.
MGT Capital Investments (MGT 1.89, -0.63 -25.00%) announced that the New York Stock Exchange informed the company that it will not approve the listing on the Exchange of the 43.8 million shares that the company is required to issue in order to complete the closing of the D-Vassive merger.
Analyst actions:
TECD was upgraded to Buy from Hold at Stifel, to Buy at CLSA, and to Buy from Neutral at BofA/Merrill, AMD was upgraded to Mkt Perform from Underperform at Bernstein,
BLOX was upgraded to Hold from Sell at Deutsche Bank,
FLEX and APH were upgraded to Buy from Neutral at Goldman,
JBL was upgraded to Neutral from Sell at Goldman,
BCOM was upgraded to Buy from Neutral at Chardan Capital Markets;
AVT was downgraded to Hold from Buy at Stifel,
ARW was downgraded to Neutral from Buy at Goldman,
IQNT was downgraded to Mkt Perform from Outperform at Raymond James,
FIVN was downgraded to Underperform from Neutral at BofA/Merrill,
AVT was downgraded to Sell from Hold at Cross Research,
BLOX was downgraded to Neutral from Buy at Guggenheim,
DTSI was downgraded to Market Perform at William Blair;
NOW was initiated with a Market Perform at BMO Capital,
MBLY was initiated with a Buy at SunTrust,
VSM was initiated with an Outperform at Oppenheimer,
NVDA was initiated with a Neutral at SunTrust,
COMM was initiated with an Equal Weight at Morgan Stanley,
ARRS was initiated with an Overweight at Morgan Stanley,
PCTY was initiated with a Sector Weight at Pacific Crest,
INTC, AVGO, MXIM, MSCC, LSCC, CAVM were initiated with a Positive at Susquehanna,
NVDA, MRVL, AMD, AMCC were initiated with a Neutral at Susquehanna,
KN was initiated with a Negative at Susquehanna,
ULTI was initiated with an Overweight at Pacific Crest,
VOD was initiated with a Hold at Argus
From Briefing.com: 5:02 pm Rambus: Rahul Mathur has accepted the position of Sr. VP and CFO (RMBS) : Prior to joining Rambus, Mr. Mathur served as senior vice president of finance at Cypress Semiconductor (CY).
4:17 pm IBM also announced extended Red Hat (RHT) collaboration for next-generation cloud platforms and plans for new facility in Boston expected to open in mid-2017 (IBM) : Through joint engineering and deeper product collaboration, the two companies plan to deliver solutions built on key components of Red Hat's portfolio of open source products. The move will help position IBM Power Systems as a featured component of Red Hat's hybrid cloud strategy spanning platform infrastructure located both on and off premises.
4:05 pm Autodesk authorizes share repurchase program of up to 30 mln shares of common stock (ADSK) : Co announced a program to repurchase up to 30 million shares of the company's common stock, in addition to the approximately 1.5 million shares that remained at the end of the second quarter of fiscal 2017 under previously announced share repurchase programs. The share repurchase program does not have an expiration date.
4:15 pm : The stock market began the week on a flat note as participants displayed a lack of conviction ahead of key policy statements from the Federal Reserve and Bank of Japan. The Nasdaq Composite (-0.2%) settled behind both the Dow Jones Industrial Average (UNCH) and the S&P 500 (UNCH).
The major averages advanced at the start of the session as a rebound in crude oil futures and a positive bias in global markets facilitated a higher start to the trading week. Oil was in focus as renewed speculation surrounding a production cap agreement boosted the energy component. Venezuelan President Nicolas Maduro made headlines over the weekend, stating that oil producers are close to reaching a deal to stabilize oil markets. However, the comments were taken with a grain of salt following contradictory reports from OPEC Secretary General Mohammed Barkindo. The oil cartel is scheduled to meet on September 26-28.
The benchmark index notched a session high in the first half hour of trade, testing but failing to clear technical resistance near the 2150/2151 price level. The broader market walked back early gains through the session as the heavily-weighted technology (-0.2%) and health care (-0.4%) sectors came under pressure. The broader market notched a session low shortly after midday, but managed to settle above that level. Four sectors ended in the green with industrials (+0.3%), financials (+0.5%), and utilities (+1.0%) leading. Conversely, technology (-0.2%), health care (-0.4%), and telecom services (-0.7%) underperformed.
The financial space (+0.5%) finished ahead of the benchmark index, rebounding from recent losses. Wells Fargo (WFC 46.01, +0.58) jumped 1.3% after Robert W. Baird upgraded the stock to Outperform from Neutral. The broader sector displayed relative strength as participants assessed the rate hike picture in coming months. The implied probability of a rate hike at the September meeting sits at 12.0% while the odds of a rate hike at the December meeting registers at 55.0%. Rate hike expectations increased last week following some firming inflation data.
In the energy sector (-0.1%), refining names outperformed amid reports of gasoline shortages on the East coast of the United States. Phillips 66 (PSX 80.35, +1.26) and Tesoro (TSO 83.54, +1.56) ended higher by 1.6% and 1.9%, respectively. Separately, Dow component Chevron (CVX 98.04, +0.20) finished ahead of the price-weighted index. For its part, crude oil settled higher by 0.6% ($43.90/bbl; +$0.28).
Homebuilders outperformed in the consumer discretionary space (-0.1%), evidenced by the 0.9% gain in the iShares Dow Jones US Home Construction ETF (ITB 27.52, +0.25). The sub-group gained following a stronger-than-expected reading of the NAHB Housing Market Index for September. Lennar (LEN 45.09, +0.75) jumped 1.7% ahead of tomorrow morning's earnings report. Separately, General Motors (GM 31.72, +0.75) rallied 2.4% after being upgraded to "Overweight" at Morgan Stanley.
In the health care space (-0.4%), biotechnology gained after Sarepta Therapeutics (SRPT 48.94, +20.79) received conditional approval from the FDA for the company's muscular dystrophy treatment. On the flipside, Merck (MRK 61.33, -0.95) ended lower by 1.5%.
On the M&A front, Infoblox (BLOX 26.35, +3.52) spiked 15.4% after announcing that Vista Equity Partners will acquire the company for $26.50 per share or approximately $1.6 billion. Separately, Isle of Capri (ISLE 22.04, +5.11) rallied 30.2% after Eldorado Resorts (ERI 13.84,- 0.41) agreed to acquire the name for $23.00 per share or approximately $1.7 billion.
Treasuries ended on a lower note with yields rising through the curve. The yield on the 2-yr note rose one basis point to 0.77% while the yield on the 10-yr note also increased one basis point (1.70%).
Today's participation was below the recent average as fewer than 760 million shares changed hands on the NYSE floor.
Today's economic data was limited to the NAHB Housing Market Index for September:
The NAHB Housing Market Index for September rose to 65 from a revised 59 in August (from 60) while the Briefing.com consensus expected the reading to come in at 59.
Tomorrow's economic data will include Housing Starts (Briefing.com consensus 1186k) and Building Permits (Briefing.com consensus 1160k) for August, which will each be released at 8:30 ET.
Russell 2000: +8.5% YTD
S&P 500: +4.7% YTD
Nasdaq: +4.6% YTD
Dow Jones: +4.0% YTD
DJ30 -3.63 NASDAQ -9.54 SP500 -0.04 NASDAQ Adv/Vol/Dec 1693/1.65 bln/1172 NYSE Adv/Vol/Dec 2042/759.5 mln/927
3:30 pm :
The dollar index was -0.3% around the 95.84 level, aiding precious metals
Commodities, as measured by the Bloomberg Commodity Index, were +0.5% around the 83.61 level
Crude oil rallied off of 1-month lows hit in the previous session ahead of tomorrow's API data after comments from the Venezuelan President & export concerns in Libya
November crude oil futures rose $0.28 (+0.6%) to $43.90/barrel
Factors affecting the price of oil include:
Shipments originally expected to resume at the ports of Ras Lanuf & Sidra last week in Libya have now been delayed by ongoing conflict in the region.
Statements from Venezuelan president Nicolas Maduro that OPEC & non-OPEC members are nearing a potential deal to restrict output.
However, comments from OPEC Secretary General Mohammed Barkindo over the weekend conflict with what was said by Maduro, as Barkindo suggested that no deal to freeze output will be reached at next week's meeting as the talks are informal and will not be a decision-making meeting.
Upcoming data to keep in mind:
The next OPEC meeting is scheduled to take place in Algiers, Algeria from Sept 26-28.
API data will be released tomorrow at 4:30 pm ET.
EIA data will be released at 10:30 am ET.
China is expected to release oil trade data this Wed, potentially contributing to further volatility in oil prices
Rig count data will be released Friday at 1 pm ET.
Natural gas erased the majority of Friday's gains ahead of Thursday's inventory data
October natural gas closed $0.02 lower (-0.7%) at $2.93/MMBtu
EIA weekly storage data will be released on Thursday at 10:30 am ET
In precious metals, gold & silver ended near session highs as the dollar index dropped
December gold ended today's session up $7.30 (+0.6%) to $1317.70/oz
December silver closed today's session $0.42 higher (+2.2%) at $19.28/oz
Today's session began on a higher note as participants responded to a rebound in crude oil futures and a positive bias in global markets. The move higher in oil was facilitated by renewed speculation surrounding a potential output agreement between OPEC and non-OPEC members. Venezuelan President Nicolas Maduro resuscitated supply freeze speculation, indicating that oil producers are close to reaching a deal to stabilize oil markets. The oil cartel is scheduled to meet on September 26-28.
The broader market narrowed its gain shortly before midday as the benchmark index tested, but failed to clear resistance near the 2150 price level. The move lower in the broader market lacked a specific catalyst, but appears to be associated with anxiety ahead of policy meetings from the Bank of Japan and Federal Reserve. However, it is widely believed that the Fed will hold steady at the September meeting. The fed funds futures market shows that the odds of a U.S. rate hike register at a mere 12.0%.
Market data today was limited to the NAHB Housing Market Index for September which rose to 65 from a revised 59 in August (from 60).
The broader market closed Monday lower as all three major US indices jogged into the red as the bell rang. Leading the losses, the Nasdaq Composite shed 9.54 points (-0.18%) to 5235.03. The Dow Jones Industrial Average lost 3.63 points (-0.02%) to 18120.17, and the S&P 500 was lower by less than a point (-0.00%) to 2139.12. Pressuring the Nasdaq today, top Nasdaq 100 components KHC -2.2%, EXPE -1.6%, VRTX -1.6%, NFLX -1.4%, REGN -1.4% and SBUX -1.4% all finished the day firmly in the red.
Posting modest losses today, the Technology (XLK 47.12, -0.09 -0.19%) sector began in the green, yet the latter half of the day tailed off with only flashes of positive trading, never returning to opening gains. Component Red Hat (RHT 75.94, +2.14 +2.90%) was the best performer today in a down sector as the stock showed relative strength ahead of Wednesday's quarterly print. Other sectors as measured by the S&P closed the day XLRE +1.03%, XLU +0.99%, XLF +0.68%, XLI +0.44%, XLFS +0.39%, XLB +0.15%, IYZ +0.06%, XLE -0.01%, XLY -0.08%, XLP -0.21%, XLV -0.36% with Healthcare lagging the rest.
In the S&P 500 Information Technology (790.15, -1.90 -0.24%) sector, trading was back and forth but ultimately ended in the red as sellers pressured the sector to near lows of the day. Component PayPal (PYPL 40.01, -0.69 -1.70%) had a tough session on the back of a premarket downgraded to a Hold rating from Buy at Canaccord Genuity. Other names in the space which closed slightly lower today included WU -1.62%, SYMC -1.47%, INTC -1.35%, AAPL -1.17%, FSLR -1.15%, YHOO -1.10%, LRCX -0.87%, TSS -0.87%.
Other notable news items among sector components:
Alphabet (GOOG 765.70, -3.18 -0.41%) announced the release of Google Trips, a travel planning app that some were suggesting will be competition for TripAdvisor (TRIP 60.00, -1.29 -2.10%).
Salesforce.com (CRM 73.00, -0.29 -0.40%) filed for a 354,473 share offering by selling stockholders.
Cisco Systems (CSCO 31.02, +0.18 +0.58%) disclosed two trusts related to Executive Chairman John Chambers adopted a pre-arranged stock trading plan.
Applied Materials (AMAT 30.30, +0.25 +0.83%) and the Institute of Microelectronics announced a five-year extension of their research collaboration at the Centre of Excellence in Advanced Packaging in Singapore.
Oracle (ORCL 39.23, +0.31 +0.80%) acquired Palerra. Financial terms of the deal were not disclosed.
Accenture (ACN 110.50, +0.62 +0.56%) and Oracle (ORCL) announced that infrastructure-as-a-service (IaaS) offerings will now be available through the Accenture Oracle Business Group, adding to the already-existing software-as-a-service (SaaS) and platform-as-a-service (PaaS) capabilities. The expansion of capabilities further positions Accenture as Oracle's largest global systems integrator (GSI) and a leader in Oracle Public Cloud.
Elsewhere in the tech space:
Tech Data (TECD 84.80, +15.46 +22.30%) to acquire the Technology Solutions business from Avnet (AVT 41.89, +2.68 +6.83%) for $2.4 billion in cash and 2.785 million shares of Tech Data common stock, in a transaction valued at about $2.6 billion. Tech Data also expects to realize about $200 million in present value of tax benefits. The transaction is expected to be significantly accretive to TECD's non-GAAP EPS in the first year after closing. TECD expects to achieve annual cost savings of about $100 million within two years after closing, primarily from efficiencies related to technology platforms, as well as duplicative functions and corporate expenses.
Infoblox (BLOX 26.35, +3.52 +15.42%) to be acquired by private equity firm, Vista Equity Partners. Under the terms of the agreement, Infoblox stockholders will receive $26.50 per share of common stock in cash, which represents a 33% premium to Infoblox's average closing share price over the last 60 trading days, and a 73% premium to Infoblox's unaffected closing price as of May 11, 2016, when media reports of interest in acquiring Infoblox were first published. The transaction values Infoblox at about $1.6 billion. The agreement was unanimously approved by Infoblox's Board of Directors. The transaction is expected to close in Infoblox's fiscal second quarter, subject to customary closing conditions and regulatory approvals.
WebMD Health (WBMD 49.02, -2.95 -5.68%) announced that the Board of Directors has appointed Steven Zatz, M.D., its President, to serve as its CEO, effective immediately. WBMD also announced an increase in the amount available under WebMD's existing stock repurchase program to $50 million, an increase of about $35 million over the amount remaining from prior authorizations.
Tessera Tech (TSRA 33.48, +0.04 +0.12%) entered into a settlement agreement with St. Paul Mercury Insurance Company.
Science Applications (SAIC 67.85, +1.00 +1.50%) was awarded an estimated $700 million fixed-price with economic-price-adjustment, indefinite-quantity contract for chemicals, packaged petroleum, oils and lubricants.
TerraForm Power (TERP 13.45, +0.40 +3.07%) and TerraForm Global (GLBL 3.76, +0.36 +10.59%) reported preliminary Q2 results and later announced the exploration into strategic alternatives.
MGT Capital Investments (MGT 2.52, -0.74 -22.70%) received a subpoena from the SEC requesting certain information from the company.
Zebra Tech (ZBRA 68.77, +1.51 +2.25%) appointed Tom Bianculli to its newly created Chief Technology Officer position to advance its leadership in the growing market of Enterprise Asset Intelligence (EAI).
Exar (EXAR 9.11, +0.12 +1.33%) appointed Gary Meyers as Chairman effective immediately.
Bitauto Holdings (BITA 26.52, +0.88 +3.43%) appointed Cynthia He as CFO effective immediately.
Analyst actions:
BKFS was upgraded to Outperform from Mkt Perform at Keefe Bruyette;
PYPL was downgraded to Hold from Buy at Canaccord Genuity,
WU was downgraded to Negative from Neutral at Susquehanna,
ANET was downgraded to Neutral from Buy at MKM Partners,
CALD was downgraded to Sell from Neutral at Dougherty & Company,
BLOX was downgraded to Neutral at Piper Jaffray, to Market Perform at William Blair, and to Mkt Perform at JMP Securities
InvestmentHouse -The Fed Versus the Bears - Weekend Newsletter:
http://www.investmenthouse.com/frblog.php
- Stocks status quo on expiration and ahead of FOMC week.
- SOX, NASDAQ leading and in decent shape. SP500, DJ30 just cannot decide.
- CPI year/year core 2+% again, but this 'speed limit' won't limit the Fed.
- The Fed versus the bears. 8 year old habits are hard to break.
Day to day, back and forth volatility continued into Friday, the September
expiration. Volume shot higher as the stocks indices struggled, but the
losses were not severe. Indeed, SOX was positive until the very session end
when some weakness hit again and took it lower with the other indices.
SP500 -8.10, -0.38%
DJ30 -88.68, -0.49%
NASDAQ -5.12, -0.10%
RUTX -0.18%
SP400 -0.51%
SOX -0.03%
VOLUME: NYSE +140%, NASDAQ +44%. Big expiration volume.
A/D: NYSE -1.8:1, NASDAQ -1.2:1
SOX and NASDAQ were the clear leading indices last week as they posted
significant upside that helped break up some potentially near term bearish
patterns.
It would appear that the while there is concern about selling, indeed GS on
Friday again issued a downside warning for SP500, old habits are hard to
give up. That would be particularly true it would appear after almost 8
years of Fed market coddling, printing trillions of dollars to inflate
financial assets to generate a 'wealth effect' in individuals and instill
'animal spirits' in the economy. Yes the middle class has dropped below 50%
and capital investment in the US is still at recession levels, but look at
that unemployment rate and look at that 5.2% wage growth! Who cares if
there are still 94M working aged people out of the workforce thus pushing
the rate lower and the wage increase was due simply changing the way they
count wages and income. In a country that lives by headlines and sound
bites all you need to do is make the assertion and quote unsupported 'facts'
and it must be true.
Well, there I go again. Anyway, the market was in prime position to sell
off but even with the negative views by the big money, indeed maybe because
of it, the indices are trying to hang in and SOX and NASDAQ actually look
pretty strong after bouncing off their 50 day MA's.
Certainly the Wednesday FOMC meeting is playing a role. Sellers have tried
to enter the market of late, particularly the prior Friday. A Fed that
likely won't raise rates acts as a counterweight to that downside pressure,
keeping the indices from totally selling off.
Frankly with the Fed likely to keep rates steady thanks to a crappy retail
sales report Thursday. Even the hotter CPI Friday with a core reading of
2.3%, now 10 months over the presumed 'speed limit' of 2.0% likely won't act
to give Yellen pause. As Brainard said on Monday, better to overshoot on
the inflation than to have premature tightening.
With the Fed likely to keep rates the same (and that is just based upon the
numbers not really pushing hard upside; the Fed could always 'surprise' the
market though I don't think Yellen has that in her) if there is any downside
between now and the meeting, that might be the downside's last hurrah until
the market gets used to the Fed decision and then has to start thinking
about what is next.
Given that, if there is downside to start the week we let the downside
positions work as far as they will then, hopefully after sharp early week
drop, we can close them in preparation for upside. Heck, if there is sharp
downside that is all the more reason the Fed does not hike as it has to give
deference to the markets of course.
Anyway, we will see if we can get some downside in better position to take
at least some profits next week and then prep in the event there is upside
in some short covering just before the FOMC decision or after a 'no change'
rate hike verdict.
NEWS/ECONOMY
August CPI: 0.2% VS 0.1 VS 0.0. Year/year: 1.1%
Core CPI: 0.3% vs 0.2% vs 0.1%. Year/year: 2.3% Highest core since 9/2008
(2.5%)
10 months of core CPI > 2%
Household wealth jumps but has the same issues as the wage increase.
Household wealth hits a record $89T, but there is a but. A big but. 50% of
US households own just 1% of the wealth, down from 3% in 1989. And sadly,
the poor are even more in debt.
What this means is what we already knew: the wealthiest captures the lion's
share of the wealth gains. That naturally follows from the middle class
falling below 50% this past year for the first time since becoming the
majority. It is a no brainer. The administration painted rosy scenario
last week but failed to mention the really nasty details of all of this
prosperity, the plight of the middle class being one of those inconvenient
truths.
GS: Cuts its outlook on SP500 and US bonds in its most recent bearish call.
DB: DOJ wants $14B fine for DB' involvement in the 2005 - 2007 mortgage
underwriting.
Once again the DOJ operates a shakedown when the government wants more $
Irony: the banks were just doing the government's bidding in getting
mortgages in the hands of people whose finances simply could not afford
them. Bush administration started it then got cold feet, warning re Freddie
Mac and Fannie Mae insolvency, but then the Congress picked up the torch
with Bernie Frank and Schumer threatening banks with hellish audits if they
did not make these loans available. So, the banks stepped in, gladly
underwriting these and knowing they could sell them to the US. A very
incestuous setup and all have unclean hands.
BOJ: Abe advisor says the "positive aspects of negative rates are very big."
For who? Certainly not for the populace. Only profligate, spendthrift
governments like negative rates. Just who are they serving? If that is a
question that needs to be asked these days: government serves government.
INTC: INTC raises its Q3 guidance.
THE MARKET
CHARTS
To view charts, click on link or paste URL into browser.
http://investmenthouse1.com/ihmedia/f/charts/sp500.jpg
http://investmenthouse1.com/ihmedia/f/charts/NASDAQ.jpg
http://investmenthouse1.com/ihmedia/f/charts/DJ30.jpg
http://investmenthouse1.com/ihmedia/f/charts/RUTX.jpg
http://investmenthouse1.com/ihmedia/f/charts/SP400.jpg
http://investmenthouse1.com/ihmedia/f/charts/SOX.jpg
SOX: Bounced off the 50 day MA tests, overcoming any notion of weakness.
Friday SOX moved higher to near the early September peak then backed off.
Trended up the 10 day EMA, needed a test, tested the 50 day, rebounded back
over the 10 day EMA. Thus far still a pretty normal test in an ongoing
uptrend.
NASDAQ: Looked somewhat iffy but managed a recovery over the 50 day EMA and
posted a solid upside break Thursday, taking the day off Friday. Nice
recovery, and with SOX leading NASDAQ has improved its look.
RUTX: Held near the 50 day MA's in the selling, bounced modestly Thursday.
RUTX remains in solid position to move higher after it too trended up the 10
day EMA and has come back to test the 50 day. Now it shows if it can bounce
a la SOX.
SP400: The midcaps fell off their 10 day EMA uptrend as well but unlike SOX
have not recovered. Of course the midcaps did not hold the 50 day MA's so
they have more resistance to deal with and right now are not dealing with
it.
SP500: Broke lower two Fridays back and have worked laterally since below
the 50 day MA's. Working laterally, trying to hang on. Has to show it can
do so, and of course a continued compliant Fed will help SP500 make a
bounce.
DJ30: Same action as SP500, moving laterally below the 50 day MA's and
below the July to early September lateral range.
LEADERSHIP
Big Names: Solid week overall. AAPL led with gaps and rallies past the
April prior high. FB trended up the 20 day EMA; not a big move but still
in the uptrend. AMZN held the 50 day EMA and bounced Friday so we
reluctantly closed it. NFLX bounced nicely Friday back to the 200 day SMA.
GOOG held the 50 day MA and is trying to move, just has not done so yet.
Biotech: Many look ready to move up out of bases formed post downtrend. We
will see if they can join in more to the upside. AMGN, AGEN have provided
good leadership. Many others are trying the same and this weekend we have a
lot on the report.
Chips: Big week for the AAPL related chips, e.g. SWKS, AVGO. Others look
ready to move as well, e.g. LSCC. MRVL may give us an entry this week as
well.
Financial: Struggled into Friday, factoring in that the Fed just may not
hike rates. C fell below recent lows while JPM faded to the 50 day EMA. MS
holding up well at the 20 day EMA.
Oil: Very mixed. Friday many oil stocks gapped lower, e.g. GPOR, COG.
CWEI, however, had another great week. APC tested near the 50 day MA and
bounced Friday. Very mixed.
Retail: Perked up nicely, e.g. JWN. Overall retail has some very resolute
stocks evne though some are selling off.
MARKET STATS
NASDAQ
Stats: -5.12 points (-0.1%) to close at 5244.57
Volume: 2.728B (+43.58%)
Up Volume: 1.15B (-410M)
Down Volume: 1.84B (+1.478B)
A/D and Hi/Lo: Decliners led 1.17 to 1
Previous Session: Advancers led 2.67 to 1
New Highs: 83 (+12)
New Lows: 49 (+6)
S&P
Stats: -8.1 points (-0.38%) to close at 2139.16
NYSE Volume: 2B (+138.92%)
A/D and Hi/Lo: Decliners led 1.78 to 1
Previous Session: Advancers led 3.03 to 1
New Highs: 44 (-13)
New Lows: 28 (+1)
DJ30
Stats: -88.68 points (-0.49%) to close at 18123.8
SENTIMENT INDICATORS
VIX: 15.37; -0.93
VXN: 15.14; -1.25
VXO: 14.8; -0.71
Put/Call Ratio (CBOE): 1; +0.16
Nine 1.0+ Readings in 3 weeks, 5 of 8 sessions over 1.0.
Bulls and Bears: Bulls and bears go different ways with bulls less bullish
and bears less bearish. Bulls are falling nicely off the 56.7% high hit on
this round that was enough to start at least some selling. The threshold
seems to get lower as this rally continues. Bears were strange, falling as
the market struggled.
Bulls: 49.0 versus 52.5
Bears: 22.6 versus 22.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 49.0 versus 52.5
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
versus 40.2% versus 44.3% versus 47.4% versus 41.2% versus 45.4% versus
43.3% versus 47.4% versus 44.4% versus 39.4% versus 36.4% versus 34.7%
versus 26.5%
Bears: 22.6 versus 22.8
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% versus 34.3% versus 35.7%
versus 39.8% versus 39.2% versus 38.1% versus 35.4% versus 36.1%
OTHER MARKETS
Bonds (10 year): 1.698% versus 1.70%. Rough week continuing downside
though Friday saw a bit of a rebound. Broke lower for sure.
Historical: 1.70% versus 1.698% versus 1.718% versus 1.671% versus 1.67%
versus 1.61% versus 1.53% versus 1.54% versus 1.601% versus 1.57% versus
1.58% versus 1.57% versus 1.57% versus 1.62% versus 1.58% versus 1.56%
versus 1.54% versus 1.58% versus 1.53% versus 1.55% versus 1.57% versus
1.558% versus 1.51% versus 1.56% versus 1.51% versus 1.54% versus 1.59%
versus 1.585% versus 1.503% versus 1.54% versus 1.558% versus 1.51% versus
1.46% versus 1.50%
EUR/USD: 1.1155 versus 1.12444. Euro bombed lower through the 50 and 200
day SMA, back to the lows from late August. Wow. Looked pretty solid for a
bounce higher.
Historical: 1.12444 versus 1.1245 versus 1.12196 versus 1.12335 versus
1.12318 versus 1.12661 versus 1.1239 versus 1.12554 versus 1.11545 versus
1.11943 versus 1.11572 versus 1.1146 versus 1.11708 versus 1.11949 versus
1.12894 versus 1.1300 versus 1.13045 versus 1.3254 versus 1.13251 versus
1.1342 versus 1.13036 versus 1.12773 versus 1.11824 versus 1.11636 versus
1.11372 versus 1.11803 versus 1.1115 versus 1.1080 versus 1.10882
USD/JPY: 102.280 versus 102.086. Unlike versus the euro, dollar was mostly
steady versus yen on the week.
Historical: 102.086 versus 102.172 versus 102.155 versus 102.814 versus
101.57 versus 102.685 versus 102.439 versus 102.439 versus 101.698 versus
101.412 versus 103.92 versus 103.226 versus 103.269 versus 102.965 versus
102.160 versus 101.808 versus 100.485 versus 100.306 versus 100.27 versus
100.297 versus 100.21 versus 99.843 versus 100.529 versus 100.953 versus
101.308 versus 101.864
Oil: 43.03, -0.88. Testing the low from two weeks back. Will see if it can
find some bounce here.
Gold: 1310.20, -7.80. Selling back to the late August low as gold tries to
hold its 3 month trading range.
SUPPORT AND RESISTANCE
NASDAQ: Closed at 5244.57
Resistance:
5271.36 is the August 2016 intraday prior all-time high
5287.61 is the all-time high from September 2016
Support:
5231.94 is the 2015 all-time high
5162 is the early November peak, 5176 is the December intraday peak
The 50 day EMA at 5150
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
The 200 day SMA at 4876
4836 is the March 2016 peak
4815 is the December 2014 peak
4811 is the November 2014 peak (intraday)
4774 is the January 2-15 high
4751 is the January 2015 lower high
4684 is the May 2016 test low
4637 is the February intraday high
4620 is the February 1 closing high
4615 from September 2014 highs, October 2014 upper gap point, late August
2015 low.
4574 is the June 2015 low
4517-4506 from the September 2015 and August 2015 closing lows
4485 are the twin July 2014 peaks
S&P 500: Closed at 2139.16
Resistance:
The 50 day EMA at 2154
2175 is the June 2016 high
2194 is the August 2016 all-time high
Support:
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 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
The 200 day SMA at 2059
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 18,222.15
Resistance:
18,247 is the August 2016 low
18,288 from March 2015
The 50 day EMA at 18,310
18,351 is the all-time high from May 2015
18,595 is the July 2016 peak
18,669 is the August 2016 all-time high
Support:
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
17,978 is the November 2015 peak
17,600 is the rough bottom of the April to June range.
The 200 day SMA at 17,574
17,351 is the September 2014 all-time high.
17,265 is a December 2015 closing low
17,245 is the November 2015 closing low
17,152 is the mid-July 2014 post bear market high
17,068 is the early July 2014 peak
17067 is the December 2014 low
17,063 is the June 2016 low
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
16,933 is the September 2015 recovery intraday peak
ECONOMIC CALENDAR
September 16 - Friday
CPI, August (8:30): 0.2% actual versus 0.1% expected, 0.0% prior (no
revisions)
Core CPI, August (8:30): 0.3% actual versus 0.2% expected, 0.1% prior (no
revisions)
Mich Sentiment, September (10:00): 89.8 actual versus 91.5 expected, 89.8
prior
Net Long-Term TIC Fl, July (16:00): $103.9B actual versus -$0.5B prior
(revised from -$3.6B)
September 19 - Monday
NAHB Housing Market , September (10:00): 59 expected, 60 prior
September 20 - Tuesday
Housing Starts, August (8:30): 1186K expected, 1211K prior
Building Permits, August (8:30): 1160K expected, 1152K prior
September 21 - Wednesday
MBA Mortgage Index, 09/17 (7:00): 4.2% prior
Crude Inventories, 09/17 (10:30): -0.559M prior
FOMC Rate Decision, September (14:00): 0.375% expected, 0.375% prior
September 22 - Thursday
Initial Claims, 09/17 (8:30): 262K expected, 260K prior
Continuing Claims, 09/10 (8:30): 2143K prior
FHFA Housing Price I, July (9:00): 0.2% prior
Existing Home Sales, August (10:00): 5.50M expected, 5.39M prior
Natural Gas Inventor, 09/17 (10:30): 62 bcf prior
From Briefing.com: Weekly Recap - Week ending 16-Sep-16
The stock market endured a volatile week, but was able to settle above last Friday's levels. The Nasdaq Composite was a clear outperformer, climbing 2.3%, while the S&P 500 added 0.5% after testing its 100-day moving average (2122.5) on several occasions.
The rate hike conversation remained top of mind throughout the week, but fears of a September hike were stomped out by the weekend. A disappointing August Retail Sales report (-0.3%; Briefing.com consensus -0.1%) contributed to the change in expectations, but somewhat surprisingly, Treasuries still sold off. Weakness in the 10-yr note drove its yield to a brief test of 1.75% before ending the week at 1.69% (+1 bp). The retreat in Treasuries suggest the bond market may be sniffing out some inflation down the road.
Taking a glance at the fed funds futures market, the implied likelihood of a September hike declined to 15.0% from last week's 24.0% while the implied odds of a hike in December slipped to 55.5% from 58.4% last week.
The technology sector (+3.0%) was a clear outperformed during the week, largely thanks to an 11.4% surge in the shares of Apple (AAPL). The top-weighted stock rallied on reports of strong iPhone 7 sales, ending the week near levels not seen since the end of 2015.
Index Started Week Ended Week Change % Change YTD %
DJIA 18085.45 18123.18 37.73 0.2 4.0
Nasdaq 5125.91 5244.57 118.66 2.3 4.7
S&P 500 2127.81 2139.11 11.30 0.5 4.7
Russell 2000 1219.21 1223.10 3.89 0.3 7.7
4:12 pm Closing Market Summary: Stocks End Volatile Week on a Lower Note (:WRAPX) :
The stock market ended a volatile week on a lower note as participants responded to a downturn in European banking names and a hotter-than-expected reading of the Consumer Price Index (CPI) for August. The Dow Jones Industrial Average (-0.5%) settled behind the S&P 500 (-0.4%) and the Nasdaq Composite (-0.1%). For the week, the S&P 500 gained 0.5% while the Nasdaq surged 2.3%.
European markets led to the downside as financials paced the retreat. Deutsche Bank (DB 13.37, -1.39) was under pressure after the U.S. Department of Justice proposed that the bank pay $14 billion in order to settle civil claims associated with the residential mortgage-backed securities crisis. Deutsche Bank has since announced that it is negotiating with the Justice Department to have the penalty reduced.
The future path of interest rate normalization was also in focus as investors assessed another round of inflation data for August. Total CPI increased 0.2% (Briefing.com consensus +0.1%) in August while core CPI, which excludes food and energy, jumped 0.3% (Briefing.com consensus +0.2%). On a year-over-year basis, CPI has increased 1.1% while core CPI is up 2.3%. The report signaled that inflation is firming, which underpinned a similar observation in yesterday's in-line core PPI reading.
Fed funds futures ticked higher following the inflation data, however, rate hike expectations remain tempered for next week's policy meeting. The implied probability of an interest rate hike at the September meeting increased to 15.0% from 12.0% in the prior session. Meanwhile, the implied probability of an interest rate hike at the December meeting rose to 52.9% from yesterday's 47.4% likelihood. The U.S. Dollar Index (96.06, +0.77, +0.81%) and short term Treasury yields also gained on the news.
The S&P 500 (-0.4%) remained pressured throughout the session as participants continued to assess a resurgence in volatility ahead of central bank policy meetings next week. Other factors impacting today's trade included a downturn in crude oil futures and another mixed performance from the Treasury complex. The energy (-0.9%) and financial (-0.9%) sectors ended with the largest losses while health care (+0.1%) and utilities (+0.9%) finished with the only gains.
In the financial sector (-0.9%), money center banks underperformed as Citigroup (C 46.41, -0.67) and Wells Fargo (WFC 45.43, -0.72) declined 1.4% and 1.6%, respectively. Wells Fargo was under pressure after being downgraded to "Underweight" from "Neutral" at Atlantic Equities. The stock declined 6.8% this week amid concerns regarding its sales practices. The broader space fell 1.3% this week, leading only energy (-0.9%; week-to-date: -2.9%) over that time.
The commodity-sensitive energy sector (-0.9%) was under pressure as crude oil extended its recent losing streak. The energy component ended the day lower by 1.9% ($43.04/bbl; -$0.81), extending its weekly loss to 6.2%. In the sector, Dow components Exxon Mobil (XOM 84.03, -1.05) and Chevron (CVX 97.84, -1.66) each finished behind the price-weighted index. The broader sector has declined 1.7% so far in September.
The technology sector (-0.3%) finished ahead of the broader market as the group pulled back from a larger weekly gain. Apple (AAPL 114.92, -0.65) finished lower by 0.6%, narrowing its weekly gain to 11.4%. Meanwhile, Oracle (ORCL 38.92, -1.94) fell 4.8% after missing bottom-line estimates for the quarter and issuing disappointing second-quarter guidance.
In the health care space (+0.1%), health care plan providers outperformed as Anthem (ANTM 125.52, +1.18) and CIGNA (CI 131.99, +3.35) gained 1.0% and 2.6%, respectively. The names outperformed following reports that the Department of Justice has dropped a claim in the lawsuit to block their potential merger. Separately, Abbott Labs (ABT 41.87, +0.75) gained 1.8% after Johnson & Johnson (JNJ 118.25, -0.38) agreed to acquire Abbott's Medical Optics division for $4.325 billion in cash.
Treasuries ended on a mixed note with the short end of the curve demonstrating relative weakness. The yield on the 2-yr note rose four basis points to 0.77% while the yield on the 10-yr note finished flat at 1.69%. The spread between the 2-yr and 10-yr note expanded to 92 basis points from 89 basis points last Friday.
Today's participation was above the recent average as more than two billion shares changed hands on the NYSE floor.
Today's economic data included CPI for August and the Michigan Sentiment Index for September:
Total CPI increased 0.2% in August (Briefing.com consensus +0.1%) while core CPI, which excludes food and energy, increased 0.3% (Briefing.com consensus +0.2%).
On a year-over-year basis, CPI is up 1.1% (vs. +0.8% in July), while core CPI is up 2.3% (vs. +2.2% in July).
Consumer inflation is firming (as is producer price inflation) and there is some data-based rationalization in the core CPI rate for the Fed to raise the fed funds rate.
However, the Fed keys in on the PCE Price Index as its primary inflation gauge and that index -- both total and core -- still shows consumer inflation below the Fed's 2 percent objective.
The preliminary reading of the University of Michigan Consumer Sentiment Survey for September was unchanged from the final August reading, holding at 89.8.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Monday's economic data will be limited to the NAHB Housing Market Index (Briefing.com consensus 59), which will cross the wires at 10:00 ET.
Russell 2000: +7.8% YTD
S&P 500: +4.7% YTD
Nasdaq: +4.7% YTD
Dow Jones: +4.0% YTD
Week in Review: Nasdaq Leads Stocks Higher
The stock market endured a volatile week, but was able tosettle above last Friday's levels. The Nasdaq Composite was a clearoutperformer, climbing 2.3%, while the S&P 500 added 0.5% after testing its100-day moving average (2122.5) on several occasions.
The rate hike conversation remained top of mind throughoutthe week, but fears of a September hike were stomped out by the weekend. Adisappointing August Retail Sales report (-0.3%; Briefing.com consensus -0.1%)contributed to the change in expectations, but somewhat surprisingly,Treasuries still sold off. Weakness in the 10-yr note drove its yield to abrief test of 1.75% before ending the week at 1.69% (+1 bp). The retreat inTreasuries suggest the bond market may be sniffing out some inflation down theroad.
Taking a glance at the fed funds futures market, the impliedlikelihood of a September hike declined to 15.0% from last week's 24.0% whilethe implied odds of a hike in December slipped to 55.5% from 58.4% last week.
The technology sector (+3.0%) was a clear outperformedduring the week, largely thanks to an 11.4% surge in the shares of Apple (AAPL). The top-weighted stock ralliedon reports of strong iPhone 7 sales, ending the week near levels not seen sincethe end of 2015.
5:43 pm TerraForm Global reports prelim Q2 results with adj EBITDA $40-46 mln and revs $52-56 mln vs $57.17 mln Cap IQ consensus (GLBL) :
Net MW Owned increased by 26 MW in 2Q due to the acquisition of Alto Cielo (Uruguay solar) in April.
Production and Revenue below management expectations due primarily to curtailment in China, and some wind turbines offline in India and Brazil.
Total production up 20% from 1Q 2016 primarily due to normal seasonality.
Revenue / MWh down 11% from 1Q 2016 due to mix, as a larger percentage of total production was from lower priced wind PPAs in 2Q 2016.
CAFD negatively impacted by $13M in accumulation of restricted cash in South Africa and India due to SunEdison (SUNEQ) bankruptcy-triggered or related defaults.
5:40 pm TerraForm Power releases prelim Q2 results with adj $152-160 mln and adj revs $198-206 mln (TERP) :
Production and revenue somewhat below management expectations due to wind resource 7% below normal, primarily in the Northeast. Fleet operations slightly better than expected.
Revenue per MWh up 27% vs. 1Q due to mix, as a higher percentage of 2Q production was from solar, which has higher pricing
($68M) negative impact to CAFD as a result of accumulation of restricted cash due to SunEdison bankruptcy-triggered or related defaults; CAFD midpoint would have been $55M had there been no change in restricted cash due to SunEdison bankruptcy-triggered or related defaults.
5:21 pm SolarCity issues statement on Nevada Public Utilities Commission vote to grandfather existing solar customers (SCTY) :
Co confirms the Public Utilities Commission's unanimous vote to ratify the stipulation negotiated by SolarCity, the Bureau of Consumer Protection, NV Energy and Public Utilities Commission Staff to grandfather solar customers in Nevada, Jon Wellinghoff, former Consumer Advocate for the State of Nevada and current SolarCity Chief Policy Officer.
The ratified agreement will grandfather all Nevadans who applied to install rooftop solar before December 31, 2015 on the net metering program they signed up under, for a period of 20 years. These customers include thousands of Nevadans who applied to go solar but have not yet installed their systems, and now have the ability to install solar under the grandfathered net metering program. SolarCity intends to commit the resources necessary to complete those installations and help all of their existing customers power their homes and communities. This order does not reverse the higher fees and charges on Nevadans who wish to go solar in the future. SolarCity intends to work with the Public Utilities Commission, legislators, and stakeholders to find a long-term solution that gives all Nevadans the freedom to install rooftop solar without being punished with higher charges.
Equity indices began the day under pressure as investors responded to a downturn in European markets. Regional bourses tilted to the downside amid weakness in financial names. Deutsche Bank (DB) led the retreat after the U.S. Department of Justice proposed a $14 billion settlement for civil claims relating to the bank's role in the residential mortgage-backed securities crisis. Deutsche Bank has since confirmed that it is negotiating with the DoJ and is seeking to have the fine reduced.
The U.S. Consumer Price Index (CPI) for August also contributed to early selling interest. CPI rose 0.2% in August while core CPI, which excludes food and energy, increased 0.3%. The inflation reading raised rate hike expectations for the coming months as participants mulled a firming inflation picture. CPI has increased 1.1% year-over-year while core CPI is up 2.3% year-over-year. The fed funds futures market shows that the implied probability of a rate hike at the September meeting has ticked up to 15.0% (from 12.0%) while the odds of a rate hike at the December meeting register at 52.9% (from 47.4%).
Also among market data readings, the preliminary reading of the University of Michigan Consumer Sentiment Survey for September was unchanged from the final August reading, holding at 89.8.
The markets closed out the week in the red. Losses were led by the Dow Jones Industrial Average which shed 88.68 points (-0.49%) to 18123.80. The S&P 500 was next, lower by 8.10 (-0.38%) to 2139.16, and the Nasdaq Composite lost 5.12 points (-0.10%) to 5244.57. This week's movements left the three major US indices +4.0%, +4.7% and +4.7%, respectively. Therefore, the lone bright spot this week was the Nasdaq, which added +2.3% in the past five trading days, as the other two indices hovered near flat lines. Top Nasdaq 100 components which aided today's advance included TSLA +2.5%, INCY +2.2%, NFLX +2.2%, BMRN +1.6% and REGN +1.5%.
As it were, all S&P sectors were lower today with Technology (XLK 47.21, -0.37 -0.78%) falling somewhere in the middle of the pack as losses went today and was near the middle of the daily trading range when the bell rang. Component Oracle (ORCL 38.92, -1.94 -4.75%) posted the worst session among sector constituents today following worse than expected Q1 EPS and in-line revenues. Other sectors as measured by the S&P closed Friday XLE -1.55%, XLFS -1.51%, XLF -1.38%, XLI -1.38%, XLP -0.94%, XLB -0.91%, XLY -0.60%, XLRE -0.34%, XLV -0.32%, IYZ -0.25%, XLU -0.04%.
In the S&P 500 Information Technology (792.05, -2.61 -0.33%) sector, trading capped off the week with modest losses as the sector was down -0.8% at lows. Component Intel (INTC 37.67, +1.11 +3.04%) was among the better performers today, resisting the broader market selling, as the company raised guidance in the premarket session for revenues and gross margins in the Q3 period. Other names in the space which under-performed today included JNPR -2.35%, GPN -2.30%, FIS -2.04%, TSS -1.92%, CA -1.57%, FSLR -1.50%, CSCO -1.49%, CTSH -1.44%, QRVO -1.36%, TDC -1.33%, PAYX -1.32%.
Other notable news items among sector components:
Oracle (ORCL) reported worse than expected Q1 EPS of $0.55 on in-line revenues which rose 1.9% compared to a year ago to $8.61 billion. SaaS and PaaS revenue were up 82% year-over-year and are expected to grow 75-80%. Software and Cloud were up 5% compared to a year ago, and are expected to grow 5-7%. ORCL guided on the conference call for Q2 in constant currency of $0.59-0.62 and revenue growth in constant currency of 0-3%.
Intel (INTC) raised its Q3 revenue and gross margin guidance, primarily driven by replenishment of PC supply chain inventory and an improving PC demand market. Specifically, INTC raised Q3 revenue guidance to $15.3-15.9 billion from $14.4-15.4 billion. Gross margin guidance also goes to 63%, up 1 point from the prior 62% guidance.
VeriSign's (VRSN 76.88, -0.33 -0.43%) Q2 domain name registrations were up 2.4% versus last quarter or by about 7.9 million.
PayPal's (PYPL 40.70, -0.13 -0.32%) Braintree detailed its partnership with China's UnionPay.
IBM (IBM 153.84, -1.82 -1.17%) and JFE Steel Co., Ltd., signed a five-year outsourcing agreement enabling the steel company to migrate core systems to the IBM Cloud while consolidating its IT infrastructure and streamlining its business operations. The company also signed a contract with the Bank of Tokyo-Mitsubishi UFJ (BTMU) to examine the design, management and execution of contracts among business partners using blockchain technologies. The two companies will begin by piloting blockchain to automate business transactions between the two companies.
Elsewhere in the tech space:
Samsung (SSNLF 1250, flat) to recall about 1 million Galaxy Note7 smartphones. The company also said new Note7 replacement devices will be available in the United States at most retail locations no later than September 21.
Pandora Media (P 13.45, +0.14 +1.05%) and Warner Music Group announce direct licensing agreement.
Mad Catz (MCZ 0.24, +0.05 +28.03%) announced the sale of Saitek Simulation product line to Logitech (LOGI 21.78, -0.23 -1.04%) for $13 million in cash.
Travelport Worldwide (TVPT 14.02, -0.25 -1.75%) announced an underwritten public offering of 7,986,979 common shares by selling shareholders.
Benchmark Electronics (BHE 23.93, -0.66 -2.68%) appointed Paul Tufano as President and CEO to replace Gayla Delly, who resigned to pursue other interests. The company also reaffirmed certain Q3 guidance for revenues between $570-660 million; also, diluted non-GAAP EPS between $0.33-0.38 (ex-restructuring charges).
ComScore (SCOR 32.46, +2.38 +7.91%) determined that various prior financial statements should no longer be relied upon. Further, based on the results of the Audit Committee investigation to date and management's review, the company cannot support the prior accounting for the non-monetary transactions recorded by the company during the years ended December 31, 2013, 2014 and 2015. The company later stated it expects to be a current SEC filer by early 2017.
Mobileye N.V. (MBLY 42.94, -1.27 -2.87%) issued a statement responding to allegations made by Tesla (TSLA 205.40, +4.98 +2.48%). The company noted it believes allegations recently attributed to a spokesperson for Tesla regarding Mobileye's position in respect of Tesla internal computer visions efforts are incorrect and can be refuted by the facts.
Demand Media (DMD 5.91, +0.22 +3.87%) acquired The Other Art Fair. Financial terms of the deal were not disclosed.
Analyst actions:
MU was upgraded to Buy from Neutral at Cleveland Research;
GWRE was downgraded to Underperform from Neutral at BofA/Merrill;
GPRO was initiated with a Buy at BofA/Merrill,
BOX was initiated with a Neutral at Mitsubishi UFJ
From Briefing.com: 4:07 pm Oracle misses by $0.03, reports revs in-line (ORCL) :
Reports Q1 (Aug) earnings of $0.55 per share, excluding non-recurring items, $0.03 worse than the Capital IQ Consensus of $0.58; revenues rose 1.9% year/year to $8.61 bln vs the $8.69 bln Capital IQ Consensus.
SaaS and PaaS revenue +82% y/y; expected to grow 75-80%.
Software and Cloud 5% y/y; expected to grow 5-7%.
Non-GAAP Operating Margin 39%
Short-term deferred revenues were $9.5 billion, up 4% in U.S. dollars and up 5% in constant currency compared with a year ago. Operating cash flow on a trailing twelve-month basis was $13.7 billion.
Co expects gross margins to climb toward 62% in Q3 (Long term target remains 80%)
"Next week at Oracle OpenWorld, we will introduce the second generation of our Infrastructure as a Service," said Larry Ellison, Oracle Chairman and CTO.Co guides on its conference call at 5pm ET.
4:15 pm : The stock market ended the Thursday affair on a broadly higher note as participants dialed back rate hike expectations following a barrage of economic data. Today's rally also featured continued strength from top-weighted Apple (AAPL 115.57, +3.80), a rebound in crude oil futures, and another mixed performance from the Treasury complex. The Nasdaq Composite (+1.5%) settled ahead of the S&P 500 (+1.0%) and the Dow Jones Industrial Average (+1.0%). The major averages shook weakness in the opening hour of trade as a weaker-than-expected reading of the Retail Sales Report for August stymied rate hike expectations for the coming months. The report indicated that retail sales declined 0.3% (Briefing.com consensus -0.1%) in August while retail sales excluding autos fell 0.1% (Briefing.com consensus +0.3%). Softening in discretionary spending will likely negatively impact third quarter GDP forecasts.
The Producer Price Index (PPI) for August also appeared to ease fears regarding a sooner-than-expected fed funds rate hike. The report showed that the PPI was flat in August (Briefing.com consensus +0.1%) while core PPI rose an in-line 0.1% over that time. The reading signaled some firming in inflation at the producer level, but also that inflation rates continue to tread below the Fed's target. On a side note, the Consumer Price Index (Briefing.com consensus +0.1%) is slated to cross the wires at 8:30 ET tomorrow.
Equities rallied throughout the session, reveling in diminished rate hike odds. The fed funds futures market estimates the odds of a rate hike at the September meeting at 12.0%, falling from 15.0% in the previous session. The implied probability of a rate hike at the December meeting fell to 46.2% from 52.9%. Additionally, the Bank of England failed to rock the boat when it opted to maintain its monetary policy stance. It is worth noting, however, that the central bank indicated that further easing could be on the way.
The S&P 500 (+1.0%) settled near its session high, testing resistance near the 2150 price level. All ten sectors ended in the green with telecom services (+1.1%), health care (+1.1%), energy (+1.1%), and technology (+1.7%) leading the advance. Conversely, materials (+0.6%) and financials (+0.7%) ended at the bottom of the leaderboard.
The heavily-weighted technology sector (+1.7%), outperformed as Dow component Apple (AAPL 115.57, +3.80) extended its recent winning streak. The stock rallied 3.4% after the company confirmed that it sold out of first run models of the iPhone 7 plus. Credit Suisse also increased its iPhone 7 sales estimates and restated its "Outperform" designation on the stock. Separately, the PHLX Semiconductor Index (+2.3%) outperformed as iPhone supplier Skyworks (SWKS 77.02, +4.62) rallied 6.4%. The price-weighted index sports a week-to-date gain of 4.4%.
Biotechnology settled ahead of the health care group (+1.1%), evidenced by the 1.5% gain in the iShares Nasdaq Biotechnology ETF (IBB 290.15, +4.22). In the ETF, Vertex Pharmaceuticals (VRTX 93.10, +2.98) led after Stifel raised its price target on the stock to $109 from $105. Meanwhile, Mylan Labs (MYL 41.49, +0.65) trimmed its month-to-date loss to 2.1%. The broader sector has jumped 1.1% this week, which compares to a gain of 0.9% in the benchmark index.
In the financial sector (+0.7%), Wells Fargo (WFC 46.15, -0.37) underperformed following yesterday's report that Federal prosecutors in California and New York are investigating the bank's sales practices. Conversely, MetLife (MET 44.50, +0.72) jumped 1.6% amid continued steepening in the yield curve. The broader sector erased a modest year-to-date loss and now sports a gain of 0.1% over that time.
Treasuries ended on a mixed note with the short end of the curve demonstrating relative strength. The yield on the 2-yr note fell two basis points to 0.74% while the yield on the 10-yr note finished flat at 1.70%. The spread between the 2-yr and 10-yr note expanded to 96 basis points from 89 on Friday.
Today's participation was above the recent average as more than 819 million shares changed hands on the NYSE floor.
Today's economic data included weekly initial claims, retail sales for August, PPI for August, the Philadelphia Fed Survey for September, the second quarter current account balance, Empire Manufacturing for September, Industrial Production and Capacity Utilization, and Business Inventories for July:
Jobless claims for the week ending September 10 were 260,000 (Briefing.com consensus 263,000), up 1,000 from the prior week and the 80th straight week they have been below 300,000.
Continuing claims for the week ending September 3 were 2.143 million, also up 1,000 from the prior week.
Total retail sales declined 0.3% in August (Briefing.com consensus -0.1%) after increasing a revised 0.1% (from 0.0%) in July.
Excluding autos, retail sales declined 0.1% (Briefing.com consensus +0.3%) after declining a downwardly revised 0.4% (from -0.3%) in July.
Total PPI was unchanged (Briefing.com consensus +0.1%) after declining 0.4% in July. Core PPI, which excludes food and energy, was up 0.1% (Briefing.com consensus +0.1%) after declining 0.3% in July.
Producer pricing trends are improving, yet inflation rates still remain comfortably below the Fed's comfort level.
The Philadelphia Fed Index checked in at 12.8 (Briefing.com consensus 0.0) versus 2.0 in August. That marked the first time since last August that the index has registered two consecutive positive readings.
The current account deficit for the second quarter totaled $119.9 billion while the Briefing.com consensus expected the deficit to hit $122.8 billion. The first quarter deficit was revised to $131.8 billion from $124.7 billion.
The Empire Manufacturing Survey was little changed at -2.0 in September (Briefing.com consensus 0.0) versus -4.2 in August. The dividing line between expansion and contraction is 0.0.
Industrial production declined 0.4% in August (Briefing.com consensus -0.3%), which wasn't a complete surprise, after increasing a downwardly revised 0.6% (from +0.7%) in July.
The capacity utilization rate dropped to 75.5% (Briefing.com consensus 75.7%) from 75.9%.
Total business inventories were unchanged in July (Briefing.com consensus +0.1%) following an unrevised 0.2% increase in June. Sales were down 0.2% after increasing 1.0% in June.
Inventory-to-sales ratio for July held steady at 1.39
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include CPI for August (Briefing.com consensus +0.1%) and the preliminary reading of the Michigan Sentiment Index for September (Briefing.com consensus 91.5), which will cross the wires at 8:30 ET and 10:00 ET, respectively. Separately, Net Long-Term TIC Flows for July will be released at 16:00 ET.
Russell 2000: +7.9% YTD
S&P 500: +5.1% YTD
Nasdaq: +4.8% YTD
Dow Jones: +4.5% YTD
DJ30 +177.71 NASDAQ +75.92 SP500 +21.49 NASDAQ Adv/Vol/Dec 2095/1.777 bln/764 NYSE Adv/Vol/Dec 2255/819.8 mln/712 3:30 pm :
Commodities, as measured by the Bloomberg Commodity Index, turned positive in the afternoon, +0.5% around the 83.08 level
Crude oil saw a volatile session, swinging between gains and losses before ending near the midpoint of session highs ahead of tomorrow's rig count data
October crude oil futures rose $0.27 (+0.6%) to $43.85/barrel
Baker Hughes rig count data will be released tomorrow at 1 pm ET
The next OPEC meeting is scheduled to take place in Algiers, Algeria from Sept 26-28
Natural gas ended pit trading higher on the heels of EIA storage data which showed a smaller-than-expected build vs. Consensus
October natural gas closed $0.03 higher (+1.0%) at $2.92/MMBtu
EIA highlights:
Natural gas inventory showed a build of +62 bcf vs expectations for inventory to be a build of approximately +63 bcf.
Working gas in storage was 3,499 Bcf as of Friday, September 9, 2016, according to EIA estimates.
Stocks were 184 Bcf higher than last year at this time and 299 Bcf above the five-year average of 3,200 Bcf.
At 3,499 Bcf, total working gas is above the five-year historical range.
In precious metals, gold erased all of yesterday's gains, silver traded lower as the dollar index traded nearly flat
December gold ended today's session down $7.90 (-0.6%) to $1318.10/oz
December silver closed today's session $0.03 lower (-0.2%) at $19.04/oz
Base metal copper extended yesterday's gains in afternoon pit trading
December copper closed $0.01 higher (+0.5%) at $2.16/lb
Equities began the day on a choppy note as investors poredover a raft of economic data. The Retail Sales Report for August came in weakerthan expected, adding to concerns surrounding third quarter GDP. Retail salesdeclined 0.3% in August while retail sales excluding autos fell 0.1%.Meanwhile, the Producer Price Index (PPI) continues to signal a tepid inflationtrend. PPI was flat in August while core PPI rose an in-line 0.1%.
The two readings took their toll on rate hike expectationsfor the coming months. The fed funds futures market indicates that the impliedprobability of a rate hike at the September meeting fell to 12.0% from 15.0% inthe previous session. The odds of a rate hike at the December meeting havedeclined to 47.4% from 52.9%. However, the U.S. Dollar Index (95.30, -0.04 -0.04%) treaded water amid a downturn in the pound. Sterling has been underpressure as investors respond to the Bank of England's latest policy decision.The central bank opted to maintain its monetary policy stance, but indicatedthat further easing could be on the way. In addition, the dollar has beenresilient against the euro after a morning decline.
Additionally, market data today included jobless claims forthe week ending September 10 which were 260,000, up 1,000 from the prior weekand the 80th straight week they have been below 300,000. As mentioned, totalretail sales declined 0.3% in August after increasing a revised 0.1% (from0.0%) in July. Total PPI was unchanged after declining 0.4% in July. Core PPI,which excludes food and energy, was up 0.1% after declining 0.3% in July. ThePhiladelphia Fed Index checked in at 12.8 versus 2.0 in August. That marked thefirst time since last August that the index has registered two consecutivepositive readings. The current account deficit for the second quarter totaled$119.9 billion while the first quarter deficit was revised to $131.8 billionfrom $124.7 billion. Also, the Empire Manufacturing Survey was little changedat -2.0 in September versus -4.2 in August. The dividing line between expansionand contraction is 0.0. Industrial production declined 0.4% in August, whichwasn't a complete surprise, after increasing a downwardly revised 0.6% (from+0.7%) in July. Lastly, total business inventories were unchanged in July followingan unrevised 0.2% increase in June. Sales were down 0.2% after increasing 1.0%in June.
In general, the broader market jogged higher as the sessionprogressed today ending barely below highs. Leading the way to the upside today, the Nasdaq Composite enjoyed gains of 75.92 points (+1.47%) to 5249.69. The S&P 500 was up 21.49 points (+1.01%) to 2147.26, and the Dow Jones Industrial Average added 177.71 points (+0.99%) to 18212.48. Halfway through September, the three major US indices stand +4.8%, +5.1% and +4.5% respectively.
Technology (XLK 47.58, +0.77 +1.64%) was again the best performer among S&P sectors as Apple (AAPL 115.57, +3.80 +3.40%) continued to fresh nine month highs as investors pushed the stock on continued iPhone pre-order commentary. Component Global Payment (GPN 76.05, +2.53 +3.44%) was among the best performers today following a premarket upgrade at Goldman to a Buy rating from a Neutral. Other sectors as measured by the S&P closed ThursdayIYZ +1.35%, XLE +1.26%, XLV +0.99%, XLFS +0.91%, XLP +0.81%, XLI +0.79%, XLU +0.76%, XLRE +0.76%, XLY +0.73%, XLF +0.67%, XLB +0.64%.
In the S&P 500 Information Technology (794.66, +13.31 +1.70%) sector, trading held pace with the broader market step higher. Component Intel (INTC 36.56, +0.94 +2.64%) was higher today on the back of a collaboration deal with pharmaceutical name Teva (TEVA 51.90, -0.05 -0.10%) to develop a wearable device for use in Huntington disease. Every current S&P 500 IT component finished the day in the green, led by SWKS +6.38%, NVDA +3.79%, HPE +3.60%, EA +3.14%, MU +3.07%, ADSK +2.87%, ADI +2.84%, QRVO +2.58%, WDC +2.48%, AMAT +2.45%, PYPL +2.18%.
Other notable news items among sector components:
Accenture (ACN 110.72, +0.92 +0.84%) has agreed to purchase a 47.4% shareholding in OCTO Technology (ISIN code FR0004157428), a technology consultancy specializing in digital transformation and software development, with the intention to acquire the remaining shares. Under the terms of the agreement, Accenture will purchase the shareholding in OCTO from Franois Hisquin, founder and CEO of OCTO, other OCTO partners and Financire Arbevel at a price of 22.50 per share and 1.7222 per equity warrant. Following the closing of the acquisition, Accenture will make a voluntary cash tender offer to acquire the remaining shares and equity warrants at the same prices.
Teva Pharma (TEVA) announced a collaboration with Intel (INTC) to develop a unique wearable device and machine learning platform for use in Huntington disease.
Salesforce.com (CRM 73.99, +0.17 +0.23%) to acquire GravityBank. Financial terms of the deal were not disclosed.
Activision Blizzard (ATVI 44.59, +0.93 +2.13%) priced $650 million of 2.300% senior notes due 2021 and $850 million of 3.400% senior notes due 2026.
Elsewhere in the tech space:
Pandora Media (P 13.31, flat) launched Pandora Plus for $4.99 per month. Service includes more skips, replays and solution for offline listening.
Viavi Solutions' (VIAV 7.47, -0.04 -0.53%) Board authorized an increase to its stock repurchase program from up to $100 million to up to $150 million of the common stock through open market or private transactions before December 31, 2017. The company also reaffirmed 1Q17 EPS and revenue guidance of $0.06-0.08 and $201-217 million, respectively.
Agilent (A 45.44, +0.58 +1.29%) announced an offering of a series of senior notes under an automatic shelf registration statement.
Sequans Communications (SQNS 1.71, -0.19 -10.00%) announced and later priced an offer of newly issued American Depositary Shares in an underwritten public offering of about 15.2 million ordinary shares, at a price of $1.65 per ADS for net proceeds of about $22.9 million.
Violin Memory (VMEM 0.90, -0.05 -6.15%) filed 10-Q with going concern qualification. The company expects to incur net losses and negative cash flows from operations for at least the next twelve months.
PC-TEL (PCTI 5.01, -0.05 -0.99%) Chairman and CEO Marty Singer to retire. David Neumann will become CEO in 2017.
Telus (TU 32.01, +0.41 +1.30%) to offer $600 million notes with 2.80% interest rate maturing in 2027.
JinkoSolar Holding's (JKS 15.94, +0.38 +2.44%) JinkoSolar entered into a Master Module Supply Agreement with Con Edison Development. Financial details were not not disclosed.
Fabrinet (FN 42.56, +1.18 +2.85%) acquired Exception Global CEM Solutions for about $13.5 million in cash.
RADA Electronic Industries (RADA 1.13, +0.20 +21.52%) received new orders totaling over $11 million since the beginning of 2016.
According to the IDC, worldwide smartwatch market will see modest growth in 2016 before swelling to 50 million units in 2020.
Analyst actions:
GPN was upgraded to Buy from Neutral at Goldman,
EXTR was upgraded to Buy from Neutral at DA Davidson;
CTSH was downgraded to Neutral from Buy at Goldman,
SYNT was downgraded to Underperform from Market Perform at William Blair,
APIC was downgraded to Sector Weight at Pacific Crest, to Neutral at Credit Suisse, and to Neutral at Roth Capital;
PYPL was initiated with a Buy at Craig Hallum,
ADSK and PTC were initiated with Buy ratings at Evercore ISI,
ANSS was initiated with a Hold at Evercore ISI,
CYBR was initiated with a Sector Weight at Pacific Crest,
ACXM was initiated with a Buy at Cantor Fitzgerald,
SYMC and NOW were initiated with Buy ratings at Guggenheim,
CHKP was initiated with a Neutral at Guggenheim
6:34 pm Agilent prices series of senior notes in an aggregate principal amount of $300 mln in public offering conducted under automatic shelf registration statement (A) : The notes will mature in September 2026 and will bear interest at an annual rate of 3.050 percent. The offering is expected to close on September 22, 2016, subject to customary closing conditions. Agilent intends to use the proceeds from the offering to repay all amounts outstanding under its revolving credit facility and for general corporate purposes thereafter.
6:18 pm Sprint confirms Samsung (SSNLF) Galaxy Note7 customers can get replacement devices beginning next week (S) :
4:16 pm Samsung to recall ~1 mln Galaxy Note7 smartphones (SSNLF) :
Name of Product: Samsung Galaxy Note7 smartphones sold prior to September 15, 2016Description: This recall involves the Samsung Galaxy Note7 smartphone sold before September 15, 2016.Hazard: The lithium-ion battery in the Galaxy Note7 smartphones can overheat and catch fire, posing a serious burn hazard to consumers.Remedy: Replace, RefundUnits: About 1 million
From Briefing.com: 4:10 pm : The stock market ended the midweek affair on a mixed note as investors favored a cautious approach ahead of a plethora of economic data and the latest policy statement from the Bank of England. The Nasdaq Composite (+0.4%) ended ahead of both the S&P 500 (-0.1%) and the Dow Jones Industrial Average (-0.2%).
Equity indices gyrated at the start of the session as investors continued to mull a recent resurgence of volatility and a downturn in crude oil futures. The energy component was under pressure as participants responded to a mixed reading of the American Petroleum Institute's weekly inventory report. The API reported that crude oil stockpiles rose by 1.4 million barrels (last: -12.0 million barrels) while gasoline inventories fell by 2.4 million barrels (last: -2.40 million barrels).
The broader market shook early weakness in the opening hour as investors looked to confirm the inventory reading with the Department of Energy's more influential stockpile data. The EIA reported that crude oil inventories declined by 0.55 million barrels (consensus: +3.80 million) after falling 14.51 million barrels in the prior week. Meanwhile, gasoline inventories increased by 0.56 million barrels (consensus: +0.34 million). WTI crude initially spiked on the news, but was unable to maintain position above the $45.00/bbl price level. Crude oil ended its day near its low, sliding 3.0% ($43.58/bbl; -$1.34).
The S&P 500 (-0.1%) moved lower with crude oil, but managed to stay in positive territory amid strength in the top-weighted technology sector (+0.4%). The benchmark index carved out a session low in the final hour of trade as seven sectors finished in the red. The consumer staples (-0.3%), financial (-0.3%), and energy (-1.2%) sectors ended at the bottom of the leaderboard while consumer discretionary (UNCH), utilities (+0.5%) and technology (+0.6%) led.
The influential technology sector (+0.6%) outperformed as Dow component Apple (AAPL 111.83, +3.88) rallied 3.6%. The name displayed relative strength as bullish pre-order data for the iPhone 7 elicited a bid for the second session in a row. The PHLX Semiconductor Index (+0.9%) also outperformed as iPhone suppliers led. Broadcom (AVGO 169.61, +4.37) and Skyworks (SWKS 72.40, +3.04) finished at the top of the index, gaining 2.6% and 4.4%, respectively.
In the health care space (-0.1%), biotechnology outperformed amid recent M&A news. Allergan (AGN 244.81, +4.71) rallied 2.0% after announcing that it would acquire Vitae Pharmaceuticals (VTAE 20.85, +12.75) for $21 per share in cash. Allergan also benefited from a bullish note from Mizuho. Conversely, McKesson (MCK 167.70, -8.14) fell 4.6% after the Department of Justice requested more information regarding the company's contribution and sale agreement with Change Healthcare.
In the financial sector (-0.3%), Wells Fargo (WFC 46.52, -0.44) erased a modest gain after reports indicated that California and New York may investigate the bank for its sales tactics. Separately, Dow component American Express (AXP 63.48, -0.88) finished at the bottom of the price-weighted index. The financial sector has declined 1.0% this week, leading only materials (-0.2%; week-to-date: -1.2%) and energy (-1.2%; week-to-date: -3.1%).
Treasuries ended higher with the short end of the curve demonstrating relative strength. The yield on the 2-yr note fell four basis points to 0.76% while the yield on the 10-yr note declined three basis points to 1.70%.
Today's participation was above the recent average as more than 878 million shares changed hands on the NYSE floor.
Today's economic data was limited to the weekly MBA Mortgage Index and Import/Export Prices for August:
The MBA Mortgage Index showed that mortgage applications increased 4.2% in the week ending September 10. This followed a 0.9% gain in the prior week.
Lower prices for agricultural and nonagricultural exports led a 0.8% decline in export prices in August while lower fuel prices paced a 0.2% decline in import prices.
Excluding agriculture, export prices declined 0.4% after increasing a revised 0.2% (from +0.3%) in July.
Excluding fuel, import prices were unchanged after increasing an unrevised 0.3% in July.
Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 263k), Retail Sales for August (Briefing.com consensus -0.1%), PPI for August (Briefing.com consensus +0.1%), the Philadelphia Fed Survey for September (Briefing.com consensus 0.0), the second quarter Current Account Balance (Briefing.com consensus -$122.8 billion), and Empire Manufacturing for September (Briefing.com consensus 0.0) each crossing the wires at 8:30 ET. Separately, Industrial Production (Briefing.com consensus -0.3%) and Capacity Utilization (Briefing.com consensus 75.7%) for August will be released at 9:15 ET while Business Inventories for July (Briefing.com consensus +0.1%) will cross the wires at 10:00 ET.
Russell 2000: +6.7% YTD
S&P 500: +4.0% YTD
Dow Jones: +3.5% YTD
Nasdaq: +3.3% YTD
DJ30 -32.29 NASDAQ +18.52 SP500 -1.19 NASDAQ Adv/Vol/Dec 1408/1.734 bln/1428 NYSE Adv/Vol/Dec 1420/878.1 mln/1566
3:30 pm :
The dollar index extended this morning's decline, -0.3% around the 95.33 level
Commodities, as measured by the Bloomberg Commodity Index, were -0.4% around the 82.69 level
Crude ended a volatile session at fresh session lows, extended yesterday's post-IEA decline following mixed EIA data
October crude oil futures fell $1.34 (-3.0%) to $43.58/barrel
EIA highlights:
Crude oil inventories had a draw of -0.559 mln (consensus called for a build of +3.80 mln barrels)
Gasoline inventories had a build of +0.567 mln (consensus called for a build of +0.34 mln barrels)
Distillate inventories had a build of +4.619 mln
Data reminders:
Baker Hughes rig count data will be released Friday at 1 pm ET
The next OPEC meeting will take place in Algiers, Algeria from Sept 26-28
Natural gas ended pit trading slightly in the red after a session of sideways trading ahead of tomorrow's inventory data
October natural gas closed $0.02 lower (-0.7%) at $2.89/MMBtu
Weekly EIA natural gas data will be released tomorrow at 10:30 am ET
In precious metals, gold & silver reversed yesterday's losses as the dollar index headed lower
December gold ended today's session up $2.00 (+0.2%) to $1326.00/oz
December silver closed today's session $0.09 higher (+0.5%) at $19.07/oz
Base metal copper found direction in afternoon pit trading after 5 consecutive sessions of trading nearly flat
December copper closed $0.05 higher (+2.4%) at $2.15/lb
The major averages began the day on a choppy note as participants assessed the chances of a rebound following yesterday's retreat. Global bourses settled on a mostly lower note as investors favored a cautious approach ahead of tomorrow's policy statement from the Bank of England. Meanwhile, falling interest rates relieved some persistent rate angst as sovereign bonds retraced a portion of yesterday's rout.
Crude oil contributed to early weakness, erasing a modest overnight gain ahead of today's session. The energy component was under pressure following a mixed reading of the American Petroleum Institute's weekly inventory report. However, equities and crude oil shrugged off the reading in the opening hour as participants looked ahead to the Department of Energy's more influential inventory report. The EIA reported that crude oil stockpiles fell by 0.55 million barrels (consensus: +3.80 million) while gasoline inventories rose by 0.56 million barrels (consensus: 0.34 million). The energy component carved out a new low shortly thereafter. As it were, October crude oil futures ended down $0.74 (-1.6%) around the $44.15/barrel level.
Rebounding off yesterday's weakness, the broader market was in the green for the majority of the session but ultimately ended mixed. The lone out-performer today was the Nasdaq Composite which added 18.52 points (+0.36%) to 5173.77. The Dow Jones Industrial Average shed 31.98 points (-0.18%) to end 18034.77, and the S&P 500 was down 1.25 points (-0.06%) to 2125.77.
Leading the day in positive territory, the Technology (XLK 46.81, +0.22 +0.47%) sector pared gains in late trading yet still finished firmly in the green. Component Apple (AAPL 111.83, +3.88 +3.59%) posted fresh YTD highs today following positive commentary to start the week and in recent news today was the subject of a few conference calls regarding iPhone pre-order levels at AT&T (T 39.89, -0.08 -0.20%) and Verizon (VZ 51.49, +0.04 +0.08%). Other sectors as measured by the S&P ended today mixed XLU +0.39%, XLY +0.01%, IYZ +0.00%, XLV -0.04%, XLI -0.09%, XLB -0.23%, XLF -0.29%, XLP -0.30%, XLFS -0.79%, XLE -1.10%.
In the S&P 500 Information Technology (781.35, +4.48 +0.58%) sector, trading was modestly lower off highs of the day, but strength held on. Component Cognizant Tech (CTSH 54.03 -0.97 -1.76%) was among the worst performers today following a premarket downgrade at CLSA to an Underperform rating from Outperform. Other names in the space which ended lower included TSS -1.45%, FLIR -1.20%, IBM -1.13%, FISV -0.96%, MSI -0.81%, WDC -0.73%, MA -0.68%, ACN -0.66%, XRX -0.61%.
Other notable news items among sector components:
The Finnish Funding Agency for Innovation and IBM (IBM 154.05, -1.76 -1.13%) announced a partnership that will enable Finland to utilize Watson cognitive computing to help doctors improve the health of its citizens, and strengthen and develop the Finnish innovation and business ecosystem in the fields of health and well-being. To facilitate the collaboration, IBM intends to establish a Watson Health Center of Excellence in Finland, the first Nordic Healthcare Competence Center, and the first National Imaging Center of Excellence outside the United States in Finland. These centers are expected to employ 150 people over the next few years.
Activision Blizzard (ATVI 43.66, +0.25 +0.58%) announced a private transaction to offer senior unsecured notes in two series.\
Cisco Systems (CSCO 31.00, -0.06 -0.19%) priced $6.25 billion of Senior Unsecured Notes in 5 separate tranches.
NVIDIA (NVDA 60.40, +0.53 +0.89%) priced $2.0 billion notes offering consisting of $1.0 billion of 2.20% notes due 2021 and $1.0 billion of 3.20% notes due 2026.
CloudCraze, an enterprise digital commerce solution built natively on Salesforce (CRM 73.82, +0.76 +1.04%), was selected as the commerce platform for Repsol (REPYY 13.33, -0.19 -1.41%). This strategic initiative will provide Repsol, specifically its Chemicals Division, with a solution to enable B2B commerce on the cloud.
Elsewhere in the tech space:
Liberty Global plc (LBTYA 32.12, -0.31 -0.96%) revealed a multi-year partnership with Netflix (NFLX 97.01, +0.92 +0.96%) which will lead to Netflix's content being made available to Liberty Global video customers across more than 30 countries around the world.
Zebra Tech (ZBRA 65.12, -1.06 -1.60%) sold its wireless LAN business to Extreme Networks (EXTR 4.01, +0.26 +6.93%) for $55 million in cash.
SAP AG's (SAP 88.32, +0.17 +0.19%) Concur to acquire travel search company Hipmunk. The transaction is expected to close in October 2016.
IMS Health (IMS 30.03, +0.17 +0.57%) announced the pricing of its offering of $1.75 billion equivalent in gross proceeds of senior notes, consisting of $1.05 billion of U.S. Dollar notes and 625 million of Euro notes to be issued by its wholly owned subsidiary, IMS Health Incorporated. The offering was upsized from the previously announced $1.5 billion equivalent aggregate principal amount. The net proceeds from the notes offering will primarily be used to extinguish certain of the issuer's and Quintiles' (Q 77.90, +0.37 +0.48%) existing indebtedness in connection with the previously announced proposed merger between IMS Health and Quintiles.
Amdocs (DOX 59.00, -1.52 -2.51%) announced the acquisition of three privately owned companies for about $260 million. The acquisitions are expected to contribute 1.5% to 2.0% to total company revenue for FY17.
ADTRAN (ADTN 18.15, -0.06 -0.33%) acquired key fiber access products, technologies and service relationships from subsidiaries of CommScope (COMM 29.50, +0.09 +0.31%). Financial terms of the deal were not disclosed.
Glu Mobile (GLUU 2.18, -0.09 -3.96%) acquired Poke Radar for $500,000 in cash.
SolarCity (SCTY 16.89, -0.17 -1.00%) issued a statement on joint agreement to grandfather 32,000 Nevadans. The company urged the Public Utilities Commissioners to ratify agreement to customers and all Nevada solar customers as soon as possible.
Amazon (AMZN 761.09, +0.08 +0.01%) announced that Alexa, Echo, and the all-new Echo Dot are now available for customers in the UK and Germany.
Cellcom Israel (CEL 7.61, +0.03 +0.40%) announced that a purported class action was filed against 013 Netvision Ltd., the company's wholly owned subsidiary, and two other Israeli international calls operators, alleging that the defendants unlawfully charge random customers with excessive and unreasonable prices for outgoing calls from Israel.
In reaction to quarterly results:
FFIV was upgraded to Outperform from Perform at Oppenheimer,
ISIL was upgraded to Neutral from Sell at Citigroup;
ISIL was downgraded to Hold at Deutsche Bank and to Neutral at B. Riley & Co.,
CTSH was downgraded to Underperform from Outperform at CLSA,
APIC was downgraded to Neutral from Overweight at JP Morgan;
GRPN was initiated with a Hold at Loop Capital,
VG was initiated with an Outperform at Robert W. Baird
From Briefing.com: 4:15 pm : The major averages ended the Tuesday affair sharply lower as rising long-term interest rates pressured the broader market. The upswing in interest rates was led by growing uncertainty surrounding the future path and effectiveness of global central bank policy. The S&P 500 (-1.5%) settled behind the Dow Jones Industrial Average (-1.4%) and the Nasdaq Composite (-1.1%). Equity indices began the session under pressure as investors continued to mull over central bank policy here at home and from overseas. Fed Governor Lael Brainard reaffirmed a dovish stance in the prior session, stating that the case for preemptive tightening has become less compelling. In response, the implied probability of a rate hike at the September meeting fell to 15.0% from 24.0% at the start of the week.
The dovish posture failed to carry over buying interest into today's session as participants responded to mixed performances from global markets and a downturn in crude oil. The energy component was under pressure after the International Energy Agency's monthly report struck a bearish tone. The IEA cut its global demand growth forecast for 2016 to 1.3 million barrels per day (previous: 1.4 million barrels) while the group also trimmed its 2017 growth estimate to 1.2 million barrels (previous: 1.4 million barrels). The negative revisions cast doubt on the potential timetable for an oil market rebalancing.
The benchmark index notched a session low (2120.27) shortly after midday, finishing narrowly above that level. All ten sectors ended in the red with financials (-1.8%), materials (-1.9%), telecom services (-2.0%), and energy (-2.9%) acting as notable laggards. Conversely, technology (-0.6%) and consumer staples (-1.4%) ended with the narrowest losses.
The commodity-sensitive energy sector (-2.9%) ended broadly lower amid a sustained downturn in crude oil. WTI crude finished lower by 3.0% ($44.92/bbl; -$1.37). In the group, oilfield service names underperformed with Baker Hughes (BHI 48.34, -1.36) and Halliburton (HAL 41.11, -1.29) losing 2.8% and 3.0%, respectively. On a side note, the American Petroleum Institute is slated to release its weekly inventory report this evening while the Department of Energy is scheduled to release its more influential inventory report tomorrow at 10:30 ET.
The economically-sensitive financial sector (-1.8%) was under pressure as participants reassessed rate hike expectations for the year. In the group, Wells Fargo (WFC 46.96, -1.58) declined 3.7%. The name has been under pressure since announcing a settlement with the Consumer Financial Protection Bureau last Thursday. The broader sector has declined 2.8% this month and currently sports a year-to-date loss of 0.2%.
Biotechnology underperformed in the health care space (-1.5%), evidenced by the 1.6% loss in the iShares Nasdaq Biotechnology ETF (IBB 282.62, -4.49). The ETF was under pressure after rallying 3.0% in the prior session. In the ETF, Vertex Pharmaceuticals (VRTX 95.27, -2.59) underperformed after Raymond James issued a "Market Perform" designation on the stock.
The influential technology space (-0.6%) finished ahead of the benchmark index as top-weighted component Apple (AAPL 108.12, +2.68) led. The Dow component rallied 2.6% after T-Mobile (TMUS 45.34, -0.59) and Sprint (S 6.56, -0.36) reported bullish pre-order data for the iPhone 7. The PHLX Semiconductor Index (-0.9%) also finished ahead of the broader market as iPhone suppliers drafted higher on the news. Broadcom (AVGO 165.24, +0.76) and Skyworks (SWKS69.36, +1.02) ended higher by 0.5% and 1.5%, respectively.
Treasuries ended sharply lower with the long end of the curve demonstrating relative weakness. The yield on the 2-yr note rose two basis points to 0.79% while the yield on the 10-yr note jumped six basis points to 1.72%.
Today's participation was above the recent average as more than one billion shares changed hands on the NYSE floo
Today's economic data was limited to the Treasury Budget for August:
The Treasury Budget for August showed a deficit of $107.1 billion versus a deficit of $64.4 billion in August 2015. The Treasury Budget data is not seasonally adjusted, so the August deficit cannot be compared to the $112.8 billion deficit registered in July.
Total receipts in August were $231.3 billion while total outlays were $338.4 billion.
Receipts were $20.5 billion more than receipts in August 2015. Total outlays, meanwhile, were $63.2 billion more than the same period a year ago.
The 12-month deficit widened to $529.9 billion from $487.2 billion in July.
Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index. Meanwhile, Import/Export Prices for August will each cross the wires at 8:30 ET.
Russell 2000: +6.8% YTD
S&P 500: +4.1% YTD
Dow Jones: +3.7% YTD
Nasdaq: +3.0% YTD
DJ30 -258.32 NASDAQ -56.63 SP500 -32.02 NASDAQ Adv/Vol/Dec 539/1.897 bln/2392 NYSE Adv/Vol/Dec 338/1.006 bln/2734 3:30 pm :
The dollar index was up +0.5% around the 95.61 level, weighing on commodities overall
Commodities, as measured by the Bloomberg Commodity Index, were -1.3% around the 83.02 level
Crude oil erased yesterday's gains, closed near session lows below the $45.00/barrel handle support ahead of tonight's API data
October crude oil futures fell $1.37 (-3.0%) to $44.92/barrel
IEA data highlights:
The IEA lowered global demand forecasts for FY16 by ~100k barrels per day for FY16 to +1.3 mln barrels a day. The IEA also lowered FY17 demand growth forecasts to +1.2 mln barrels per day, about 200k less than previous estimates.
Decline in oil demand in China and Europe were also cited by the IEA as factors influencing the updated forecast.
Saudi Arabia takes the top spot from US shale as the world's largest producer.
IEA estimated that the U.S. had shut in 460k barrels a day of production, while Saudi Arabia pumped out an extra 400k barrels a day.
OPEC producer United Arab Emirates increased oil production by 20k barrels per day to 3.09 mln barrels, its highest output level ever.
Data reminders:
The next OPEC meeting will take place in Algiers, Algeria from Sept 26-28
API data will be released today after the bell
Weekly EIA petroleum data will be released Wed at 10:30 am ET
Rig count data will be released Friday at 1 pm ET
Natural gas ended afternoon pit trading unchanged ahead of Thursday's EIA inventory data
October natural gas closed flat at $2.91/MMBtu
Weekly EIA data will be released Thursday at 10:30 am ET
In precious metals, gold & silver traded modestly lower & in tandem with each other as the dollar index surged
December gold ended today's session down $1.60 (-0.1%) to $1324.00/oz
December silver closed today's session $0.02 lower (-0.1%) at $18.98/oz
Today's session began on a lower note as a lack of carry over buying interest and a downturn in crude oil weighed on index futures. Global bourses finished on a mixed note, shrugging off the positive bias from yesterday's rebound here at home. China's Shanghai Composite (+0.1%) finished little changed despite a string of stronger-than-expected economic data. Meanwhile, European markets finished with losses, carving out lows during the U.S. session.
A bearish reading of the International Energy Agency's monthly report also contributed to early weakness. The IEA lowered its global demand growth forecast for 2016 to 1.3 million barrels per day (previous: 1.4 million barrels) while also cutting its 2017 estimates to 1.2 million barrels (previous: 1.4 million barrels). The disappointing outlook has called into question the potential timetable for an oil market re-balancing. At the end of the session, October crude oil futures fell $1.37 (-3.0%) to $44.92/barrel.
In terms of market data, the Treasury Budget for August announced today showed a deficit of $107.1 billion versus a deficit of $64.4 billion in August 2015. The Treasury Budget data is not seasonally adjusted, so the August deficit cannot be compared to the $112.8 billion deficit registered in July.
The major averages ended the Tuesday affair sharply lower as rising long-term interest rates pressured the broader market. The upswing in interest rates was led by growing uncertainty surrounding the future path and effectiveness of global central bank policy. Leading the three major US indices lower today, the S&P 500 was down 32.02 points (-1.48%) to 2127.02. The Dow Jones Industrial Average lost 258.32 points (-1.41%) to 18066.75, and the Nasdaq Composite posted the most tame session, shedding only 56.63 points (-1.09%) to 5155.25.
To that end, every S&P sector turned in a negative session today with Technology (XLK 46.59, -0.34 -0.72%) posting the softest losses. Component Intuit (INTU) was among the worst performers today following a premarket downgrade of the stock to an Underweight rating from an Equal Weight at Morgan Stanley. Other sectors as measured by the S&P closed the day XLE -2.86%, IYZ -2.51%, XLB -1.86%, XLF -1.77%, XLI -1.47%, XLY -1.42%, XLFS -1.41%, XLU -1.38%, XLV -1.34%, XLP -1.23% as the Energy complex lagged.
In the S&P 500 Information Technology (776.87, -4.94 -0.63%) sector, action turned lower to start and never recovered. Component Apple (AAPL 108.12, +2.68 +2.55%) turned in a solid performance today on the back of some favorable pre-order numbers for the company's latest iPhone iteration. Other names in the space which managed to stave off the weakness today included PYPL +2.81%, SWKS +1.49%, AVGO +0.46%, QRVO +0.30%, WDC +0.11%, EA +0.04%.
Other notable news items among sector components:
Apple (AAPL) posted a strong session in the midst of a broader market sell-off following favorable pre-orders announced by both Sprint (S 6.56, -0.36 -5.20%) and T-Mobile US (TMUS 45.34, -0.59 -1.28%).
Facebook (FB 127.21, -1.48 -1.15%) confirmed details of Messenger Platform v1.2 including the beginning of messages with payments.
NVIDIA (NVDA 59.87, -0.88 -1.45%) unveiled a palm-sized, energy-efficient artificial intelligence (AI) computer that automakers can use to power automated and autonomous vehicles for driving and mapping.
The U.S. Federal government has awarded Accenture (ACN 110.53, -2.23 -1.98%) Federal Services
FedRAMP certification for the Accenture Federal Cloud ERP solution, determining that its enterprise resource planning solution is compliant with federal security requirements.
CTERA Networks announced a $25 million investment round led by Bessemer Venture Partners with additional participation from Cisco (CSCO 31.06, -0.38 -1.21%), and with Vintage Investment Partners joining as a new investor.
Alliance Data (ADS 213.41, -3.08 -1.42%) announced a card services performance update. Detailed in the release, net charge offs as a % of average receivables were 4.1% for the month ending August 31, 2016. ADS noted this measure was tracking to its guidance of 4.9% to 5.0% principal loss rates for the third quarter and full year 2016, respectively.
Elsewhere in the tech space:
Pandora Media (P 14.10, -0.19 -1.33%) announced the signing of direct licensing agreements for recorded music with Merlin Network, Sony Music (SNE 32.16, -0.51 -1.56%), and Universal Music Group along with The Orchard and over 30 other independent labels/distributors. Financial terms of the deal were not disclosed.
Intersil (ISIL 21.70, +1.94 +9.82%) to be acquired by Renesas (RNECF 6.08, +0.43 +7.61%) for $22.50 per share in cash, or about $3.2 billion.
FXCM (FXCM 9.25, +0.07 +0.76%) reported August 2016 retail customer trading volumes were down 18% compared to a year ago to $270 billion.
Action Semi (ACTS 2.08, +0.07 +3.48%) entered into a merger agreement for going private transaction at $2.20 per share in cash.
Cincinnati Bell (CBB 4.08, -0.16 -3.77%) announced it plans to offer $425 million aggregate principal amount of its Senior Notes due 2024.
XO Group (XOXO 18.40, -0.19 -1.02%) acquired proposal story platform How He Asked. Financial terms of the deal were not disclosed.
Sanmina (SANM 26.91, -0.15 -0.55%) announced a $150 million stock repurchase program.
Mimecast (MIME 15.60, -1.48 -8.67%) filed a $80 million ordinary share offering by selling shareholders.
Luxoft Holding (LXFT 52.11, -1.30 -2.43%) acquired Pelagicore AB. Financial terms of the deal were not disclosed.
Vivint Solar (VSLR 2.98, -0.20 -6.29%) received an unfavorable ruling in a lawsuit against SunEdison (SUNEQ 0.04, +0.00 +2.87%) related to failed merger, according to the Wall Street Journal.
RADA Electronics (RADA 0.54, -0.02 -3.53%) to commence a 1:2 reverse split, effective tomorrow.
Sphere 3D (ANY 0.63 +0.03 +5.45%) announced they are exploring a formal non-binding expression of interest to sell certain assets and other options to increase shareholder value, in late stage discussions to seek additional access to capital.
Analyst actions:
WDC was upgraded to Buy from Neutral at Longbow,
TXN was upgraded to Outperform from Mkt Perform at Bernstein,
KLAC was upgraded to Outperform from Neutral at Credit Suisse,
SYMC and QLYS were upgraded to Buy at Wunderlich,
OTEX was upgraded to Outperform from Market Perform at BMO Capital;
NFLX was downgraded to Underperform from Neutral at Macquarie,
MOBL and CHKP were downgraded to Hold from Buy at Wunderlich,
INTU was downgraded to Underweight from Equal Weight at Morgan Stanley,
PRGS was downgraded to Neutral from Buy at Ladenburg Thalmann,
ISIL was downgraded to Hold from Buy at Drexel Hamilton;
XRX and SBAC were initiated with Buy ratings at SunTrust,
ROG was initiated with a Buy at Needham,
XPLR was initiated with a Buy at Maxim Group,
BR was initiated with an Overweight at Atlantic Equities
From Briefing.com: 4:31 pm Action Semi enters into definitive merger agreement for going private transaction at $2.20/share in cash (shares halted) (ACTS) : The merger consideration represents a premium of 49.7% to the closing price of the co's ADSs on May 18, 2016, the last trading day prior to the co's announcement of its receipt of a "going-private" proposal, and a premium of 40.6% to the volume weighted average closing price of the co's ADSs during the 30 trading days prior to its receipt of a "going-private" proposal. The Buyer Consortium intends to fund the merger through available cash of the co and its subsidiaries.
The co's board of directors, acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the Board approved the Merger Agreement and the merger and resolved to recommend that the co's shareholders vote to authorize and approve the Merger Agreement and the merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its independent financial and legal advisors.
The merger, which is currently expected to close during the last quarter of 2016, is subject to customary closing conditions including the approval of the Merger Agreement by an affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy at a meeting of the co's shareholders which will be convened to consider the approval of the merger agreement and the merger
4:29 pm Amkor names Megan Faust CFO (AMKR) :
Ms. Faust joined Amkor in 2005 and brings more than 20 years of finance and accounting experience to her new position as CFO, including her service as Corporate Controller of Amkor since 2010.
Ms. Faust succeeds Joanne Solomon, who has left the co to pursue other opportunities.
4:10 pm : The stock market began the week on a sharply higher note as market participants dialed back rate hike expectations for the coming months. The major averages finished broadly higher, retracing the lion's share of Friday's losses. The Nasdaq Composite (+1.7%) settled slightly ahead of the S&P 500 (+1.5%) and the Dow Jones Industrial Average (+1.3%).
Interest rates remained in focus at the start of the session as participants mulled over a continued downturn in global bond markets. Early weakness was attributed to persistent uncertainty regarding the future path of global monetary policy. Recall that last week the European Central Bank disappointed investors by voting to leave its monetary policy stance unchanged. Furthermore, ECB President Mario Draghi indicated that the Governing Council did not discuss expanding the asset purchase program at the central bank's latest meeting.
Equity indices shook weakness in the opening hour of trade as Atlanta Fed President (non-FOMC voter) Dennis Lockhart and Minneapolis Fed President (non-FOMC voter) Neel Kashkari struck divergent tones on the future path of interest rate normalization. Mr. Lockhart signaled that recent data seriously warrants the discussion of raising rates. However, Mr. Kashkari stated that there's no urgency in raising rates at this time.
The major averages notched fresh session highs shortly after Fed Governor Lael Brainard reaffirmed her dovish stance. Governor Brainard stated that the case for preemptive tightening is less compelling given persistently low inflation and continued slack in the labor market. Ms. Brainard continues to advocate a cautious approach given the limited nature of the Fed's policy toolkit. In response, the implied probability of a rate hike at the September meeting fell to 15.0% from 24.0% in the prior session.
The benchmark index settled near its best level of the day, testing resistance near the 2160 price level. All ten sectors ended in the green with technology (+1.7%), utilities (+1.7%), consumer staples (+1.9%), and telecom services (+2.0%) leading the pack. On the flipside, the commodity-sensitive energy (+0.9%) and materials (+1.0%) sectors finished at the bottom of the leaderboard.
The defensively-oriented consumer staples sector (+1.9%) outperformed as the group recovered from last Friday's 2.1% decline. In the group, Dow component Wal-Mart (WMT 71.94, +1.64) demonstrated relative strength after being upgraded to "Outperform" from "Market Perform" at Cowen. Meanwhile, Philip Morris International (PM 100.64, +3.10) ended higher by 3.2% after Goldman added the stock to its conviction buy list. The broader sector trimmed its month-to-date loss to 1.4%.
In the technology sector (+1.7%), HP (HPQ 14.49, +0.54) gained 3.9% after announcing that it will acquire Samsung's (SSNLF 1250.00, 0.00) printer business for approximately $1.05 billion. Meanwhile, Apple (AAPL 105.44, +2.31) gained 2.2%, recovering from last week's 4.3% decline. The stock was under pressure after unveiling its iPhone 7 device last Thursday. The PHLX Semiconductor Index finished higher by 2.0%, narrowing its month-to-date loss to 2.2%.
Biotechnology outperformed in the health care space (+1.6%), evidenced by the 3.0% gain in the iShares Nasdaq Biotechnology ETF (IBB 287.11, +8.48). In the ETF, Mylan Labs (MYL 41.33, +1.44) rebounded 3.6%. The sub-group also benefited from reports that activist investor Starboard has taken a 4.6% stake in Perrigo (PRGO 95.23, +6.52).
The financial sector (+1.2%) ended behind the broader market as investors trimmed rate hike expectations and as Treasury yields pulled back. In the group, Wells Fargo (WFC 48.54, -0.18) underperformed as the stock continues to see weakness from last Thursday's settlement with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Office of the LA City Attorney.
Treasuries ended modestly higher, recovering from relative weakness at the start of the session. The yield on the 2-yr note fell two basis points to 0.77% while the yield on the 10-yr note ticked down to 1.67% (-1 bps).
Today's participation was above the recent average as more than 992 million shares changed hands on the NYSE floor.
There was no economic data of note released today.
Tomorrow's economic data will be limited to the Treasury Budget for August, which will be released at 14:00 ET.
Russell 2000: +8.6% YTD
S&P 500: +5.6% YTD
Dow Jones: +5.2% YTD
Nasdaq: +4.1 % YTD
DJ30 +239.62 NASDAQ +85.98 SP500 +31.23 NASDAQ Adv/Vol/Dec 2074/1.832 bln/789 NYSE Adv/Vol/Dec 2159/992.3 mln/843 3:30 pm :
The dollar index was down -0.2% around the 95.16 level
Commodities, as measured by the Bloomberg Commodity Index, were nearly flat (+0.07%) around the 84.08 level
Crude oil closed a volatile session near highs of the day ahead of tomorrow's monthly IEA report
October crude oil futures rose $0.41 (+0.9%) to $46.29/barrel
Monthly IEA data will be released tomorrow morning
API data will be released tomorrow after the bell
Weekly EIA data will be released Wed at 10:30 am ET
Rig count data will be released Friday at 1 pm ET
The next OPEC meeting will take place in Algiers, Algeria from Sept 26-28
Contributing factors affecting the price of oil include:
OPEC released its monthly market report this morning, revised FY17 non-OPEC supply estimates upward by 0.35 mb/d to 56.52 mb/d.
Non-OPEC oil supply in 2016 is now expected to contract by 0.61 mb/d, following an upward revision of 0.18 mb/d from the August MOMR to avg 56.32 mb/d. This has been mainly due to a lower-than-expected decline in US tight oil and a better-than-expected performance in Norway, as well as the early start-up of Kashagan field in Kazakhstan.
World oil demand growth in 2016 is now anticipated to increase by 1.23 mb/d after a marginal upward revision, mainly to reflect better-than-expected OECD data for the first half of the year. Oil demand in 2016 is expected to avg 94.27 mb/d.
Demand for OPEC crude in 2016 is estimated to stand at 31.7 mb/d, some 1.7 mb/d over last year. In 2017, demand for OPEC crude is forecast at 32.5 mb/d, an increase of 0.8 mb/d over the current year.
Natural gas erased all of Friday's losses, closed near 2-week highs
October natural gas closed $0.12 higher (+4.3%) at $2.91/MMBtu
Weekly EIA inventory data will be released Thursday at 10:30 am ET
In precious metals, gold & silver closed lower for the fourth consecutive session, despite the dollar index declining
December gold ended today's session down $9.00 (-0.7%) to $1325.60/oz
December silver closed today's session $0.36 lower (-1.9%) at $19.00/oz
Today's session began on a lower note as participants responded to a downturn in global markets. Equities pulled back overnight, picking up where U.S. markets left off on Friday. The mover lower was facilitated by growing uncertainty regarding the path of global monetary policy and rising interest rates. Recall that Treasuries tumbled following Thursday's disappointing policy statement from the European Central Bank. The central bank opted to maintain its monetary policy stance, leaving interest rates and asset purchases unchanged.
The broader market trimmed losses in the first hour of trade as participants mulled recent commentary from Atlanta Fed President (non-FOMC voter) Dennis Lockhart and Minneapolis Fed President (non-FOMC voter) Neel Kashkari. President Lockhart indicated that incoming data warrants a serious discussion regarding a potential interest rate hike while President Kashkari believes there's no urgency in raising rates at this time. Both Fed officials took a somewhat standoffish approach, offering no real time table. In response, the implied probability of a rate hike at the September meeting fell to 21.0% from 24.0% in the prior session.
The Monday session was capped off with firm gains as all three major US indices posted a recovery off last week's weakness. Leading the charge higher, the Nasdaq Composite gained just shy of 86 points (+1.68%) to 5211.89. The S&P 500 added a solid 31.23 points (+1.47%) to 2159.04, and the Dow Jones Industrial Average was hampered (albeit modestly) by early weakness in the energy complex, specifically as October crude oil futures rallied off morning lows to end up $0.41 (+0.9%) to $46.29/barrel. To that end, the Dow staved off selling pressure to advance 239.62 points (+1.32%) to 18325.07.
Technology (XLK 46.93, +0.77 +1.67%) finished the first trading day of the week firmly in the green. Component HP Inc. (HPQ 14.49, +0.54 +3.90%) was the strongest gainer today following the acquisition of Samsung Electronics (SSNLF 1250, flat) printer business for $1.05 billion plus equity investment payments through open market purchases. Other sectors as measured by the S&P ended the day IYZ +3.35%, XLP +1.88%, XLU +1.77%, XLV +1.48%, XLY +1.40%, XLI +1.28%, XLF +1.12%, XLE +0.99%, XLFS +0.97%, XLB +0.95% with all areas showing strength.
In the S&P 500 Information Technology sector (781.81, +13.05 +1.70%), trading jogged higher and higher as the session progressed, ultimately ending near highs. Component Microsoft (MSFT 57.05, +0.84 +1.49%) finished with an equally impressive session of its own following recent weakness as news that the company entered a six-year agreement with HP Inc. (HPQ) to deploy Dynamics to HPQ employees drove the stock higher. Other names in the space which out-performed included ADS +3.75%, ATVI +2.77%, LRCX +2.63%, AMAT +2.53%, NTAP +2.51%, QRVO +2.44%, SWKS +2.37%, AVGO +2.30%, XRX +2.29%, MCHP +2.29%, AAPL +2.24%.
Other notable news items among sector components:
HP Inc. (HPQ) to acquire Samsung Electronics Co., Ltd.'s (SSNLF) printer business in a deal valued at $1.05 billion. The acquisition is expected to be accretive in the first full year following closing, with cost synergies and a strong financial model. The transaction is expected to close within 12 months pending regulatory review and other customary closing conditions. After closing, Samsung has agreed to make a $100 million to $300 million equity investment in HP through open market purchases.
Microsoft (MSFT) entered a six-year agreement with HP Inc. (HPQ) to deploy Microsoft Dynamics to thousands of employees across HP, dramatically enhancing collaboration across marketing, sales and service operations. With Dynamics, as well as Azure, Office 365 and other Microsoft Cloud solutions, HP has invested in the sales and service collaboration platform it needs to deliver a seamless sales experience for customers and partners while increasing the company's performance and economies.
Qualcomm (QCOM 62.25, +1.73 +2.86%) announced the opening of Qualcomm Communication Technologies (Shanghai) Co. Ltd., a semiconductor test facility in the Waigaoqiao (WGQ) free-trade zone in Shanghai, and its first foray into providing manufacturing services for semiconductors.
CSRA (CSRA 26.78, +0.58 +2.21%) was awarded a contract to continue providing systems engineering and technical assistance support for the Joint Integrated Air and Missile Defense Organization (JIAMDO). The single-award contract was won as a recompete and is valued at $53 million, over a five-year period.
Oracle (ORCL 40.68, +0.65 +1.62%) extended its tender offer in connection with the acquisition of
NetSuite (N 110.05, +0.04 +0.04%) until October 6 to facilitate the completion of outstanding antitrust reviews.
Sanofi (SNY 39.82, +0.63 +1.61%) and Verily Life Sciences LLC, (formerly Google Life Sciences), an
Alphabet (GOOGL 798.82, +10.34 +1.31%) company, announced the launch of Onduo, a joint venture created through Sanofi and Verily's diabetes-focused collaboration.
Equinix (EQIX 366.00, +3.22 +0.89%) was selected by the Monet Submarine Cable investors to provide U.S. facilities and services for the next-generation cable landing station architecture to support the Monet Submarine Cable System. Monet is a planned submarine cable that is currently designed to deliver over 60 terabits of capacity between the U.S. and Brazil. Monet is owned by Algar Telecom, Angola Cables, Antel and Alphabet's (GOOGL) Google.
Elsewhere in the tech space:
Verizon (VZ 52.57, +0.75 +1.45%) acquired Sensity Systems. Financial terms of the deal were not disclosed.
SolarCity (SCTY 17.80, +1.03 +6.14%) raised $305 million in its second cash equity transaction. A private investment fund affiliated with Quantum Strategic Partners Ltd. and advised by Soros Fund Management LLC provided the equity investment in a portfolio of residential, commercial and industrial solar projects. The transaction also included a fully amortizing, 18-year loan that was syndicated to five high-quality institutional investors.
MediaNews Group Inc., the largest shareholder of Monster Worldwide (MWW 3.52, +0.08 +2.33%), with an ownership interest of 11.6% of Monster's outstanding shares, delivered an open letter to Monster shareholders. Among other points, the shareholder noted, "We want to reiterate that we will not tender our shares in the current tender offer and we intend to exercise our appraisal rights to receive the actual value of our shares -- not the undervalued Randstad price -- in the event the current Randstad deal closes."
Open Text (OTEX 65.15, +5.38 +9.00%) to acquire Dell EMC's Enterprise Content Division, including Documentum for $1.62 billion. ECD offers a suite of leading Enterprise Content Management solutions with deep industry focus, including the Documentum, InfoArchive, and LEAP product families. The company expects the deal to be immediately accretive to earnings and sees the closing of said deal within 90-120 days.
Syntel (SYNT 45.72, +5.03 +12.36%) announced that its Board of Directors has declared a special cash dividend of $15 per share. In connection with the one-time repatriation, the Company expects to recognize a one-time tax expense of about $264 million (net of foreign tax credits) in the third quarter of 2016. The special cash dividend will be funded through dividends to the company by U.S. subsidiaries, the one-time repatriation of about $1.24 billion of cash held by the company's foreign subsidiaries and a portion of borrowings under a new senior credit facility. The company has expanded its borrowing capacity to $500 million under the new senior credit facility while paying in full and terminating the $200 million prior existing senior credit facility. In connection with the one-time repatriation, the company expects to recognize a one-time tax expense of about $264 million (net of foreign tax credits) in the third quarter of 2016. As a result of the additional tax expense and anticipated changes to "other income" which will result from the issuance of the special cash dividend, the company is revising its outlook for 2016 EPS from the previously announced $2.55 to $2.70 earnings per share to a loss of $0.60 to $0.75 per share. There is no update at this time to the outlook for 2016 revenue or margins.
Tesla Motors (TSLA 198.30, +3.83 +1.97%) detailed Autopilot Version 8 in blog post, stating onboard radar will be used to provide 'more advanced signal processing'.
TerraForm Global (GLBL 3.58, -0.08 -2.19%) and TerraForm Power (TERP 13.28, +0.12 +0.91%) received non-compliance Nasdaq letters and requested hearings.
Intelsat S.A. (I 2.83, +0.18 +6.79%) powered by its satellite backbone, updated the in-service date for the Intelsat 33e satellite, successfully launched on 24 August 2016. The in-service date is being adjusted from fourth quarter 2016 to first quarter 2017.
NXT-ID (NXTD 3.40, -0.69 -16.85%) announced the effective date of a 1:10 reverse stock split. The reverse split became effective after the close of trading on NASDAQ on Friday, September 9, 2016. The shares began trading on a split-adjusted basis commencing at the open this morning.
Dangdang (DANG 6.60, +0.07 +1.07%) shareholders approved the going private transaction at $6.70 per share, and the company expects transaction to close as soon as practicable.
Analyst actions:
P was upgraded to Buy from Neutral at SunTrust;
TRUE, RUBI were downgraded to Underweight from Equal Weight at Morgan Stanley,
PAY was downgraded to In-Line from Outperform at Imperial Capital;
PANW was initiated with a Buy at Rosenblatt,
DMD was initiated with a Buy at Craig Hallum