Sector Investing

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From Briefing.com: 4:10 pm : The stock market ended on a cautious note after enduring a sloppy session that lacked concerted sector leadership. The S&P 500 settled right below its flat line, while the Russell 2000 lost 0.5% after displaying intraday volatility.

Equities began the first session of May near their flat lines amid the lack of leadership from overseas as most global markets were closed for Labor Day. Despite the quiet open, small caps were active from the get-go as the Russell 2000 retreated as much as 1.1% during the first hour of action. The index halted its slide at the 200-day moving average (1113.73), which has been acting as an area of support since mid-April.

The subsequent reversal took place as fast as the early slide, placing the Russell 2000 ahead of the remaining indices. The late-morning strength began fading into the afternoon, which sent the small-cap index back towards its morning low.

Meanwhile, the S&P 500 spent the bulk of the afternoon within four points of its flat line as individual sectors traded in mixed fashion. Most notably, consumer discretionary (+0.4%) and utilities (+0.3%) outperformed throughout the session, with the utilities sector extending its 2014 advance to 14.0%.

For its part, the discretionary sector was boosted by media names amid reports indicating AT&T (T 35.58, -0.12) approached DirecTV (DTV 80.76, +3.16) about a potential $40 billion acquisition. Momentum names also served as support to the sector as Amazon.com (AMZN 307.89, +3.76), Netflix (NFLX 336.52, +14.48), and Priceline.com (PCLN 1180.60, +22.85) jumped between 1.2% and 4.5%.

Staying on the momentum theme, high-growth names also played a part in the outperformance of the Nasdaq Composite (+0.3%). High-beta listings held up well after Yelp (YELP 64.02, +5.70) reported better than expected earnings and revenue. Another measure of support came from the shares of Facebook (FB 61.15, +1.37), which rallied 2.3% after being added to the U.S. Focus List at Credit Suisse.

Elsewhere, biotechnology climbed, which also contributed to the Nasdaq's relative strength. The iShares Nasdaq Biotechnology ETF (IBB 232.50, +2.25) gained 1.0%, while the broader health care sector ended flat. The third-largest group saw an intraday spike amid reports Pfizer (PFE 31.15, -0.13) may up its bid for AstraZeneca (AZN 81.09, +2.04).

Also of note, the leading sector from April, energy (-0.4%), finished near the bottom of the leaderboard as top component (and Dow member) ExxonMobil (XOM 101.41, -1.00) weighed. The stock lost 1.0% after beating earnings estimates on below-consensus revenue.

On the fixed income side, Treasuries rallied throughout the session, which was a bit perplexing. The benchmark 10-yr yield fell to 2.61%, settling not far above its lowest close of the year (2.58%).

That move was supported in part by the weaker than expected initial claims report, but the interesting thing was that it held up in the wake of the stronger than expected ISM Index and in front of the April employment report on Friday. The continued buying interest in the benchmark note, which has been seen all year, isn't something one would expect to see if there was a strong belief that the economy is getting ready to hit escape velocity.

Participation was a bit below average as 682 million shares changed hands at the NYSE floor.

Looking back at today's data:

The initial claims level increased to 344,000 for the week ending April 26 from an upwardly revised 330,000 (from 329,000) for the week ending April 19. That was the highest initial claims reading since February, while the Briefing.com consensus expected the claims level to fall to 315,000. There were no special factors cited for the increase, but in all likelihood, the recent volatility has resulted from seasonal adjustment issues surrounding the Easter holiday.
Personal income increased 0.5% in March after increasing an upwardly revised 0.4% (from 0.3%) in February. The Briefing.com consensus expected income to increase 0.4%.
Personal spending also topped expectations, increasing 0.9% in March after increasing an upwardly revised 0.5% (from 0.3%) in February.
Core PCE prices increased 1.2% y/y and remain well below the Fed's 2.0% target.
The April Challenger Job Cuts report indicated a 6.0% year-over-year increase to follow the previous decline of 30.2%.
The ISM Manufacturing Index increased to 54.9 in April from 53.7 in March. The Briefing.com consensus expected the ISM Manufacturing Index to increase to 54.5. The gain in the ISM Index was in-line with the improvements reported in the regional Federal Reserve manufacturing surveys released throughout April.
Construction spending increased 0.2% in March after falling a downwardly revised 0.2% (from +0.1%) in February. The Briefing.com consensus expected construction spending to increase 0.4%. The extreme winter weather in January and February did not lead to a release in pent up demand, suggesting the weather effects may have been overstated.

Tomorrow, the Nonfarm Payrolls report for April (Briefing.com consensus 210,000) will be released at 8:30 ET, while March Factory Orders (consensus 1.6%) will be announced at 10:00 ET.

S&P 500 +1.9% YTD
Dow Jones Industrial Average -0.1% YTD
Nasdaq Composite -1.2% YTD
Russell 2000 -3.0% YTD

DJ30 -21.97 NASDAQ +12.90 SP500 -0.27 NASDAQ Adv/Vol/Dec 1288/1.91 bln/1367 NYSE Adv/Vol/Dec 1753/682.2 mln/1316

3:30 pm :

June gold traded in negative territory after the FOMC announced yesterday that it would continue its tapering path and reiterated an upbeat outlook for the economic future of the U.S. The yellow metal dipped to a session low of $1277.30 per ounce and eventually settled with a 1.0% loss at $1283.40 per ounce.
July silver also chopped around in the red. It fell as low as $18.86 per ounce, its lowest level since July 2013, and settled with a 0.7% loss at $19.03 per ounce.
June crude oil extended yesterday's losses as the dollar index traded slightly higher. The energy component touched a session low of $98.80 per barrel when pit trade opened and inched higher until late morning action. It brushed a session high of $99.91 per barrel and eventually settled with a 0.3% loss at $99.48 per barrel.
June natural gas fell deeper into negative territory following bearish inventory data. The EIA reported that for the week ending Apr 25, inventories showed a build of 82 bcf when a smaller build of 75-77 bcf was anticipated. It sold-off from a session high of $4.81 per MMBtu and settled at its session low of $4.71 per MMBtu, booking a loss of 2.3%.

4:49PM Micros Systems beats by $0.06, beats on revs; raises FY14 guidance (MCRS) 51.95 +0.45 : Reports Q3 (Mar) adj. earnings of $0.72 per share, $0.06 better than the Capital IQ Consensus Estimate of $0.66; revenues rose 10.8% year/year to $349 mln vs the $330.98 mln consensus.

Co issues upside guidance for FY14, raises EPS to $2.53-2.57, excluding non-recurring items, from $2.46-2.51 vs. $2.48 Capital IQ Consensus; raises FY14 revs to $1.360-1.385 bln from $1.32-1.345 bln vs. $1.34 bln Capital IQ Consensus Estimate.

4:39PM Univ Elec beats by $0.08, beats on revs; guides Q2 EPS in-line, revs in-line (UEIC) 36.70 -0.65 : Reports Q1 (Mar) earnings of $0.40 per share, $0.08 better than the Capital IQ Consensus Estimate of $0.32; revenues rose 13.2% year/year to $129.8 mln vs the $123.28 mln consensus.

Business Category revenue was $118.4 million, compared to $104.6 million. The Business Category contributed 91.2% of total net sales in both periods. Consumer Category revenue was $11.4 million, compared to $10.1 million. The Consumer Category contributed 8.8% of total net sales in both periods. Gross margins were 28.3%, compared to 28.6%.

Co issues in-line guidance for Q2, sees EPS of $0.56-0.66 vs. $0.61 Capital IQ Consensus Estimate; sees Q2 revs of $141-149 mln vs. $144.22 mln Capital IQ Consensus Estimate.

4:33PM Multi-Fineline misses by $0.12, misses on revs; guides Q3 revs below consensus (MFLX) : Reports Q2 (Mar) loss of $1.00 per share, excluding non-recurring items, $0.12 worse than the Capital IQ Consensus Estimate of ($0.88); revenues fell 32.2% year/year to $117.8 mln vs the $126.35 mln consensus.

Co issues downside guidance for Q3, sees Q3 revs of $115-130 mln vs. $145.64 mln Capital IQ Consensus Estimate.

4:30PM ON Semiconductor beats by $0.02, reports revs in-line; guides Q2 revs in-line (ONNN) 9.38 -0.03 : Reports Q1 (Mar) earnings of $0.17 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.15; revenues rose 6.9% year/year to $706.5 mln vs the $711.56 mln consensus. Co issues in-line guidance for Q2, sees Q2 revs of $738-768 mln vs. $741.61 mln Capital IQ Consensus Estimate.

"Backlog level for the second quarter of 2014 represents approximately 80 to 85 percent of our anticipated second quarter 2014 revenue. Average selling prices for the second quarter of 2014 are expected to be down approximately one percent when compared to the first quarter of 2014. The outlook for the second quarter of 2014 includes stock-based compensation expense of approximately $11 to $14 million."

4:14PM Ingram Micro expands mobility services offerings with acquisition of Global Mobility Products (IM) 26.85 -0.11 : IM today announced it has acquired Global Mobility Products (GMP), a Canadian-based leading provider of mobile reverse logistics, repair and asset recovery services. As Ingram Micro Mobility further extends its reach into the Canadian mobility market, the acquisition of GMP is expected to provide the business with a superior, end-to-end forward and reverse logistics value proposition, enhancing the company's ability to provide a full suite of wireless device lifecycle services in Canada.

GMP's customers include Canada's largest mobile operators and retailers, as well as leading manufacturers. GMP's high-touch services include reverse logistics, asset recovery and repair services for device refurbishing and reselling from contract customers and the open market. The company also provides returns management and creates adaptive programs to meet customer-specific applications. Providing services at approximately 3,000 retail locations through its recently acquired 46,000 square feet state-of-the-art repair facility, GMP provides Ingram Micro Mobility customers with added capabilities and value-added services to supplement its already robust suite of offerings.
Founded in 1995 and headquartered in Burlington, Ontario, GMP has approximately 150 employees and has established a strong Canadian presence, with representation throughout the country in all provinces. GMP will operate as a wholly owned subsidiary of Ingram Micro. Founding principal John Gnocato will be moving to other ventures. Operating principal Ryan Djordjevic will continue to lead the company as a senior director, reporting directly to Nejdawi.

4:06PM Rubicon Tech misses by $0.09, beats on revs; guides Q2 EPS below consensus (RBCN) 10.18 +0.05 : Reports Q1 (Mar) loss of $0.43 per share, $0.09 worse than the Capital IQ Consensus Estimate of ($0.34); revenues rose 72.3% year/year to $14.3 mln vs the $13 mln consensus.

Co issues downside guidance for Q2, sees EPS of ($0.46) to ($0.38) vs. ($0.20) Capital IQ Consensus Estimate.
"We expect the LED market to continue to strengthen in the second quarter resulting in some pricing improvement, particularly for four-inch material. Core sales volumes in the second quarter will decline somewhat as we have exhausted our excess boule inventory. We also believe we will see meaningfully higher wafer revenue in the second quarter which will improve utilization but, in the near-term, will not improve margins. With reduced core revenue offsetting increased wafer revenue, we expect total revenue in the second quarter to be similar to the first quarter. We expect our loss per share in the second quarter to be between $0.38 and $0.46, based on a share count of 26.1 million shares."

12:29PM Notable movers of interest (SCANX) : The following are some of today's most notable movers of interest, categorized by market capitalization (large cap over $10 billion and mid cap between $2-10 billion) and ranked by % change (all stocks over 100K average daily volume).

Large Cap Gainers

TMUS (31.76 +8.43%): Missed on Q1 EBITDA ests; lowered FY14 EBITDA guidance; raised postpaid net add guidance; renewed reports Sprint (S) is preparing a bid for TMUS.
DTV (81.72 +5.31%): AT&T (T) is in discussions with DTV over $40 bln acquisition, according to reports.
LNKD (162.11 +5.63%): Trading higher following YELP results; co reports earnings today after the close.

Large Cap Losers

SLM (9.04 -64.89%): Replaced Alpha Natural Resources (ANR) in the S&P MidCap 400 after being replaced by Navient (NAVI), its spin-off, in the S&P 500; initiated with an Outperform at Credit Suisse; tgt $11;
WDC (83.35 -5.37%): Beat on EPS by $0.06, reported revs in-line.
CAH (65.8 -5.34%): Reported EPS in-line, missed on revs.

Mid Cap Gainers

CTRX (42.4 +12.32%): Beat on EPS by $0.06, beat on revs; guided FY14 EPS in-line, revs in-line.
YELP (65.69 +12.64%): Beat on EPS by $0.02, beat on revs; guided Q2 revs in-line; raised FY14 guidance; upgraded to Outperform from Neutral at Macquarie; upgraded to Overweight from Neutral at Piper Jaffray; upgraded to Outperform from Sector Perform at RBC Capital Mkts; tgt lowered to $60 from $84 at UBS; tgt lowered to $95 from $115 at Pacific Crest.
CW (69.25 +8.3%): Beat on EPS by $0.11, beat on revs; guided FY14 EPS in-line, reaffirmed FY14 revs guidance.

Mid Cap Losers

AVP (13.28 -13.1%): Missed on EPS by $0.09, missed on revs.
JDSU (11.08 -12.55%): Missed on EPS by $0.01, missed on revs; guided Q4 EPS below consensus, revs below consensus; target lowered to $13 at RBC Capital Mkts; tgt lowered to $15 from $18 at MKM Partners.
BVN (11.56 -11.08%): Missed on EPS by $0.07, missed on revs.

11:41AM Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (116) outpacing new lows (91) (SCANX) : Stocks that traded to 52 week highs: ABG, ADMS, AFG, AGN, AHGP, ALL, AMKR, AMT, APH, ARCX, ASX, AZN, BAH, BBW, BFR, BLL, BWC, CBG, CHSP, CMI, CNX, COMM, CORE, CRESY, CSTM, DAL, DEG, DLX, DOX, DTV, DYN, ENB, EQM, ESS, FISV, FUR, GAS, GOL, HAR, HBI, HCC, HGT, HNRG, HOG, HST, HURN, ICGE, ICON, IFF, IHG, INT, IQNT, IT, ITT, KEX, KFRC, KR, LAD, LAWS, LNT, LO, LSI, LUV, LVLT, MACK, MDU, MEMP, MIC, MMM, MO, MPC, MRK, MTOR, MTW, MU, MWV, MYGN, MZA, NFX, NLSN, NVS, ODFL, OILT, OKE, OSHC, PES, PPL, RAD, RDS.B, RHI, SAN, SHO, SLCA, SLG, SNDK, SOHO, SPIL, SRT, STO, SWHC, THRM, TI, TI.A, TSLX, UG, UPIP, UPL, VDSI, VNO, VSEC, WAG, WEC, WIN, WMB, WNRL, XEL

Stocks that traded to 52 week lows: ACPW, AMBR, AMRC, AMWD, ANAD, ANR, ARQL, ATNY, AVD, AVP, BGC, BGFV, BHLB, BKCC, BLFS, BNNY, CERE, CFFI, CHOP, CLUB, COH, CRMB, CTC, CTHR, DMD, DVR, EDMC, ELX, ENTR, ESIO, ESNT, FBR, FCBC, FLXN, GBDC, GNE, GORO, GTIV, HAE, HOS, HTBI, HTLF, ICUI, IKAN, INGN, IPCM, ISNS, JDSU, JOUT, KN, LEI, LGCY, LUB, MCGC, NC, NEWS, NIHD, NYMX, OPLK, ORIT, PAL, PBY, PFSI, PLPC, RELL, RMGN, RTEC, SCOK, SGI, STMP, STNR, SUNS, TCCO, TCRD, TEAR, TEU, TG, TGE, TLOG, TOPS, TR, TRMK, TSRO, TWMC, UBNK, UNXL, VHI, VLGEA, VPRT, WLT, ZIXI

ETFs that traded to 52 week highs: AFK, EFA, EWI, EWK, EWP, EWQ, EWU, EZU, IOO, IXC, IYK, PALL, VGK

ETFs that traded to 52 week lows: none


9:05AM SolarCity launches First-of-its-Kind Solar Service in Nevada (SCTY) 53.25 : Co is launching its solar service in Nevada for the first time. The nation's largest solar power provider will make it possible for many Las Vegas area homeowners to install solar panels for free and pay less for solar electricity than they pay for electricity from the local utility. SolarCity can allow Nevada homeowners to go solar for as little as $30 per month, with design, installation, financing, insurance, monitoring and a performance guarantee included.

SolarCity has already hired more than 400 people in Nevada, and plans to hire 400 more in the next year

8:41AM Interdigital Comm beats by $0.03, beats on revs (IDCC) 34.72 : Reports Q1 (Mar) loss of $0.05 per share, $0.03 better than the Capital IQ Consensus Estimate of ($0.08); revenues rose 22.1% year/year to $57.84 mln vs the $57.12 mln consensus.

Increase in revs was primarily due to increased shipments by, and the coverage of additional products under our agreement with, per-unit licensee Pegatron. Additionally, technology solutions revenue increased as a result of the third quarter Intel (INTC) arbitration award that clarified whether royalties were owed on specific product classes.
10% customers for qtr were Pegatron Corporation (31%) and Sony Corporation of America (17%).