From Briefing.com: 4:20 pm : The stock market ended the Thursday session on an upbeat note despite receiving some disappointing data ahead of the open. The S&P 500 settled higher by 0.5% with nine sectors registering gains, while the Dow Jones Industrial Average (+0.4%) underperformed throughout the trading day.
Shortly before the open, the second revision to Q1 GDP revealed a 1.0% contraction, while the Briefing.com consensus expected a smaller decline of 0.5%. Interestingly, the subpar report led to just a brief stumble in the futures market, which recovered swiftly. That recovery may have been aided by today's initial claims report, which suggested the labor market remains on solid ground.
Even though almost all sectors finished in the green, there was no concerted leadership among the top-weighted sectors. Of the four largest groups, health care (+0.8%) and technology (+0.7%) displayed strength throughout the session, while consumer discretionary (+0.4%) and financials (+0.2%) joined the party in the late afternoon.
Most notably, the technology sector drew significant strength from the shares of Apple (AAPL 635.38, +11.37), which gained 1.8%. The largest tech stock extended its May advance to 7.7%, while also giving a major boost to the Nasdaq Composite. Interestingly, Apple's strength had little impact on the performance of other large cap tech names as Cisco Systems (CSCO 24.68, -0.14), Google (GOOG 560.08, -1.60), and Qualcomm (QCOM 80.19, -0.03) posted slim losses.
Elsewhere, the health care sector ended among the leaders even as biotechnology had a tough time keeping up with the sector. The iShares Nasdaq Biotechnology ETF (IBB 240.96, +1.37) added 0.6% versus a 0.8% gain for the countercyclical sector.
Staying on the countercyclical side, the consumer staples sector (+0.8%) benefitted from a broad rally, while ignoring below-consensus quarterly results from Costco (COST 114.14, -0.10). Shares of the wholesale retailer finished the session with a slim loss of just 0.1%.
Meanwhile, the other two defensive sectors-utilities (+0.1%) and telecom services (unch)-spent the entire session near their flat lines.
Like the two countercyclical sectors, Treasuries also settled in the neighborhood of their flat lines, but not before seeing intraday strength. Treasuries rallied through the first two hours of action, but spent the remainder of the day in a steady retreat. As a result, the 10-yr note slipped four ticks, sending the benchmark yield higher by one basis point to 2.46%.
Participation remained light as only 532 million shares changed hands at the floor of the New York Stock Exchange. In fact, the final tally represented the lowest volume of the year with the count coming in just below the previous 2014 low of 533.3 million that was registered on January 3.
Reviewing today's data:
First quarter GDP was revised down to -1.0% in the second estimate from a 0.1% gain in the advance estimate. GDP increased 2.6% in Q4 2013. The Briefing.com consensus expected GDP to be revised down to -0.5%. The revisions brought GDP down into negative territory for the first time since falling 1.3% in Q1 2011. Almost the entire revision was due to weaker inventory data. Inventory growth, which was down $24.30 billion from fourth quarter levels in the advance estimate, was revised to -$62.70 billion. That reduced GDP growth by an additional 1.1 percentage points (1.62 percentage points in total). Excluding inventories, real final sales were virtually unchanged in the second estimate, up 0.6% vs. a 0.7% gain in the advance estimate. Real final sales are still well below 2013 levels.
The initial claims level fell to 300,000 for the week ending May 24 from a slightly upwardly revised 327,000 (from 326,000) for the week ending May 17. The Briefing.com consensus expected the initial claims level to fall to 318,000. Layoff levels are showing no signs of stability. After weeks of biases from likely seasonal adjustment problems, it looked like claims were stabilizing in the 320,000 to 330,000 range. However, over the past few weeks, claims have flirted with 300,000 a couple of times before retreating back toward 325,000.
Pending home sales for April rose 0.4%, which was worse than the 1.0% increase forecast by the Briefing.com consensus. Today's reading followed last month's unrevised increase of 3.4%.
Tomorrow, Personal Income (Briefing.com consensus 0.3%), Personal Spending (consensus 0.2%), and Core PCE Prices (expected 0.2%) will all be released at 8:30 ET, while the Chicago PMI report for May (consensus 60.3) will cross the wires at 9:45 ET. The day's data will be topped off with the final reading of the May Michigan Consumer Sentiment Survey (expected 81.4), which will be released at 9:55 ET.
S&P 500 +3.9% YTD
Dow Jones Industrial Average +0.7% YTD
Nasdaq Composite +1.7% YTD
Russell 2000 -1.7% YTD
DJ30 +65.56 NASDAQ +22.87 SP500 +10.25 NASDAQ Adv/Vol/Dec 1562/1.57 bln/1072 NYSE Adv/Vol/Dec 2054/532.3 mln/1011
3:30 pm :
June gold fell for a fourth consecutive session despite weakness in the dollar index. The yellow metal briefly poked into positive territory in morning action and brushed a session high of $1260.60 per ounce. However, it quickly retreated back into the red and settled with a 0.2% loss at $1256.30 per ounce.
July silver came off its session low of $18.78 per ounce set moments after floor trade opened and trended higher until late morning action. It touched a session high of $19.09 per ounce but slipped back into negative territory. It eventually settled at $19.02 per ounce, or 0.2% lower.
July crude oil trended higher following inventory data that showed a build of 1.657 mln when a build of 0.1-0.5 mln was anticipated. In addition, gasoline inventories decreased by 1.803 mln when consensus called for a build of 0.0-0.3 mln. The energy component lifted from its session low of $102.87 per barrel set in early morning action and brushed a session high of $103.94 per barrel. It settled at $103.60 per barrel, booking a gain of 0.9%.
July natural gas, on the other hand, fell to a session low of $4.53 per MMBtu on inventory data that showed a build of 114 bcf when a smaller build of 100-110 bcf was expected. It rose into positive territory in late morning action but retreated back into the red. It eventually settled with a 1.1% loss at $4.56 per MMBtu.
6:00 pm Agilent announces global distribution agreement with Cartagenia for CNV analysis (A) : Co announced an agreement for global distribution of Cartagenia's cloud-based software for copy number variation (CN.V) analysis. This agreement will enable Agilent to sell usage-priced annual licenses for Cartagenia's Bench Lab CNV module to small and medium-sized cytogenetic laboratories. The use-based licenses allow labs with limited budgets and little or no bioinformatics resources to gain access to a powerful interpretation support module to draft clinical grade reports.
4:27 pm Power Integrations adds $50 mln to stock repurchase program (POWI) : Co announced that its board of directors has expanded the company's stock-repurchase program, authorizing the use of an additional $50 mln for the repurchase of the company's common stock. Purchases will continue to be made according to price/volume guidelines set by the board of directors. The action follows a prior authorization of $50 mln in October 2012, of which the company has utilized $41 mln, repurchasing approximately 1.1 million shares at an average price of about $38 per share. This total includes 415,000 shares repurchased in the current quarter. Power Integrations had $217.7 million in cash and investments as of March 31, 2014.
4:21 pm OmniVision beats by $0.13, beats on revs; guides Q1 EPS and rev above consensus (OVTI) : Reports Q4 (Apr) earnings of $0.40 per share, excluding non-recurring items, $0.13 better than the Capital IQ Consensus of $0.27; revenues fell 1.5% year/year to $331 mln vs the $292.11 mln consensus.
Co issues upside guidance for Q1, sees EPS of $0.43-0.63 vs. $0.29 Capital IQ Consensus; sees Q1 revs of $360-400 mln vs. $305.53 mln Capital IQ Consensus.
"We are pleased to conclude our fiscal 2014 on a high note. Our financial metrics have continued to improve, with better gross margin, higher cash balance, and lower inventories. We have made meaningful progress on multiple fronts, including the diversification of our revenues into multiple geographies, especially in Asia, and the strong growth in our emerging automotive and security markets," said Shaw Hong, chief executive officer of OmniVision Technologies, Inc. "We are also working on new technologies and applications in our core and emerging markets that have the potential to substantially enhance our market position over the longer term."
4:16 pm Microsoft and salesforce.com (CRM) announce global, strategic partnership (MSFT) : Co announced a strategic partnership to create new solutions that connect salesforce.com's customer relationship management (CRM) apps and platform to Microsoft Office and Windows so customers can be more productive. Terms of the deal were not disclosed.
4:15 pm Avago Tech beats by $0.08, beats on revs (AVGO) : Reports Q2 (Apr) non-GAAP earnings of $0.85 per share, $0.08 better than the Capital IQ Consensus Estimate of $0.77; revenues rose 24.7% year/year to $701 mln vs the $678.2 mln consensus. Co issues guidance for Q3 (Jul), sees Q3 revs of $1.30-1.40 bln, this is not comparable to $728.4 mln Capital IQ Consensus Estimate because it includes the LSI acquisition.
Co reports Q2 non-GAAP gross margin of 54% vs. 51.5-53.5% guidance. Co guides to Q3 non-GAAP gross margin of 54-56%, which is not comparable to consensus due to the LSI acquisition.
4:06 pm Violin Memory beats by $0.01, misses on revs; Co anticipates revenue growth in the second half of this fiscal year (VMEM) : Reports Q1 (Apr) loss of $0.25 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of ($0.26); revenues fell 27.0% year/year to $18.1 mln vs the $23.27 mln consensus.
Fiscal Year 2015 Business Outlook
"Looking forward, we anticipate revenue growth in the second half of this fiscal year as our new products, strategic relationships and more efficient go-to-market model are expected to contribute meaningfully to our results," added DeNuccio.
Fiscal year 2015 non-GAAP gross margin of 52-56%
Fiscal year 2015 non-GAAP operating expenses of $115-125 mln
4:01 pm Violin Memory announces agreement to sell its PCIe product line for ~ $23 mln in cash and the assumption of certain liabilities totaling $0.5 mln (VMEM) : Co announced that it has entered into a definitive agreement to sell its PCIe product line to SK hynix for ~ $23 million in cash and the assumption of certain liabilities totaling $0.5 million. This sale is consistent with the Company's previously announced plan to review strategic alternatives for its PCIe flash memory card business in order to focus on markets where Violin has proven technology leadership and significant growth opportunities.
Large Cap Gainers
TSN (43.38 +6.47%): Co announced $50.00/share cash proposal to acquire Hillshire Brands (HSH).
S (9.42 +2.42%): Co Chairman backs reasoning for T-Mobile (TMUS) deal, according to WSJ story out yesterday afternoon.
BIIB (318.12 +3.01%): Upgraded to Overweight from Neutral at JP Morgan; tgt raised to $375 from $300.
Large Cap Losers
SPG (165.04 -6.2%): Announced completion of spin-off of Washington Prime Group (WPG); updated guidance to reflect spin off of WPG; sees FY14 FFO of $8.96-9.06 (from $9.60-9.70 previously), not comparable to the $9.62 consensus; target lowered to $165 from $175 at Imperial Capital.
KORS (93.31 -3.81%): Mentioned unfavorably on Mad Money (WDAY also lower on unfavorable mention); target raised to $110 at Telsey Advisory Group.
CM (89.85 -1.37%): Reported CAD2.17 vs CAD2.03 consensus; increased quarterly dividend to $1.00/share from prior dividend of $0.98/share.
Mid Cap Gainers
HSH (52.2 +16.03%): Tyson Foods (TSN) announced $50.00/share cash proposal to acquire HSH.
MELI (89.68 +9.24%): Upgraded to Overweight from Neutral at JP Morgan; tgt lowered to $104 from $114.
PANW (75.65 +8.83%): Beat on EPS by $0.01, beat on revs; settled patent dispute with Juniper (JNPR) for ~$175 mln in cash and stock; sees Q4 non-GAAP EPS of $0.10-0.11 a share, Q4 consensus $0.12; sees revs of $158-162 mln, Q4 consensus $157.8 mln; upgraded to Outperform from Perform at Oppenheimer; upgraded to Strong Buy from Outperform at Raymond James; tgt raised to $90 from $84; target raised to $95 at Needham.
Mid Cap Losers
BAH (22.1 -6.47%): Announced sale of 10 mln shares of common stock by an affiliate of the Carlyle Group (CG).
TECD (60.64 -3.65%): Missed on EPS by $0.01, beat on revs.
RXN (25.39 -3.02%): Priced 15 mln shares of common stock by selling shareholders at $25.50 per share.
11:58 am European Markets Closing Prices (:SUMRX) : European markets are now closed; stock markets across Europe performed as follows:
UK's FTSE:+0.3%
Germany's DAX:0.0%
France's CAC:0.0%
Spain's IBEX:-0.2%
Portugal's PSI:-0.9%
Italy's MIB Index:-0.4%
Irish Ovrl Index:-0.4%
Greece ATHEX Composite: -1.1%
11:39 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (128) outpacing new lows (28) (:SCANX) : Stocks that traded to 52 week highs: AAPL, ABC, ACMP, AL, ALK, AMKR, AMOT, AON, ARCB, ARRS, ASTC, ATRI, BELFB, BNS, BR, BWS, CE, CHC, CLDT, CLS, CNI, CNW, CODE, COF, CP, CSX, DIS, DOW, DVD, DVN, ECF, EL, EMES, ENSG, EQM, EVDY, FCH, FDEF, FGP, GD, GDP, GLNG, GPK, GSAT, H, HA, HCC, HSH, HSP, IBA, IDTI, IHS, IMO, IMOS, IPG, IRS, ISIL, JBLU, JD, JMEI, LSTR, LUV, MACK, MAR, MLR, MMI, MOH, MPWR, MU, NEN, NFX, NNBR, NRG, NSC, NTT, NYLD, OXY, PAH, PCYG, PDH, PEP, PES, PKY, PPL, PTP, RAD, RDI, REX, RHI, ROL, RUK, SABR, SAFM, SBR, SCI, SEM, SIG, SKX, SN, SNDK, SNN, SOHO, SPIL, SRC, SYPR, TEN, TGS, TIF, TMH, TMUS, TPL, TRUE, TRV, TRW, TSLX, UEIC, UGI, UHAL, UNS, USLM, VET, VTNR, WAG, WIN, WLK, WWAV, YONG, Z
Stocks that traded to 52 week lows: AG, ANV, AUY, BVN, CDE, CHS, CIO, COVS, DCIX, EDMC, ESI, EXPR, FLL, FRED, GMAN, IAG, JE, OMEX, OXF, SC, SOQ, SPHS, SVM, TCCO, TLYS, VHI, VLTC, WLT
ETFs that traded to 52 week highs: AGG, EFA, FAN, IYK, IYT, LQD, MBB, MES, OEF, SHY, SOXX, SPY, VTI, XLB, XLK
ETFs that traded to 52 week lows: TBT, VXX
11:03 am Ingram Micro: ESET announces a strategic and exclusive distribution alliance with Ingram Micro (IM) : ESET, a provider of digital protection, announced a strategic and exclusive distribution alliance with Ingram Micro (IM). Ingram Micro will provide U.S. channel partners with quick and efficient access to ESET's full suite of award-winning business solutions to meet growing demand across industry sectors.
7:50 am Avago Tech: Seagate (STX) to acquire LSI's flash businesses from Avago for $450 mln in cash (AVGO) : Seagate Technology plc (STX) and AVGO announced that they have entered into a definitive asset purchase agreement under which Seagate will acquire the assets of LSI's Accelerated Solutions Division and Flash Components Division ("FCD") from Avago for $450 million in cash.
In FY15, Seagate would expect the combination of its enterprise SSD product line and these SSD Controller families to generate revenues of at least $150 mln and be slightly accretive to the co gross margin with operating margin headwind of $30-40 mln.
As Seagate drives operational synergies and leverages its SSD technology into its product portfolio, the co would expect the operating margin contribution from its SSD business to be neutral to positive in FY16 and beyond. The transaction is expected to close in Q3 of calendar year 2014, subject to the satisfaction of customary closing conditions and the receipt of certain regulatory approvals, including those required by the Hart-Scott-Rodino Antitrust Improvements Act.
Aehr Test Systems (AEHR) has shipped ABTS Burn-in and Test Systems to two new customers in China, one to a Chinese semiconductor foundry to fill a previously announced order and the other to a Chinese government research institute.
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