From Briefing.com: 4:10 pm : The major averages started the new trading week on an upbeat note, but the bulk of the action on Monday took place at the start of the session. The S&P 500 rose 0.5% with nine sectors registering gains, while the Dow Jones Industrial Average (+0.7%) outperformed. For its part, the small-cap Russell 2000 (+0.5%) settled in the middle of its trading range after showing relative strength at the start.
Equity indices received an opening boost from the financial sector (+0.6%), which in turn, was underpinned by Citigroup (C 48.42, +1.42) after the bank reported its earnings. Shares of Citigroup jumped 3.0% in reaction to above-consensus results that excluded the impact of a $3.8 billion charge stemming from settlements related to RMBS and CDO-related claims. The financial sector, meanwhile, spent the entire session in a steady retreat from its early high.
Although financials slipped from their opening levels, that void was filled by other influential sectors like energy (+0.9%) and technology (+0.8%).
The top-weighted S&P 500 sector-technology-rallied on the back of its largest components. Apple (AAPL 96.45, +1.23), Google (GOOGL 594.26, +7.61), Facebook (FB 67.90, +1.56), and IBM (IBM 189.87, +1.87) gained between 1.0% and 2.4% to name a few. However, chipmakers were not as strong with the PHLX Semiconductor Index tacking on 0.4%.
Elsewhere, the energy sector was boosted by M&A activity, while crude oil ended the session little changed at $100.99/bbl. On the acquisition front, Kodiak Oil & Gas (KOG 14.91, +0.68) rose 4.8% after agreeing to be acquired by Whiting Petroleum (WLL 84.58, +6.04) for $6 billion.
The energy sector was not the only source of M&A news as industrials (+0.6%) and health care (+0.4%) also benefitted from deals.
Among industrials, URS (URS 58.40, +6.38) surged 12.3% after agreeing to be acquired by Aecom (ACM 34.98, +3.22) for $56.31 per share. Furthermore, defense contractors and transports also displayed relative strength with the PHLX Defense Index and the Dow Jones Transportation Average both adding 0.7%.
On the countercyclical side, health care was limited to a gain of 0.4% even though Shire Pharmaceuticals (SHPG 254.27, +5.21) jumped 2.1% on reports it will accept a $53 billion takeover bid from AbbVie (ABBV 54.85, -0.11). Also of note, Mylan (MYL 51.24, +1.04) struck a $5.3 billion deal to purchase Abbott's (ABT 41.82, +0.52) non-US developed markets specialty and branded generics business.
Similar to health care, other countercyclical sectors also ended behind the broader market. Consumer staples (+0.4%) and telecom services (+0.3%) posted modest gains, while the utilities sector lost 1.2%.
Treasuries ended near their lows with the 10-yr yield up two basis points at 2.54%.
Participation was well below average as less than 600 million shares changed hands at the NYSE.
Tomorrow, the Retail Sales report for June (Briefing.com consensus 0.7%), June import/export prices, and the July Empire Manufacturing survey (consensus 13.2) will be released at 8:30 ET, while the Business Inventories report for May (consensus 0.6%) will cross the wires at 10:00 ET. Also of note, Fed Chair Janet Yellen will appear before the Senate Banking Committee to provide her semiannual testimony on the economy and monetary policy.
S&P 500 +7.0% YTD
Nasdaq Composite +6.3% YTD
Dow Jones Industrial Average +2.9% YTD
Russell 2000 +0.2% YTD
DJ30 +111.61 NASDAQ +24.93 SP500 +9.53 NASDAQ Adv/Vol/Dec 1759/1.47 bln/995 NYSE Adv/Vol/Dec 1978/579.7 mln/1098 3:30 pm :
Precious metals fell today as equity markets advanced and concerns over the health of the Portuguese banking system lessened.
Aug gold traded as low as $1302.20 per ounce after retreating from its session high of $1316.60 per ounce set at pit trade open. It eventually settled with a 2.3% loss at $1306.70 per ounce.
Sep silver pulled back from a session high of $21.13 per ounce and settled 2.5% lower at $20.92 per ounce, just above its session low of $20.90 per ounce.
Aug crude oil dipped to a session low of $100.22 per barrel in morning action but recovered into positive territory as it headed into the close. The energy component touched a session high of $101.04 per barrel and settled at $100.99 per barrel, or 0.2% higher.
Aug natural gas touched a session low of $4.09 per MMBtu in morning action after trading as high as $4.17 per MMBtu earlier in the session. However, it managed to erase losses and settled unchanged at $4.15 per MMBtu.
Large Cap Gainers
PRGO (154.72 +5.86%): Seeing rumors that co has hired a bank to explore a sale of the company
PBR (15.94 +4.94%): Added to LATAM Spotlight list at Goldman
TSLA (226.65 +3.91%): Higher following Bloomberg report that China will mandate 30% electric car usage by 2016 for government vehicles
Large Cap Losers
GG (27.71 -2.50%): Weakness in large cap gold companies: NEM, ABX also lower
KORS (86.76 -2.30%): Mentioned cautiously in WSJ article; also mentioned positively in Barron's article
HSY (94.77 -1.74%): Lower following sale of Russel Stover Candies to Lindt & Sprungli
Mid Cap Gainers
URS (57.72 +10.96%): To be acquired by AECOM (ACM) for $56.31 per share in cash and stock; ACM also higher
WLL (84.38 +7.44%): Announced acquisition of Kodiak Oil & Gas
(KOG) in an all-stock transaction valued at $6.0 bln, expected to be accretive to EPS in 2015; target raised to $112 from $110 at Howard Weil; target raised to $102 from $96 at Brean Capital; KOG also higher
AMKR (11.57 +4.19%): Target raised to $13 from $9 at Topeka Capital Markets
Mid Cap Losers
RVBD (19.13 -6.00%): Sees Q2 EPS at low end of $0.26-0.28 range, ex items, vs $0.27 estimate; sees Q2 revs of $264-265 mln (lowered from $274-280 mln) vs $277.6 mln estimate; Elliott management reaffirmed $21 per share bid
GTAT (15.22 -5.17%): Weakness attributed to Credit Agricole comments raising concerns about iPhone sapphire covers
GPRO (37.11 -4.45%): Mentioned cautiously in Barron's article; continued decline following strong gains seen following IPO
12:01 pm Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (124) outpacing new lows (36) (:SCANX) : Stocks that traded to 52 week highs: AA, AAT, AB, ABG, ADM, AGII, AGRO, AIV, AMRE, AMT, AN, AUO, AVB, AWH, BAX, BITA, BLL, BMA, BPOP, BSAC, BTI, CALM, CBEY, CBK, CBM, CENX, CHE, CI, CL, CMRE, CMSB, COO, CRESY, CTP, DCM, DMLP, EDN, EDR, EFX, ENVE, EQR, ERJ, ESC, ESCA, ESS, ETN, GA, GGAL, GILD, GLUU, GPK, GPRE, GRH, GTIV, HAR, HNP, HNT, HT, INTC, INTT, JLL, KEX, KOG, KRC, LE, LEA, LRCX, LUV, MAYS, MDCI, MGA, MIC, MMC, MO, MOH, MRH, MSFT, NAVI, NJ, NSC, NTT, PBCP, PEP, PES, PFG, PPC, PPS, PRE, PTR, PTSI, QCOR, QGEN, R, RE, REX, RGEN, RHP, SAFM, SE, SIMO, SMLP, SQBG, SUMR, SUNE, TEO, THRM, TIME, TPX, TRW, UMC, UNH, URI, VNTV, WDC, WLB, WLK, WLL, WLP, WRI, WTM, WYN, XBKS, XL, ZSPH
Stocks that traded to 52 week lows: ARO, ATRS, AXTI, BAA, BECN, BSDM, CGA, CGG, CHCI, CHLN, CHUY, CLRX, DWA, ESIO, FHCO, GIMO, GKNT, GMAN, GOMO, HGSH, JE, KIOR, KITE, KKD, LIME, MGT, MRKT, NDLS, NETE, NEWL, PULS, QRM, REXX, SODA, TCCO, WTW
ETFs that traded to 52 week highs: DIA, EWT, IYK, IYT, IYZ, OEF, PFF, QQQ, VWO, XLK
ETFs that traded to 52 week lows: JJG, VXZ
10:01 am Riverbed Technology: Elliott comments on Riverbed's earnings miss; reaffirms $21 bid for the company; demands consideration of a sale (RVBD) : Elliott Management issued the following public statement regarding Riverbed Technology:"
"Riverbed's poor performance this quarter reveals its decision to stonewall prospective buyers to be a serious and costly mistake. The results of the Board's decision to "bet on execution" are in: revenue guidance lowered to $265 million on disappointing sales, a topline miss of nearly 5% from guidance that was given only one quarter ago. All Riverbed stakeholders will end up paying for this reckless gamble, in which the Board clearly put the interests of a deeply entrenched management team ahead of shareholders. This is a clear sign that dramatic change is needed at Riverbed: The Board should immediately retain an advisor and announce a review of strategic alternatives, including a sale. To that end, as the company's largest shareholder, we reaffirm our cash bid of $21 per share."
Cypress Semiconductor (CY) and United Microelectronics (UMC) announced that UMC licensed Cypress's SONOS embedded Flash memory intellectual property for the 55-nanometer process technology node.
8:35 am Riverbed Technology lowers Q2 rev guidance; sees EPS at low end of prior range (RVBD) : Co issues downside guidance for Q2 (Jun), sees EPS at the low end previous $0.26-0.28 range, excluding non-recurring items, vs. $0.27 Capital IQ Consensus; lowers Q2 (Jun) revs to 264-265 mln from $274-280 mln vs. $277.6 mln Capital IQ Consensus.
"Second quarter sales were below our expectations, principally in North America as we experienced longer sales cycles on some of our larger and more complex deals. We have carefully reviewed our opportunities and prospects for the remainder of the year and continue to have confidence in our ability to grow the business and deliver targeted earnings performance," said Jerry M. Kennelly, chairman and CEO, Riverbed. "During the quarter, we continued to prudently manage expenses and focus on achieving operating leverage, as demonstrated by our solid EPS performance within our guided range.
7:37 am Harmonic lowers Q2 guidance and guides Q3 below expectations (HLIT) : Co issues downside guidance for Q2 (Jun), sees EPS of $0.00-0.02, excluding non-recurring items, vs. $0.06 Capital IQ Consensus; lowers Q2 (Jun) revs to $108-110 mln from $113-123 mln vs. $118.32 mln Capital IQ Consensus.
Non-GAAP gross margin is expected to be in the range of 49.0% to 51.0%, compared with the Company's previous guidance of 52.5% to 53.5%. Non-GAAP operating expenses are expected to be in the range of $52.5 million to $53.5 million, compared with the Company's previous guidance of $54.5 million to $55.5 million. Preliminary bookings for the second quarter of 2014 were $113.4 million, with first half 2014 bookings ~1% higher than bookings in the first half of 2013. Total backlog and deferred revenue was $132.1 million as of June 27, 2014, compared to $126.4 million as of March 29, 2014.Co issues downside guidance for Q3 (Sep), sees Q3 (Sep) revs of $103-113 mln vs. $124.82 mln Capital IQ Consensus.
"We saw a global slowdown in our video business as several of our larger customers began planning for our new virtualized approaches for delivering video services. This video slowdown was particularly pronounced among EMEA and North American Broadcast and Media customers, where we also saw several anticipated projects delayed and growing consideration of the new Ultra HD format and new HEVC compression technology. Our North America Cable business performed better, as strong demand for our cable edge products continued, including for the NSG Pro platform released last year. Looking ahead, while the transitioning video market is turbulent and we are consequently cautious about our near-term results, the growing signs of coming video technology investment cycles and our cable customers' continuing positive response to our CCAP products are encouraging. We therefore remain positioned and focused on achieving the company's overarching objectives for driving sustainable top and bottom line growth."
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