From Briefing.com: 4:15 pm : The major averages posted modest Tuesday losses after being unable to hold their opening gains. Small caps displayed relative weakness throughout the session, which resulted in the Nasdaq Composite (-0.5%) and Russell 2000 (-1.0%) ending behind the S&P 500 (-0.2%) and the Dow Jones Industrial Average (+0.03%).
Equities appeared to be on track for an upbeat session after the financial sector (+0.7%) got out to an early lead thanks to better than expected earnings from Goldman Sachs (GS 169.17, +2.17) and JPMorgan Chase (JPM 58.27, +1.98). The two influential sector components gained 1.3% and 3.5%, respectively, but their strength was not enough to keep the benchmark index out of the red.
The S&P 500 slumped to lows in the late morning after supplemental remarks to Fed Chair Yellen's semiannual testimony on monetary policy singled out biotechnology and social media stocks as groups that have had their valuations stretched. Appropriately, stocks from both arenas responded by pacing the late-morning retreat.
Most notably, the iShares Nasdaq Biotechnology ETF (IBB 252.43, -5.67) lost 2.2%, which put the ETF back near its lowest levels of the month. For its part, the health care sector (-0.9%) was the weakest performing group.
Meanwhile, another countercyclical sector-consumer staples-also ended near the bottom of the leaderboard. The sector lost 0.8% with tobacco names exerting pressure as Lorillard (LO 60.17, -7.05) tumbled 10.5% after agreeing to be acquired by Reynolds American (RAI 58.84, -4.34) for $68.88 per share. The deal announcement was followed by news that Moody's is reviewing ratings of both names for potential downgrades.
Outside of consumer staples and health care, the other two countercyclical sectors fared well. The telecom services sector rose 0.7% and utilities added 0.5%.
Turning back to the cyclical side, financials remained in the green throughout the day, while the industrial sector (+0.1%) crept into positive territory during the afternoon. Transports contributed to the rebound (Dow Jones Transportation Average +0.4%) with JB Hunt (JBHT 76.94, +2.65) leading the pack. The stock rallied 3.6% after reporting in-line results this morning.
Elsewhere, the top-weighted S&P 500 sector-technology (-0.2%)-underperformed intraday, but caught up to the S&P 500 ahead of the close. Social media names lagged, but were able to trim some of their losses. Facebook (FB 67.16, -0.73), Twitter (TWTR 37.88, -0.43), and Yelp (YELP 69.02, -2.09) lost between 1.1% and 2.9%.
Treasuries ended the day little changed after alternating between gains and losses. The 10-yr yield finished the day at 2.55%.
Participation bucked the recent trend with an above-average 716 million shares changing hands at the NYSE.
Economic data included June Retail Sales, June import/export prices, July Empire Manufacturing survey, and the Empire Manufacturing Survey:
Retail sales increased 0.2% in June following an upwardly revised 0.5% (from 0.3%) increase in May, while the Briefing.com consensus expected an increase of 0.7%
The June employment report signaled a strong increase in aggregate earnings and motor vehicle sales for the same month exceeded 17 million SAAR for the first time since July 2006. Both of those factors were expected to drive retail sales growth in June, yet failed to provide the oomph needed to accelerate consumer demand
It seems likely that consumers pocketed some of the extra earnings in June and increased their savings rate
Excluding motor vehicles, retail sales increased a 0.4% in June, which was the same growth rate following an upward revision (from 0.1%) in May. The consensus expected these sales to increase 0.6%
Export prices, excluding agriculture, fell 0.3% in June after increasing 0.1% in the prior reading
Excluding oil, import prices declined 0.1%, which followed last month's unchanged reading
The Empire Manufacturing Survey for July registered a reading of 25.6, which was well ahead of the prior month's reading of 19.3. It was also ahead of the Briefing.com consensus estimate, which was pegged at 13.2
Business inventories increased 0.5% in May following an unrevised 0.6% increase in April, while the Briefing.com consensus expected business inventories to increase 0.6%
Inventories for manufacturers (0.8%) and merchant wholesalers (0.5%) were known prior to the release. Only retailer inventories, which increased 0.2% in May after increasing 0.5% in April, were unknown
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while June PPI (Briefing.com consensus 0.2%) will be reported at 8:30 ET. The Net Long-Term TIC Flows report for May will cross the wires at 9:00 ET, while June Industrial Production (consensus 0.4%) and Capacity Utilization (expected 79.2%) will both be announced at 9:15 ET. The busy day of data will also include the 10:00 ET release of the NAHB Housing Market Index for July (consensus 50) and the July Fed Beige Book, which will be released at 14:00 ET.
S&P 500 +6.8% YTD
Nasdaq Composite +5.7% YTD
Dow Jones Industrial Average +2.9% YTD
Russell 2000 -0.8% YTD
DJ30 +5.26 NASDAQ -24.03 SP500 -3.82 NASDAQ Adv/Vol/Dec 779/1.62 bln/2052 NYSE Adv/Vol/Dec 1052/716.3 mln/2001 3:35 pm :
Precious metals were under pressure today as the dollar index advanced during Fed Chair Janet Yellen's Senate testimony.
The Fed Chair's comments stayed in-line with her prior message as she was optimistic about the direction of the economy and employment but remained cautious on the page of the recovery.
Aug gold fell into negative territory below the $1300 per ounce level from its session high of $1313.20 per ounce set in early morning pit trade. It traded as low as $1292.60 per ounce and eventually settled at $$1297.20 per ounce, or 0.7% lower.
Sep silver also retreated into the red after trading as high as $21.13 per ounce in early morning action. It brushed a session low of $20.67 per ounce and settled with a 0.1% loss at $20.89 per ounce.
Aug crude oil fell below the $100.00 per barrel level as the stronger dollar index pressured prices. The energy component traded as low as $98.99 per barrel in morning action and eventually settled with a 1.1% loss at $99.86 per barrel.
Aug natural gas pulled back from its session high of $4.15 per MMBtu set in early morning pit trade and traded as low as $4.09 per MMBtu. Unable to gain momentum, it settled with a 1.2% loss at $4.10 per MMBtu.
6:03 pm Adobe Systems and Google (GOOG) announce a 'digital type breakthrough' (ADBE) : Co announced the release of Source Han Sans, an open source typeface supporting Japanese, Chinese and Korean, as well as Latin, Greek and Cyrillic alphabets. It was developed in collaboration with Adobe's key partner Google (GOOG) and contracted foundry partners across East Asia (Changzhou SinoType, Iwata Corporation, and Sandoll Communication). "Source Han Sans marks a record-breaking typeface in terms of size, scale, complexity and support for Japanese, Chinese and Korean all within the same font family. It provides designers and developers creating content for international audiences one uniform font to use in print and Web files no matter the language - eliminating the need to license multiple fonts."
4:33 pm Apple and IBM announce exclusive partnership to transform enterprise mobility through a new class of business apps (AAPL) : The landmark partnership aims to redefine the way work will get done, address key industry mobility challenges and spark true mobile-led business change-grounded in four core capabilities:
a new class of more than 100 industry-specific enterprise solutions including native apps, developed exclusively from the ground up, for iPhone and iPad; unique IBM cloud services optimized for iOS, including device management, security, analytics and mobile integration; new AppleCare service and support offering tailored to the needs of the enterprise; and new packaged offerings from IBM for device activation, supply and management. The new IBM MobileFirst for iOS solutions will be built in an exclusive collaboration that draws on IBM's big data and analytics capabilities fused with Apple's consumer experience, hardware and software integration and developer platform. The combination will create apps that can transform specific aspects of how businesses and employees work using iPhone and iPad.
4:16 pm Intel beats by $0.02, reports revs in-line with raised guidance range; guides Q3 rev, gross margin above consensus; raises FY14 rev, gross margin guidance; adds $20 bln to buyback (INTC) : Reports Q2 (Jun) earnings of $0.55 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.53; revenues rose 8.0% year/year to $13.83 bln vs the $13.72 bln consensus -- co guidance raised to $13.4-14.0 bln from $12.5-13.5 bln on June 12.
Q2 gross margin of 64.5% vs Street expectations near 64% (co guided for Q2 gross margin of 64%, +/- a couple of percentage pts, rasied from 63% at midpoint). PC Client Group revenue of $8.7 billion, up 9 percent sequentially and up 6 percent year-over-year.Data Center Group revenue of $3.5 billion, up 14 percent sequentially and up 19 percent year-over-year.Internet of Things Group revenue of $539 million, up 12 percent sequentially and up 24 percent year-over-year.Mobile and Communications Group revenue of $51 million, down 67 percent sequentially and down 83 percent year-over-year.Software and services operating segments revenue of $548 million, down 1 percent sequentially and up 3 percent year-over-year.Co issues upside guidance for Q3, sees Q3 revs of $13.9-14.9 bln vs. $14.05 bln Capital IQ Consensus; gross margin 66% +/- a couple % points vs. 62.6% consensus.
Co issues upside guidance for FY14, sees FY14 revs of +5% to ~$55.34 bln vs. $54.72 bln Capital IQ Consensus Estimate. Gross margin percentage: 63 percent, plus or minus a few percentage points, from upper half of 61% +/- a few % points.
The company generated ~$5.5 billion in cash from operations, paid dividends of $1.1 billion, and used $2.1 billion to repurchase 74 million shares of stock.
Intel announced that it intends to return more cash to shareholders by lowering its cash balance further through increased share repurchases. The board of directors authorized an increase of $20 billion to its share repurchase program and the company is forecasting share repurchases of ~$4 billion in the third quarter, with additional share repurchases in the fourth quarter.
4:11 pm Yahoo! misses by $0.01, misses on revs (YHOO) : Reports Q2 (Jun) earnings of $0.37 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.38; revenues fell 2.9% year/year to $1.04 bln vs the $1.08 bln consensus.
Display:
GAAP display revenue was $436 million for the second quarter of 2014, an 8 percent decrease compared to $472 million for the second quarter of 2013. Display revenue ex-TAC was $394 million for the second quarter of 2014, a 7 percent decrease compared to $423 million for the second quarter of 2013; street expectations was $425 mln.The number of Ads Sold increased approximately 24% compared to the second quarter of 2013 (Street expectations +4.5%) Price-per-Ad decreased approximately 24% compared to the second quarter of 2013 (Street expectations -3%)Search:
GAAP search revenue was $428 million for the second quarter of 2014, a 2 percent increase compared to $418 million for the second quarter of 2013 (which included the Microsoft RPS guarantee). Search revenue ex-TAC was $428 million for the second quarter of 2014, a 6 percent increase compared to $403 million for the second quarter of 2013 (which included the Microsoft RPS guarantee); Street expectations $443.8 mln. The number of Paid Clicks increased approximately 3% compared to the second quarter of 2013. Price-per-Click increased approximately 15% compared to the second quarter of 2013.
4:10 pm Yahoo! -- Earnings Mover -- (YHOO) : Reverses as high as 36.89 (close 35.61). its two month high from June is at 36.17 with its four month high/range top from April is at 37.30.
Large Cap Gainers
RBS (11.21 +2.94%): Strength in financial related names (IBN, DB, C also higher).
APC (108.93 +2.84%): Co provided a financial update, including the establishment of a new unsecured five-year credit facility, the issuance of senior notes, and the sale of Western Gas Equity Partners (WGP) common units.
BBBY (61.02 +1.48%): Priced $1.5 bln of Senior Unsecured Notes, announced planned $1.1 bln accelerated share repurchase and planned $250 mln revolving credit facility.
Large Cap Losers
LO (61.77 -8.11%): Co to be acquired by Reynolds American (RAI) in a cash-and-stock transaction currently valued at $68.88 per LO share, or a total of $27.4 bln, including the assumption of net debt.
KORS (80.75 -5.74%): Downgraded to Hold from Buy at Maxim Group; tgt lowered to $85 from $109.
RAI (59.88 -5.22%): Co to acquire Lorillard (LO) in a cash-and-stock transaction currently valued at $68.88 per LO share, or a total of $27.4 bln, including the assumption of net debt; Moody's reviewing LO and RAI ratings for downgrade on deal announcement.
Mid Cap Gainers
ROC (83.18 +9.88%): Co to be acquired by Albemarle (ALB) in cash and stock transaction valued at ~ $6.2 bln; transaction values ROC at $85.53 per share.
GPRO (39.81 +8.06%): Initiated with a Mkt Outperform at JMP Securities; tgt $60.
CPA (151.29 +3.96%): Reported June passenger traffic increased 13.0% y/y.
Mid Cap Losers
AAN (31.32 -6.59%): Co lowered Q2 guidance; lowered EPS to $0.34-0.37 from $0.43-0.48 vs. $0.46 est; sees Q2 (Jun) revs of ~$672 mln from ~$675 vs. $678.43 mln est.
LXK (46.53 -5.88%): Downgraded to Underperform from Mkt Perform at Bernstein.
ACAD (21.07 -4.62%): Co appointed Stephen Davis as Chief Financial Officer and Chief Business Officer.
12:09 pm Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (102) outpacing new lows (49) (:SCANX) : Stocks that traded to 52 week highs: AAT, AB, ACM, AIV, AKR, ALB, AMD, ATVI, AVB, BAMM, BBL, BDSI, BIOA, BITA, BK, BLK, BLL, CALM, CBEY, CBG, CCK, CDXS, CENX, CHRW, COF, CSX, DFS, DVA, EDR, ELP, EPR, EQR, ESS, FRT, GA, GILD, GLRE, GLUU, GPN, GPRE, GRH, HST, IDTI, IESC, INTC, KMB, KOG, KRC, LE, LEA, LGIH, LRCX, LUV, MAA, MCO, MFC, MIC, MJN, MSFT, NAVI, NS, NSC, NTT, OILT, PBI, PES, PJC, PPC, PPS, PTP, PTR, PTSI, PXLW, QGEN, REX, ROC, RY, SAFM, SAVE, SCOK, SIAL, SIMO, SNDK, ST, SUSP, TBI, TGP, THRM, TIME, UBIC, UEIC, UMC, UNH, URI, URS, VNTV, WDC, WLL, WLP, WTM, XL, YUM
Stocks that traded to 52 week lows: ACXM, ALLY, AMBI, ARO, AVD, AXTI, BAA, BAXS, BECN, BSDM, BTH, CAB, CGG, CHCI, CHLN, CHUY, CLRX, CNHI, DRI, FHCO, FNGN, GFIG, GKNT, GMAN, GOMO, INFA, JCTCF, JE, KITE, LL, MCRI, MGT, NEWL, OPTT, OXF, PGEM, PRXI, PT, PVH, QRM, REXX, RUBI, SHOS, SPWH, STLY, TCCO, UDF, WFM, WTW
ETFs that traded to 52 week highs: DBB, DIA, EEM, EWT, FXB, IYF, IYT, OEF, QQQ, URE, VWO, XLK
ETFs that traded to 52 week lows: JJA, JJG, VXZ
11:01 am Vishay announces Vishay HiRel Systems has earned AS9100 Rev C and International Organization for Standardization (:ISO) 9001:2008 certification for its plant in Zhuhai, China (VSH) :
9:06 am Rackspace announced a new strategy to deliver public cloud services; Rackspace Cloud Monitoring is now free for all customers (RAX) : Rackspace (RAX) announced a new strategy to deliver public cloud services to the market with Fanatical Support.
Rackspace Cloud Monitoring is now free for all customers. Co enhanced its managed cloud service levels and launched a more transparent service-based pricing model that represents a clear view of infrastructure pricing and emphasizes the value of Rackpace's cloud management expertise. Managed Infrastructure service level offers an hourly service level rate of $0.005/GB RAM, with a $50 per month minimum, plus standard infrastructure rates. Managed Operations service level offers an hourly service level rate of $0.02/GB RAM, with a $500 per month minimum, plus standard infrastructure rates. Rackspace also will continue to provide volume pricing discounts, so as a customer grows, the price of additional servers declines.
8:31 am Cisco Systems announces a multi-year sales and go-to-market agreement with Microsoft (MSFT) designed to modernize data centers (CSCO) :
Co announced a multi-year sales and go-to-market agreement with Microsoft designed to modernize data centers through the delivery and acceleration of integrated solutions.Highlights:
Go-to-Market: Cisco and Microsoft agree to a three-year go-to-market plan focused on transforming data centers through the delivery of integrated solutions for enterprise customers and service providers.In year one, the companies will focus on six countries -- the United States, Canada, UK, Germany, France, and Australia -- with expansion to additional countries in the following years.Cisco and Microsoft will align partner incentive programs to accelerate solutions selling via mutual channel partners. Cisco and Microsoft sales teams will work together on cloud and data center opportunities, including an initial program focused on the migration of Windows 2003 customers to Windows 2012 R2 on the Cisco UCS platform.Cypress Semiconductor (CY) announced TechInsight's Teardown.com has found that a Cypress TrueTouch Gen5 controller drives the touchscreen of the new Gear Live smartwatch from Samsung (SSNLF).
Integrated Device Technology (IDTI) has shipped over 1 mln DDR4 registers, the result of growing demand for the next generation of DRAM modules needed for the coming Intel (INTC) Xeon processor E5-2600 v3 platform.
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