From Briefing.com: 4:10 pm : The major averages posted solid gains ahead of tomorrow's policy directive from the Federal Open Market Committee. The S&P 500 rallied 0.8%, while the Russell 2000 (+0.3%) could not keep pace with the benchmark index.
Equity indices hovered near their flat lines during the first two hours of action, but surged in reaction to reports from the Wall Street Journal concerning tomorrow's FOMC statement. Specifically, Fed watcher Jon Hilsenrath indicated that the statement will once again reflect the Fed's intentions to keep the fed funds rate at the zero bound for a considerable time after quantitative easing is wound down. The report sent the market higher since it contrasted with recent speculation that the Fed would drop the 'considerable time' language from its guidance, thus implying a swifter rate hike.
Furthermore, the late-morning rally was assisted by reports indicating the People's Bank of China will provide CNY500 billion to its top five banks through a Short-term lending facility. This followed a disappointing Foreign Direct Investment report (-1.8%), which dropped to its lowest level in more than four years.
A central bank trifecta was completed after reports from Nikkei revealed that Japan's government plans to lower its economic assessment in the September report due on Friday. The news hinted at a potential move from the Bank of Japan and weighed on the yen.
All ten sectors finished in the green, but only three groups were able to settle ahead of the broader market. Health care (+1.4%) and utilities (+1.2%) were the top-performing countercyclical sectors, while energy (+1.2%) finished ahead of other growth-sensitive groups.
The health care sector padded its third-quarter gain to 5.6% with help from biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 270.82, +4.73) rallied 1.8%.
For its part, the energy sector, which endured a rough start to the month, continued this week's outperformance. The sector extended its week-to-date gain to 1.9%, but remains down 3.4% so far in September. Crude oil factored into today's strength, rallying 2.0% to $94.91/bbl. The energy component received some support from a weaker dollar as the Dollar Index slipped 0.3%.
Meanwhile, most of the remaining cyclical groups could not keep up with the market. Interestingly, the technology sector (+0.7%) was among the early laggards, but ended just behind the S&P 500 thanks to a strong showing from chipmakers. The PHLX Semiconductor Index advanced 1.7% with Micron (MU 31.45, +1.43) pacing the rally amid Wall Street Journal reports indicating the company may introduce wearable devices. Also of note, shares of Apple (AAPL 100.86, -0.77) were down as much as 2.0% at the start, but narrowed their loss to 0.8% by the end of the day.
Treasuries spent the day in a steady retreat from their early morning highs. The 10-yr note ended flat with its yield at 2.59%.
Participation was ahead of recent averages with more than 630 million shares changing hands at the NYSE.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET, while August CPI (Briefing.com consensus 0.0%) and Q2 Current Account (expected deficit of $114.50 billion) will be reported at 8:30 ET. The NAHB Housing Market Index for September (consensus 56) will be released at 10:00 ET, while the latest policy statement from the FOMC will cross the wires at 14:00 ET.
Nasdaq Composite +9.0% YTD
S&P 500 +8.2% YTD
Dow Jones Industrial Average +3.4% YTD
Russell 2000 -0.9% YTD
DJ30 +100.83 NASDAQ +33.86 SP500 +14.85 NASDAQ Adv/Vol/Dec 1520/1.74 bln/1292 NYSE Adv/Vol/Dec 1960/632.4 mln/1100 3:30 pm : The dollar index remained in the red in afternoon trading, which helped provide price support to commodities.
Crude oil had a nice run today, gaining over $2/barrel on a steady climb upwards. Oct crude oil finished the day $2.02 to $94.91/barrel
Oct natural gas has a nice run today too, extending yesterday's gains. Oct NG closed 6 cents higher to $3.99/MMBtu
Dec gold rose today by $1.40 to $1236.20/oz, while Dec silver gained $0.11 to $18.73/oz. Dec copper rallied 8 cents to $3.17/lb.
4:06 pm Adobe Systems beats by $0.02, reports revs in-line; Q3 cloud subs +502% vs guidance of +1 mln in H2 of 2014 with seq. growth QoQ. (ADBE) : Reports Q3 (Aug) earnings of $0.28 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.26; revenues rose 1.0% year/year to $1.01 bln vs the $1.01 bln consensus.
Adobe exited Q3 with 2 million 810 thousand paid Creative Cloud subscriptions, an increase of 502K QoQ vs guidance of +1 mln in H2 of 2014 with seq. growth QoQ. Creative Annualized Recurring Revenue grew to $1.40 billion, and total Digital Media ARR grew to $1.62 billion.
ADBE is expected to guide for the fourth quarter in a presentation shortly.4:06 pm Verizon investing $13.8 mln in new solar projects in N.J. this year, bringing total to more than $34 mln (VZ) :
12:05 pm 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
PBR (17.86 +7.98%): Strength in Brazil ADRs; recent election polls indicate Rousseff is tied with Silva, according to reports (ITUB, BBD, BRFS, VIV also higher).
HUM (132.11 +3.49%): Co announced $2 bln share repurchase authorization.
EPD (40.42 +2.12%): Mentioned favorably on Mad Money.
Large Cap Losers
MPEL (25.73 -4.99%): Macau gaming related names showing weakness following cautious comments from Wells Fargo & escalating Macau worker protests (MGM, LVS, WYNN also lower).
CHU (17.08 -2.37%): Reports indicate that AAPL's iPhone 6 launch in China won't come until next year.
VIPS (195 -0.8%): Announced shareholder approval of the adoption of a dual-class share structure.
Mid Cap Gainers
OIBR (0.73 +11.91%): Trading higher on headlines that Telecom Italia (TI) may acquire the company.
AEO (14.2 +5.42%): Upgraded to Overweight from Equal Weight at a boutique firm.
P (27.19 +4.9%): Chatter that MSFT may take stake in co.
Mid Cap Losers
WPG (17.12 -7.26%): Co to acquire Glimcher Realty Trust (GRT) for $4.3 bln in stock and cash including the assumption of debt (stock and cash transaction valued at $14.20 per Glimcher common share).
SHLD (31.31 -6.59%): Disclosed $400 million secured short-term loan.
GPRO (64.75 -3.65%): Initiated with a Buy at Cleveland Research; tgt $78.
Cree (CREE) has filed patent infringement lawsuits in the U.S. District Court for the Western District of Wisconsin to prevent Harvatek and Kingbright from infringing Cree's patented intellectual property. These patents, among other things, protect Cree's LED component portfolio, including Cree's white light LEDs.
Mellanox Technologies (MLNX) announced that its end-to-end 10 and 40 Gigabit Ethernet interconnect solutions support the recently announced IBTA RoCEv2 specification.
8:38 am American Superconductor provides update on litigation with Sinovel Wind Group; AMSC is seeking ~$450 million in monetary damages (AMSC) : AMSC issued several updates regarding its litigation with Sinovel Wind Group. In the trade secret infringement case, the Beijing Higher People's Court upheld AMSC's position by rejecting Sinovel's appeal to transfer the case to the Beijing Arbitration Commission.
Trade Secret Infringement Case - The Beijing Higher People's Court upheld the Beijing No. 1 Intermediate People's Court's ruling that the dispute will be heard by the Beijing Courts separate from the commercial arbitration claims. AMSC is seeking approximately US$450 million in monetary damages in the trade secret infringement case.Trade Secret Infringement Case - On September 15, 2014, the Beijing No. 1 Intermediate People's Court held its first substantive hearing in the Beijing case. At the hearing, the parties presented evidence, reviewed claims, and answered questions from the court. The Hainan case is expected to be heard in the Hainan court system. AMSC is seeking ~$6 million in monetary damages in the Beijing copyright infringement case and $200,000 in monetary damages in the Hainan copyright infringement case. U.S. Department of Justice Case - In May of 2014, a magistrate judge rejected Sinovel's challenge. Sinovel appealed the decision and in September 2014, the District Judge upheld the decision of the magistrate judge. Sinovel immediately appealed this ruling to the United States Court of Appeals for the Seventh Circuit.
Broadcom (BRCM) announced that SK Broadband has selected Broadcom's Ultra HD SoC technology to power its new B UHD tv set-top box and IPTV services.
Veeco Instruments (VECO) announced that its new Odyssey Ion Beam Deposition Upgrade for the NEXUS IBD-LDD System has repeatedly produced photomask blanks with zero deposition defects larger than 70 nanometers.
AMD (AMD) announced a new collaboration with Canonical that provides a way to deploy an OpenStack private cloud. The solution features the SeaMicro SM15000 server, Ubuntu LTS 14.04 and OpenStack, which includes a set of powerful tools to build one of the most flexible and reliable private clouds.
8:11 am Juniper Networks: BroadSoft (BSFT) selects Juniper Networks to power its global BroadCloud data centers (JNPR) : Co announced that BroadSoft (BSFT) has deployed a comprehensive cloud networking solution across its data centers comprised of Juniper routing, switching and security products, as well as Juniper Networks Support.
5:03 am Canadian Solar announces 1.5 MW solar module supply agreement in Jordan (CSIQ) : Co announces that it has been awarded a module supply agreement to provide 1.5 MW of photovoltaic modules to Kawar Energy for a rooftop solar power project located in a university in Amman, Jordan. Canadian Solar will supply its high efficiency 72 cell CS6X300P modules with power output respectively of 300Wp to this project.
It is tough to keep a stock market addicted to easy monetary policy down when there are reports suggesting that easy monetary policy is going to remain intact. That's essentially what transpired on Tuesday as the S&P 500 information technology sector, which declined 0.6% on Monday, recouped the entirety of that loss and then some. It did so, too, without the help of Apple (AAPL 100.86, -0.77).
Causality for Tuesday's broad market advance was not difficult to pinpoint. It stemmed from a late-morning comment from Wall Street Journal Fed watcher, Jon Hilsenrath, that the Fed may keep its "considerable time" phrase in the newest FOMC directive. The latter is due to be released on Wednesday at 2:00 p.m. ET.
The stock market, which has been on edge of late about the possibility of that phrase being removed in an effort to start signaling the prospect of an earlier than expected rate hike, spiked in the wake of that report and didn't really look back for the rest of the day.
The Dow Jones Industrial Average hit a new record high and the S&P 500 flirted with another close above the 2,000 level. It came up just shy, yet it gained 0.8% for the session. The S&P 500 information technology sector increased 0.7% and effectively executed a near 180 degree turn from Monday's session when 54 of 66 components traded lower. On Tuesday 55 of the 66 components traded higher.
Apple (AAPL 100.86, -0.77) was conspicuously absent from the advance. While the stock finished off its lows, it struggled to gather upside momentum amid reports the launch of iPhone 6 and iPhone 6 Plus could be delayed in China until 2015.
Separately, Apple was found to have infringed on some of VirnetX Holding's (VHC 8.30, -6.62) patents; however, VirnetX bore the brunt of that decision. Barron's, citing a Reuters report, said the U.S. Appeals Court vacated a $368.2 million damages award for VirnetX before sending the case back to the lower courts.
Another company taking on Apple's cachet of always being in the news is Alibaba Group (BABA) and it's not even a publicly-traded company -- not yet anyway.
On Friday it will be and its IPO is receiving very strong demand, evidenced by the company's amended F-1 filing last night noting its IPO price range is being raised to $66 to $68 from $60 to $66. That was nothing short of pleasing to hear for Yahoo (YHOO 42.71, +0.16), which has a 23% stake in the company.
Yahoo rose modestly on Tuesday, which belies the enviable fact that it is up almost 20% since August 7.
To be sure, there were a lot of 1.0%+ gainers on Tuesday as the thought of a dovish-sounding Fed dancing in traders' heads and short-covering activity supported the turnaround effort from Monday when many stocks were down more than 1.0%.
Micron Technology (MU 31.45, +1.43) was a case in point. The DRAM maker declined 4.76% on Monday and it gained 4.76% on Tuesday.
Twitter (TWTR 50.83, +1.45) dropped 5.2% on Monday and gained 2.9% on Tuesday. Facebook (FB 76.08, +1.50) fell 3.7% on Monday and gained 2.0% on Tuesday.
The list goes on and on, because the hope that the Fed will continue to sound undoubtedly dovish with its policy directive went on and on in Tuesday's trading.
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