From Briefing.com: 4:15 pm : The stock market followed Wednesday's sharp rally with an even sharper slide that clipped all ten sectors. The S&P 500 lost 2.1% and slid back below its 100-day moving average (1962.28) while the Russell 2000 tumbled 2.7%.
Equities began the trading day with modest losses, but the energy sector (-3.7%) was a notable laggard from the start once again. That prevented the broader market from turning positive while the relative weakness among most of the remaining cyclical sectors allowed for the selling to feed on itself.
The energy sector registered its largest one-day loss since surrendering 4.0% in April 2013 with crude oil contributing to the weakness. West Texas Intermediate crude plunged 2.4% to $85.22/bbl while Brent crude slipped below the $90.00/bbl level for the first time in more than two years. Following today's slide, WTI crude is down 6.8% since the start of October.
Macroeconomic concerns aside, crude prices were also pressured by the dollar rebounding from three days of losses. The Dollar Index (85.55, +0.25) traded lower overnight but erased that decline in the morning. Strikingly, greenback strength has had little effect on precious metals with gold futures climbing 1.5% to $1224.20/ozt.
The sell-off caused a scramble in search of volatility protection. The CBOE Volatility Index (VIX 18.96, +3.85) surged more than 25.0% to its highest level since early February. Treasuries, however, surrendered their overnight gains in the early morning before spending the session near their flat lines. The 10-yr note shed four ticks with its yield rising one basis point to 2.33%.
As mentioned earlier, most cyclical sectors underperformed the broader market, which prevented a sustained rebound from taking hold. The growth concerns weighed on economically-sensitive sectors like consumer discretionary (-2.3%), industrials (-2.3%), and materials (-2.5%), while financials (-2.1%) ended in-line with the S&P 500.
The widespread losses masked an 12.5% dive in the shares of Gap (GPS 36.67, -5.23) after the company reported below-consensus comparable store sales for September and announced the resignation of Chief Executive Officer Glenn Murphy.
Elsewhere, the technology sector (-1.7%) ended ahead of the other cyclical groups. Shares of Apple (AAPL 101.02, +0.22) contributed to the outperformance after activist investor Carl Icahn argued for a larger repurchase program in a letter sent to Chief Executive Officer Tim Cook.
Meanwhile, the four countercyclical sectors displayed some intraday strength, but the consumer staples sector (-0.9%) was the only group to register a loss smaller than 1.6%.
Today's participation was stronger than average with 874 million shares changing hands at the NYSE floor.
Economic data was limited to Initial Claims and Wholesale Inventories:
Weekly initial claims ticked down to 287,000 from a downwardly revised rate of 288,000 (from 287,000), while the Briefing.com consensus expected a reading of 295,000
Once again, the Department of Labor said there were no special factors affecting the reading, suggesting an improvement in labor market conditions
The four-week moving average of 287,750 for initial claims is at its lowest level since February 4, 2006
Wholesale inventories increased 0.7% in August after increasing an upwardly revised 0.3% (from 0.1%) in July, while the Briefing.com consensus expected an increase of 0.3%
Tomorrow, Import/Export Prices for September will be announced at 8:30 ET while the September Treasury Budget (Briefing.com consensus $106 billion) will be released at 14:00 ET.
Nasdaq Composite +4.8% YTD
S&P 500 +4.3% YTD
Dow Jones Industrial Average +0.5% YTD
Russell 2000 -8.3% YTD
DJ30 -334.97 NASDAQ -90.26 SP500 -40.68 NASDAQ Adv/Vol/Dec 393/2.09 bln/2618 NYSE Adv/Vol/Dec 365/874.0 mln/2750 3:40 pm :
Crude oil and natural gas futures slid lower all day and ended today's session at today's lows
Precious metals and copper rose notably today and largely held its gains
in afternoon trade, gold and silver traded in a tight consolidated pattern
Tomorrow at noon EST, the USDA will release its monthly demand/supply report for grains
12:51 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
UAL (45.15 +3.01%): Reported September 2014 consolidated traffic decreased 0.2%, consolidated capacity decreased 0.4%; positive commentary from Cowen, Credit Suisse, UBS, others.
VTR (64.21 +0.82%): Strength in REIT's as investors flock to yield plays for safety with deep broad market sell-off (VNO & SPG also higher).
CRM (57.92 +0.04%): Assumed with a Buy at MKM Partners premarket; tgt $67.
Large Cap Losers
GPS (36.73 -12.34%): Announced CEO Glenn Murphy resigning, reported Sep same store sales were flat vs +1.2% Retail Metrics consensus.
TCK (16.12 -7.36%): Reports China to reinstate tariffs on coal imports.
VOD (31.51 -5.26%): Downgraded to Reduce from Neutral at Nomura.
Mid Cap Gainers
RVBD (18.69 +3.38%): Announced the Board has determined to undertake a comprehensive reviewof strategic and financial alternatives to enhance shareholder value.
SRC (11.3 +0.89%): Strength in REIT's as investors flock to yield plays for safety with deep broad market sell-off (O & HTA also higher).
EAT (53.36 +0.45%): Restaurants mostly higher following strong results from Ruby Tuesday (RT).
Mid Cap Losers
HUB.B (111.51 -10.22%): Sees Q3 revs +7% (~$894.4 mln) vs Capital IQ Consensus Estimate of approx +7.7% ($900.03 mln); sees FY14 revs at low end of previously provided guidance of +5-6%; downgraded to Perform from Outperform at Oppenheimer.
AMD (3.03 -7.62%): Appoints Dr. Lisa Su as President & CEO to replace Rory Read, who stepped down; downgraded Neutral from Outperform at Wedbush; tgt lowered to $3 from $6.
AXLL (35.12 -6.6%): Initiated with a Underperform at RBC Capital Mkts; tgt $28.
11:41 am Stocks/ETFs that traded to new 52 week highs/lows this session - New lows (187) outpacing new highs (48) (:SCANX) : Stocks that traded to 52 week highs: AGN, APT, AUXL, BDX, BLE, CAG, CALM, CCI, CLX, COST, CVS, DPS, DTE, DTSI, DUK, DVA, ELLI, GMCR, GTIV, HAWK, HD, HE, HPY, IMDZ, JACK, KO, KR, LAKE, LMNX, LTS, MNST, MO, NHTB, NI, NZH, OBCI, PEP, PTRY, QTS, RDNT, RDUS, RENT, SRE, TAYD, THS, TTPH, UUU, WLDN
Stocks that traded to 52 week lows: ABB, ABIO, ACFN, ACUR, AEGN, ALB, ALCS, ALU, AMD, AMZG, AOI, AR, ARO, ASNA, ASTI, ATLS, ATOS, AWX, AXLL, BAMM, BBG, BEBE, BECN, BGMD, BH, BNFT, BPHX, BTU, BXE, CACH, CAS, CHK, CHOP, CIE, CLB, CLD, CLNE, CLNT, CLRO, CNX, COCO, COG, CPST, CRH, CRIS, CRR, CRRS, CTCM, CYOU, CYTX, DCTH, DEST, DLIA, DNR, DRNA, E, ECOM, EDAP, ELY, EOPN, EPM, EROC, FFHL, FMC, FOMX, FRED, FTEK, FWM, GLPI, GMO, GRAM, GRO, GTE, GTXI, HGG, HNSN, HOV, HVT, ICD, IKGH, ININ, ISCA, ISTR, KCAP, KIRK, KNOP, KODK, KOSS, KRA, KRO, KUTV, KWK, LAS, LF, LGL, LGND, LPI, LRN, LUK, LXFR, MAN, MBT, MDR, MDWD, MEA, MGCD, MIL, MPO, NAK, NDRO, OC, OCLS, OEC, OGEN, OMN, ONCY, ONTX, ORBT, ORIG, PBY, PCOM, PGN, PHMD, PLPM, PRGN, PSUN, PT, QLTI, REE, REN, REXX, ROIA, ROIAK, ROYT, SALE, SALT, SANW, SB, SDRL, SGY, SGYP, SHOS, SPAN, SREV, SSE, SSNI, STC, STNG, STNR, STXS, SWSH, SZYM, TCS, TECU, TG, TGA, TGE, TIGR, TINY, TKAI, TLM, TLP, TLYS, TPI, TRCH, TRUP, TTMI, TZOO, UAMY, UBS, UVV, VCYT, VIP, VNOM, VOC, VOD, VPCO, WAIR, WLT, WPRT, WSTL, WTI, WTSL, XNY, ZA, ZEP, ZNGA
ETFs that traded to 52 week highs: HYD, SHY, TLH, TLT, XLP
ETFs that traded to 52 week lows: EFA, EWO, EWQ, EZU, OIL, REMX, TBT, UGA, USO, VGK
9:43 am Riverbed Technology: Elliott comments on Riverbed's release (RVBD) :
"We commend the Board for initiating a strategic review and believe that Riverbed is a great company with products customers value," said Jesse Cohn, portfolio manager at Elliott Management. "We have made a $21 bid for the company, and our team and advisors look forward to completing our confirmatory diligence in an expedited fashion."
8:39 am Apple: Icahn is requesting AAPL considers accelerating its share repurchase in letter (AAPL) : Some key excerpts from the letter include:
"the excess liquidity the company continues to hold on its balance sheet affords the company an amazing opportunity to take further advantage of this valuation disconnect by accelerating share repurchases". "This investment represents the largest position in our investment history, reflecting the strength of the convictions we have expressed in this letter". "Our valuation analysis tells us that Apple should trade at $203 per share today, and we believe the disconnect between that price and today's price reflects an undervaluation anomaly that will soon disappear"."Apple Pay will launch in October 2014, and while we expect limited financial impact in FY 2015 as retailers upgrade their infrastructure to incorporate the requisite near-field communications technology (:NFC), we expect a more meaningful contribution in FY 2016 that accelerates into FY 2017 and the following years". "Over the next three years, we expect the Apple Watch to have a significant impact on Apple's growth. Apple's first new product category since the iPad in 2010, and the company's first foray into wearables, the Apple Watch will launch early next calendar year".
8:31 am Novatel Wireless announces ticker symbol change to MIFI effective Oct. 15, 2014 (NVTL) :
Co will change its NASDAQ ticker symbol to 'MIFI' -- effective at the start of trading on October 15, 2014. The company will continue to operate as Novatel Wireless.
7:35 am Taiwan Semi reports September rev +8% MoM to NT$74.85 bln; rev +19.7% YoY to NT$540.3 bln YTD (TSM) :
Microsemi (MSCC) announced the availability of its new ultra secure SmartFusion2 SoC FPGAs and IGLOO2 FPGAs that have more advanced security features at the device, design and system levels than any other leading FPGA manufacturer.
7:04 am Spansion and ISSI (ISSI) to develop RAM products based on breakthrough Spansion HyperBus interface; both cos will have rights to sell HyperRAM products under a long-term supply agreement fulfilled by ISSI (CODE) : Co and Integrated Silicon Solution (ISSI), a leader in advanced memory solutions, announced plans to develop HyperRAM products based on the Spansion HyperBus interface, which dramatically improves performance while reducing the number of pins. Both companies will have rights to sell HyperRAM products under a long-term supply agreement fulfilled by ISSI.
Spansion and ISSI plan to release the first HyperRAM products in the first half of 2015 and will provide additional details at that time.
6:06 am Chipmos Technology sees Q3 revs above consensus (IMOS) : Co issues upside guidance for Q3 (Sep), sees Q3 (Sep) revs of $190.7 mln vs. $189.90 mln Capital IQ Consensus Estimate.
In local currency, Revenue for the third quarter of 2014 was NT$5,806.3 million, representing an increase of 7.3% as compared to the second quarter of 2014 and an increase of 13.6% from the same period in 2013. This is above the high-end of the Company's guidance, which called for revenue to increase by ~3-7% as compared to the second quarter of 2014. The Company expects gross margin on a consolidated basis to be at the high-end of its prior guidance range of ~23% to 26% for the third quarter of 2014
Tech Stocks
It seems the law of gravity took over in the stock market, because what went up on Wednesday came down on Thursday.
That was true anyway in most instances as the majority of stocks at the NYSE and Nasdaq lost ground. Declines of 2.0% or more were not out of the ordinary -- a point reflected in the major indices, all of which declined at least 2.0%. The Russell 2000 was the biggest loser, falling 2.5% after gaining 1.9% on Wednesday.
What happened, you ask? Well, it all began with what didn't happen.
There wasn't any follow-through buying interest at the opening bellThe S&P 500 failed to push above its 50-day simple moving average Germany's DAX Index coughed up a 1.5% gain and ended up just 0.1%Oil prices kept sliding ($85.25, -2.06)Better than expected earnings results and guidance from Alcoa (AA 15.39, -0.68) and PepsiCo (PEP 93.57, -0.37) was glossed over; andThere was little enthusiasm for the indication that the four-week moving average for initial claims fell to its lowest level since February 4, 2006The most influential factor perhaps was the quick inclination to sell into Wednesday's strength. It came as a surprise since Wednesday's key reversal after the FOMC Minutes had many participants thinking the bulls would regain control of the tape.
That didn't happen and that piqued concerns that the buy-the-dip trade, which has worked effectively for so long, may no longer be the easy money trade. Consequently, there was a flush of selling interest that hit far and wide and left the major indices near their lows for the day when the closing bell rang.
The S&P 500 information technology sector (-1.7%) was not immune by any means to the selling pressure, although it did manage to outperform the broader market. That being the case, and on a day like Thursday, all eyes would naturally turn to Apple (AAPL 101.02, +0.22) for explanation.
Sure enough, Apple was one of just two stocks in the information technology sector to end higher. Yahoo (YHOO 41.10, +0.02) was the other. In both cases, it's fair to say that the influence of activist investors played a part in their relative strength.
Yahoo, of course, is being hounded by Starboard Value to take steps to unlock shareholder value. There wasn't any new information on that front on Thursday, but with the proceeds from the Alibaba Group (BABA 88.79, +0.49) IPO sitting in its coffers, investors are undoubtedly anticipating a constructive announcement soon. That consideration and a Business Insider report that Yahoo may convert Tumblr into a YouTube-like service helped underpin the stock.
As far as Apple is concerned, there were a number of headlines out pertaining to the company, yet one stood out above all others and that was Carl Icahn's letter to CEO Tim Cook requesting that Apple accelerate accelerate its share repurchases. Mr. Icahn said his valuation analysis suggests Apple should be a $203 stock.
Apple has a long way to go to get to where Mr. Icahn sees it, but its strength on Thursday went a long way toward keeping the technology sector's losses from being even greater than they were.
In other developments, the semiconductor stocks were hit particularly hard.
Micron (MU 30.64, -1.68), Atmel (ATML 7.47, -0.48), RF Micro Devices (RFMD 10.34, -0.67), TriQuint Semiconductor (TQNT 17.11, -1.11), Advanced Micro Devices (AMD 2.95, -0.33), which named a new CEO, and Kulicke & Soffa (KLIC 13.23, -0.79) all declined more than 5.0%. The Philadelphia Semiconductor Index dropped 2.7% as all 30 of its components ended with a loss.
Amazon.com (AMZN 315.37, -7.33) became a story stock after a Wall Street Journal report suggested the company is planning to open its first store in New York City before the holidays. Separately, Amazon announced after Wednesday's close that it is expanding its operations in Costa Rica, adding 1,000 new jobs in the process.
Microsoft (MSFT 45.85, -0.93), which is in the midst of cutting jobs, was out Thursday shooting down rumors that it might end its Surface tablet business. Microsoft coyly said in a blog post that its Surface tablet is here to stay.
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