Sector Investing

[ReturntoSender]

From Briefing.com: 4:20 pm : The major averages ended the Thursday session on a higher note with the Dow Jones Industrial Average (+1.3%) spending the entire day in the lead. However, the strength among blue chips masked the underperformance of high-beta chipmaker and transport stocks. Furthermore, defensively-oriented health care (+1.8%) and utilities (+2.1%) finished in the lead, suggesting a lack of strong conviction.

Shortly before the open, the advance reading of Q3 GDP revealed growth of 3.5% while the Briefing.com consensus expected an increase of 3.0%. The news contributed to a rebound in the futures market, which had been pressured by early weakness in European equities. However, markets across Europe were able to erase their losses before ending for the day.

The Dow held the lead from the start thanks to a surge in its top-weighted component. Shares of Visa (V 236.65, +21.99) soared 10.2% in reaction to a bottom-line beat and news of a $5 billion buyback.

Visa's peer, MasterCard (MA 83.13, +7.14), also had a strong showing, spiking 9.4%, after it too surpassed earnings estimates. However, the two names were unable to push the technology sector (+0.2%) ahead of the broader market as other influential components like Apple (AAPL 106.98, -0.36), Facebook (FB 74.11, -1.75), and Microsoft (MSFT 46.05, -0.57) underperformed. Chipmakers also lagged with the PHLX Semiconductor Index falling 1.2%.

The high-beta group slumped after ending yesterday's session on its 50-day average (623.74). The complex widened its October loss to 3.4% with its largest component-Intel (INTC 32.58, -1.34)-plunging 4.0%.

Elsewhere among cyclical sectors, the materials space (+0.7%) had the strongest showing while energy (-0.3%) spent the day in the red. Crude oil, which fell 1.4% to $81.10/bbl, contributed to the weakness, while Chevron (CVX 117.20, +0.06) and ExxonMobil (XOM 94.45, -0.14) ended little changed ahead of their quarterly reports.

Also of note, industrials (+0.4%) could not catch up to the broader market due to the weakness among transports. The Dow Jones Transportation Average slid 1.2% with Con-way (CNW 42.35, -2.81) diving 6.2% despite beating bottom-line estimates. Meanwhile, peer C.H. Robinson (CHRW 69.22, -2.88) tumbled 4.0% in reaction to a Credit Suisse downgrade to 'Underperform' from 'Neutral.'

Meanwhile on the countercyclical side, consumer staples (+0.55%) and telecom services (+0.3%) slipped behind the market in the afternoon while health care (+1.8%) and utilities (+2.1%) finished in the lead.

The health care sector was boosted by strong results from AmerisourceBergen (ABC 84.84, +5.10) and Cigna (CI 97.10, +3.10). As for biotechnology, the iShares Nasdaq Biotechnology ETF (IBB 296.70, +6.07) settled higher by 2.1%.

Treasuries notched their highs right after the GDP report before spending the session in a steady retreat. The 10-yr yield slipped one basis point to 2.31%.

Today's participation was ahead of average with 730 million shares changing hands at the NYSE.

Economic data was limited to GDP and Initial Claims:


According to the advance estimate, GDP grew at an annualized rate of 3.5% during the third quarter while the Briefing.com consensus expected the reading to come in at 3.0%
Real final sales jumped 4.2%, which was the largest spike since Q4 2010
The export deficit narrowed to $409.90 billion from $460.40 billion, boosting GDP growth by 1.32 percentage points
Government spending surged 4.6%, representing the sharpest increase since Q2 2009
Weekly Initial Claims increased to 287,000 from a revised rate of 284,000 (from 283,000) while the Briefing.com consensus called for a reading of 284,000
Claims have held below the 300,000 mark for the past several weeks, suggesting payroll gains should surpass 200,000
Continuing claims increased to 2.384 million from an upwardly revised 2.355 million (from 2.351 million)

Tomorrow, September Personal Income (Briefing.com consensus 0.3%), Personal Spending (consensus 0.1%), Core PCE Prices (expected 0.1%), and the Q3 Employment Cost Index (expected 0.5%) will all be released at 8:30 ET while the Chicago PMI report for October (consensus 60.0) will cross the wires at 9:45 ET. The day's data will be topped off with the final release of the Michigan Sentiment survey for October (expected 86.4).

Nasdaq Composite +9.3% YTD
S&P 500 +7.9% YTD
Dow Jones Industrial Average +3.7% YTD
Russell 2000 -0.7% YTD

DJ30 +221.11 NASDAQ +16.91 SP500 +12.35 NASDAQ Adv/Vol/Dec 1757/1.88 bln/1081 NYSE Adv/Vol/Dec 1961/729.8 mln/1118 3:30 pm :

Crude trended lower overnight into the pit session open, eventually reaching a LoD of $80.8 near lunch time; futures moved higher but has since moved back toward the session low. Dec crude finished the day at $81.10/barrel, down 1.4%.
Natural gas has been trending higher since yesterday's LoD of $3.696, ending today's session 1.2% higher at $3.83/MMBtu
Silver was the worst performing commodity today, tanking 4.5% to $16.44/oz.
Dec gold lost 2.2% at $1198.50/oz, while Dec copper fell 1.2% at $3.07/lb

4:37 pm Emulex beats by $0.06, beats on revs; guides Q2 EPS in-line, revs in-line (ELX) : Reports Q1 (Sep) earnings of $0.14 per share, $0.06 better than the Capital IQ Consensus Estimate of $0.08; revenues fell 9.6% year/year to $103.8 mln vs the $96.08 mln consensus.

Co issues in-line guidance for Q2, sees EPS of $0.14-0.18 vs. $0.15 Capital IQ Consensus Estimate; sees Q2 revs of $102-108 mln vs. $104.63 mln Capital IQ Consensus Estimate.

4:34 pm AXT beats by $0.01, beats on revs; announced a $5 mln stock repurchase program (AXTI) : Reports Q3 (Sep) earnings of $0.02 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.01; revenues rose 12.7% year/year to $23.1 mln vs the $21.76 mln consensus.

"Revenue came in ahead of our expectations, and we achieved another quarter of profitability through improved gross margins and tight expense control. Further, we are diversifying our customer base throughout our product portfolio and are pleased to be gaining traction in several areas that have been a strong focus of our sales efforts. The changes in the gallium arsenide landscape over the past two years have had an adverse impact on our business. However, these changes are finally beginning to settle and new applications for our products are emerging across our substrate portfolio. I am very pleased to have a strong team in place with the expertise to maximize our potential as we evolve our business to meet new opportunities."
Co also announced a $5 million stock repurchase program

4:27 pm Microchip misses by $0.01, reports revs in-line with downside preannouncement; guides Q3 EPS below consensus, revs in-line (MCHP) : Reports Q2 (Sep) earnings of $0.67 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus of $0.68; revenues rose 10.9% year/year to $546.2 mln vs the $546.19 mln consensus.

Co guided for Q2 rev of $346 mln vs. $566 mln consensus on Oct 9.
Co issues guidance for Q3, sees EPS of $0.59-0.64, excluding non-recurring items, vs. $0.62 Capital IQ Consensus Estimate; sees Q3 GAAP revs of $500.9-528.2 vs. $521.82 mln Capital IQ Consensus Estimate.

Co declares dividend of $0.3565 vs. $0.3560 prevously .

4:21 pm Tessera Tech beats by $0.07, beats on revs; guides Q4 revs above consensus (TSRA) : Reports Q3 (Sep) earnings of $0.87 per share, $0.07 better than the Capital IQ single analyst estimate of $0.80; revenues rose 150.1% year/year to $93.3 mln vs the $91.9 mln single analyst estimate.

Co issues upside guidance for Q4, sees Q4 revs of $50-54 mln vs. $44.60 mln Capital IQ Consensus Estimate. Operating expenses are expected to be between $31 million and $33 million. The Company expects approximately $4.7 million of amortization of intangible assets and $3.2 million of stock-based compensation expense. The Company also expects a loss from discontinued operations of approximately $0.8 million.

4:20 pm Silicon Image beats by $0.04, misses on revs; guides Q4 EPS in-line, revs below consensus (SIMG) :

Reports Q3 (Sep) earnings of $0.11 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.07; revenues fell 11.3% year/year to $70.3 mln vs the $72.47 mln consensus.
Co issues mixed guidance for Q4, sees EPS of $0.05-0.08 vs. $0.07 Capital IQ Consensus Estimate; sees Q4 revs of $61-66 mln vs. $66.57 mln Capital IQ Consensus Estimate.

4:14 pm Power Integrations misses by $0.05, misses on revs; guides Q4 revs below consensus (POWI) : Reports Q3 (Sep) earnings of $0.65 per share, excluding non-recurring items, $0.05 worse than the Capital IQ Consensus Estimate of $0.70; revenues fell 1.7% year/year to $90.14 mln vs the $94.93 mln consensus.

Co issues downside guidance for Q4, sees Q4 revs of $83-89 mln vs. $97.73 mln Capital IQ Consensus Estimate.
Non-GAAP gross margin is expected to be approximately 54 percent. (Excludes approximately $0.2 million of stock-based compensation and $0.6 million of amortization of acquisition-related intangibles.) GAAP gross margin is expected to be approximately 53 percent.

4:12 pm ON Semiconductor misses by $0.01, beats on revs; guides Q4 revs above consensus (ONNN) : Reports Q3 (Sep) earnings of $0.21 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.22; revenues rose 16.5% year/year to $833.5 mln vs the $811.05 mln consensus.

Co issues upside guidance for Q4, sees Q4 revs of $835-875 mln vs. $820.92 mln Capital IQ Consensus EstimateBacklog levels for Q4 represent approx 80 to 85 percent of anticipated revenueAverage selling prices for Q4 are expected to be down approx one to two percent when compared to Q3

4:10 pm AXT announces $5 mln stock repurchase program (AXTI) :

3:02 pm Cirrus Logic hammered after reporting, vacillating near its six month close low from Oct at 18.99 -- session low 18.90 (CRUS) : The Oct intraday low does not come into play until 18.39.

12:47 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

BBD (14.94 +8.81%): Reported YTD net income of BRL 11.22 bln, up 24% y/y; Upgraded to Overweight from Neutral at JP Morgan.
V (235.23 +9.58%): Reported Q4 results that beat consensus estimates by $0.08, revs in-line, guided FY15 ~in-line, announced new $5 bln buyback; Upgraded at FBR.
BMY (58.34 +7.72%): Announced encouraging results from their Phase 2 study of Opdivo for patients with lung cancer.

Large Cap Losers

GG (19.35 -10.07%): Reported Q3 earnings of $0.09 per share, $0.10 worse than the Capital IQ Consensus Estimate of $0.19; revenues fell 6.2% year/year to $1.09 bln vs the $1.05 bln consensus; Gold's steep drop on the day to under $1200 an ounce is also adding to the decline.
BWA (54.31 -4.48%): Reported EPS in-line, missed on revs; guided FY14 EPS below consensus, revs below consensus.
CHRW (69.6 -3.47%): Downgraded to Underperform from Neutral at Credit Suisse; tgt lowered to $65 from $68.

Mid Cap Gainers

ACHC (59.86 +13.14%): Beat Q3 consensus estimates by $0.05, beat on revs; raised FY14 EPS above consensus; announced accretive acquisition of CRC Heatlh Group for $1.175 bln.
LOPE (48.1 +11.29%): Reported Q3 results that beat consensus estimate by $0.08, beat on revs; guided FY14 above consensus; Announced formulation of independent committee to explore options; Upgraded to Overweight from Neutral at Piper Jaffray.
MD (62.33 +10.01%): Beat Q3 consensus estimates by $0.01, beat on revs; guided Q4 EPS; Announces $600 mln buyback, expanded credit facility.

Mid Cap Losers

PRXL (53.35 -16.06%): Reported Q1 results that beat consensus estimate by $0.07, reported revs in-line, guided Q2 EPS below consensus, guided FY15 EPS in-line; Downgraded to Neutral at Robert W. Baird, tgt lowered to $63.
AUY (4.56 -15.24%): Reported Q3 loss of $0.01 per share, $0.07 worse than the Capital IQ Consensus Estimate of $0.06; revenues rose 9.8% year/year to $501.23 mln vs the $569.73 mln consensus.
TEX (27.14 -11.25%): Missed Q3 consensus estimates by $0.02, reported revs in-line; reaffirmed FY14 revs guidance, sees FY14 EPS at or near the bottom of previously provided range; Downgraded to Neutral at RW Baird.

11:54 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (161) outpacing new lows (114) (:SCANX) : Stocks that traded to 52 week highs: ABC, ABCW, ACHC, ADP, ADPT, AEE, AEP, AGII, AGIO, ALGT, ALL, AMGN, ANAC, AVA, AVIV, AWK, BABY, BGCP, BIDU, BIN, BLKB, BMY, BOTJ, BURL, CBPO, CELG, CHD, CHFN, CI, CLCT, COST, CRL, CSX, CTAS, CWT, CYBR, DFT, DLR, DPZ, DTE, DUK, DV, ED, EDE, ELLI, ENSG, EPAM, EROS, ESBF, ETR, EW, EXR, FAF, FFG, FRT, GBNK, GD, GEO, GILD, GMCR, GPC, GPX, GSBC, HAIN, HCN, HDSN, HNI, HPP, HRL, HT, HUBS, HUM, IBCA, IDA, INFN, IRF, IT, ITC, JAH, KRC, LB, LCI, LEAF, LEG, LMT, LNT, LOPE, LOW, MERC, MHFI, MRH, MSEX, MSTR, NAVI, NKE, NOC, NP, NU, ODFL, ORLY, PCG, PEB, PEI, PEOP, PFSW, PG, PNW, POR, PSTB, PTRY, PVTB, RDCM, RDI, RDN, RE, RGEN, ROG, ROL, RSG, SAFT, SCG, SCOR, SFST, SGC, SLG, SMCI, SMMF, SONC, SPNC, SRE, SSNC, STON, STRA, SUI, SXI, SXT, SYF, TE, TEG, TEVA, TFSL, TFX, THG, TRV, TTPH, TTWO, TUES, USLM, USPH, UUU, V, VAC, VASC, VDSI, VPRT, WEC, WGP, WM, WRI, XEL, ZAGG

Stocks that traded to 52 week lows: ABX, ADNC, AEM, AFOP, AG, AIXG, AKG, AMCC, AMRN, ANV, ARAY, ASA, ASGN, AU, AUY, AVL, AVP, AXPW, AXU, BAMM, BBL, BCO, BTG, CAB, CBNJ, CCSC, CDE, CEF, CEL, CGG, COT, CRNT, CRR, CYRN, DMD, DRAM, DRNA, DSS, EPRS, ESCR, EVGN, FCX, FTEK, GG, GLRI, GNBC, GRVY, GSS, GTLS, GTU, GZT, HGG, HL, HMY, HVT, IAG, INS, INVN, IPI, JCTCF, KEG, KGC, KZ, LAS, LEU, LF, LIQD, LOJN, LPG, MUX, NANO, NEM, NGD, NKA, NOA, OGEN, OI, ONP, OPHC, P, PAAS, PHMD, PPP, PTNR, PWE, RCKY, RDEN, REMY, RGR, RIO, RRTS, RTGN, SAND, SID, SLW, SMT, SSRI, STM, SVBL, SVLC, SVM, TGA, TGB, TLM, TRCH, TRX, TSPT, ULBI, VALE, VGZ, VOC, VTG, WNC, WSTL

ETFs that traded to 52 week highs: IBB, ICF, IHF, IYH, RTH, XBI, XLP, XLU, XLV

ETFs that traded to 52 week lows: GDX, GDXJ, SIL, SIVR, SLV

9:29 am Alcatel-Lucent +14% in Paris following Q2 results with upside operating income; progress on restructuring (ALU) : Telco communications equipment company Alcatel-Lucent (ALU) is +14% in Paris and set to gap up by a similar amount in the US after the co reported a EUR 9 mln net loss in Q2 or EPS of (EUR0.00) vs. the EUR 0.02 consensus and (EUR0.08) last year; rev fell 6% to $3.25 bln vs. $3.33 bln consensus.

Operating income +50% to EUR 170 mln vs. EUR 136 mln consensusInvestors appear to be encouraged as Q2 results demonstrate progress on co's Shift Plan (restructuring initiatives). Co will host Investor Day on November 11

8:51 am KLA-Tencor announces offering of senior notes (KLAC) : Co announced that it intends to offer, subject to market and other conditions, senior notes under an automatic shelf registration statement on file with the SEC.

8:37 am Interdigital Comm beats by $0.14, beats on revs (IDCC) : Reports Q3 (Sep) earnings of $0.34 per share, $0.14 better than the Capital IQ Consensus Estimate of $0.20; revenues fell 29.8% year/year to $77.6 mln vs the $71.75 mln consensus.

"We saw a dramatic increase in recurring revenue year over year, our licensee base is large and key licensees continue to perform well, and we are actively working to extend the portion of the market under license. Our jury trial win this week in our patent infringement case with ZTE is certainly a very positive development in that regard."

8:08 am O2Micro beats by $0.01, beats on revs (OIIM) : Reports Q3 (Sep) loss of $0.11 per share, $0.01 better than the Capital IQ Consensus Estimate of ($0.12); revenues fell 17.2% year/year to $15.4 mln vs the $15.03 mln consensus.

"Our third quarter results were in-line with the updated guidance that we provided in early October and reflect a difficult quarter in our power management business for notebooks."