From Briefing.com: Monday wasn't exactly a day for the trading ages. Rather, it looked more like a day for the aged as things moved slowly in another mixed session that saw the Dow (+0.1%) and S&P 500 (+0.1%) outperform the Nasdaq (-0.4%) and Russell 2000 (-0.7%).
By and large, it was a continuation of the consolidation trade that took root last week as neither buyers nor sellers could establish a foothold in Monday's trading. That was perhaps fitting as some disappointing macro news offset some exciting micro news.
The disappointment on the macro side was rooted in the report that Japan's third quarter GDP declined 0.4% quarter-over-quarter (-1.6% annualized) on the heels of a 1.9% decline (-7.3% annualized) in the second quarter. In doing so, Japan officially slipped back into a recession.
That understanding cast a pall on sentiment in overnight action, yet the broader market managed to hold its own on a combination of M&A announcements that included Halliburton (HAL 49.23, -5.85) acquiring Baker-Hughes (BHI 65.23, +5.34) in a $34.6 billion cash-and-stock transaction and Actavis (ACT 247.94, +4.17) acquiring Allergan (AGN 209.20, +10.55) in a $66 billion cash-and-stock offer.
The S&P 500 information technology sector (-0.2%) took it all in from a distance and never made any real waves as it dipped on some modest profit-taking interest. Including Monday's retreat, the sector is still up 11.9% from its October 16 low.
Volume was on the lighter side for most winners and losers alike. Cisco (CSCO 26.47, +0.15) was a notable exception there, advancing for a second straight session following its fiscal first quarter earnings results on heavier-than-average volume.
Gains in other widely-held stocks like Hewlett-Packard (HPQ 37.41, +0.49), Intel (INTC 34.24, +0.29), EMC Corp. (EMC 30.38, +0.33), Oracle (ORCL 41.16, +0.32), and Yahoo (YHOO 52.37, +0.62) helped offset losses in other widely-held names like Apple (AAPL 113.99, -0.19), Facebook (FB 74.24, -0.64), Google (GOOG 536.51, -7.89), KLA-Tencor (KLAC 79.02, -1.31), and Salesforce.com (CRM 62.51, -1.40).
The news behind those respective moves was limited in most respects.
Apple traded down despite RBC Capital Markets raising its price target to $120 from $115; meanwhile, Yahoo got a pop after a Forbes article highlighted Citigroup's belief that the current valuation of Alibaba (BABA 114.25, -0.85) within Yahoo is a 37% discount to Friday's closing price.
On a related note, BABA slipped 0.7% on Monday despite a number of hedge funds disclosing new positions in the stock in their quarterly 13F filings.
Chinese Internet stocks had a down day in general after leading e-commerce site JD.com (JD 25.00, -2.01) reported its quarterly results and disappointed with a fourth quarter sales outlook that was basically in-line with expectations. With JD gaining 13% over the prior seven sessions, investors were apparently geared up to hear more robust sales guidance.
Baidu (BIDU 244.00, -5.70), Sohu.com (SOHU 49.23, -1.73), Dangdang (DANG 12.89, -0.41), Weibo (WB 18.50, -0.43), and Changyou.com (CYOU 22.55, -1.32) all dropped more than 2.0%.
The biggest loser within the S&P 500 information technology sector on Monday was chip equipment maker Lam Research (LRCX 77.79, -2.02). It declined 2.5% on heavier-than-average volume and no specific news to account for its negative disposition. That decline, as well as declines in many other semiconductor-related names, weighed on the Philadelphia Semiconductor Index, which lost 0.5%.
4:20 pm Xilinx BoD authorizes a repurchase of up to $800 mln of the Co's outstanding common stock (XLNX) : Co announces its BoD has granted an authorization for the Co to repurchase up to $800 mln of its common stock, or ~7% of its outstanding shares at the current stock price. Since FY10, the Co has repurchased approximately 50 mln shares for approximately $1.6 bln.
4:09 pm Closing Market Summary: Countercyclical Sectors Pace Slim Advance (:WRAPX) : The stock market began the new trading week on an unassuming note. The S&P 500 (+0.1%) added just over a point while the Nasdaq (-0.4%) and Russell 2000 (-0.8%) underperformed throughout the session.
The benchmark index started under modest pressure, but was able to finish near its best level of day with help from countercyclical sectors. News from overseas contributed to the early weakness as Japan's preliminary GDP report for Q3 revealed the second consecutive decline (-0.4%; expected 0.5%), meaning the country is now in recession. The news gave an overnight boost to the yen, but the currency was back to unchanged against the dollar (116.20) by the start of the U.S. session. The yen weakened a bit during the session, sending the dollar/yen pair to 116.50.
Although the S&P 500 started in the red, the index was back near its flat line in the first hour with help from comments made by European Central Bank President Mario Draghi. Mr. Draghi appeared in front of a European parliamentary committee and provided another reminder that the ECB stands ready to act if downside risks continue mounting.
The combination of Mr. Draghi's comments and the relative strength in countercyclical sectors kept the S&P 500 from dipping too far into the red. However, the index never climbed too far above its flat line either with participants reluctant to take on additional risk after an 11.2% rally over the past month. Below-average participation spoke to the cautious posture as fewer than 675 million shares changed hands at the NYSE floor.
As mentioned earlier, countercyclical sectors displayed strength with consumer staples (+0.6%), health care (+0.5%), and utilities (+1.3%) registering solid gains while the telecom services sector (-0.2%) underperformed.
The staples sector rallied behind Tyson Foods (TSN 43.01, +2.35), which spiked 5.8% in reaction to a bottom-line beat. Elsewhere, health care was underpinned by news indicating Actavis (ACT 247.94, +4.17) agreed to acquire Allergan (AGN 209.20, +10.55) for $219/share in cash and stock. Biotechnology displayed intraday strength, but the iShares Nasdaq Biotechnology ETF (IBB 288.84, +0.67) narrowed its gain to 0.2% by the close.
M&A activity was not isolated to the health care sector as Halliburton (HAL 49.23, -5.85) agreed to acquire Baker Hughes (BHI 65.23, +5.34) for $78.62/share, representing a 40.8% premium to BHI's price on October 10 before the initial offer was made. As for energy, the sector narrowed its loss to 0.4%, but still ended at the bottom of the leaderboard. Crude oil registered another decline, sliding 0.3% to $75.61/bbl.
The remaining growth-sensitive sectors settled closer to their flat lines, but the relative weakness among chipmakers kept the Nasdaq in the red throughout the session. The PHLX Semiconductor Index lost 0.5% while the technology sector shed 0.2%.
Treasuries ended near their lows with the 10-yr higher by a basis point at 2.33%.
Tomorrow, October PPI (Briefing.com consensus -0.2%) will be released at 8:30 ET while the NAHB Housing Market Index for November (consensus 55) will cross the wires at 10:00 ET.
Nasdaq Composite +11.8% YTD S&P 500 +10.4% YTD Dow Jones Industrial Average +6.5% YTD Russell 2000 +0.1% YTD
1:01 pm Fairchild Semi announced management changes to streamline the company's reporting structure; President and COO Vijay Ullal to depart the co; CEO Mark Thompson to assume title of president (shares halted) (FCS) : Vijay Ullal, President and Chief Operating Officer, has departed the company. The changes are effective immediately. More than two years ago, the co initiated an extensive restructuring of its supply chain, including a manufacturing footprint consolidation that is on schedule to be completed in 2015. The company also sought to upgrade its leadership team to accelerate operational improvement, one part of which was hiring Mr. Ullal.
12:40 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
BHI (66.07 +10.31%): To be acquired by Halliburton (HAL) for $78.62 per share in a transaction valued at $34.6 bln.
AGN (209.52 +5.47%): To be acquired by Actavis (ACT) for $219 per share in a transaction valued at $66 bln.
TSN (42.82 +5.31%): Reported Q4 earnings of $0.87 per share, $0.10 better than the Capital IQ Consensus Estimate of $0.77, revenues rose 13.6% year/year to $10.11 bln vs the $10.14 bln consensus; guided FY15 EPS in-line; co reported record Q4 sales and record 2014 sales and adj. EPS.
Large Cap Losers
HAL (49.72 -9.73%): Pulling back after announcing a deal to by BHI for almost $35 bln as investors digest the details of the proposed acquisition, including a $3.5 bln break-up fee HAL will have to pay should the transaction fail to obtain antitrust approvals.
JD (25.65 -5.03%): Reported Q3 loss of RMB 0.12 per share, which may not be comparable to the Capital IQ Consensus Estimate of (RMB 0.03); revenues rose 60.8% year/year to RMB 29.01 bln vs the RMB 28.71 bln consensus.
PBR (9.36 -5.93%): The co confirmed it will delay its Q3 earnings release as a result of a corruption probe into the energy firm.
Mid Cap Gainers
EXH (36.01 +6.63%): Announced plan to separate its international and fabrication businesses into a new publicly traded company.
HAS (56.26 +4.15%): Higher following reports that talks with DreamWorks (DWA) have cooled; Needham opined that the strategic benefits of a DWA purchase would be outweighed by financial and strategic risks.
LEAF (37.95 +3.89%): Target raised to $42 from $36 at JMP Securities; Mkt Outperform.
Mid Cap Losers
DWA (22.2 -14.68%): Lower following reports that the talks with Hasbro (HAS) about a possible acquisition may be fading.
DNR (9.95 -11.21%): Downgraded to Neutral from Outperform at Credit Suisse, tgt $16 and downgraded to Neutral from Buy at Sterne Agee following management changes and the declaration of the company's 2015 capital plan in which they plan to reduce capex by 50%.
ASNA (12.11 -7.94%): Heard downgraded to Mkt Perform at Avondale; stock rose sharply on Friday following an insider filing from Golden Gate detailing a 244K position in the company.
11:41 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (112) outpacing new lows (67) (:SCANX) : Stocks that traded to 52 week highs: AAC, AAPL, ABBV, ABC, ACT, AEC, AGN, AIRT, AMOT, ANIP, BBW, BCE, BG, BIN, BLE, BLMT, BOOT, BPY, BRCD, CARO, CERN, CQB, CTP, CVA, CYAN, CYBR, DENN, DHX, DLR, DLTR, DOC, DPLO, EA, ENV, EROS, ESPR, EW, FBMS, FCE.A, FNF, GNTX, HAIN, HSP, HWBK, IFN, INFY, INGR, INTU, IP, IT, JBSS, KAR, LABL, LB, LEAF, LOGM, LOW, LVLT, MERC, MFRM, MHFI, MHG, MRGE, MSBF, MSTR, MTD, MUSA, NATH, NCLH, NTES, NUVA, NVEE, NWL, NXPI, OCUL, OPLK, OTEX, OVAS, OVBC, PAHC, PANW, PAYC, PDCO, PEBK, PEI, PLKI, QLYS, QTM, RCMT, RDCM, RENT, RHT, ROG, RVP, SCMP, SHO, SHW, SJR, SRT, SSNC, TCX, TFX, TGTX, TSRA, TU, VAL, VYFC, WIFI, WMT, XRAY, YHOO, ZTS
Stocks that traded to 52 week lows: ACUR, ACY, ADGE, AEZS, AHPI, ASPS, ATEA, ATL, AXX, BAXS, BRSS, CACH, CEL, CORI, CPAH, CZZ, DARA, DLIA, DNR, EDMC, EMITF, ENRJ, EPAX, EVGN, FATE, FES, FORD, GGB, HGR, HIIQ, HNR, ICA, KOP, LGCY, LOV, LPHI, MDU, NADL, NCTY, NPD, NRT, PBR.A, PCYO, PICO, PLPC, PTNR, RIG, RLOG, RNO, SARA, SM, SPRO, SR, STXS, TAXI, TNH, UVV, VIVO, VRML, VRTS, VVUS, WF, WPX, WSTL, WTSL, YUMA, ZU
ETFs that traded to 52 week highs: PPH, PSK, RTH, XLY
ETFs that traded to 52 week lows: none
9:31 am Ascent Solar announced the signing of a definitive agreement to raise $35 mln in financing from one institutional investor (ASTI) : Co announces the signing of a definitive agreement to raise $35 mln in financing from one institutional investor. ASTI will receive $4.5 mln in gross proceeds at closing. The remaining $30.5 mln of gross proceeds from the financing will be placed at closing into restricted control accounts of the Co. ASTI intends to use the proceeds of the offering to fund the continued operations and expansion of its retail channels for its EnerPlex products in the US, Europe and Asia, brand building, as well as the launch of additional EnerPlex products.
9:06 am JDS Uniphase: Sandell releases open letter to the shareholders of JDS Uniphase; Sandell to vote 'AGAINST' director nominees Thomas Waechter and Martin Kaplan; believes Mr. Waechter should follow through on stated willingness to pursue a sale of CCOP business (JDSU) :
9:06 am STMicroelectronics' secure microcontroller selected by Sony (SNE) for next-generation payment cards in Japan (STM) :
Co announced that its latest dual-interface secure microcontroller has been selected by Sony to power the new micropayment-enabled cards that will reach Japanese consumers by H1 2016.The market's most advanced dual-interface (contact / contactless) secure microcontroller, ST's ST31G480 combines high computing power and energy efficiency with superior flexibility and interoperability.It is the only device available today that can automatically detect and handle different types of radio-frequency communication used by the card readers.KLA-Tencor (KLAC) announced the closing of its $1.25 bln five-year senior unsecured revolving credit and term loan facility. This credit facility consists of $750.0 mln of amortizing term loans and commitments for an unfunded revolving credit facility of $500.0 mln.
8:37 am Solar Power announced that its wholly owned subsidiary, SPI Solar Power has entered into a framework agreement with TBEA Xinjiang Sunoasis to acquire from TBEA Sunoasis 168.5 mw of solar projects across China (SOPW) : Co announced that its wholly owned subsidiary, SPI Solar Power Co., Ltd., has entered into a framework agreement with TBEA Xinjiang Sunoasis Co., Ltd., a subsidiary of TBEA Co., Ltd. and a top machinery maker in China according to China Machinery Top 500 Research Report, to acquire from TBEA Sunoasis 168.5 megawatts of solar projects across China, including in Gansu Province, Xinjiang Region, Inner Mongolia Region and Qinghai Province. These projects are expected to be connected to the grid starting from 2014 to the end of 2015. SPI and TBEA Sunoasis will enter into a definitive equity interest purchase agreement no later than March 31, 2015.
7:00 am Rudolph Tech announced that it has received multi-system orders from several customers for its latest MetaPULSE G metal metrology system in support of their mobile device components ramp (RTEC) : "Consumer demand for more power and higher functionality from handheld devices and the burgeoning Internet of Things are driving continued technological innovation in the mobile and connected device markets. As a result, we see tremendous growth in specialty components such as MEMS sensors, frequency filters and power devices supporting the mobile and wireless IC market."
6:56 am Cray awarded $80 million contract from King Abdullah University of Science and Technology (CRAY) : Co announced it has been awarded a contract to provide King Abdullah University of Science and Technology in Saudi Arabia with multiple Cray systems that span the Company's line of compute, storage and analytics products.
The contract with KAUST marks Cray's return to the Middle East for the first time in nearly 20 years. Cray will provide KAUST with a Cray XC40 supercomputer with DataWarp technology, a Cray Sonexion 2000 storage system, a Cray Tiered Adaptive Storage (TAS) system and a Cray Urika-GD graph analytics appliance. The Cray XC40 system at KAUST, named "Shaheen II," will be 25 times more powerful than its current system.
Consisting of products and multiple years of service and support, the contract is valued at more than $80 million and the systems are expected to be installed in 2015.
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