From Briefing.com: The Bureau of Economic Analysis reported on Tuesday that real GDP increased at an annualized rate of 3.9% in its second estimate versus its advance estimate of 3.5%. In dollar terms, the U.S. economy is a $16.2 trillion economy.
Apple (AAPL 117.60, -1.03) isn't quite that large, but on Tuesday its market capitalization topped $700 billion, which is roughly the size of Ireland, Norway, and Portugal combined in purchasing power parity terms.
Apple is one big company, one big story, and one big stock. It would ultimately succumb to some profit-taking interest on Tuesday after topping the $700 billion mark. There was probably more psychological resistance there than anything else considering Stifel was the latest firm to raise its price target (to $130 from $115) and Apple is expected to be one of the biggest beneficiaries of this holiday shopping season.
The latter point notwithstanding, IDC said on Tuesday that the worldwide tablet market is expected to see a massive deceleration this year to 7.2% growth from 52.5% growth in 2013 due primarily to 2014 marking the first full year of decline in Apple iPad shipments.
On a related note, IDC estimates that worldwide PC shipments will decline by 2.7% in 2014, which is a slight improvement from its prior estimate that called for a 3.7% decline. Hewlett-Packard (HPQ 37.63, +0.13) for one took the IDC forecast in stride. It tacked on 0.4% ahead of its earnings report after Tuesday's close.
Wholesale distributor Tech Data (TECD 63.38, +0.75), which reported better than expected third quarter results, provided a measure of support for Hewlett-Packard. HP is Tech Data's largest vendor, accounting for 21% of consolidated net sales in its last fiscal year followed by none other than Apple at 13% of Tech Data's consolidated net sales.
The biggest mover in the S&P 500 information technology sector (+0.1%) on Tuesday was Facebook (FB 75.64, +1.63). It jumped 2.2% on no news.
Salesforce.com (CRM 59.34, +1.25), Adobe Systems (ADBE 72.00, +0.78), Harris Corp. (HRS 71.85, +0.80), Lam Research (LRCX 81.00, +1.01), NetApp (NTAP 43.09, +0.46), Visa (V 257.26, +2.64), and MasterCard (MA 86.34, +1.35) were the only other sector components to gain more than 1.0%.
MasterCard and Visa were probably seen as potential holiday shopping beneficiaries given all of the cashless purchases that will soon be made.
There wasn't a single stock in the S&P 500 information technology sector that closed down more than a percentage point. The biggest "loser" was Apple, which dropped 0.9%.
Despite Apple's influential weight, the sector still managed to outperform the S&P 500 (-0.1%).
Elsewhere, Chinese Internet stocks Qihoo 360 Technology (QIHU 74.74, +5.28) and Dangdang (DANG 11.25, -1.16) took divergent paths following their latest earnings results.
QIHU jumped 8% after topping third quarter expectations and hearing Stifel reiterate its Buy rating on the stock. Dangdang, meanwhile, slumped 9% after reporting third quarter earnings that were slightly below analysts' average estimate and issuing fourth quarter revenue guidance ahead of expectations.
Brocade Communications (BRCD 11.39, -0.30) was another earnings reporter that didn't get treated too kindly. After besting fiscal fourth quarter earnings expectations, some cautious remarks from the analysts at Wunderlich (re: valuation) and Oppenheimer (re: SAN switching revenue remaining range bound) weighed on the stock and overshadowed supportive remarks from the analyst at RBC (re: operational focus driving better profit growth).
Postcript: After the close, Hewlett-Packard reported fiscal fourth quarter adjusted earnings of $1.06 per share, which were slightly ahead of analysts' average estimate, on a 2.5% decline in revenue to $28.41 billion.
The company said it sees fiscal first quarter EPS in the range of $0.89 to $0.93, excluding non-recurring items, and FY15 EPS of $3.83 to $4.03.
Shares of HPQ were down 1.2% in after hours trading as of this posting.
4:31 pm Interdigital Comm: Innovation Partners expands its relationship with McGill University in Canada (IDCC) : Co announced that its Innovation Partners unit has entered into a collaboration agreement with McGill University in Montreal, Canada. The collaboration, which explores new forms of mobile information delivery, is funded by a grant from the Natural Sciences and Engineering Research Council (:NSERC) of Canada.
4:11 pm Closing Market Summary: Stocks End Flat Following Upward Q3 GDP Revision (:WRAPX) : The stock market ended the Tuesday session on a flat note. The S&P 500 shed 0.1% after spending the day in a ten-point range while the other indices also settled near their unchanged levels.
Despite the flat finish, equity indices rallied at the start after the second revision to Q3 GDP surprised to the upside (3.9%; Briefing.com consensus 3.2%). However, the opening spike marked the session high for the S&P 500, which returned to unchanged by the end of the first hour.
The S&P 500 dipped into the red during morning action with the move taking pace amid weakness in the energy sector (-1.6%). The growth-sensitive group widened its week-to-date loss to 2.3% after a meeting between Russia, Saudi Arabia, Mexico, and Venezuela did not produce an agreement to reduce output. Crude oil also retreated on the news, but saw a short-lived spike on its way down in reaction to reports OPEC members may opt to cut supply at Thursday's meeting in order to stem the recent decline in price. The energy component ended lower by 2.2% at $74.09/bbl.
The energy sector was the lone decliner of note while most of the remaining groups ended with modest gains. The consumer discretionary space (+0.3%) finished in the lead after a few names reported earnings. Brown Shoe (BWS 31.29, +2.81), DSW (DSW 34.39, +0.74), and Signet Jewelers (SIG 131.59, +8.60) beat estimates while Tiffany & Co (TIF 107.62, +2.61) missed by a penny. The sector finished in the lead even though homebuilders lagged with the iShares Dow Jones US Home Construction ETF (ITB 25.93, -0.15) shedding 0.6%.
Elsewhere, the industrial sector (+0.2%) also finished near the lead with help from transport stocks. The Dow Jones Transportation Average extended to a fresh record, ending higher by 0.4%. Airlines benefitted from lower fuel prices with Delta Air Lines (DAL 44.08, +0.57) advancing 1.3%.
Another cyclical sector-technology-led at the start, but narrowed its gain to just 0.1% by the close. Apple's (AAPL 117.61, -1.02) market cap briefly crossed the $700 billion mark in the morning, but the top-weighted sector component retreated into the close. Unlike Apple, the sector was able to avoid turning negative thanks to gains in other large components like Intel (INTC 36.32, +0.07) and Facebook (FB 75.63, +1.62).
Treasuries notched their lows in reaction to the GDP report, but rallied throughout the day. The 10-yr yield ended lower by five basis points at 2.26%.
Participation was ahead of average with more than 830 million shares changed hands at the NYSE floor.
Economic data included Q3 GDP, Case-Shiller 20-city Index, FHFA Housing Price Index, and Consumer Confidence:
Third quarter GDP was revised up to 3.9% in the second estimate from 3.5% while the Briefing.com consensus expected a reading of 3.2% All of the gain in third quarter GDP resulted from an upward swing in inventories
Real final sales were revised down to 4.1% from 4.2%
The positive surprise was mostly the result of an unexpected upward revision to personal consumption expenditures with goods spending in the third quarter revised up to 4.3% from 3.1% The Case-Shiller 20-city Index for September rose 4.9%, which was ahead of the Briefing.com consensus (4.6%) The September FHFA Housing Price Index was unchanged to follow last month's 0.4% uptick The Consumer Confidence Index dropped to 88.7 in November from a downwardly revised 94.1 (from 94.5) while the Briefing.com consensus expected an increase to 96.0. The Present Conditions Index declined to 91.3 from 94.4 while the Expectations Index fell to 87.0 from 93.8 Tomorrow will be busy on the economic front with the MBA Mortgage Index set to cross the wires at 7:00 ET. Weekly Initial Claims, October Durable Orders, and October Personal Income/Spending Data will be released at 8:30 ET while the Chicago PMI for November will cross at 9:45 ET. The final reading of the Michigan Sentiment Survey will be released at 9:55 ET while New and Pending Home Sales will be reported at 10:00 ET.
Nasdaq Composite +13.9% YTD
S&P 500 +11.8% YTD
Dow Jones Industrial Average +7.5% YTD Russell 2000 +2.1% YTD
4:10 pm Hewlett-Packard beats by $0.01, misses on revs; guides Q1 EPS within range (midpoint below consensus); reaffirms FY15 EPS guidance (HPQ) : Reports Q4 (Oct) adj. earnings of $1.06 per share, $0.01 better than the Capital IQ Consensus Estimate of $1.05; revenues fell 2.5% year/year to $28.41 bln vs the $28.76 bln consensus.
Personal Systems revenue was up 4% YoY with a 4.0% operating margin. Commercial revenue increased 7% and Consumer revenue decreased 2%. Total units were up 5% with Desktops units down 2% and Notebooks units up 8%. Printing revenue was down 5% YoY with an 18.1% operating margin. Total hardware units were down 1% with Commercial hardware units up 5% and Consumer hardware units down 4%. Supplies revenue was down 7%. Enterprise Group revenue was down 4% YoY with a 14.8%. Enterprise Services revenue was down 7% YoY with a 6.8% operating margin operating margin.Co issues guidance for Q1, sees EPS of $0.89-0.93, excluding non-recurring items, vs. $0.93 Capital IQ Consensus.
Co reaffirms guidance for FY15, sees EPS of $3.83-4.03, excluding non-recurring items, vs. $3.96 Capital IQ Consensus Estimate.
HP generated $2.7 billion in cash flow from operations in the fourth quarter, down 4% from the prior-year period. HP also utilized $750 million of cash during the quarter to repurchase approximately 21.7 million shares of common stock in the open market. HP exited the quarter with $15.5 billion in gross cash.
4:04 pm Analog Devices beats by $0.01, beats on revs; guides Q1 EPS in-line, revs in-line (ADI) : Reports Q4 (Oct) earnings of $0.69 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.68; revenues rose 20.1% year/year to $814 mln vs the $804.58 mln consensus. Non-GAAP gross margin of 66.4% of revenue; Non-GAAP operating margin of 33.2% of revenue.
Co issues in-line guidance for Q1, sees EPS of $0.58-0.64 vs. $0.62 Capital IQ Consensus Estimate; sees Q1 revs of $745-775 vs. $766.22 mln Capital IQ Consensus Estimate.
4:03 pm Aehr Test Systems announces private placement of 1,065,029 shares of common stock at $2.431/share (AEHR) : Total gross proceeds to co will be $2.6 million, before offering expenses. The closing of the private placement will take place on November 26, 2014, and no placement agent was used in connection with the transaction.
12:29 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
PLL (97.15 +2.6%): Beat Q1 consensus estimates by $0.09, beat on revs; reaffirmed FY15 EPS guidance.
CMCSA (56.37 +2.46%): Added to US 1 List at BofA/Merrill.
AAL (44.36 +2.67%): Strength in airlines ahead of the busiest travel day of the year and as crude oil prices continue their drop to multi-year lows.
Large Cap Losers
WDAY (86.65 -6.31%): Reported Q3 that beat consensus estimates by $0.06, beat on revs; guided JanQ revs in-line; Tgt lowered at FBR on disappointing guidance.
HRL (52 -3.93%): Missed Q4 consensus estimates by $0.01, reported revs in-line; guided FY15 EPS below consensus.
LVLT (48.6 -2.9%): Downgraded to Neutral from Outperform at Macquarie.
Mid Cap Gainers
QIHU (75.2 +8.26%): Reported Q3 earnings that beat consensus estimates by $0.02, beat on revs; guided Q4 revs above consensus; Bullish commentary from Stifel.
SIG (129.9 +5.62%): Reported Q3 results that beat consensus estimates by $0.03, revs were in-line; guided Q4 EPS in-line.
PANW (119.59 +5.59%): Reported Q1 earnings of $0.15 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.12; revenues rose 50.0% year/year to $192.3 mln vs the $181.73 mln consensus; Tgt raised at Northland, FBR, Topeka, others.
Mid Cap Losers
CASY (79.95 -9.01%): Announced that it will revise financial results due to error in ethanol excise tax reporting; aggregate impact of the unrecorded excise taxes for the period from Jan 1, 2012 through Jul 31, 2014, fully diluted EPS is ~4.5 cents in each of the affected quarters; Downgraded to Neutral at Northcoast.
P (18.58 -5.88%): Downgraded to Underperform from Mkt Perform at FBR Capital; tgt lowered to $11 from $28.
NBR (15.89 -3.11%): Lower after a judge yesterday suspended merger plans between NBR and C&J Energy (CJES), instructing CJES to solicit proposals from other potential buyers.
11:50 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (261) outpacing new lows (62) (:SCANX) : Stocks that traded to 52 week highs: AAPL, AAVL, ABAX, ABG, ACNB, ACT, ACTG, AEC, ALSN, AMAG, AMC, AMT, ANCX, AON, APD, AVGO, AVNR, BBW, BC, BDR, BDX, BERY, BIF, BIN, BJRI, BKW, BLK, BLT, BMRN, BNDX, BOOT, BRK.A, BRK.B, BSET, BTF, BURL, BWLD, CACI, CAF, CATO, CBAN, CBRL, CELG, CENX, CFN, CFO, CHKP, CHSP, CIM, COKE, COLM, COTY, COV, CPRT, CSCO, CST, CSX, CTRN, CVA, CVTI, DENN, DGX, DIN, DISH, DLPH, DLTR, DNB, DPLO, DPO, DPS, DSGX, DSPG, DYAX, EA, EAT, EEFT, ELLI, ENL, EPB, EVN, EW, FBMS, FCB, FEUZ, FFC, FFIV, FFNW, FGL, FII, FIS, FLC, FNF, FOLD, FPXI, FTCS, FTNT, FV, GGG, GGP, GK, GPC, GPI, GPN, GTT, HBI, HCKT, HDS, HIG, HLT, HPI, HRC, HSIC, HSNI, HSP, HTLD, HUM, IMAX, IMKTA, INCY, JBLU, JBSS, JWN, KEYS, KLAC, KMP, KMR, KMX, KNX, LB, LBRDA, LBRDK, LBTYK, LBY, LEAF, LEN, LII, LM, LNC, LOW, LQ, LSTR, M, MCRL, MDT, MDXG, MGPI, MMC, MNDO, MRH, MSTR, MTD, MUSA, MWV, MYCC, NAVG, NCLH, NDAQ, NOC, NSC, NUW, NVDA, NXPI, OCUL, ODFL, ONEQ, ORLY, OVAS, PANW, PDCO, PEI, PERY, PLKI, PLL, PLOW, PMCS, PSCD, PSCT, QQXT, QTEC, QTM, R, RAND, RBA, RDI, RDY, RE, RFMD, RGC, RL, RMAX, ROP, RSTI, RT, RTN, RUK, RVP, RVSB, SBAC, SEIC, SFBS, SHLX, SIG, SJR, SNE, SNPS, SONC, SPR, SQBK, ST, STOR, SWFT, SWKS, SYK, SYMC, TBK, TCX, TDY, TFSL, TFX, THI, TIF, TJX, TMO, TNET, TQNT, TQQQ, TRI, TSEM, TSRA, TTWO, TXT, UCFC, UNP, UPLD, V, VAC, VAL, VDSI, VEC, VFC, VMEM, VONG, VR, VTHR, VTR, VUSE, VWR, WAB, WDC, WERN, WEX, WHR, WLDN, WRB, WY, XL, XNPT, XRAY, ZAYO, ZSPH, ZUMZ
Stocks that traded to 52 week lows: ALE, AMDA, APDN, BGH, BIND, BLRX, BRSS, CEL, CSUN, DCTH, DWSN, ECT, EEI, ENVA, EPM, ESEA, EVGN, FES, FMD, GNBC, GOMO, GZT, HIX, JMEI, KMDA, LEU, MCP, MDGN, MIN, MRTX, MZOR, NCQ, NDRM, NDRO, NSPH, NSPR, ORPN, OXFD, PBIB, PHMD, PICO, PRSS, PTNR, RCPI, RGDO, RNO, RVLT, SALT, SARA, SDLP, SIFY, SIR, SLTC, SPKE, SQQQ, SYPR, SZYM, TGA, VLTC, WGA, WRES, XOOM
ETFs that traded to 52 week highs: IGN, IHF, IHI, IWF, IYF, IYH, IYJ, IYT, MDY, PPA, QQQ, RTH, SDY, SMH, SOXX, UYG, VTI, XBI, XLI, XLK, XLV, XLY, XRT
ETFs that traded to 52 week lows: FXA
7:39 am NXP Semi announced the pricing of its previously announced private offering of $1 bln aggregate principal amount of 1.00% cash convertible senior notes due 2019 (NXPI) : The Notes will bear interest at a rate of 1.00% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2015. The Notes will mature on December 1, 2019. The initial conversion rate for the Notes is 9.7236 shares of NXP's common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of approximately $102.84 per share), which represents an approximately 35.0% conversion premium over the last reported sale price of $76.18 per share of NXP's common stock on the NASDAQ Global Select Market on November 24, 2014.
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