From Briefing.com: Stocks, bonds, commodities, and currencies... they were all in on Tuesday's action and they all saw plenty of volatility. It was a roller-coaster session indeed that tossed and turned on the back of oil price movements and swings in the Russian ruble.
Russia effectively stole the headline spotlight after its central bank raised its key lending rate to 17.0% from 10.5% in an effort to limit ruble depreciation risks and inflation risks.
That move sent the Russian stock market into a tailspin, caused all sorts of palpitations for the ruble, and triggered a negative start, along with a slide in WTI crude futures below $54.00 per barrel, for the U.S. stock market. The dollar-denominated RTS Index declined 12.4% on Tuesday after being down more than 16.0%.
The U.S. stock market soon turned around from its opening losses, riding the relative strength of the energy sector, a sharp rebound in WTI crude futures above $57.00 per barrel, and a bounce in the ruble that tempered some of the fears seen earlier when it was down as much as 18% against the dollar.
The turnaround effort in the U.S., however, ran into a wall around 11:30 a.m. ET when selling efforts picked up again in a broad-based manner. The major indices would end the day mired in negative territory close to, or at, their lows of the session. The Nasdaq Composite (-1.2%) trailed behind the Dow Jones Industrial Average (-0.7%) and S&P 500 (-0.9%).
The S&P 500 information technology sector (-1.5%) was one of the worst-performing sectors on Tuesday, trailing behind only the consumer discretionary sector, which declined 1.6%.
The underperformance was easy to pinpoint when taking into account that heavyweights like Apple (AAPL 106.75, -1.48, -1.4%), Google (GOOG 495.39, -18.41, -3.6%), Microsoft (MSFT 45.16, -1.51, -3.2%), Facebook (FB 74.69, -2.30, -3.0%) and Yahoo (YHOO 48.85, -0.97, -2.0%) were among its biggest decliners.
The weakness in Microsoft and Google stemmed from analyst downgrades. Bank of America/Merrill Lynch cut its rating on Microsoft to Underperform from Neutral, noting concerns about margin leverage, while JPMorgan Chase cut its price target for Google from $670 to $600, citing concerns about growing competition from Facebook and the shift from desktop to mobile search.
Facebook's weakness wasn't news-driven; rather, it was consistent with a generally weak outing for the social media space, evidenced by a 2.1% drop in the Global X Social Media Index ETF (SOCL 17.40, -0.38). To that end, Twitter (TWTR 35.13, -1.72, -4.7%) was on the losing end of things, too, after Evercore cut its price target from $55 to $45. Other laggards included LinkedIn (LNKD 215.62, -2.40, -1.1%), Groupon (GRPN 6.83, -0.18, -2.6%), and Russian ADR Yandex (YNDX 16.82, -0.86, -4.9%).
Yahoo didn't have any specific news afflictions. It announced the closing of its BrightRoll acquisition, saying the transaction should enhance its EBITDA. The weakness in Yahoo, then, looked to be an offshoot of the profit taking that hit the broader market.
The same could be said for Apple, which was found not guilty of violating antitrust law in a jury case considering its use of iTunes 7.0 firmware and software in its iPod model. The favorable ruling was returned after just three hours of deliberations.
There was a lot of red seen across the sector as 54 of the 66 components comprising the sector finished Tuesday with a loss.
The best-performing component was Applied Materials (AMAT 23.85, +0.46), which jumped 2.0% on heavier than average volume and no news. Its gains helped the Philadelphia Semiconductor Index (-0.7%) outperform the market. On a related note, Needham said Tuesday it thought the SOX Index could outperform the Nasdaq again in 2015 after outperforming in 2013 and 2014, noting that the industry is less prone to cyclical booms and busts than in the past.
Cognizant Technology (CTSH 51.22, +0.71) for its part tacked on 1.4% after Deutsche Bank raised its price target from $58 to $69 and named the company its top pick in IT services.
Elsewhere, Amazon.com (AMZN 295.06, -11.01) had a rough day. It shed 3.6% and fell below $300 for the first time in five weeks following news reports that Google is aiming to get more competitive with Amazon. Including Tuesday's loss, AMZN is down 26% since the start of the year.
Priceline (PCLN 1045.84, -32.80) could feel Amazon's pain. It declined 3.0% after Goldman Sachs removed the stock from its Conviction Buy List.
Unisys (UIS 26.10, +1.88), on the other hand, bucked the broader selling trend and rallied close to 8% after naming Peter A. Altabef its President and CEO effective January 1, 2015. Mr. Altabef previously served as President and CEO of Perot Systems Corporation and MICROS Systems.
4:16 pm Closing Market Summary: Stocks Slump With One Eye on Russia (:WRAPX) : The stock market endured a volatile session on Tuesday with investors keeping one eye on the oil market and one on the dollar/ruble exchange rate. The Russell 2000 (-0.1%) registered the slimmest decline while the S&P 500 settled lower by 0.9% after failing to hold its 100-day (1988) and 50-day moving averages (2001).
Yesterday evening, the Central Bank of Russia hiked its key interest rate by 650-basis points to 17.0% with the move aimed at halting the recent freefall in the ruble. The news gave a brief boost to the Russian currency, but the ruble was down more than 18.0% (77.93) against the dollar this morning, which invited concerns about potential economic and financial risks stemming from the continued plunge. This sent participants scrambling in search of safe havens, which boosted Treasuries and the yen.
Meanwhile in the commodity market, crude oil was down in excess of 2.5% this morning, but the energy component spiked off its low shortly after the start of the pit session. Oil was able to return to its flat line, but could not make a sustained move into the green, ending with a nine-cent loss at $55.87/bbl.
The rebound in crude occurred as equities climbed off their lows, while the ruble managed to reclaim its overnight loss. Also of note, the dollar/yen pair narrowed its decline to about 110 pips (116.70), allowing the Dollar Index (87.93, -0.53) to climb off its low. The index hovers just below its November high going into tomorrow's FOMC policy directive, which will be released at 14:00 ET.
While the FOMC statement is likely to acknowledge continued growth and strength in the U.S. labor market, it is unlikely that it will have a strong hawkish undertone considering the recent weakness in crude oil and the resulting impact on inflation.
Only two sectors ended the day in the green with energy (+0.7%) representing the lone advancer on the cyclical side. The energy sector was able to rally as participants deemed the growth-sensitive sector oversold on a short-term basis after losing 8.1% so far in December. Today's advance trimmed the sector's month-to-date loss to 7.0% with Dow component Chevron (CVX 101.70, +0.84) climbing 0.8%.
Also of note, the industrial ended on its flat line, owing its outperformance to defense contractors, and specifically, shares of Boeing (BA 124.25, +2.17). The stock jumped 1.8% after the company hiked its quarterly dividend 25.0% to $0.91 per share and increased its share repurchase plan to $12 billion.
The remaining cyclical sectors could not stay out of the red with consumer discretionary (-1.6%), financials (-1.0%), and technology (-1.5%) driving the market to fresh lows during afternoon action.
Notably, the tech sector trailed the broader market throughout the day, but its underperformance proved to be a significant drag in the afternoon. Google (GOOGL 498.16, -17.68) and Microsoft (MSFT 45.22, -1.45) posted respective losses of 3.4% and 3.1%, with the latter suffering from a Bank of America/Merrill Lynch downgrade to 'Underperform' from 'Neutral.'
The underperformance of technology kept the Nasdaq (-1.2%) behind the S&P 500 throughout the day while afternoon weakness in the biotech space pressured the tech-heavy index to a fresh low ahead of the close. The iShares Nasdaq Biotechnology ETF (IBB 293.67, -3.99) and the health care sector both lost 1.3%.
Treasuries ended near their highs with the 10-yr yield lower by seven basis points at 2.05%.
Participation was ahead of average with more than 996 million shares changing hands at the NYSE floor.
Economic data was limited to Housing Starts and Business Permits:
Housing starts declined 1.6% in November to 1.028 million from an upwardly revised 1.045 million (from 1.009 million) while the Briefing.com consensus expected a reading of 1.035 million Recent gains in the NAHB Homebuilders survey suggested rapid construction growth is on the near-term horizon. Over the last 12 months, however, housing starts have averaged 994,000 per month and recent trends are slightly upward moving. Homebuilders may be saying that they expect strong demand growth, yet the lackluster housing starts data clearly show that they are not actively preparing for accelerated demand Building Permits declined 5.2% to 1.035 million while the consensus expected a reading of 1.060 million Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while November CPI (Briefing.com consensus -0.1%), Core CPI (consensus 0.1%), and Q3 Current Account Balance (consensus -$95.00 billion) will all be reported at 8:30 ET. Also of note, the FOMC will release its latest policy directive at 14:00 ET.
Nasdaq Composite +8.9% YTD
S&P 500 +6.7% YTD Dow Jones Industrial Average +3.0% YTD Russell 2000 -2.0% YTD
2:52 pm General Electric reaffirms 2014 revenue outlook of +0-5% at Investor Meeting (GE) :
Industrial ++- Strong Industrial segment growth ... +10% 3Q YTD; Margin expansion ... +50 bps. 3Q YTD GE Capital ~$6.7B- Delivering on 2014 framework ... TY ~$6.9B; Phase 1 of Retail Finance transaction + Nordics sale Corporate - Will outperform $500MM cost out target; Restructuring > gains ... 2 higher restructuring & other charges ... TY ~(11) Total operating earnings- Positive impact of share reduction CFOA $14-17B- Total year tracking to framework; ~$3B GE Capital dividends Total revenues 0-5%- Industrial segment organic 4-7% ... +5% 3Q YTD; GE Capital 0-(5)% ... (5)% 3Q YTD
1:03 pm Amkor announced that it has granted GLOBALFOUNDRIES a non-exclusive license to its proprietary copper pillar wafer bump technology (AMKR) : The agreement provides for the transfer of the co's copper pillar wafer bump technology to GLOBALFOUNDRIES and a license under Amkor's intellectual property to enable GLOBALFOUNDRIES to bump wafers based on this technology.
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
CLR (33.02 +6.69%): Oil & gas companies outperforming on the day as oil stabilizes and jumps despite dropping to $53.68 earlier (SU, APA, EPD also notably higher).
CVS (93.67 +4.23%): At Analyst Day guided FY15 EPS in-line, reaffirmed FY14 guidance; raised dividend 27%; added $10 bln buyback.
MNST (108.72 +3.53%): Upgraded to Buy from Outperform at Credit Agricole.
Large Cap Losers
WHR (177.1 -3.41%): Co sees FY15 ongoing business diluted EPS of $14.00-15.00 vs $14.41 mln Capital IQ Consensus Estimate; sees FY14 ongoing business diluted EPS of $10.90-11.10 (lowered from previous guidance of $11.50-12.00) vs $11.65 Capital IQ Consensus Estimate.
PGR (25.82 -1.6%): Announced that it has agreed to acquire a controlling position in ARX Holding Corp, the parent company of American Strategic Insurance and its affiliates, for ~$875 mln in cash.
S (3.98 -1.73%): Reports out the co may be fined $105 mln for overcharging.
Mid Cap Gainers
TLM (7.58 +47.95%): Repsol (REPYY) confirmed plans to acquire Talisman Energy for $8.00 per common share in all-cash transaction.
GRUB (33.27 +4.82%): Upgraded to Buy from Neutral at Goldman; tgt raised to $43 from $42; Heavy activity in the Mar 35 calls.
SPWR (24.46 +5.16%): Upgraded to Overweight from Equal-Weight at Morgan Stanley.
Mid Cap Losers
NAV (30.9 -11.84%): Reported Q4 (Oct) loss of $0.88 per share, $0.98 worse than the Capital IQ Consensus Estimate of $0.10 (GAAP $0.08); revenues rose 9.3% year/year to $3.01 bln vs the $3.01 bln consensus.
OCN (20.93 -5.96%): Reports out that the co's compliance issues may be under scrutiny; The co confirmed they are working closely with the Office of Mortgage Settlement Oversight on two issues.
QIHU (57.6 -3.44%): The co announced it has formed a strategic partnership with Coolpad Group Limited a smartphone co in China, through investing $409.05 mln in cash to take a 45% stake in a joint venture with Coolpad.
12:10 pm Stocks/ETFs that traded to new 52 week highs/lows this session- New lows (108) outpacing new highs (7) (:SCANX) : Stocks that traded to 52 week highs: AXTA, CVS, ED, KR, ROST, SPLS, WM
Stocks that traded to 52 week lows: ABEV, ABX, AEM, APA, APC, ARCC, AU, AVP, BBVA, BSMX, CAM, CCJ, CIG, CLR, CMLP, CNO, CNQ, COP, CRC, CVE, CVX, CX, DDD, DNR, DVN, EBR, ECA, ESV, EXH, FCX, FLR, FLS, FSLR, FTI, GLNG, GOOGL, HAL, HES, HFC, HLF, HP, IBM, JEC, KOS, L, LINE, LUK, LVS, MBT, MCD, MDU, MGM, MPEL, MRO, MUR, NBL, NE, NEM, NGLS, NRG, OGE, OIBR, OIBR.C, OII, OKE, OKS, OUT, OXY, P, PAA, PAGP, PBR, PBR.A, PSX, PTEN, PWR, QEP, RGP, RIG, S, SBS, SE, SFUN, SGEN, SLB, SMFG, SPN, SSYS, SU, SWN, TCK, TOT, TSU, UPL, VALE, VALE.P, VIP, VIV, WFT, WLK, WLL, WPX, WPZ, WYNN, XOM, YNDX, YPF, ZU
ETFs that traded to 52 week highs: none
ETFs that traded to 52 week lows: AFK, AMJ, BJK, BKF, BNO, DBC, DIG, DJP, ECH, EEB, EMB, EPOL, EPU, EWA, EWM, EWW, EWZ, GDXJ, GSG, GULF, HYG, IEO, IGE, ILF, IXC, IYE, JNK, KOL, MES, OIH, OIL, PBD, PBW, REMX, RSX, SEA, SGG, TBT, UGA, UHN, USCI, USO, XES, XLE, XME, XOP
Note: To reduce the list of stocks making 52 week highs/lows to a manageable size we have filtered out stocks below $2 bln in market cap and below 1 mln average volume. Without this filter 39 stocks made 52 week highs and 655 stocks made 52 week lows.
10:01 am Google and Verizon (VZ) enter into global patent license agreement (GOOG) : Co and Verizon (VZ) have entered into a long-term patent cross-license agreement covering a broad range of products and technologies. The agreement allows each company to reduce the risk of future patent litigation.
"Verizon has long championed patent reforms and industry actions that promote innovation," said Verizon General Counsel Randal Milch. "We look forward to striking similar deals with other high-tech companies also concerned with the innovation tax that patent trolls often collect."
9:01 am Amtech Systems reaches $21 mln in solar orders to-date in Q1 FY2015 on a large order from Asia; total solar & non-solar orders reach $28 mln (ASYS) : Co announced that since October 1, 2014, it has received approximately $28 million in orders, including $21 million in orders for its solar products. The $21 million in solar orders includes a significant order from a leading Chinese manufacturer and the previously announced order from Mission Solar Energy. The orders are expected to ship within the next three to nine months.
7:32 am SunEdison announced that is has closed its second fund for distributed generation projects in the United States with Barclays and Citi; lease pass-through fund is valued at $117 mln (SUNE) :
Co announced that is has closed its second fund for distributed generation projects in the United States with Barclays and Citi.The lease pass-through fund is valued at $117 million, and follows on the Barclays and Citi fund closed earlier this year.
7:31 am Charles & Colvard entered into a new exclusive supply agreement on December 12, 2014 with Cree (CREE) for purchases of silicon carbide crystals (CTHR) :
Co entered into a new Exclusive Supply Agreement on December 12, 2014 with Cree, Inc. (CREE) for purchases of silicon carbide (SiC) crystals. The new Exclusive Supply Agreement supersedes and replaces the existing Amended and Restated Exclusive Supply Agreement with Cree that is set to expire in 2015.The new Exclusive Supply Agreement is set to expire in June 2018; however, provided certain conditions are met, Charles & Colvard has a renewal option to extend the term of the agreement for an additional two-year period.
6:03 am Cabot Micro announced that its Board has elected David H. Li as President and CEO and member of the Board, effective January 1, 2015; William P. Noglows will continue to serve as Executive Chairman of the Board (CCMP) : As President and CEO, Mr. Li, who is currently Cabot Microelectronics' Vice President of the Asia Pacific Region, will succeed Mr. Noglows, who has served as the company's Chairman, President and CEO since 2003.
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