Sector Investing

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From Briefing.com: The 2014 trading year ended on a rather somber note, with the S&P 500 falling 1% on the last day of the year. The Technology Sector also tumbled into year-end with the S&P 500 Information Technology Index closing 1.2% lower. It's worth noting though that after such large gains on the year, it is little surprise to see stocks fall as traders take profits before the year ends.

Taking a look at the entire 2014 year, the Tech Sector gained 19.62%. We've include a breakdown of how each industry group within the sector performed:

Communications Equipment +12.49%

Electronic Equipment, Instruments & Components +22.57%

Internet Software & Services +7.88%

IT Services +4.05%

Semiconductors & Semiconductor Equipment +33.91%

Software +21.51%

Technology, Hardware, Storage & Peripherals +37.67%

In regards to news, Topeka noted that it sees factors that drove growth in 2014 such as the ad and retail shift to the Internet, mobility, programmatic ad buying, and same-day delivery, continuing in 2015. They believe we should see a more meaningful shift from TV ad budgets to online video as TV ratings continue to suffer, Internet measurability improves, in-store tacking develops, and large brands become convinced of the targeting and reach capabilities of the Internet providers.

The beneficiaries should be Google (GOOG 526.40 -4.02) (could announce a capital return plan in 2015; key risk is AAPL signing on with another search engine), Facebook (FB 78.02 -1.20) (Topeka top pick for 2015 for the third year in a row), Twitter (TWTR 35.87 +0.01), Yahoo (YHOO 50.51 -0.71) and AOL (AOL 46.17 -0.38. Topeka also expects IAC/Interactive Corp (IACI 60.79 -0.73) to finally split into two or maybe three companies. But they do not believe Amazon (AMZN 310.35 +0.05) is a break-up story so it is unlikely that Bezos spins off AWS.

In other news, DA Davidson raises its target on Skyworks Solutions (SWKS 72.71 -0.15) to $85 from $75, noting the 3 main drivers continue to be Apple (AAPL 110.38 -2.14) with the success of the iPhone 6, China-related smartphone business, and, to a lesser degree, Samsung. While it is still a bit early to precisely call the first quarter, most of the management teams are looking for relatively normal seasonality; however, since this is coming off record levels, DA Davidson believes most radio frequency companies will report record first quarter results. DA Davidson also noted that SWKS remains a favorite RF/analog name due to its strong leverage to the tier-1 handset OEMs and emerging market 4G rollout.

Elsewhere in the sector, GrubHub (GRUB 36.32 +0.45) was upgraded to Outperform from Market Perform at Barrington Research, which raised its price target to $43.

4:11 pm Closing Market Summary: Stocks Slide to End 2014 (:WRAPX) : The stock market ended the last session of 2014 on a lower note. The S&P 500 lost 1.0%, but that did not stop the benchmark index from gaining 11.4% over the course of 2014. Meanwhile, the tech-heavy Nasdaq ended the session (-0.9%) and the year (+13.4%) ahead of the S&P 500.

Before we delve into the details of today's trading day, it is important to note that trading volume at the NYSE was among the lowest of the year (650 million), suggesting few carbon-based life forms took part in the final affair of the year.

All ten sectors settled in the red with utilities (-1.9%) ending at the bottom of the leaderboard. In all likelihood, today's selling was a function of profit taking after the countercyclical sector led the 2014 market rally with a gain of 24.3%.

The remaining groups did not fare much better. The top-weighted technology sector (-1.2%) was among the early leaders, but began fading from its high not long before noon ET, dragging the broader market down with it. Apple (AAPL 110.38, -2.14) began the day with a slim gain, but found itself in the red within the first 45 minutes of the session. The largest sector component continued retreating throughout the day while other large cap tech names followed suit. Shares of Apple fell 1.9% today, but still soared nearly 38.0% in 2014. Chipmakers, meanwhile, outperformed with the PHLX Semiconductor Index losing 0.6%.

The outperformance of chipmakers helped the Nasdaq exhibit some relative strength, but the index also received a helping hand from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 303.35, -1.27) shed 0.4% while the health care sector (-1.0%) could not stay out of the red, narrowing its 2014 advance to 23.3%.

Elsewhere among cyclical groups, financials (-1.2%) lagged while the energy sector lost 0.8% to widen its 2014 decline to 10.0% amid another volatile day in oil trading pits. WTI crude dipped below the $52.60/bbl mark ahead of the close, but rocketed back to its session high to end the day lower by 1.0% at $53.49/bbl.

Also of note, the consumer discretionary sector (-0.4%) ended ahead of other groups. Homebuilders and retailers were responsible for the outperformance as iShares Dow Jones US Home Construction (ITB 25.88, +0.20) gained 0.8% while SPDR S&P Retail ETF (XRT 96.01, -0.28) slipped 0.3%.

Treasuries capped a strong year with another rally. As a result, the benchmark 10-yr yield fell two basis points to 2.17%, finishing 87 basis points below its close from December 31, 2014. On a somewhat related note, the Dollar Index (90.27, +0.28) climbed 0.3% to end the year at its best level since early 2006.

Economic data included Initial Claims, Chicago PMI, and Pending Home Sales:


The initial claims level increased to 298,000 for the week ending December 27 from an upwardly revised 281,000 (from 280,000) while the Brieifng.com consensus expected an increase to 290,000

The Department of Labor reported that there were no special factors driving the increase in unemployment insurance filings; however, it is possible that the Christmas holiday played at least a small part in the increase
The continuing claims level fell to 2.353 million from an upwardly revised 2.406 million (from 2.403 million) while the consensus expected a decline to 2.375 million

After four consecutive months above 60, the Chicago PMI fell from 60.8 in November to 58.3 in December while the Briefing.com consensus expected a decline to 60.0
Pending home sales for November rose 0.8%, which was in-line with the Briefing.com consensus Friday's data will be limited to the ISM Index for December (Briefing.com consensus 57.5) and the November Construction Spending report (consensus 0.1%). Both reports will be released at 10:00 ET.
Nasdaq Composite +13.4% YTD
S&P 500 +11.4% YTD
Dow Jones Industrial Average +7.5% YTD Russell 2000 +3.6% YTD12:32 pm RF Micro Device and TriQuint Semiconductor (TQNT) announce intent to delist both co's common stock from NASDAQ in connection with merger expected to close tomorrow (RFMD) :

Trading in the common stock of the new combined company, Qorvo, Inc., is expected to commence on the NASDAQ Global Select Market on January 2, 2015, under the stock ticker symbol (QRVO)

11:45 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (262) outpacing new lows (58) (:SCANX) : Stocks that traded to 52 week highs: AAL, AAT, AAVL, AAWW, ACC, ACNB, ACOR, ACU, AEL, AGN, AIZ, ALGT, ALK, ALOT, AMED, AN, ANGO, ANW, AOS, APU, ARMK, AVIV, AVY, AYN, AYR, AZO, BAC, BBN, BFK, BJRI, BKE, BLE, BLJ, BMI, BR, BRKL, BSRR, BWLD, BYM, CAPL, CASY, CBF, CCO, CDR, CEMP, CFI, CFN, CFNL, CHEV, CHSP, CMCSA, CMCSK, CNV, CONE, COR, CPF, CRI, CSBK, DAL, DCT, DDR, DF, DGX, DLTR, DMF, DOOR, DRE, DRI, ENH, EQY, ESSA, EVBN, EXAM, FCH, FFBC, FFG, FICO, FSBW, FWRD, GABC, GGP, GIII, GNCMA, GNMK, GPT, GPX, GSBC, HA, HALL, HBIO, HD, HDP, HEOP, HFBC, HI, HME, HMHC, HMN, HNT, HPP, HR, HSNI, HTA, HTBI, HVB, HW, HWAY, HZO, IART, IBCA, IBP, IIM, INGN, IPCC, IPG, IPHI, ISSI, JAH, JBLU, JFC, JMBA, JPM, JRS, JWN, KITE, KR, KRG, KWR, LAWS, LB, LBY, LDL, LFC, LKFN, LNCE, LOW, LTC, LTM, LUV, M, MAC, MACK, MCA, MCRL, MFL, MHD, MHF, MHN, MIG, MJI, MLI, MMSI, MPW, MRGE, MS, MSFG, MTD, MTOR, MUA, MUJ, MUSA, NAC, NATH, NAVG, NBB, NBTB, NEV, NHI, NIO, NKX, NPI, NPM, NQM, NQS, NRO, NRX, NUVA, NXP, NXR, OHI, OMER, OSBC, OUTR, OZRK, PCQ, PEI, PFBC, PFSW, PLAY, PLD, PLKI, PLUS, PMCS, PNFP, PNI, PPG, PRI, PSCD, QVCA, RDI, REG, REXR, RFI, RFMD, RGA, RIF, RIT, RJET, RL, RLH, RLI, RLJ, ROG, ROIC, ROST, RPAI, RPT, RQI, RUTH, RYAAY, SBRA, SCHL, SCMP, SEB, SHLX, SIGM, SJW, SKT, SLM, SNX, SPLS, SPTN, SRCE, SSNC, SSS, STC, STL, SUSQ, SWIR, SYNL, TGT, TJX, TQNT, TRV, TSCO, TTGT, TWC, UAL, UBNK, UNF, USAK, VFC, VNO, VRTU, VTWO, WBB, WHR, WM, WRE, WSBF, WSM, WYN

Stocks that traded to 52 week lows: AMZG, BOSC, CCLP, CHKR, CLSN, CMRE, COCO, COMT, CRT, CVRR, DCM, DRAM, DSWL, ELON, ELTK, EQT, ESCR, EVEP, FFHL, FRD, FTGC, FTSM, GAI, GF, GNI, HERO, ICD, KUTV, LBIX, LBRDK, LIQD, LMRK, LUB, MSN, NAME, ONTX, PERI, PFIE, PFN, PT, RFIL, ROYT, SDR, SHIP, SRV, SWN, SWZ, TAT, TLP, UBS, VLTC, VOC, VRTA, WBAI, WHLR, WHZ, WPCS, ZHNE

ETFs that traded to 52 week highs: IHF, IWM, IYG, RTH, URE, UWM, VNQ, XHB, XLY, XRT

ETFs that traded to 52 week lows: BNO, DBC, DJP, FXE, FXF, GSG, OIL, SGG, UGA, UNG, URA, USCI, USO

8:42 am Vishay acquired all of the remaining outstanding shares of Capella Microsystems for ~$21.0 mln (VSH) : The completion of the merger will result in 100% of Capella's results being included in net earnings attributable to Vishay stockholders subsequent to December 31, 2014. Due to the nature of Capella's business, ~$75 mln of the purchase price is allocated to definite-lived intangible assets. The acquisition of the non-controlling interest had no impact on the value ascribed to these intangible assets. The annual amortization expense of the intangible assets will be ~$10 mln.