From Briefing.com: The S&P 500 edged slightly lower on the first trading day of 2015, falling 0.03%, paring back nearly all of its losses right before the close. While the S&P 500 Information Technology Index also rallied into the close, it still underperformed the broader market, closing down 0.15% on Friday.
The IT Services industry group started the year off on a positive note, gaining 0.34% to open the year. On the other hand, the Technology Hardware, Storage & Peripherals group lost 0.70% and led the sector in declines.
Taking a look at the news headlines, Perfect World (PWRD 19.25 +3.49), an online game developer and operator in China, soared 22% following its announcement Friday morning that its board of directors has received a preliminary non-binding proposal letter from its founder and chairman, Mr. Michael Yufeng Chi, to acquire the company at $20 per ADS and take it private.
PWRD's Board has formed a special committee of independent to consider this proposal. The Independent Committee intends to retain a financial advisor and legal counsel to assist it in its work. Meanwhile, the Board cautions shareholders and others considering trading in its securities that the Board just received the preliminary non-binding proposal from Mr. Chi and no decisions have been made with respect to PWRD's response to the proposal.
In other news, analysts returned to work today, releasing a few notable ratings updates:
Apple (AAPL 109.33 -1.05): Argus raised its AAPL target to $125 from $120, while maintaining its Buy rating on the stock. Argus noted that the company is poised to deliver strong fiscal first quarter 2015 results, driven mainly by the global success of the iPhone 6 and iPhone 6 Plus. Argus expects AAPL to set records for total revenue, total smartphone revenue, and net income in fiscal first quarter 2015. Smartphones likely contributed more than 60% of first quarter revenue, and AAPL's phone share appears to be growing both domestically and globally. Argus believes that other important categories also performed well in Q1. Argus also expects the iPhone 6 and 6 Plus to continue their global expansion in 2015, supplemented by ongoing strength in Mac, enterprise strength in iPad, and the growing Apple software ecosystem.Argus does not expect Apple Watch to be a major contributor in 2015, though it rarely pays to underestimate AAPL.
Paychex (PAYX 46.24 +0.07): Topeka Capital Markets maintained its Sell rating on PAYX, noting that despite an attractive dividend yield, improved macro backdrop, and relatively low expectations, firm does not believe PAYX will generate enough net income growth to justify its super-premium relative valuation, particularly when other names in the sector trade at similar multiples but offer far higher revenue and EPS growth rates. PAYX's intact and unchanged 2015 guidance supports Topeka's view that net income upside surprise is unlikely, and firm thinks this wide growth/valuation gap is unsustainable.
Qorvo (QRVO 70.40): MKM Partners updated it coverage on QRVO, following combination of RFMD+TQNT, with Buy, $73 price target. MKM disagrees with the bears, and believes earnings multiples slightly above average S&P500 are now justified by exposure to one of the top secular growth trends in semiconductors and an improving fundamental backdrop. Specifically, there is room for RF names to beat expectations on better demand elasticity in China's low-end 4G after a choppy 2014 and early upgrade programs driving shorter replacement cycles in developed markets.
Synaptics (SYNA 64.25 -4.59) was downgraded to Sector Perform from Outperform at Pacific Crest
SS&C Technologies (SSNC 55.28 -3.21) was downgraded to Mkt Perform from Outperform at Raymond James
Sierra Wireless (SWIR 47.95 +0.56): was downgraded to Market Perform from Outperform at Northland Capital. Its price target was raised to $40 from $33
Top % gainers in the sector: Twitter (TWTR 36.56 +0.69), Infosys (INFY 31.90 +0.44), Visa (V 265.02 +2.82), Fleetcor (FLT 150.26 +1.55), and International Business Machines (IBM 162.06 +1.62)
Top % decliners in the sector: LG Display (LGL 14.26 -0.89), Baidu (BIDU 223.08 -4.89), Workday (WDAY 80.41 -1.20), Oracle (ORCL 44.33 -0.64), and Arm Holdings (ARMH 45.70 -0.60)
Weekly Recap - Week ending 02-Jan-15Dow +9.92 at 17832.99, Nasdaq -9.24 at 4726.81, S&P -0.70 at 2058.20
The stock market began 2015 on a cautious note with the major averages surrendering their opening gains. The S&P 500 ended flat while the Dow Jones Industrial Average (+0.1%) settled just above its flat line.
Equity indices started the day with broad-based gains, but the early buying spree ended in a flash. The S&P 500 marked its high 11 minutes after the start of the session before reversing course. The index continued its retreat through the 9:00 ET release of disappointing Construction Spending and ISM reports, and marked its session low shortly after 13:30 ET.
The S&P 500 tried to fight its way back into the green during the afternoon, but losses among influential sectors like consumer discretionary (-0.7%), consumer staples (-0.4%), industrials (-0.2%), and technology (-0.2%) proved too large to overcome.
Notably, the discretionary sector suffered from broad weakness. Homebuilders and retailers lagged with iShares Dow Jones US Home Construction ETF (ITB 25.67, -0.21) and SPDR S&P Retail ETF (XRT 95.34, -0.67) falling 0.8% and 0.7%, respectively. The two groups helped the sector finish at the bottom of the leaderboard.
Elsewhere, industrials contributed to the persistent pressure as transport stocks underperformed. The Dow Jones Transportation Average lost 0.5% with all but five components ending in the red. Shipper Kirby (KEX 81.53, +0.79) outperformed while freight carrier CH Robinson (CHRW 73.84, -1.05) brought up the rear.
Similar to industrials, the technology sector kept the market under pressure during the afternoon. Large cap listings settled in mixed fashion, but Apple (AAPL 109.33, -1.05) fell 1.0%, which contributed to the underperformance of the Nasdaq Composite. However, chipmakers lagged early, but climbed into the afternoon, allowing the PHLX Semiconductor Index to end flat.
On the upside, the utilities sector (+0.6%) ended in the lead, but more notable was the outperformance of health care (+0.4%). The countercyclical group benefitted from daylong strength in biotechnology that sent the iShares Nasdaq Biotechnology ETF (IBB 306.34, +2.99) higher by 1.0%.
Also of note, the energy sector (+0.4%) ended in the green even as crude oil continued its retreat, dropping 1.6% to $52.57/bbl. Greenback strength factored into the move as the Dollar Index jumped 0.9% to 91.12. The dollar picked up about 1.5% against the British pound and 1.0% against the euro, with the latter sliding after a Financial Times op-ed penned by Mario Draghi was viewed as a preamble to a sovereign QE announcement from the European Central Bank.
Treasuries registered solid gains after erasing their overnight losses. The benchmark 10-yr yield fell five basis points to 2.12%.
Participation was in-line with recent totals as 628 million shares changed hands at the NYSE floor.
Economic data was limited to Construction Spending and ISM:
Construction spending in November declined 0.3% from October, which was revised up to show an increase of 1.2% versus 1.1% previously
The November reading was below the Briefing.com consensus estimate, which called for a 0.1% increase
The disappointment was rooted in public construction spending, which declined 1.7% to a seasonally adjusted annual rate of $277.30 billion largely due to a 2.5% pullback in educational construction spending
The ISM Index for December checked in at 55.5, down 3.2 percentage points from the high 58.7 reading in November
The December reading marked the 19th consecutive month of expansion; however, it was weaker than the Briefing.com consensus estimate, which was pegged at 57.5
A number above 50 denotes expansion, so the pullback in December doesn't connote weakness so much as it connotes the manufacturing sector cooling down from a very hot November
Monday's session will be free of economic data.
Week in Review: Stocks Slide Into 2015
The holiday-shortened week began with a full day of trading on Monday, yet the stock market acted like it was still on vacation. Volume was light and the major indices held to narrow trading ranges that bracketed the unchanged line for much of the session. The S&P 500 managed to eke out its seventh gain in the last eight sessions. In doing so, it established another record closing high that pulled it ever closer to the 2100 level. However, most of the action happened away from the U.S. stock market. To that end, European bourses had a roller-coaster session, riding a wave of Greek politics that included a third failed vote for the prime minister's preferred presidential candidate, the subsequent announcement that parliament would be dissolved, and news that snap elections would be held on January 25.
The stock market ended Tuesday on a broadly lower note. The Nasdaq Composite (-0.6%) was the weakest performer among the major averages while the S&P 500 (-0.5%) ended a bit ahead of the tech-heavy index. Equities began the day in negative territory and remained below their flat lines until the close. However, participation was very limited with just 524 million shares changing hands at the NYSE floor. The light activity was also reflected by narrow trading ranges with the S&P 500 bounded between 2,080 and 2,084 for most of the session. Cyclical sectors were responsible for the bulk of the weakness as three of six growth-sensitive groups settled in-line with or behind the broader market while the utilities sector (-2.1%) was the only laggard on the countercyclical side.
Equities 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. All ten sectors settled in the red with utilities (-1.9%) ending at the bottom of the leaderboard. In all likelihood, the 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.
Index Started Week Ended Week Change % Change YTD %
DJIA 18053.71 17832.99 -220.72 -1.2 0.1
Nasdaq 4806.86 4726.81 -80.05 -1.7 -0.2
S&P 500 2088.77 2058.20 -30.57 -1.5 -0.0
Russell 2000 1215.21 1198.80 -16.41 -1.4 -0.5
4:51 pm This week's biggest % gainers/losers (:SCANX) : The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).
This week's top 20 % gainers
Healthcare:IDRA (4.9 +22.81%),AAVL (58.92 +21.13%),ARWR (7.71 +18.25%),RMTI (10.15 +17.89%),KITE (60.61 +12.18%)
Materials:PVG (6.16 +16.45%),SAND (3.74 +15.08%),IAG (2.81 +14.23%),PPP (3.97 +12.15%)
Consumer Discretionary:MPG (19.22 +18.13%),CNV (8.34 +17.3%)
Information Technology:PWRD (19.25 +21.6%),IPHI (17.74 +14.3%)
Financials:MIG (8.38 +23.24%)
Energy:CEQP (8.36 +19.26%),EROC (2.53 +17.13%),SHLX (41.99 +16.64%),SDLP (17.24 +16.09%),MPLX (75.9 +14.76%),AM (27.41 +13.78%)
This week's top 20 % losers
Healthcare:MDXG (9.74 -13.73%),RDNT (8.66 -9.89%)
Materials:SID (1.95 -12.56%)
Industrials:CVEO (3.87 -51.99%),KBAL (9.11 -10.25%)
Consumer Discretionary:WTW (21.53 -19.39%),WBAI (16.94 -11.77%),ZQK (2.2 -9.47%),DV (44.28 -9.39%)
Information Technology:SYNA (64.25 -10.51%)
Financials:FUR (15.84 -11.8%),EHTH (24.23 -9.96%)
Energy:TPLM (4.64 -21.36%),EMES (53.41 -17.03%),SSE (5.74 -13.03%),XCO (2.09 -12.18%),PBR.A (6.95 -9.86%)
Telecommunication Services:PT (1.05 -13.22%),MBT (7.17 -12.35%),GSAT (2.68 -10.96%)
3:37 pm Earnings Preview for the week of January 5 - 9 (:SUMRX) : Of the companies reporting earnings for the week of January 5 - 9 some of the bigger names include:
Tuesday: Pre Market - CMC, CVGW, ZEP, LNN
After Hours - MU, SHLM, TISI, SONC, LNDC
Wednesday: Pre Market - SVU, MON, RPM, MSM, GBX, UNF
After Hours - GEF, MG, RECN, WDFC
Thursday: Pre Market - STZ, APOL, GPN, SCHNAfter Hours - BBBY, PSMT, HELE, RT, VOXX, TCS, ANGO, CUDA, EOPN
Friday: Pre Market - INFY, AYI, AZZ, SYRG
1:04 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
TTM (43.75 +3.48%): Announced total sales of commercial and passenger vehicles in December 2014 of 41,734 vehicles, an increase of 10% y/y.FNF (35.16 +2.06%): Upgraded to Overweight from Equal Weight at a boutique firm.SNI (76.64 +1.82%): Reports out that Yahoo (YHOO) considered a Scripps Networks Interactive acquisition last year.
Large Cap Losers
MPEL (24.15 -4.92%): Casino stocks with exposure to Macau down following data from the Macau Gaming Inspection and Coordination Bureau reporting December gross gaming rev -30.4% YoY (MGM & LVS also lower).KSS (59.23 -2.97%): Sector-wide weakness in retail (JWN & UA also lower).
Mid Cap Gainers
LINE (11.67 +15.21%): Announced 2015 oil and gas capital budget; reduced annual distribution to $1.25 per unit from the previous level of $2.90; approved 2015 CapEx budget of $730 mln, down 53% y/y.CNV (8.31 +4.99%): Initiated with a Outperform at Credit Suisse; tgt $13.KITE (59.55 +3.26%): Price target raised to $71 from $34, maintain Outperform at Credit Suisse.
Mid Cap Losers
SYNA (63.3 -8.05%): Downgraded to Sector Perform from Outperform at Pacific Crest.SSNC (54.51 -6.8%): Downgraded to Mkt Perform from Outperform at Raymond James.
11:54 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (86) outpacing new lows (45) (:SCANX) : Stocks that traded to 52 week highs: ACOR, AGN, ALDR, ALGT, ALOT, ANW, ASPX, AYN, BCLI, BJRI, BLE, BNDX, BYM, CBRL, CCO, CFI, CHEV, CMRX, CNV, COTY, COWN, CZNC, DGX, DIN, EGRX, ESPR, ESSA, FPRX, HEOP, HFBC, HOFT, HTBI, HW, IBCA, JFC, JMBA, JRS, KITE, LFC, LH, LOAN, M, MACK, MHN, MPG, MPLX, MRNS, MSFG, NATH, NBB, NEA, NIO, NPM, NQS, OCUL, OMER, ONEQ, OSBC, OZRK, PFSW, PGNX, PLAY, PLKI, PNI, PZC, PZZA, QLGC, RCL, RESN, RJET, RLGT, RLH, RVSB, SAPE, SHLX, SMTC, SNFCA, STBZ, TSS, UAL, UEIC, UIHC, USAK, USCR, VMO, WTBA
Stocks that traded to 52 week lows: BORN, CEL, COMT, DSWL, EAC, ELON, ESCR, FEUZ, FTGC, GF, GLOW, GNBC, GNI, HELI, HNR, IBTX, ICD, IDN, ISHG, KB, KND, KUTV, LMRK, LTBR, MN, MXC, NCTY, PT, PTBI, PTNR, PW, RICE, RLJE, SIFY, SODA, SWN, SWZ, TGC, TZOO, UBS, VIVO, VLTC, VSCP, WBAI, XGTI
ETFs that traded to 52 week highs: UUP
ETFs that traded to 52 week lows: BJK, BNO, BWX, DBC, DJP, EPOL, EWY, FXB, FXC, FXE, FXF, FXS, GSG, JJC, OIL, SGG, TBT, UGA, UHN, USCI, USO
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