From Briefing.com: Lead headlines Thursday morning were negative in their orientation. Retail sales declined 0.6% in February (-0.1% excluding autos) and Intel (INTC 30.83, -1.50, -4.6%) lowered its revenue outlook for the first quarter citing weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain.
All the stock market did was string together one of its strongest showings in a while. The Russell 2000 jumped 1.6%, The Dow Jones Industrial Average increased 1.5%, and the S&P 500 rose 1.3%. The Nasdaq Composite gained 0.9%, held back a bit by the Intel warning.
The notion that the Federal Reserve might hold off on raising the fed funds rate in June following the weak retail sales data helped fuel Thursday's broad-based rebound effort. In addition, a pullback in the U.S. Dollar Index, the S&P 500 reclaiming a position back above its 50-day simple moving average, and a big gain in the financial sector (+2.2%) after the Federal Reserve approved capital return plans for all but a few banks solidified the bullish bias.
The S&P 500 information technology sector (+0.5%) participated in the advance, but underperformed for the third session in a row.
Other than the Intel news, there wasn't a lot of news of note out of the sector -- not that it mattered as other forces were at work in the rally effort.
Notable news items from sector components included:
Intel (INTC 30.83, -1.50, -4.6%): Company lowered its first quarter revenue guidance to $12.5-13.1 bln from $13.2-14.2 bln. The midpoint of the new range was well below analysts' average expectation. The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain. Intel said it believes the changes to demand and inventory patterns are caused by lower than expected Windows XP (MSFT 41.01, -0.97, -2.3%) refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe. The data center business, it said, is meeting expectations. The company is forecasting the mid-point of the gross margin range to remain at 60%, plus or minus a couple of percentage points, as lower PC unit volume is offset by higher platform average selling prices. Expectations for R&D and MG&A spending and depreciation in the first quarter remain unchanged. All other expectations have been withdrawn and will be updated with the company's first-quarter earnings report on April 14.
Intuit (INTU 96.69, +1.51, +1.6%): Announced a seamless integration between QuickBooks Online and leading ecommerce company Bigcommerce to make accounting and bookkeeping easier for businesses selling online. The direct integration is first available to Big commerce merchants, and will automatically update and transfer invoices, expenses and other financial data
Micron (MU 28.01, +0.13, +0.5%): Disclosed that on March 5, 2015, the Board appointed Mark Adams as interim CFO and Mark Heil as interim Principal Financial and Accounting Officer. Messrs. Adams and Heil will serve in these interim positions until such time as a permanent Chief Financial Officer is appointed to fill the vacancy created by the retirement of Ron Foster. In addition to serving in these interim positions, Messrs. Adams and Heil will continue to serve in their current positions of President, and Senior Finance Director and Corporate Controller, respectively.
Yahoo (YHOO 42.94, +0.44, +1.0%): Walt Disney and Yahoo announced an extension and expansion of their relationship. Good Morning America will launch a new daily 'Yahoo Your Day' series, featuring Yahoo editors, bringing Yahoo's digital magazines to GMA.
In industry news: IDC Worldwide said tablet shipments are expected to reach 234.5 million units in 2015, a modest year-over-year increase of 2.1% from 2014. Although the outlook has been tempered, IDC still expects low but positive growth for the market in the years to come as demand in the commercial sector increases, and as Microsoft slowly gains a foothold.Elsewhere in the technology space:
Alibaba (BABA 81.92, -0.07, -0.1%): Forbes discussed that Alibaba may make $200 mln SnapChat investment
Amazon.com (AMZN 375.25, +8.88, +2.4%): According to TechCrunch, Amazon.com acquired 2lemetry, a startup that has developed an enterprise-focused platform to track and manage IP-enabled machines and other connected devices. Financial terms were not disclosed.
BlackBerry (BBRY 9.94, +0.04, +0.4%): Canso Investment Counsel discloses 5.4% passive stake in 13G filing
Analyst Action:
Alibaba (BABA 81.92, -0.07, -0.1%): target lowered at Deutsche Bank to $98 from $105.10; Buy
Hewlett-Packard (HPQ 32.72, +0.11, +0.3%): downgraded to Equal Weight from Overweight at Barclays
Ingram Micro (IM 23.04, -0.44, -1.9%): downgraded to Equal Weight from Overweight at Barclays
Intel (INTC 30.83, -1.50, -4.6%): target lowered to $31 from $34.50 at Northland Capital; maintain Market Perform... target lowered to $35 from $40 at Topeka Capital Markets; Buy... Intel target lowered to $36 from $38 at Cowen; Market Perform... target lowered to $40 from $45 at MKM Partners; Buy
LinkedIn (LNKD 266.42, +1.47, +0.7%): target raised to $300 from $285 at Canaccord Genuity; Buy
Motorola Solutions (MSI 64.96, -0.35, -0.5%): downgraded to Underperform from Mkt Perform at Raymond James
4:15 pm : The major averages enjoyed a broad-based rebound on Thursday after the S&P 500 (+1.3%) lost 3.6% during the previous seven sessions. The benchmark index reclaimed its 50- (2,060) and 100-day (2,044) moving averages while the Russell 2000 (+1.7%) outperformed.
Equity indices charged higher out of the gate and maintained narrow ranges into the afternoon before extending to new highs during the last hour of action. The market all but ignored a disappointing retail sales report for February (-0.6%; Briefing.com consensus +0.4%), but it could be argued that the weak reading increased the likelihood that the Fed will delay its first rate hike.
More notably, the greenback weakened a bit with the Dollar Index (99.26, -0.54) shedding 0.5% to narrow its March gain to 4.1%. The Index was down more than 1.0% this morning, but climbed off its session low that was notched after the release of the retail sales report.
Today's dollar weakness was not enough to keep crude oil from ending the pit session lower by 2.3% at $47.11/bbl while the energy sector (-0.5%) was the only group that finished in the red.
Meanwhile, the remaining nine sectors posted gains between 0.5% (technology) and 2.2% (financials).
In fact, technology was the only advancer limited to a slimmer gain than 1.0%, which was largely due to a 4.7% slump in the shares of Intel (INTC 30.80, -1.53) after the company cut its Q1 revenue guidance due to weaker than expected demand for business desktop PCs. The stock widened its quarter-to-date loss to 15.1% and contributed to the underperformance of the Nasdaq Composite (+0.9%).
Elsewhere among cyclical sectors, financials benefitted from last evening's news that the Federal Reserve approved capital plans of 28 out of 31 major banks. Bank of America (BAC 16.08, -0.02) was requested to make adjustments to its plan while Deutsche Bank (DB 31.70, +0.12) and Banco Santander (SAN 6.87, +0.10) had their plans rejected due to qualitative concerns. Thanks to today's advance, the sector is now up 0.6% for the month while the remaining groups continue holding March losses.
Similar to financials, the consumer discretionary sector (+2.0%) advanced 2.0% or more amid broad strength. Retailers rallied with the SPDR S&P Retail ETF (XRT 99.31, +1.70) spiking 1.7% while restaurant names benefitted from better than expected results from Shake Shack (SHAK 47.79, +0.89) and Zoe's Kitchen (ZOES 34.94, +2.24).
Treasuries registered gains, but ended well below their highs following an afternoon retreat. The 10-yr yield slipped two basis points to 2.10% after hitting a low near 2.04%.
Today's participation was relatively light with fewer than 750 million shares changing hands at the NYSE floor.
Economic data included Initial Claims, Retail Sales, Import/Export Prices, and Business Inventories:
Retail sales declined 0.6% in February after declining 0.8% while the Briefing.com consensus expected an increase of 0.4%
Some may blame the inclement weather in the Northeast as a contributing factor; however, in our opinion, the decline simply resulted from consumers continuing their savings trend and not spending.
The numbers were pretty weak across the board, with motor vehicle sales being the hardest hit sector. These sales fell 2.5% in February after increasing 0.5% in January.
Excluding motor vehicle sales, retail sales declined 0.1% after declining 1.1% while the consensus expected an increase of 0.6%.
The initial claims level declined to 289,000 for the week ending March 7 from an upwardly revised 325,000 (from 320,000) while the Briefing.com consensus expected a decline to 306,000
According to the Department of Labor, there were no special factors that impacted the data
Export prices, excluding agriculture, increased 0.2% in February after decreasing 1.0% in the prior reading
Excluding oil, import prices fell 0.3%, which followed last month's 0.7% decline
Business Inventories were unchanged in January while the Briefing.com consensus expected an increase of 0.1%
The December reading was revised to unchanged from 0.1%
The Treasury Budget for February showed a deficit of $192.30 billion while the Briefing.com consensus expected a deficit of $192.00 billion
Tomorrow, February PPI (Briefing.com consensus 0.3%) will be released at 8:30 ET while the preliminary reading of the Michigan Sentiment Index (consensus 95.8) for March will cross the wires at 10:00 ET.
Nasdaq Composite +3.3% YTD
Russell 2000 +2.6% YTD
Dow Jones Industrial Average +0.4% YTD
S&P 500 +0.3% YTD
DJ30 +259.83 NASDAQ +43.35 SP500 +25.71 NASDAQ Adv/Vol/Dec 2045/1.72 bln/794 NYSE Adv/Vol/Dec 2262/732.9 mln/821
3:40 pm :
Natural gas and crude oil futures slid lower today and held those losses
Nat gas sold off following the weekly EIA storage data and ultimately closed $0.10 lower at $2.73/MMBtu
WTI crude oil lost steam and finished floor trading $1.10 lower at $47.11/barrel
Copper futures held gains today with the May contract ending $0.05 higher at $2.66/lb
Gold and silver also closed with a modest gains
1:05 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
MS (36.49 +4.41%): Announces share repurchase of up to $3.1 bln; Increases quarterly dividend to $0.15 from $0.10.
DG (73.93 +3.47%): Reported Q4 EPS in-line, revs in-line; guided FY16 EPS below consensus, revs in-line; Q4 comps +4.9%; CFO to retire; approved initiation of $0.22/share quarterly dividend.
Large Cap Losers
INTC (30.81 -4.7%): Lowered Q1 rev guidance on weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain, reaffirms gross margin; withdraws all other expectations; Price target lowered at Topeka Capital Mkts., Cowen, others.
BAC (15.94 -1.09%): Released results of CCAR ; Fed has asked Bank of America to submit an additional capital plan by September 30, 2015 addressing certain weaknesses.
Mid Cap Gainers
MTN (92.83 +9.2%): Beat Q2 consensus EPS estimates by $0.79, reported revs in-line; sees FY15 EBITDA at low end of range; raised dividend 50%.
SID (1.73 +4.85%): Reported Q4 revenues of R3.82 bln, down 2% q/q; Reports Q4 EBITDA of R1.0 bln, +3% q/q.
JBLU (17.94 +4.67%): Announced February traffic; Revenue passenger miles increased 10% Y/Y.
Mid Cap Losers
ACAD (33.55 -25.04%): Announced delay in filing of NDA submission for NUPLAZID (pimavanserin) for the treatment of Parkinson's disease; Also announced retirement of CEO Uli Hacksell; Price target lowered at Needham, Jefferies, others.
CNX (27.3 -4.88%): Downgraded to Underperform from Neutral at BofA/Merrill.
IM (22.7 -3.32%): Downgraded to Equal Weight from Overweight at Barclays.
11:57 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (162) outpacing new lows (75) (:SCANX) : Stocks that traded to 52 week highs: ABC, ACGL, ACHC, ACT, AEO, AFFX, AFH, AGN, AIR, ALGT, AMAG, AMBA, AMRN, AMSG, ARMK, ASPX, ATRO, BBNK, BBY, BFAM, BFIN, BFR, BIO, BKD, BKMU, BMA, BMY, BRP, BSFT, BURL, CACC, CATY, CBM, CBMG, CBRL, CEVA, CGNX, CHFN, CLDN, CNC, COO, CPF, CRL, CRUS, CSBK, CSFL, CSV, CUBI, CVTI, DD, DEPO, DG, DVA, DW, DXJS, EIG, ESLT, FCAU, FCCY, FCS, FHN, FIX, FL, FLTX, FLWS, FRC, FRME, FSFG, GLOB, GM, GTN.A, GTT, GY, HASI, HCC, HCHC, HMHC, HPTX, HTLF, IBKR, IBP, IIVI, IMKTA, INCR, INFN, INTL, IPXL, IRCP, IRS, ISLE, ISSI, ITG, JBHT, JEQ, JRN, KAI, KR, LBIO, LEVY, LII, LPSB, LQ, MD, MDVN, MEI, METR, MGLN, MKTX, MMS, MNRO, MYL, MYRG, OA, OLED, ORA, PAM, PBCP, PBIP, PF, PLCE, PNC, PNFP, PNK, PRXL, PSCH, RAVE, RCPT, RGA, RHP, RJF, RMD, SCAI, SCI, SCLN, SCSS, SFNC, SIGI, SNV, SPR, SRDX, SSP, STZ, SVU, SWM, SXT, TGS, TGT, TREE, TSRO, ULTA, USCR, UTHR, VAC, VIPS, WAL, WBB, WBS, WETF, WMS, WSO, XPO, ZAGG
Stocks that traded to 52 week lows: ACRX, ADAT, AETI, AMCF, ATNM, AVAL, BAK, BIOS, BOCH, BTU, BVX, CIB, CLD, CMTL, CNSI, CNX, DPM, DWSN, DXM, ECA, EGI, ELON, FHCO, FORD, FTGC, GCO, GLRI, GRMN, GULTU, HDP, HGT, HMIN, HSBC, HWCC, ICLD, IRET, KLAC, LAYN, LCUT, LND, LOCM, LODE, LOR, MEIL, MRVC, MTLS, MXPT, NOA, OESX, ONVO, OPXA, PFIE, PGN, PHIIK, PQ, RMP, RYAM, SB, SEED, SINA, SKIS, SMTX, TGC, TLF, TORM, TST, UFPT, UPLD, VNCE, WLT, WYNN, XCO, XNET, YOKU, ZHNE
ETFs that traded to 52 week highs: EWJ, PSK
ETFs that traded to 52 week lows: DBA, RJA
9:16 am Integrated Silicon has entered into a definitive merger agreement under which a consortium of investors led by Summitview Capital will acquire all of the outstanding shares of ISSI for $19.25 per share in cash (ISSI) : The ISSI Board of Directors has unanimously approved the merger agreement and recommends that the ISSI stockholders vote to approve the merger agreement. Details regarding the record date, and the date, time and place of the special meeting of stockholders to vote on the transaction will be announced at a later date. The transaction is currently expected to close in the third calendar quarter of 2015.
The proposed transaction values ISSI's equity at ~$639.5 million, on a fully diluted basis.9:09 am Intel follow up: Lowers Q1 rev guidance on weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain, reaffirms gross margin; withdraws all other expectations (INTC) : Co issues downside guidance for Q1 (Mar), lowers Q1 rev guidance to $12.5-13.1 bln from $13.2-14.2 bln vs $13.70 bln Capital IQ Consensus.
The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain. The company believes the changes to demand and inventory patterns are caused by lower than expected Windows XP (MSFT) refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe. The data center business is meeting expectations. The company is forecasting the mid-point of the gross margin range to remain at 60%, plus or minus a couple of percentage points, as lower PC unit volume is offset by higher platform average selling prices. Expectations for R&D and MG&A spending and depreciation in the first quarter remain unchanged. All other expectations have been withdrawn and will be updated with the co's first-quarter earnings report on April 14.
7:16 am JA Solar beats by $0.02, beats on revs (JASO) : Reports Q4 (Dec) earnings of $0.28 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.26; revenues rose 61.3% year/year to $576.4 mln vs the $538.99 mln consensus.
Total shipments were 952.7 megawatts, increases of +43.2% y/y and +21.3% sequentially. Shipments of modules and module tolling were 879.6 MW, increases of +142.1% y/y and +26.8% sequentially. Shipments of cells and cell tolling were 73.1 MW, decreases of 75.8% y/y and 20.5% sequentially. Gross margin was 15.5%, remained unchanged y/y and an increase of 50 basis points sequentially. Guidance: For the first quarter of 2015, the Company expects total cell and module shipments to be in the range of 680 MW to 750 MW. Full year 2015 shipments are expected to be in the range of 3.6 GW to 4.0 GW, including 200 MW to 300 MW of modules shipments to the Company's downstream projects.
7:03 am DSP Group announces that the Board has unanimously authorized it to enter into a pre-arranged stock repurchase plan pursuant to Rule 10b5-1 under which it may repurchase shares of its Common Stock in the aggregate amount of up to $10 mln (DSPG) : This plan replaces the previous buyback program announced in November 2013, which expired at the end of February 2015.
