From Briefing.com: Wednesday was hump day and the stock market most definitely did not get over the hump. It fell back further, adding to this week's losses with a sizable retreat that saw each of the major indices decline at least 1.5% on the other side of a lousy Durable Orders report for February.
The selling was not unique to the stock market.
In general, there wasn't much demand for U.S. assets as the bond market and the dollar also lost ground in Wednesday's trading. The shared misery implied that there may have been some portfolio rebalancing activity at the end of the quarter shaping the action.
The S&P 500 information technology sector was a particularly weak spot. It declined 2.7%, which qualified it as the worst-performing sector. All 66 components finished lower and only four -- EMC Corp (EMC 25.68, -0.13, -0.5%), Fidelity National Information Services (FIS 67.54, -0.60, -0.9%), NetApp (NTAP 35.74, -0.11, -0.3%), and Yahoo (YHOO 44.20, -0.22, -0.5%) -- escaped with a loss that was less than 1.0%.
The biggest decliner in the sector on Wednesday was Lam Research (LRCX 72.76, -6.00, -7.6%), which suffered along with many other semiconductor-related companies in a broad-based selloff of the former highflying group. Avago Technologies (AVGO 124.43, -8.69, -6.5%), which had gained 32% for the year entering Wednesday's trading, was another big loser that contributed to a 4.6% decline in the Philadelphia Semiconductor Index.
Notable news items from sector components included the following:
Apple (AAPL 123.38, -3.31, -2.6%): TechChrunch reported that it has learned that Apple (AAPL) acquired database software company FoundationDB; financial terms were not available
Broadcom (BRCM 42.31, -2.28, -5.1%): Announced that Inspur Group, Shandong Cable Network's primary systems integrator, has selected Broadcom's Ultra HD system-on-chip and Wi-Fi SoC for a new line of 4Kp60 cable set-top boxes.
Facebook (FB 82.92, -2.39, -2.8%): Started its F8 Facebook Developers Conference on Wednesday... Unveiled Messenger Platform which allows users to access other apps and create content within Messenger. Messenger Business will allow users to contact businesses (e.g. change an order, track a package) via Messenger. Said 600 mln use FB Messenger; voice call feature now represents 10% of all VoIP calls.
Paychex (PAYX 49.20, -2.10, -4.1%): Reported Q3 (Feb) earnings of $0.46 per share, in-line with estimates. Revenues rose 8.3% year/year to $704.3 mln, which was slightly ahead of analysts' average expectation. Guidance is unchanged from that provided in June 2014 and is asfollows: Payroll service revenue 3% - 5%; HRS revenue 16% - 19%; total service revenue 8% - 10%; and net income 6% - 8%
VeriSign (VRSN 65.13, -1.16, -1.8%): Announced it has priced an offering of $500 million aggregate principal amount of 5.25% senior, unsecured notes due 2025. The company intends to use the proceeds from this offering for general corporate purposes, including, but not limited to, the repurchase of shares under its share repurchase program.Elsewhere in the technology space:
Fortinet (FTNT 33.10, -1.05, -3.1%): Announced that its broad network security training and certification program is being adopted across the globe at rapid scale, as companies look to expand their knowledge and expertise in protecting critical assets from cyber attacks.
National Semiconductor (NSM 25.99, -5.15, -16.5%): Announced and priced a public offering of 17.5 mln shares of common stock; expects gross proceeds of ~$500 mln.
Lexmark International (LXK 43.27, +2.48, +6.1%): Announced a deal to acquire Kofax (KFX 10.95, +3.45, +46.0%) for $11.00 per share in cash for a total enterprise value of ~ $1 bln
Yelp (YELP 45.76, -1.28, -2.7%): Announced that it is now available for use by consumers in Taiwan
Analyst Action:
Advanced Micro Devices (AMD 2.63, -0.15, -5.6%): UBS downgraded to Sell from Neutral
Micron (MU 26.57, -1.39, -5.0%): initiated with a Neutral at MKM Partners; target $33
Twitter (TWTR 49.50, -1.97, -3.8%): downgraded to Hold from Buy at Pivotal Research Group; target $51
4:10 pm : The stock market registered its third consecutive decline on Wednesday with the S&P 500 ending lower by 1.5%. The benchmark index settled below its 50-day moving average (2,067) while the Nasdaq Composite (-2.0%) underperformed throughout the day.
The S&P 500 hovered near its flat line during the opening hour, but high-beta groups like biotechnology, chipmakers, and transport stocks began showing weakness early on and continued their retreat throughout the day. As a result, eight sectors settled in the red with five ending behind the benchmark index.
Most notably, the technology sector surrendered 2.7% with chipmakers enduring even more aggressive selling. All 30 components of the PHLX Semiconductor Index (-4.6%) finished in the red with ARM Holdings (ARMH 49.90, -3.31) and Lam Research (LRCX 72.75, -6.01) leading the slide with respective losses of 6.2% and 7.6% while heavyweight Intel (INTC 29.89, -0.90) tumbled 2.9%.
The sharp losses within the tech sector pressured the Nasdaq while biotechnology also weighed on the index. The iShares Nasdaq Biotechnology ETF (IBB 341.30, -14.65) slumped 4.1%, extending its week-to-date loss to 6.9%. Meanwhile, the health care sector (-1.8%) outperformed in the early going, but settled among the laggards. Shares of Merck (MRK 58.26, -0.37) contributed to the opening strength after announcing a new $10 billion share repurchase program, but ended lower by 0.5%. For its part, the health care sector narrowed its March gain to 0.8% while the remaining nine groups are down at least 1.1% for the month (consumer discretionary).
Elsewhere among countercyclical groups, the consumer staples sector (-0.2%) slipped into the red during the final hour, but still finished well ahead of the broader market thanks to a 34.9% surge in the shares of Kraft (KRFT 83.15, +21.83) after the company agreed to merge with H.J. Heinz. KRFT shareholders are expected to receive a special dividend of $16.50 when the deal closes.
Also of note, the industrial sector (-1.7%) lagged throughout the session amid broad weakness in transport stocks. The Dow Jones Transportation Average slid 2.0% to widen its Q1 decline to 4.6%. Airlines paced the retreat with four of five carriers losing more than 3.0%.
On the upside, the energy sector added 1.2% thanks to daylong strength in crude oil that sent the energy component higher by 3.5% to $49.19/bbl. WTI crude received a measure of support from dollar weakness as the Dollar Index (96.88, -0.32) slipped 0.3%.
Interestingly, Treasuries retreated alongside equities with the 10-yr yield climbing five basis points to 1.92%.
Economic data was limited to Durable Orders and MBA Mortgage Index:
Durable goods orders declined 1.4% in February after increasing a downwardly revised 2.0% (from 2.8%) in January while the Briefing.com consensus expected an increase of 0.4%
Aircraft orders, which played a major role in the overall orders increase for January, reversed direction in February. Total aircraft orders -- defense and nondefense -- declined 14.0% in February after increasing 68.1% in January
Excluding transportation, durable goods orders declined 0.4% in February after declining a downwardly revised 0.7% (from 0.0%) in January. The consensus expected these orders to increase 0.3%.
The weekly MBA Mortgage Index rose 9.5% to follow last week's 3.9% decline
Tomorrow, weekly Initial Claims (Briefing.com consensus 290K) will be reported at 8:30 ET.
Nasdaq Composite +3.0% YTD
Russell 2000 +2.4% YTD
S&P 500 +0.1% YTD
Dow Jones Industrial Average -0.6% YTD
DJ30 -292.60 NASDAQ -118.21 SP500 -30.45 NASDAQ Adv/Vol/Dec 509/2.05 bln/2427 NYSE Adv/Vol/Dec 808/771.7 mln/2259 3:35 pm :
WTI crude oil futures rallied today in afternoon trading, climbing as high as $49.46/barrel
May crude finished today's pit trading session $1.66 higher at $49.19/barrel
However, oil is pulling back in electronic trade and is now +3% at $48.92/barrel
Natural gas futures remained consolidated after sliding lower this morning, ending today's session $0.07 lower at $2.74/MMBtu
Apr gold rose $5.70 today to $1197.20/oz, while May silver gained +$0.06 at $17.00/oz
5:51 pm Photronics promotes Dr. Peter Kirlin to CEO (PLAB) : Co announced that as part of a long-term succession planning process, Dr. Peter Kirlin has been promoted from President to Chief Executive Officer, effective May 4, 2015 and will join the Company's Board of Directors. Constantine ("Deno") Macricostas, Photronics' current Chairman and CEO, will continue on the Board of Directors as Executive Chairman.
12:40 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
KRFT (85.35 +39.18%): To merge with the H.J. Heinz Company to create The Kraft Heinz Company; Kraft shareholders to receive a special cash dividend of $16.50 per share upon closing.
TSO (92.92 +2.88%): Industry-wide strength in oil & gas refiners (VLO, PSX, MPC, others also higher).
EL (84.02 +0.79%): Upgraded to Overweight from Neutral at Piper Jaffray; tgt raised to $100 from $75.
Large Cap Losers
QRVO (77.17 -7.26%): Sector wide weakness in semiconductors following an earlier downgrade at Advanced Micro (AMD) (SWKS, LRCX, AVGO, among others notably lower).
TSLA (193.83 -3.91%): Downgraded to Underperform from Outperform at Credit Agricole.
GMCR (119.73 -3.35%): Heard OTR Global out cautious on the name. Mid Cap Gainers
LXK (43.59 +6.86%): Announced a deal to acquire Kofax (KFX) for $11.00 per share in cash for a total enterprise value of ~ $1 bln;
X (25.26 +2.31%): Announced it will consolidate its North American Flat-Rolled operations and temporarily idle its Granite City Works operations in Granite City, Ill.
HAIN (65.18 +2.72%): Strength in consumer staple food names following the Kraft (KRFT) merger news (PF, WWAV also higher).
Mid Cap Losers
APOL (21.38 -23.62%): Beat Q2 Consensus EPS Estimates by $0.06, missed on revs; guided Q3 revs below consensus; lowered FY15 guidance.
NSM (27.95 -10.26%): Announced and priced a public offering of 17.5 mln shares of common stock; expects gross proceeds of ~$500 mln.
NVAX (8.41 -9.14%): Announced a proposed public offering of $175 mln of common stock.
12:21 pm Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (132) outpacing new lows (35) (:SCANX) : Stocks that traded to 52 week highs: ABM, AFAM, AHL, AHS, ALOG, AMOT, AMWD, ARI, ATE, ATRC, BFIN, BHLB, CCBG, CDXS, CENT, CENTA, CI, CMT, COKE, CRWN, CSV, CTB, CUBI, DAX, DOX, EBSB, EFSC, EIG, EL, ESSA, FDP, FFG, FIX, FLEX, FLO, FSFG, GB, GPIC, GRX, GY, HAIN, HCHC, HEI.A, HELE, HILL, HMHC, HW, HXL, INT, INUV, ISLE, JACK, JRN, KFX, KMG, KRFT, KYO, LB, LMAT, LNCE, LNDC, LOGM, LQ, LWAY, MATW, MDT, MHLD, MLI, MOH, MSCI, MSG, MTSI, NCFT, NEWT, NHC, NVEE, OCUL, OTTR, OVAS, PBF, PF, PFNX, PKI, PNK, RALY, RDI, REPH, ROIC, ROP, RXDX, SBBX, SBFG, SBH, SCAI, SCVL, SFNC, SIGM, SJM, SNX, SPF, SPLP, SPTN, SSP, STBZ, STE, STMP, SURG, SYKE, TA, TERP, TILE, TSLF, TUMI, TWO, UFI, UHS, UHT, USAT, UVE, UWN, VLGEA, VLO, VYFC, WDFC, WETF, WFBI, WNR, WST, WTM, WWAV, WWW, XL
Stocks that traded to 52 week lows: ACRX, AMDA, APOL, ARLP, CARV, CCIH, CHEK, CLIR, CUR, DXLG, DXM, EGLE, ENLK, FPP, GOMO, IKAN, KUTV, LPTN, MAT, MCOX, NBS, NRT, OIBR.C, OXGN, PERF, PHT, PRGN, RXII, SHOS, SONS, SXC, SXCP, TGC, WHLR, WTW
ETFs that traded to 52 week highs: EWJ, MBB, PFF
ETFs that traded to 52 week lows: VNM
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