From Briefing.com: The major indices overcame larger losses in the early going that stemmed from reports of military action in Yemen, which drove up oil prices, but still ended lower for the day.
Follow-through selling interest from Wednesday's sell-off, which weighed further on the semiconductor and biotech stocks, also contributed to the weakness.
Confronted with a first quarter revenue warning from leading flash storage company SanDisk (SNDK 66.20, -14.98, -18.5%), the Philadelphia Semiconductor Index dropped another 1.4%. It is now down 7.6% for the week and 1.7% year-to-date.
Notwithstanding the disappointment from SanDisk, the S&P 500 information technology sector (+0.1%) still managed to post a gain and to outperform the broader market with the help of strong gains in Accenture (ACN 94.17, +5.96, +6.8%) and Red Hat (RHT 75.37, +6.92, +10.1%) following their earnings reports.
Notable news items from sector components included the following:
Accenture (ACN 94.17, +5.96, +6.8%): Reported Q2 (Feb) earnings of $1.08 per share, which was ahead of analysts' average expectation. Revenues rose 5.1% year/year to $7.49 bln, also ahead of estimates. Sees Q3 revenues of $7.35-7.60 bln, which assumes a foreign-exchange impact of negative 11 percent compared with the third quarter of fiscal 2014.Sees FY15 EPS of $4.66-4.76 versus prior guidance of $4.66 to $4.80. Raises constant currency revenue growth outlook; now sees net revenue growth in local currency to be in the range of 8-10%, compared with 5-8% previously. Accenture's business outlook for the full 2015 fiscal year now assumes a foreign-exchange impact of negative 8 percent compared with fiscal 2014; the previous foreign-exchange assumption was negative 5 percent.
Apple (AAPL 124.26, +0.88, +0.7%): NYTimes details news that Apple and Beats plan streaming service to compete with Spotify.
IBM (IBM 160.59, +1.39, +0.9%): Announced the Department of Health in England has chosen the company to enhance its electronic staff record system
Jabil Circuit (JBL 22.87, +0.10, +0.4%): Director disclosed purchase of 21,500 shares at $23.18-23.25 worth ~$499K (transaction date 3/25)
Red Hat (RHT 75.37, +6.92, +10.1%): Reported Q4 (Feb) earnings of $0.43 per share, excluding non-recurring items, which was ahead of analysts' average expectation. Revenues rose15.9% year/year to $463.9 ml, also ahead of estimates. Sees Q1 revenues of $469-474 mln and adjusted EPS of ~$0.41. Sees FY16 revenues of $1.99-2.02 bln and adjusted EPS of 1.79-1.82. Separately, Board of Directors has authorized the repurchase of up to $500 million of the Company's common stock from time to time on the open market or in privately negotiated transactions. The new program replaces the previous $300 million repurchase program that is scheduled to expire on March 31, 2015; $220 mln of it was used.
SanDisk (SNDK 66.20, -14.98, -18.5%): Company issued downside guidance for Q1 (Mar), saying it sees Q1 (Mar) revenues of ~$1.3 bln versus the previously forecasted revenue range of $1.40 billion to $1.45 billion. The change in first quarter revenue estimate is primarily due to certain product qualification delays, lower than expected sales of enterprise products and lower pricing in some areas of the business. The Company expects continued impact to its 2015 financial results from these factors as well as the previously identified supply challenges, and now forecasts 2015 revenue to be lower than the previous guidance. Other forecasts for the quarter and the year are withdrawn, and the Company will provide an update during its first quarter earnings call on April 15, 2015.Elsewhere in the technology space:
Amazon.com (AMZN 367.14, -3.82, -1.0%): Company announced unlimited cloud storage with Amazon Cloud Drive; two new storage plans for customers to securely store their existing content collections. Customers can choose either the Unlimited Photos Plan ($11.99/yr) or Unlimited Everything Plan ($59.99/yr) and only pay one flat fee per year.
Cree (CREE 35.03, -1.39, -3.8%): Introduced the LED Rural Utility Light Series, designed to deliver a combination of price, performance and quality to accelerate adoption of LED lighting across rural areas in North America.
Electro Scientific Industries (ESIO 6.30, -0.11, -2.0%): Announced that its Board of Directors has made two significant changes to its governance practices in order to be more responsive to shareholder interests. The Board amended the Company's bylaws to declassify the Board and also voted to terminate the shareholder rights agreement, which had been in place since May 2009, by accelerating the expiration date of the rights agreement to March 26, 2015.
FireEye (FEYE 39.30, +0.09, +0.4%): Announced that FireEye CEO and Chairman of the Board Dave DeWalt will call upon state leaders to place a higher priority on cyber defense at a meeting of the National Governors Association later this month.Analyst Action:
Apple (AAPL 124.26, +0.88, +0.8%): target raised to $145 from $140 at Credit Suisse; Outperform
ASML Holding (ASML 99.07, -5.56, -5.1%): downgraded to Sell from Hold at Deutsche Bank
BlackBerry (BBRY 9.31, +0.03, +0.5%): target lowered to $9.70 from $10.30 at Nomura; Neutral
Netflix (NFLX 418.26, -3.49, -0.9%): Argus initiates with Hold rating
Paychex (PAYX 49.01, -0.19, -0.3%): target raised to $46 from $44 at RBC Capital Markets; Underperform
Red Hat (RHT 75.36, +6.91, +10.1%): target raised to $85 from $75 at Mizuho... target raised to $83 from $77 at BMO Capital Markets... target raised to $80 from $75 at RBC Capital Markets; maintain Outperform... target raised to $86 from $75 at Susquehanna; Positive... target raised to $70 from $66 at Deutsche Bank; Hold... target raised to $78 from $74 at UBS; maintain Buy
SanDisk (SNDK 66.20, -14.98, -18.4%): downgraded to Neutral from Buy at BTIG... target lowered to $80 at Cowen; Market Perform... downgraded to Neutral from Buy at Bank of America/Merrill Lynch
Taiwan Semi (TSM 23.20, +0.02, +0.1%: downgraded to Neutral from Buy at Citigroup
Twitter (TWTR 49.92, +0.42, +0.7%): target raised to $58 from $50 at Evercore ISI; Buy
4:10 pm : The major averages ended Thursday with modest losses after climbing off their opening lows. The S&P 500 shed 0.2% and settled below its 100-day moving average (2,057) while the Nasdaq Composite (-0.3%) underperformed.
Equity indices could not avoid registering their fourth consecutive decline, but they were able to avoid settling on their lows. Still, the benchmark index will enter the Friday session down 2.5% for the week.
The market began the day under pressure after overnight reports revealed that coalition forces from ten countries, led by Saudi Arabia, carried out air strikes against rebel forces in Yemen. This followed yesterday's reports indicating Yemen's President Hadi fled his country by sea.
The news gave a boost to the dollar, but the yen also rallied against its peers, which signaled caution among participants in the foreign exchange market. The Dollar Index (97.36, +0.38) gained 0.4% as the greenback spiked 0.8% against the euro, sending the single currency from a morning high near 1.1050 to 1.0880. For its part, the dollar/yen pair slipped 0.3% to 119.20 after testing the 118.50 level in the morning.
In addition, the latest developments in the Middle East led to concerns about potential disruptions to the energy market. As a result, crude oil surged 4.6% to $51.43/bbl. However, the energy sector (-0.2%) could not make it out of the red.
Meanwhile, the remaining cyclical sectors ended in mixed fashion. Consumer discretionary (-0.6%) and industrials (-0.3%) underperformed while materials (+0.2%) and technology (+0.1%) registered slim gains.
In the technology sector, large cap names like Apple (AAPL 124.24, +0.86), IBM (IBM 160.59, +1.39), and Oracle (ORCL 42.99, +0.06) gained between 0.1% and 0.9% while Accenture (ACN 94.17, +5.69) and Red Hat (RHT 75.36, +6.91) posted respective gains of 6.8% and 10.1% after beating estimates.
The tech sector managed to turn positive despite notable weakness among chipmakers that sent the PHLX Semiconductor Index lower by 1.4%. The industry group struggled after SanDisk (SNDK 66.20, -14.97) lowered its Q1 revenue guidance below analyst estimates.
Elsewhere, another high-beta group-biotechnology-pressured the market in the early going, but was able to return near its flat line by the end of the session. The iShares Nasdaq Biotechnology ETF (IBB 340.81, -0.49) will enter tomorrow's affair down 6.8% for the week.
Treasuries spent the day in a steady retreat from their early morning highs. The benchmark 10-yr yield spiked eight basis points to 2.01%.
Today's participation was above average with more than 808 million shares changing hands at the NYSE floor.
Economic data was limited to weekly initial claims, which declined to 282,000 from last week's unrevised 291,000 while the Briefing.com consensus expected a reading of 290,000.
After three weeks above 300,000, the 4-week moving average for initial claims has dropped below that threshold, suggesting the claims level is reestablishing a trend below 300,000.
Tomorrow, the third estimate of Q4 GDP will be released at 8:30 ET (Briefing.com consensus 2.4%) while the final reading of the Michigan Sentiment Index for March (consensus 92.0) will cross the wires at 10:00 ET.
Nasdaq Composite +2.7% YTD
Russell 2000 +2.3% YTD
S&P 500 -0.1% YTD
Dow Jones Industrial Average -0.8% YTD
DJ30 -40.31 NASDAQ -13.16 SP500 -4.90 NASDAQ Adv/Vol/Dec 1215/1.86 bln/1576 NYSE Adv/Vol/Dec 1200/808.2 mln/1838
3:40 pm :
The dollar index rallied today off of its overnight lows, which weighed on some commodities
WTI rallied overnight on Saudi strikes in Yemen. May crude rallied as high as $52.48/barrel and closed the day $2.24 higher at $51.43/barrel
Nat gas held its losses today following its post-inventory sell-off. May nat gas ended today's session $0.05 lower at $2.69/MMBtu
Gold held gains, closing $7.70 higher at $1204.90/oz.
Meanwhile, May silver ended $0.14 higher to $17.14/oz. Copper slid lower all day as the dollar index gained strength, ultimately ending $0.02 higher at $2.81/lb
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