Sector Investing

[ReturntoSender]

From Briefing.com: Weekly Recap - Week ending 27-Mar-15Dow +34.43 at 17712.66, Nasdaq +27.86 at 4891.22, S&P +4.87 at 2061.02

The major averages registered their first advance of the week on Friday with the Nasdaq Composite (+0.6%) ending ahead of the S&P 500 (+0.2%). Despite today's modest uptick, the two indices ended with respective losses of 2.7% and 2.2% for the week.

Overall, the final session of the week was fairly quiet with equity indices bouncing around narrow ranges. The S&P 500 spent the day in a ten-point channel with the bulk of the action occurring near its 100-day moving average (2,058). The benchmark index settled below that level on Thursday, but managed to reclaim that mark today.

Six of ten sectors registered gains with most countercyclical groups showing relative strength. The telecom services sector was an exception, ending flat, while consumer staples (+0.6%), utilities (+0.5%), and health care (+0.7%) posted gains.

Most notably, the third largest sector by weight-health care-was underpinned by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 347.46, +6.65) surged 2.0%, but still ended the week lower by 5.2%. Today, however, the industry group did some heavy lifting and contributed to the outperformance of the Nasdaq even as large cap technology names struggled.

The technology sector (+0.2%) started in-line with the market, but slumped from its opening high in a move that coincided with Apple (AAPL 123.25, -0.99) turning negative. The stock settled lower by 0.8%, but managed to hold its 50-day moving average (122.67). Meanwhile, high-beta chipmakers traded in mixed fashion until the final hour when it was reported that Intel (INTC 32.00, +1.92) is in talks to acquire Altera (ALTR 44.41, +9.83). The two names soared 6.4% and 28.5%, respectively and the news set a fire under the entire chipmaker space with the PHLX Semiconductor Index surging 2.8%. It is worth noting that the late surge lifted the entire sector into positive territory.

Elsewhere among cyclical sectors, energy (-0.7%) and financials (-0.1%) lagged while consumer discretionary (+0.5%) and industrials (+0.4%) outperformed.

The energy sector ended the day at the bottom of the barrel, but still finished the week ahead of the remaining cyclical sectors (-0.7%). Crude oil factored into today's weakness as the energy component fell 5.0% to $48.87/bbl and continued its retreat during electronic trading. Despite the plunge, WTI crude gained 4.9% for the week.

Also of note, the financial sector (-0.1%) finished with a slim loss today, but ended the week behind the remaining nine sectors with a 3.0% loss.

On the flip side, the consumer discretionary sector (+0.5%) ended ahead of other cyclical groups with help from homebuilders and retailers. The iShares Dow Jones US Home Construction ETF (ITB 27.79, +0.46) gained 1.7% while SPDR S&P Retail ETF (XRT 100.24, +0.82) advanced 0.8%.

Treasuries spent the day in a steady climb from their overnight lows with the 10-yr yield slipping four basis points to 1.96%.

Today's participation was below average with roughly 725 million shares changing hands at the NYSE floor.

Economic data was limited to Q4 GDP and Michigan Sentiment:

GDP growth in Q4 2014 was unrevised in the third estimate and remained at 2.2% after increasing 5.0% in Q3. The Briefing.com consensus expected a revision to 2.4%
Real final sales saw a slight upward revision to 2.3% from 2.1%, but nothing in the data altered the notion that economic growth trends slowed down significantly in the fourth quarter
The University of Michigan Consumer Sentiment Index was revised up to 93.0 in the March final reading from a preliminary reading of 91.2 while the Briefing.com consensus expected a revision up to 92.0

On Monday, February Personal Income, Personal Spending, and core PCE Prices will be released at 8:30 ET while the Pending Home Sales report for February will cross the wires at 10:00 ET.

Week in Review: Stocks Pull Back

The stock market began the trading week on a sleepy note. The Dow Jones Industrial Average (-0.1%) and S&P 500 (-0.2%) surrendered their slim gains during the final hour while the Nasdaq Composite settled lower by 0.3% after lagging throughout the session. Equity indices spent the entire Monday session near their flat lines while the Dollar Index (96.86, -1.05) extended its retreat that began during the previous week. The index fell 1.1% with the greenback giving up 1.4% to the euro (1.0966). The single currency rallied in the morning and saw little afternoon reaction to a joint press conference held by German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras. The two leaders did not provide any specifics about their earlier meeting, suggesting the two sides remain at odds with regard to finding a sustainable solution for Greece.

Equity indices registered their second consecutive decline on Tuesday with the S&P 500 retreating 0.6%. The benchmark index ended in-line with the Dow Jones Industrial Average while the Nasdaq Composite (-0.3%) outperformed slightly. Equities traded near their flat lines through the first half of the session before sliding to lows during afternoon action. All ten sectors finished the day in negative territory with technology (-0.3%) registering the slimmest loss. Also of note, the Dollar Index (97.15, +0.12) was on track for its third consecutive decline, but an early morning rebound following an in-line CPI report (+0.2%) helped the Index finish with a slim gain. Meanwhile, crude oil endured some intraday volatility before settling higher by 0.1% at $47.51/bbl. Strikingly, crude's flat finish could not stop the energy sector (-0.8%) from ending the day among the laggards. Notably, Whiting Petroleum (WLL) sank 19.5% after pricing a secondary share and note offering.

The 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) and Lam Research (LRCX) leading the slide with respective losses of 6.2% and 7.6% while heavyweight Intel (INTC) tumbled 2.9%.

On Thursday, equities posted 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. 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 Wednesday'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.

Index Started Week Ended Week Change % Change YTD %
DJIA 18127.65 17712.66 -414.99 -2.3 -0.6
Nasdaq 5026.42 4891.22 -135.20 -2.7 3.3
S&P 500 2108.06 2061.02 -47.04 -2.2 0.1
Russell 2000 1266.37 1240.41 -25.96 -2.0 3.0

The stock market managed to break this week's losing streak on Friday, but it did so in a furtive fashion.

The major indices danced gingerly in a narrow range for most of a thinly-traded session, but eventually resolved things with a late move to the upside that was catalyzed by a Wall Street Journal report that Intel (INTC 32.00, +1.92, +6.4%) is in talks to acquire Altera (ALTR 44.41, +9.83, +28.5%).

Soon thereafter, Fed Chair Yellen toed a prevailing Fed line, suggesting in a speech she gave in San Francisco that a rate rise may well be warranted this year, but that the timing of the first increase will be determined in light of incoming data on labor market conditions, inflation, and other aspects of the current expansion. She added, however, that she thinks it will be appropriate for monetary policy to remain accommodative for some time.

It was a favorable end to an otherwise tough week for the stock market, which saw the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 decline 2.3%, 2.7%, and 2.2%, respectively.

The S&P 500 information technology sector dropped 2.6% for the week, but jumped 0.2% on Friday. The entirety of that gain was logged in the final 30 minutes of trading.

Similarly, the Philadelphia Semiconductor Index (SOX) was roughly flat for the day before the Intel-Altera M&A speculation hit, but took off in the wake of that report and ended up 2.8% on Friday. Notwithstanding that strong gain, the SOX Index still dropped 5.0% for the week.

Notable news items from sector components included the following:

Akamai Technologies (AKAM 71.29, +0.26, +0.4%): Announced the opening of its Toronto sales and services office. The new office at 901 King Street West will support employees focused on sales, services, engineering, and security, and will complement Akamai's existing Ontario location in Ottawa.

Google (GOOG 548.34, -6.83, -1.2%): Johnson & Johnson announced that its medical device company Ethicon has executed a definitive agreement to enter into a strategic collaboration with Google to advance surgical robotics to benefit surgeons, patients and health care systems. The collaboration was facilitated by Johnson & Johnson Innovation in California.The closing of the transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions. The transaction is expected to close duringthe second quarter of 2015. Financial terms were not disclosed.

Intel (INTC 32.00, +1.92, +6.4%): The Wall Street Journal reported late in Friday's trading session that Intel is in talks to acquire Altera (ALTR 44.41, +9.83, +28.5%).

Jabil Circuit (JBL 22.90, +0.03, +0.1%): Director bought ~22K shares at $23.21 worth ~$499K

Yahoo! (YHOO 45.09, +0.62, +1.4%): Company disclosed that on March 26, 2015, its Board of Directors approved an additional share repurchase program of $2.0 billion which will expire on March 31, 2018. The amount of shares of common stock authorized to be repurchased under the New Repurchase Program is in addition to the amount remaining under the Company's existing stock repurchase program announced in November 2013, which expires in December 2016. As of the date hereof, $726 million remains available under the Existing Repurchase Program. Elsewhere in the technology space:

BlackBerry (BBRY 9.46, +0.16, +1.7%): Reported Q4 (Feb) earnings of $0.04 per share, excluding non-recurring items, which was ahead of analysts' average expectation. Revenues fell 32.4% year/year to $660 mln, which was below expectations. On its call, Blackberry said it has seen analyst models of an FY16 loss of ($0.13) - ($0.08). The company noted that it intends to do better than those estimates. The Company continues to anticipate positive free cash flow and continues to target sustainable non-GAAP profitability some time in fiscal 2016.

Analyst Action:

Amazon.com (AMZN 370.56, +3.21, +0.9%): target raised to $430 from $405 at Citigroup; Buy

EMC (EMC 25.17, -0.64, -2.5%): downgraded to Sector Perform from Outperform at Pacific Crest

FireEye (FEYE 39.81, +0.50, +1.3%): initiated with a Market Perform at Raymond James

Facebook (FB 83.30, +0.29, +0.4%): target raised to $96 from $93 at Robert W. Baird; Outperform... target raised to $98 from $88 at Barclays; Overweight

SanDisk (SNDK 64.59, -1.61, -2.4%): downgraded to Hold from Buy at Evercore ISI

Yahoo! (YHOO 45.09, +0.62, +1.4%) initiated with an Overweight at Morgan Stanley; target $55

4:37 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:ABMD (70.31 +17.18%),IMGN (8.25 +10.89%)

Materials:AKS (4.49 +10.86%)

Industrials:NMM (11.08 +13.64%)

Consumer Discretionary:OXM (70.8 +21.27%),QUNR (41.78 +13.81%),FIVE (35.24 +10.61%)

Information Technology:KFX (10.92 +44.64%),ALTR (44.41 +20.19%),GLOB (21.07 +18.3%),STMP (67.58 +15.17%),RALY (14.88 +15.08%)

Energy:FMSA (6.72 +23.99%),CAK (0.52 +21.16%),AXAS (3.26 +12.03%),PGH (3.01 +11.07%),NOG (7.81 +10.78%),EPE (10.74 +10.61%)

Consumer Staples:KRFT (89.1 +43.85%),DPLO (33.72 +20.9%)

This week's top 20 % losers

Healthcare:CLDN (21.09 -19.75%),CEMP (32 -19.54%),ESPR (90.65 -19.3%),SCMP (14.5 -18.95%),SGNT (22.83 -18.61%),IDRA (3.43 -18.06%),ZIOP (11.45 -17.6%),LBIO (11.2 -17.59%),ZSPH (40.93 -17.11%),KITE (59.78 -16.85%)

Consumer Discretionary:APOL (19.2 -30.83%)

Information Technology:SONS (8 -44.58%),SNDK (64.59 -25.82%),YGE (1.97 -17.57%),ROVI (18.48 -16.76%)

Financials:WRLD (74.98 -19.69%),ENVA (19.16 -19.05%),NSM (25.02 -16.43%)

Energy:WLL (30.5 -21.85%),BTU (5.13 -16.45%)

3:33 pm Earnings Preview for the week of March 30 - April 3 (:SUMRX) : Of the companies reporting earnings for the week of March 30 - April 3 some of the bigger names include:

Monday:
Pre Market - UTIW, AIR, CALM, NCFT
After Hours - MDLY

Tuesday:
Pre Market - SAIC, CONN, MOV, VTNR
After Hours - SNX, DCO, LNDC, INGN, RGSE, FRPT, PRGN

Wednesday:
Pre Market - MON, AYI, UNF, IKGH
After Hours - SPWH, PRGS, SIGM

Thursday:
Pre Market - KMX, DANG, CVGW, PERY, SEAC
After Hours - MU, FC

12:53 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

BMRN (130.76 +13.16%): Trading higher on a report the company may be acquired by Shire (SHPG); Also had its price tgt raised at Deutsche Bank and UBS.
CCL (47.18 +6.22%): Beat Q1 consensus EPS estimates by $0.11, missed on revs; guided Q2 EPS below consensus; lowered high end of FY15 EPS, reaffirmed net rev yield ex-FX.
KRFT (88.08 +4.37%): Upgraded to Buy at Canaccord Genuity.

Large Cap Losers

MT (9.58 -4.2%): Downgraded to Sell from Neutral at Citigroup.

TSLA (184.01 -3.36%): Initiated with a Hold at Argus; also reports out that China Tesla's Model S registrations fell 45% month over month.
EMC (25.26 -2.15%): Downgraded to Sector Perform at Pacific Crest.

Mid Cap Gainers

OLN (32.86 +20.85%): Dow Chemical (DOW) announced it will spinoff of its chlor-alkali and downstream derivatives businesses to combine with Olin Corporation (OLN) in transaction valued at $5 bln.
ICPT (291.79 +3.22%): Price target raised to $400 from $300 at Deutsche Bank; Buy.
BBRY (9.54 +2.58%): Beat Q4 consensus EPS estimates by $0.08, missed on revs with 1.3 mln smartphones; reaffirmed target for FY16 non-GAAP profitability.

Mid Cap Losers

RIG (14.52 -5.32%): Sector-wide weakness in the energy sector with WTI crude declining 2.6% on the day (DNR, SDRL, CIE also lower).
ALGN (52.35 -4.09%): Co announced that Thomas Prescott will retire as president and CEO effective June 1, 2015.
WCC (67.62 -3.04%): Downgraded to Neutral from Outperform at Robert W. Baird.

11:55 am Stocks/ETFs that traded to new 52 week highs/lows this session - New lows (65) outpacing new highs (47) (:SCANX) : Stocks that traded to 52 week highs: ADPT, AMOT, AYI, AZO, BMRN, CBPO, CCL, CEA, CRWN, CUK, DK, DPLO, DRRX, ENSG, FBR, FIX, FSFG, GLOB, GY, HMPR, HPTX, IMH, INFN, KAI, KRFT, LEVY, MHF, MTN, OLN, PKI, PRSC, REV, ROLL, SABR, SBCF, SIG, SPTN, TA, TIK, TSLF, USAT, UWN, VASC, VRNT, WWAV, WWW, ZNH

Stocks that traded to 52 week lows: ACRE, ADEP, AI, ALIM, AMCF, APOL, ARDM, ARLP, AXPW, BAGR, BANX, BOSC, BTU, BV, CECE, CHCI, CHEK, CLTX, DSX, DV, DWSN, ELON, FBC, FHCO, FSAM, FULL, GLF, GRAM, IKAN, INPH, JMI, KBR, LAYN, MAT, MEIP, MICT, MLHR, MRVC, MSB, MSM, NBS, NTP, OB, OHRP, ONVO, OPXA, OXGN, PDI, PFMT, PKX, PM, PRGN, PRGX, RCS, REN, SCHN, SNDK, SNI, SONS, TDW, TSU, TWI, VIV, WIN, YUMA

ETFs that traded to 52 week highs: none

ETFs that traded to 52 week lows: SGG, VNM

7:08 am BlackBerry beats by $0.08, misses on revs with 1.3 mln smartphones; reaffirms target for FY16 non-GAAP profitability (shares halted -- will resume at 7:30 ET) (BBRY) : Reports Q4 (Feb) earnings of $0.04 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus Estimate of ($0.04); revenues fell 32.4% year/year to $660 mln vs the $778.38 mln consensus.

The revenue breakdown for the quarter was ~42% for hardware, 47% for services and 10% for software. During the fourth quarter, the Company recognized hardware revenue on ~1.3 mln BlackBerry smartphones. ~1.6 mln BlackBerry smartphones were sold through to end customers (Street ests near ~1.9 mln), with an ASP of $211 compared to $180 in the previous quarter. Non-GAAP gross margin of 48.3%, with a third consecutive quarter of positive hardware gross margin. Outlook: The Company continues to anticipate positive free cash flow. The Company is expanding its distribution capability, and expects traction from these efforts to manifest some time in fiscal 2016. The company continues to target sustainable non-GAAP profitability some time in fiscal 2016.