From Briefing.com: The stock market seemed to have all it wanted Monday with the news that the People's Bank of China announced a 100 basis point reduction in the reserve requirement ratio for all Chinese banks. That move was larger than expected (in fact, it was the biggest cut since November 2008) and ignited another policy-driven party on Wall Street.
The major indices took off out of the gate and barely looked back. In the process, they recouped a significant portion of the losses they suffered on Friday.
The S&P 500 information technology sector (+1.8%) led Monday's broad-based advance that saw all ten sectors record gains for the session.
A healthy showing from Apple (APPL 127.60, +2.85, +2.3%) and a big jump in IBM (IBM 166.16, +5.49, +3.4%) ahead of its earnings report proved to be a catalyst for the sector's outperformance, which was highlighted by gains in 60 of the 66 sector members.
Notable news items from sector components included the following:
Autodesk (ADSK 61.04, +0.69, +1.1%): Company and Mattel announced they have signed an exclusive agreement to power the Mattel toy line with cutting-edge 3D design and 3D printing technology. The joint initiative will provide a new immersive experience by combining beloved physical toys with digital adventures.
CA, Inc. (CA 31.70, +0.50, +1.6%): Announced a settlement and update on its AppDynamics litigation, saying it "...is pleased with the settlement of these cases, which includes substantial licensing payments from AppDynamics to CA."
Harris (HRS 79.30, +0.75, +1.0%): Announced $74 mln in orders from an international customer to deliver Falcon tactical radios
IBM (IBM 166.16, +5.49, +3.4%): After Monday's close, reported Q1 (Mar) earnings of $2.91 per share, excluding non-recurring items, which was ahead of analysts' average expectation. Revenues fell 11.9% year/year to $19.59 bln, which was slightly below estimates. Adjusting for currency (8%) and divested businesses (4%), revenues were flat year-over-year. Strategic imperatives revenue up more than 30% adjusting for currency and divested businesses; up more than 20%, as reported. Cloud revenue up more than 75% adjusting for currency and divested businesses; up more than 60% as reported. Business analytics revenue up more than 20% adjusting for currency and divested businesses; up 12% as reported. Global Services revenues decreased 12% (down 2% adjusting for currency and divested businesses) to $12.2 billion. Services backlog of $121 billion, flat year-to-year adjusting for currency and divested businesses. Company reaffirmed guidance for FY15, saying it sees EPS of $15.75-16.50, excluding non-recurring items, and free cash flow flat year-over-year.
Lam Research (LRCX 71.99, +1.33, +1.9%): After Monday's close, reported Q3 (Mar) earnings of $1.40 per share, which was ahead of analysts' average expectation. Revenues rose 13.5% year/year to $1.39 bln, also topping estimates. For Q4, sees revenues of $1.41-1.51 bln, which is ahead of analysts' average expectation.
Microchip Technology Inc. (MCHP 49.61, +0.41, +0.8%): Announced that AUDI AG is networking the Audi virtual cockpit system in its new TT Models using MOST technology. Specifically, it is deploying Microchip's OS81118 MOST150 Intelligent Network Interface Controller.
Qualcomm (QCOM 68.64, +1.53, +2.3%): According to re/code, sources it spoke to have indicated that Qualcomm is planning to have Samsung manufacture its next-generation Snapdragon 820 processor
Seagate Technology (STX 59.13, +1.70, +3.0%): Announced four Cray Inc. (CRAY 30.25, +0.74, +2.5%) customers will be among the first to implement Seagate's latest high performance computing storage technology.
Teradata (TDC 43.15, +0.05, +0.1%): Announced the launch of the Software-Defined Warehouse, an enhancement to the Teradata Database. The Software-Defined Warehouse enables organizations to consolidate multiple data warehouses into one system without sacrificing security or service level performance.
Elsewhere in the technology space:
Alibaba Group (BABA 82.20, +0.30, +0.4%): Announced it received notices from Zhejiang Price Bureau that it has been fined ~$81,000 for matters related to Singles Day pricing by third-party sellers on its Tmall marketplace in 2013 and 2014 and ~$48,000 for pricing in other promotions in 2013 and 2015. The company noted it will be reinforcing pricing rules and regulations with its sellers in its daily operations and emphasizing these rules well in advance of its 2015 Singles Day activities.
Check Point Software (CHKP 85.88, +4.13, +5.1%): Before Monday's open, reported Q1 (Mar) earnings of $0.95 per share, which was ahead of analysts' average expectation. Revenues rose 9.0% year/year to $373 mln, also ahead of estimates. Separately, the company also announced a new partnership with FireEye (FEYE 42.43, +1.59, +3.9%) to share threat intelligence.
Ericsson (ERIC 12.54, +0.11, +0.9%): Company and Intel (INTC 32.73, +0.26, +0.8%) Security are working together to make managed security solutions available for telecom operators to bundle with the existing services they provide to enterprises.
FireEye (FEYE 42.43, +1.59, +3.9%): Announced an expansion of its Fuel partner program with the launch of the FireEye Fuel Cyber Security Coalition, which brings together security and infrastructure vendors to create an ecosystem to better protect customers.
Sanmina (SANM 23.36, +0.22, +1.0%): After Monday's close, reported Q2 (Mar) earnings of $0.50 per share, which was below analysts' average expectation. Revenues rose 3.5% year/year to $1.53 bln, which was also shy of estimates. For Q3, sees EPS of $0.48-0.52 and revenues of $1.50-1.55 bln. Both estimates are below expectations.
The stock market seemed to have all it wanted Monday with the news that the People's Bank of China announced a 100 basis point reduction in the reserve requirement ratio for all Chinese banks. That move was larger than expected (in fact, it was the biggest cut since November 2008) and ignited another policy-driven party on Wall Street.
The major indices took off out of the gate and barely looked back. In the process, they recouped a significant portion of the losses they suffered on Friday.
The S&P 500 information technology sector (+1.8%) led Monday's broad-based advance that saw all ten sectors record gains for the session.
A healthy showing from Apple (APPL 127.60, +2.85, +2.3%) and a big jump in IBM (IBM 166.16, +5.49, +3.4%) ahead of its earnings report proved to be a catalyst for the sector's outperformance, which was highlighted by gains in 60 of the 66 sector members.
Notable news items from sector components included the following:
Autodesk (ADSK 61.04, +0.69, +1.1%): Company and Mattel announced they have signed an exclusive agreement to power the Mattel toy line with cutting-edge 3D design and 3D printing technology. The joint initiative will provide a new immersive experience by combining beloved physical toys with digital adventures.
CA, Inc. (CA 31.70, +0.50, +1.6%): Announced a settlement and update on its AppDynamics litigation, saying it "...is pleased with the settlement of these cases, which includes substantial licensing payments from AppDynamics to CA."
Harris (HRS 79.30, +0.75, +1.0%): Announced $74 mln in orders from an international customer to deliver Falcon tactical radios
IBM (IBM 166.16, +5.49, +3.4%): After Monday's close, reported Q1 (Mar) earnings of $2.91 per share, excluding non-recurring items, which was ahead of analysts' average expectation. Revenues fell 11.9% year/year to $19.59 bln, which was slightly below estimates. Adjusting for currency (8%) and divested businesses (4%), revenues were flat year-over-year. Strategic imperatives revenue up more than 30% adjusting for currency and divested businesses; up more than 20%, as reported. Cloud revenue up more than 75% adjusting for currency and divested businesses; up more than 60% as reported. Business analytics revenue up more than 20% adjusting for currency and divested businesses; up 12% as reported. Global Services revenues decreased 12% (down 2% adjusting for currency and divested businesses) to $12.2 billion. Services backlog of $121 billion, flat year-to-year adjusting for currency and divested businesses. Company reaffirmed guidance for FY15, saying it sees EPS of $15.75-16.50, excluding non-recurring items, and free cash flow flat year-over-year.
Lam Research (LRCX 71.99, +1.33, +1.9%): After Monday's close, reported Q3 (Mar) earnings of $1.40 per share, which was ahead of analysts' average expectation. Revenues rose 13.5% year/year to $1.39 bln, also topping estimates. For Q4, sees revenues of $1.41-1.51 bln, which is ahead of analysts' average expectation.
Microchip Technology Inc. (MCHP 49.61, +0.41, +0.8%): Announced that AUDI AG is networking the Audi virtual cockpit system in its new TT Models using MOST technology. Specifically, it is deploying Microchip's OS81118 MOST150 Intelligent Network Interface Controller.
Qualcomm (QCOM 68.64, +1.53, +2.3%): According to re/code, sources it spoke to have indicated that Qualcomm is planning to have Samsung manufacture its next-generation Snapdragon 820 processor
Seagate Technology (STX 59.13, +1.70, +3.0%): Announced four Cray Inc. (CRAY 30.25, +0.74, +2.5%) customers will be among the first to implement Seagate's latest high performance computing storage technology.
Teradata (TDC 43.15, +0.05, +0.1%): Announced the launch of the Software-Defined Warehouse, an enhancement to the Teradata Database. The Software-Defined Warehouse enables organizations to consolidate multiple data warehouses into one system without sacrificing security or service level performance.
Elsewhere in the technology space:
Alibaba Group (BABA 82.20, +0.30, +0.4%): Announced it received notices from Zhejiang Price Bureau that it has been fined ~$81,000 for matters related to Singles Day pricing by third-party sellers on its Tmall marketplace in 2013 and 2014 and ~$48,000 for pricing in other promotions in 2013 and 2015. The company noted it will be reinforcing pricing rules and regulations with its sellers in its daily operations and emphasizing these rules well in advance of its 2015 Singles Day activities.
Check Point Software (CHKP 85.88, +4.13, +5.1%): Before Monday's open, reported Q1 (Mar) earnings of $0.95 per share, which was ahead of analysts' average expectation. Revenues rose 9.0% year/year to $373 mln, also ahead of estimates. Separately, the company also announced a new partnership with FireEye (FEYE 42.43, +1.59, +3.9%) to share threat intelligence.
Ericsson (ERIC 12.54, +0.11, +0.9%): Company and Intel (INTC 32.73, +0.26, +0.8%) Security are working together to make managed security solutions available for telecom operators to bundle with the existing services they provide to enterprises.
FireEye (FEYE 42.43, +1.59, +3.9%): Announced an expansion of its Fuel partner program with the launch of the FireEye Fuel Cyber Security Coalition, which brings together security and infrastructure vendors to create an ecosystem to better protect customers.
Sanmina (SANM 23.36, +0.22, +1.0%): After Monday's close, reported Q2 (Mar) earnings of $0.50 per share, which was below analysts' average expectation. Revenues rose 3.5% year/year to $1.53 bln, which was also shy of estimates. For Q3, sees EPS of $0.48-0.52 and revenues of $1.50-1.55 bln. Both estimates are below expectations.
Veeco Instruments (VECO 31.14, +0.24, +0.8%): Announced that the University of Cambridge has ordered the Propel Power Gallium Nitride Metal Organic Chemical Vapor Deposition System for GaN-on-silicon power electronics and light emitting diode research and development.
VMware (VMW 84.27, -0.80, -0.9%): Announced two new open source projects built to enable enterprise adoption of cloud-native applications -- Project Lightwave, an identity and access management project that will extend enterprise-scale and security to cloud-native applications; and Project Photon, a lightweight Linux operating system optimized for cloud-native applications.
Analyst Action:
Amazon.com (AMZN 389.51, +13.95, +3.7%): target raised to $395 from $330 at Wedbush; Neutral
Applied Materials (AMAT 21.76, +0.27, +1.3%): added to Franchise Picks List at Jefferies
Nokia (NOK 7.61, -0.01, -0.1%): downgraded to Hold from Buy at Jefferies
Seagate Tech (STX 59.13, +1.70, +3.0%): target raised to $68 from $65 at Needham; maintain Strong Buy
Symantec (SYMC 24.19, -0.05, -0.2%): upgraded to Hold from Underperform at Jefferies; target raised to $21 from $20
4:32 pm Ultra Clean Holdings beats by $0.01, reports revs in-line; guides Q2 EPS below consensus, revs below consensus (UCTT) : Reports Q1 (Mar) earnings of $0.14 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.13; revenues fell 13.1% year/year to $125.3 mln vs the $125.46 mln consensus. Co issues downside guidance for Q2, sees EPS of $0.04-0.07, excluding non-recurring items, vs. $0.14 Capital IQ Consensus Estimate; sees Q2 revs of $112-117 mln vs. $127.39 mln Capital IQ Consensus Estimate.
4:10 pm IBM beats by $0.08, reports revs in-line; reaffirms FY15 guidance (IBM) : Reports Q1 (Mar) earnings of $2.91 per share, excluding non-recurring items, $0.08 better than the Capital IQ Consensus Estimate of $2.83; revenues fell 11.9% year/year to $19.59 bln vs the $19.68 bln consensus; flat YoY adjusting for currency and divested businesses (8% and 4%, respectively.
Strategic imperatives revenue up more than 30% adjusting for currency and divested businesses; up more than 20%, as reported: Cloud revenue up more than 75% adjusting for currency and divested businesses; up more than 60% as reported; For cloud delivered as a service, annual run rate of $3.8 billion compared to $2.3 billion in the first quarter of 2014; Business analytics revenue up more than 20% adjusting for currency and divested businesses; up 12% as reported;Global Services revenues decreased 12% (down 2% adjusting for currency and divested businesses) to $12.2 billion
Services backlog of $121 billion, flat year-to-year adjusting for currency and divested businesses.Co reaffirms guidance for FY15, sees EPS of $15.75-16.50, excluding non-recurring items, vs. $15.90 Capital IQ Consensus; FCF flat YoY.
4:10 pm Lam Research beats by $0.10, beats on revs; guides Q4 revs above consensus (LRCX) : Reports Q3 (Mar) earnings of $1.40 per share, $0.10 better than the Capital IQ Consensus Estimate of $1.30; revenues rose 13.5% year/year to $1.39 bln vs the $1.37 bln consensus. Non-GAAP gross margin of 44.7%, non-GAAP operating margin of 19.9%. Shipments were $1,497 million, up 20% from the prior quarter.
Co issues upside guidance for Q4, sees Q4 revs of $1.41-1.51 bln vs. $1.39 bln Capital IQ Consensus Estimate. Sees Q4 gross margin 43.1%-45.1%.
4:07 pm Rambus beats by $0.02, reports revs in-line; guides Q2 revs below consensus (RMBS) : Reports Q1 (Mar) earnings of $0.08 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.06; revenues fell 6.9% year/year to $72.9 mln vs the $73.13 mln consensus.
Guidance: Co issues downside guidance for Q2, sees Q2 revs of $70-$74 mln vs. $75.52 mln Capital IQ Consensus Estimate.
4:07 pm Sanmina misses by $0.03, misses on revs; guides Q3 EPS below consensus, revs below consensus (SANM) : Reports Q2 (Mar) earnings of $0.50 per share, $0.03 worse than the Capital IQ Consensus Estimate of $0.53; revenues rose 3.5% year/year to $1.53 bln vs the $1.6 bln consensus. Co issues downside guidance for Q3, sees EPS of $0.48-0.52 vs. $0.56 Capital IQ Consensus Estimate; sees Q3 revs of $1.50-1.55 mln vs. $1.64 bln Capital IQ Consensus Estimate.
4:05 pm CalAmp acquires Crashboxx for $1.5 mln in upfront cash and future earn-out payments based on post-acquisition sales (CAMP) : Co announces it has acquired privately held Crashboxx, an early stage technology company focused on insurance telematics applications across the entire auto insurance lifecycle. Consideration for the acquisition was $1.5 mln in upfront cash and future earn-out payments based on post-acquisition sales.
4:10 pm : The stock market began the week on an upbeat note with the S&P 500 (+0.9%) erasing the bulk of its decline from Friday. The benchmark index reclaimed its 50-day moving average (2,086) at the start and spent the remainder of the day near its early high while the Dow Jones Industrial Average (+1.2%) and Nasdaq Composite (+1.3%) outperformed.
Global equity markets enjoyed a strong start to the week after the People's Bank of China lowered the reserve requirement ratio for all banks to 18.5% from 19.5%. The 100-basis point cut was the largest such move since November 2008 and was implemented in hopes of avoiding a slowdown in China's economic growth.
The easing news from China helped markets in Europe register broad gains with investors overlooking the latest Greece-related developments. Specifically, the Greek government has requested local governments to transfer their cash balances to the Bank of Greece as the troubled sovereign continues scrambling for funds ahead of the next IMF payment deadline. That being said, the euro slid about 0.7% to 1.0735 against the dollar while the Dollar Index (97.93, +0.41) advanced 0.4%.
All ten sectors registered solid gains with five groups adding more than 1.0%. The top-weighted technology sector (+1.8%) ended in the lead after climbing throughout the session with large cap components fueling the move. To that point, Apple (AAPL 127.60, +2.85), Google (GOOGL 544.53, +11.79), Facebook (FB 83.09, +2.31), and Microsoft (MSFT 42.90, +1.28) rallied between 2.2% and 3.1% while Dow component IBM (IBM 166.16, +5.49) jumped 3.4% ahead of its earnings report.
Speaking of earnings, investors received just a small batch of reports this morning, but the floodgates will open as the week continues. The consumer discretionary sector (+1.1%) ended among the leaders with an assist from Hasbro (HAS 74.16, +8.27), which surged 12.6% in reaction to better than expected earnings and revenue.
Elsewhere, the industrial sector (+1.1%) also displayed relative strength with transport stocks doing some heavy lifting. The Dow Jones Transportation Average spiked 1.7% with all 20 components ending in the green. Railroads stood out with CSX (CSX 34.89, +1.59) soaring 4.8% while Kansas City Southern (KSU 107.37, +2.88) jumped 2.8% ahead of tomorrow's earnings report.
Another cyclical sector-financials (+0.5%)-could not catch up to the broader market even though Morgan Stanley (MS 36.96, +0.21) reported better than expected results. Shares of MS climbed 0.6% while other major financials posted comparable gains.
Treasuries spent the day in a slow retreat from their overnight highs with the 10-yr yield rising two basis points to 1.88%.
Today's participation was on the light side with fewer than 670 million shares changing hands at the NYSE floor.
Investors did not receive any economic data today and tomorrow's session will also be free of noteworthy releases.
Nasdaq Composite +5.5% YTD
Russell 2000 +5.0% YTD
S&P 500 +2.0% YTD
Dow Jones Industrial Average +1.2% YTD
DJ30 +208.63 NASDAQ +62.79 SP500 +19.22 NASDAQ Adv/Vol/Dec 1964/1.52 bln/885 NYSE Adv/Vol/Dec 2147/668.3 mln/890 3:35 pm :
Strength in the dollar index continued to help weigh on commodities today
Select commodities like oil traded more independently compared to showing the typical inverse correlation
June crude oil ultimately ended today's trading session $0.53 higher at $57.85/barrel. May nat gas lost $0.09 to $2.54/MMBtu
Metals continued to feel pressure from strength in the dollar today
June gold ended $9.60 lower at $1193.50/oz, while May silver fell $0.33 to $15.89/oz
May copper fell $0.05 to $2.73/lb
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