From Briefing.com: The stock market is two-for-two this week as it strung together another winning session on Tuesday, bolstered by a variety of factors that included some enthusiasm for potential M&A activity after The Wall Street Journal reported its sources claimed Tsinghua Group, a Chinese state-owned company, is preparing a $23 billion, or $21.00 per share, offer to acquire Micron Technology (MU 19.61, +2.00, +11.4%).
Micron's gain helped spearhead a 1.1% gain in the Philadelphia Semiconductor Index and also added some luster to the S&P 500 information technology sector (+0.4%), which performed in-line with the broader market.
Once again, there was some solid leadership from large-cap components, namely Google (GOOG 561.10, +14.55, +2.7%), Seagate Technology (STX 47.61, +1.33, +2.9%), and Sandisk (SNDK 55.49, +1.84, +3.4%), which rallied in response to the takeover speculation surrounding Micron.
Intel (INTC 29.65, -0.08, -0.3%), which reports its quarterly results after Wednesday's close, was a notable laggard along with Apple (AAPL 125.61, -0.05, -0.04%).
The Intel report will be a focal point on Wednesday, but leading up to the report all eyes and ears will be concentrated on Fed Chair Yellen's semiannual monetary policy report before the House Financial Services Committee at 10:00 a.m. That testimony will follow China's Q2 GDP report, which will be a driver of overnight action.
Notable news items from sector components included the following:
Applied Materials (AMAT 18.89, -0.42, -2.2%): Company hosted its 2015 Analyst Meeting, providing an update to the company's strategy for generating profitable growth. The company introduced its 2018 financial model targeting non-GAAP earnings per share of $2.00, assuming global wafer fab equipment spending in the $33.5 billion range.The key focal points in the presentation included: (1) Delivering profitable growth with highly differentiated materials engineering products and services (2) Gaining share in the fastest growing areas of the semiconductor equipment market and (3) Addressing more technology inflections than any other equipment company.
Computer Sciences (CSC 67.33, -0.04, -0.1%): Announced filing of form 10 for planned spin-off of U.S. Public Sector Business; Transaction expected to close by October 2015. The intent to separate CSC into two companies -- one to serve public sector clients in the U.S. and one to serve commercial and government clients globally -- was announced on May 19. The spin-off of the public sector business will be effected through a one-for-one distribution of the new entity's stock to CSC shareholders, and will include a special dividend of $10.50 per share at closing.
Electronic Arts (EA 72.25, -1.29, -1.8%): Comcast confirms partnering with Electronic Arts to develop an all new service that brings HD gaming experiences to the TV via X1
Jabil Circuit (JBL 20.50, +0.14, +0.7%): Company announced it has signed a memorandum of understanding (MOU) with the management board of Saigon Hi-Tech Park in Vietnam. The agreement will allow the company to expand its current operation in the hi-tech park. The new facility, slated for groundbreaking in 2017, will focus on high-volume production of computing, storage, networking, telecommunications, automotive, digital home, mobility, point of sale, printing, industrial and energy sectors.
KLA-Tencor (KLAC 55.63, -0.69, -1.2%): Announced increase in its quarterly dividend to $0.52/share from $0.50/share
Micron (MU 19.61, +2.00, +11.4%): The Wall Street Journal reported that its sources said Tsinghua Unigroup, a state-owned Chinese company, is preparing to make a $23 billion, or $21.00 per share, offer to acquire Micron. Reuters cited an MU spokesman as denying that an offer was received. Early analyst reaction cast some doubt on the potential for the deal to materialize based on a belief that such an offer would be too low, opportunistic, and could face challenges from regulators.
Oracle (ORCL 40.78, -0.02, -0.1%): Said that on July 9, 2015, a federal court dismissed Rimini Street and Seth Ravin's claim that Oracle engaged in 'copyright misuse' through its software licenses. Additionally, the Court rejected Rimini's attempt to exclude Oracle's damages expert from testifying at trial in the first of the two cases between the companies. In that case, Oracle is suing Rimini for $209 million in lost profits. Trial begins September 14, 2015.
Elsewhere in the technology space:
Check Point Software (CHKP 80.12, +0.18, +0.2%): Expanded its collaboration with VMware (VMW 84.31, +0.51, +0.6%) to extend security to enterprise private cloud environments through a new software-defined data center offering.
Freescale Semiconductor (FSL 38.82, +1.16, +3.1%): Announced a pre-certified Thread networking stack, compliant to the R1.0 specification recently released to Thread Group members, which will usher in a new level of compelling solutions for the connected home.
Newport (NEWP 18.27, +0.06, +0.3%): Reaffirmed guidance in presentation slides, saying it sees a year-over-year increase in Q2 (Jun) EPS and revenues of $154-161 million. Newport reported Q2 EPS of $0.34 last year. Company said it is optimistic about 2015 and beyond.
Twitter (TWTR 36.72, +0.94, +2.6%): There was some takeover speculation in Twitter, but Bloomberg TV later reported that this story was a fake.
Analyst Action:
Accenture (ACN 100.74, +0.19, +0.2%): downgraded to Neutral from Outperform at Robert W. Baird; target $110
Amazon.com (AMZN 465.57, +10.00, +2.2%): upgraded to Buy from Neutral at UBS
EMC (EMC 25.12, -0.83, -3.2%): downgraded to Hold from Buy at Summit Research; target to $26 from $34
First Solar (FSLR 45.81, -0.20, -0.4%): resumed with an Overweight at JP Morgan... upgraded to Buy at Standpoint Research; target $60
Intel (INTC 29.64, -0.09, -0.3%): downgraded to Underperform from Market Perform at Bernstein
Micron (MU 19.61, +2.00, +11.4%): upgraded to Equal Weight from Underweight at Morgan Stanley
Visa (V 70.10, +0.58, +0.8%): target raised to $81 from $77 at Bernstein -- Top Pick
4:11 pm Mattson says that it has shipped its 100th plasma etch system since introducing its first etch product in 2009 (MTSN) :
4:09 pm Aehr Test Systems also announced that Gary Larson VP of Finance/CFO plans to retire effective Sept 8; intends to name Corp Controller Ken Spink to serve as interim CFO (AEHR) : Spink will assume these responsibilities upon the effectiveness of Mr. Larson's retirement and will work with Mr. Larson in transitioning these responsibilities.
4:04 pm Aehr Test Systems reports Q4 EPS of ($0.13) vs ($0.12) year ago on revs -10% y/y to $1.8 mln (no estimates); fiscal year-end backlog +100% y/y to $12 mln (AEHR) :
4:10 pm : The major average registered their fourth consecutive advance on Tuesday with the S&P 500 climbing 0.5%. The benchmark index reclaimed its 50-day moving average (2,100) at the start of the session while the tech-heavy Nasdaq Composite (+0.7%) outperformed throughout the trading day.
Equity indices began near their flat lines after overnight reports from Vienna revealed that P5+1 negotiators agreed to a nuclear deal with Iranian representatives. The news had little impact on the market, but crude oil was down about 2.0% overnight amid expectations that global oil supplies will increase once Iran begins selling its oil on the open market. However, an intraday rebound resulted in crude oil climbing 1.7% to $53.06/bbl. Accordingly, the energy sector (+0.8%) climbed alongside crude oil to end the day among the leaders, while only the health care sector (+1.0%) had a better showing.
The influential health care space finished the day well ahead of other countercyclical groups even though Johnson & Johnson (JNJ 99.78, -0.49) slumped 0.5% despite reporting a two-cent beat. However, biotechnology filled the void with iShares Nasdaq Biotechnology ETF (IBB 387.94, +8.79) spiking 2.3%, which contributed to the relative strength in the Nasdaq.
Furthermore, high-beta chipmakers also helped the Nasdaq stay ahead of the broader market with the PHLX Semiconductor Index rallying 1.1%. Micron (MU 19.61, +2.00) was the standout performer, soaring 11.4% after the Wall Street Journal reported Micron may have received a $21.00/share takeover offer from Tsinghua Unigroup. As for large cap tech names, Apple (AAPL 125.61, -0.05), Microsoft (MSFT 45.62, +0.08), and Oracle (ORCL 40.78, -0.02) ended near their flat lines while Google (GOOGL 584.18, +12.45) outperformed, climbing 2.2%.
Elsewhere among cyclical sectors, financials (+0.4%) spent the day behind the broader market even though JPMorgan Chase (JPM 69.04, +0.95) and Wells Fargo (WFC 57.25, +0.51) posted respective gains of 1.4% and 0.9% in reaction to earnings. JPMorgan Chase delivered a bottom-line beat on below-consensus revenue while Wells Fargo matched earnings expectations on revenue that missed estimates.
On the downside, the utilities sector (-0.1%) was the lone decliner, narrowing its July gain to 3.6%.
Treasuries spiked in the morning following a disappointing Retail Sales report. The 10-yr note settled just below its high with the benchmark yield falling five basis points to 2.40%.
Today's participation was in-line with recent totals as 680 million shares changed hands at the NYSE floor.
Economic data included Retail Sales, Import/Export Prices, and Business Inventories:
Retail sales declined 0.3% in June after increasing a downwardly revised 1.0% (from 1.2%) in May while the Briefing.com consensus expected an increase of 0.3%
The motor vehicle manufacturers reported that unit sales declined to 17.2 million SAAR in June from 17.8 million SAAR in May, which translated into a sizable 1.1% decline in sales at motor vehicles and parts dealers
Excluding motor vehicles, retail sales declined 0.1% in June after increasing a downwardly revised 0.8% (from 1.0%) in May while the consensus expected an increase of 0.5%
Core sales, which exclude motor vehicle dealers, gasoline stations, and building material and supply stores, declined 0.1% in June after increasing 0.6% in May
Export prices, excluding agriculture, decreased 0.1% in June after increasing 0.7% in the prior reading
Excluding oil, import prices decreased 0.2%, which followed last month's unchanged reading
Business inventories increased 0.3% in May after increasing an unrevised 0.4% in April while the Briefing.com consensus expected an increase of 0.2%
The inventory changes from manufacturers (0.0%) and merchant wholesalers (0.8%) were known prior to the release. The only new information was that retailer inventories were flat in May after increasing 0.6% in April.
Inventory declines from motor vehicle and parts retailers (-0.2%) and furniture and appliances retailers (-0.3%) were offset by increases from general merchandise stores (0.5%) and building material and supply stores (0.2%)
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while June PPI (Briefing.com consensus 0.3%) and July Empire Manufacturing survey (consensus 3.5%) will both be released at 8:30 ET. Industrial Production (consensus 0.2%) and Capacity Utilization (expected 78.1%) for June will be reported at 9:15 ET while the Federal Reserve's July Beige Book will cross at 14:00 ET.
Nasdaq Composite +7.8% YTD
Russell 2000 +5.6% YTD
S&P 500 +2.4% YTD
Dow Jones Industrial Average +1.3% YTD
DJ30 +75.90 NASDAQ +33.38 SP500 +9.35 NASDAQ Adv/Vol/Dec 1814/1.55 bln/1041 NYSE Adv/Vol/Dec 1947/679.7 mln/1092
3:35 pm :
Crude oil prices were volatile following the Iran nuclear agreement deal
Ultimately, Aug crude oil closed +$0.88 to $53.06/barrel.
Natural gas futures rallied this morning, it appeared on hot weather forecasts
Aug nat gas finished the day -$0.02 at $2.84/MMBtu
AUg gold fell $2.20 today to $1153.40/oz, while Sept silver lost $0.13 to $15.32/oz
Copper ended unchanged at $2.54/lb
11:44 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (179) outpacing new lows (67) (:SCANX) : Stocks that traded to 52 week highs: AAP, ABCD, ABG, ACAD, ADMS, AFMD, AGN, AIG, ALDW, ALJ, ALK, ALLB, ALXN, AMSF, AMZN, ANAC, ANSS, ASBB, ATRA, AVOL, AYI, BIB, BKS, BMRN, BMY, BRO, BSET, BYD, CASH, CBZ, CCL, CFNL, CGIX, CHCO, CHE, CHRS, CLFD, CLGX, CMN, COKE, CPHD, CRV, CS, CUBI, CUK, CVS, CXRX, CYNO, DBVT, DEPO, DNKN, DPLO, DST, DVAX, DY, EBAY, EEFT, EGBN, ELLI, ELNK, ERI, ESNT, ESXB, EURN, EW, FB, FCB, FISV, FIT, FRC, FRME, GAIN, GIL, GLOB, GTN, GTN.A, GUID, HALO, HAS, HCA, HF, HMPR, HOLX, HQH, HQL, HRTG, HSIC, HSP, IACI, IBB, IDI, ILMN, IMGN, INCY, ITRN, JBLU, JBSS, JLL, KMPR, LEG, LGND, LJPC, LNCE, LPNT, LXFT, MAN, MCO, MD, MDXG, MHLD, MTG, MTN, NAT, NBIX, NCLH, NGHC, NKE, NMR, NORD, NTRI, NVR, NWL, OMCL, OPB, ORLY, OSIR, PANW, PENN, PETS, PFNX, PLAY, PRTA, PSCD, Q, QADA, QLIK, QTWO, RARE, RDUS, RE, RLH, RMTI, RNST, RTRX, SBUX, SCHW, SEE, SFBS, SGU, SNA, SNPS, SPNS, SQBG, SREV, SSNC, STJ, STMP, STNG, SYN, TAST, TDOC, TDY, TFX, THG, THOR, TOWN, TPX, TREE, TSO, TWX, TXRH, TYL, UHS, ULTA, UVV, VLO, WD, WWAV, ZGNX
Stocks that traded to 52 week lows: AIXG, ALTV, AP, ASTI, AXON, BBEP, BBK, BBN, BEP, BIS, BTZ, BXLT, CHCI, CIG.C, CKP, CRDS, CVR, EIP, ELTK, ENOC, EPAX, EVO, FHCO, GMCR, GRAM, GWR, HTGM, IFMI, KBIO, KEM, LINC, LPL, LTRE, MFM, MILL, MTR, MYM, NAVI, NBD, NETE, NPP, NTRA, NVG, OAKS, PBT, PDBC, PERI, PGH, PKE, PMT, PNF, QUAD, ROYL, SFY, SMT, SSTK, STRI, SXCP, THTI, TTF, TTM, UNXL, VNCE, VXUP, WHZ, XBIT, ZBIO
ETFs that traded to 52 week highs: FDN, IBB, XBI, XLY
ETFs that traded to 52 week lows: VXZ
8:32 am KLA-Tencor increases quarterly dividend to $0.52/share from $0.50/share (KLAC) :
6:51 am Micron remains higher by 12% on reports of $21 buyout offer from China's Tsinghua Unigroup, while MU denies receipt of an offer (MU) :
Early analyst reaction casts some doubt on the potential for the deal to materialize, suggesting the offer is too low, opportunistic and could face challenges from regulators.
Given the low price and initial denial from MU, it is also likely that MU management would not accept such a deal.
6:08 am Chipmos Technology announces Board authorization for a $25 mln share repurchase program (IMOS) :
2:34 am Applied Materials targets non-GAAP EPS of $2.00 in 2018 (AMAT) : Co hosted its 2015 Analyst Meeting, providing an update to the company's strategy for generating profitable growth.
The company introduced its 2018 financial model targeting non-GAAP earnings per share of $2.00, assuming global wafer fab equipment spending in the $33.5 billion range.
The key focal points in the presentation included:
Delivering profitable growth with highly differentiated materials engineering products and services
Gaining share in the fastest growing areas of the semiconductor equipment market
Addressing more technology inflections than any other equipment company
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