From Briefing.com: The broader market ended the Wednesday session surging to highs of the day. On the back of comment from the October FOMC meeting, and market data, all three major US indices closed well above flat lines. The tech-heavy Nasdaq Composite led the way higher, adding 89.19 points (+1.79%) to close 5075.20. The S&P 500 closely followed, higher by 33.14 points (+1.62%) to 2083.58. The Dow Jones Industrial Average rounded out the bunch up 247.66 points (+1.42%) to end 17737.16.
Market data reported this morning was limited to Housing Starts, which declined 11.0% to a seasonally adjusted annual rate of 1.060 million units from a downwardly revised 1.191 million in September (from 1.206 million), and weekly MBA Mortgage Index, which posted a reading of +6.2% on the back of last week's 1.3% decline. In addition, markets surged to highs as the October FOMC meeting minutes showed that a large majority of Federal Reserve officials were open to a December rate hike.
For its part, the Technology (XLK 43.68, +0.63 +1.46%) sector closed much like the broader market, surging to highs as the bell rang. Sector component Teradata (TDC 28.19, +1.66 +6.26%) closed with notable gains today as the company was mentioned by a sell side analyst as potentially being up for sale. TDC did not, however, confirm this speculation. Other sectors finished the session XLV +1.95%, XLB +1.78%, XLF +1.78%, XLY +1.71%, XLE +1.65%, XLI +1.39%, XLP +1.38%, IYZ +1.33%, XLU +0.64% led by Healthcare.
Broader strength in the Semiconductor (SOX 662.14, +6.32 +0.96%) industry today was predicated on the early morning news that ON Semiconductor (ON 9.89, -0.85 -7.91%) would buy fellow chip-maker Fairchild Semi (FCS 19.40, +1.52 +8.50%) for $20 per share in cash, or about $2.4 billion. The deal led to broader strength across the sector, with names like SUNE +7.62%, NXPI +4.45%, SWKS +4.23%, CREE +4.20%, AVGO +3.16%, QRVO +2.92%, MCHP +2.75%, NVDA +2.46% finishing higher on the session.
Also posting a strong session, Internet (FDN 75.82, +1.19 +1.59%) names closed with marked gains. Component Rackspace (RAX 27.34, +1.17 +4.47%) closed the session near highs as the company announced after-hours last night the pricing of an offering of $500 million (from $350 million) 6.5% senior notes due 2024. Other names in the sector that closed with gains included TRIP +7.12%, RAX +4.47%, EXPE +3.65%, AMZN +3.15%, NFLX +3.01%, TWTR +2.66%, FB +2.51%.
The S&P 500 Information Technology sector (734.35, +11.57 +1.60%) closed higher today. Names like AVGO +3.16%, QRVO +2.92%, WDC +2.85%, HPQ +2.71%, XRX +2.53%, WU +2.52%, MU +2.16%, V +2.07%, GOOG +2.03%, GOOGL +1.88% helped the sector outperform as component Qualcomm (QCOM 48.00, -4.98 -9.40%) managed to closed well lower on an unfavorable report alleging violation of Korean competition law. Notable names Apple (AAPL 117.29, +3.60 +3.17%) closed near session highs as the company was added this morning to Goldman's Conviction Buy List.
Other notable news items among sector components:
Citrix Systems (CTXS 70.54, -7.88 -10.05%) updated on its operations review, stating that a spinoff of the GoTo family of products into a public company is in the best interest of shareholders. The company also gave FY16 guidance of revenue growth of 1-2% or roughly $3.28-3.31 billion. Also, CTXS expects FY15 non-GAAP EPS of $4.0-4.50. In addition, the company named Tim Minahan as Chief Marketing Officer.
Bottomline Technologies (EPAY 28.96, +0.53 +1.86%) announced a strategic alliance with Visa (V 80.46, +1.63 +2.07%) that will create a way for businesses to pay and get paid. Visa's commercial card solution, Visa Payables, and Bottomline's payment network, Paymode-X, will join to create Paymode-X with Visa Payables.
CA Tech (CA 28.04, +1.14 +4.24%) increased its dividend to $1.02 per share for the year. The company also announced an additional $750 million share repurchase program.
Qualcomm (QCOM) announced the receipt of a report from Korea Fair Trade Commission alleging it violates Korean competition law.
Motorola Solutions (MSI 71.98, +0.93 +1.31%) increased its dividend to $0.41 from $0.34 per share.
Ericsson (ERIC 9.55, +0.07 +0.74%), with Vodafone (VOD 33.58, +0.07 +0.21%) and Qualcomm (QCOM), conducted world's first live testing of advanced LTE Carrier Aggregation of LTE in licensed and unlicensed bands on a commercial mobile network.
Autodesk (ADSK 61.25 flat) and ZWCAD Software settled outstanding litigation in the Hague and the US District Court of the Northern District of California.
Oracle (ORCL 38.70, +0.57 +1.49%) introduced a series of new innovations within the Oracle Marketing Cloud. The new innovations enable marketers to orchestrate relevant mobile interactions for consumers and salespeople, clearly attribute revenue to marketing activities and optimize the experience for individual customers.
Elsewhere in the technology space:
Fairchild Semi (FCS) to be acquired by ON Semiconductor (ON) for $20 per share in cash, or about $2.4 billion.
OSI Systems (OSIS 93.04, +7.70 +9.02%) received a multi-year framework contract, to provide the RTT 110 explosives detection system to airports in France.
TiVo (TIVO 8.90, +0.20 +2.36%) announced that CEO Tom Rogers will relinquish his position on January 31, 2016. A search committee has been formed to find a replacement.
VimpelCom (VIP 3.68, +0.07 +1.94%) to divest stake in Zimbawe subsidiary for $40 million.
Rackspace (RAX) priced an upsized offering of $500 million of 6.500% senior notes due 2024.
Analyst actions:
SHOP was upgraded to Outperform from Mkt Perform at Raymond James,
CA was upgraded to Buy from Hold at Standpoint Research;
FCS was downgraded to Equal Weight from Overweight at Morgan Stanley,
CTXS was downgraded to Neutral from Buy at Mizuho
4:34 pm Semtech misses by $0.05, reports revs in-line; guides Q4 EPS below consensus, revs in-line (SMTC) :
Reports Q3 (Oct) earnings of $0.19 per share, excluding non-recurring items, $0.05 worse than the Capital IQ Consensus of $0.24; revenues fell 22.2% year/year to $115.8 mln vs the $115.07 mln Capital IQ Consensus. Q3 GAAP Gross Profit Margin of 60.1% and 60.3% on a Non-GAAP Basis. Co issues guidance for Q4, sees EPS of $0.14-0.18, excluding non-recurring items, vs. $0.23 Capital IQ Consensus Estimate; sees Q4 revs of $113-119 mln vs. $114.25 mln Capital IQ Consensus Estimate. Co sees Q4 Non-GAAP gross profit margin is expected to be in the range of 59.0% to 60.0%.
4:31 pm Motorola Solutions announces it will voluntarily delist its shares from the Chicago Stock Exchange; will continue to list on NYSE (MSI) :
4:05 pm : The stock market ended the midweek session on a broadly higher note with the Nasdaq Composite leading the way. The tech-heavy Index spiked 1.8% while the S&P 500 (+1.6%) followed not far behind, charging back above its 200-day moving average (2,065).
Equity indices climbed out of the gate, continuing their steady charge into the afternoon and through the release of FOMC minutes from the October meeting, which left little doubt that the Fed is poised to raise rates at the December meeting. Specifically, the minutes indicated that "it may well become appropriate to initialize the normalization process at the next meeting, provided that unanticipated shocks do not adversely affect the economic outlook."
To be fair, it would be hard to categorize the statement as hawkish if one were to judge solely based on the market's reaction to the commentary as Treasuries charged back to unchanged (10-yr yield 2.27%) while the dollar ticked lower against the euro.
All ten sectors ended the day in positive territory with eight groups adding more than 1.0%. The financial sector (+1.8%) settled near the top of the leaderboard, driven higher by solid gains among the likes of Bank of America (BAC 17.84, +0.41), Citigroup (C 54.98, +1.49), and JPMorgan Chase (JPM 67.45, +1.32). The three names gained between 2.0% and 2.8%, benefiting from rising rate hike expectations.
Elsewhere, the energy sector (+1.6%) also posted a solid gain, but not before seeing some intraday volatility. The commodity-sensitive group led at the start, but made a brief appearance in the red amid a late-morning pullback in crude oil. WTI crude ended higher by 0.4% at $41.95/bbl after sliding from its session high near $41.53/bbl. Interestingly, the pullback developed after the latest storage report from the Energy Information Administration showed a smaller than expected inventory build (252,000 barrels; expected 2.0 million barrels).
Staying on the cyclical side, the top-weighted technology sector (+1.6%) settled in line with the broader market, masking a 3.2% spike in the shares of Apple (AAPL 117.29, +3.60), which was brought on by news that Goldman Sachs added the stock to its Conviction Buy List. Also of note, the PHLX Semiconductor Index gained 1.0%, overshadowing an 8.5% surge in Fairchild Semiconductor (FCS 19.40, +1.52) after the company agreed to be acquired by ON Semiconductor (ON 9.89, -0.85) for $20/share.
Over on the countercyclical side, the health care sector (+2.0%) spent the bulk of the session in a position of relative strength while consumer staples (+1.4%), telecom services (+0.8%), and utilities (+0.7%) underperformed. As for health care, the sector was boosted by biotechnology, evidenced by a 2.9% spike in iShares Nasdaq Biotechnology ETF (IBB 338.74, +9.60), which registered its fourth consecutive advance.
Today's participation was ahead of average as more than 850 million shares changed hands at the NYSE floor.
Economic data reported this morning was limited to Housing Starts and MBA Mortgage Index:
The October Housing Starts report was a disappointment as starts declined 11.0% to a seasonally adjusted annual rate of 1.060 million units from a downwardly revised 1.191 million in September (from 1.206 million)
The Briefing.com consensus expected a reading of 1.173 million
The downturn was driven by a 25.1% decline in multifamily starts, which followed on the heels of an 18.1% increase in September. A natural pullback was expected after the big September increase, yet the drop was more pronounced than many had thought.
There wasn't a pickup in single-family starts either as they dropped 2.4% to 722,000, led by a 6.9% decline in the South
The weekly MBA Mortgage Index rose 6.2% to follow last week's 1.3% decline
Tomorrow, weekly Initial Claims (Briefing.com consensus 272,000) and the November Philadelphia Fed Survey (expected -1.0) will be reported at 8:30 ET while the October Leading Indicators report (consensus 0.6%) will be released at 10:00 ET.
Nasdaq Composite +7.2% YTD
S&P 500 +1.2% YTD
Dow Jones Industrial Average -0.5% YTD
Russell 2000 -2.6% YTD
DJ30 +247.66 NASDAQ +89.19 SP500 +33.14 NASDAQ Adv/Vol/Dec 1995/1.82 bln/927 NYSE Adv/Vol/Dec 2373/868.2 mln/699
3:30 pm :
Precious metals climbed modestly higher following the FOMC minutes
In pit trading, however, Dec gold finished +0.10 higher at $1068.70/oz, while Dec silver -0.5% to $14.10/oz
Currently, gold is $1070.50 and silver is $14.15/oz
WTI crude oil has been climbing higher since it's late-morning LoD of $41.28/barrel.
Jan crude finished floor trade at $41.95/barrel, which is $0.18 higher, but rose at high as $42.21/barrel by 3:15pm ET
Natural gas futures consolidated in the afternoon session... no real action. Dec nat gas closed the day -0.9% to $2.35/MMBtu
3:33 pm Pericom Semi's Board unanimously rejects the revised acquisition offer from Montage Technology Group Limited; says offer 'still suffers from fundamental flaws and significant risks' (PSEM) :
The Board noted:
"The increased $17.75 per share purchase price provided by the Diodes (DIOD) transaction represents a substantial premium which is backed by fully committed financing from a U.S. bank. After months of negotiations and repeated opportunities to revise its offer, Montage has proven unable or unwilling to obtain fully committed financing, instead presenting Pericom with inadequate one-page financing letters that, despite the Company's numerous requests, Montage has failed to make available to Pericom shareholders. Despite Montage's revised offer, these inadequate one-page financing letters have remained unchanged and no new financing commitments have been presented to Pericom. Considering these and other factors, the Pericom Board unanimously reaffirmed its recommendation that shareholders vote the WHITE proxy card "FOR" the Diodes Merger Agreement to lock in the substantial premium that would be realized upon the prompt closing of the Diodes Merger Agreement."
11:40 am Stocks/ETFs that traded to new 52 week highs/lows this session - New lows (162) outpacing new highs (51) (SCANX) :
Stocks that traded to 52 week highs: AAME, ACRS, AGRO, ANGI, ARG, AYI, BCOM, CAC, CCRN, CMN, CWST, DMTX, EBS, EDUC, EFX, EGHT, ESLT, FBC, FBHS, FCLF, FLIC, FRBK, GAME, GDEN, HCKT, HD, IDTI, IGLD, MAS, MITK, MPWR, MSI, NCTY, OC, OLBK, OMI, OSIS, OVBC, PARR, PBF, PCBK, PCL, PE, RIVR, RNG, STZ, TAP, TTI, VC, VII, VRSN
Stocks that traded to 52 week lows: AAMC, AAN, ABUS, ACSF, ACTG, AGI, AIQ, ANGO, APT, ARC, ARDC, ARES, ASA, ASNA, ASTC, ATOS, AUPH, AZUR, BBW, BEBE, BGI, BGX, BIOD, BNTC, BOBE, BONT, BSI, BSL, BVN, CARB, CDE, CEF, CETC, CGIX, CLUB, CMLS, CNAT, CNIT, CPRX, CPST, CREG, CTIC, CYRX, DELT, DSX, DYN, EGLE, ENI, ENRJ, ENSV, ENVA, EQT, ESEA, EVAR, EVER, EXC, FINL, FRGI, FSAM, FTAI, FTGC, FWM, GARS, GASS, GFI, GILT, GLBL, GLPI, GLRE, GOGL, GPOR, GPRO, GSI, HBIO, HIE, HNI, HNSN, HOS, HSGX, HSNI, ICLD, ICON, IPHS, JCS, JYNT, KKD, KLXI, KOOL, LLNW, MCUR, MIK, MSTX, MUA, MXPT, NAO, NETE, NMBL, NMM, NRG, NSL, NTCT, NVGS, ONTX, OSTK, OZM, PAAC, PBYI, PED, PEG, PEIX, PERF, PETX, PGLC, PQ, PRGN, QCOM, QUAD, RACE, RADA, RBY, RCII, REV, RKDA, RLJ, RMGN, ROKA, RRGB, RUN, SALT, SB, SBLK, SBRA, SEMI, SGNL, SJT, SKUL, SMCI, SRG, SSH, SSI, STR, STRP, STV, SUNE, TAT, TERP, THR, TLN, TLYS, URG, UUUU, VCEL, VMEM, VRX, VSLR, WING, WIW, WPG, WRES, WSM, WTT, XHR
ETFs that traded to 52 week highs: none
ETFs that traded to 52 week lows: DBB, DBC, DJP, FXF, JJC, JJG, PPLT, RJA
7:02 am PMC-Sierra: Microsemi (MSCC) increases its offer to acquire PMC-Sierra; new offer valued at $12.05/ PMCS share (PMCS) :
Microsemi Corporation (MSCC) announced that it has increased its proposal to acquire PMC-Sierra in a cash and stock transaction.
Under the terms of Microsemi's proposal, PMC shareholders would receive $9.22 in cash and 0.0771x of a share of Microsemi common stock for each share of PMC common stock. Based on the closing stock price of Microsemi on Nov. 17, 2015, the transaction is valued at $12.05 per PMC share. The revised proposal is expected to be immediately accretive to Microsemi's non-GAAP EPS and free cash flow. Microsemi anticipates achieving more than $100 million in annual cost synergies with greater than $75 million of those to be realized in the first full quarter of combined operations. Microsemi estimates approximately $0.60 of non-GAAP EPS accretion in the first full year after closing the transaction.
6:16 am Qualcomm announces receipt of report from Korea Fair Trade Commission alleging it violates Korean competition law (QCOM) :
The co confirmed that it has recently received the Korea Fair Trade Commission's staff-generated Case Examiner's Report, which commences a process that affords Qualcomm the ability to respond to allegations and defend itself. The ER alleges, among other things, that we do not properly negotiate aspects of our licenses, and that our practice of licensing our patents only at the device level and requiring that our chip customers be licensed to our intellectual property violate Korean competition law. The ER proposes remedies including modifications to certain business practices and monetary penalties.
Qualcomm states the allegations and conclusions contained in the ER are not supported by the facts and are a serious misapplication of law and it intends to vigorously defend itself at the Commission hearings and remain hopeful that the Commission will reject the conclusions of the Examiner's Report. The company expects the process to take some time.
6:11 am Fairchild Semi to be acquired by ON Semiconductor (ON) for $20/share in cash, or ~$2.4 bln (FCS) :
Following consummation, the transaction is expected to be immediately accretive to ON Semiconductor's non-GAAP earnings per share and free cash flow, excluding any non-recurring acquisition related charges, the fair value step-up inventory amortization, and amortization of acquired intangibles. ON Semiconductor anticipates achieving annual cost savings of $150 million within 18 months after closing the transaction.
The transaction is not subject to a financing condition. ON Semiconductor intends to fund the transaction with cash from the combined companies balance sheet and $2.4 billion of new debt. The debt financing commitment also includes provisions for a $300 million revolving credit facility which will be undrawn at close. ON Semiconductor remains committed to its share repurchase program, and the agreed upon financing provides flexibility to continue share repurchases going forward.The transaction has been unanimously approved by ON Semiconductor's and Fairchild's boards of directors and is expected to close late in the second quarter of 2016.
3:42 am EZchip: Raging Capital comments on shareholder opposition to proposed EZchip merger; views 'Go Shop' a victory for shareholders (EZCH) :
Raging Capital Management, the largest shareholder of EZchip Semiconductor (EZCH), owning ~7.2% of the ordinary shares outstanding, commented today on EZchip's decision to postpone the shareholder vote on the Company's proposed sale to Mellanox Technologies (MLNX) and to include a "Go Shop" provision in its agreement with Mellanox
"EZchip's decision to amend the agreement with Mellanox to allow for a Go Shop provision supports our strong belief that the original process to sell EZchip was both flawed and incomplete. While we believe EZchip should not have entered into the contract with Mellanox to begin with, now that they have belatedly agreed to a Go Shop process, we intend to hold the Board and management accountable if this process is not conducted in a manner that gives other interested parties a full and fair opportunity to make superior proposals."
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