Sector Investing

[ReturntoSender]

From Briefing.com: Broader market action took indices deep into the red. The Nasdaq Composite closed down 85.70 points (-1.67%) to 5037.53. The S&P 500 also closed lower, losing 29.89 points (-1.44%) to 2049.62. The Dow Jones Industrial Average posted the most modest losses of the bunch, shedding 252.01 points (-1.42%) to 17477.67. Economic data was disseminated in the form of Initial Claims, Factory Orders and ISM Services. Initial Claims for the week ending Nov. 28 were up 9,000 from the prior week to 269,000. The ISM non-Manufacturing Index for November fell to 55.9 from 59.1, and the October Factory Orders were up 1.5%.

Of note on the session, the European Central Bank made a small adjustment to its interest rate corridor (deposit facility rate down to -0.3% from -0.2%, marginal lending facility unchanged at +0.3%, and the main refinancing rate was also unchanged at +0.05%). The ECB, however, did not increase the size of its asset purchases, disappointing a global equity complex which was on tip-toes waiting for more stimulus. Fed Chair Janet Yellen also spoke today, reiterating her stance that the fed funds rate is ready to be raised at the December meeting.

Action on Thursday left Technology (XLK 43.50, -0.57 -1.29%) near lows of the day. Shares of Yahoo! (YHOO 34.34, -1.31 -3.67%) were notably weak today as reports were out that the company's Board still did not come to a definitive decision regarding the Aabaco (BABA 82.59, -2.40 -2.82%) spin-off. . Names like BRCM +4.05%, VRSN +2.83%, WDC +1.96%, HPQ +1.67% resisted the sell-off, with names like ADI -2.78%, CSC -2.59%, PAYX -2.34%, CTXS -2.32%, ORCL -2.30%, ADBE -2.29% closing well below flat lines. Other sectors closed the session XLP -0.52%, XLU -0.76%, XLB -0.88%, IYZ -1.18%, XLI -1.25%, XLY -1.51%, XLF -1.63%, XLE -2.00%, XLV -2.19%.

Leading losses today was the Software (IGV 104.07, -2.03 -1.91%) sector, which closed near session lows as broader market action took components lower. Verint Systems (VRNT 40.00, -6.46 -13.90%) was one of the worst performing components, closing near the low end of the day's trading range on the heels of worse than expected Q3 results.

Also among the worst performing sectors on the day, Internet (FDN 75.93, -1.30 -1.68%) names were weaker today as trading only briefly managed to stay above flat lines. Shares of component Pandora Media (P 12.63, -1.63 -11.43%) closed down on the session on the back of an offering which was announced last night. Other components which finished lower were TRUE -5.07%, VEEV -3.54%, CSOD -3.41%, JNPR -3.24%, IACI -2.90%, PYPL -2.62%.

The S&P 500 Information Technology sector () also closed just off session lows as early gains did not hold into afternoon trading. Blue chip names like INTC -2.27%, STX -2.23%, FISV -2.19%, TDC -1.96%, MSFT -1.83%, CSCO -1.79%, FB -1.59%, ACN -1.54%, FIS -1.40%, WU -1.37%, MU -1.33%, EBAY -1.31%, GOOG -1.29%, GOOGL -1.24% closed lower on the session.

Other notable news items among sector components:

Teradata (TDC) to dissolve its co-president management structure, names Robert Fair as Chief Operating Officer.

Ford (F 13.98, -0.28 -1.96%) is releasing a new software update for more than 5 million SYNC-equipped vehicles dating back to the 2011 model year, adding more convenience for Apple (AAPL 115.20, -1.08 -0.93%) iPhone users with Siri Eyes-Free capability.

TE Connectivity (TEL 66.01, -0.66 -0.99%) increased quarterly dividend to $0.37 from $0.33 per share.

NetApp (NTAP 30.86, -0.07 -0.23%) filed a mixed securities shelf offering for an undisclosed amount.

Elsewhere in the technology space:

Pandora Media (P) to offer $300 million aggregate principal amount of convertible senior notes due in 2020 in a private placement.

Vantiv (VNTV 51.11, -1.48 -2.81%) announced the sale of about 13.37 million shares by Fifth Third Bank, partial warrant cancellation and partial net exercise of warrant; co expects accretion of ~$0.03-0.04 in adj EPS in 2016.

ManTech (MANT 32.39, -0.62 -1.88%) was awarded a $407 million contract to provide full-spectrum security support services to the U.S. Air Force.

MeetMe (MEET 3.00, +0.17 +6.01%) reported a new mobile monthly active user record of 4,039,950 in November.

Inphi (IPHI 29.05, -0.70 -2.35%) priced a $200 million offering of 1.125% convertible senior notes due 2020.

Bazaarvoice (BV 4.53, +0.03 +0.67%) named Elizabeth Ritzcovan as Chief Revenue Officer effective December 7.

In reaction to quarterly results:

Avago Tech (AVGO 144.78, +12.57 +9.51%) reported better than expected Q4 EPS of $2.51 on revenues which rose 15.1% YoY to $1.85 billion. The company also guided Q1 revenues in the range of $1.76-1.81 billion.

Verint Systems (VRNT) reported a miss on expectations for the Q3 top and bottom lines; Q3 EPS came in at $0.78 on revenues which fell 1.1% YoY to $285.3 million. The company also lowered guidance for the FY16 period - VRNT now sees EPS of $3.30 from $3.45 on revenues of $1.15-1.19 billion, down from $1.20-1.25 billion.

Box (BOX 13.21, -0.95 -6.71%) reported in-line EPS for Q3 as a loss of $0.31 per share on better than expected revenues of $78.7 million. The company also issued upside Q4 guidance of revenues in the range of $81-82 million.

Violin Memory (VMEM 0.96, -0.34 -26.40%) reported a miss on the top and bottom line for Q3 results. EPS came in at a loss per share of $0.19 on revenues which fell 42.4% YoY to $12.5 million. The company also announced the exploration of strategic alternatives.

Analyst actions:

HIMX was upgraded to Outperform from Market Perform at Northland Capital;
NCR was downgraded to Perform from Outperform at Oppenheimer,
VRNT was downgraded to Neutral from Outperform at Credit Suisse4:55 pm Analog Devices prices offering of $850 mln of 3.90% senior unsecured notes due December 15, 2025 and $400 mln of 5.30% senior unsecured notes due December 15, 2045 (ADI) :

4:47 pm Analog Devices to redeem its outstanding 3.00% senior unsecured notes due April 15, 2016 (ADI) :

4:35 pm Motorola Solutions agrees to acquire Airwave for ~$1.2 bln; expects transaction to be immediately accretive to non-GAAP earnings and free cash flow (MSI) :

Co and Airwave announced that they have entered into an agreement for Motorola Solutions to acquire Airwave for 817.5 million ($1.2 billion).

Motorola Solutions expects its net cash payment to be 700 million ($1 billion) at closing. In addition, a deferred cash payment of 64 million will be made in November 2018. The agreement is expected to close in the first quarter of 2016. Airwave is the largest private operator of a public safety network in the world, delivering mission-critical voice and data communications to more than 300 emergency and public service agencies in Great Britain. Motorola Solutions currently plans to fund the transaction with bank financing and cash on hand, predominantly from international funds. Upon closing, the company expects the transaction to be immediately accretive to non-GAAP earnings and free cash flow. Airwave is owned by investment fund Macquarie European Infrastructure Fund 2, which is supportive of the transaction.

4:20 pm OmniVision beats by $0.05, beats on revs; guides Q3 EPS in-line, revs in-line (OVTI) :

Reports Q2 (Oct) earnings of $0.37 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.32; revenues fell 12.9% year/year to $343.1 mln vs the $315.04 mln Capital IQ Consensus. Co issues in-line guidance for Q3, sees EPS of $0.24-0.39, excluding non-recurring items, vs. $0.29 Capital IQ Consensus Estimate; sees Q3 revs of $310-340 mln vs. $306.56 mln Capital IQ Consensus Estimate.

4:01 pm SunPower starts construction on 100-Megawatt Boulder solar plant for NV Energy (SPWR) : Co announced that construction has commenced on Boulder Solar, a 100-megawatt (AC) solar power plant located in the Eldorado Valley of Boulder City, Nev. NV Energy has contracted to buy the power generated at the plant under a 20-year power purchase agreement.

4:10 pm : The stock market ended Thursday on a woeful note after global investors reduced their equity exposure in reaction to an underwhelming policy statement from the European Central Bank. The S&P 500 lost 1.4%, falling below its 200-day moving average (2,065), while the Nasdaq Composite (-1.7%) underperformed.

Equity indices held slim gains at the open, but that proved to be a mirage as the market marched lower throughout the day after the European Central Bank made a slight adjustment to its interest rate corridor (deposit facility rate down to -0.3% from -0.2%, marginal lending facility unch at +0.3%, and main refinancing rate unch at +0.05%), but did not increase the size of its asset purchases, thus disappointing a global equity complex that was hungry for more stimulus. The euro responded by having its best day of the year, soaring nearly 450 pips off its intraday low against the dollar to 1.0950. In turn, the Dollar Index (97.79, -2.25) plunged 2.3% to early November levels.

The greenback faced daylong pressure, seeing little respite from comments made by Fed Chair Janet Yellen during her appearance before the Joint Economic Committee. During her testimony, Chair Yellen maintained her recent tone, suggesting the Federal Open Market Committee is ready to raise the fed funds rate at the December meeting. Treasuries began retreating in the morning and continued their slide into the afternoon. As a result, the 10-yr yield spiked 15 basis points to 2.33%.

All ten sectors ended in the red, paced by energy (-2.0%) and health care (-2.2%). Both sectors spent the day near the bottom of the leaderboard with energy retreating despite a 2.9% surge in crude oil, which settled at $41.09/bbl.

As for health care, the top-weighted countercyclical group was pressured by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 321.97, -11.97) plunged 3.6%, returning to levels from the middle of November. Biotech's underperformance kept the Nasdaq well behind the broader market while the technology sector (-1.3%) ended just ahead of the S&P 500. Although pockets of relative strength were few and far between, it is worth noting that Avago Technologies (AVGO 144.78, +12.57) jumped 9.5% after beating bottom-line estimates and guiding in-line with analyst expectations. Avago's big gain helped the PHLX Semiconductor Index (-0.6%) end ahead of the broader market, but that was a small victory considering 24 of 30 components of the SOX index posted losses.

Today's selloff invited above-average participation as more than 990 million shares changed hands at the NYSE floor.

Economic data reported today included Initial Claims, Factory Orders, and ISM Services:

Initial claims for the week ending November 28 were up 9,000 from the prior week to 269,000 (Briefing.com consensus 267,000)
That dropped the four-week moving average by 1,750 to 269,000, which is near a 15-year low
There were no special factors influencing initial claims, which have been bounded between 250,000 and 300,000 since July 2014
Continuing claims for the week ending November 21 were 2.161 million (Briefing.com consensus 2.177 million), an increase of 6,000 from a downwardly revised 2.155 million (from 2.207 million) for the prior week
The ISM Non-Manufacturing Index for November fell to 55.9 from 59.1 while the Briefing.com consensus expected an increase to 58.3
The October reading was the second-highest reading for the index since December 2005, so it was in the realm of possibility that the index would pull back in November. A number above 50.0 still denotes expansion and November marked the 70th consecutive month of growth in the non-manufacturing sector
October Factory Orders increased 1.5% while the Briefing.com consensus expected an increase of 1.1%
The report showed new orders for manufactured durable goods increased 2.9%, which was a bit below the 3.0% increase reported in the Durable Orders report

Tomorrow, November Nonfarm Payrolls (Briefing.com consensus 196K) and October Trade Balance (expected -$43.00 billion) will be reported at 8:30 ET.

Nasdaq Composite +6.4% YTD
S&P 500 -0.5% YTD
Dow Jones Industrial Average -1.9% YTD
Russell 2000 -2.5% YTD

DJ30 -252.01 NASDAQ -85.70 SP500 -29.89 NASDAQ Adv/Vol/Dec 690/1.90 bln/2300 NYSE Adv/Vol/Dec 578/992.8 mln/2517

3:45 pm :

The dollar index had one of its worst losses this year, giving commodities a boost today
In current trade, the dollar index is
Oil prices were volatile today ahead of the OPEC meeting overnight, closing higher in today's session
Front-month Jan crude oil rose 2.9% today to $41.09/barrel
Jan nat gas rose 0.1% to $2.18/MMBtu
Copper ended flat at $2.05/lb, while precious metals posted gains
Feb gold rose +0.8% to $1061.50/oz, while Mar silver gained +0.6% at $14.09/oz

11:35 am Stocks/ETFs that traded to new 52 week highs/lows this session - New lows (166) outpacing new highs (75) (SCANX) : Stocks that traded to 52 week highs: AFG, ARMK, AROW, BABY, BHLB, BRCM, BRSS, BSFT, BWXT, CASY, CLX, COST, CPS, CSBK, CVT, CWAY, CYT, CYTK, DYAX, EDU, EDUC, EGOV, ELY, EMCI, EPAY, ERIE, EXLS, EXTR, FBC, FBHS, FCVA, FFNW, FIBK, FLTX, FPRX, FXCB, GDEN, GFF, GVA, HA, HRL, IDTI, JBT, KR, KRNY, LKFN, LXFT, MG, MGPI, MKTX, MTN, NFLX, NOW, NTES, NTGR, NUAN, OCLR, OLED, PLAB, ROCK, SGA, SHOR, SIRO, SIX, SKYW, SOCB, THST, TSN, TYL, VGR, VRSN, WINS, XRAY, XRS, ZAGG

Stocks that traded to 52 week lows: ACP, ADK, AETI, AHGP, AP, APU, ARLP, ARO, AROC, ATLS, ATOS, AXP, BBOX, BBVA, BCA, BEL, BG, BID, BPT, BTU, CAMT, CARB, CBA, CBL, CCO, CDTI, CEN, CEQP, CHK, CHU, CLRB, CLUB, CMI, CMO, CNP, CNXR, COG, CPN, CPST, CTR, CVGI, CVM, CVO, CYD, D, DMLP, DRAM, DSE, DSX, DUK, DYN, EMG, EMO, ENB, ENI, ENLK, ENVA, EQGP, EQT, ESEA, ETP, EXC, FCX, FEI, FELP, FEN, FIF, FMO, FPL, GER, GLNG, GLRE, GMLP, GOGL, GRAM, GTU, HH, HOS, HRT, I, ICL, JMF, KED, KIN, KMF, KMI, KYE, KYN, LHO, LNCO, LSBG, MHGC, MIE, MIL, MIXT, MMLP, MXPT, NAO, NCQ, NFG, NGL, NGLS, NML, NS, NSH, OCIP, OEC, OGE, OKE, ORIG, PAA, PAGP, PCAR, PEB, PEG, PLTM, PQ, PZG, R, RAS, RBY, RCKY, RICE, RIO, RLJ, ROSG, ROYT, RWLK, SALT, SAUC, SBLK, SC, SDLP, SE, SEMG, SFY, SJI, SMM, SPH, SPXC, SRF, STML, SWN, SXE, TAC, TGP, TK, TLN, TLP, TOO, TPZ, TRGP, TTP, TYG, UNFI, UNP, UPL, VKTX, VRNT, WMLP, WPG, WPRT, WPZ, WSCI, YUMA, ZFGN

ETFs that traded to 52 week highs: none

ETFs that traded to 52 week lows: AMJ, KOL, MBB, UNG