From Briefing.com: The broader market stepped down the staircase today, as the session began with modest gains but that action would not hold. All three major US indices slowly ticked lower as the session progressed, with all three closing near lows of the session as the final bell rang. Action turned to the red about an hour into the day, and action never came back as the Nasdaq Composite saw losses of 159.85 points (-3.41%) today to close 4526.06. The S&P 500 was also down today to the tune of 48.40 points (-2.50%) to 1890.28. The Dow Jones Industrial Average closed with the most modest of losses among the three, albeit shedding 364.81 points (-2.21%) to end 16151.41 on the day.
Economic data today consisted of the MBA Mortgage Index, which showed a seasonally adjusted increase of 21.3% in mortgage applications. Also today, the Federal Reserve's January Beige Book crossed the wires at 2 p.m. ET. The Beige Book highlighted that economic activity has expanded in nine of twelve regions, and that the outlook for future growth remains mostly positive.
Technology (XLK 39.73, -1.10 -2.69%) also jogged lower today, it seemed like making new lows as the minutes ticked by. Shares of component Microchip (MCHP 41.31, -0.54 -1.29%) ended the session in the red as the company confirmed Atmel's (ATML 7.96, +0.28 +3.65%) determination of MCHP's superior proposal. Other sectors ended today XLY -3.37%, XLV -2.97%, IYZ -2.74%, XLF -2.60%, XLI -2.41%, XLE -2.40%, XLB -2.31%, XLP -1.83%, XLU -0.05% with Consumer Discretionary posting the worst losses.
Internet (FDN 65.82, -2.87 -4.18%) names also displayed relative pressure today as action began the session, but displayed weakness as the broader market turned lower. Shares of component Netflix (NFLX 106.56, -10.02 -8.59%) pressured the sector as the stock saw some heavy volume to the downside today as cautious analyst commentary on the name circulated after the market opened. Other components which showed weakness today included TRUE -7.11%, AMZN -5.84%, JCOM -5.74%, TRIP -5.71%, ETFC -5.51%, EXPE -4.94%, TWTR -4.79%, DWRE -4.66%, N -4.52%.
In-line with the broader market index, the S&P 500 Information Technology sector (664.42, -19.07 -2.79%) finished near session lows. Holding steady with the broader market trend, shares of component Qualcomm (QCOM 46.10, -0.42 -0.90%) displayed modest weakness today as the company announced an agreement to form a Joint Venture with TDK Corp. to enable the delivery of certain RF filters and modules. Other components which displayed pressure today included QRVO -9.80%, ADSK -7.15%, SWKS -6.71%, FSLR -5.90%, MU -5.19%, AVGO -5.09%, CTXS -4.97%, WDC -4.53%, YHOO -4.07%, VRSN -4.04%, SNDK -4.00%, FB -3.95%, HRS -3.95%, ORCL -3.65%, GOOG -3.51%.
Other notable news items among sector components:
Qualcomm (QCOM) and TDK Corporation announced an agreement to form a joint venture to enable delivery of RF front-end modules and RF filters into fully integrated systems for mobile devices and fast-growing business segments, such as Internet of Things, drones, robotics, automotive applications and more, under the name RF360 Holdings Singapore
According to a company blog post, Microsoft (MSFT 51.64, -1.14 -2.16%) acquired various technology assets from Event Zero. Financial terms of the deal were not disclosed
Elsewhere in the technology space:
Atmel Board determined the Microchip (MCHP) $8.15 per share proposal was 'superior' to the existing merger agreement with Dialog Semi (DLGNF 32.00, flat).
Orange (ORAN 16.79, -0.34 -1.98%) to acquire Airtel's subsidiaries in Burkina Faso and Sierra Leone.
Multi-Fineline (MFLX 12.86, -3.54 -21.59%) expects Q4 sales of about $169 million, slightly below the company's previous guidance range and expects Q1 to decline 30% sequentially.
PFSWeb (PFSW 11.59, -0.42 -3.50%) raised its 2015 guidance to a range between $183-187 million, +32%-35% from 2014 and an increase from the previous 2015 guidance range of $180-186 million. PFSW also reaffirmed 2016 guidance targeting 2016 service fee equivalent revenue to range between $220-230 million, and adjusted EBITDA to range between $23-25 million.
TiVo (TIVO 7.86, -0.01 -0.13%) named Naveen Chopra as interim CEO effective January 30.
Analyst actions:
InterCloud Systems (ICLD 0.72, +0.08 +12.50%) CEO released a letter to shareholders. The letter held that the company expects to see continued growth in 2016 and that the pipeline of sales opportunities remains strong.
FXCM (FXCM 14.15, -2.78 -16.42%) reported December and Q4 metrics. The company said ongoing sales process may not be completed in Q1 as previously indicated.
WebMD Health (WBMD 53.21, +3.00 +5.97%) disclosed that revenue and Adjusted EBITDA are expected to be slightly above the high end of the ranges provided in the November 3, 2015.
QCOM was upgraded to Positive from Neutral at Susquehanna,
MSFT was upgraded to Overweight from Equal Weight at Morgan Stanley,
CSOD was upgraded to Outperform from Mkt Perform at FBR Capital,
BKFS was upgraded to Buy from Neutral at BofA/Merrill;
CMPR was downgraded to Underweight from Equal Weight at Barclays, I was downgraded to Sell from Neutral at Goldman,
DLGNF was downgraded to Underweight from Neutral at JP Morgan
5:40 pm Atmel lowers Q4 rev guidance on weaker than expected billings; sees Q4 EPS below consensus (ATML) : Co issues downside guidance for Q4 (Dec), sees EPS of $0.06 vs. $0.07 Capital IQ Consensus Estimate; lowers Q4 (Dec) revs to $261-262 mln from $266-286 mln vs. $276.83 mln Capital IQ Consensus Estimate.Non-GAAP gross margin is expected to be ~47.3 to 47.7%, at the midpoint of the original outlook of 47.0 to 48.0% The lower revenue was the result of weaker than expected billings, primarily in Asia, as distributors reduced inventory levels due to uncertainties associated with the company's ongoing acquisition processBriefing Note:
Earlier today, ATML Board determined Microchip (MCHP) $8.15/share proposal as 'superior' to existing merger agreement with Dialog Semiconductor (DLGNF).4:25 pm : The major averages ended their midweek session sharply lower with the tech-heavy Nasdaq (-3.4%) trailing the S&P 500 (-2.5%). Equity indices surrendered their opening gains amid continued growth concerns that also pressured crude oil from its overnight high. Including today's tumble, the benchmark index has surrendered 7.5% since the beginning of 2016 while the Nasdaq has slid 9.6%.
Overnight, oil advanced from yesterday's low with better than expected December trade data from China contributing to the advance. China's trade report showed a surplus of $60.1 billion versus the expected $51.3 billion. Despite the beat, this represented the sixth consecutive month of year-over-year declines in exports. While this was not good enough to boost China's Shanghai Composite (-2.4%), it was sufficient in helping the battered commodity rally.
At the beginning of our trading day, oil was up more than 3.0%, contributing to early strength in equities. The energy-component would lose momentum shortly after the open once the weekly EIA gasoline inventories showed a build of 8.438 million barrels. WTI crude showed a loss of 1.1% before ending its pit session unchanged at $30.43/bbl. On a related note, crude inventories rose 0.243 million barrels compared to an expected increase of 2.504 million barrels.
Another reminder of the persistent growth concerns came from rail company CSX (CSX 22.35, -1.35), which issued lower 2016 guidance when it reported Q4 earnings after yesterday's close. The company cited global and industrial slow down trends that would affect their core business, leading to an expected decline in year-over-year earnings. The transports reeled from this guidance, evidenced by the 3.7% decline in the Dow Jones Transportation Average which is now down 10.5% on the year. Fellow rail company Norfolk Southern (NSC 71.44, -4.49) suffered a 5.9% decline while Avis (CAR 27.19, -2.11) posted the worst loss in the index, falling 7.2%.
Sectors like, consumer discretionary (-3.4%), health care (-2.9%), technology (-2.8%), financials (-2.6%), and industrials (-2.3%) paced the retreat while utilities (UNCH), telecom services (-1.1%), consumer staples (-1.7%), and energy (-1.8%) outperformed.
Once again, today's retreat saw the biggest losses among names that enjoyed strength in 2015. To that point, discretionary component Netflix (NFLX 106.56, -10.02) sank 8.6% following a report from ITG Research which revised revenue estimates for the company, citing domestic subscriber weakness. Elsewhere in the space, Amazon (AMZN 581.81, -36.08) declined 5.8%.
Switching to the technology space, large-cap constituents Facebook (FB 95.44, -3.93) and Alphabet (GOOGL 719.57, -25.77) showed relative weakness with respective declines of 4.0% and 3.5%. Fellow large-caps Microsoft (MSFT 51.64, -1.14) and Apple (AAPL 97.39, -2.57) fared better than the sector, but could not stay out of the red. Elsewhere in the space, the high-beta chipmakers underperformed, evidenced by the 3.1% decline in the PHLX Semiconductor Index.
Looking at the health care space, biotechnology showed relative weakness with a decline of 5.4% in the iShares Nasdaq Biotechnology ETF (IBB 280.14, -16.06).
Treasuries ended their day near their highs with the yield on the 10-yr note lower by four basis points at 2.07%.
Trading volume remained heavy with more than a billion shares changing hands at the NYSE floor once again.
Today's economic data included the MBA Mortgage Index, the December Treasury Budget, and the Federal Reserve;s January Beige Book.
The MBA Mortgage Index showed a seasonally adjusted increase of 21.3% in mortgage applications.
The December Treasury Budget showed a deficit of $14.4 billion.
The Treasury data are not seasonally adjusted, so the December deficit cannot be compared to the November deficit of $64.6 billion.
Total receipts in December were $349.6 billion while total outlays were $364.1 billion.
Receipts were $14.3 billion more than December 2014 receipts while total outlays were $30.6 billion more than December 2014.
The yearly deficit increased by $16.3 billion to $477.8 billion.
Tomorrow, weekly initial claims (Briefing.com consensus 275k) and December import/export prices will be released at 8:30 ET.
Russell 2000 -11.1% YTD
Nasdaq -9.6% YTD
S&P 500 -7.5%
Dow Jones -7.3%
1:13 pm Cadence Design and Arrow Electronics (ARW) announce collaboration (CDNS) :
Collaboration will bring integrated design tools to engineers, helping them accelerate the pace of new product development and get products to market faster and cheaper.
As part of the collaboration, the companies plan to allow engineers using the Cadence OrCAD suite of printed circuit board (:PCB) design tools to access Arrow's comprehensive online component and reference design data available through SiliconExpert.
9:24 am RFMD chip stocks set to open lower after Qualcomm (QCOM) signs competitive JV with Japanese TDK Corp (SWKS) : RFMD stocks: QRVO -8%, SWKS -4%, AVGO -1%, NXPI -1%. These companies are in the AAPL supply chain.
9:19 am Microchip confirms Atmel (ATML) determination of MCHP's proposal being superior; notes merger expected to be immediately accretive (MCHP) : If Microchip and Atmel execute a merger agreement on the terms proposed by Microchip, the transaction is expected to be immediately accretive to Microchip's non-GAAP earnings per share following the closing of such transaction.
8:33 am Atmel Board determines Microchip (MCHP) $8.15/share proposal as 'superior' to existing merger agreement with Dialog Semiconductor (DLGNF) (ATML) :
The binding Microchip agreement provides for Microchip's acquisition of all outstanding shares of Atmel common stock at a purchase price of $8.15 per share, consisting of $7.00 in cash and a fraction of a share of Microchip common stock having a value of $1.15, based on a ten-day average of the closing price of Microchip's common stock measured as of the day before the closing of the proposed transaction (with cash being substituted for Microchip common stock to the extent that the aggregate number of shares of Microchip stock issued in exchange for Atmel stock would exceed 13 mln shares). On January 12, 2016, Atmel notified Dialog that Atmel's Board intends to terminate the Dialog merger agreement and enter into a definitive merger agreement with Microchip in the binding form delivered to Atmel. Consistent with the Dialog merger agreement, Atmel's board will consider in good faith any changes to the Dialog mergeragreement or other arrangements that Dialog may offer in writing and would be legally binding upon Dialog by January 19, 2016. Microchip's offer will remain open and binding until 10:00 PM California time on Tuesday, January 19, 2016. If Atmel terminates the Dialog merger agreement, it will be required to pay a termination fee in the amount of $137,300,000 to Dialog. There can be no assurance that Atmel will terminate the Dialog merger agreement or enter into the Microchip merger agreement.
8:31 am Capstone Turbine received order for two C1000 microturbines to provide clean power for offshore oil company operating in South China Sea; expected to be commissioned in mid-2016 (CPST) :
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