From Briefing.com: The broader market was all green when the day was done. The advance was led by the Dow Jones Industrial Average, which added 115.94 points (+0.74%) to 15882.68. The S&P 500 was also strong, adding 9.66 points (+0.52%) today to close 1868.99. The Nasdaq Composite was also higher, but only just so, as it took gains under 1 points (+0.01%) today, ending 4472.06. Market data today consisted of Initial Claims, which for the week ending January 16 were up 10,000 to 293,000. Continuing claims for the week ending January 9 were down 56,000 to 2.208 million. The Philadelphia Fed Index for January checked in at -3.5 versus -10.2 in December.
Today's trade kicked off with mixed action as weakness in Asia and a choppy futures market took all three indices higher at the open. The advances faded quickly off the open, but finished strong as the oil and energy markets gained steam. For context, the front month March Crude oil contract finished the session up 4.2% to $29.54/barrel. Crude rallied following the Energy Information Administration's weekly inventory report which saw inventory build 3.979 million barrels with gasoline inventories showing a 4.563 million barrel build.
Technology (XLK 39.31, +0.24 +0.61%) was also higher today as the early gains were quickly surrendered, but the broader market action in the latter part of the session pressured the sector to the upside. Component Xilinx (XLNX 46.78, +3.70 +8.59%) led the action to the upside on Thursday as the company reported a mixed Q3, but beat expectations on the top line with revenues of $566 million. Other sector ended XLE +3.11%, XLY +1.28%, XLB +0.88%, XLI +0.44%, XLP +0.39%, IYZ +0.31%, XLU -0.09%, XLV -0.30%, XLF -0.43% led to the upside by Energy with weakness in Financials.
Semis (SOX 587.56, +8.62 +1.49%) were again the best outperformers on the session as action was in the green all day. Component ON Semiconductor (ON 8.39, +0.12 +1.45%) displayed strength today as the company extended its tender offer to acquire Fairchild Semi (FCS 20.28, +0.07 +0.35%). Other SOX components which displayed relative strength today included SUNE +9.40%, MU +7.96%, CREE +5.32%, SWKS +2.71%, MRVL +2.53%, ASML +2.46%, QCOM +2.44%.
At the end of the session, the S&P 500 Information Technology sector (654.00, +2.18 +0.33%) was at an even 645 when the bell rang as broader market action dictated trading trends today. Component F5 Networks (FFIV 89.51, -0.51 -0.57%) was slightly weaker today as the company reported a mixed Q1, but beat expectations on the bottom line with EPS of $1.73; FFIV also issued downside guidance for the Q2 period. Shares of FFIV were also upgraded this morning at Citigroup. Other components which finished the day higher with the sector included HPQ +4.08%, FSLR +3.20%, APH +2.73%, WU +2.48%, YHOO +1.84%.
Other notable news items among sector components:
Citrix Systems (CTXS 65.42, -1.08 -1.62%) appointed Kirill Tatarinov as President and CEO.
Visa (V 71.56, +0.86 +1.22%) appointed Lynne Biggar as EVP and Chief Marketing and Communications Officer effective February 1.
ACI Worldwide (ACIW 18.70, -0.13 -0.69%) divested its Community Financial Services Business to Fiserv (FISV 89.64, +0.69 +0.78%).
Apple (AAPL 96.30, -0.49 -0.51%) announced the creation of Europe's first iOS App Development Center in Italy, to give students practical skills and training on developing iOS apps for the world's most innovative and vibrant app ecosystem.
MariaDB Corporation, a 'leader' in open-source relational database solutions for high availability, scalability, and performance, announced it has received $9 million in equity financing to support accelerating sales and advanced technology development. Intel (INTC 29.66, +0.07 +0.24%) Capital and California Technology Ventures were among the investors in the $9 million equity financing.
IBM (IBM 122.91, +1.05 +0.86%) confirmed it has acquired Ustream. Financial terms of the deal were not disclosed.
Elsewhere in the technology space:
FireEye (FEYE 14.79, -0.08 -0.54%) announced Q4 total billings, total revenue and non-GAAP loss per share are expected to be within previously issued guidance range. Also announced acquisition of privately held iSIGHT Partners for $200 million. The deal is expected to be slightly accretive to FY16 operating income and cash flow.
Unwired Planet (UPIP 10.37, +1.41 +15.74%) won German cellular patent infringement case against
Samsung (SSNLF 1025, flat), LG Electronics and Huawei.
GrubHub (GRUB 19.42, -0.99 -4.85%) expanded its delivery service to the Los Angeles market.
Alarm.com (ALRM 16.39, +0.47 +2.95%) extended its technology partnership with Monitronics International.
Proofpoint (PFPT 57.32, +1.35 +2.41%) and Palo Alto (PANW 144.60, -2.30 -1.57%) will team up to provide customers with extended protection from and intelligence into the sophisticated attacks targeting users, data and content via email and social media.
SunEdison (SUNE 2.56, +0.21 +9.17%) disclosed it entered into purchase agreement amendment. The company also clarified the rights and obligations of SUNE.
ON Semiconductor (ON) extended tender offer to acquire Fairchild (FCS).
Cypress Semi (CY 8.22, +0.58 +7.59%) reaffirmed its Q4/FY15 guidance. The company also confirmed previously announced buyback to commence Jan 22.
In reaction to quarterly results:
Verizon (VZ 45.87, +1.42 +3.19%) reported EPS for the Q4 period which beat expectations at $0.89 per share; VZ had revenues in Q4 of $34.25 billion. The company saw Service revenues increase 1.4% in Q4 and Wireless retail postpaid net additions of 1.5 million. VZ also reaffirmed FY16 adj, earnings plateauing at a level comparable to 2015.
F5 Networks (FFIV) reported Q1 EPS which beat expectations at $1.73 on revenues which rose 5.8% year-over-year to $489.5 million. The company also guided Q2 EPS in the range of $1.61-1.64 and revenues in the range of $480-490 million.
Logitech Intl SA (LOGI 14.73, +1.01 +7.36%) reported Q3 EPS which beat expectations at $0.41 on revenues which was worse than expectations at $621 million. LOGI also raised FY16 non-GAAP operating income guidance to about $170 million from $150 million. Also, LOGI sees retail sales of 7-9%, up from 7% growth.
Xilinx (XLNX) reported Q3 EPS which was in-line at $0.49 on revenues which were better than expected at $566 million. The company also issued guidance for the Q4 period at EPS of about $0.51-0.54 on revenues of flat QoQ from $566 million.
Companies scheduled to report quarterly results tonight: EGHT, DGII, MXIM
Analyst actions:
TEF was upgraded to Outperform from Underperform at Macquarie,
HOLI was upgraded to Neutral from Reduce at Nomura,
ASML was upgraded to Buy from Neutral at Bryan Garnier,
ADTN was upgraded to Buy from Hold at Needham,
FFIV was upgraded to Neutral from Sell at Citigroup,
VIVHY was upgraded to Buy from Hold at Societe Generale
4:05 pm Maxim Integrated reports EPS in-line, beats on revs; guides Q3 mostly below estimates (MXIM) :
Reports Q2 (Dec) earnings of $0.32 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.32; revenues fell 9.2% year/year to $510.8 mln vs the $505 mln Capital IQ Consensus.
Co issues downside guidance for Q3, sees EPS of $0.38-0.44, excluding non-recurring items, vs. $0.46 Capital IQ Consensus Estimate; sees Q3 revs of $535-575 mln vs. $569.03 mln Capital IQ Consensus Estimate.
"In our March quarter, we expect continued growth in Automotive, a sequential increase in our Communications & Data Center and Consumer businesses and a seasonal uptick in Industrial."
4:10 pm : The major averages ended the Thursday session off their highs, as a rebound fizzled out in afternoon action, leaving the key indices near the middle of their trading ranges. The rebound in equities took place along with a similar effort in crude oil. The commodity and the stock market lost some of their momentum once the energy component traded above the $30.00/bbl price level. The Dow Jones Industrial Average (+0.7%) lead the S&P 500 (+0.5%) and the tech-heavy Nasdaq (UNCH).
Ahead of today's session, the European Central Bank left its deposit facility rate and refinancing operations rate unchanged at -0.3% and 0.05%, respectively. However, ECB President Mario Draghi stated that the central bank "will need to review and therefore possibly reconsider" its monetary policy stance in March as downside risks have increased in 2016. Mr. Draghi's comments invited heavy speculation regarding future stimulus provisions, lifting futures to new highs.
Oil was able to rally in unison with equity futures, as the oversold commodity sought to recover from a 20.0%+ decline since the start of 2016. WTI crude continued its rally despite poor readings from the Energy Information Administration's weekly inventory report. The report showed an inventory build of 3.979 million barrels (expected 2.811 million barrels) while the gasoline inventories report showed a 4.563 million barrel build (expected 1.378 million barrels). WTI crude was up more than 6.3% before it ticked down from its high into the commodities pit session close, ending 4.2% higher at $29.54/bbl.
In front of the pack, energy (+2.9%), telecom services (+2.4%), consumer discretionary (+1.4%) and materials (+0.9%) lead while financials (-0.3%), health care (-0.3%), and utilities (UNCH) trailing.
Looking at the energy sector, component Kinder Morgan (KMI 13.88, +1.87) climbed 15.6% today, thanks to positive price action in crude oil. Additionally, the company reported above-consensus Q4 earnings. Elsewhere in the group, Dow components Chevron (CVX 81.05, +2.07) and Exxon Mobil (XOM 74.10 +0.92) underperformed the space with respective advances of 2.6% and 1.3%.
Moving to the health care space, heavyweight UnitedHealth Group (UNH 113.50, -1.29) trailed the sector with a decline of 1.1%. This came after the company helped the health care sector top the leaderboard yesterday. On a related note, biotechnology showed relative weakness throughout today's session. The iShares Nasdaq Biotechnology ETF (IBB 278.75, -6.74) slid 2.4%% after yesterday's 3.5% climb.
In the technology space (+0.6%), large-cap constituents Apple (AAPL 96.30, -0.49) and Microsoft (MSFT 50.48, -0.31) were unable to make any headway. Meanwhile, data storage names posted some of the steepest declines with Seagate Technology (STX 27.56, -1.66) and Western Digital (WDC 43.94, -1.85). The two names declined 5.7% and 4.0%, respectively. Elsewhere the high-beta chipmakers showed relative strength, evidenced by the 1.5% gain in the PHLX Semiconductor Index.
In specific industry news, rail companies struggled following Union Pacific's (UNP 71.00 -2.61) disappointing earnings results this morning. The company fell 3.6% after announcing that revenue fell 15.4% year-over-year in Q4. The company cited uncertainty in the energy market and the relative strength of the dollar for the shortfall. Fellow rail company, Norfolk Southern (NSC 70.07, -1.11) felt some of the same headwinds, as it ended its day lower by 1.6%.
Treasuries retreated for most of the session as the rally in equities and oil kept buying suppressed. During the afternoon retreat, the benchmark note was able to move off its low, but the 10-yr yield still ended higher by three basis points at 2.01%.
Today's trading session was true to recent form, generating volume of more than 1.1 billion shares at the NYSE floor.
Economic data has included weekly initial/continuing claims and the January Philadelphia Fed Survey.
Initial claims for the week ending January 16 were higher than expected, rising 10,000 to 293,000 (Briefing.com consensus 280,000).
There were no special factors influencing initial claims, which have been bounded between 250,000 and 300,000 since July 2014. The latest reading, however, is the highest level of claims since the first week of July 2015.
With the latest reading, the four-week moving average for initial claims increased by 6,500 to 285,000, which is the highest average since July 11, 2015.
Continuing claims for the week ending January 9 were lower than expected, falling by 56,000 to 2.208 million (Briefing.com consensus 2.252 million).
The four-week moving average for continuing claims increased by 3,250 to 2.228 million.
The Philadelphia Fed Index for January checked in at -3.5 versus -10.2 in December. ( Briefing.com consensus -4.0).
While the headline number was better than expected, it still doesn't qualify as good considering a number below zero still connotes a contraction in manufacturing conditions.
The diffusion index for future general activity fell from a revised reading of 24.1 for December to 19.1 for January. In other words, confidence in the outlook is still positive but weakening.
The business outlook survey for January, the improvement was driven by the shipments index, which moved from a contractionary reading of -2.1 for December to an expansionary reading of 9.6 for January.
Tomorrow's economic data will include December Existing Home Sales (Briefing.com consensus 5.12 million) and December Leading Indicators (Briefing.com consensus -0.1%) with both set to cross the wires at 10:00 ET.
Russell 2000 -12.1% YTD
Nasdaq -10.7% YTD
Dow Jones -8.9% YTD
S&P 500 -8.6% YTD
DJ30 +115.94 NASDAQ +0.37 SP500 +9.66 NASDAQ Adv/Vol/Dec 1678/2.147 bln/1337 NYSE Adv/Vol/Dec 2005/1.167 bln/1077
3:40 pm :
The dollar index lost steam today after surging higher this morning, giving select commodities some help
WTI crude oil futures rallied this morning, despite some bearish storage data, running from around $28/barrel to just over $30/barrel
At the end of floor trading, front-month Mar crude oil closed +4.2% at $29.54/barrel
In other energy, Mar natural gas closed the day +0.9% at $2.14/MMBtu
Gold remained in negative territory all day, finishing its session -$7.90 at $1098.30/oz. Mar silver lost -0.4% to close at $14.09/oz
Mar copper, on the other hand, rallied 2% to end at $2.00/lb
7:51 am Xilinx last night also disclosed mgmt benefits in the event of a change of control (XLNX) : Xilinx entered into an amendment to the employment letter agreement between the Company and Moshe Gavrielov, the Company's President and Chief Executive Officer. If the Company terminates Mr. Gavrielov's employment other than for Cause, the consummation of a Change of Control, then subject to a general release signed by Mr. Gavrielov becoming effective, Mr. Gavrielov will receive the following severance benefits: a) twenty-four months of base salary and two years of target bonus, payable in a lump sum; b) 100% accelerated vesting of time-based equity compensation awards, etc... On January 19, 2016, the Company also entered into a Change of Control Agreement with each of its named executive officers:; CFO, and multiple VPs.
XLNX is +8% premarket; stock has been a rumored M&A candidate.
7:10 am Verizon beats by $0.01, reports revs in-line; reaffirms FY16 adj. plateauing at a level comparable to 2015 (VZ) :
Reports Q4 (Dec) earnings of $0.89 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.88; revenues rose 3.2% year/year to $34.25 bln vs the $34.12 bln Capital IQ Consensus.
Wireless:
Service revenues plus installment billings increased 1.4%; wireless operating income margin was 28.6 percent, up from 23.5 percent in fourth-quarter 2014.
Verizon Wireless reported 1.5 million retail postpaid net additions in fourth-quarter 2015. Verizon added 906,000 4G smartphones to its postpaid customer base in fourth-quarter 2015. Postpaid phone net adds totaled 449,000 as net smartphone adds of 713,000 were partially offset by a net decline of basic phones. Tablet net adds totaled 960,000 in the quarter, and net prepaid devices declined by 157,000.
Wireline: Consumer revenues were $4.1 billion, an increase of 2.6% YoY. Fios revenues represented 80.4% of the total.
Co reaffirms guidance for FY16, sees EPS comparable to $3.99, excluding non-recurring items, vs. $3.97 Capital IQ Consensus. Verizon, on a consolidated basis, expects to mitigate 2016 earnings pressures resulting from the sale of high-margin wireline operations to Frontier Communications (FTR)(expected to close at the end of the first quarter), from the continued shift of the wireless customer base to device payment plans and from the ramping of new business models. As previously stated, Verizon expects full-year 2016 adjusted earnings to plateau at a level comparable to its strong full-year 2015 adjusted earnings. Additionally, for 2016, the company expects: Consolidated adjusted EBITDA margin consistent with full-year 2015. Consolidated capital spending of between $17.2 billion and $17.7 billion. This includes ~$150 million for the properties to be sold to Frontier.
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