From Briefing.com: The broader market closed Thursday lower, snapping the three day winning streak. The worst losses were in the Nasdaq Composite which lost 46.53 points (-1.03%) today to close 4487.54. The S&P 500 was lower 8.99 points (-0.47%) to 1917.83, and the Dow Jones Industrial Average shed 40.40 points (-0.25%) to 16413.43. Action was mild (by recent standards) in all three major US indices. Lateral, mixed trade persisted over the first hour of action but a slide in crude oil after its inventory data led to a decline into mid-morning and the three indices never recovered.
Market data today came in the form of the initial claims reading which showed claims falling by 7,000 to 262,000 for the week ending February 13. Continuing claims for the week ending February 6 were up 30,000 to 2.273 million. Also, the Philadelphia Fed Index showed a slight improvement with a reading of -2.8 for February versus -3.5 for January. The Conference Board's Leading Economic Index declined 0.2% in January.
Technology (XLK 40.63, -0.15 -0.37%) was an under-performer today, eking just above flat lines several times in the session, only to quickly surrender those gains. Bucking the trend, component NVIDIA (NVDA 30.04, +2.38 +8.60%) was notably higher today following the company's better than expected Q4 results and better than expected Q1 revenue guidance. Other sectors closed today XLU +1.64%, IYZ +0.25%, XLI -0.06%, XLB -0.29%, XLP -0.45%, XLF -0.57%, XLV -0.62%, XLY -0.66%, XLE -1.25% with Utilities and Telecoms leading the upside and Energy lagging.
Software (IGV 89.16, -1.10 -1.22%) names were also weak today as component Tyler Tech (TYL 124.19, -22.55 -15.37%) performed the worst following the company's mixed Q4 and worse than expected FY16 guidance. Other IGV names which under-performed today included MSTR -4.65%, PFPT -4.32%, ULTI -3.48%, CRM -2.84%, ZEN -2.81%, IMPV -2.74%, EA -2.49%.
In the S&P 500 Information Technology sector (668.83, -4.44 -0.66%), action was mostly in the red save for the first hour or so of the session. Shares of IBM (IBM 132.47, +6.37 +5.05%) were notably strong today following a pre-market upgrade of the shares to an Overweight rating at Morgan Stanley. Components which finished the session lower included QRVO -2.84%, AVGO -2.76%, SWKS -2.57%, LRCX -2.14%, GOOGL -1.98%, INTU -1.92%, AAPL -1.90%.
Other notable news items among sector components:
IBM (IBM) Watson Health announced plans to acquire Truven Health Analytics for $2.6 billion.
IBM also announced it and SoftBank (SFTBY 22.99, -1.12 -4.67%) began general availability of six cognitive services in the Japanese language that can be used to create IBM Watson-powered apps in the region.
Alliance Data's (ADS 197.43, +4.86 +2.52%) BoDs approved a $500 million increase in the company's recently announced stock repurchase program, resulting in an aggregate authorization of up to $1 billion during 2016.
Electronic Arts (EA 58.35, -1.49 -2.49%) announced the pricing of an offering of senior notes.
NEC & Juniper Networks (JNPR 24.00, +0.43 +1.82%) expanded JV into Latin America, Europe, Middle-East, & Asia-Pacific with Retail as a Service, Surveillance as a Service, & Internet of Things initiatives.
Red Hat (RHT 65.35, -0.99 -1.49%) will bring DevOps to networking by extending Ansible - its powerful IT automation and DevOps platform - to include native agentless support for automating heterogeneous network infrastructure devices using the same simple human and machine readable automation language that Ansible provides to IT teams.
Qualcomm (QCOM 49.08, +0.67 +1.38%) and SpiderCloud Wireless announced the planned development of LTE-U, LTE-LAA, and MulteFire systems for enterprises and public venues.
Efma, an association of 3,300 financial services companies from more than 130 countries, and Accenture (ACN 98.52, -0.53 -0.54%) have launched "Innovation in Insurance," a program to identify and award the most-innovative insurance initiatives and projects around the world.
In addition to reporting quarterly results, NetApp (NTAP 23.93, +0.38 +1.61%) detailed plans to reduce workforce by 12%.
King Digital (KING 17.99, +0.01 +0.06%) confirmed the High Court of Ireland approved the acquisition by subsidiary of Activision Blizzard (ATVI 28.88, -0.57 -1.94%). The deal is expected to take effect on February 23 2016.
Elsewhere in the tech space:
Ingram Micro (IM 36.34, +6.69 +22.56%) to be acquired by Tianjin Tianhai for $38.90 per share in cash, or about $6 billion.
SunEdison (SUNE 1.51, -0.16 -9.58%) sold its Kuching facility and plans to close its Pasadena facility. The company expects about $437 million in Q4 charges as a result.
Endurance International (EIGI 10.28, +0.91 +9.71%) disclosed a restructuring plan in connection with its acquisition of Constant Contact (CTCT). Said actions are expected to require a restructuring charge estimated at about $18-22 million.
SunEdison Semiconductor (SEMI 5.57, +1.89 +51.36%) to explore a range of strategic alternatives following the receipt of an unsolicited preliminary indication of interest.
SeaChange (SEAC 5.36, -0.21 -3.77%) implemented certain cost-saving actions with respect to its Timeline Labs operations. The company anticipates these actions will result in restructuring and severance charges of about $1 million in Q1 of 2017.
Aspen Tech (AZPN 32.98, +1.02 +3.19%) will not revise its previously announced 185 pence per share offer for KBC Advanced Technologies.
ComScore's (SCOR 38.57, +1.23 +3.29%) Board approved the repurchase of up to $125 million of the company's common stock.
Anadigics (ANAD 0.73, +0.05 +7.28%) declared a competing bidder's proposal to acquire the co for $0.78 per share a 'superior offer' to the previously announced offer of $0.66 per share.
Quality Systems (QSII 14.84, +0.44 +3.06%) appointed Jamie Arnold, Jr as CFO effective March 1.
Marvell (MRVL 9.28, -0.02 -0.22%) and Carnegie Mellon University have settled their patent infringement lawsuit. MRVL will pay $750 million to university.
In reaction to quarterly results:
NVIDIA (NVDA) reported better than expected Q4 EPS and revenues of $0.52 and $1.4 billion, respectively. NVDA also gave Q1 revenue guidance which was better than expected at $1.235-1.285 billion.
DISH Network (DISH 43.17, -2.90 -6.29%) reported a Q4 GAAP EPS loss of $0.27 on revenues which rose 3.4% year-over-year to $3.81 billion. The company activated about 2.773 million gross new Pay-TV subscribers in 2015 compared to about 2.601 million in 2014.
NetApp (NTAP) reported better than expected Q3 EPS of $0.70 on worse than expected revenues which also fell 10.3% year-over-year to $1.39 billion. The company also guided Q4 EPS and revenues worse than expected at $0.55-0.60 and $1.35-1.50 billion, respectively.
Synopsys (SNPS 44.00, +0.39 +0.89%) reported better than expected Q1 EPS of $0.68 on revenues which rose 4.9% year-over-year to $568.6 million. SNPS also guided Q2 EPS and revenues better than expected at $0.78-0.81 and $595-610 million, respectively.
Tyler Tech (TYL) reported worse than expected Q4 EPS of $0.59 on better than expected revenues of $158.9 million. The company also guided FY16 EPS worse than expected at $3.33-3.45 and guided FY16 revenues at $765-780 million.
Arris (ARRS 21.33, -2.91 -12.00%) reported better than expected Q4 EPS of $0.62 on worse than expected revenues of $1.1 billion. ARRS also guided Q1 EPS worse than expected at $0.37-0.42 and guided Q1 revenues better than expected at $1.56-1.61 million.
Brocade (BRCD 9.67, +1.15 +13.50%) reported better than expected Q1 EPS and revenues of $0.29 and $574 million, respectively. The company guided for Q2 EPS and revenues of $0.22-0.24 and $542-562 million, respectively, on the conference call.
Companies scheduled to report quarterly results tonight/tomorrow morning: AFOP MDRX AMAT ANET EQIX INAP MCHX MRIN MDCA TSYS TRUE YUME/COMM TDS USM
Analyst actions:
AMZN was upgraded to Buy from Hold at Canaccord Genuity, MRVL was upgraded to Buy from Hold at Standpoint Research, IBM was upgraded to Overweight from Equal Weight at Morgan Stanley, LXK was upgraded to Neutral from Underperform at Credit Suisse, BRCD was upgraded to Buy from Hold at Wunderlich, RHT was upgraded to Buy from Neutral at Citigroup, TSM was upgraded to Overweight from Equal Weight at Morgan Stanley, TI was upgraded to Buy from Neutral at BofA/Merrill; IM was downgraded at Needham and Citigroup, NTAP was downgraded to Neutral from Outperform at Robert W. Baird, HOLI was downgraded to Neutral from Overweight at JP Morgan, TWER was downgraded to Neutral from Buy at DA Davidson
4:16 pm Novatel Wireless reports Q4 net loss per share of ($0.04) vs. ($0.05) two analyst estimate; Revenue increased 4.9% to $58.1 mln vs. $69.4 mln estimate, issues downside Q1 guidance (MIFI) :
Overall non-GAAP gross margin increased to 35.4% in 4Q15, compared to 23.8% in 4Q14, as the company continues its transition toward an improved mix of higher margin IoT offerings.
Guidance: Co issues downside guidance for 1Q16, sees loss per share of ($0.09)-($0.06) vs. ($0.05) single analyst estimate; sees revenue of $59-$64 mln vs. $68.7 mln estimate.
4:10 pm Novatel Wireless to sell telematics hardware business to Micronet Enertec Technologies (MICT) for $24 mln (MIFI) :
Novatel Wireless will receive $12 million in cash upon the closing of the transaction and will receive two payments of $6 million on each of the first and second anniversaries of the date of completion of the transaction.
In addition, Novatel Wireless and Micronet will enter into a manufacturing and supply agreement whereby Novatel Wireless will agree to purchase products from Micronet following the closing of the transaction.
Each company's Board of Directors has approved the proposed transaction, which is expected to close by the end of the first quarter 2016.
4:08 pm Univ Elec beats by $0.06, misses on revs; guides Q1 EPS below consensus, revs above consensus (UEIC) :
Reports Q4 (Dec) earnings of $0.91 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $0.85; revenues rose 17.1% year/year to $162.1 mln vs the $163.96 mln Capital IQ Consensus.
Co issues mixed guidance for Q1, sees EPS of $0.46-0.54, excluding non-recurring items, vs. $0.60 Capital IQ Consensus Estimate; sees Q1 revs of $153-161 mln vs. $143.90 mln Capital IQ Consensus Estimate.
4:05 pm Applied Materials beats by $0.01, reports revs in-line; guides Q2 EPS above consensus, revs above consensus (AMAT) :
Reports Q1 (Jan) earnings of $0.26 per share, $0.01 better than the Capital IQ Consensus of $0.25; revenues fell 0.7% year/year to $2.26 bln vs the $2.24 bln Capital IQ Consensus. Non-GAAP gross margin was 42.4%; operating margin was 17.8%.
Co issues upside guidance for Q2, sees EPS of $0.30-0.34 vs. $0.26 Capital IQ Consensus Estimate; sees Q2 revs +5-10% sequentially, which equates to $2.37-2.48 vs. $2.28 bln Capital IQ Consensus Estimate.
"As the market moves into the sweet spot for Applied's materials engineeringtechnology, we see strong demand for our semiconductor, display and servicebusinesses," said Gary Dickerson, president and CEO. "We are maintaining apositive outlook for 2016 as our customers make strategic, inflection-driveninvestments that play to our strengths."
4:15 pm : The major averages ended the day on a modestly lower note as equity indices pulled back from a three day rally. Today's loss of momentum can be attributed to the financial sector moving from leader to laggard, short-term overbought conditions, volatile oil trade, and key earnings misses. A final hour sell off pushed the major indices to their worst levels of the day as investors demonstrated increased risk aversion. The Nasdaq Composite (-1.0%) was the worst performer while the S&P 500 (-0.5%) and the Dow Jones Industrial Average (-0.3%) registered slimmer losses.
The economically-sensitive financial sector (-0.6%) was under pressure today after dovish remarks from St. Louis Fed President and FOMC voting member James Bullard called into question future fed funds rate hikes. Overnight, President Bullard voiced his opinion that the Fed can afford to be more patient in raising its policy rate. This weighed on the sector as continued low rates would limit banks' earnings prospects.
The benchmark index had trimmed its February loss from 4.9% to 1.2% over the past three trading days, with the consumer discretionary space (-0.7%) and technology (-0.7%) trimming their respective monthly losses from 6.4% and 6.2% to 2.3% and 2.5%. Today's action saw a pullback from the three-day rally.
On the commodities front, volatile oil trade weighed on the broader market as a bearish reading from the Department of Energy's weekly inventory report offset some additional speculation regarding whether OPEC and non-OPEC states could agree to a production cap agreement. The EIA inventory report showed a 2.147 million barrel build in crude inventories compared to last week's 0.754 barrel draw. This forced WTI crude to pare most of its gain, ending the day higher by 0.1% at $30.68/bbl. As a result, energy (-0.9%) settled with the worst loss of the day.
Dow component Wal-Mart (WMT 64.12, -1.99) tumbled 3.0% after defensive guidance overshadowed a bottom-line beat. The retail giant posted the worst performance in the composite while also leading the broader consumer staples sector (-0.5%) lower. Elsewhere in the Dow, IBM (IBM 132.45, +6.35) outperformed after receiving an upgrade at Morgan Stanley from "Equal-Weight" to "Overweight". The upgrade cited IBM's faster than expected move to analytics and cloud-focused business.
In the heavyweight technology space, fellow large names were not able to draw on IBM's success as Apple (AAPL 96.26, -1.86), Facebook (FB 103.47, -1.73), and Alphabet (GOOGL 717.51, -14.46) all displayed relative weakness. NVIDIA (NVDA 30.04, +2.38) outperformed, surging 8.6%, in the PHLX Semiconductor Index (-0.6%) after reporting above-consensus results with better than expected guidance for Q1.
Biotechnology underperformed, evidenced by a 2.6% tumble in the iShares Nasdaq Biotechnology ETF (IBB 259.42, -6.90). To be fair though, health care component Johnson & Johnson (JNJ 104.24, +1.74) was the only large-cap able to maintain traction in positive territory.
Today's trade saw a retreat to risk-off assets with the Treasury Complex, gold, and the yen rallying to end the day. Meanwhile, utilities (+1.6%) and telecom services (+1.1%) saw a revival in interest that had led the spaces to the best performances in volatile January and February. The yield on the 10-yr note ended its day seven basis points lower at 1.74% while gold ended higher by 2.3% at $1,238.60/ozt. On the foreign exchange front, the dollar/yen pair ended lower by 0.7% at 113.25.
Today's participation was in the neighborhood of the recent average with 1.05 billion shares changing hands at the NYSE floor.
Today's economic data included the weekly initial claims report, the February Philadelphia Fed Survey, and January Leading Indicators:
The latest initial claims report showed claims falling by 7,000 to 262,000 (Briefing.com consensus 274,000) for the week ending February 13.
That is the lowest initial claims reading in the last 12 weeks and places claims at the lower end of the 250,000-300,000 range they have been pinned at since July 2014.
The Department of Labor said there were no special factors influencing the initial claims data, which pushed the four-week moving average down 8,000 to 281,250.
Continuing claims for the week ending February 6 increased by 30,000 to 2.273 million (Briefing.com consensus 2.237 mln)
The four-week moving average for this series up 13,500 to 2.263 million, which is the highest level since the week of August 28, 2015.
The Philadelphia Fed Index showed some slight improvement with a reading of -2.8 for February (Briefing.com consensus -2.9) versus -3.5 for January.
The dividing line between expansion and contraction is 0.0. February marked the sixth straight month the general business activity index has been below zero, signalling that there has been a persistent contraction in regional manufacturing activity.
Strikingly, the indexes for all business indicators showed lower readings than the prior month and only one index -- the shipments index -- registered a reading above zero. Specifically, the shipments index dropped to 2.5 from 9.6 in January.
The closely-watched new orders index fell to -5.3 from -1.4 while the number of employees index declined to -5.0 from -1.9. The indexes for both prices paid (to -2.2 from -1.1) and prices received (to -4.5 from -2.8) also fell deeper into negative territory.
Separately, the diffusion index for future general activity dipped to 17.3 from 19.1. That index has been trending lower since last summer and is now at its lowest level since November 2012.
The Conference Board's Leading Economic Index declined 0.2% in January (Briefing.com consensus 0.2%) showed slight improvement from the downwardly revised 0.3% decline (from -0.2%) for December.
The decline in January was paced by large negative contributions from stock prices (-0.27 percentage points), initial claims (-0.11 percentage points), and the ISM New Orders Index (-0.08 percentage points).
Eight of the ten indicators are known ahead of time, so the variability to the consensus estimate typically revolves around building permits, which are usually released a day ahead of the report, and the Conference Board's estimate for manufacturers' new orders, nondefense capital goods orders excluding aircraft.
The Leading Economic Index increased 0.3% for the six-month period ending in January versus a 1.8% growth rate seen during the previous six months. Separately, the Coincident Economic Index increased 0.3% in January while the Lagging Economic Index increased 0.1%.
Tomorrow's economic data will be limited to the 8:30 ET release of January CPI (Briefing.com consensus -0.1%) and Core CPI (Briefing.com consensus +0.1%). DJ30 -40.40 NASDAQ -46.53 SP500 -8.99 NASDAQ Adv/Vol/Dec 1129/1.762 bln/1796 NYSE Adv/Vol/Dec 1562/1.053 bln/1480
3:40 pm :
Oil futures are sliding lower in electronic trade and just hit a new low for the day
In floor trade, Mar crude finished the day +0.1% at $30.68/barrel
In other energy, despite positive weekly EIA storage data, Mar nat gas reversed and closed -5% at $1.85/MMBtu
Precious metals got a boost today, but copper slipped one cent to $2.07/lb
Apr gold gained +1.3% to $1226.70/oz, while Mar silver rose +0.3% to $15.42/oz
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