From Briefing.com: Weekly Recap - Week ending 01-Apr-16The major averages enjoyed another round of weekly gains as the first quarter came to a close. The S&P 500 gained 1.8% for the week while the Nasdaq Composite outperformed, climbing 3.0% since last Friday.
Although the Nasdaq showed relative strength during the week, the tech-heavy index remains down 1.9% for the year versus a 1.4% gain in the S&P 500.
The first two days of the week were very quiet with investors sitting on their hands ahead of Fed Chair Janet Yellen's speech that was scheduled for Wednesday. Ms. Yellen spoke before the Economic Club of New York and her remarks were interpreted as decidedly dovish. All in all, Fed Chair Yellen echoed her recent comments in the speech, which was a relief for the market that was becoming concerned about the Fed Chair assuming a more hawkish posture, akin to St. Louis Fed President and FOMC voting member James Bullard.
Over the past couple weeks Mr. Bullard was quoted by various outlets as cautioning that the next rate hike is not far off and that a hike in April is entirely possible. However, all those worries were cast aside after Ms. Yellen's speech focused heavily on global growth concerns and emphasized the importance of employing a cautious approach to raising rates. As a result, stocks, Treasuries, and gold surged at the expense of the dollar.
By putting so much emphasis on international developments, Fed Chair Yellen essentially moved the goalposts, indicating the Fed is no longer targeting just "progress towards 2.0% inflation and an unemployment rate below 6.5%," but also looking to maintain global economic stability.
As the week wore on, investors received the Employment Situation report for March (215K; Briefing.com consensus 200K), which showed average hourly earnings growth of 0.3% (Briefing.com consensus +0.3%). This report strengthened the rate hike argument, but Fed Chair Yellen's speech was still fresh in the minds of investors. Accordingly, stocks began Friday under pressure, but rallied off their lows as investors weighed domestic economic conditions against the global growth picture.
On Friday afternoon the fed funds futures market priced in a 53.0% chance of the next rate hike taking place in September after assigning a 41.3% chance to a September hike on Thursday.
Index Started Week Ended Week Change % Change YTD %
DJIA 17515.73 17793.02 277.29 1.6 2.1
Nasdaq 4773.50 4914.54 141.04 3.0 -1.9
S&P 500 2035.94 2072.82 36.88 1.8 1.4
Russell 2000 1079.54 1117.70 38.16 3.5 -1.6
Broader market action left the three major US indices near session highs. The beginning of the second quarter commenced with slight losses, but the negative action would not hold and all three major US indices went red-to-green at about 10:30 a.m. ET. The day ended with the tech-heavy Nasdaq Composite ending 44.69 points (+0.92%) higher to 4914.54. The S&P 500 closed up 13.04 points (+0.63%) to 2072.78. Rounding out the bunch, the Dow Jones Industrial Average added 107.66 points (+0.61%) to close 17792.75. This week's action took the indices -1.9%, +1.4% and +2.1% YTD, respectively.
As it were, the Technology (XLK 44.70, +0.34 +0.77%) sector notably strong, ending the day near session highs. Component Fidelity Nat'l Info (FIS 65.00, +1.69 +2.67%) was notably strong as the stock was upgraded to a Buy rating from Neutral at Goldman premarket. Other sectors closed the session IYZ +1.37%, XLV +1.14%, XLP +1.06%, XLB +0.96%, XLF +0.89%, XLI +0.47%, XLY +0.42%, XLU +0.38%, XLE -1.34% with upside being driven by Telecoms and the lone laggard being Energy.
In the S&P 500 Information Technology (743.45, +6.33 +0.86%) sector, trading was weak to begin Friday but losses would not hold and the sector ended near highs. Component Adobe Systems (ADBE 95.16, +1.36 +1.45%) also turned in an out-performing session despite shareholder ValueAct disposing of a majority of its stake in the company, leaving the firm holding only 6,000 share of the name. Other components which finished the day higher included MU +5.35%, CRM +2.57%, AVGO +2.14%, PYPL +2.07%, TSS +1.93%, FB +1.72%, NVDA +1.46%, V +1.45%, MA +1.45%.
Other notable news items among sector components:
Harris (HRS 77.80, -0.06 -0.08%) was awarded a $17 million order to supply tactical radios to Middle-East nation.
Adobe Systems (ADBE) shareholder ValueAct disposed of a majority of its stake after selling 8.73 million shares. The firm now only holds 6,000 shares in the company.
Red Hat (RHT 75.52, +1.01 +1.36%) announced the availability of a no-cost Red Hat Enterprise Linux subscription, available as part of the Red Hat Developer Program.
Qualcomm (QCOM 50.88, -0.26 -0.51%) and Ricardo entered into a Wireless Electric Vehicle Charging technology license agreement. Ricardo licensed QCOM's Halo technology to commercialize WEVC systems for Plug-In Hybrid and Electric Vehicles.
Elsewhere in the tech space:
United Online (UNTD 11.46, -0.08 -0.69%) announced the sale of StayFriends for EUR 16 million.
Marvell (MRVL 9.94, -0.37 -3.59%) filed to delay the company's Form 10-K. Also, the company expressed that it expects to incur a net loss for fiscal 2016.
Rovi (ROVI 17.40, -3.11 -15.16%) entered into the extension of its existing Interactive Program Guide License and Distribution Agreement and Patent License Agreement with Time Warner Cable (TWC 205.03, +0.41 +0.20%), which was scheduled to expire March 31.
ROVI, DISH Network (DISH 46.29, +0.03 +0.06%), and Echostar (SATS 43.94, -0.35 -0.79%) agreed to a standstill during which the parties have agreed not to pursue litigation against each other.
ROVI filed a patent infringement lawsuit against Comcast (CMCSA 61.87, +0.79 +1.29%) in the Eastern District of Texas.
SunEdison (SUNE 0.46, -0.08 -14.85%) disclosed the receipt of a subpoena from the Department of Justice, informal inquiry from SEC.
SunPower (SPWR 22.49, +0.15 +0.67%) announced the purchase agreement award of 500 Megawatts of solar in Mexico.
Zayo Group Holdings (ZAYO 24.29, +0.05 +0.21%) upsized its offering and priced $550 million of 6.375% Senior Notes due 2025.
ON Semiconductor (ON 9.70, +0.11 +1.15%) extended the previously announced tender offer to acquire
Fairchild Semiconductor (FCS 20.00, flat) for $20.00 per share to April 14, 2016.
Orange (ORAN 16.48, -0.90 -5.18%) confirmed the end of discussions with Bouygues.
Analyst actions:
NFLX was upgraded to Overweight from Neutral at Atlantic Equities,
FIS was upgraded to Buy from Neutral at Goldman,
JCOM was upgraded to Buy from Neutral at Citigroup;
ALRM was downgraded to Hold from Buy at Stifel,
VNTV was downgraded to Neutral from Buy at Goldman;
BOX was initiated with a Buy at Drexel Hamilton
4:10 pm Closing Market Summary: Stocks End Week Higher as Jobs Fall In-Line (:WRAPX) :
The stock market ended an upbeat week on a higher note as investors focused on the largely in-line reading of the March jobs report. Additional factors that impacted today's trade included a downturn in oil, a transitory rebound in the dollar, and leadership from the heavily-weighted health care (+1.3%), technology (+0.9%), and financial (+0.8%) sectors. The Nasdaq Composite (+0.9%) finished the day ahead of the Dow Jones Industrial Average (+0.6%) and the S&P 500 (+0.6%).
Today's session started on a wobbly note as investors adopted a risk-off posture ahead of and immediately following the release of the Employment Situation Report for March. The reading of the report showed progress towards the Fed's dual mandate, as nonfarm payrolls increased by 215,000 (Briefing.com consensus 200,000) and average hourly earnings ticked higher by 0.3% (Briefing.com consensus 0.3%). However, the near-term impact of this report is likely to be diminished considering recent dovish commentary from Fed Chair Janet Yellen. In remarks made on Wednesday, Ms. Yellen had acknowledged strong employment readings, but still called for a cautious path towards interest rate normalization given global economic concerns.
The broader market staged a rebound off its low as heavily-weighted health care (+1.3%), technology (+0.7%), and financials (+0.8%) moved up the leaderboard in the opening hour. The groups were able to maintain their leadership positions throughout the session and finished their day ahead of the broader market.
Conversely, the energy sector (-1.4%) ended its day with the largest loss as a slump in oil weighed on the sector. The energy component was pressured throughout the day as commentary from Saudi Arabian Crown Prince Mohammed bin Salman cast doubts on the country's participation in a supply freeze agreement. Additionally, early strength from the dollar also weighed. WTI crude ended its day lower by 4.0% at $36.76/bbl.
Biotechnology outperformed in the countercyclical health care (+1.3%) as the group rebounded from its difficult start to the year. The iShares Nasdaq Biotechnology ETF (IBB 268.31, +7.50) gained 2.8% as the sub-group moved higher in sympathy with Regeneron Pharmaceuticals (REGN 405.25, +44.81). Regeneron spiked 12.4% today after reporting positive results in two phase-three trials of its Dupilumab medication. The broader health care space extended its week to date gain to 1.9%.
The heavily-weighted financial sector (+0.8%) also rebounded from larger losses today, as the space trimmed its 2016 decline to 4.8%. The group demonstrated broad strength as credit service names and investment brokerage companies outperformed. On that note, Dow component Goldman Sachs (GS 159.82, +2.84) topped the price-weighted index.
The Dow Jones Transportation Average (-0.7%) underperformed today as the sector pulled back from larger year to date gains. Major airlines showed the largest losses in the index as American Airlines (AAL 39.52, -1.49) and United Continental (UAL 56.72, -3.14) surrendered 3.6% and 5.3%, respectively, after receiving downgrades at Deutsche Bank.
The U.S. Dollar Index (94.58, +0.00) surrendered early gains, falling to its flat line in the early afternoon. The euro gained 0.1% against the dollar and ended at 1.1394 while the dollar/yen pair finished at 111.63 (-0.8%).
The Treasury complex traversed a narrow range today as the yield on the 10-yr fluctuated between 1.77% (UNCHF) and 1.80% (+3 bps). The yield on the 10-yr note ended higher by one basis point at 1.78%.
Today's participation was above the recent average as more than 958 million shares changed hands on the NYSE floor.
Today's economic data included the Employment Situation Report for March, ISM Index for March, Construction Spending for February, and the final reading of Michigan Consumer Sentiment:
Nonfarm payrolls increased by 215,000 (Briefing.com consensus 200,000)February nonfarm payrolls revised to 245,000 from 242,000 Private sector payrolls increased by 195,000 (Briefing.com consensus 195,000)February private sector payrolls revised to 236,000 from 230,000 Unemployment rate was 5.0% (Briefing.com consensus 4.9%) versus 4.9% in FebruaryThe U-6 unemployment rate, which accounts for the total unemployed plus persons marginally attached to the labor force and the underemployed, was 9.8% versus 9.7% in FebruaryMarch hourly earnings were up 0.3% (Briefing.com consensus +0.3%) after being down 0.1% in February.Over the last 12 months, average hourly earnings have risen 2.3% versus 2.2% in February
The average workweek was unchanged at 34.4 (Briefing.com consensus 34.5)
The labor force participation rate was 63.0% versus 62.9% in February
The ISM Index for March checked in at 51.8, up from 49.5 in February and above the Briefing.com consensus estimate of 50.6.A number below 50.0 denotes contraction, which is where the index has been trapped for five consecutive months prior to today's release. The five-month streak of readings below 50 was the longest stretch of this kind since 2009.The March improvement was driven by increases in most sub-indices of the report. The New Orders Index rose to 58.3 from 51.5; the Imports Index rose to 49.5 from 49.0; the Exports Index increased to 52.0 from 46.5; the Supplier Deliveries Index rose to 50.2 from 49.7; and the Prices Index surged to 51.5 from 38.5.
Although the vast majority of components improved, the Employment Index slipped to 48.1 from 48.5.
Total construction spending was down 0.5% in February (Briefing.com consensus +0.2%). Furthermore, construction spending in January was revised up to 2.1% from 1.5%.Total construction spending is up 10.3% year-over-year, with private construction spending up 10.6% and public construction spending up 9.2%.The final reading for the University of Michigan Consumer Sentiment Survey for March increased to 91.0 (Briefing.com consensus 90.5) from the preliminary reading of 90.0. Despite the upward revision, the March reading marked a downturn from the final reading of 91.7 for February and a similar showing in January (92.0).Monday's economic data will be limited to the 10:00 ET release of Factory Orders for February (Briefing.com consensus -1.7%).
Nasdaq Composite -1.8% YTD
Russell 2000 -1.6% YTD
S&P 500 +1.4% YTD
Dow Jones +2.1% YTD
Week in Review: Stocks Climb as Fed Chair Remains Dovish
The major averages enjoyed another round of weekly gains asthe first quarter came to a close. The S&P 500 gained 1.8% for the week whilethe Nasdaq Composite outperformed, climbing 3.0% since last Friday.
Although the Nasdaq showed relative strength during theweek, the tech-heavy index remains down 1.9% for the year versus a 1.4% gain inthe S&P 500.
The first two days of the week were very quiet withinvestors sitting on their hands ahead of Fed Chair Janet Yellen's speech thatwas scheduled for Wednesday. Ms. Yellen spoke before the Economic Club of NewYork and her remarks were interpreted as decidedly dovish. All in all, FedChair Yellen echoed her recent comments in the speech, which was a relief forthe market that was becoming concerned about the Fed Chair assuming a morehawkish posture, akin to St. Louis Fed President and FOMC voting member JamesBullard.
Over the past couple weeks Mr. Bullard was quoted by variousoutlets as cautioning that the next rate hike is not far off and that a hike inApril is entirely possible. However, all those worries were cast aside after Ms.Yellen's speech focused heavily on global growth concerns and emphasized theimportance of employing a cautious approach to raising rates. As a result,stocks, Treasuries, and gold surged at the expense of the dollar.
By putting so much emphasis on international developments,Fed Chair Yellen essentially moved the goalposts, indicating the Fed is nolonger targeting just "progress towards 2.0% inflation and an unemploymentrate below 6.5%," but also looking to maintain global economic stability.
As the week wore on, investors received the EmploymentSituation report for March (215K; Briefing.com consensus 200K), which showedaverage hourly earnings growth of 0.3% (Briefing.com consensus +0.3%). Thisreport strengthened the rate hike argument, but Fed Chair Yellen's speech wasstill fresh in the minds of investors. Accordingly, stocks began Friday underpressure, but rallied off their lows as investors weighed domestic economic conditionsagainst the global growth picture.
On Friday afternoon the fed funds futures market priced in a53.0% chance of the next rate hike taking place in September after assigning a41.3% chance to a September hike on Thursday.
4:29 pm Microchip announces that Atmel (ATML) shareholders approved merger with Microship (MCHP) : Microchip expects to close the merger on Monday, April 4, 2016. Microchip also announced that the average closing price of Microchip common stock based on the ten trading days ending on April 1, 2016 was $48.439 per share and, based on such price and the terms of the merger agreement, Microchip will issue a total of approximately 10.1 million shares to the stockholders of Atmel in the transaction with each share of Atmel common stock being exchanged for $7.00 per share in cash and $1.15 of Microchip common stock.
8:04 am SunPower announces purchase agreement award of 500 Megawatts of solar in Mexico (SPWR) :
Co has been awarded power purchase agreements with CFE, Mexico's state-owned electric utility, to deliver one terawatt-hour of energy, equivalent to approximately 500 megawatts, over the term of the agreements. SunPower's awards from the auction include almost 400 megawatts in Yucatan and more than 100 megawatts in Guanajuato, and their associated clean energy certificates. The auction was held as a result of Mexico's sweeping energy sector reform, which opened the market for energy companies to compete as generation providers. incorporated ~$0.35-0.40/share contribution from SpringCastle for the full year.
7:10 am BlackBerry beats by $0.07, misses on revs (shares halted -- will resume at 7:30 AM ET) (BBRY) :
Reports Q4 (Feb) loss of $0.03 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of ($0.10); GAAP revenues fell 29.7% year/year to $464 mln vs the $564.86 mln Capital IQ Consensus. Non-GAAP revenue for the fourth quarter of fiscal 2016 was $487 mln with GAAP revenue of $464 mln. GAAP revenue reflects a purchase accounting write down of deferred revenue associated with recent acquisitions. The non-GAAP revenue breakdown for the quarter was ~32% for software and services, 29% for service access fees, and 39% for hardware and other revenue. Co reported Q4 adjusted EBITDA of $78 mln. Outlook: The company expects to grow software and services at around 30 percent. The Company continues to anticipate positive free cash flow and adjusted EBITDA for the full 2017 fiscal year.
JinkoSolar Holding (JKS) announces that it will supply METKA-EGN USA with 57.65 MW of PV solar modules for the largest solar PV plant in Puerto Rico. JinkoSolar will deliver the 57.65 MW of PV solar modules for the project located in the municipality of Isabela, Puerto Rico. The owner of the project is Oriana, a subsidiary of Sonnedix USA, and a member of the Sonnedix group of companies according to JinkoSolar
6:34 am Tesla Motors trading higher by 7.5% following Model 3 unveil (TSLA) :
Tesla is trading higher by 7.5%% at $247 in early trading, following the unveiling of the Model 3 last night. As expected, the Model 3 is priced at $35K before options, at least 215 miles of range and zero to 60 mph in under 6 seconds. The Model 3 will include autopilot and autopilot safety features. Model 3 production is scheduled to begin in late 2017.CEO Elon Musk indicated that TSLA had collected 115K Model 3 reservations already.Note that Tesla may also release Q1 deliveries today. Tesla previously guided for Q1 deliveries up 60% year over year to 16,000 EVs (Model S and Model X).
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