From Briefing.com: Weekly Recap - Week ending 13-May-16After registering two consecutive weekly losses, the stock market faced a range-bound week, which ended with a modest slip for the S&P 500. The benchmark index surrendered 0.5% for the week while the Nasdaq Composite outperformed slightly, shedding 0.4%.
The trading week featured a fair dose of economic data, which included an in-line Core PPI reading for April (+0.1%) and better than expected April Retail Sales (+1.3%; Briefing.com consensus 0.8%). The dollar responded by continuing its rebound off the 2016 low that was registered on May 3. The Dollar Index added 0.7% for the week, settling near levels from late March/early April.
Market participants received another batch of quarterly earnings during the week, but the results did not have a far-reaching impact. At the end of the week, nearly 92.0% of S&P 500 components had reported their results. Blended earnings were down 7.0% year-over-year while earnings on a reported basis were down 7.6%.
Investors heard from a handful of Fed officials throughout the week with some cautioning that the possibility of a rate hike in June should not be dismissed entirely. The fed funds futures market, however, remains convinced that the next rate hike will not come before December. The market is pricing in just an 8.0% likelihood of a rate increase in June while the probability of a December hike is at 62.0%.
Index Started Week Ended Week Change % Change YTD %
DJIA 17740.63 17539.77 -200.86 -1.1 0.7
Nasdaq 4736.16 4718.89 -17.27 -0.4 -5.8
S&P 500 2057.14 2047.10 -10.04 -0.5 0.2
Russell 2000 1114.72 1102.30 -12.42 -1.1 -3.0
6:01 pm Lam Research and KLA-Tencor (KLAC) receive request for additional information on their proposed transaction from the DoJ (LRCX) : The companies are working with the staff of the DOJ on the terms of a consent decree. Lam Research and KLA-Tencor remain confident of securing necessary regulatory approvals and expect the transaction to close in the third calendar quarter. The companies have received clearance from competition authorities in Germany, Ireland, Israel and Taiwan and are in discussions with competition regulators in other jurisdictions.
4:16 pm Corning announces extension of tender offer for shares of Alliance Fiber Optic Products (AFOP) (GLW) :
Co announced that it, along with Apricot Merger Co ("Purchaser"), a direct, wholly owned subsidiary of Corning, pursuant to the Agreement and Plan of Merger dated April 7, 2016 (the "Merger Agreement"), among Corning, Purchaser, and Alliance Fiber Optic Products (AFOP), has exercised its right to extend the offering period of its previously announced tender offer to purchase all of the outstanding shares of common stock of AFOPThe Merger Agreement allows Corning to extend the offering period if the transactions between Corning and Dow Corning Corporation that were previously announced on December 11, 2015 are not yet closed.
4:13 pm Closing Market Summary: Averages End Week Lower as Retailers Weigh (:WRAPX) :
The stock market ended a downbeat week on a lower note as equities pulled back following continued weakness from the retail sub-group. Additional focal points included the S&P 500 (-0.9%) breaching technical support at its 50-day simple moving average (2054.74), mounting selling pressure from the oil pit, a leg higher in the dollar, and weakness from the heavyweight financial (-1.3%), industrial (-1.2%), and consumer discretionary (-1.2%) sectors. The Dow Jones Industrial Averages (-1.1%) finished behind the S&P 500 (-0.9%) and the tech-heavy Nasdaq (-0.4%).
The major averages opened on a mixed note as investors weighed a positive reading of April Retail Sales (+1.3%; Briefing.com consensus +0.8%) against continued weakness in the retail space. Reports from Nordstrom (JWN 39.16, -6.07) and Dillard's (DDS 59.86, -0.78) capped off a bad week for the group as both offered below-consensus results for their quarters.
Equities were unable to find their bearings as a persistent downturn in crude oil and strength in the dollar kept pressure on the broader market. The S&P 500 (-0.9%) tested and defended support near its 50-day simple moving average (2054.74) in the late morning, but was unable to do so again when retesting that level in the early afternoon.
The major averages ebbed lower through the afternoon as heavily-weighted financials (-1.3%), industrials (-1.2%), and consumer discretionary (-1.2%) extended their losses to round out the leaderboard. For its part, WTI crude ended its week on a down note ($46.22/bbl; -0.9%), but still finished with a gain of 3.7% since last Friday's settlement at $44.59/bbl.
In the industrial sector (-1.2%), rail names ended with larger losses as Norfolk Southern (NSC 85.97, -2.21) and Kansas City Southern (KSU 87.97, -2.21) finished the day lower by 2.5% apiece. The industrial group showed broad-based weakness as construction machinery names and aerospace and defense names all ended with meaningful losses. Furthermore, the Dow Jones Transportation Average (-1.2%) erased its 2016 gain and is now flat for the year.
The financial sector (-1.3%) saw weakness in money center banks and real estate investment trusts (REITs). The largest losses among REITs came from those with primary holdings in retail properties. The names moved lower during the week as they traded lower with the SPDR S&P Retail ETF (XRT 41.04, -0.57). Simon Properties (SPG 196.49, -5.95) and General Growth (GGP 27.67, -0.46) extended their weekly declines to 6.8% and 5.9%, respectively.
Retail names continued to underperform in the consumer discretionary space (-1.2%). Nordstrom (JWN 39.16, -6.07) ended its day lower by 13.4%, finishing the week down 18.5%. Elsewhere, Macy's (M 31.22, +0.01) and Kohl's (KSS 35.74, +0.59) outperformed.
Conversely, health care (-0.2%) and technology (-0.3%) finished the day with the slimmest losses. In the health care space (-0.2%) biotechnology showed relative strength, evidenced by the 0.9% gain in the iShares Nasdaq Biotechnology ETF (IBB 253.90, +2.17).
Treasuries ended on a mixed note with the 10-yr note ending near its best level of the session. The yield on the 10-yr note slipped five basis points to 1.70%.
Volume was heavier than average with 854 million shares trading at the NYSE. The advance-decline line favored decliners at the NYSE by a 2-to-1 margin.
Today's economic data included Core PPI for April, Retail Sales for April, March Business Inventories, and the preliminary reading of the University of Michigan Consumer Sentiment Survey for May:
The index for final demand was up 0.2% (Briefing.com consensus +0.3%), driven by a 0.1% increase in the index for final demand services and a 0.2% increase in the index for final demand goods.
The Producer Price Index for April didn't upset the inflation apple cart.
The index for final demand, excluding food and energy, was up 0.1% as expected.On an unadjusted basis, the final demand index was unchanged for the 12 months ended in April after being down 0.1% in March. Excluding food and energy, the final demand index was up 0.9% versus up 1.0% in March.The April Retail Sales report was much better than expected. Total retail sales increased 1.3% month-over-month (Briefing.com consensus +0.8%).That gain was fueled by a 3.2% increase in auto sales, a 2.2% jump in gasoline station sales, and a 2.1% uptick in sales at nonstore retailers.Excluding autos, retail sales increased 0.8% (Briefing.com consensus +0.5%) on top of an upwardly revised 0.4% increase (from +0.2%) in March.The retail sales gains in April were fairly broad-based. The only decline seen was in building material, garden equipment, and supplies dealers (-1.0%), which might have been impacted from the unseasonably cool spring temperatures. General merchandise store sales were flat, yet department store sales were reportedly up 0.3%.This is a good report that will feed favorably into Q2 GDP forecasts based on the recognition that core retail sales, which exclude auto, gas, building material, and food services sales, increased 0.9%.
These sales factor into the computation of the goods component for personal consumption expenditures.
Total business inventories increased 0.4% in March (Briefing.com consensus +0.2%) after an unrevised 0.1% decline in February.
Manufacturers' inventories (+0.2%) and wholesaler inventories (+0.1%) were already known.
Retailer inventories were the only unknown and they increased 1.0% on the heels of a 0.7% increase in February.
The biggest driver of the increase in retailer inventories was a 2.3% increase in motor vehicle and parts dealers inventories.
The only retail category seeing an inventory decline in March was food and beverage stores (-0.8%).
The total business inventory-to-sales ratio was 1.41 in March, which was unchanged from February but up from 1.37 in March 2015.The University of Michigan's Preliminary Consumer Sentiment report for May brought some good news to the market as the index spiked to 95.8 from the final reading of 89.0 in April.
The Briefing.com consensus estimate was pegged at 90.0.
The uptick was attributed largely to an improved outlook among consumers due to more frequent income gains, a better jobs outlook, and the expectation of lower inflation and interest rates.
Those views were reflected in the Expectations Index, which surged to 87.5 from 77.6 in April.
The Current Economic Conditions Index also improved, rising more modestly to 108.6 from 106.7.
In the same period a year ago, the Index of Consumer Sentiment stood at 90.7.
May marked the first time in four months that there was an increase in consumer sentiment.Monday's economic data will be limited to Empire Manufacturing for May (Briefing.com consensus 6.2) and the May NAHB Housing Market Index (Briefing.com consensus 59), which will be released at 8:30 ET at 10:00 ET, respectively. Separately, March Net Long-Term TIC Flows will be released at 16:00 ET.
Nasdaq Composite -5.8% YTDRussell 2000 -2.9% YTDS&P 500 +0.1% YTDDow Jones +0.6% YTDWeek in Review: Searching for Direction
After registering two consecutive weekly losses, the stockmarket faced a range-bound week, which ended with a modest slip for theS&P 500. The benchmark index surrendered 0.5% for the week while the Nasdaq Compositeoutperformed slightly, shedding 0.4%.
The trading week featured a fair dose of economic data,which included an in-line Core PPI reading for April (+0.1%) and better thanexpected April Retail Sales (+1.3%; Briefing.com consensus 0.8%). The dollarresponded by continuing its rebound off the 2016 low that was registered on May3. The Dollar Index added 0.7% for the week, settling near levels from lateMarch/early April.
Market participants received another batch of quarterlyearnings during the week, but the results did not have a far-reaching impact.At the end of the week, nearly 92.0% of S&P 500 components had reportedtheir results. Blended earnings were down 7.0% year-over-year while earnings ona reported basis were down 7.6%.
Investors heard from a handful of Fed officials throughoutthe week with some cautioning that the possibility of a rate hike in June shouldnot be dismissed entirely. The fed funds futures market, however, remainsconvinced that the next rate hike will not come before December. The market ispricing in just an 8.0% likelihood of a rate increase in June while the probabilityof a December hike is at 62.0%.
Following yesterday's mixed closed to equities, the market capped off a what would have been a flat week with losses. The negative bias grew about midday, and ultimately ended with the Dow Jones Industrial Average at the bottom, down 185.18 points (-1.05%) to 17535.32. The S&P 500 closed lower by 17.50 points (-0.85%) to 2046.61. The Nasdaq Composite shed 19.66 points (-0.41%) today to end 4717.68. Today's action takes the three major indices +0.6%, +0.1% and -5.8% YTD, respectively.
The stock market traded lower as investors weighed the latest batch of weak results from the retail sub-group against an above-consensus reading of April Retail Sales (+1.3%). Permeating the markets were disappointing quarterly results and guidance from Nordstrom (JWN 39.16, -6.07 -13.42%). The company missed expectations for its quarter, adding to the negative results that retail names have reported this earning season. On that note, the SPDR S&P Retail ETF (XRT 41.04, -0.57 -1.37%) has lost -4.6% this week, compared to a loss of -1.5% in the broader consumer discretionary sector.
To that end, sectors finished Friday XLE -1.28%, XLP -1.26%, XLI -1.26%, XLF -1.21%, XLY -1.19%, XLB -0.97%, XLU -0.48%, IYZ -0.36%, XLV -0.23% as measured by the S&P. Technology (XLK 42.21, -0.16 -0.38%) closed today rather flat as morning gains turned into afternoon losses and the sector returned to its YTD losing ways, now standing -1.5% during that timeframe. Component Symantec (SYMC 16.79, -0.11 -0.65%) finished with a muted session following the company's in-line Q1 guidance and lowered quarterly dividend.
In the S&P 500 Information Technology sector (697.27, -1.98 -0.28%), the week wrapped up with losses, taking the sector to -3.4% YTD. Component NVIDIA (NVDA 40.98, +5.41 +15.21%) performed the best today on the back of a better than expected Q1 report and Q2 revenue guidance. Other names in the space which ended modestly lower with the sector included TDC -3.26%, WDC -2.53%, XRX -2.27%, TEL -1.67%, YHOO -1.49%, SWKS -1.48%, V -1.36%, FISV -1.32%, APH -1.29%, AKAM -1.23%, FSLR -1.08%.
Other notable news items among sector components:
Skyworks (SWKS 60.75, -0.91 -1.48%) appointed Liam Griffin as CEO. Current CEO David Aldrich will continue as the chairman.
Apple (AAPL 90.52, +0.18 +0.20%) plans to invest $1 billion in China ride sharing company Didi.
In addition to reporting quarterly results, Symantec (SYMC) reduced their quarterly dividend to $0.075 from $0.15 per share.
IBM (IBM 147.72, -1.18 -0.79%) announced data analytics and consumer insights provider, evolve24, is adopting IBM Cloud to host its neuroscience omni-channel data analytics platform for improved performance and scalability.
Oracle (ORCL 39.61, -0.22 -0.55%) announced an increasing number of hospitals and healthcare systems worldwide are choosing Oracle Enterprise Resource Planning (ERP) Cloud to help increase productivity, lower costs, and improve controls. Adventist Health, Family Health, Presbyterian Medical Services, and Southern New Hampshire Health are just a few of the more than 1,800 organizations that have recently turned to Oracle ERP Cloud.
Elsewhere in the tech space:
SeaChange (SEAC 3.35, -0.02 -0.59%) acquired DCC Labs for $8 million in cash and stock, closed May 9. The transaction is expected to be accretive in fiscal 2017.
Advanced Micro (AMD 3.67, +0.08 +2.23%) appointed John Caldwell as Chairman, succeeding Bruce Claflin.
SunEdison (SUNEQ 0.17, -0.00 -0.52%) provided Chief Administration Officer, Chief Accounting Officer and Chief Financial Officer Brian Wuebbels a formal 30-day notice of the termination of his employment.
Hackett Group (HCKT 14.68, +0.23 +1.59%) increased its existing buyback by $5 million for total of $8.1 million share repurchase program.
ON Semiconductor (ON 8.95, -0.02 -0.22%) and Fairchild Semi (FCS 19.86, -0.03 -0.15%) extended their previously announced $20.00 per share cash tender offer to purchase all of the outstanding shares until May 26.
Tyler Tech's (TYL 149.33, +1.22 +0.82%) Board authorized the repurchase of up to an additional 1.5 million shares of common stock, bringing the total authorization to 2.1 million shares.
Intricon (IIN 5.29, -0.20 -3.64%) announced and priced a 700,000 share public offering of common stock at $5.25 per share.
In reaction to quarterly results:
NVIDIA (NVDA) reported better than expected Q1 EPS and revenues of $0.46 and $1.3 billion, respectively. Further, the company guided Q2 revenues ahead of expectations at about $1.35 billion (plus or minus about 2% which equates to about $1.323-1.377 billion).
Symantec (SYMC) issued in-line guidance for Q1 EPS of $0.24-0.26 and revenues of 3-6%. They noted expectations for Q2 revenue growth and margins to be similar to Q1 and improve in the second half of 2017 as they benefit from the deferred revenue tailwind of more ratable revenue and start to see results from their efficiency program. The company also issued in-line guidance for FY17 EPS of $1.06-1.10.
Bitauto Holdings (BITA 21.44, -3.12 -12.70%) reported worse than expected Q1 EPS of $0.07 on better than expected revenues which rose 48.5% versus last year to $168 million. Additionally, BITA guided Q2 revenues ahead of expectations at $209.4-217.1 million.
Luxoft Holding (LXFT 61.19, +2.89 +4.96%) reported better than expected Q4 EPS and revenues of $0.56 and $169.2 million, respectively. The company also guided FY17 EPS worse than expectations at at least $2.85, but guided revenues for FY17 ahead of expectations at at least $780.9 million.
Companies to be aware of that report on Monday: Premarket - LEJU, VRTU; After-hours - A, SCOR, MXPT, XCOM
Analyst actions:
NVDA was upgraded to Buy at Topeka Capital Mkts and Roth Capital,
CYBR and NOK were upgraded to Buy from Neutral at BofA/Merrill;
WDC was downgraded to Underperform from Neutral at BofA/Merrill,
TXTR was downgraded to Mkt Perform from Mkt Outperform at JMP Securities,
APPF was downgraded to Equal Weight from Overweight at Morgan Stanley,
SMGZY was downgraded to Hold from Buy at Jefferies;
VECO was initiated with an Overweight at Pacific Crest,
CREE was initiated with a Sector Weight at Pacific Crest,
ANET was initiated with a Neutral at JP Morgan,
SSNC was initiated with an Outperform at RBC Capital Mkts,
NEWR was initiated with a Neutral at Robert W. Baird
11:44 am NVIDIA (+13%) breaks out to new all time highs following beat and raise report (NVDA) : Topeka and ROTH upgraded the stock to Buy this morning.
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