From Briefing.com: 4:13 pm Cisco Systems beats by $0.02, reports revs in-line; guides Q4 EPS above consensus, rev in-line/mostly above estimates (CSCO) : Reports Q3 (Apr) earnings of $0.57 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.55; revenues fell 1.1% year/year to $12 bln vs the $11.95 bln Capital IQ Consensus with product revenue up 1% and service revenue up 11%. Revenue by geographic segment was: Americas up 4%, EMEA down 2%, and APJC up 10%. Product revenue growth was led by Security, Collaboration and SP Video which increased by 17%, 10% and 18%, respectively. Wireless and Data Center each increased by 1%, while Switching and NGN Routing decreased by 3% and 5%, respectively. Non-GAAP total gross margin and product gross margin were 65.2% and 64.5%, respectively. The non-GAAP product gross margin was unchanged compared to the third quarter of fiscal 2015 as continued productivity improvements were offset by pricing and to a lesser extent product mix; non-GAAP service gross margin was 67.1%.Co issues guidance for Q4, sees EPS of $0.59-0.61, excluding non-recurring items, vs. $0.58 Capital IQ Consensus; sees Q4 revs +0-3% (ex-divested SP Video CPE Business) to ~$12.36-12.73 bln vs. $12.43 bln Capital IQ Consensus Estimate.
4:08 pm TerraForm Global receives notification letter from Nasdaq indicating firm remains delinquent in filing form 10-K, firm has until May 31 to submit plan to regain compliance with listing requirements (GLBL) :
4:15 pm : The stock market ended the Wednesday affair on a flat note as the major averages rebounded following a hawkish reading of the FOMC's April minutes. Other focal points of today's action included continued weakness from the retail sub-group, a rebound in the dollar, and the outperformance of the heavily-weighted financial (+1.9%), technology (+0.5%), and health care (+0.3%) groups. The Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (UNCH) and the Dow Jones Industrial Average (UNCH).
The major averages began their day on a choppy note as overseas indices responded to raised expectations regarding the timing and speed of interest rate normalization in the U.S. Meanwhile, a weaker-than-expected outlook from Target (TGT 67.84, -5.77) pressured the retail sub-group and big box names. However, equities recovered from their opening-hour weakness as strength from the oil patch extended into the broader market.
Equity indices climbed through the afternoon as support from oil and the heavyweight financial (+1.9%), technology (+0.5%), and health care (+0.3%) spaces bolstered the broader market. The major averages notched session highs shortly before the release of the FOMC Minutes from the April meeting.
The minutes from the April FOMC meeting indicated that a June rate hike remains wholly on the table. The committee did note that it would continue to assess incoming economic data and whether it was consistent with the Fed's dual mandate. As a result, the fed funds futures market ended the day with a 33.8% likelihood of a rate hike at the June meeting, compared to yesterday's 15.0% probability.
Seven sectors ended in the red with utilities (-1.9%), materials (-1.5%), telecom services (-1.4%) and consumer staples (-1.0%). Conversely, the heavyweight financial (+1.9%), technology (+0.5%), and health care (+0.3%) groups finished with the only gains.
In the financial sector (+1.9%), money center banks demonstrated relative strength as the group responded to the increased likelihood of an interest rate hike in the short term. Bank of America (BAC 14.69, +0.68) and Citigroup (C 45.87, +2.17) ended with gains of 4.9% and 5.0%, respectively. Conversely, interest-rate sensitive real estate investment trusts (REITs) underperformed in the space.
The high-beta chipmakers outperformed in the technology space (+0.5%), evidenced by the 1.6% gain in the PHLX Semiconductor Index. Micron Technology (MU 10.05, +0.38) and Cavium Networks (CAVM 47.77, +1.30) finished at the top of the price-weighted index. In the broader sector, Apple (AAPL 94.56, +1.07) gained 1.1% after announcing it would establish a Design and Development Accelerator in Bengaluru, India.
In the health care space (+0.3%), biotechnology outperformed, evidenced by the 1.4% gain in the iShares Nasdaq Biotechnology ETF (IBB 262.77, +3.60). The ETF sports a loss of 1.9% for the month of May.
Big box names weighed in the consumer staples space (-1.0%) as the group traded lower with consumer discretionary (-0.6%) name Target. The company disappointed investors with its guidance, but topped bottom-line estimates for the quarter. Elsewhere, Wal-Mart (WMT 63.15, -1.95) lost 3.0% ahead of tomorrow morning's earnings report.
A downturn in Treasuries weighed on the interest-rate sensitive utilities (-1.9%) sector as yields rose throughout the complex. The yield on the 10-yr note ended its day higher by seven basis points at 1.85%.
The Dollar Index (95.22, +0.67) spiked following the release of the FOMC minutes, which could breathe new life into the policy divergence trade. The euro/dollar pair ended lower by 0.9% (1.1216) while the dollar/yen pair finished at 110.22 (+1.0%).
Today's volume on the NYSE floor came in below the recent average with fewer than 758 million shares changing hands. However, a trading unit at the NYSE experienced technical issues, which temporarily suspended trading in 199 symbols.
Today's economic data was limited to the weekly MBA Mortgage Index:
The weekly MBA Mortgage Index showed a seasonally adjusted decrease of 1.6% in mortgage applications.
Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 278k) and the Philadelphia Fed Survey for May (Briefing.com consensus 2.7), which will both cross the wires at 8:30 ET. Finally, April Leading Indicators (Briefing.com consensus 0.3%) will be released at 10:00 ET.
Nasdaq Composite -5.4% YTD
Russell 2000 -3.1% YTD
S&P 500 +0.2% YTD
Dow Jones +0.6% YTD
DJ30 -3.36 NASDAQ +23.39 SP500 +0.42 NASDAQ Adv/Vol/Dec 1838/1.77 bln/1228 NYSE Adv/Vol/Dec 1044/758.4 mln/1977
3:30 pm :
The dollar index sees a notable afternoon spike after the release of the Fed Minutes stating a June rate hike is on the table, index is up +0.6% around the 95.14 level
Commodities, as measured by the Bloomberg Commodity Index, are down -0.4% at 85.40
Crude oil closes lower following the release of EIA storage data that showed an unexpected build compared to estimates for a draw
June crude oil futures fell $0.15 (-0.3%) to $48.15/barrel
Crude oil inventories had a build of +1.31 mln (consensus called for a draw of about -2.7 mln)
Gasoline inventories had a draw of -2.496 mln
Distillate inventories had a draw of -3.17 mln
Contributing factors affecting the price of oil include:
Goldman Sachs has made bullish comments about WTI crude, suggesting the oil market has gone to a supply deficit situation
Nigerian supply concerns after Nigerian output has been curtailed substantially on unrest there
Venezuelan oil production concerns amid political instability in the region
Oil investor T. Boone Pickens believes supply & demand are now balanced, expects $50-$60/barrel oil prices as early as 2 months from now
API inventory data released yesterday after the bell showed a build of +3.5 mln barrels compared to expectations for a draw of about -3.2 mln barrels
The next OPEC meeting is scheduled to take place on June 2, 2016
Natural gas declines for the fourth consecutive trading session, closing near the lows of the day
June natural gas closed $0.05 lower (-2.4%) at $2.00/MMBtu
EIA natural gas inventory data is scheduled to be released tomorrow at 10:30 am ET
In precious metals, gold plunges to finish pit trading at fresh lows of the day
June gold ended today's session down $2.00 (-0.2%) to $1274.60/oz
Silver moved in tandem with gold, finishing at fresh lows of the day in afternoon pit trading
July silver closed today's session $0.10 lower (-0.6%) at $17.14/oz
Base metal copper continues its initial morning decline in afternoon pit trading
July copper closed $0.01 lower (-0.5%) at $2.08/lb
Equity indices began the session under pressure as global bourses followed U.S. futures lower overnight. The negative bias in equities can be attributed to yesterday's hawkish remarks from a string of FOMC members. Taken as a whole, the group emphasized that a June rate hike remains on the table. Additionally, disappointing guidance from Target (TGT 68.00, -5.61 -7.62%) weighed on big box names and the already beleaguered retail sub-group.
The major averages shook early weakness as investors shifted their attention toward the latest inventory data from the Department of Energy. The results were mixed with crude oil inventories (+1.31 million barrels) missing the mark while gasoline inventories (-2.49 million barrels) showed a larger-than-expected draw. As a result, traders momentarily stymied the advance in oil with the energy component ultimately ending lower, down -0.3% to $48.15/barrel.
Wednesday trade rebounded from yesterday's weakness as a pullback following the April Fed minutes took stocks lower, but the three major indices ended split. The tech-heavy Nasdaq Composite added 23.39 points (+0.50%) today to end 4739.12. The S&P 500 closed up less than a point (+0.02%) to 2047.63. The Dow Jones Industrial Average was down 3.36 points (-0.02%) to 17526.62. The April Fed Minutes were released today, and highlights from the comments held that the Fed is leaving open the possibility of an increase to the federal funds rate at the June FOMC meeting.
Economic data, save the Fed minutes, was limited today to the weekly MBA Mortgage Index which showed a seasonally adjusted decline of 1.6% in mortgage applications.
Technology (XLK 42.45, +0.12 +0.28%) for its part closed the session modestly higher as gains were cut following the Fed, but the sector was able to climb out of the red. Component Salesforce.com (CRM 77.87, +1.10 +1.43%) was modestly higher today ahead of the company's latest quarterly print, which is scheduled for release after the closing bell tonight. Other sectors as measured by the S&P ended the session split with XLF +1.75%, IYZ +1.22%, XLV +0.42%, XLI -0.34%, XLY -0.58%, XLE -0.96%, XLP -1.16%, XLB -1.53%, XLU -1.87% as Financials ended at the top and Utilities were pressured.
Semis (SOX 649.36, +10.47 +1.64%) were a notable standout today as names like MU +3.93%, QRVO +3.03%, ARMH +2.93%, ON +2.91%, CAVM +2.80%, NXPI +2.69%, NVDA +2.55%, TSM +2.48% puffed a collective chest and ended in the green. Component Analog Devices (ADI 55.82, +0.45 +0.81%) released its latest quarterly numbers ahead of the open this morning, and beat on both the top and bottom lines of expectations, much to the delight of investors. The company did guide Q3 EPS and revenues worse than expected, but the overall out-performance of the group kept the name in the green.
In the S&P 500 Information Technology (703.01, +3.63 +0.52%) sector, Wednesday jostling ultimately ended with gains. Names like STX +3.08%, SWKS +2.02%, AVGO +1.92%, EBAY +1.80%, FFIV +1.72%, QCOM +1.54%, AMAT +1.43%, LLTC +1.24%, MCHP +1.15%, AAPL +1.14%, LRCX +1.13%, NTAP +1.02%, TXN +1.01%, XLNX +0.92% resisted the Fed minutes sell-off and ended with gains.
Other notable news items among sector components:
Apple (AAPL 94.56, +1.07 +1.14%) announced a new initiative to support engineering talent and accelerate growth in India's iOS developer community. The company will establish a Design and Development Accelerator in Bengaluru, the home of India's startup scene.
Fiserv (FISV 102.46, -0.69 -0.67%) announced that Bangkok Bank Public Company Limited, a leading Thai bank with about 17 million customer accounts, is making financial services faster and easier with new mobile banking functionality.
Microsoft (MSFT 50.81, +0.30 +0.59%) reached an agreement to sell the company's entry-level feature phone assets to FIH Mobile Ltd., a subsidiary of Hon Hai/Foxconn Technology Group (HNHPF 4.59, flat), and HMD Global, Oy for $350 million.
Castlight Health (CSLT 4.05, +0.85 +26.56%) announced a strategic alliance with SAP (SAP 77.52, +0.56 +0.73%). SAP acquired shares and warrants from CSLT.
SAP (SAP) and UPS (UPS 101.30, +0.21 +0.21%) to partner to simplify industrial on-demand manufacturing through end-to-end 3D printing innovation.
Elsewhere in the tech space:
inContact (SAAS 13.83, +4.82 +53.50%) to be acquired by NICE (NICE 66.56, +2.75 +4.31%) for $14.00 per share in cash.
Inteliquent (IQNT 16.32, -0.27 -1.63%) acquired Shopety for $4.4 million.
KEYW Holding (KEYW 8.39, +0.53 +6.74%) sold its HawkEye G product line business of Hexis Cyber Solutions. The combined deal value along with a previously announced sale totals about $20 million in cash and purchaser stock.
Nxt-ID (NXTD 0.39, +0.06 +18.45%) entered into a purchase agreement to acquire 100% membership interests in LogicMark for $20 million in cash.
Gogo (GOGO 9.67, +0.12 +1.26%) commenced a $500 million offering of senior secured notes due 2022.
Novanta (NOVT 14.88, -0.02 -0.13%) to acquire Reach Technology. Financial terms of the deal were not disclosed.
RealPage (RP 21.34, +0.29 +1.38%) acquired AssetEye for $4.8 million. RP noted the deal is not expected to have a material impact to its 2016 financial performance.
Synopsys (SNPS 48.36, +0.58 +1.21%) acquired Simpleware. Financial terms of the deal were not disclosed
Mercury (MRCY 20.04, +0.04 +0.20%) received a $4.2 million follow-on order from a defense prime contractor for digital signal processing modules for an unmanned airborne synthetic aperture radar application.
GoDaddy (GDDY 30.48, +0.68 +2.28%) acquired FreedomVoice for $42 million in cash plus up to $5 million in potential future milestones payments.
ARM Holdings (ARMH 41.06, +1.17 +2.93%) acquired Apical for $350 million. The company noted the deal closed on May 17.
In reaction to quarterly results:
Analog Devices (ADI) reported better than expected Q2 EPS of $0.64 on in-line revenues which fell 5.1% versus last year to $778.8 million. The company also guided Q3 EPS at the midpoint of expectations at $0.66-0.74 with revenues expected to come in light at $800-840 million.
Booz Allen Hamilton (BAH 28.94, +1.43 +5.20%) reported in-line Q4 EPS of $0.41 with better than expected revenues which rose 6.1% versus last year to $1.42 billion. BAH also issued in-line guidance for FY17 EPS of $1.65-1.75.
Acxiom (ACXM 19.67, -2.71 -12.11%) reported better than expected Q4 EPS and revenues of $0.18 and $224.66 million, respectively. ACXM also guided FY17 EPS and revenues worse than expected at $0.55 to slightly higher, and $870-890 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: CSCO, CRM, SNPS, TTWO, WSTL/CMCM, HQCL
Analyst actions:
SNX was upgraded to Outperform from Underperform at Raymond James;
SAAS was downgraded to Hold from Buy at Lake Street and to Hold from Buy at Summit Research;
BATS was initiated with a Hold at Deutsche Bank,
BBRY was initiated with an Underperform at Macquarie,
CLS and SHOP were initiated with an Outperform at Macquarie,
XTLY was initiated with a Buy at Lake Street,
BRCD was initiated with a Buy at BofA/Merrill
10:13 am Semiconductor Hldrs ETF continues to provide relative strength (SMH) : Noted earlier that Semi SMH / XSD was displaying relative strength with the recent following through in the SMH setting a new high for the week at 52.84 near its 50 day ema and May peak at 52.89/52.92 -- MU +5.7%, AMD +3.6%, MRVL +2.6%, CRUS +2.5%, NVDA +2%, AVGO +1.7%, LSCC +1.4%, TER +1.4%, MCHP +1.2%, TSM +1.1%.
8:04 am Analog Devices beats by $0.02, reports revs in-line; guides Q3 EPS midpoint below consensus, revs below consensus (ADI) :
Reports Q2 (Apr) earnings of $0.64 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus of $0.62; revenues fell 5.1% year/year to $778.8 mln vs the $777.65 mln Capital IQ Consensus. Co issues downside guidance for Q3, sees EPS of $0.66-0.74, excluding non-recurring items, vs. $0.74 Capital IQ Consensus Estimate; sees Q3 revs of $800-840 mln vs. $840.44 mln Capital IQ Consensus Estimate."Looking ahead, stable order flows in the B2B markets lead us to plan for a largely seasonal third quarter in these markets, and for sequential revenue growth to resume in the consumer market.
Importantly for ADI, we expect our B2B markets, in the aggregate, to grow in the mid-to-high single digits on a year-over-year basis in the third quarter."
7:51 am NXP Semi announces intention to offer senior unsecured notes due 2021 & senior unsecured notes due 2023 for total proceeds of $1.0 bln pursuant to Rule 144A & Regulation S
(NXPI) : The co intends to use the net proceeds from the offering of the notes and cash on hand to repay $500 mln aggregate principal amount of its existing secured term loan B due 2020 and $500 mln aggregate principal amount of its outstanding senior secured notes due 2021.
6:04 am Photronics reports EPS in-line, misses on revs; guides Q3 EPS in-line, revs below consensus (PLAB) :
Reports Q2 (Apr) earnings of $0.13 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.13; revenues fell 3.5% year/year to $122.9 mln vs the $125.54 mln Capital IQ Consensus. Co issues guidance for Q3, sees EPS of $0.10-0.18 vs. $0.17 Capital IQ Consensus Estimate; sees Q3 revs of $118-128 mln vs. $132.91 mln Capital IQ Consensus Estimate.
4:36 am ARM Holdings acquires Apical for $350 mln, acquisition closed on May 17 (ARMH) :
ARM has acquired the entire share capital of Apical, an imaging and embedded computer vision intellectual property products for a cash consideration of $350 mln
The acquisition accelerates the ARM ecosystem's growth into new markets such as connected vehicles, robotics, smart cities, security systems, industrial/retail applications and Internet of Things devices.Apical technology extends ARM's product portfolio in existing markets such as smartphones and cameras.
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