From Briefing.com: 4:10 pm : The stock market ended the Wednesday affair on a flat note as the major averages rebounded from opening weakness. Additional factors for today's trade included a reversal in crude oil, weakness in the dollar, mixed economic data, and the outperformance of the heavily-weighted financial (+0.3%) and health care (+0.4%) sectors. The Nasdaq Composite (+0.1%) ended its day in-line with the S&P 500 (+0.1%) and ahead of the Dow Jones Industrial Average (UNCH).
Today's session started on a lower note as equity futures responded to a negative bias in international bourses. Overnight, Japan's Nikkei (-1.6%) led the retreat after Prime Minister Shinzo Abe announced that he would delay the next sales tax hike until 2019. Prime Minister Abe also stated that he would unveil a new fiscal stimulus package in the fall. Meanwhile, tepid readings from China's May Caixin Manufacturing PMI (49.2; consensus 49.3) and German Manufacturing PMI for May (52.1; consensus 52.4) added to the shaky start.
Equity indices climbed off their opening lows as investors examined a strong reading of the ISM Service Index for May (51.3; Briefing.com consensus 50.4). However, April Construction Spending (-1.8%; Briefing.com consensus +0.5%) missed estimates, but contained a positive revision to the March reading (to 1.5% from 0.3%). The major averages climbed through the afternoon as a reversal in crude oil bolstered the move higher in equities. WTI crude ended its day lower by 0.1% at $49.06/bbl.
Seven sectors finished in the green as consumer staples (+0.7%), health care (+0.4%), financials (+0.3%), and materials (+0.3%) led the pack. Conversely, telecom services (-1.0%), technology (-0.3%), and consumer discretionary (-0.1%) rounded out the board.
In the consumer staples sector (+0.7%), household product names displayed relative strength with Colgate-Palmolive (CL 71.20, +0.79) and Estee Lauder (EL 92.99, +1.21) gaining 1.1% and 1.3%, respectively. Elsewhere, Costco (COST 152.52, +3.75) outperformed after receiving an upgraded to "Buy" from "Neutral" at Goldman Sachs.
Generic drug names sported the largest gains in the health care space (+0.4%). Mylan Labs (MYL 44.46, +1.12) led the group after it reported that it will launch generic versions of Cephalon's Nuvigil and Mayne's Doxteric medications. Elsewhere, Valeant Pharmaceuticals (VRX 29.79, +1.34) jumped 4.7% after announcing that it will release its quarterly report on June 7.
In the financial sector (+0.3%), money center banks demonstrated relative strength as the sub-group moved higher in sympathy with JPMorgan Chase (JPM 65.69, +0.42). The company gained 0.6% after it raised its second-quarter trading revenue guidance. Conversely, real estate investment trusts (REITs) with primary holdings in residential properties underperformed. Equity Residential (EQR 66.37, -2.84) fell 4.1% after lowering its second-quarter revenue growth estimates to 4.0-4.5% (from 4.5-5.0%).
Automotive names underperformed in the consumer discretionary space (-0.1%) as Ford (F 13.11, -0.38) and General Motors (GM 30.22, -1.06) fell 2.8% and 3.4%, respectively. The two companies reported disappointing May sales. AutoNation (AN 49.67, -0.77) and CarMax (KMX 52.09, -1.57) ticked lower in sympathy with the names. Separately, Demandware (DWRE 74.81, +26.82) rallied 55.9% after Salesforce.com (CRM 83.45, -0.26) announced that it would acquire the company for $75.00 per share in cash, or approximately $2.8 billion.
The U.S. Dollar Index (95.42, -0.47) ended near its session low as the euro and the yen extended their gains against the greenback. The euro/dollar pair finished higher by 0.5% (1.1190) while the dollar lost 1.1% against the yen (109.57).
The Treasury complex ended on a mixed note with the yield on the 10-yr note flat at 1.84%. Meanwhile, the yield on the 2-yr note rose two basis points to 0.89%.
Today's volume was above the recent average as more than 880 million shares changed hands on the NYSE floor.
Today's economic data included the MBA Mortgage Index, ISM Service Index for May, and Construction Spending for April:
The weekly MBA Mortgage Index showed a seasonally adjusted decline of 4.1% in mortgage applications.
The ISM Manufacturing Index for May checked in at 51.3. That was up from 50.8 in April and was ahead of the Briefing.com consensus estimate of 50.4.
The dividing line between expansion and contraction is 50.0, so May marked the third straight month of expansion for the manufacturing sector
The weakening dollar from earlier in the year and the spike in oil prices has offered some relief to the sector.
There was a nice headline surprise here then, with the improvement from April, yet a look under the hood didn't exactly reveal a manufacturing sector running on all cylinders.
Notably, the improvement in May was not a function of an increase in new orders, production, inventories, or the backlog of orders. Those indexes all declined from April.
In particular, the New Orders Index slipped from 55.8 to 55.7, the Production Index dropped from 54.2 to 52.6, the Inventories Index fell from 45.5 to 45.0, and the Backlog of Orders Index went from 50.5 to 47.0.
The main drivers of the uptick in May were the Prices Index, which jumped from 59.0 to 63.5, and the Customers' Inventories Index, which rose from 46.0 to 50.0.
The indexes for employment, new export orders, and imports were all unchanged.
Construction spending declined 1.8% month-over-month in April, which created a jarring headline surprise given the understanding that the Briefing.com consensus estimate called for a 0.5% increase.
Part of the headline disappointment, though, can be attributed to the large upward revision for March.
Specifically, it was reported that construction spending in March increased 1.5% after it was previously reported to be up just 0.3%.
That upward revision stemmed from positive revisions for both private (from 1.1% to 2.3%) and public (from -1.9% to -0.6%) spending.
That should help somewhat when the third estimate for Q1 GDP is released, especially since February also saw an upward revision to 1.4% from 1.0%.
Conversely, the decline in construction spending in April stands as a negative input for Q2 GDP forecasts.
The spending activity for April featured a 1.5% decline in private construction and a 2.8% decline in public construction.
The drop in private construction was accented by a 1.5% decline in residential construction and a 1.5% decline in nonresidential construction, which was weighed down by a 1.5% drop in manufacturing and a 3.6% decline in both commercial and health care.
In terms of public construction, the biggest weights there were highway and street and educational, which declined 6.6% and 2.5%, respectively.
On a year-over-year basis, total construction spending is up 4.5%, with private construction up 5.7% and public construction up 1.2%.
Tomorrow's economic data will include the Challenger Job Cuts for May and the May ADP Employment Change Report (Briefing.com consensus 180k), which will be released at 7:30 ET and 8:15 ET, respectively. Meanwhile, weekly initial claims (Briefing.com consensus 268k) will cross the wires at 8:30 ET. DJ30 +2.47 NASDAQ +4.20 SP500 +2.37 NASDAQ Adv/Vol/Dec 1814/1.645 bln/1124 NYSE Adv/Vol/Dec 1987/880.5 mln/1008
3:30 pm :
The dollar index weakens in the afternoon, down -0.5% around the 95.40 level, boosting commodities
Commodities, as measured by the Bloomberg Commodity Index, are up +0.7% at 85.91
Crude oil exhibited notable volatility in pit trading, opening below $48.00/barrel and rallying near parity with the previous session's close ahead of tomorrow's OPEC meeting
July crude oil futures fell $0.04 (-0.1%) to $49.06/barrel
Due to the shortened week, weekly EIA petroleum inventory data is now scheduled to be released at 11:00 am ET on Thursday, 30 min after EIA natural gas data
Monthly IEA data is scheduled to be released on June 14
The next OPEC meeting is fast-approaching, scheduled to take place tomorrow in Vienna, Austria
API petroleum storage data is scheduled to be released today after the bell
Natural gas surges for the third consecutive session, buyoed by updated warmer weather forecasts signaling possible increases in near-term demand for natural gas
July natural gas closed $0.09 higher (+3.9%) at $2.38/MMBtu
EIA natural gas inventory data is scheduled to be released at its normal time this Thursday at 10:30 am ET
In precious metals, gold stages a modest afternoon rally off the $1209/oz level as the dollar lost momentum, closing lower on the day
August gold ended today's session down $2.80 (-0.2%) to $1214.70/oz
Reminder: Yesterday gold futures switched their front month to August from June, as indicated by the active amount of volume in the contracts
Silver sees a move similar to gold, rallying in the afternoon but closing lower on the day as the dollar experiences losses
July silver closed today's session $0.05 lower (-0.3%) at $15.93/oz
Base metal copper inches lower in afternoon pit trading
July copper closed $0.02 lower (-1.0%) at $2.07/lb
It was another relatively quiet day in the US equity marketsas the S&P 500 rose 0.1% and the Nasdaq 100 (QQQ) was flat. Strong ISMManufacturing data was offset by weaker Construction Spending while a reversalin crude oil ahead of tomorrow's OPEC meeting provided support to stocks.
The most notable story out of the technology sector was Salesforce.com's(CRM -0.3%) acquisition of Demandware (DWRE) at a 56% premium for $2.8 bln. The7x next year's sales multiple drew some eyebrows but many analysts haveapplauded the bold strategic move as the deal will only be mildly dilutive toFY17 operating margins. CEO Marc Benioff said it was a very competitive deal. DWREcompetes with Oracle (ORCL), SAP (SAP) and NetSuite (N). This was the secondsoftware deal in as many days after Marketo (MKTO) was taken private yesterday.
IDC sees worldwide smartphone shipments growing just 3.1% in2016 after growing 10.5% last year and 28% in 2014. Apple (AAPL -1.4%) fell for the second day in a row afterNikkei reported the iPhone won't see any major enhancements until next year. Thenext iPhone is expected to be out in September.
Alibaba (BABA -6.5%) fell through its 50 day mobbing average after Softbank said it was reducing its staketo 28%. BABA is buying $2 bln in shares from the Japanese conglomerate.
Other headlines from the technology sector came from the thirdannual Code Conference.
Amazon CEO Jeff Bezos gave an interview last night. Interestingly,he said that 1000 people at Amazon are working on the popular artificial intelligenceproject dubbed Alexa.
Facebook (FB) COO Sheryl Sandberg said she is not interestedin the being the next CEO of Walt Disney (DIS). Some have speculated she wouldemerge from Mark Zuckerburg's shadow for that coveted role as CEO Bob Iger's successoris currently up in the air.
Saudi Arabia invested a whopping $3.5 bln in Uber at a $62.5bln valuation. The ride-sharing behemoth operates in 69 countries.
Broker calls:
Axiom downgraded Cimpress (CMPR) to Sell
Sidoti downgraded Daktronics to Neutral
In the after hours:
Box (BOX) is down 8% after the company beats quarterly salesand reported a smaller than expected net loss but missed billings estimates(growing only 9%). Box reaffirmed its goal to be FCF positive by Q4.
Guidewire (GWRE) is up 5% after beating Q estimates andguiding Q4 in-line
Looking ahead, networking company Ciena (CIEN) will reporttomorrow morning while chip giant Broadcom (AVGO) and will report tomorrow afternoon.
It was another relatively quiet day in the US equity marketsas the S&P 500 rose 0.1% and the Nasdaq 100 (QQQ) was flat. Strong ISMManufacturing data was offset by weaker Construction Spending while a reversalin crude oil ahead of tomorrow's OPEC meeting provided support to stocks.
The most notable story out of the technology sector was Salesforce.com's(CRM -0.3%) acquisition of Demandware (DWRE) at a 56% premium for $2.8 bln. The7x next year's sales multiple drew some eyebrows but many analysts haveapplauded the bold strategic move as the deal will only be mildly dilutive toFY17 operating margins. CEO Marc Benioff said it was a very competitive deal. DWREcompetes with Oracle (ORCL), SAP (SAP) and NetSuite (N). This was the secondsoftware deal in as many days after Marketo (MKTO) was taken private yesterday.
IDC sees worldwide smartphone shipments growing just 3.1% in2016 after growing 10.5% last year and 28% in 2014. Apple (AAPL -1.4%) fell for the second day in a row afterNikkei reported the iPhone won't see any major enhancements until next year. Thenext iPhone is expected to be out in September.
Alibaba (BABA -6.5%) fell through its 50 day mobbing average after Softbank said it was reducing its staketo 28%. BABA is buying $2 bln in shares from the Japanese conglomerate.
Other headlines from the technology sector came from the thirdannual Code Conference.
Amazon CEO Jeff Bezos gave an interview last night. Interestingly,he said that 1000 people at Amazon are working on the popular artificial intelligenceproject dubbed Alexa.
Facebook (FB) COO Sheryl Sandberg said she is not interestedin the being the next CEO of Walt Disney (DIS). Some have speculated she wouldemerge from Mark Zuckerburg's shadow for that coveted role as CEO Bob Iger's successoris currently up in the air.
Saudi Arabia invested a whopping $3.5 bln in Uber at a $62.5bln valuation. The ride-sharing behemoth operates in 69 countries.
Broker calls:
Axiom downgraded Cimpress (CMPR) to Sell
Sidoti downgraded Daktronics to Neutral
In the after hours:
Box (BOX) is down 8% after the company beats quarterly salesand reported a smaller than expected net loss but missed billings estimates(growing only 9%). Box reaffirmed its goal to be FCF positive by Q4.
Guidewire (GWRE) is up 5% after beating Q estimates andguiding Q4 in-line
Looking ahead, networking company Ciena (CIEN) will reporttomorrow morning while chip giant Broadcom (AVGO) and will report tomorrow afternoon.
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