From Briefing.com: Weekly Recap - Week ending 24-Jun-16 The stock market gallivanted higher though the first four days of the week, but the upbeat attitude dissipated on Thursday evening after it became clear that the British referendum on membership in the European Union ended with a 51.9% victory for the 'Leave' camp. The resulting Friday selloff sent the S&P 500 lower by 3.6%. The index slid below its 50-day moving average (2080), surrendering 1.6% for the week.
Although the weekly decline in the S&P 500 did not look particularly concerning, the moves that unfolded in the foreign exchange market caught the attention of many.
The final set of polls released ahead of the referendum pointed to a growing edge for the 'Remain' camp, which lulled some market participants into a false sense of security. The pound notched a fresh six-month high against the dollar at 1.5018, but reversed in a flash after actual results began pouring in.
The first signs of an impending reversal in the foreign exchange market began appearing around 18:00 ET on Thursday when the pound started backing away from its high. This took place after it was reported that the 'Remain' camp secured just a slight victory in Newcastle, where status quo was expected to prevail by a large margin. Subsequent vote counts hinted at a much closer result than it was first expected, which invited risk-off positioning into capital markets.
At its lowest point, the pound was down nearly 11.0% against the dollar, but that decline was narrowed to 8.0% by the end of Friday. The volatility left the pound down more than 1,000 pips versus the dollar for the day, which is a move that would be expected to unfold over a few weeks under typical conditions.
U.S. Treasuries surged in reaction to the developments, pressuring the 10-yr yield to 1.40%--its lowest level since mid-2012.
The defensive finish to the week weighed on rate hike expectations, and the fed funds futures market now sees a higher chance of a rate cut in July (7.2%), September (7.2%), or November (7.0%) than that of a hike in November (1.9%). Looking farther out, the likelihood of a hike in February 2017 sits at a lowly 22.3%.
Index Started Week Ended Week Change % Change YTD %
DJIA 17675.16 17400.82 -274.34 -1.6 -0.1
Nasdaq 4800.34 4707.98 -92.36 -1.9 -6.0
S&P 500 2071.22 2037.31 -33.91 -1.6 -0.3
Russell 2000 1144.73 1124.80 -19.93 -1.7 -1.0
4:14 pm Closing Market Summary: U.S. Stocks Follow Global Bourses Lower Post-Brexit (:WRAPX) :
The major averages ended a tumultuous session on a sharply lower note, selling off after the United Kingdom surprised markets by voting to leave the European Union. The move had widespread implications throughout capital markets as the S&P 500 (-3.4%) tumbled 75 points, losing the most points since September 1, 2015. Today's trade featured a flight from risk assets, a bid in safe havens, and the underperformance of the heavily-weighted financial (-5.4%), technology (-4.3%), industrial (-4.0%), and consumer discretionary (-3.6%) sectors. The Nasdaq Composite (-4.1%) ended its day behind the S&P 500 (-3.6%) and the Dow Jones Industrial Average (-3.4%).
Global equity markets tumbled overnight as participants reacted to a surprise result from yesterday's Brexit vote. The "Leave" camp carried the referendum after receiving 51.9% of last night's vote. In response, European indices paced the retreat as investors looked ahead to the multi-year legal process of withdrawing the UK from the EU. Additionally, foreign exchange markets were in focus as the pound sank to a three-decade low (1.3231) against the dollar.
The major U.S. averages gapped lower at the beginning of the session as the heavyweight financial (-5.4%), technology (-4.3%), and industrial (-4.0%) sectors dragged on the broader market. To be fair though, all six cyclical sectors experienced heavy selling pressure as a flight from risk assets resulted in losses between 3.5% (energy) and 5.4% (financials). A downturn in crude oil added to the negative tenor as a rally in the buck weighed on the dollar-denominated commodity. For its part, WTI crude ended its pit session lower by 5.0% ($47.60/bbl; -$2.52). The S&P 500 (-3.6%) ended off its worst level of the day, but below prior technical support at the 2050 price level.
The economically-sensitive financial sector (-5.4%) moved lower in sympathy with European banking names as Deutsche Bank (DB 14.72, -3.12) experienced its largest daily point loss since 2008. Elsewhere, Lloyds Banking (LYG 3.33, -1.01) and Royal Bank of Scotland (RBS 5.43, -2.06) lost 23.3% and 27.5%, respectively. On the home front, Dow component Goldman Sachs (GS 141.86, -10.80) ended its day at the bottom of the price-weighted index. The broader sector fell 5.4% today, extending its yearly loss to 7.4%.
The high-beta chipmakers demonstrated relative weakness, evidenced by the 5.8% decline in the PHLX Semiconductor Index. The growth-sensitive group experienced pressure as Skyworks (SWKS 61.61, -5.60) plunged 8.3%. In the broader technology sector (-4.3%), large cap component Microsoft (MSFT 49.86, -2.05) fell 4.0%.
In the consumer discretionary space (-3.6%), retail names ended ahead of the broader sector as the SPDR S&P Retail ETF (XRT 41.10, -0.90) declined 2.1%. On the flipside, PVH (PVH 93.55, 9.19) fell 8.9% after the company reported that net revenue generated from inside the United Kingdom constituted 3.0% of its total net revenues. Separately, travel names weighed as large cap component Priceline (PCLN 1232.14) fell 11.4%.
The U.S. Dollar Index (95.48, +1.95) ended broadly higher as the euro and the pound finished with substantial losses against the buck. The euro/dollar pair declined 2.4% (1.1111) while sterling plunged 8.1% against the dollar (1.3676).
The Treasury complex settled off its session high as the yield on the 10-yr note finished lower by 17 basis points at 1.57%.
Today's participation was above the recent average as more than 1.1 billion shares changed hands on the NYSE floor. The Russell 2000 (-3.7%) likely contributed to the increased volume ahead of this evening's annual rebalancing.
Today's economic data was limited to Durable Orders for May and the final reading of Michigan Consumer Sentiment for May:
The advance report on durable goods disappointed as new orders declined 2.2% month-over-month (Briefing.com consensus -0.6%) while orders excluding transportation declined 0.3% (Briefing.com consensus +0.1%).
The disappointment is deep-seated for several reasons.
First, orders declined in almost every category.Secondly, business investment continued to flag, evidenced by a 0.7% decline in new orders for nondefense capital goods excluding aircraft, which followed a 0.4% decline in April.Third, shipments of nondefense capital goods excluding aircraft, which factor into the GDP report, were down 0.5%, reversing most of a 0.6% increase in April.
On a year-over-year basis, new orders excluding transportation are down 0.5% while orders for nondefense capital goods excluding aircraft are down 3.5%.
The decline in May featured a 34.1% drop in orders for defense aircraft and parts. Overall, though, new orders for transportation equipment declined 5.6%, led by a 2.8% drop in orders for motor vehicles and parts.Some other prominent order declines were seen in primary metals (-1.4% after a 0.7% decline in April), fabricated metal products (-0.3% after a 3.6% increase in April), machinery (-0.2% after a 2.0% decline in April), electrical equipment, appliances, and components (-0.1% after a 0.2% decline in April).The final reading for the University of Michigan Consumer Sentiment Survey revealed a dip to 93.5 from the preliminary reading of 94.3. The Briefing.com consensus estimate was pegged at 94.0.
The final reading for June was below the final reading of 94.7 for May and below the 96.1 reading seen for June 2015.
It was said in the release that consumers were a bit less optimistic in late June due to rising concerns about prospects for the U.S. economy.
Those concerns showed up in the Index of Consumer Expectations, which slipped to 82.4 from 84.9 in May.
The Current Economic Conditions Index actually ticked up to 110.8 from 109.9. That is the highest reading for this index since January 2007.Separately, consumers' inflation expectations for the next 12 months were left unchanged at 2.4%.Monday's economic data will be limited to the International Trade in Goods Report for May, which will be released at 8:30 ET.
Nasdaq Composite - 6.0% YTD
Russell 2000 -0.7% YTD
S&P 500 -0.3% YTDDow Jones -0.1% YTD Week in Review: Brexit Spoils Bull Party
The stock market gallivanted higher though the first fourdays of the week, but the upbeat attitude dissipated on Thursday evening afterit became clear that the British referendum on membership in the European Unionended with a 51.9% victory for the 'Leave' camp. The resulting Fridayselloff sent the S&P 500 lower by 3.6%. The index slid below its 50-daymoving average (2080), surrendering 1.6% for the week.
Although the weekly decline in the S&P 500 did not lookparticularly concerning, the moves that unfolded in the foreign exchange marketcaught the attention of many.
The final set of polls released ahead of the referendumpointed to a growing edge for the 'Remain' camp, which lulled some marketparticipants into a false sense of security. The pound notched a freshsix-month high against the dollar at 1.5018, but reversed in a flash afteractual results began pouring in.
The first signs of an impending reversal in the foreignexchange market began appearing around 18:00 ET on Thursday when the pound startedbacking away from its high. This took place after it was reported that the 'Remain'camp secured just a slight victory in Newcastle, where status quo was expectedto prevail by a large margin. Subsequent vote counts hinted at a much closerresult than it was first expected, which invited risk-off positioning into capitalmarkets.
At its lowest point, the pound was down nearly 11.0% againstthe dollar, but that decline was narrowed to 8.0% by the end of Friday. The volatilityleft the pound down more than 1,000 pips versus the dollar for the day, which isa move that would be expected to unfold over a few weeks under typicalconditions.
U.S. Treasuries surged in reaction to the developments, pressuringthe 10-yr yield to 1.40%--its lowest level since mid-2012.
The defensive finish to the week weighed on rate hikeexpectations, and the fed funds futures market now sees a higher chance of a ratecut in July (7.2%), September (7.2%), or November (7.0%) than that of a hike inNovember (1.9%). Looking farther out, the likelihood of a hike in February 2017sits at a lowly 22.3%.
Today's session began on a higher note as U.S. equity futures traded higher lockstep with European bourses. Equity indices in the region displayed a bullish bias as investors responded to the final round of preliminary Brexit polls. The polling data indicated that the "Remain" camp leads the "Leave" faction. As a result, risk assets received a bid with a rally in the pound leading the move. Cable notched a new six-month high overnight, climbing to the 1.4950 price level.
Economic date today came in the form of the initial claims reading, which for the week ending June 18 fell by 18,000 from the prior week to 259,000. Continuing claims for the week ending June 11 decreased by 20,000 to 2.142 million. Further, new home sales declined 6.0% month-over-month in May to a seasonally adjusted annual rate of 551,000 from a downwardly revised 586,000 (from 619,000) in April. Also, the Conference Board reported a 0.2% decline in its Leading Economic Index for May.
The session was capped off with solid gains as stocks pushed to highs when the bell rang. Bullish action began to persist about a half hour before the close, and continued until the finish ahead of tonight's Brexit decision. The tech-heavy Nasdaq Composite led the way higher, advancing 76.72 points (+1.59%) to close 4910.04. The S&P 500 was up 27.87 points (+1.34%) to 2113.32 when the bell rang, and the Dow Jones Industrial Average finished above 18K, adding 230.24 points (+1.29%) to end 18011.07.
Technology (XLK 43.97, +0.59 +1.36%) posted impressive gains today as component Micron (MU 14.05, +1.33 +10.46%) was higher by % following two premarket upgrades at Nomura and Susquehanna. Other sectors as measured by the S&P closed the day XLF +2.10%, XLE +1.65%, XLB +1.54%, XLV +1.31%, XLI +1.16%, XLY +0.98%, XLP +0.61%, XLU +0.28% with Financials leading the charge and Utilities lagging, but still ending the day in the green.
In the S&P 500 Information Technology (727.30, +10.76 +1.50%) sector, trading ended near highs with components Red Hat (RHT 78.39, -1.36 -1.71%) and Accenture (ACN 118.94, -0.14 -0.12%) ending among the few laggards, feeling the pressure following quarterly results. Other names in the sector which closed the day higher included WDC +5.09%, QRVO +4.74%, AKAM +4.52%, JNPR +4.48%, NTAP +3.29%, ADSK +2.93%, SWKS +2.85%, QCOM +2.79%, HPQ +2.70%.
Other notable news items among sector components:
In addition to reporting quarterly results, Red Hat (RHT) announced the acquisition of 3scale; financial details of the deal were not disclosed. RHT also announced a $1 billion share buyback.
Harris (HRS 84.14, +0.75 +0.90%) received a $1.7 billion multi-year contract from the US Army.
Biological Industries announced a co-branding agreement with Corning's (GLW 20.79, +0.24 +1.17%) subsidiary, Mediatech, Inc., which will enable cell therapy, research, and manufacturing organizations around the world to purchase the innovative, xeno-free NutriStem human pluripotent stem cell medium in conjunction with GLW's existing portfolio of stem cell-focused technologies. Before the end of this year, Corning and BI will launch a jointly-branded NutriStem hPSC XF Medium, which will continue to be manufactured by BI, but marketed, distributed and supported worldwide by Corning's global commercial team.
HP (HPQ 12.95, +0.34 +2.70%) recalled batteries for HP and Compaq notebook computers due to fire and burn hazards. The recall involves lithium-ion batteries containing Panasonic (PCRFY 9.20, +0.31 +3.43%) cells used in the notebook computers.
Elsewhere in the tech space:
Alarm.com (ALRM 25.09, +2.57 +11.41%) to acquire two business units from Icontrol Networks for about $140 million. The deal is expected to be EPS accretive on a non-GAAP basis for FY17.
SunEdison (SUNEQ 0.13, -0.00 -2.43%) CEO Ahmad Chatila resigned. The company will appoint John Dubel as CEO, both effective June 22.
Groupon's (GRPN 3.35, +0.10 +3.08%) on-demand delivery service OrderUp enters into partnership with Qdoba Mexican Eats, a sub of Jack in the Box (JACK 87.72, +1.68 +1.95%), to deliver from a number of the restaurants' locations.
T-Mobile US (TMUS 43.67, +0.97 +2.27%) appointed Peter Osvaldik as Chief Accounting Officer.
CACI Intl (CACI 90.89, -8.41 -8.47%) issued worse than expected guidance for 2017 in the form of EPS of $6.02-6.43 and revenues of $4.05-4.25 billion.
58.com (WUBA 46.63, +1.38 +3.05%) divested 65.7% its stake in Mayi in exchange for a minority stake in Tujia by completing a share swap in Mighty Talented Limited.
Black Knight Financial (BKFS 34.99, +0.99 +2.91%) acquired Motivity Solutions. Financial terms of the deal were not disclosed.
In reaction to quarterly results:
Accenture (ACN) reported in-line Q3 EPS of $1.41 on better than expected revenues which rose 8.6% versus last year to $8.43 billion. The company also guided Q4 revenues of $8.25-8.50 billion. For the FY16 period, the company raised EPS expectations to $5.29-5.33 from $5.21-5.32 - also raised revenue expectations to growth of 9.5-10.5% from 8-10%.
BlackBerry (BBRY 7.00, +0.26 +3.86%) reported better than expected Q1 EPS of net breakeven and revenues which fell 39.2% versus last year and came in worse than expectations to $400 million ($424 million in non-GAAP). For the FY17 period, the company issued better than expected guidance for EPS of ($0.15).
Red Hat (RHT) reported in-line EPS for Q1 of $0.50 on revenues which rose 18.1% versus last year to $567.9 million. For Q2, the company sees EPS of about $0.54 on revenues of $587-593 million. For FY17, RHT expects EPS of $2.19-2.23 (down from $2.22-2.26 due to the 3scale acquisition) and revenues of $2.38-2.42 billion.
Companies scheduled to report quarterly results tonight: SNX
Analyst actions:
MU was upgraded to Positive from Neutral at Susquehanna and to Buy from Reduce at Nomura;
SCTY was downgraded to Equal Weight from Overweight at Morgan Stanley,
MTD was downgraded to Neutral from Buy at Citigroup,
CACI was downgraded to Market Perform from Outperform at Wells Fargo,
POWI was downgraded to Neutral from Buy at Sidoti;
GRPN, EBAY and AMZN were initiated with Buy ratings at Maxim Group,
MTSC was initiated with an Overweight at JP Morgan,
VDSI was initiated with a Buy at Sidoti,
ZEN was initiated with a Buy at UBS
3:13 pm FormFactor completes acquisition of Cascade Microtech (CSCD) (FORM) :
11:00 am Semi Manufacturing to purchase a 70% stake of LFoundry for a consideration of EUR49 mln (SMI) :
The co jointly announces with LFoundry Europe and Marsica Innovation S.p.A. the signing of an agreement on June 24, 2016 to purchase a 70% stake of LFoundry for a consideration of 49 million EUR. LFoundry is an integrated circuit wafer foundry headquartered in Italy, which is owned by LFE and MI. At the closing, SMIC, LFE and MI will own 70%, 15% and 15% of the corporate capital of the target respectively. This acquisition benefits both SMIC and LFoundry, through increased combined scale, strengthened overall technology portfolios, and expanded market opportunities for both parties to gain footing in new market sectors. In fiscal year 2015, LFoundry revenue reached 218 million EUR. This acquisition will bring both companies additional room for business expansion. At present, SMIC's total capacity includes 162,000 8-inch wafers per month and 62,500 12-inch wafers per month, which represents a total 8-inch equivalent capacity of 302,600 wafers per month. LFoundry's capacity amounts to 40,000 8-inch wafers per month. Thus, by consolidating the entities, overall total capacity would increase by 13%; this combined capacity will provide increased flexibility and business opportunities for supporting both SMIC and LFoundry customers.
9:27 am TerraForm Power commences consent solicitations of its 5.875% Senior Notes due 2023 and its 6.125% Senior Notes due 2025 to obtain waivers relating to certain reporting covenants under the indentures (TERP) :
6:04 am Canadian Solar announces a funing cell factory in China has been damaged by a tornado & has caused personal injuries, factory is shut down while damage is being assessed (CSIQ) :
At this moment, the Company expects to recover substantially all of its financial losses through insurance. The Company's other wafer, cell and module manufacturing facilities in China and abroad are not affected.The Company now plans to cover its solar cell needs by increasing the output from its Suzhou solar cell factory, ramping up production at its new cell factory in Thailand and by purchasing additional solar cells from its long term third-party suppliers, who have agreed to supply the additional solar cells. As a result, the Company expects to fulfill its module delivery commitments and maintain its annual module shipment guidance. "Our thoughts are with the families of Canadian Solar employees and the local residents impacted by the severe weather. We have immediately dispatched our internal emergence response team from our other facilities in China to help our employees in Funing and people in the local communities. We are assessing the situation but do not expect it to have a material impact on our business," said Dr. Shawn Qu, Chairman and CEO of the co.
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