From Briefing.com: 4:15 pm : The stock market began its week on a lower note as investors eyed the potential implications of the United Kingdom leaving the European Union. The decision has had far reaching consequences across capital markets as investors look for clues to the potential timing and terms of the official breakup. Additional focal points impacting today's trade included strengthening in the dollar, a downturn in oil, and the underperformance of the heavyweight financial (-2.8%), technology (-2.3%), and industrial (-2.3%) spaces. The Nasdaq Composite (-2.4%) ended its day behind the S&P 500 (-1.8%) and the Dow Jones Industrial Average (-1.5%).
The major U.S. averages began under pressure as investors eyed a continued downturn in European bourses. European equity markets stumbled for the second straight session as investors maintained their risk-off posture. Specifically, British banking names led the losses as concerns mounted regarding how a Brexit may impact lenders in the region and the potential effects of an elongated period of low interest rates. Additionally, Barclays (BCS 7.03, -1.86) plunged 20.9% after numerous firms downgraded the stock post-Brexit.
The S&P 500 (-1.8%) gapped down at the beginning of the session, slipping alongside weakness in heavily-weighted financials (-2.8%), technology (-2.3%), and industrials (-2.43). The benchmark index tested technical support at the psychological 2000 price level in the opening hour and continued to trade near that level for most of the session. Equities carved out fresh intraday lows in the final hour of trade, but were able to finish the day above those levels. Eight sectors ended in negative territory with commodity-sensitive materials (-3.4%) trailing financials (-2.8%), energy (-2.5%), and technology (-2.3%). Conversely, countercyclical utilities (+1.3%) and telecom services (+0.6%) ended in the green.
The economically-sensitive financial sector (-2.8%) demonstrated broad-based weakness as it traded lower in sympathy with European banking names. In the sector, asset management companies and life insurance names showed the largest losses as Bank of New York Mellon (BK 35.88, -2.11) and MetLife (MET 36.53, -2.91) fell 5.6% and 7.4%, respectively. Elsewhere, Dow component American Express (AXP 57.67, -2.39) finished at the bottom of the price-weighted index.
The high-beta chipmakers demonstrated relative weakness, evidenced by the 4.0% decline in the PHLX Semiconductor Index. The Semiconductor Index has lost 7.3% this month, compared to a loss of 4.6% in the benchmark index over that time. In the technology space (-2.3%), large cap components Microsoft (MSFT 48.43, -1.40) and Facebook (FB 108.99, -3.08) underperformed, declining 2.8% apiece.
The energy sector (-2.5%) ended its day under pressure as investors weighed a 2.4% ($46.48/bbl; -$1.12) decline in crude oil. In the group, independent oil and gas names underperformed as the sub-group faces steeper downside risks from a prolonged downturn in crude oil. Elsewhere, Dow component Exxon Mobil (XOM 8886, -0.53) lost 0.6%.
The Dow Jones Transportation Average (-3.1%) finished behind the benchmark index as airlines underperformed. The U.S. Global Jets ETF (JETS 19.85, -0.82) lost 4.0% today, extending its monthly decline to 13.7%.
The U.S. Dollar Index (96.43, +0.98) ended higher by 1.0% as the greenback gained over commodity currencies, the euro, and the pound. The euro/dollar pair ended lower by 0.9% (1.1020) while sterling lost 3.4% (1.3209) against the buck. Separately, the dollar lost 0.1% against the safe haven yen (102.09).
The Treasury complex ended near its best level of the day as the yield on the 10-yr note slipped ten basis points to 1.46%.
Today's participation was above the recent average as more than 1.2 billion shares changed hands on the NYSE floor.
Today's economic data was limited to the International Trade in Goods Report for May:
May International Trade in Goods showed a deficit of $60.59 billion, compared to the April deficit of $57.53 billion.
Tomorrow's economic data will include the third estimate of first quarter GDP (Briefing.com consensus 1.0%) and the third estimate for the first quarter GDP deflator (Briefing.com consensus 0.6%), which will both be released at 8:30 ET. Separately, the Case-Schiller 20-city index for April (Briefing.com consensus 5.5%) and Consumer Confidence for June (Briefing.com consensus 93.1) will cross the wires at 9:00 ET and 10:00 ET, respectively.
Nasdaq -8.3% YTD
Russell 2000 -4.0% YTD
S&P 500 -2.1% YTD
Dow Jones -1.6% YTD
DJ30 -260.51 NASDAQ -113.54 SP500 -36.87 NASDAQ Adv/Vol/Dec 437/2.147 bln/2149 NYSE Adv/Vol/Dec 586/1.271 bln/2496
3:30 pm :
The dollar index continues clocking in massive gains, up another +1% in addition to Friday's +2% gains, near the 96.46 level, weighing on commodities
Commodities, as measured by the Bloomberg Commodity Index, are down -0.3% at 86.66
Crude oil closes near session lows, seeing a sharp spike within the last 10 min of pit trading close, possibly due to short covering
August crude oil futures fell $1.12 (-2.4%) to $46.48/barrel
EIA crude oil inventory data is scheduled to be released Wednesday at 10:30 am ET
API data is scheduled to be released tomorrow at 4 pm ET
Reminder: Friday's Baker Hughes total U.S. rig count was down 3 to 421 rigs following last week's increase of 10 rigs
Monthly IEA data is scheduled to be released on July 13
Natural gas rallies and closes near fresh session highs despite extremely notable strength in the dollar index
August natural gas closed $0.05 higher (+1.9%) at $2.74/MMBtu
EIA natural gas inventory data is scheduled to be released Thursday at 10:30 am ET.
In precious metals, gold manages to close higher despite extremely notable strength in the dollar index as investors/traders flee to safety amidst a broad market sell-off
August gold ended today's session up $2.10 (+0.2%) to $1324.60/oz
On Friday, gold futures closed up +5% for the day
The dollar index is up +1%, around the 96.37 level
Silver trades near parity with the previous close, down slightly on the day
July silver closed today's session $0.03 lower (-0.2%) at $17.75/oz
Base metal copper inches higher in afternoon pit trading
July copper closed $0.01 higher (+0.5%) at $2.12/lb
Corn & soybean futures close higher while wheat futures closed lower ahead of the USDA crop report to be released today at 4 pm ET
December corn closed $0.01 higher (+0.3%) at $3.86/bushel
Corn has changed its front month to December from July, as indicated by the active amount of volume in the contracts
Corn prices have declined in the past five consecutive sessions, falling $0.53, or 12.1%, to $3.85/bushel, largely as the supply outlook for some crops have improved
September wheat closed $0.07 lower (-1.5%) at $4.58/bushel
November soybeans closed $0.23 higher (+2.1%) at $11.07/bushel
Recent weather highlights:
In the Corn Belt, additional showers on top of recent locally heavy rain are further improving moisture supplies for corn and soybeans from eastern Iowa into Ohio
Soil moisture remains limited, however, across central and southern Michigan and on the triple point between Iowa, Missouri, and Illinois
In the South, showers and thunderstorms linger in the northern Delta and along the central Gulf Coast. Moderate to severe drought persists, however, from the eastern Delta into the southern Appalachians.
European equity markets moved lower overnight, extending sharp losses from the prior week. Specifically, European banking names were under pressure as participants began to weigh the potential timing and terms of the U.K.'s formal exit from the single market. On that note, Royal Bank of Scotland (RBS 4.69, -0.74) and Barclays (BCS 7.03, -1.85) have declined 13.63% and 20.83%, respectively.
The second day of negative bias swept through the broader market today following last week's UK referendum voting results. The broader market finished Monday under intense pressure, with the Nasdaq Composite shedding a further 113.54 points (-2.41%) to 4594.44. The S&P 500 was down 36.87 points (-1.81%) to 2000.54 when the day was done, and the Dow Jones Industrial Average lost a further 260.51 points (-1.50%) to 17140.24. Just two days ago, the Dow was north of 18K and the S&P was topping 2111, but a historic move in the past two sessions has taken US equities to near three-month lows.
Technology (XLK 41.42, -0.86 -2.03%) was again weak as components Western Digital (WDC 42.18, -5.66 -11.83%) and Seagate Tech (STX 20.87, -2.29 -9.89%) saw pressure in reaction to their exposure to the European market. Other sectors as measured by the S&P closed the session XLU +0.83% XLP -0.22% XLV -1.31% XLY -1.81% XLI -2.35% XLF -2.85% XLE -3.20% XLB -3.37% as Utilities were the only safe haven today with Materials pressuring.
In the S&P 500 Information Technology (680.24, -16.17 -2.32%) sector, we saw another day of losses as component Skyworks (SWKS) was -5.8% lower following a bearish initiation at Morgan Stanley. Other names in the space which edged lower today included MU -7.34%, NTAP -7.12%, ADSK -6.42%, TDC -6.29%,HPQ -5.79%, CSRA -5.46%, JNPR -5.39%, HPE -5.29%, XRX -5.19%, RHT -4.73%.
Other notable news items among sector components:
IBM (IBM 143.50, -3.09 -2.11%) received contract from the Dept. of Defense with a ceiling value of about $320 million.
Qualcomm (QCOM 51.14, -0.98 -1.88%) along with its subsidiary, Qualcomm Technologies, Inc., announced Qualcomm Technologies' 5G New Radio (NR) prototype system and trial platform. The 5G NR prototype system operates in the sub-6 GHz spectrum bands and is being utilized to showcase the Company's innovative 5G designs to efficiently achieve multi-gigabit per second data rates and low latency.
Harris (HRS 78.49, -2.49 -3.07%) received a $27 million order to deliver maritime electronic warfare payloads for the U.S. Naval Research Laboratory's Advanced Decoy Architecture Project program.
8point3 Energy Partners LP (CAFD 14.77, +0.21 +1.44%) removed Joseph Kishkill from the Board of Directors of the General Partner effective July 5, 2016. It also removed Mr. Kishkill from the Board pursuant to the exercise by First Solar (FSLR 44.23, -1.79 -3.89%) of its right to request the removal of any director that FSLR had designated to serve on the Board. The company noted there were no disagreements between Mr. Kishkill and the General Partner or any officer or director of the General Partner which led to Mr. Kishkill's removal from the Board. Additionally, the company announced the removal of Mark Widmar as CFO, who will be replaced by Bryan Schumaker effective July 5, 2016.
Elsewhere in the tech space:
Synopsys (SNPS 51.33, -0.75 -1.44%) and Lattice Semiconductor (LSCC 4.94, -0.47 -8.69%) extended their multi-year OEM agreement for FPGA design software.
Vectrus (VEC 26.96, +0.32 +1.20%) announced the US Court of Appeals issued a decision reversing the decision of the Court of Federal Claims.
Genpact (G 25.41, -0.81 -3.09%) acquired PNMsoft. Financial terms of the deal were not disclosed, and the deal is not expected to be material to financial performance.
Immersion (IMMR 7.18, -0.32 -4.27%) signed a multi-year license agreement with Lenovo (LNVGY 11.68, -0.27 -2.26%) for the use of TouchSense haptic technology for Windows and Android smartphones/tablets. Financial terms of the deal were not disclosed.
INTL FCStone (INTL 25.56, -0.52 -1.99%) to acquire Sterne Agee's correspondent securities clearing business and the independent wealth management business from Stifel Financial (SF 30.31, -2.24 -6.88%). Financial terms of the deal were not disclosed.
Izea (IZEA 7.59, -0.11 -1.43%) filed for a $75 million common stock shelf offering.
Callidus Software (CALD 18.31, -0.73 -3.83%) acquired Badgeville Technology for $7.5 million.
Intelsat (I 2.15, -0.15 -6.52%) disclosed discussions with certain unaffiliated investment funds concerning a proposed issuance of secured notes.
Zix Corp (ZIXI 3.62, -0.10 -2.69%) appointed David Rockvam as CFO.
Analyst actions:
P was upgraded to Overweight from Equal Weight at Morgan Stanley,
AMAT was upgraded to Buy from Neutral at DA Davidson,
BT was upgraded to Buy from Neutral at Citigroup;
BT was downgraded to Neutral from Outperform at Credit Suisse,
MXIM, NXPI and ADI were downgraded to Neutral from Buy at BofA/Merrill,
ANET was downgraded to Underperform from Buy at BofA/Merrill,
CNSL was downgraded to Hold from Buy at Drexel Hamilton;
AVGO was initiated with an Overweight at Morgan Stanley,
QRVO was initiated with an Equal Weight at Morgan Stanley,
SWKS was initiated with an Underweight at Morgan Stanley
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