From Briefing.com: 4:15 pm : The stock market ended the Wednesday affair on a broadly higher note, extending its recent rebound alongside European bourses. Equity markets continued their uptrend as investors maintained their risk-on posture, bidding oversold currencies, commodities, and the heavily-weighted financial (+2.3%), health care (+1.9%), and industrial (+1.7%) sectors. The Nasdaq Composite (+1.9%) finished ahead of the S&P 500 (+1.7%) and the Dow Jones Industrial Average (+1.6%).
Global equity markets tilted to the upside overnight as European bourses continued to recover from their recent weakness. The Euro Stoxx 50 (+2.8%) trimmed its post-Brexit decline to 6.8% while the U.K.'s FTSE (+3.6%) erased its loss, and is now up 3.6% since Thursday's referendum. Additionally, strength from the oil patch contributed to the early positive bias as the energy component gained following the American Petroleum Institute's weekly inventory data.
The major U.S. averages gapped higher at the start of the session, bolstered by a largely in-line reading of the Personal Income and Spending Report for May. The release was largely a non-event, having little impact on rate hike expectations. On that note, Federal Reserve Governor Powell commented overnight that global risks have shifted to the downside following the British referendum.
The benchmark index climbed through the afternoon, eventually finding resistance near the 2070 price level. The area is significant as it represents the underside of Friday's gap down and rests within five points of the index's 50-day simple moving average (2076.49). Ten sectors ended in the green with financials (+2.3%) and energy (+2.0%) leading the pack while health care (+1.9%), industrials (+1.8%), and technology (+1.7%) followed.
The economically-sensitive financial sector (+2.3%) ended the session near its best level of the day as money center banks outperformed. In the group, JPMorgan Chase (JPM 61.20, +1.68), Citigroup (C 42.12, +1.68), and Bank of America (BAC 13.19, +0.49) gained between 2.8% and 4.2% ahead of this evening's Comprehensive Capital Analysis and Review (CCAR) results. Expectations remain high that most banks will be granted approval to boost their respective capital return programs. The broader sector trimmed its monthly loss to 4.9%, but still sports a loss of 5.6% for the year.
Biotechnology displayed relative strength in the health care space (+1.9%), evidenced by the 2.2% rebound in the iShares Nasdaq Biotechnology ETF (IBB 256.05, +5.39). The ETF has rallied 6.0% since notching a four-month closing low on Monday (241.49). In the sub-group, large cap Biogen (BIIB 238.91, +10.39) jumped 4.6% after receiving an upgrade to "Outperform" at Bernstein.
The transports outperformed in the industrial sector (+1.8%), evidenced by the 2.2% gain in the Dow Jones Transportation Average. In the sector, airlines outperformed as the U.S. Global Jets ETF (JETS 20.96, +0.58) rebounded 2.9%. The ETF has trimmed its post-Brexit loss to 5.1%. Elsewhere, General Electric (GE 30.55, +0.61) rallied 2.0% after the company received approval to have its nonbank Systemically Important Financial Institution designation rescinded.
The U.S. Dollar Index (95.79, -0.45) extended its losing streak, weakening for the second session. The euro gained 0.4% against the dollar (1.1106) while the pound finished higher by 0.7% against the buck (1.3437). Separately, the dollar gained 0.1% against the safe haven yen (102.84).
Treasuries spent most of their session near their flat lines despite a persistent rally in equities. However, the complex notched new session lows in the final hour as the yield on the 10-yr note rose four basis points to 1.51%.
Today's participation was above the recent average as more than one billion shares changed hands on the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index, the Personal Income and Spending Report, and Pending Home Sales for May:
The weekly MBA Mortgage Index showed a seasonally adjusted decrease of 2.6% in mortgage applications.
Personal income increased 0.2%, which was weaker than expected (Briefing.com consensus +0.3%), and personal spending jumped 0.4%, which was stronger than expected (Briefing.com consensus +0.3%).
The core PCE Price Index, which excludes food and energy, increased 0.2%, which was just as expected.
Income growth was led by a 0.2% increase in wages and salaries.
Spending growth featured a 0.5% increase in goods spending and a 0.4% increase in services spending.
The personal savings rate dipped from 5.4% to 5.3%.
The PCE Price Index increased 0.2%, which left it up 0.9% year-over-year.
That is down from the 1.1% year-over-year increase seen in April.
The core PCE Price Index was up 1.6% year-over-year for the third straight month.
All in all, this was not a report that would have triggered an increased fear of a Fed rate hike at the July meeting even if Brexit didn't happen.
Brexit, of course, did happen, so the fact that the May report was mixed, and didn't feature a pickup in inflation on a year-over-year basis, will only help to solidify the belief that the Fed is likely on hold for some time yet.
Pending Home Sales for May declined by 3.7% while the Briefing.com consensus expected a downtick of 1.4%. Meanwhile, the April reading was revised to 3.9% from 5.1%.
Tomorrow economic data will be limited to weekly initial claims (Briefing.com consensus 265k) and Chicago PMI for June (Briefing.com consensus 50.8), which will be released at 8:30 ET and 9:45 ET, respectively.
Nasdaq Composite -4.6% YTD
Russell 2000 -0.4% YTD
S&P 500 +1.3% YTD
Dow Jones +1.6% YTD
Broader market trading capped off the Wednesday session with a modestly strong close, compounded by modestly higher volume. The Nasdaq Composite led the session higher, up today 87.38 points (+1.86%) to 4779.25. The S&P 500 was up 34.68 points (+1.70%) to 2070.77, and the Dow Jones Industrial Average added 284.96 points (+1.64%) to 117694.68. As it were, trading volume was moderately higher today as about 1,924 million shares traded hands on the NASDAQ floor versus an average near 1,744 million and about 1,025 million shares were exchanged on the NYSE floor versus an average near 980 million.
Market data came through the wires today in the form of the weekly MBA Mortgage Index, which showed a seasonally adjusted decrease of 2.6% in mortgage applications. Also, personal income increased 0.2%, which was weaker than expected, and personal spending jumped 0.4%, which was stronger than expected. Additionally, Pending Home Sales for May declined by 3.7%. Meanwhile, the April reading was revised to 3.9% from 5.1%.
A positive bias in the Technology (XLK 42.90, +0.65 +1.54%) sector took it to highs at session end as component NetApp (NTAP 24.47, +1.29 +5.57%) was strong amid news disclosed last night that the company prepaid certain lenders in the amount of $850 million on July 27. Other sectors as measured by the S&P ended the day XLF +2.27%, XLV +1.91%, XLE +1.90%, XLI +1.78%, XLB +1.69%, XLY +1.61%, XLP +1.16%, XLU +0.27% with Financials leading the charge higher and Utilities lagging, but ultimately finishing higher.
In the S&P 500 Information Technology (705.59, +11.53 +1.66%) sector, trading was higher with the broader market as component Oracle (ORCL 40.55, +1.42 +3.63%) was among the best performers following a premarket upgrade to Neutral at JP Morgan, and an Information article which suggested the company could be a possible suitor for Salesforce.com (CRM 79.00, +1.45 +1.87%). Other names in the space which ended in positive territory included FSLR +3.71%, QRVO +3.60%, AVGO +3.49%, ADS +3.39%, ADSK +3.38%, HPQ +3.31%, INTU +3.11%, AKAM +2.85%, AMAT +2.70%, JNPR +2.60%.
Other notable news items among sector components:
NetApp (NTAP) announced the prepayment to certain lenders in the realm of $850 million of outstanding borrowings occurred on June 27, 2016. Also approved a new form of double trigger Change of Control Severance Agreement.
Western Digital (WDC 45.60, +1.99 +4.56%) introduced a new suite of 256 gigabyte (GB) microSD cards, which includes the new 256GB SanDisk Extreme microSDXC UHS-I card -- the fastest microSD card in its class.
Facebook (FB 114.16, +1.46 +1.30%) was notably higher today following a Reuters report that the company received a favorable ruling in a Belgian privacy case.
Salesforce.com (CRM) ticked higher on the session following an Information report which suggested a potential takeout, specifically mentioning Microsoft (MSFT 50.54, +1.10 +2.22%) and Oracle (ORCL).
FLIR Systems (FLIR 30.17, +0.48 +1.62%) acquired Armasight, Inc., a developer of precision sporting, hunting, and military optics products, for about $41 million in cash. The company anticipates this transaction will be neutral to 2016 net earnings and accretive thereafter.
MasterCard (MA 92.13, +1.71 +1.89%) announced a collaboration with Microsoft (MSFT) to bring simple and secure e-commerce payments to Microsoft Dynamics users.
F5 Networks (FFIV 112.52, +2.21 +2.00%) announced the availability of its firewall solution focused on delivering end-to-end security across service provider networks. The standalone carrier-class firewall supports up to 1.2 billion concurrent connections and over 20 million connections per second. Today's announcement is aligned with F5's commitment to expand its portfolio of dedicated security offerings.
Elsewhere in the tech space:
CenturyLink (CTL 28.45, +0.61 +2.19%) acquired certain strategic assets of the company formerly known as Active Broadband Networks. Financial terms of the deal were not disclosed.
Advanced Micro (AMD 5.13, +0.01 +0.20%) to acquire HiAlgo. Financial terms of the deal were not disclosed.
ComScore (SCOR 23.71, -0.12 -0.48%) entered into a multi-market agreement with Hearst Television for the use of its ratings system in three of its stations. The financial terms of the agreement were not disclosed.
Science Applications (SAIC 56.30, +1.09 +1.97%) named Corporate Controller Maria Bishop as the interim CFO effective July 1 while the company continues its ongoing search for a new CFO.
Arris (ARRS 20.58, +0.21 +1.03%) sold its Whole Home Solution platform to Espial. Financial terms of the transaction were not disclosed.
SunEdison (SUNEQ 0.13, +0.00 +0.57%) announced a new leadership team including Philip Gund as CFO.
CalAmp (CAMP 14.20, +0.11 +0.78%) authorized a $25 million share repurchase over the next 12 months.
Universal Display (OLED 66.19, +0.64 +0.98%) acquired the OLED Intellectual Property assets of BASF SE (BASFY 75.09, +1.84 +2.52%) for about EUR 87 million.
Vishay (VSH 11.98, -0.02 -0.17%) acquired from a holder about $12.4 million principal amount of its floating rate exchangeable unsecured notes due 2102.
Gogo (GOGO 8.23, +0.24 +3.00%) expanded its coverage on the eastern seaboard of North America and in central Canada, providing about 1 hour of additional air-to-ground inflight connectivity in both locations for business aircraft.
GameLoft (GLOFY 35.62, flat) announced its shareholders appointed five members proposed by Vivendi (VIVHY 18.28, +0.68 +3.86%) to the Board.
TerraForm Power (TERP 10.34, +1.59 +18.17%) was strong today on the heels of a 12.13% active stake filed by Brookfield Asset Management.
Orange (ORAN 16.20, +0.59 +3.78%) to acquire Pay TV provider Sun Communications in Moldova. The company also announced a new investment in Wi-Fi connectivity marketplace BandwidthX.
Earnings:
CalAmp (CAMP) reported better than expected Q1 EPS and revenues of $0.30 and $91.1 million, respectively. The company also guided for in-line Q2 EPS of $0.25-0.31 and worse than expected revenues of $90-95 million.
Analyst actions:
ORCL was upgraded to Neutral from Underweight at JP Morgan,
AUO was upgraded to Outperform from Neutral at Credit Suisse,
IPGP was upgraded to Buy from Hold at Canaccord Genuity;
SCOR was downgraded to Neutral from Positive at Susquehanna,
ZBRA was downgraded to Neutral from Buy at Northcoast;
SHOP was initiated with a Buy at Monness Crespi & Hardt,
EPAY was initiated with an Overweight at First Analysis Sec,
FLTX was initiated with an Overweight at Morgan Stanley,
KN was initiated with a Hold at The Benchmark Company,
PSTG was initiated with an Outperform at Macquarie,
DMD was initiated with a Buy at Roth Capital
4:12 pm Ultratech sends letter to shareholders urging them to vote for its Director nominees at the upcoming Annual Meeting of Stockholders scheduled for July 19 (UTEK) :
Co announced that it has mailed a letter to stockholders in connection with its 2016 Annual Meeting of Stockholders scheduled for July 19, 2016.
The Board of Directors continues to unanimously recommend that stockholders vote the WHITE proxy card "FOR" all seven of the co's director nominees.
The co has been under pressure from activist Neuberger Berman because the co's stock price has been stuck at roughly $20/share for 20 years.
Co believes that the co's 12 month stock appreciation represents progress and argues that the board should stay fully intact.
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