From Briefing.com: 4:15 pm : The stock market ended its day on a lower note, slipping alongside European bourses. The move lower in U.S. equities was prompted by growing fears regarding Italian banking names and revitalized concerns regarding the United Kingdom's exit from the European Union. Additional factors impacting today's trade included a downturn in crude oil, strengthening in the dollar, and the underperformance of the heavyweight financial (-1.5%), industrial (-0.9%), consumer discretionary (-0.7%), and technology (-0.7%) sectors. The Nasdaq Composite (-0.8%) ended behind the S&P 500 (-0.7%) and the Dow Jones Industrial Average (-0.6%).
The major U.S. averages began the day under pressure as investors eyed a downturn in European bourses. European equity markets stumbled as participants weighed remarks from the Bank of England. The central bank struck a cautious tone this morning, warning of risks to commercial property and capital inflows following the country's surprise Brexit vote. Furthermore, Italian banks were in focus after the European Central Bank notified Banca Monte dei Paschi di Siena that it needs to reduce its non-performing loan load.
The S&P 500 (-0.7%) opened under pressure, slipping alongside weakness in heavily-weighted financials (-1.5%), industrials (-0.9%), consumer discretionary (-0.7%), and technology (-0.7%). The benchmark index tested and maintained technical support near 2084/2085 into the afternoon. However, equities succumbed to further selling pressure as crude oil moved to new session lows. WTI crude ended its session lower by 4.7% ($46.73/bbl; -$2.28).
Buyers stepped in during the final hour, enabling the benchmark index to close eight points off its worst level of the day. Eight sectors ended in the red with energy (-1.9%), materials (-1.9%), and financials (-1.5%) rounding out the board. The remaining cyclical sectors ended with losses between 0.7% (technology) and 0.9% (industrials). On the flipside, countercyclical sectors outperformed as utilities (+0.7%), consumer staples (+0.5%), telecom services (UNCH) and health care (-0.1%) each benefited from safe-haven inflows.
The financial sector (-1.5%) remained pressured throughout the session, trading lower in sympathy with European banking names. On that note, Barclays (BCS 7.21, -0.38) ended lower by 5.0% as falling bond yields and the Bank of England's outlook weighed. On the home front, Dow component JPMorgan Chase (JPM 59.55, -1.71) rounded out the price-weighted index. The bank name fell 2.8% after rebounding 2.8% last week. Elsewhere, real estate investment trusts outperformed as Public Storage (PSA 259.74, +5.90) gained 2.3%.
In the industrial sector (-0.9%), airlines demonstrated relative weakness, evidenced by the 1.6% decline in the U.S. Global Jets ETF (JETS 21.10, -0.35). The group moved lower in sympathy with Delta Air Lines (DAL 34.62, -1.15) after the company reported that passenger unit revenue fell 5.0% year-over-year in June. The airline also cut its second-quarter operating margins and unit revenue guidance.
The high-beta chipmakers underperformed in the technology space (-0.7%) as the PHLX Semiconductor Index declined by 1.8%. Qorvo (QRVO 51.82, -2.68) and Skyworks (SWKS 58.85, -3.78) rounded out the index. In the broader technology sector, data storage names underperformed as Seagate Technology (STX 23.16, -0.87) and Western Digital (WDC 44.72, -1.75) lost a respective 3.6% and 3.8%.
The U.S. Dollar Index (96.21, +0.56) ended near its best level of the day as the euro, commodity currencies, and the pound each lost ground to the buck. The single currency lost 0.8% against the greenback (1.1070) while the dollar/Canadian dollar pair gained 1.2% (1.2997). Separately, the dollar lost 0.9% against the yen (101.71).
The Treasury complex settled broadly higher as the yield on the 10-yr note slipped seven basis points to 1.37%. The 10-yr yield notched a new all-time low (1.35%) earlier in the session.
Today's participation was above the recent average as more than 955 million shares changed hands on the NYSE floor.
Economic data was limited to Factory Orders for May:
New orders for manufactured goods declined 1.0% in May (Briefing.com consensus -0.9%) to follow a revised 1.8% increase in April (from 1.9%).
The decline snapped a streak of two consecutive increases.
Shipments ticked up 0.2% despite the overall decline, representing the third consecutive increase.
Orders for durable goods decreased 2.3% after increasing a revised 3.2% in April (from 3.4%).
Transportation orders fell 5.7% and orders for manufactured nondurable goods ticked up 0.3%.
Total inventories for all manufacturing industries decreased 0.3%, representing the tenth decline in the past eleven months.
The inventories-to-shipments ratio was unchanged at 1.36.
Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index. Additionally, the May Trade Balance (Briefing.com consensus -$40.0 billion) and June ISM Services (Briefing.com consensus 53.3) will cross the wires at 8:30 ET and 10:00 ET, respectively. The day's data will be capped off with FOMC Minutes from the June meeting, which will be released at 14:00 ET.
Nasdaq Composite -3.7% YTD
Russell 2000 +0.3% YTD
S&P 500 +2.2% YTD
Dow Jones +2.4% YTD
DJ30 -108.75 NASDAQ -39.67 SP500 -14.40 NASDAQ Adv/Vol/Dec 778/1.543 bln/2277 NYSE Adv/Vol/Dec 809/955.4 mln/2235
3:30 pm :
The dollar index extends this morning's gains, up +0.5% around the 96.17 level, weighing on commodities overall
Commodities, as measured by the Bloomberg Commodity Index, are down -2.5% at 87.43
Crude oil plummets to close at fresh lows of the session as the dollar index stages a notable afternoon rally
August crude oil futures fell $2.28 (-4.7%) to $46.73/barrel
Factors potentially affecting the price of crude include:
5 recent attacks this weekend on various oil pipelines located in Nigeria by militant groups after a brief stalemate
In Nigeria they pumped an avg 1.53 mln barrels a day last month, an increase of about 90,000 a day from May
Last Friday, Baker Hughes reported rig count data showing that rigs were added for 4 out of the 5 previous weeks, signaling that local production may be increasing
Due to the shortened week, API data will be released Wednesday at 4:30 pm ET and EIA crude oil data will be released Thursday, 30 min after regularly scheduled natural gas inventory data
Baker Hughes rig count data will be released this Friday at 1 pm ET
IEA Monthly data will be released July 13th
Natural gas retreats from 1-year highs hit in the previous session, plummeting nearly -8%, its biggest one-day decline of 2016
August natural gas closed $0.23 lower (-7.7%) at $2.76/MMBtu
EIA natural gas inventory data will be released Thursday at 10:30 am ET, at its regularly scheduled time
In precious metals, gold sees an afternoon of consolidation, ending near highs of the day despite notable strength in the dollar index
August gold ended today's session up $19.50 (+1.5%) to $1358.40/oz
Silver closes at fresh 2-year highs as the gold:silver ratio reaches a 2-year low, despite the dollar index gaining afternoon momentum
September silver closed today's session $0.35 higher (+1.8%) at $19.93/oz
Base metal copper consolidates in the afternoon to close near its morning lows
September copper closed $0.04 lower (-1.8%) at $2.18/lb
Futures slipped overnight, falling alongside a downturn in European markets. Markets in Europe adopted a risk-off posture as investors ruminated over commentary from the Bank of England. The central bank struck a cautious note this morning, citing risks to capital markets in the country following the Brexit referendum. Additionally, Italian banks have been in focus after the European Central Bank asked Italy's Banca Monte dei Paschi di Siena to cut net non-performing loans by 40.0%.
Then this morning, the major averages opened on a lower note, weighed down by a downturn in crude oil. The energy component slipped form the $47.50 price level at the beginning of the session as the dollar-denominated commodity was pressured by strengthening in the greenback.
Broader market action took a modest break from last week's strong showing as all three major US indices ended in negative territory. Leading the decline, the Nasdaq Composite shed 39.67 points (-0.82%) to 4822.90. The S&P 500 was down 14.40 points (-0.68%) to 2088.55, and the Dow Jones Industrial Average lost 108.75 points (-0.61%) to 17840.62.
Technology (XLK 43.15, -0.32 -0.74%), as it were, also turned in a slightly weaker session compared to last week as component Skyworks (SWKS 58.82, -3.78 -6.04%) was downgraded for the second time in as many trading days, this time to Sector Weight at Pacific Crest. Other sectors as measured by the S&P closed the day XLU +0.74%, XLP +0.56%, XLV -0.10%, IYZ -0.66%, XLY -0.81%, XLI -0.91%, XLF -1.50%, XLB -1.81%, XLE -2.01% with Utilities gaining on an overall down day and Energy posting the steepest losses.
In the S&P 500 Information Technology (708.76, -5.20 -0.73%) sector, trading ended near the middle of the daily range as components NVDA +1.48%, ATVI +1.36% and PAYX +1.09% managed to resist the sell-off on no apparent catalyst. Other names in the space which closed Tuesday lower included MU -4.72%, WDC -3.77%, STX -3.62%, NTAP -3.33%, HPQ -2.91%, ADSK -2.83%, ADI -2.31%, AKAM -2.25%.
Other notable news items among sector components:
Accenture (ACN 113.10, -0.42 -0.37%) announced the completion of its acquisition of a majority stake in IMJ Corporation (IMJ). Financial terms of the deal were not disclosed.
BNP Paribas (BNPQY 21.55, -0.55 -2.49%) announced that, in relation to Visa's (V 74.67, +0.19 +0.26%) completion of the acquisition of Visa Europe, this sale will translate into an estimated exceptional capital gain of about EUR565 million after taxes BNP in Q2.
First Solar (FSLR 47.77, -0.72 -1.48%) is reallocating production capacity at its Kulim, Malaysia, facility to support a new assembly line dedicated to FSLR's recently announced Series 5 thin film photovoltaic module offering. As a result, FSLR will end production of its TetraSun crystalline silicon solar panel product currently manufactured there, and expects to incur impairment and related charges of about $90 million to $110 million, substantially all of which is expected to be non-cash. These actions are expected to reduce First Solar's operating expenses by $2 million to $4 million this year and $8 million to $10 million annually going forward.
As part of its expansion strategy in Mexico, The Western Union Company (WU 19.13, -0.23 -1.19%), announced an agreement with Walmart de Mexico y Centroamrica (WMMVY 23.10, -1.07 -4.43%) to offer international money transfer services under the Western Union, Vigo and Orlandi ValutaSM brands throughout Mexico.
According to ReCode, Yahoo! (YHOO 37.50, -0.49 -1.29%) suitors including Verizon (VZ 56.53, +0.32 +0.57%) will offer new bids tomorrow.
A Wall Street Journal report detailed the increased offer for LinkedIn (LNKD 190.01, +0.51 +0.27%) shares from Microsoft (MSFT 51.17, +0.01 +0.02%) via Salesforce.com's (CRM 78.67, -1.16 -1.45%) bidding.
A Reuters article later suggested that Alphabet's (GOOG 694.49, -4.72 -0.68%) Google and Facebook (FB 114.00, -0.19 -0.17%) were among other interested parties in LNKD.
Skyworks Solutions (SWKS) expanded its antenna tuning product portfolio with the addition of several new high performance solutions.
Elsewhere in the tech space:
Cyber-Ark Software (CYBR 49.40, +1.03 +2.13%) elected Founder and CEO Udi Mokady as Chairman of the Board effective June 30.
Rovi (ROVI 15.86, +0.32 +2.06%) renewed its multi-year license with Verizon (VZ).
MAM Software Group (MAMS 5.80, -0.37 -6.00%) Chairman Gerald Czarnecki resigned June 29.
Himax Tech (HIMX 8.02, +0.54 +7.22%) announced preliminary Q2 EPS and revenues ahead of prior guidance and expectations. EPS came in at $0.115 and revenues were $201.1 million. The company also made a statement regarding the previously announced retirement of the company's Chief Technology Officer, Chih-Chung Tsai, stating it does not see his departure as impacting the business going forward.
FactSet (FDS 162.12, +0.94 +0.58%) updated Q4 guidance following the sale of its Market Metrics business - Q4 adjusted EPS reaffirmed at $1.68-1.72, and lowered sales guidance to $286-292 million from $292-298 million.
Arris (ARRS 22.53, +1.26 +5.92%) entered into a warrant agreement with Comcast Cable (CMCSA 65.01, -0.27 -0.41%) for the opportunity to acquire ordinary shares based on specific sales targets for FY16-FY17.
Blucora (BCOR 11.05, +0.35 +3.27%) to sell its Infospace business to OpenMail for $45 million in cash. The transaction is expected to close in the third quarter.
Twilio (TWLO 33.99, -0.03 -0.10%) announced an extended collaboration with Amazon Web Services.
Analyst actions:
HIMX was upgraded to Buy from Neutral at Nomura,
WNS was upgraded to Outperform from Neutral at Robert W. Baird;
NFLX was downgraded to Hold from Buy at Needham,
CRUS and SWKS were downgraded to Sector Weight from Overweight at Pacific Crest;
FTV was initiated with an Overweight at Morgan Stanley and a Neutral at Citigroup,
EQIX was initiated with a Buy at Goldman
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