From Briefing.com: 4:20 pm : The major averages extended their recent rally to a third session as investors eyed potential stimulus measures out of the United Kingdom and Japan. The broader market maintained its risk-on approach, bidding up oil, growth sectors, and beleaguered currencies while selling off safe-haven assets. The S&P 500 (+0.7%) and the Dow Jones Industrial Average (+0.7%) each carved out all-time intraday and closing highs while the Nasdaq Composite (+0.7%) turned positive for the year.
U.S. equities began the day on a higher note, responding to a continued rebound in overseas bourses. Japan's Nikkei (+2.5%) paced the rebound after Prime Minister Shinzo Abe announced a potential stimulus package could total JPY10 trillion. Separately, the Bank of England's Mark Carney added to stimulus speculation when he stated that a monetary response remains available should Britain's post-Brexit outlook worsen. The Bank of England is scheduled to meet this Thursday.
The broader market gapped up at the start of the session with the benchmark index (+0.7%) and the Dow Jones Industrial Average (+0.7%) each notching new, all-time intraday highs during the first half hour of trade. The major averages pulled back soon thereafter in a move that corresponded with a short-lived downturn in crude oil. The benchmark index found support near the 2147 price level and exhibited a mostly positive bias for the remainder of the day.
The major indices ended the day off their highs with seven sectors finishing in positive territory. The energy (+2.3%) and materials (+1.9%) sectors finished ahead of the heavily-weighted financial (+1.2%), technology (+1.0%), and industrials (+0.9%) sectors. The defensive-oriented telecom services (-0.3%), health care (-0.5%), and utilities (-1.4%) sectors trailed the action and were the only sectors that lost ground on Tuesday.
The commodity-sensitive energy (+2.3%) sector ended its day on top of the leaderboard, rallying in conjunction with a 4.4% gain in oil futures ($46.74, +$1.97). OPEC's monthly report facilitated some buying interest after the cartel raised its demand outlook for 2016 and 2017. OPEC now estimates that global demand will increase by one million barrels per day by 2017. Separately, Alcoa (AA 10.69, +0.55) boosted the materials (+1.9%) sector after it beat analysts' estimates for the second quarter.
The Dow Jones Transportation Average (+2.2%) displayed relative strength as the major airlines outperformed. United Continental (UAL 46.16, +3.75) rallied 8.8% after raising its second-quarter unit revenue guidance. American Airlines (AAL 34.66, +3.50) spiked 11.2% after announcing that its consolidated pre-tax income will increase by $200 million due to co-branded credit cards.
The financial sector (+1.2%) displayed broad-based strength, trading higher in sympathy with European banking names. Royal Bank of Scotland (RBS 4.87, +0.15) and Barclays PLC (BCS 7.95, +0.28) settled higher by 3.2% and 3.7%, respectively. Dow component JPMorgan Chase (JPM 63.20, +1.93), which announced it will be raising the pay for 18,000 minimum wage workers, outperformed the price-weighted average. JPMorgan Chase will report its quarterly results before the open on Thursday.
Data storage names led in the technology space (+1.0%) after Seagate Technology (STX 29.35, +5.26) increased its second quarter guidance due to better than expected demand for its HDD product portfolio. The stock surged 21.8%. The high-beta chipmakers also displayed relative strength, evidenced by the 1.3% gain in the PHLX Semiconductor Index.
The U.S. Dollar Index (96.49, -0.08) ended its day modestly lower as the euro and pound each rebounded against the greenback. The euro/dollar pair finished higher by 0.1% (1.1063) while the pound climbed 2.0% against the buck (1.3251).
The Treasury complex finished on a lower note and saw broad-based selling pressure. The yield on the 10-yr note ended the day higher by seven basis points at 1.51%.
Today's trading volume was above the recent average as more than 952 million shares changed hands on the NYSE floor.
Today's economic data included May wholesale inventories and the May Job Openings and Labor Turnover Survey:
Wholesale inventories increased 0.1% in May (Briefing.com consensus +0.2%) after increasing an upwardly revised 0.7% (from 0.6%) in April.
Taking into account the upward revision to the prior month, May wholesale inventories were largely in-line with expectations.
The increase in May was driven by a 0.2% increase in nondurable inventories, which was aided by a 1.2% increase in apparel inventories and a 5.9% jump in farm products inventories.
Durable inventories were up 0.1%, bolstered by a 1.6% increase in professional equipment inventories and a 1.1% increase in electrical inventories.
Wholesale sales increased 0.5% following a downwardly revised 0.8% increase (from 1.0%) in April.
The wholesale inventories to sales ratio dipped to 1.35 from 1.36, but was up from 1.31 in the same period a year ago.
On a year-over-year basis, wholesale sales are down 2.5% while wholesale inventories are up 0.5%.
Wholesale inventories are just one component of total business inventories.
Manufacturing and retail inventories make up the rest of total business inventories.
The market doesn't typically pay much attention to this release since the full business inventories release comes a few days later.
The May Job Openings and Labor Turnover Survey showed that job openings came in at 5.500 million from a revised 5.845 million (from 5.788 million) in April.
Tomorrow's economic data will include the weekly MBA Mortgage Index and Import/Export Prices for May, which will cross the wires at 7:00 ET and 8:30 ET, respectively. The Fed's Beige Book for July and the Treasury Budget for June will both be released at 14:00 ET. DJ30 +120.74 NASDAQ +34.18 SP500 +14.98 NASDAQ Adv/Vol/Dec 2096/1.69 bln/803 NYSE Adv/Vol/Dec 2141/952.4 mln/897
3:30 pm :
The dollar index loses momentum, down -0.1% around the 96.46 level
Commodities, as measured by the Bloomberg Commodity Index, are up +1.6 at the 87.49 level
Crude oil rallies and closes at fresh highs of the session ahead of tonight's API data
August crude oil futures rose $1.97 (+4.4%) to $46.74/barrel
Monthly IEA data is scheduled to be released tomorrow
EIA petroleum inventory data is scheduled to be released tomorrow at 10:30 am ET
API data will be released today after the close
Natural gas sees a morning surge, consolidating just below its high of the session
August natural gas closed $0.03 higher (+1.1%) at $2.73/MMBtu
EIA natural gas inventory data will be released Thursday at 10:30 am ET
In precious metals, gold drops and consolidates around its afternoon lows, despite weakness in the dollar
August gold ended today's session down $21.30 (-1.6%) to $1335.60/oz
Silver futures see notable declines in the afternoon, easing off of 2-year highs hit last week to end lower along with gold for the day
September silver closed today's session $0.13 lower (-0.6%) at $20.17/oz
Base metal copper surges to close at highs of the session in afternoon pit trading
September copper closed $0.06 higher (+2.8%) at $2.21/lb
Grain futures close higher after the release of the WASDE Report
December corn closed $0.03 higher (+0.8%) at $3.60/bushel
September wheat closed $0.06 higher (+1.4%) at $4.36/bushel
November soybeans closed $0.29 higher (+2.7%) at $10.86/bushel
Wasde Highlights:
Global ending stocks:
Global corn ending stocks rose 1.6% to 208.39 million metric tons
Global wheat ending stocks fell 1.6% to 253.70 mmt
Global soybean ending stocks rose 1.2% at 67.10 mmt
In the U.S.:
Corn yield expectations for the 2016/17 crop season remained unchanged at 168.0 bushels per harvest acre
Wheat saw a big boost in yield expectations, rising 6% to 51.3 bu per harvested acre
Soybeans yields were unchanged, along with corn, at 46.7 bu per harvested acre
U.S. ending stocks:
Corn rose 3.6% to 2.081 bln bushels
Wheat rose 5.2% to 1.105 bln bushels
Soybean rose 12% to 290 mln bushels
4:48 pm SolarCity announces collaboration with Pacific Gas and Electric Company (PCG) (SCTY) : PG&E is teaming up with SolarCity to install smart inverters and battery storage systems for residential rooftop solar customers. The demonstrations will evaluate how PG&E can enhance the stability and power quality of the grid and optimize solar generation and power-flow management through the coordinated use of distributed energy resources like solar with smart inverters and battery storage. The demonstration is expected to commence this September and end in December 2017.
4:03 pm SemiLEDs reports Q3 results (no estimates); guides Q4 rev (LEDS) :
Q3 EPS ($1.06) vs ($0.77) last year; revs $2.4 mln, -18% YoY (no estimates).
Co sees Q4 rev $2.0-2.5 bln."The transition toward the fabless business model has taken longer than we anticipated; however, we still believe it is the right model... This should help us to lower our cash needs while evaluating other potential business opportunities."Equity indices climbed at the beginning of the session as the benchmark index and Dow Jones Industrial Average each notched all-time intraday highs. Global bourses tilted to the upside overnight as Japan's Nikkei (+2.5%) paced the advance. Prime Minister Shinzo Abe fueled risk appetite when he announced that the latest stimulus package from the country could total JPY10 trillion. Across the pond, Bank of England Governor Mark Carney added to the policy stimulus fervor when he commented that options remain available to the central bank should Britain's outlook worsen. Additionally, a rally in crude oil added to the bullish tenor as investors responded to optimistic comments from OPEC regarding demand in 2016 and 2017.
Market data today came in the form of the wholesale inventories reading which increased 0.1% in May after increasing an upwardly revised 0.7% (from 0.6%) in April. Additionally, the May Job Openings and Labor Turnover Survey showed that job openings declined to 5.500 million from a revised 5.845 million (from 5.788 million) in April.
Broader market movements took all three major US indices higher, closing out Tuesday with widespread gains. The broader market now boasts a three-day winning streak with action today being led higher by the tech-heavy Nasdaq Composite which added 34.18 points (+0.69%) to 5022.82. The S&P 500 added 14.98 points (+0.70%) to 2152.14, and the Dow Jones Industrial Average gained 120.74 points (+0.66%) to 18347.67. By those numbers, the Dow and the S&P closed at record highs today, and the Nasdaq pulled out of negative territory to take a breather in the green, YTD.
Another strong session out of the Technology (XLK 44.75, +0.37 +0.83%) sector as gains were had across the board, and the sector finished near highs of the day. Component Seagate Tech (STX 29.40, +5.31 +22.04%) performed the best out of all components as the company raised certain guidance owing to better than expected demand for the company's HDD product portfolio. Other sectors as measured by the S&P closed the day XLE +2.48%, XLB +1.82%, XLF +1.26%, XLI +0.92%, IYZ +0.67%, XLV +0.49, XLY +0.39%, XLP -0.54%, XLU -1.37% as Energy led the surge higher and Utilities under-performed.
In the S&P 500 Information Technology (737.95, +7.01 +0.96%) sector, a comfortably positive bias permeated most components as holding Oracle (ORCL 41.42, +0.64 +1.57%) turned in a solid session as the stock was upgraded ahead of the open this morning to an Outperform rating from a Market Perform at BMO Capital. Other names in the space which ended higher today included WDC +4.77%, MU +4.67%, HPQ +4.26%, TDC +4.15%, ADSK +3.41%, CSRA +3.32%, NTAP +3.03%, LRCX +2.21%, GLW +2.19%, WU +1.94%.
Other notable news items among sector components:
Seagate Tech (STX) raised guidance on better than expected demand for the company's HDD product portfolio. Specifically, the company raised guidance for Q4 revenues of $2.65 billion well above prior guidance of $2.3 billion. STX expects to report HDD unit shipments of about 37 million, reflecting about 62 exabytes, average capacity per drive of 1.7 terabytes and average selling price per unit of $67 for the fiscal fourth quarter 2016.
Symantec (SYMC 21.02, +0.22 +1.06%) to name Michael Fey as President and Chief Operating Officer upon closing of the previously announced acquisition of Blue Coat.
Xerox (XRX 9.67, +0.17 +1.79%) shares were in play today as reports of a potential RR Donnelley & Sons (RRD 18.81, +0.36 +1.95%)/XRX merger with XRX's copy unit.
IBM (IBM 157.04, +1.71 +1.10%) announced plans to establish the first IBM Center for Blockchain Innovation in Singapore.
Accenture (ACN 116.50, +1.04 +0.90%) has opened an Accenture Digital Hub in Tokyo, Japan to support the digital transformation of clients by helping them embrace open innovation.
Juniper Networks (JNPR 23.10, +0.24 +1.05%) announced that eBay Classifieds Group (EBAY 25.13, +0.27 +1.09%) has deployed Juniper Networks Contrail Networking to build automated and highly scalable virtual overlay networks, enabling its customers to easily buy, sell, trade and connect.
Western Union (WU 19.98, +0.38 +1.94%) announced the renewal of its relationship with Rite Aid (RAD 6.87, -0.01 -0.15%).
Shutterstock (SSTK 55.24, +6.54 +13.43%) announced an API integration with Alphabet's (GOOG 720.64, +5.55 +0.78%) Google. The image licensing deal provides Google's digital and mobile display advertising products, including Adsense, Adwords, and Admob, with access to Shutterstock's collection of more than 90 million images for license.
Elsewhere in the tech space:
Imperva (IMPV 47.58, -0.56 -1.16%) lowered Q2 guidance citing impacts by extended sales cycles across most geographies and verticals predominantly relating to larger deals. Specifically, the company lowered guidance to Q2 (Jun) EPS of $(0.20) to $(0.22), prior $(0.02) to $(0.04) and lowered Q2 revenue guidance to $57.5-58.0 million, prior $65.5-66.5 million.
Twitter (TWTR 18.10, +0.39 +2.20%) and Bloomberg announced a live streaming partnership.
Network-1 (NTIP 2.77, -0.02 -0.72%) disclosed a settlement of patent litigation with Alcatel-Lucent Entities and ALE.
Helios & Matheson (HMNY 9.77, +0.30 +3.17%) and Zone Technologies signed a definitive agreement and plan of merger.
FARO Techs (FARO 34.05, +0.27 +0.80%) to acquire BuildIT Software & Solutions. Financial terms of the deal were not disclosed.
8x8 (EGHT 15.19, +0.29 +1.95%) received three new patents related to networked contact centers, data storage and conferencing.
Blackbaud (BLKB 70.61, +1.63 +2.36%) acquired Attentive.ly. Financial terms of the deal were not disclosed.
Analyst actions:
STX was upgraded to Equal Weight from Underweight at Morgan Stanley,
ORCL was upgraded to Outperform from Market Perform at BMO Capital Mkts,
MITK was upgraded to Buy from Hold at Needham;
EMC was downgraded to Neutral from Buy at Mizuho,
MGI and TSM were downgraded to Neutral from Overweight at JP Morgan,
VOD was downgraded to Neutral from Buy at Citigroup,
CTSH was downgraded to Neutral from Buy at SunTrust,
NTGR was downgraded to Neutral from Buy at Rosenblatt,
SYMC was downgraded to Hold from Buy at Standpoint Research,
TSM was downgraded to Neutral from Buy at Nomura;
LXFT, INFY, GLOB were initiated with a Sector Weight at Pacific Crest,
ACN, CTSH, EPAM were initiated with an Overweight at Pacific Crest,
FTV was initiated with a Neutral at JP Morgan,
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