From Briefing.com: 4:10 pm : The stock market ended the Wednesday affair on a flat note as the broader market spent most of the session consolidating after its recent rally. The S&P 500 (UNCH) ended its day narrowly above its flat line, extending its winning streak to a fourth session. Additional factors impacting today's trade included a downturn in oil, softening in the dollar, a rebound in safe havens, and the underperformance of the heavily-weighted consumer discretionary (-0.5%) and technology (-0.1%) sectors. The Dow Jones Industrial Average (+0.1%) ended ahead of the benchmark index (UNCH) and the Nasdaq Composite (-0.3%). U.S. equities began the day on a choppy note, responding to a weakening rally overseas. European markets ended their session on a flat note as investors looked ahead to a Thursday policy meeting at the Bank of England. Governor Mark Carney previously stated that policy meetings over the next two months should be viewed as one meeting, raising concerns that the central bank will not offer further easing measures until August. Additionally, crude oil added to the cautious tone after the American Petroleum Institute reported a surprise crude oil build in its weekly inventory report (+2.2 million barrels; last: -6.73 million barrels).
The major averages ebbed lower throughout the morning as investors ruminated over the Department of Energy's latest stockpile data. The Energy Information Administration reported that crude oil inventories declined by 2.54 million barrels, compared to the estimated 2.95 million barrel draw. Furthermore, the report also showed that gasoline inventories rose by 1.21 million barrels, compared to the estimated 0.43 million barrel draw. In response, WTI crude extended its decline, ending the day lower by 4.0% ($44.87/bbl; -$1.87).
Equity indices ticked higher in the afternoon, essentially ignoring the release of the Fed's Beige Book for July. The Beige Book reported that economic activity continued to expand at a modest pace, but that inflationary pressures remained subdued. The major indices finished off their best levels of the day with seven sectors in the green. The defensively-oriented telecom services (+0.8%), utilities (+0.8%), and consumer staples (+0.5%) ended in the front of the pack while energy (-0.7%), consumer discretionary (-0.5%), and technology (-0.1%) rounded out the board.
In the consumer discretionary space (-0.5%), Michaels Stores (MIK 27.13, -1.75) underperformed after announcing that it would conduct a secondary stock offering of 11 million shares. The company also lowered its second-quarter guidance below analysts' estimates. Elsewhere, heavyweight Amazon (AMZN 742.63, -5.58) declined by 0.8% after yesterday's "Prime Day" sale. However, the company reported that worldwide orders increased by 60.0% year-over-year.
The economically-sensitive financial sector (UNCH) ended its day near its flat line as investors looked ahead to key earnings reports later in the week. On that note, JPMorgan Chase (JPM 63.16, -0.04) will report tomorrow morning while Citigroup (C 43.33, -0.11) and Wells Fargo (WFC 48.27, -0.08) will both release their earnings ahead of Friday's opening bell.
The Dow Jones Transportation Average (+0.7%) displayed relative strength as rail names outperformed. In the group, CSX (CSX 28.21, +1.19) jumped 4.4% after the company reported a bottom-line beat on in-line revenue. The company released its report early, looking to clarify incorrect information that was released via Twitter. On the flipside, airlines underperformed as the group pulled back from their yesterday's rally. Delta Air Lines (DAL 39.56, -0.65) slipped 1.6% ahead of tomorrow morning's earnings call.
The U.S. Dollar Index (96.32, -0.12) ended near its high as the buck gained ground against commodity currencies and the pound. The dollar/Canadian dollar pair finished higher by 0.5% (1.2977) while sterling lost 0.8% against the greenback (1.3138).
Treasuries enjoyed a bid throughout today's session as yields fell throughout the complex. The yield on the 10-yr note settled at 1.47%, sliding four basis points.
Today's trading volume was below the recent average as fewer than 815 million shares changed hands on the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index, Import/Export Prices for June, and the Treasury Budget for June:
The weekly MBA Mortgage Index showed a seasonally adjusted increase of 7.2% in mortgage applications.
Import prices increased 0.2% in June while export prices increased 0.8%.
Notwithstanding the headline increases, this report hasn't kicked up any noticeable inflation dust for the Federal Reserve.
The uptick in import prices was driven by a 6.2% increase in fuel prices.
Excluding fuel, import prices actually declined 0.3%, which was the largest monthly drop since the index declined 0.3% for six consecutive months from July to December 2015.
On a year-over-year basis, nonfuel import prices are down 1.8%.
Higher export prices in June were led by a 2.4% jump in agricultural export prices.
Excluding agriculture, export prices increased 0.5%.
That is the fourth straight monthly increase in nonagricultural export prices, yet they are still down 3.8% year-over-year.
The Treasury Budget for June showed a surplus of $6.3 billion versus a surplus of $50.5 billion in June 2015.
The Treasury Budget data is not seasonally adjusted, so the June surplus cannot be compared to the $52.5 billion deficit registered in May.
Total receipts in June were $329.6 billion while total outlays were $323.3 billion.
Receipts were $13.4 billion less than receipts in June 2015. Total outlays, meanwhile, were $48.7 billion more than the same period a year ago.
The 12-month deficit widened to $523.6 billion from $479.3 billion in May.
Tomorrow's economic data will include weekly initial claims (Briefing.com consensus 265k) and Core PPI for June (Briefing.com consensus 0.1%), which will each be released at 8:30 ET.
Russell 2000 +5.8% YTD
Dow Jones +5.4% YTD
S&P 500 +5.3% YTD
Nasdaq Composite UNCH YTD
DJ30 +24.45 NASDAQ -17.09 SP500 +0.28 NASDAQ Adv/Vol/Dec 1175/1.515 bln/1650 NYSE Adv/Vol/Dec 1390/814.2 mln/1605 3:30 pm :
The dollar index is down -0.2% around the 96.25 level, aiding select commodities in afternoon pit trading
Commodities, as measured by the Bloomberg Commodity Index, are down -0.6% at 86.98
Crude oil plummets to end near session lows after the release of mixed EIA storage data
August crude oil futures fell $1.87 (-4.00%) to $44.87/barrel
Baker Hughes rig count data will be released this Friday at 1 pm ET
API data released yesterday evening showed a build of +2.20 mln barrels compared to last week's draw of -6.736 barrels
Monthly IEA data highlights:
Global oil supplies rose by 0.6 mb/d in June, to 96 mb/d, after outages curbed OPEC and non-OPEC supplies in May, while production was 750 kb/d below as higher OPEC output only partially offset non-OPEC declines, the newly released IEA Oil Market Report (OMR) for July informs subscribers. Non-OPEC supplies are set to decline by 0.9 mb/d in 2016, to 56.5 mb/d, before rising 0.2 mb/d in 2017.
Growing uncertainty over the global economy and the related dollar strength weighed, but the downside was limited by further declines in US production and inventories. OPEC crude output rose by 400 kb/d in June to an eight-year high of 33.21 mb/d, including newly re-joined Gabon. Saudi Arabia ramped up to a near-record rate of 10.45 mb/d and Nigerian flows partially recovered.
EIA crude oil inventory highlights:
Crude oil inventories had a draw of -2.546 mln (consensus called for a draw between -2.2 mln and -3.2 mln barrels)
Gasoline inventories had a build of +1.213 mln
Distillate inventories had a build of +4.058 mln
Natural gas extends the previous session's gains, closing slightly above yesterday's close ahead of tomorrow's inventory data
August natural gas closed $0.01 higher (+0.4%) at $2.74/MMBtu
In precious metals, gold sees an afternoon of consolidation after an early morning surge, as the dollar loses momentum
August gold ended today's session up $7.80 (+0.6%) to $1343.40/oz
Silver futures end near year-to-date highs as the dollar index holds onto its morning losses
September silver closed today's session $0.24 higher (+1.2%) at $20.41/oz
Base metal copper closes higher for the fourth consecutive session
September copper closed $0.03 higher (+1.4%) at $2.24/lb
4:34 pm Rambus announces that its Cryptography Research Division and Boeing (BA) have signed a license agreement for the inclusion of advanced differential power analysis countermeasures in Boeing products (RMBS) :
4:34 pm Microsoft announces professional degree program (MSFT) : On Wednesday at the Worldwide Partner Conference, Microsoft Corp. announced the Microsoft Professional Degree (:MPD) program, the first program of its kind to offer employer-endorsed, university-caliber curriculum for professionals at any stage of their career. MPD is a Microsoft-led initiative that provides professionals with real-world knowledge and hands-on experience to grow their skills in critical fields. The initial MPD offering is in data science, with all courseware available on edX.org, the nonprofit online learning destination founded by Harvard University and MIT.
4:13 pm Ultratech responds to Neuberger Berman and recommends stockholders vote for director nominees - Arthur Zafiropoulo, Michael Child, Paramesh Gopi, Nicholas Konidaris, Dennis R. Raney, Henri Richard and Rick Timmins (UTEK) :
"Contrary to the recent public statements made by Neuberger, Ultratech has provided responses to the points raised. In addition, in order to make sure its stockholders had all the facts about Neuberger's director nominees, Ultratech factually outlined the numerous concerns of its Board of Directors that arose from the thorough vetting of Ronald Black and Beatriz Infante....Beginning in 2015, Ultratech's Board and management team have been actively engaged with Neuberger regarding its issues. Instead of continuing to work with Ultratech to identify candidates with the right credentials to serve on the Company's Board, Neuberger chose to end the constructive dialogue and launch a costly and distracting proxy fight. Ultratech remains willing to engage with Neuberger and recently reached out to Neuberger in an attempt to resolve this contest. Unfortunately, based on these discussions, the Company believes Neuberger is more interested in a contested vote as opposed to reaching a mutually agreeable resolution for the benefit of all stockholders."Ultratech has publicly committed to a process by which it will refresh its Board. This process led to the nomination of Dr. Paramesh Gopi to stand for election at the 2016 Annual Meeting, with Joel Gemunder stepping down from the Board. Furthermore, the Board will add a highly-qualified director candidate for each of the following two to three years, resulting in an average tenure of the directors of approximately 10 years following the 2019 Annual Meeting.4:11 pm Ultratech issues a response to Neuberger Berman's most recent letter, remains willing to engage with Neuberger in an attempt to resolve matters (UTEK) :
Highlights of letter (as stated by Ultratech):
Ultratech remains willing to engage with Neuberger and recently reached out to Neuberger in an attempt to resolve this contest. Based on these discussions, the co believes Neuberger is more interested in a contested vote as opposed to reaching a mutually agreeable resolution for the benefit of all stockholders.Ultratech believes that Neuberger is required to disclose all of the relevant facts concerning their nominees to Ultratech stockholders so that Ultratech stockholders can make an informed decision.The Ultratech Board unanimously recommends that stockholders vote on the WHITE proxy card FOR all seven of the Company's director nominees.Equity futures inched higher overnight as investors continued to eye potential stimulus measures while shrugging off weakening economic conditions. Japan's Nikkei (+0.8%) outperformed despite weaker-than-expected readings of Industrial Production in June (-2.6%; expected -2.2%) and Capacity Utilization in May (-2.4% month-over-month; last -1.0%). Separately, European bourses ended their day little changed as participants looked ahead to Thursday's Bank of England meeting.
The major averages inched higher at the start of the session, attempting to extend their recent rally. However, the broader market pulled back when the Department of Energy's weekly inventory report disappointed investors. The EIA reported that crude inventories (-2.54 million barrels) shrank slower than expected while gasoline inventories (+1.21 million barrels) also missed expectations.
Additional economic data today included the weekly MBA Mortgage Index which showed a seasonally adjusted increase of 7.2% in mortgage applications. Also, import prices increased 0.2% in June while export prices increased 0.8%. Data was capped off today by the June Treasury Budget announcement, which showed a surplus of $6.3 billion versus a surplus of $50.5 billion in June 2015 and the Fed Beige Book which highlighted that economic activity continues to expand at a modest pace.
It was fun while it lastedthe broader market snapped the recent winning streak today, coming off all-time highs in the early part of the session. While the majority of afternoon trade was spent up and down in and out of gains and losses, the markets ultimately ended mixed as gains were led by the Dow Jones Industrial Average which added 24.45 points (+0.13%) to 18372.12. The S&P 500 also finished in the green, albeit modestly, as the index was higher by less than one point (+0.01%) to 2152.43. The Nasdaq Composite was the lone laggard today, down 17.09 points (-0.34%) to 5005.73. Four of the top five Nasdaq 100 components posted losses today, as Apple (AAPL -0.56%), Alphabet (GOOGL -0.42%), Alphabet (GOOG -0.51%), Microsoft (MSFT +0.56%), and Amazon (AMZN -0.75%) could perhaps be the reasoning for the sector under-performance.
Where the broader market broke, however, the Technology (XLK 44.76, +0.01 +0.02%) sector did not falter as the space resisted the broader market pressure. Component Level 3 (LVLT 56.29, +1.91 +3.53%) finished higher today on the back of some M&A chatter in the name that circulated this afternoon, yet was never confirmed. Other sectors as measured by the S&P ended today XLU +0.79%, XLP +0.56%, IYZ +0.52%, XLB +0.27%, XLI +0.24%, XLF +0.00%, XLV -0.04%, XLY -0.49%, XLE -0.86% with Utilities leading in positive territory and Energy felt the broader market pressure.
The S&P 500 Information Technology (737.27, -0.68 -0.09%) sector closed out the day in the green after a brief stint in negative territory as component Facebook (FB 116.78, -1.15 -0.98%) ended modestly lower following cautious commentary from Citron Research. Other notable movers in the sector today included QRVO -2.29%, ADS -1.75%, FSLR -1.68%, FLIR -1.56%, ATVI -1.29%, FFIV -1.23%, HPE -0.96%.
Other notable news items among sector components:
Intuit (INTU 115.92, -0.42 -0.36%) named Lucas Watson as executive vice president, chief marketing and sales officer.
TSYS (TSS 54.62, -0.08 -0.15%) announced that Lloyds Banking Group (LYG 2.99, -0.03 -0.99%) renewed its agreement with TSYS to continue to process the bank's UK commercial card portfolio.
Alphabet (GOOG 716.98 -3.66 -0.51%) acquired Kifi. Financial terms of the deal were not disclosed.
Cadence Design (CDNS 25.51, -0.07 -0.27%) announced that its implementation and sign-off tools have achieved certification on the Intel (INTC 35.01, +0.07 +0.20%) third-generation 10nm tri-gate process for customers of Intel Custom Foundry.
Intel (INTC) Security announced the expansion of its extensive partner ecosystem through the Intel Security Innovation Alliance.
Electronic Arts (EA 77.62, -1.89 -2.38%) announced it will host a conference call on July 19, 2016 to discuss changes to the way in which it externally reports its financial performance in response to the SEC's Compliance and Disclosure Interpretations regarding use of non-GAAP financial measures that were released on May 17, 2016. EA noted it will not be discussing any business results on the call.
Facebook (FB) underperformed today amid cautious commentary from Citron Research.
Elsewhere in the tech space:
Amazon (AMZN 742.63, -5.58 -0.75%) confirmed earlier reports of Prime Day success - Customer orders surpassed Prime Day 2015 by more than 60% worldwide and more than 50% in the U.S.
SolarCity (SCTY 24.22, -0.39 -1.58%) announced a collaboration with Pacific Gas and Electric Company (PCG 64.56, +0.86 +1.35%).
Imprivata (IMPR 19.01, +4.51 +31.10%) to be acquired by Thoma Bravo for $19.25 per share in cash.
FXCM (FXCM 9.20, +0.01 +0.11%) filed for $125 million mixed securities shelf offering.
ExlService (EXLS 54.23, +0.42 +0.78%) named Mike Toma as Chief Technology Officer.
Net Element (NETE 2.14, +0.28 +15.05%) disclosed it entered into a $10 million purchase agreement with ESOUSA Holdings.
Nokia (NOK 5.89, +0.30 +5.37%) and Samsung (SSNLF 1220, flat) expanded their patent license agreement. NOK expects the result to have a positive impact on net sales starting in Q3.
M&A chatter circulated in Level 3 (LVLT) this afternoon, pushing the stock higher.
Analyst actions:
P was upgraded to Overweight from Neutral at Piper Jaffray;
YELP was downgraded to Underperform from Market Perform at Wells Fargo,
XPLR was downgraded to Neutral from Buy at Roth Capital,
EMC was downgraded to Neutral from Outperform at Macquarie,
KEYW was downgraded to Hold from Buy at Maxim Group,
SCOR was downgraded to Neutral from Buy at Sidoti,
IMPR was downgraded to Neutral from Overweight at Piper Jaffray;
FICO was initiated with a Buy at Dougherty & Co,
ETFC was initiated with a Buy at Buckingham,
FTV was initiated with a Buy at UBS
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