From Briefing.com: 4:15 pm : The stock market ended the Thursday affair on a higher note as the Dow Jones Industrial Average (+0.7%) and the S&P 500 (+0.5%) extended their recent jaunts to all-time highs. Today's positive bias can be attributed to hints of further policy easing and stronger-than-expected quarterly results from JPMorgan Chase (JPM 64.12, +0.96). Additionally, a rebound in oil futures, a risk-on posture, and strong sector leadership from the heavily-weighted financial (+0.9%), technology (+0.8%), and industrial (+0.7%) sectors added to the bullish tone. The major averages jumped at the start of the session, trading higher alongside an extended rally in global markets. The Bank of England helped support the latest round of buying interest when committee members indicated that the central bank was likely to provide further policy stimulus next month. The Bank of England was widely expected to lower its benchmark lending rate at today's meeting, but opted to examine incoming data to determine the specific size and nature of future stimulus. Separately, Dow component JPMorgan added to the bullish tone when it reported top- and bottom-line beats ahead of the open.
The benchmark index notched a session high in the first hour of trade (2168.99), but pulled back soon thereafter when it failed to clear technical resistance near the 2168 price level. Equities ebbed lower through the morning as heavily-weighted financials (+0.9%), technology (+0.8%), and industrials (+0.7%) trimmed some early gains. The S&P 500 (+0.5%) inched back towards its high in the afternoon, finishing its day five points off its best level. Nine sectors finished above their flat lines with financials (+0.9%), materials (+0.8%), and technology (+0.8%) leading the pack while countercyclical utilities (-0.7%), consumer staples (+0.1%), telecom services (+0.2%), and health care (+0.4%) rounded out the leaderboard.
The Dow Jones Transportation Average (+1.1%) finished ahead of the broader market as a rally in airlines boosted the index. The sub-group traded higher in sympathy with Delta Air Lines (DAL 40.98, +1.42) after it reported above-consensus bottom-line results and said that revenue per available seat mile is expected to turn positive by the end of the year. Elsewhere, CSX (CSX 29.05, +0.84) extended its post-earnings winning streak, jumping 3.0%.
The economically-sensitive financial sector (+0.9%) topped the leaderboard as results from JPMorgan Chase (JPM 64.12, +0.96) bolstered the broader sector. Life insurance names, investment brokerages, and money center banks each finished with solid gains. Additionally, Wells Fargo (WFC 48.94, +0.67) and Citigroup (C 44.45, +1.12) gained a respective 1.4% and 2.6% ahead of tomorrow morning's quarterly reports. Separately, Dow component Goldman Sachs (GS 162.54, +4.62) finished at the top of the price-weighted index.
In the technology sector (+0.9%), heavyweight component Apple (AAPL 98.79, +1.92) outperformed after supplier Taiwan Semiconductor (TSM 27.11, +0.22) reported a bottom-line beat and raised its revenue guidance for the third quarter. Other Apple suppliers also outperformed as Skyworks (SWKS 67.39, +2.04) and Qorvo (QRVO 59.31, +2.64) rallied 3.1% and 4.7%, respectively. Elsewhere, LINE Corp (LN 41.58, +8.74) experienced heavy demand on its first day of public trading, jumping 26.6% from its Monday pricing at $32.84.
The U.S. Dollar Index (96.11, -0.11) ended modestly lower as the buck lost ground against commodity currencies and the pound. The dollar/Canadian dollar pair finished lower by 0.6% (1.2898) as crude oil rebounded 1.8% ($45.66/bbl; +0.79). Meanwhile, Sterling gained 1.5% against the dollar (1.3337) as participants reacted to the Bank of England's surprise decision to maintain its monetary policy stance.
Treasuries were pressured at the beginning of the session as investors weighed a hotter-than-expected reading of June PPI (0.5%; Briefing.com consensus: +0.3%). The yield on the 10-yr note rose five basis points to 1.53%.
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 weekly initial claims and PPI for June:
Initial claims for the week ending July 9 were unchanged at 254,000 (Briefing.com consensus 265,000), marking the 71st straight week that initial claims have been below 300,000.
There were no special factors influencing the latest initial claims reading, which lowered the four-week moving average for the series from 264,750 to 259,000.
That is the lowest level since April 2016.
Continuing claims for the week ending July 2 increased by 32,000 to 2.149 million.
The four-week moving average for this series still dipped from 2,146,250 to 2,143,000.
The Producer Price Index (PPI) for June revealed a 0.5% increase in the PPI for final demand (Briefing.com consensus +0.3%), which was driven by a 0.4% jump in prices for final demand services.
The index for final demand goods increased 0.8%, which was the largest monthly increase since May 2015 and was led by a 4.1% uptick in prices for final demand energy.
The index for final demand less foods and energy ("core PPI") advanced 0.4% (Briefing.com consensus +0.1%).
That was the third straight monthly increase in core PPI and the largest monthly gain since January.
On a year-over-year basis, PPI for final demand is up 0.3% after being down 0.1% in May while core PPI is up 1.3% after being up 1.2% in May.
This is an inflation report that is apt to be seen favorably by the Federal Reserve as price trends are moving in the Fed's preferred direction.
Tomorrow's economic data will include Empire Manufacturing for July (Briefing.com consensus 5.0), Retail Sales for June (Briefing.com consensus +0.2%), and CPI for June (Briefing.com consensus +0.3%) each crossing the wires at 8:30 ET. Separately, Capacity Utilization (Briefing.com consensus 75.0%) and Industrial Production (Briefing.com consensus 0.2%) will be released at 9:15 ET. Finally, the day's data will be capped off with the 10:00 ET release of Business Inventories for May (Briefing.com consensus 0.2%) and the preliminary reading of the University of Michigan Sentiment Index for July (Briefing.com consensus 93.0).
Dow Jones +6.2% YTD
S&P 500 +5.9% YTD
Russell 2000 +5.9% YTD
Nasdaq Composite +0.5% YTD
DJ30 +134.22 NASDAQ +28.33 SP500 +11.31 NASDAQ Adv/Vol/Dec 1586/1.49 bln/1276 NYSE Adv/Vol/Dec 1728/815.3 mln/1289 3:30 pm :
The dollar index is down -0.2% at 96.07, boosting commodities overall
Commodities, as measured by the Bloomberg Commodity Index, are up +0.2% at 87.12
Crude oil closes above the $45/barrel handle of support after yesterday's notable post-EIA sell-off
August crude oil futures rose $0.79 (+1.8%) to $45.66/barrel
Baker Hughes rig count data will be released tomorrow at 1 pm ET
Natural gas sees an initial spike after the release of its inventory number, but ultimately closes in the red
August natural gas closed $0.01 lower (-0.4%) at $2.73/MMBtu
Natural gas inventory showed a build of +64 bcf vs expectations for inventory to be a build of approximately +58 bcf.
Working gas in storage was 3,243 Bcf as of Friday, July 8, 2016, according to EIA estimates.
Stocks were 507 Bcf higher than last year at this time and 586 Bcf above the five-year average of 2,657 Bcf.
At 3,243 Bcf, total working gas is above the five-year historical range.
In precious metals, gold sees an afternoon of consolidation on lighter than avg volume, closing near session lows despite dollar weakness
August gold ended today's session down $11.30 (-0.8%) to $1332.10/oz
Silver trades near parity with the previous session's close, consolidating along with gold and closing slightly lower for the day
September silver closed today's session $0.09 lower (-0.4%) at $20.32/oz
Base metal copper closes afternoon pit trading unchanged
September copper closed flat at $2.24/lb
Global bourses extended their recent rally as investors looked to potential policy stimulus measures from the Bank of Japan and the Bank of England. Japan's Nikkei (+1.0%) extended its recent winning streak amid reports that the country is on the verge of revealing a large stimulus package. Separately, investors shrugged off news that the Bank of England held off on cutting its benchmark interest rate. The central bank was widely expected to cut its policy rate by 25 basis points (to 0.25%). However, bank committee members indicated that expectations remain high for an August rate cut.
Market data today came in the form of initial claims for the week ending July 9 which were unchanged at 254,000, marking the 71st straight week that initial claims have been below 300,000. Continuing claims for the week ending July 2 increased by 32,000 to 2.149 million. The Producer Price Index (PPI) for June revealed a 0.5% increase in the PPI for final demand, which was driven by a 0.4% jump in prices for final demand services. The index for final demand less foods and energy ("core PPI") advanced 0.4%.
The major averages notched session highs in the first hour of trade as equity markets looked to continue their recent risk rally. The broader market grabbed another session of gains as all-time highs were set in the Dow Jones Industrial Average and S&P 500. To that end, the Dow led all three major US indices today, higher by 134.29 (+0.73%) to 18506.41. The Nasdaq Composite added 28.33 points (+0.57%) to 5034.06, and the S&P 500 was up 11.32 points (+0.53%) to 2163.75.
Technology (XLK 45.05, +0.29 +0.65%) was again among the best performing sectors in the markets as component Alliance Data (ADS 212.55, +3.12 +1.49%) out-performed following a long-term agreement with The Children's Place (PLCE 83.16, +0.15 +0.18%). Other sectors as measure by the S&P closed today XLF +0.94%, XLB +0.89%, XLI +0.76%, XLE +0.51%, XLV +0.43%, XLY +0.41%, IYZ +0.03%, XLP -0.02%, XLU -0.65%, led by Financials and Materials.
In the S&P 500 Information Technology (743.22, +5.95 +0.81%) sector, trading ended just off highs as component Cree (CREE 27.74, +2.66 +10.61%) was notably higher on the back of the sale of its Wolfspeed Power & RF division to Infineon Technologies (IFNNY 15.18, +0.42 +2.84%) for $850 million in cash; additionally, the company announced preliminary Q4 revenue expectations at the upper end of its target range at about $388 million. Other names in the space which displayed relative out-performance included QRVO +4.66%, EBAY +3.82%, SWKS +3.12%, HPE +2.51%, FSLR +2.49%, ADSK +2.27%, AVGO +2.15%, AAPL +1.98%, PYPL +1.73%, ADS +1.47%, IBM +1.43%.
Other notable news items among sector components:
Microsoft (MSFT 53.74, +0.23 +0.43%) 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.
The European Commission takes further steps in investigations alleging Alphabet's (GOOG 720.95, +3.97 +0.55%) Google's comparison shopping and advertising-related practices breach EU rules.
MasterCard (MA 91.45, +1.11 +1.23%) commented on the UK Competition Appeal Tribunal ruling in the Sainsbury's Supermarkets (JSAIY 12.32, +0.20 +1.63%) case. "On first look, we are grateful that the court found that significant benefits flow to both retailers and cardholders from interchange in the UK. What's interesting is that the court concluded that a lawful level of credit interchange for the UK market would be over 65% higher than the 30bps rate cap imposed in the 2015 Interchange Fee Regulation ("IFR")...While we are disappointed to see liability as part of the finding, we note that in awarding a limited portion of the claimed damages, the court concluded that Sainsbury's did not pass through interchange costs to consumers in the form of higher prices." As a result, the company expects to take a pre-tax charge of approximately US$90 million as a special item in its second quarter 2016 financial results reflecting the judgment.
Accenture (ACN 116.77, -0.06 -0.05%), the University of Notre Dame Initiative for Global Development and The Rural Development Company launched the first solar-powered microgrids in the northern KwaZulu-Natal district of uMkhanyakude, South Africa, as part of the Connectivity, Electricity and Education for Entrepreneurship (CE3) program.
Alliance Data Systems (ADS) announced its Columbus, Ohio-based card services business signed a new long-term agreement to provide private label credit card services for Secaucus, N.J.-based The Children's Place, Inc. (PLCE).
Elsewhere in the tech sector:
Communications Workers of America has notified AT&T (T 42.77, +0.18 +0.42%) that Mobility employees failed to ratify a four-year contract. The parties have agreed to meet in a continuing effort to reach an agreement.
Cree (CREE) announced an agreement to sell its Wolfspeed Power and RF division, which includes the silicon carbide substrate business for power, RF and gemstone applications, to Infineon Technologies AG (IFNNY) for $850 million in cash. Additionally, the company announced that preliminary revenue results for Q4 were at the upper end of the company's target range at about $388 million.
Hollysys' (HOLI 18.80, -0.07 -0.37%) wholly owned subsidiary, Concord Corporation Pte. Ltd., signed a significant contract with Mitsubishi Heavy Industries Ltd. to provide the engineering, supply, installation, testing and commissioning for part of Power Distribution System Package for Doha Metro Phase 1. The contract is approximately valued at QAR 227 million, or USD $62.3 million.
FairPoint Communications (FRP 16.27, +0.33 +2.07%) announced that CFO and EVP, Ajay Sabherwal, has tendered his resignation. Mr. Sabherwal's resignation will be effective following a structured transition and the filing of the company's Form 10-Q for the quarter ended June 30, 2016. Karen Turner has accepted a promotion to replace Mr. Sabherwal as CFO after previously serving as Executive Vice President, Operational Support.
Telus (TU 33.62, +0.26 +0.78%) to acquire the Canadian business of Nightingale Informatix. Financial terms of the deal were not disclosed.
EarthLink (ELNK 6.73, -0.05 -0.74%) acquired Boston Retail Partners, LLC. Financial terms of the deal were not disclosed.
In reaction to quarterly results:
WNS (WNS 26.64, -1.01 -3.65%) reported better than expected Q1 EPS of $0.45 on better than expected revenues which also rose 10.4% versus last year to $148 million. The company also issued downside guidance for FY17 EPS of $1.78-1.89 on revenues which, at the mid-point, were worse than expectations at $541-569 million.
Taiwan Semi (TSM 27.11, +0.22 +0.82%) reported better than expected earnings for Q2 of NT$0.15 and better than expected revenues of NT$221.81 billion. The company also issued upside guidance for Q3 revenues of NT$254-257 billion.
Analyst actions:
AMX was upgraded to Market Perform at Itau BBA;
TSM was downgraded to Outperform at Daiwa,
CA was downgraded to Neutral from Buy at Mizuho,
IMPR was downgraded to Mkt Perform from Outperform at Leerink Partners,
AEIS was downgraded to Mkt Perform from Outperform at Raymond James,
BRCD was downgraded to Underperform from Neutral at Robert W. Baird,
TI was downgraded to Hold from Buy at HSBC;
FTV was initiated with a Hold at Stifel,
LN was initiated with a Buy at Jefferies,
IMPV was initiated with a Hold at Evercore ISI
(Disclosure: Briefing.com has a business relationship with Microsoft)
3:23 pm Semiconductor Hldrs ETF continues to display relative strength, notches new session high (SMH) : The SMH is up for the seventh session in a row with its hitting 59.97 in recent trade today. An extension target and its 2015 / 15 year high come into play slightly above at 60.03/60.13. Some top performers today include: CREE, QRVO, CRUS, AVGO. AMD, ASML, NVDA, AMAT, MCHP, MRVL, TSM.
CY +5.6% (Betaville report suggesting the company is attracting multiple potential buyers and previously rejected Summitview $14 / share bid)
6:35 am Infineon confirms deal to acquire Cree's (CREE) Wolfspeed Power and RF division for $850 mln (IFNNY) : The business to be acquired by Infineon has generated pro-forma revenues of US Dollar 173 million in the twelve months ending March 27, 2016. The acquisition will be immediately accretive to Infineon's adjusted earnings-per-share and margin. Infineon will fund the transaction with bank financing of US Dollar 720 million and US Dollar 130 million of cash-on-hand. Infineon will maintain its strong balance sheet after the cash- and debt-financed transaction. Infineon's capital structure will stay well within the previously communicated targets of Euro 1 billion gross cash plus 10 to 20 percent of revenue, and no more than two times the gross debt-to-EBITDA.
5:58 am Cree to sell its Wolfspeed Power & RF division to Infineon Technologies (IFNNY) for $850 mln in cash, sees prelim Q4 revenue results at the upper end of its target range at ~$388 mln (CREE) :
The Wolfspeed Power and RF division includes the silicon carbide substrate business for power, RF and gemstone applications The business to be acquired by Infineon generated pro-forma revenue of $173 million in the last twelve months ending March 27, 2016*. Both Cree's Board of Directors and Infineon's Supervisory Board have approved the transaction. J.P. Morgan Securities LLC served as the company's financial adviser on the transaction. The closing of the transaction is expected by the end of calendar year 2016, and is subject to customary closing conditions and regulatory approvals, including HSR and CFIUS clearance. The Company targets approximately $585 million of net proceeds after tax and other deal related costs. Q4 Business Update:
Commercial lighting gained momentum in Q4, as orders increased, customer service improved significantly and nine new products or significant upgrades were released. LED Products also executed well, delivering solid quarter over quarter revenue growth. Preliminary revenue results for Q4 were at the upper end of the Company's target range at ~$388 mln vs $382.87 mln Capital IQ Consensus EstimateLighting Products revenue was in line with the expectations for this segment in the Company's previously announced revenue targets at approximately $197 million. LED Products revenue was higher than the expectations for this segment in the Company's previously announced revenue targets at approximately $160 million due in part to the benefit of licensing revenue. Wolfspeed revenue was in line with the expectations for this segment in the Company's previously announced revenue targets at approximately $31 million.
4:22 am Taiwan Semi beats by NT$0.15, beats on revs; guides Q3 revs above consensus (TSM) :
Reports Q2 (Jun) earnings of NT$2.80 per share, NT$0.15 better than the Capital IQ Consensus of NT$2.65; revenues rose 8.0% year/year to NT$221.81 bln vs the NT$217.47 bln Capital IQ Consensus.Gross margin for the quarter was 51.5%Shipments of 16/20-nanometer accounted for 23% of wafer revenues, and 28-nanometer process technology accounted for 28% of total wafer revenues. Advanced technologies, defined as 28-nanometer and more advanced technologies, accounted for 51% of total wafer revenues.
Outlook:
Co issues upside guidance for Q3, sees Q3 revs of NT$254-257 bln vs. NT$252.57 bln Capital IQ Consensus Estimate.Gross profit margin is expected to be between 50-52%Operating profit margin is expected to be between 39.5% and 41.5%.The management also states 2016 capital budget to be between $9.5-10.5 billion.
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