From Briefing.com: Weekly Recap - Week ending 22-Jul-16The stock market flirted with its first weekly decline in four weeks, but steady buying interest on Friday helped equities secure yet another round of weekly gains. The S&P 500 added 0.6% while the Nasdaq Composite (+1.4%) outperformed.
Quarterly earnings were in focus throughout the week, but more results will be released in coming weeks with 75.4% of S&P 500 members still due to report their earnings. So far, blended earnings for the second quarter are down 3.6% with energy (-78.2%) and materials (-10.1%) showing the largest blended declines while sectors like telecom services (+6.1%) and consumer discretionary (+8.5%) have shown blended earnings growth.
Next week will feature more quarterly reports, but central banks will be back in the spotlight, starting with a Wednesday policy statement from the Federal Reserve. The Fed will be followed by the Bank of Japan, which will announce the results of its meeting on Friday.
Investors have not shown much concern about the upcoming Fed meeting, considering the fed funds futures market implies just a 2.4% chance of a rate hike being announced on Wednesday. Rate hike expectations for the next two meetings remain subdued while the implied probability of a rate hike in December sits at 47.8%.
Index Started Week Ended Week Change % Change YTD %
DJIA 18516.55 18570.85 54.30 0.3 6.6
Nasdaq 5029.59 5100.16 70.57 1.4 1.9
S&P 500 2161.74 2175.03 13.29 0.6 6.4
Russell 2000 1205.31 1212.73 7.42 0.6 6.8
4:18 pm Closing Market Summary: Low Volume Affair Extends Recent Bull Run (:WRAPX) :
The stock market ended an upbeat week on a higher note as the major averages soared to new all-time highs. The broader market maintained its bullish posture as investors examined a hodgepodge of quarterly earnings reports. Other focal points impacting today's trade included strengthening in the dollar, weakness from the oil pit, and key sector leadership from the technology (+0.5%), consumer discretionary (+0.5%), and financial (+0.6%) sectors. The Nasdaq Composite (+0.5%) finished in-line with the S&P 500 (+0.5%) and ahead of the Dow Jones Industrial Average (+0.3%).
Equity indices began the day on a choppy note as participants eyed a relatively flat finish in global bourses. Across the pond, the first batch of post-Brexit regional PMI readings came in on a mixed note as the United Kingdom's July Manufacturing PMI (49.1; last: 52.1) and July Services PMI (47.4; expected last: 52.3) each showed noticeable contractions. On the flipside, eurozone PMI fared better, but July Manufacturing PMI (51.9; last: 52.8) and July Services PMI (52.7; last: 52.8) both declined from their June readings.
The benchmark index slipped during the first hour of trade, finding its bearings after the preliminary reading of U.S. Markit Manufacturing PMI (52.9; last: 51.3) for July came in better than expected. The major averages rallied off their opening low as heavily-weighted industrials (+0.1%) and technology (+0.5%) erased their opening losses. All ten sectors finished in the green as financials (+0.6%), telecom services (+1.3%), and utilities (+1.3%) led the pack. The remaining gainers ended with upticks between 0.1% (industrials) and 0.5% (consumer discretionary).
The financial sector (+0.6%) extended its weekly gain to 0.7%, compared to a gain of 0.6% in the benchmark index. In the group, asset management companies outperformed as they rebounded alongside Bank of New York Mellon (BK 39.19, +0.59). Additionally, Dow component American Express (AXP 64.28, +0.85) outperformed as it rebounded in sympathy with Visa (V 79.91, +1.12). The credit service name beat bottom-line estimates for the quarter and announced an additional $5 billion in share buybacks. Separately, E*TRADE (ETFC 25.81, +0.59) climbed 2.3% as investors responded to a 10.5% increase in revenue year-over-year.
The consumer discretionary space (+0.5%) outperformed as restaurant names gained alongside Chipotle Mexican Grill (CMG 442.48, +24.41). The stock rallied 5.8% after reporting better-than-feared quarterly results. Elsewhere, Panera Bread (PNRA 215.54, +5.59) and Buffalo Wild Wings (BWLD 140.77, +6.12) gained 2.7% and 4.6%, respectively. The two names are slated to report earnings next Tuesday. On the flipside, 21st Century Fox (FOXA 27.11, -0.07) underperformed after Fox News CEO Roger Ailes resigned from his position.
In the technology space (+0.5%), Dow component Microsoft (MSFT 56.57, +0.77) outperformed, extending its weekly advance to 5.3%. The high-beta chipmakers ended the day in-line with the broader sector as the group moved higher in sympathy with Advanced Micro (AMD 5.84, +0.62). The stock spiked 11.9% after beating estimates for the quarter and raising its third-quarter outlook. On the flipside, Skyworks (SWKS 64.81, -6.11) underperformed as inventory fears outweighed positive quarterly results.
The heavily-weighted industrial sector (+0.1%) finished above its flat line as rail names and airlines rebounded. Union Pacific (UNP 92.85, +1.92) jumped 2.1% after falling 3.4% yesterday. Dow component General Electric (GE 32.06, -0.53) rounded out the price-weighted index after reporting a 16.0% loss in organic orders. Elsewhere, Honeywell (HON 115.61, -3.05) finished lower by 2.6% after its top line failed to impress investors.
The U.S. Dollar Index (97.36, +0.36) settled higher as the yen, euro, and pound each slipped against the greenback. The dollar/yen pair finished higher by 0.2% (106.07) while the single currency ticked lower by 0.4% against the buck (1.0978). Separately, sterling fell 1.0% against the dollar (1.3098).
The Treasury complex finished on a mixed note with the yield on the 10-yr note rising one basis point to 1.56%.
Today's trading volume was below the recent average as fewer than 733 million shares changed hands on the NYSE floor.
There was no economic data of note released today. Monday's economic calendar will also be empty, but data will pick up later in the week with a Wednesday release of the FOMC's July Policy Statement.
Week in Review: Stocks Climb to Record(er) Highs
The stock market flirted with its first weekly decline infour weeks, but steady buying interest on Friday helped equities secure yetanother round of weekly gains. The S&P 500 added 0.6% while the NasdaqComposite (+1.4%) outperformed.
Quarterly earnings were in focus throughout the week, butmore results will be released in coming weeks with 75.4% of S&P 500 membersstill due to report their earnings. So far, blended earnings for the secondquarter are down 3.6% with energy (-78.2%) and materials (-10.1%) showing thelargest blended declines while sectors like telecom services (+6.1%) andconsumer discretionary (+8.5%) have shown blended earnings growth.
Next week will feature more quarterly reports, but centralbanks will be back in the spotlight, starting with a Wednesday policy statementfrom the Federal Reserve. The Fed will be followed by the Bank of Japan, whichwill announce the results of its meeting on Friday.
Investors have not shown much concern about the upcoming Fedmeeting, considering the fed funds futures market implies just a 2.4% chance ofa rate hike being announced on Wednesday. Rate hike expectations for the nexttwo meetings remain subdued while the implied probability of a rate hike inDecember sits at 47.8%.
Russell 2000 +6.8% YTDDow Jones +6.6% YTDS&P 500 +6.4 YTDNasdaq Composite +1.9%
Broader market action ended the week modestly off highs. The S&P 500 made another all-time high, ending up 9.86 points (+0.46%) to 2175.03. The Nasdaq Composite led all major US indices today, gaining 26.26 points (+0.52%) to 5100.16, and the Dow Jones Industrial Average added 53.62 points (+0.29%) to 18570.85. This week's moves left the indices +6.4%, +1.8% and +6.6% YTD, respectively. There hasn't been many investors dipping their toes in the water as of late, though, as tepid volume continued this week with a Friday affair where about 732 million shares changed hands at the NYSE floor versus an average near 947 million, and 1,513 million shares were exchanged at the NASDAQ floor versus an average of about 1,707 million.
Rebounding off morning weakness, the Technology (XLK 45.83, +0.29 +0.64%) sector ended near highs as component Skyworks (SWKS 64.81, -6.11 -8.62%) reported better than expected Q3 EPS, but the stock sold-off as pressure from Apple (AAPL 98.66, -0.77 -0.77%) related to iPhone demand took the stock lower. Other sectors as measured by the S&P closed IYZ +2.63%, XLU +1.33%, XLF +0.64%, XLP +0.47%, XLY +0.42%, XLE +0.31%, XLB +0.27%, XLV +0.20%, XLI +0.19% with every sector experiencing some level of gains.
In the S&P 500 Information Technology (757.00, +3.88 +0.52%) sector, trading capped off the third full week in July with gains as component PayPal (PYPL 37.42, -2.71 -6.75%) reported its Q2 results, but shares likely sold-off on a deal the company announced with Visa (V 79.91, +1.12 +1.42%), as shareholders are worried the agreement might dent profit margins. Other names in the sector that closed higher included NVDA +2.72%, CTXS +2.18%, ADSK +2.08%, QCOM +2.04%, EBAY +1.87%, NTAP +1.85%, ADBE +1.79%, CSRA +1.71%, RHT +1.62%, JNPR +1.58%, HPE +1.52%, WDC +1.45%, MSFT +1.38%.
Other notable news items among sector components:
PayPal (PYPL) and Visa (V) announced a U.S. strategic partnership that will result in an improved and more seamless payment experience for Visa cardholders and will offer greater choice in how consumers pay with the PayPal and Venmo wallets. The partnership puts PYPL and V on a new path, with the companies working more collaboratively to accelerate the adoption of safe, reliable and convenient digital payments for consumers and merchants. Further, the arrangement is designed to carry significant benefits for issuing financial institutions, acquirers, and merchants.
In addition to reporting quarterly results, Skyworks (SWKS) increased its quarterly dividend to $0.28 per share from $0.26 per share. In addition, the BoDs authorized the repurchase of up to $400 million of common stock. This newly authorized stock repurchase program replaces in its entirety the $400 million stock repurchase program that was approved by the Board of Directors on November 10, 2015, and had about $73 million of repurchase authority remaining.
According to reports, Verizon (VZ 56.10, +0.73 +1.32%) is close to a deal to acquire Yahoo!'s (YHOO 39.38, +0.53 +1.36%) internet business; reports suggest a $5 billion price tag.
Elsewhere in the tech space:
Ingram Micro (IM 34.26, -0.74 -2.11%) and Tianjin Tianhai Elect announced the deal remains on track to close in the second half of 2016.
TrueCar's (TRUE 8.99, +0.11 +1.24%) Chief Risk Officer John Stephenson will resign effective July 31.
Methode Electronics (MEI 34.73, +0.08 +0.23%) named John Hrudicka as CFO and VP of corporate finance effective July 25, succeeding Douglas Koman who is retiring.
BlackBerry (BBRY 6.88, +0.04 +0.58%) won a U.S. patent infringement lawsuit brought by Mobile Telecommunications.
According to the company's website, Workday (WDAY 79.97, +1.79 +2.29%) acquired operational analytics and data discovery company Platfora. Financial details of the deal were not disclosed.
ComScore (SCOR 26.71, -1.05 -3.78%) announced that co-founder Dr. Magid Abraham will resign as executive Chairman effective in 2018.
In reaction to quarterly results:
AT&T (T 43.11, +0.59 +1.39%) reported in-line Q2 EPS and revenues of $0.72 and $40.5 billion. T added 2.1 million wireless customers in the period and stated they are on track to meet or exceed full-year guidance.
Visa (V) reported better than expected Q3 EPS of $0.69 on in-line revenues which rose 3.2% versus last year to $3.63 billion. Additionally, the company reaffirmed FY16 guidance of low double digit adjusted EPS ex-FX and 7-8% revenue growth, ex-FX.
PayPal (PYPL) reported in-line Q2 EPS of $0.36 on better than expected revenues which rose 15.4% versus last year to $2.65 billion. Further, PYPL guided in-line Q3 EPS and revenues of $0.33-0.35 and $2.62-2.67 billion, respectively. For FY16, the company sees in-line EPS and revenues of $1.47-1.50 and $10.75-10.85 billion, respectively.
Skyworks (SWKS) reported better than expected Q3 EPS of $1.24 on in-line revenues of $751.7 million. The company sees Q4 EPS of about $1.43, modestly ahead of expectations on in-line revenue growth of 10-11% to about $827-834 million.
Maxim Integrated (MXIM 38.35, +0.64 +1.70%) reported mixed Q4 results with better than expected EPS of $0.49 and worse than expected revenues of $566.12 million. MXIM sees Q1 EPS and revenues in-line at $0.44-0.50 and $540-580 million, respectively.
Advanced Micro (AMD 5.84, +0.62 +11.88%) reported a better than expected Q2 loss per share of ($0.05) on better than expected revenues which grew 9.0% versus last year to $1.03 billion. AMD also issued upside Q3 revenue guidance of an 18% sequential increase, plus or minus 3%.
Proofpoint (PFPT 72.15, +6.88 +10.54%) reported better than expected Q2 EPS and revenues of $0.06 and $89.9 million, respectively. The company gave upside guidance for Q3 EPS of $0.04-0.06 and revenues of $93.5-94.5 million. For FY16, PFPT also sees better than expected EPS and revenues of $0.06-0.10 and $361.5-363.5 million, respectively.
Qumu (QUMU 3.40, -1.16 -25.44%) was weaker today as the company reported preliminary Q2 results which were below expectations. QUMU now sees Q2 EPS of ($0.48) versus prior expectations of ($0.40) and revenues of $6.5 million versus prior expectations for $8.7 million. The company pegged the lowered outlook on, 'several enterprise opportunities that would have enabled us to attain our revenue guidance were delayed into the second half of the year.'
Companies scheduled to report quarterly results Monday morning: EEFT, SILC, S
Analyst actions:
SINA was upgraded to Buy from Hold at Jefferies;
PFPT was downgraded to Sector Weight and P was downgraded to Underweight at Pacific Crest,
TWTR was downgraded to Mkt Perform from Outperform at Raymond James,
FB was downgraded to Neutral from Buy at BTIG Research,
ETFC was downgraded to Neutral from Buy at Goldman,
PYPL was downgraded to Market Perform from Outperform at Wells Fargo,
ADS was downgraded to Market Perform from Outperform at BMO Capital,
SOHU was downgraded to Neutral from Buy at Citigroup;
CMTL was initiated with a Buy at Ladenburg Thalmann,
PYTCY was initiated with a Buy at Berenberg
4:05 pm Monolithic Power names Bernie Blegen as CFO (MPWR) : Blegen has served as interim chief financial officer since March 2016
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