From Briefing.com: 5:04 pm Closing Market Summary: Averages Eke Out Gains on Friday (:WRAPX) : The major averages finished Friday's session near their unchanged marks as investors digested the latest remarks from Fed Chair Janet Yellen. The Nasdaq (+0.2%) outperformed while the S&P 500 (+0.1%) finished with a slim gain. The Dow closed the day unchanged.
According to the Fed funds futures market, it appears that a March rate hike is on after Fed Chair Yellen said nothing to upset that notion on Friday afternoon. Ms. Yellen expressed her belief that a March rate hike is indeed appropriate as long as the economy evolves as expected. The CME Fed Watch Tool now assigns an implied probability of 79.7% to a March rate hike, up slightly from yesterday's 77.5%.
The U.S. dollar retreated in the wake of Ms. Yellen's comments, nearly doubling its earlier loss. The U.S. Dollar Index (101.35, -0.81) finished Friday lower by 0.8%.
Conversely, Treasuries climbed back towards their flat lines after holding losses going into Ms. Yellen's speech. The benchmark 10-yr yield finished one basis point higher at 2.48% while the 2-yr yield closed two basis points lower at 1.29%.
The financial sector (+0.4%) profited from the steepening of the Treasury yield curve, closing the day with the health care sector (+0.4%) at the top of the leaderboard. The biotechnology industry had a hand in the health care group's positive performance, evidenced by the 0.9% increase in the iShares Nasdaq Biotechnology ETF (IBB 302.49, +2.70).
Conversely, consumer staples closed Friday near the bottom of the leaderboard following Costco's (COST 170.26, -7.72) most recent earnings report. The wholesale retailer tumbled 4.3% after reporting worse than expected earnings per share results after Thursday's close.
Costco's performance also negatively influenced retailers, evidenced by the 1.4% decline in the SPDR S&P 500 Retail ETF (XRT 42.72, -0.62). The consumer discretionary sector, which comprises many retailers, also underperformed, closing lower by 0.2%.
Crude oil finished the day 1.4% higher at $53.33/bbl, but the energy group (-0.4%) still had trouble keeping pace with the broader market.
Also of note, Snap (SNAP 27.09, +2.61) followed up Thursday's IPO with a 10.7% spike in Friday's session. The social media company had an IPO price of $17.00 per share, but opened for trading late on Thursday morning at $24.00 per share.
Today's lone economic report was February ISM Services:
The ISM Services Index for February increased to 57.6 while the Briefing.com consensus expected reading of 56.5. The prior month's reading was left unchanged at 56.5.
Monday's lone economic report, January Factory Orders (Briefing.com consensus 1.0%), will cross the wires at 10:00 ET.
Nasdaq Composite +9.1% YTD
S&P 500 +6.4% YTD
Dow Jones Industrial Average +6.3% YTD
Russell 2000 +2.7% YTD
Week In Review: Dow 21,000 and Beyond
The stockmarket continued its relentless push higher, which resulted in the sixthconsecutive weekly advance for the S&P 500 and the Dow Jones IndustrialAverage cruising past 21,000. The benchmark index gained 0.7% for the week, extending its first quarter advance to 6.4%. TheNasdaq underperformed during the week (+0.4%),but remains ahead so far in 2017 (+9.1%).
The first twodays of the week were highlighted by sideways action as most participants saton their hands ahead of President Donald Trump's first address to Congress,which took place on Tuesday evening. There was some profit taking ahead of theevening address on Tuesday, but not only was the selling limited, it took placeafter a strong run in February that ended with the S&P 500 gaining 3.7% forthe month.
Tuesday'smodest downtick was wiped out in short order as equity indices charged out ofthe gate on Wednesday, jumping to new record highs. The upbeat disposition wasattributed to President Donald Trump's address, which was free of surprises anddeemed 'presidential' by pundits. President Trump reiterated his commitment toa $1 trillion infrastructure plan and made another mention of a big tax reformplan on the horizon. Details, however, remain to be seen.
However, itwasn't all President Trump as investors received some positive news from theglobal economic front on Thursday. China's Manufacturing PMI for February(51.6; expected 51.1) beat expectations while eurozone Manufacturing PMI (55.4;expected 55.5) ticked down slightly, but remained in expansion.
On the domesticdata front, fourth quarter GDP was left unrevised at 1.9% in the secondestimate, while more recent data like February Chicago PMI (57.4; Briefing.comconsensus 53.0), February Consumer Confidence (114.8; Briefing.com consensus 111.5),and February ISM Index (57.7%; Briefing.com consensus 56.1%) beat expectations.That combination, and some hawkish comments from Fed officials, contributed toa notable shift in rate hike expectations.
The fed funds futures market ended the week showing a 79.9% implied probability of a rate hike inMarch, indicating a prevailing belief that the Federal Reserve is likely toraise the target range for the fed funds rate at its March 14-15 FOMCmeeting. Fed Chair Yellen herself contributed to those increasedexpectations with a speech on Friday in which she indicated a furtheradjustment in the fed funds rate would likely be appropriate at the Marchmeeting if the FOMC's evaluation of matters concludes that employment andinflation are continuing to evolve in line with its expectations.
This week also featured the widely-hyped, andclosely-followed, IPO of social media company Snap (SNAP) on Thursday. The IPO priced at $17, yet the stock snapped higher when it first openedfor trading, hitting the $24.00 mark before closing the session at $24.48 andfinishing the week at $27.08.
The featured item in the coming week will be the FebruaryEmployment Situation Report. The latter will be released on Friday. The nonfarm payrolls number and unemployment rate will capture most of thegeneral media's attention, yet market participants will be focusing moreintently on the average hourly earnings figure and the implications it couldhold for future inflation, consumer spending, and monetary policy decisions.
Friday's action ended modestly higher, though initially pressured this morning. Action was led today by the Nasdaq Composite which added 9.53 points (+0.16%) to 5870.75. The S&P 500 followed, higher by 1.20 points (+0.05%) to 2383.12, and the Dow Jones Industrial Average posted gains of 2.74 points (+0.01%) to 21005.71. All told, this week's moves took the three major averages to +9.0%, +6.4% and +6.3% YTD, respectively.
Today's lone piece of economic data was the ISM Services Index for February which increased to 57.6 and the prior month's reading was left unchanged at 56.5.
After a modestly lower morning session, the Technology (XLK 52.86, +0.12 +0.23%) space turned it around in the latter half of Friday. Components MU +3.52%, GPN +2.99%, FTR +2.14%, WDC +1.65%, NTAP +1.28%, TDC +1.19%, INTU +1.02%, AMAT +1.01%, XRX +0.96% helped solidify the advance. Financials edged out Healthcare for the top spot among S&P sectors on Friday XLF +0.48%, XLV +0.40%, XLI +0.11%, XLB -0.08%, XLY -0.15%, XLE -0.19%, XLU -0.31%, XLRE -0.31%, IYZ -0.33%, XLP -0.38%.
In the S&P 500 Information Technology (892.74, +1.68 +0.19%) space, trading also turned higher in the latter half of Friday. Components FIS +0.83%, ATVI +0.79%, CTXS +0.78%, FISV +0.74%, MSI +0.66%, PYPL +0.61%, AAPL +0.57% all posted modest gains on Friday.
Other notable news items among sector components:
Hewlett Packard Enterprise (HPE 23.04, +0.09 +0.41%) disclosed the board set a record date of Mar 20, 2017 for the previously announced spin-off of its enterprise services business.
Verizon's (VZ 50.08, +0.10 +0.20%) Board authorized the corporation to repurchase up to 100 million shares of its common stock.
GrubHub (GRUB 34.28, -0.59 -1.69%) disclosed that on Mar 1, 2017 the Board appointed Stanley Chia to the position of COO.
Lumentum (LITE 46.70, +0.95 +2.08%) upsized and priced a $400 million offering of convertible notes due 2024.
Alliance Data (ADS 244.48, +0.54 +0.22%) proposed to offer EUR 300 million aggregate principal amount of senior notes due 2022.
Cincinnati Bell (CBB 19.05, +0.05 +0.26%) appointed COO Leigh Fox as President and CEO effective May 31, succeeding Ted Torbeck.
Endurance International (EIGI 8.00, -0.40 -4.76%) disclosed that COO Ronald LaSalvia resigned effective immediately.
Commscope (COMM 39.30, +0.39 +1.00%) priced its offering of $750 million in aggregate principal amount of 5.000% senior unsecured notes due 2027.
TerraForm Power (TERP 11.67, +0.23 +2.01%) secured an additional $86 million expansion of project financing for power plants in Canada.
In reaction to quarterly results:
Autodesk (ADSK 85.32, -2.00 -2.29%) reported a better than expected Q4 loss per share of $0.28 on in-line revenues which fell 26.1% compared to a year ago to $478.8 million. The company also guided Q1 EPS and revenues below market expectations at ($0.27)-($0.21) and $460-480 million, respectively. For FY18, the company sees worse than expected EPS and revenues of ($0.73)-($0.56) and $2.0-2.05 billion, respectively.
Marvell (MRVL 16.09, +0.24 +1.51%) reported better than expected Q4 EPS of $0.22 on in-line revenues of $571.4 million. For Q1, the company sees better than expected EPS and revenues of $0.19-0.23 and $570 million, plus or minus 2% (which equates to about $558-581 million).
Nutanix (NTNX 23.00, -8.12 -26.09%) reported a better than expected Q2 loss per share of $0.28 on better than expected revenues of $182.2 million. The company guided Q3 EPS below market expectations at ($0.45)-($0.48) on in-line revenues of $180-190 million.
Immersion (IMMR 8.58, -2.11 -19.74%) reported a worse than expected Q4 loss per share of $0.27 and worse than expected revenues of $9.3 million. The company also guided FY17 EPS and revenues worse than expected at ($0.76)-($1.05) and $38-42 million.
Analyst actions:
EXPE was upgraded to Neutral from Sell at Citigroup,
SEDG was upgraded to Mkt Outperform from Mkt Perform at JMP Securities;
PANW was downgraded to Hold from Buy at Argus,
CIEN was downgraded to Neutral from Buy at BofA/Merrill,
NTNX was downgraded to Underweight from Equal Weight at Morgan Stanley,
IMMR was downgraded to Hold from Buy at Craig Hallum,
LPL was downgraded to Underperform from Mkt Perform at Bernstein,
ACIW was downgraded to Market Perform from Outperform at Avondale,
AUO was downgraded to Underperform from Mkt Perform at Bernstein,
BCOR was downgraded to Hold from Buy at Standpoint Research;
SNAP was initiated with an Underweight at Atlantic Equities and with a Neutral at Susquehanna,
GPRO was initiated with a Sell at Citigroup,
ULTI and PCTY were initiated with Neutral ratings at Mizuho,
PAYC was initiated with a Buy at Mizuho,
INFY was initiated with a Sell at Goldman,
CSC was initiated with a Sector Weight at Pacific Crest
Large Cap Gainers
MU (25.47 +3.12%): Shares continue to rise after the co presented yesterday at Morgan Stanley's Technology Conference and says Q2 Non-GAAP results expected to be at or above the high end of guidance.
