From Briefing.com: 4:14 pm Closing Market Summary: Financials Influence Averages Modestly Higher on Thursday (:WRAPX) :
The financial sector (+1.2%) nudged the broader market into positive territory on Thursday as the bulls couldn't resist bank stocks in light of last week's dip. The three major U.S. averages settled with gains of 0.3% apiece while the small-cap Russell 2000 (+0.8%) outperformed.
In a day short on headlines, investors kept an eye on crude oil as the energy component moved back above the psychologically important $50.00 mark. WTI crude finished 1.7% higher at $50.30/bbl after Kuwait voiced support to extend OPEC/non-OPEC production cuts beyond June. In addition, Kuwaiti oil minister Essam al-Marzouq said that several other nations are in favor of the extension. However, despite crude oil's positive performance, the energy sector (+0.5%) struggled to stay ahead of the broader market.
In addition to the financials and energy sectors, the industrial group (+0.5%) also outperformed the broader market as its components settled higher across the board. Most of the remaining cyclical sectors closed the day with modest gains while the countercyclical groups finished mixed.
The rate-sensitive utilities sector (-0.7%) settled at the bottom of the leaderboard as selling pressure within the Treasury market left yields in positive territory. However, the pressure wasn't applied equally across the yield curve with the front end holding up a bit better than the back end; the 10-yr yield (2.41%) finished four basis points higher while the 2-yr yield (1.28%) added only one basis point.
Elsewhere on the defensive side of the market, the consumer staples (-0.2%) and health care (unch) groups finished with the utilities sector in the red while the telecom services space (+0.4%) closed in the green. Biotechnology names weighed on the health care sector, evidenced by the 0.4% downtick in the iShares Nasdaq Biotechnology ETF (IBB 293.39, -1.03).
On the corporate front, lululemon athletica (LULU 50.76, -15.54) plunged 23.4% after reporting worse than expected earnings and issuing disappointing guidance. The negative influence seeped into the broader athletic apparel market, leaving Nike (NKE 56.04, -0.64) and Under Armour (UAA 20.09, -0.53) with respective losses of 1.1% and 2.6%.
On the data front, investors received the third estimate of fourth quarter GDP and Initial Claims:
The third reading of fourth quarter GDP pointed to an expansion of 2.1%, while the Briefing.com consensus expected a reading of 2.0%. The third estimate of fourth quarter GDP Deflator came in at 2.0%, which is in line with the Briefing.com consensus.
The key takeaway from the report is that despite the upward revision, growth trends remains subdued amid soft business spending.
The latest weekly initial jobless claims count totaled 258,000 while the Briefing.com consensus expected a reading of 245,000. Today's tally was below the unrevised prior week count of 261,000. As for continuing claims, they rose to 2.052 million from the revised count of 1.987 million (from 2.000 million).
The key takeaway from this report is that while claims have increased notably from this year's low of 223,000, they are still at encouraging levels, having held below 300,000 for 108 weeks in a row.
Tomorrow, investors will receive a slew of economic reports, including February Personal Income (Briefing.com consensus 0.4%), Personal Spending (Briefing.com consensus 0.2%), and PCE Price Index (Briefing.com consensus 0.1%) at 8:30 ET, March Chicago PMI (Briefing.com consensus 55.8) at 9:45 ET, and the final University of Michigan Consumer Sentiment reading (Briefing.com consensus 97.6) at 10:00 ET.
Nasdaq Composite +9.9% YTD
S&P 500 +5.8% YTD
Dow Jones Industrial Average +4.9% YTD
Russell 2000 +1.9% YTD
All finishing higher on Thursday, the broader market closed just under all-time highs. The Dow Jones Industrial Average was the best performer, adding 69.17 points (+0.33%) today to 20728.49. The S&P 500 was up 6.93 points (+0.29%) when the bell rang to 2368.06, while the Nasdaq Composite gained 16.80 points (+0.28%) to 5914.34.
Market data today included the third reading of fourth quarter GDP which pointed to an expansion of 2.1%, while the third estimate of fourth quarter GDP Deflator came in at 2.0%. Additionally, the latest weekly initial jobless claims count totaled 258,000, below the unrevised prior week count of 261,000. As for continuing claims, they rose to 2.052 million from the revised count of 1.987 million (from 2.000 million).
The Technology (XLK 53.41, +0.10 +0.19) space ended higher today, holding onto afternoon strength. Component Akamai Tech (AKAM 60.53, -2.91 -4.59%) was the worst performer today, pressured after the company's Investor Summit which occurred during the session; the company also last night disclosed the acquisition of SOASTA in an all cash deal for an undisclosed sum. The rest of the S&P sectors finished led by the Financial space XLF +1.31%, follower by IYZ +1.09%, XLI +0.55%, XLY +0.26%, XLRE +0.22%, XLB +0.02%, XLV +0.01%, XLE -0.03%, XLP -0.20%, XLU -0.76%.
In the S&P 500 Information Technology (907.12, +1.31 +0.14%) space, trading finished just under highs after making a new all-time high during the session. Component Global Payments (GPN 80.70, +1.87 +2.37%) performed well today after being upgraded to an Overweight rating at Barclays. Other names in the space which outperformed today included STX +3.17%, WDC +2.90%, HPQ +2.26%, NVDA +1.92%, QRVO +1.81%, MU +1.65%, XRX +1.51%, ADS +1.45%, WU +1.19%, FLIR +1.16%.
Other notable news items among sector components:
Broadcom (AVGO 220.04, -1.27 -0.57%) entered into an agreement to sell its data center switching, routing, and analytics business to Extreme Networks (EXTR 7.38, +0.92 +14.24%) for $55 million in cash. The deal is contingent on AVGO closing its proposed acquisition of Brocade (BRCD 12.44, +0.01 +0.08%).
Analog Devices (ADI 82.20, +0.29 +0.35%) acquired OneTree Microdevices. Financial terms were not disclosed.
Akamai Tech (AKAM) to acquire SOASTA in an all-cash transaction for an undisclosed sum; co expects the SOASTA acquisition to be slightly dilutive to its adj FY 17 EPS in the range of $0.06-0.07 and to become accretive in 2018.
VMware (VMW 91.42, -0.42 -0.46%) enters into a Stock Purchase Agreement with Dell Technologies (DVMT 63.99, +0.09 +0.14%), under which VMware agreed to buy back $300 million of its common stock currently held by a Dell subsidiary.
Fujitsu (FJTSY 31.35, +0.28 +0.90%) and VMware (VMW) announced an expanded strategic collaboration to bring innovative IoT solutions to customers in the automobile industry.
Progress Software (PRGS 29.35, +0.68 +2.37%) acquired DataRPM for $30 million, with $28.3 million paid in cash, and $1.7 million payable to DataRPM's founders in the form of restricted Progress stock. Also appointed Paul Jalbert, chief accounting officer, as CFO replacing Kurt Abkemeier, who will leave the company effective immediately.
Take-Two (TTWO 58.90, +0.11 +0.19%) and Sony (SNE 33.48, +0.33 +1.00%) entered into a PlayStation Global Developer and Publisher Agreement.
In reaction to quarterly results:
Science Applications (SAIC 74.97, -11.28 -13.08%) reported in-line Q4 EPS of $0.79 on worse than expected revenues of $1.03 billion.
Progress Software (PRGS) reported better than expected Q1 EPS and revenues of $0.34 and $91.2 million, respectively. For Q2, the company sees in-line EPS of $0.35-0.37 and worse than expected revenues of $89-92 million. The company also reaffirmed FY17 EPS and revenue guidance $1.64-1.69 and $388-396 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: UNXL/BBRY
Analyst actions:
CYBR was upgraded to Buy from Neutral at Goldman,
APPS was upgraded to Buy from Neutral at Roth Capital,
GPN was upgraded to Overweight from Equal Weight at Barclays,
SIGM was upgraded to Buy from Hold at Lake Street,
NTNX was upgraded to Outperform from Sector Perform at FBN Securities;
SCWX was downgraded at BofA/Merrill, Goldman and Barclays,
EXAR was downgraded to Stifel and B. Riley & Co.,
CY was downgraded to Underweight from Equal Weight at Morgan Stanley;
QLYS was initiated with an Overweight at Morgan Stanley,
CYBR was initiated with an Equal Weight at Morgan Stanley,
AAOI was initiated with a Sell at Vertical Research
