From Briefing.com: 4:23 pm Closing Market Summary: Tech Stocks Rally on Monday (:WRAPX) :
The stock market opened the week on a positive note with the top-weighted technology (+0.9%) and financials (+0.5%) sectors pacing the advance. The S&P 500 (+0.2%) traded within a ten-point range, settling near its opening level after challenging its all-time closing high (2,395.96). Meanwhile, the Nasdaq (+0.7%) outperformed, ending the session convincingly higher, while the Dow (-0.1%) posted a small loss.
Investors received several headlines from the nation's capital on Monday. The first was news of an agreement between congressional leaders that, if approved, will keep the government funded through September. The deal, which puts fears of a government shutdown on hold, sent the S&P 500 into positive territory at the opening bell.
However, the next headline, which was a statement from President Trump, resulted in a small sell-off in the early-afternoon session. Mr. Trump said that he may favor breaking up the nation's biggest banks, which briefly sent the financial sector lower. However, stocks recovered shortly thereafter as the headline provided little new information; President Trump has mentioned reinstating Glass-Steagall prior to today's announcement.
Lastly, Mr. Trump said that he was open to raising the federal tax on gasoline in order to finance his infrastructure package. This news had a minimal impact on today's activities, however, it's worth noting as the Trump administration will likely continue playing with different tax ideas to supplement the president's tax reform package.
In the end, news from the nation's capital came and went, but the real driver behind today's victory was large-cap names like Apple (AAPL 146.60, +2.95), Amazon (AMZN 948.43, +23.44), Microsoft (MSFT 69.41, +0.95), Alphabet (GOOGL 932.82, +8.30), and Facebook (FB 152.46, +2.21). The five names settled with gains between 0.9% (Alphabet) and 2.5% (Amazon) and carried the top-weighted technology sector to the top of the day's leaderboard.
The heavily-weighted financial sector also played a big part in today's positive performance, pairing with the technology group to carry the broader market. The two sectors that comprise around 35.0% of the broader market watered-down the effects of bearish countercyclical groups like consumer staples (-0.5%), utilities (-0.7%), and telecom services (-0.8%).
Crude oil weighed on the energy sector (-0.2%), finishing its trading day 0.9% lower at $48.86/bbl. However, outside of real estate (+0.6%), the remaining sectors--industrials, consumer discretionary, materials, and health care--finished relatively flat, settling within 0.3% of their unchanged marks.
In the bond market, Treasuries settled lower across the board, however, selling pressure was not distributed equally across the yield curve. The 10-yr yield (2.32%) finished four basis points higher while the 2-yr yield (1.29%) added only two basis points.
It's worth noting that today's trading volume was relatively light. Market were closed across Europe and most of Asia in observance of Labor Day. 874.2 million shares changed hands at the NYSE floor (50-day simple moving average: 1.09 billion).
On the data front, investors received several economic reports on Monday, including March Personal Income and Personal Spending, the April ISM Index, and March Construction Spending:
March personal income rose 0.2%, which is below the Briefing.com consensus of 0.3%. Meanwhile, March personal spending was unchanged (Briefing.com consensus 0.1%). February Personal Income was revised to 0.3% (from 0.4%) while February Personal Spending was revised to 0.0% (from 0.1%). Separately, PCE prices for March declined by 0.2% (Briefing.com consensus N/A) while Core PCE prices ticked down by 0.1% (Briefing.com consensus 0.0%).
The key takeaway from the report is that it showed a deceleration in both the PCE Price Index and the core PCE Price Index year-over-year. That will temper concerns about the Fed being behind the curve in fighting inflation and it will quiet concerns about the Fed needing to be more aggressive in tightening monetary policy than is currently projected.
The ISM Index for April declined to 54.8 from an unrevised reading of 57.2 in March while the Briefing.com consensus expected a downtick to 56.5.
The key takeaway from the report is that the manufacturing sector registered growth for the eighth consecutive month, albeit at a slower pace from recent months which featured the highest reading for the index in February (57.7) since August 2014.
The Construction Spending report for March showed a decrease of 0.2% while the Briefing.com consensus expected an increase of 0.4%. The prior month's reading was revised to 1.8% from 0.8%.
The key takeaway from the report is that the headline disappointment for March was more than offset by the upward revision to February, meaning the March miss wasn't a true miss.
Tomorrow, investors will not receive any economic reports, but April auto and truck sales will be released throughout the day.
Nasdaq Composite +13.2% YTD
S&P 500 +6.7% YTD
Dow Jones Industrial Average +5.8% YTD
Russell 2000 +3.7% YTD
4:19 pm Advanced Micro reports EPS in-line, revs in-line; guides Q2 revs mostly above consensus (AMD) :
Reports Q1 (Mar) loss of $0.04 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of ($0.04); revenues rose 18.3% year/year to $984 mln vs the $984.4 mln Capital IQ Consensus, driven by higher revenue in both the Computing and Graphics and Enterprise, Embedded, and Semi-Custom business segments. Revenue was down 11 percent sequentially, due primarily to seasonality in both segments. However, Computing and Graphics segment revenue decline was better than seasonal due to the initial sales from high performance Ryzen desktop processors.
Computing and Graphics segment revenue was $593 million, up 29 percent year-over-year and down 1 percent sequentially. The year-over-year increase was driven primarily by higher desktop and graphics processor sales. The sequential decrease was primarily due to a decrease in mobile and graphics processor sales largely offset by initial revenue from high performance Ryzen desktop processors.
Co issues guidance for Q2, sees Q2 revs +14-20% Q/Q to ~$1.12-1.18 bln vs. $1.12 bln Capital IQ Consensus Estimate.
4:09 pm Advanced Energy beats by $0.08, reports revs in-line; guides Q2 EPS above consensus, revs above consensus (AEIS) :
Reports Q1 (Mar) earnings of $1.04 per share, $0.08 better than the Capital IQ Consensus of $0.96; revenues rose 45.0% year/year to $149.35 mln vs the $147.86 mln Capital IQ Consensus.
Co issues upside guidance for Q2, sees EPS of $1.00-1.10 vs. $0.97 Capital IQ Consensus Estimate; sees Q2 revs of $150-160 mln vs. $147.31 mln Capital IQ Consensus Estimate.
"Our financial performance this quarter continued to reach new highs, with increases in Semiconductor and Service revenues and a sizable rebound in Industrial applications," said Yuval Wasserman. In total, our business performed significantly better than last year's first quarter due to our operational leverage and robust business model."
4:06 pm Rudolph Tech beats by $0.02, beats on revs; guides Q2 EPS in-line, revs in-line (RTEC) :
Reports Q1 (Mar) earnings of $0.26 per share, $0.02 better than the Capital IQ Consensus of $0.24; revenues rose 11.6% year/year to $60.7 mln vs the $58.58 mln Capital IQ Consensus.
Co issues in-line guidance for Q2, sees EPS of $0.28-0.34 vs. $0.33 Capital IQ Consensus Estimate; sees Q2 revs of $63-68 mln vs. $66.80 mln Capital IQ Consensus Estimate.
"This strong performance in the first quarter is a record start to the year for Rudolph and is a result of continued demand in advanced packaging and strong growth in leading-edge memory which grew 20% over the prior quarter. Our integrated process control solutions for both AP and front-end applications offer a compelling value to our customers by providing critical process data and software solutions that enable their engineers to rapidly quantify, characterize, and perform root cause analysis of critical defects. This translates to faster ramp rates for new devices, with higher quality levels and reduced manufacturing cost for our customers."
4:06 pm Integrated Device beats by $0.01, reports revs in-line (IDTI) :
Reports Q4 (Mar) earnings of $0.35 per share, $0.01 better than the Capital IQ Consensus of $0.34; revenues fell 7.2% year/year to $175.7 mln vs the $175.05 mln Capital IQ Consensus.
Non-GAAP gross profit for 4Q17 was $106.1 million, or 60.4%, compared with non-GAAP gross profit of $108.7 million, or 61.6% last quarter, and $117.0 million, or 61.8%, reported in the same period one year ago.
Commentary: "During the first week of fiscal 2018, we closed our announced acquisition of GigPeak, a leading provider of high-performance optical interconnect solutions, which further accelerates our existing growth strategy. Entering the new fiscal year, IDT is strongly positioned and levered to multiple growth vectors that are tied to IDT's unique analog and mixed-signal expertise. We continue to see robust demand for our expanding product and technology portfolio, and with our ongoing focus on driving operational excellence, we look forward to delivering exceptional value to our shareholders in the coming year."
Monday closed a mixed affair as opening gains stretched in the Nasdaq and S&P, but a weaker final 30 minutes spelled losses for the Dow. That being said, the Nasdaq Composite performed the best today, adding a stout 44 points (+0.73%) to 6091.60. The S&P 500 gained 4.13 points (+0.17%) to 2388.33, while the Dow Jones Industrial Average lost 27.05 points (-0.13%) to 20913.46.
On the data front, March personal income rose 0.2%, while March personal spending was unchanged. February Personal Income was revised to 0.3% (from 0.4%) while February Personal Spending was revised to 0.0% (from 0.1%). Separately, PCE prices for March declined by 0.2% while Core PCE prices ticked down by 0.1%. Also, the ISM Index for April declined to 54.8 from an unrevised reading of 57.2 in March. Lastly, the Construction Spending report for March showed a decrease of 0.2% while the prior month's reading was revised to 1.8% from 0.8%.
Leading all other S&P sectors on Monday, the Technology (XLK 54.79, +0.41 +0.75%) space finished the session just off highs. Component Autodesk (ADSK 91.98, +1.91 +2.12%) enjoyed some healthy gains following a premarket upgrade out of Morgan Stanley. Behind the Tech space, the remaining S&P sectors shook out as follows -- XLF +0.68%, XLRE +0.63%, XLV +0.21%, XLY +0.11%, XLB +0.06%, XLE -0.24%, XLI -0.30%, XLP -0.40%, IYZ -0.44%, XLU -0.60%.
In the S&P 500 Information Technology (936.19, +7.86 +0.85%) space, trading declined modestly at the close yet still finished Monday with solid gains. Component Harris (HRS 109.71, -2.18 -1.95%) was one of the worst performing names after Barclays took the name to Equal Weight. Other names in the space which outperformed with the sector included AMAT +2.68%, NVDA +2.24%, MU +2.24%, ADSK +2.12%, AAPL +2.05%, JNPR +1.76%, SYMC +1.55%, ADS +1.54%, FB +1.47%, MSFT +1.39%, ADBE +1.02%, CTXS +1.00%.
Other notable news items among sector components:
Twitter (TWTR 17.54, +1.06 +6.43%) shares were higher today in reaction to CEO Jack Dorsey disclosing a 574K share purchase after the market closed on Friday. Additionally, a WSJ story today suggested the company will partner with Bloomberg for a streaming news service.
Nintendo (NTDOY 31.65, -0.03 -0.09%) announced Mario Kart 8 Deluxe for the Nintendo Switch system was the fastest-selling game in the Mario Kart series with more than 459,000 combined packaged and digital sales in the U.S. on launch day alone (April 28).
Jive Software (JIVE 5.27, +0.22 +4.46%) to be acquired by ESW Capital for $5.25 per share in cash.
Cognex (CGNX 85.63, +0.29 +0.34%) increased its quarterly dividend to $0.085 per share from $0.075 per share. The company also announced a new $100 million share repurchase program.
Motorola Solutions (MSI 86.16, +0.19 +0.22%) to acquire Kodiak Networks. Financial terms of the deal were not disclosed.
In reaction to quarterly results:
Broadsoft (BSFT 35.20, -3.20 -8.33%) reported better than expected Q1 EPS of $0.19 on in-line revenues of $79.7 million. The company also guided Q2 EPS and revenues below market expectations at $0.20-0.32 and $84-88 million, respectively. BSFT reaffirmed FY17 EPS guidance of $2.20-2.50 and lowered revenue guidance to $380-390 million from $390-400 million.
Plantronics (PLT 57.24, +2.64 +4.84%) reported better than expected Q4 EPS of $0.81 on worse than expected revenues of $209.0 million. The company also guided Q1 EPS and revenues below market expectations at $0.70-0.80 and $211-221 million, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: AEIS, AMD, BLKB, CGNX, HLIT, INST, IDTI, IVAC, EGOV, RTEC, SBAC/CDK, EIGI, EXLS, FIS, IPGP, MA, SQNS, SHOP, VSM
Analyst actions:
FSLR was upgraded to Neutral from Underperform at Credit Suisse,
ADSK was upgraded to Overweight from Equal Weight at Morgan Stanley,
PYPL was upgraded to Outperform from Sector Perform at FBN Securities;
WDC was downgraded to Hold from Buy at Jefferies,
HRS and BAH were downgraded to Equal Weight from Overweight at Barclay,
TYPE was downgraded to Neutral from Buy at B. Riley & Co.,
SHOP was downgraded to Neutral from Buy at Monness Crespi & Hardt,
EGHT was downgraded to Market Perform from Outperform at William Blair;
ELVT was initiated with a Buy at Stifel and an Outperform at William Blair
