From Briefing.com: 4:38 pm Closing Market Summary: Stocks Settle Flat Ahead of Memorial Day Weekend (:WRAPX) :Friday's session was range-bound throughout with the major U.S. indices trending sideways at their unchanged marks from start to finish. The S&P 500 (unch) and the Nasdaq (+0.1%) eked out their seventh-consecutive wins while the Dow (unch) finished three points below its flat line. For the week, the S&P 500 added 1.4%.
Sector movement was modest with ten of the eleven groups settling within 0.3% of their unchanged marks. The consumer staples sector (+0.3%) finished ahead of the broader market, thanks in part to Costco's (COST 177.86, +3.13) positive performance; the company added 1.8% after reporting better than expected earnings and revenues. The consumer discretionary (+0.3%) and materials (+0.3%) spaces also outperformed.
The energy sector (+0.1%) finished slightly higher with crude oil climbing 1.8% to $49.78/bbl, which was an encouraging sign in light of yesterday's tumble. On Thursday, WTI crude dropped 4.8% after OPEC and non-OPEC nations agreed to maintain their current production levels for nine months, but stopped short of cutting production once again. For the week, WTI crude lost 1.1%.
Similarly, the top-weighted technology space (unch) registered a slim gain. Chipmakers underpinned the sector, evidenced by the 0.4% increase the PHLX Semiconductor Index. Marvell (MRVL 17.67, +0.73) led the semiconductor advance, jumping 4.3%, after reporting better than expected earnings/revenues and issuing upbeat guidance.
On the flip side, the real estate group posted a notable loss, slipping 0.7%, but the other laggards finished just a step below their flat lines. The health care space (-0.2%) showed relative weakness as biotech names weighed; the iShares Nasdaq Biotechnology ETF (IBB 288.22, -2.30) lost 0.8%. Incyte (INCY 134.38, -4.03) was the weakest biotech name, dropping 2.9%.
Today's participation was a bit light ahead of the extended holiday weekend; 682.8 million shares changed hands at the NYSE floor (50-day simple moving average: 1.1 billion).
Outside of the equity market, the U.S. dollar added 1.0% against the British pound (1.2813) following a UK pre-election poll, which suggested that the Labour party has gained some ground on the Conservative party ahead of the country's snap election on June 8. U.S. Treasuries ended Friday's session slightly higher with the benchmark 10-yr yield slipping one basis point to 2.25%.
On the data front, investors received several economic reports on Friday, including April Durable Orders, the second estimate of first quarter GDP, and the final reading of the University of Michigan Consumer Sentiment Survey for May:
April durable goods orders declined 0.7%, which is above the 1.8% decrease expected by the Briefing.com consensus. The prior month's reading was revised to 2.3% (from 0.7%). Excluding transportation, durable orders decreased 0.4% (Briefing.com consensus 0.4%) to follow the prior month's revised uptick of 0.8% (from -0.2%).
The key takeaway from the report is that nondefense capital goods orders excluding aircraft -- a proxy for business spending -- were flat for the second straight month. Shipments of those goods, which factor into GDP forecasts, declined 0.1% in April.
The second reading of first quarter GDP pointed to an expansion of 1.2%, while the Briefing.com consensus expected a reading of 0.8%. The second estimate of first quarter GDP Deflator came in at 2.2%, which below the Briefing.com consensus of 2.3%.
The key takeaway from the report is that the revision moved in the right direction, which will aid in tempering concerns about the slowdown when pitted against some otherwise rosy forecasts for the second quarter (Atlanta Fed GDPNow model at 4.1%) that should produce a more encouraging average for the first half of 2017.
The final reading of the University of Michigan Consumer Sentiment Index for May declined to 97.1 (Briefing.com consensus 97.5) from 97.7 in the preliminary reading.
The key takeaway from the report is that consumer sentiment levels continue to hover at post-election highs despite a politically partisan divide on the economic outlook.
The stock market will be closed on Monday in observance of Memorial Day. On Tuesday, investors will receive April Personal Income (Briefing.com consensus 0.4%) and Spending (Briefing.com consensus 0.4%) at 8:30 ET and May Consumer Confidence (Briefing.com consensus 119.5) at 10:00 ET.
Nasdaq Composite +15.4% YTD
S&P 500 +7.9% YTD
Dow Jones Industrial Average +6.7% YTD
Russell 2000 +1.9% YTD
Week In Review: Five for Five
The stock market registered five wins this week, three of which resulted in a new record high for the S&P 500. A continuation of last week's 'buy-the-dip' trade fueled the bulls at the beginning of the week, but the FOMC minutes from the May 2-3 meeting became the catalyst for the midweek move to new record highs. For the week, the S&P 500 added 1.4%.
Before moving into record-high territory, investors had to repair the damage done by last week's 800-pound gorilla; namely, a New York Times article that highlighted a potential obstruction of justice move by President Trump. The allegation prompted the stock market's worst one-day decline since September on May 17, therefore, investors' first priority was reclaiming what was lost.
Two modest wins on Monday (+0.5%) and Tuesday (+0.2%) put the S&P 500 right at the 2,400 mark, which is the level it hit right before the swoon on May 17. Led by the financial sector, the benchmark index challenged said level a few times on Tuesday, but it just needed a little something extra to get over the hump. The FOMC minutes from the May 2-3 meeting answered the call on Wednesday.
In the minutes, the Fed revealed a possible approach to unwind its massive balance sheet; the central bank would like to introduce a gradual increase of caps to limit the reinvestment of maturing securities. In addition, the Fed's willingness to discuss the issue showed that the central bank has pretty good confidence in the economic outlook, having attributed first quarter weakness to transitory factors.
Following the report, the S&P 500 advanced to new record highs on Wednesday and Thursday. However, investors in the crude oil futures market weren't so bullish. The energy component tumbled nearly 5.0% on Thursday after OPEC and non-OPEC nations agreed to extend their current production adjustment by nine months, but stopped short of increasing the magnitude of the supply cut.
Equities finished the week with a sleepy, range-bound performance on Friday as investors got a jump start on the extended holiday weekend. For the week, the top-weighted technology sector outperformed yet again, adding 2.3%, with Apple (AAPL), Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), and Facebook (FB) increasing their aggregate market value to an astounding $2.93 trillion.
The fed funds futures market still points to the June FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 83.1%, up from last week's 78.5%.
Tech Stocks from Briefing.com
When the bell rang on Friday, the broader market posted a split finish. Leading action 'higher' (if you could call it that) was the tech-heavy Nasdaq Composite - adding 4.94 points (+0.08%), the index finished at 6210.19, an all-time closing high. The S&P 500 added less than a point (+0.03%) to 2415.82, while the Dow Jones Industrial Average was kept under wraps, shedding about 2.67 (-0.01%) to 21080.28. These moves take the three major US indices +15.4%, +7.9% and +6.7% YTD, respectively.
Market data today included the April durable goods orders reading which declined 0.7%, while the prior month's reading was revised to 2.3% (from 0.7%). Excluding transportation, durable orders decreased 0.4% to follow the prior month's revised uptick of 0.8% (from -0.2%). The second reading of first quarter GDP pointed to an expansion of 1.2%, while the second estimate of first quarter GDP Deflator came in at 2.2%. The final reading of the University of Michigan Consumer Sentiment Index for May declined to 97.1 from 97.7 in the preliminary reading.
The Technology (XLK 56.38, -0.03 -0.05%) space ended modestly lower today. Component Synopsys (SNPS 74.37, +0.84 +1.14%) was one of the better performing names today as the company announced an accelerated share repurchase agreement to repurchase an aggregate of $100 million of stock. The Consumer Staples XLP +0.37% space was the best performing S&P sector today, followed by XLY +0.30%, XLB +0.21%, XLE +0.14%, XLI +0.12%, XLU +0.00%, XLF -0.08%, XLV -0.18%, IYZ -0.28%, XLRE -0.62%.
In the S&P 500 Information Technology (966.77, +0.10 +0.01%) space, trading managed to escape Friday with a ten cent gain. Component HP (HPQ 18.47, +0.10 +0.54%) was one of the names in the green today after the company announced a partnership with Easy Print, a printing products platform. Other names in the space which outperformed included NVDA +2.59%, MU +1.12%, AMAT +1.07%, WDC +0.83%, LRCX +0.79%, XLNX +0.64%, ADI +0.57%, PYPL +0.51%, MSFT +0.50%.
Other notable news items among sector components:
BlackBerry (BBRY 11.11, -0.11 -0.98%) reached an agreement with Qualcomm (QCOM 57.52, -0.36 -0.62%). An arbitration panel has issued a final award providing for the payment by Qualcomm to BlackBerry of a total amount of $940 million for calendar 2016 and 1Q17.
Synopsys (SNPS) accelerated its share repurchase agreement to repurchase an aggregate of $100 million of stock.
HP (HPQ) announced a strategic partnership with Easy Print, a printing and customized products enterprise-level procurement platform.
CDK Global (CDK 60.48, -0.71 -1.16%) announced that CFO Al Nietzel, is leaving the Company to pursue other interests effective May 31, 2017.
Atlassian (TEAM 35.58, -0.37 -1.03%) co-CEOs adopted new 10b5-1 trading plans.
Web.com (WEB 23.10, +1.90 +8.96%) shares were higher today in reaction to reports of takeover interest.
Asure Software (ASUR 14.40, -0.23 -1.57%) acquired iSystems and Compass HRM and updated FY17 guidance.
In reaction to quarterly results:
Marvell (MRVL 17.67, +0.73 +4.31%) reported better than expected Q1 EPS and revenues of $0.24 and $579.18 million, respectively. For Q2, the company sees EPS ahead of market expectations at $0.26-0.30 and in-line revenues of $585-615 million.
Splunk (SPLK 62.41, -4.68 -6.98%) reported a better than expected loss per share of $0.01 for Q1 and better than expected revenues of $242.4 million. For Q2, the company sees revenues of $267-269 million. For FY18, SPLK sees revenues of about $1.195 billion (prior of about $1.185 billion).
Veeva Systems (VEEV 66.82, +5.08 +8.23%) reported better than expected Q1 EPS and revenues of $0.24 and $157.9 million, respectively. For Q2, the company sees EPS and revenues ahead of market expectations at $0.20 and $163-164 million, respectively. For FY18, VEEV sees EPS of $0.82-0.84 (from $0.78-0.80) on revenues between $665-669 million (from $655-660 million).
Brocade (BRCD 12.63, -0.02 -0.16%) reported worse than expected Q2 EPS and revenues of $0.10 and $552.8 million, respectively.
21Vianet (VNET 5.33, -0.27 -4.82%) reported a Q1 loss of RMB0.17 per share on better than expected revenues of RMB862.2 million.
Analyst actions:
NTAP was upgraded to Neutral from Sell at UBS,
MRVL was upgraded to Outperform from Perform at Oppenheimer,
VEEV was upgraded to Buy from Neutral at BofA/Merrill,
INFN was upgraded to Outperform from Market Perform at Wells Fargo,
PHI was upgraded to Outperform from Neutral at Macquarie;
TRIP was downgraded to Underperform from Neutral at Macquarie,
JKS was downgraded to Underweight at Morgan Stanley and to Sell from Neutral at Citigroup
