From Briefing.com: 4:37 pm Closing Market Summary: Stocks Register First Win of the Week (:WRAPX) :
The stock market posted its first win of the week on Wednesday, however, several upcoming macro events held the major averages in check. The S&P 500 and the Dow added 0.2% apiece while the Nasdaq (+0.4%) finished a step above its peers.
Equities have been relatively flat all week ahead of tomorrow's full plate of events, which includes the UK general election, the latest policy decision from the European Central Bank, and the testimony of former FBI Director James Comey. Keeping in line with the week's sideways trend, equities opened Wednesday's session slightly higher, but were hovering at their flat lines by midday.
However, in the afternoon session, equities reclaimed their earlier gains after the prepared remarks that Mr. Comey will deliver before the Senate Intelligence Committee on Thursday were released.
The initial response was positive as market participants were seemingly heartened by the understanding that there wasn't any overt obstruction of justice claim in Mr. Comey's prepared statement. Nevertheless, the response overall was a measured one as participants were cognizant that more information will be forthcoming at the hearing itself.
Back on Wall Street, the energy sector (-1.5%) suffered at the hand of a bearish inventory report from the Energy Information Administration (EIA), which showed that both crude and gasoline inventories increased by 3.3 million barrels for the week ended June 2. Crude oil immediately plunged deep into negative territory following the EIA reading, finishing its day 4.9% lower at $45.49/bbl.
However, the heavily-weighted financial sector (+0.8%) helped to mitigate the energy group's bearish influence by providing solid sector leadership from start to finish. The top-weighted technology (+0.3%) sector also helped keep the bears at bay, thanks in large part to the outperformance of Apple (AAPL 155.37, +0.92) and chipmakers. AAPL added 0.6% while the PHLX Semiconductor Index increased by 0.7%.
The influential health care sector also outperformed, adding 0.3%, while the remaining advancers finished with gains between 0.1% (materials) and 0.5% (real estate). In addition to the energy group, the industrials (-0.1%) and consumer staples (-0.1%) sectors finished in negative territory.
Outside of the equity market, safe-haven assets like the Japanese yen (109.84, -0.4%), gold ($1,289.57/ozt, -0.6%), and U.S. Treasuries gave back some of Tuesday's gains on Wednesday. The benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, finished three basis points higher at 2.18%.
Regarding tomorrow's events in Europe, the latest polling data indicates that Prime Minister Theresa May's Conservative Party has a strong lead against the Labour Party. Meanwhile, the ECB is expected to leave rates unchanged, however, reports suggest that the central bank will lower its inflation outlook due to weaker energy prices.
On the data front, investors received two economic reports--April Consumer Credit and the weekly MBA Mortgage Applications Index--on Wednesday:
The Consumer Credit report for April showed an increase of $8.1 billion while the Briefing.com consensus expected growth of $15.0 billion. The prior month's credit growth was revised to $19.6 billion from $16.4 billion.
The weekly MBA Mortgage Applications Index increased 7.1% to follow last week's 3.4% decrease.
Tomorrow, investors will receive the weekly Initial Claims Report (Briefing.com consensus 240,000) at 8:30 ET.
Nasdaq Composite +17.0% YTD
S&P 500 +8.7% YTD
Dow Jones Industrial Average +7.1% YTD
Russell 2000 +2.9% YTD
Tech Stocks from Briefing.com
The broader market flushed out some bears today on a modest rebound off yesterday's weak session. Ending with the best finish on Wednesday, the tech-heavy Nasdaq Composite added 22.32 points (+0.36%) to 6297.38. The Dow Jones Industrial Average gained 37.46 (+0.18%) to 21173.69, while the S&P 500 advanced 3.81 points (+0.16%) to 2433.14.
The Technology (XLK 57.31, +0.18 +0.32%) space ended in the green today, recouping a portion of yesterday's losses. Component IBM (IBM 150.98, -1.39 -0.91%) was modestly lower today following comments made at its BofA/Merrill Tech Conference appearance. The Financial space XLF +0.77% led the remaining S&P sectors higher today, followed by XLRE +0.53%, XLU +0.33%, XLV +0.26%, XLY +0.18%, XLB +0.13%, XLP -0.03%, XLI -0.14%, IYZ -0.65%, XLE -1.43%.
In the S&P 500 Information Technology (981.24, +2.62 +0.27%) space, trading approached all-time highs but didn't get above the $983.28 level. Components MU +2.95%, SWKS +1.50%, ADI +1.49%, AMAT +1.48%, EA +1.48%, NTAP +1.47%, MCHP +1.29%, NVDA +1.21%, ATVI +1.17%, EBAY +0.85%, PYPL +0.84%, TXN +0.81% helped maintain the strong rebound session.
Other notable news items among sector components:
In addition to reporting earnings, Ambarella (AMBA 53.60, -6.12 -10.25%) also authorized the repurchase of up to an additional $50 million of its ordinary shares over a twelve-month period commencing July 1, 2017.
Accenture (ACN 126.55, +0.22 +0.17%) to acquire Phase One Consulting, Phase One delivers Salesforce solutions related to modernization and digital transformation for the federal market.
Upland Software (UPLD 21.61, -0.44 -2.00%) priced a public offering of about 1.9 million shares of its common stock at a price to the public of $21.50 per share.
DragonWave (DRWI 1.13, +0.48 +75.00%) was awarded contract from SmartSky Networks, a North American 4G LTE inflight service provider.
In reaction to quarterly results:
SeaChange (SEAC 2.46, +0.04 +1.65%) reported an in-line Q1 loss of $0.15 per share on worse than expected revenues of $16.67 million. The company also guided Q2 EPS and revenues in-line at ($0.09)-($0.03) and $17-20 million, respectively. SEAC also guided FY18 EPS of ($0.10) to +0.02 on revenues in-line at $80-90 million.
HealthEquity (HQY 52.68, +4.19 +8.64%) reported better than expected Q1 EPS and revenues of $0.23 and $55.4 million, respectively. For FY18, the company sees revenues of $222-227 million (from prior $220-225 million) on net income between $33.0-37.0 million, Adjusted EBITDA between $78.0-83.0 million and non-GAAP net income to be in a range between $38.0 million and $42.0 million.
Ambarella (AMBA) reported better than expected Q1 EPS of $0.39 on in-line revenues of $64.1 million. The company also guided Q2 revenues below market expectations at $69-72 million.
Companies scheduled to report quarterly results tonight/tomorrow: CMTL, OKTA, VRNT/SOL
Analyst actions:
CNSL was upgraded to Neutral from Sell at Citigroup;
WIT was downgraded to Underperform from Hold at Jefferies,
NTES was downgraded to Reduce from Buy at Standpoint Research;
SYMC, PANW, SPLK, FEYE, FTNT, QLYS, RPD were initiated with Neutral ratings at Susquehanna, CHKP, PFPT and IMPV were initiated with Positive ratings at Susquehanna,
NICE was initiated with a Neutral at Citigroup
