From Briefing.com: 4:31 pm Closing Market Summary: Easy Come, Easy Go (:WRAPX) :In a nutshell, 'easy come, easy go' sums up Tuesday's session as the stock market gave back nearly all of Monday's climb to new record highs. The Nasdaq (-0.8%) and the Dow (-0.3%) settled on opposite sides of the benchmark S&P 500 (-0.7%) while the small-cap Russell 2000 (-1.1%) underperformed.
The major averages opened Tuesday's session modestly lower with the energy sector (-1.3%) showing relative weakness. Crude oil futures plagued the energy group, dropping as low as $42.95 per barrel, as concerns about excess supply, and a deteriorating technical picture, continued to weigh on the commodity. The energy sector retraced some of its early loss, as did crude oil, but the sector still finished at the bottom of the day's leaderboard. WTI crude closed 2.1% lower at a price of $43.53 per barrel.
In general, cyclical sectors struggled amid the day's risk-off tone. Like energy, the consumer discretionary (-1.3%) and industrials (-1.2%) groups finished comfortably behind the benchmark index amid broad weakness. However, homebuilders were a pocked of strength within the consumer discretionary space, pushing the iShares U.S. Home Construction ETF (ITB 34.00, +0.12) higher by 0.4%, after Lennar (LEN 53.87, +1.13) reported better than expected earnings and revenues. In the industrial sector, transports underperformed, evidenced by the 1.8% decrease in the Dow Jones Transportation Average.
The top-weighted technology (-0.8%) and financials (-0.8%) sectors finished just a tick behind the broader market with just a handful of components managing to settle in the green. In the financial space, American Express (AXP 82.51, +0.63) was the top-performer, adding 0.8%. Meanwhile, tech heavyweights Oracle (ORCL 45.84, +0.11) and Adobe Systems (ADBE 140.91, +0.56) outperformed, adding around 0.3% apiece, ahead of their latest earnings reports.
On the countercyclical side, the heavily-weighted health care sector (+0.3%) settled at the top of the day's leaderboard, thanks in large part to the outperformance of the biotechnology industry. The iShares Nasdaq Biotechnology ETF (IBB 303.59, +3.80) increased by 1.3% with names like Regeneron Pharmaceuticals (REGN 495.33, +23.66), Alexion Pharmaceuticals (ALXN 119.05, +2.89), and Biogen (BIIB 266.00, +5.46) leading the charge.
The lightly-weighted utilities group (+0.1%) also managed to settle in the green, but the remaining defensive-oriented sectors--consumer staples (-0.4%) and telecom services (-1.0%)--finished in the red.
U.S. Treasuries moved higher in a curve-flattening trade on Tuesday with the 2-yr (1.35%) and 10-yr (2.16%) yields slipping one basis point and three basis points, respectively. Meanwhile, in the currency market, the U.S. Dollar Index (97.43, +0.20) registered its second-consecutive win, climbing 0.2%.
The greenback showed notable strength against the British pound (1.2630), adding 0.9%, following dovish remarks from Bank of England Governor Mark Carney, who said that the BoE should not rush to hike interest rates.
It's also worth noting that Fed Vice Chair Stanley Fischer (FOMC voter) and Boston Fed President Eric Rosengren (non-FOMC voter) both commented on the potential downside of keeping interest rates too low for too long. Mr. Fischer focused on the risks to the housing market while Mr. Rosengren discussed the effects on the overall financial system.
Tuesday's lone economic report--first quarter Current Account Balance--came in better than expected, showing a deficit of $116.8 billion (Briefing.com consensus -$123.4 billion). The fourth quarter deficit was revised to $114.0 billion from $112.4 billion.
On Wednesday, investors will receive the weekly MBA Mortgage Applications Index and May Existing Homes Sales (Briefing.com consensus 5.52 million). The two reports will be released at 7:00 ET and 10:00 ET, respectively.
Nasdaq Composite +15.0% YTD
S&P 500 +8.9% YTD
Dow Jones Industrial Average +8.6% YTD
Russell 2000 +3.4% YTD
4:22 pm FedEx beats by $0.37, reports revs in-line; guides FY18 EPS in-line (FDX) :
Reports Q4 (May) earnings of $4.25 per share, excluding non-recurring items, $0.37 better than the Capital IQ Consensus of $3.88; revenues rose 21.0% year/year to $15.7 bln vs the $15.56 bln Capital IQ Consensus.
FedEx Express Segment
Revenue $7.18 billion, +6.8% y/y
Operating margin 12.7%
Revenue increased 7% primarily due to increased package volume, driven by international export growth of 5%, and higher base rates. Operating results increased primarily due to higher base rates, increased package volume, a positive net benefit from fuel and the continued benefit of cost management initiatives.
TNT Express Segment
Revenue $1.91 billion
Operating margin 4.4%
FedEx Ground Segment
Revenue $4.68 billion, +9% y/y
Operating margin 15.0%
Revenue increased due primarily to higher base rates and average daily package volume growth of 3%. Operating income increased due to higher yields and volume, partially offset by network expansion and staffing costs as well as increased self-insurance reserves.
FedEx Freight Segment
Revenue $1.70 billion, +6% y/y
Operating margin 7.8%
Revenue increased due to higher base rates and fuel surcharges. Average daily shipments were flat as the company focuses on improving revenue quality. Operating results decreased slightly as higher salaries and wages and increased information technology expenses offset the benefit from higher base rates.
Co issues in-line guidance for FY18, sees EPS of $13.20-14.00, excluding non-recurring items, vs. $13.58 Capital IQ Consensus Estimate.
CapEx expected to be $5.9 bln in 2018, in line with expectations.
4:12 pm Adobe Systems beats by $0.07, beats on revs; guides Q3 EPS above consensus, revs above consensus (ADBE) :
Reports Q2 (May) earnings of $1.02 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $0.95; revenues rose 26.7% year/year to $1.77 bln vs the $1.73 bln Capital IQ Consensus.
Co issues upside guidance for Q3, sees EPS of ~$1.00, excluding non-recurring items, vs. $0.97 Capital IQ Consensus Estimate; sees Q3 revs of ~$1.815 bln vs. $1.8 bln Capital IQ Consensus Estimate. Co expects to achieve approximately $300 million of net new Digital Media ARR
Earnings Call Script
Tech Stocks from Briefing.com
The broader market gave back the majority of yesterday's advance, as all three major indices finished lower. The tech-heavy Nasdaq Composite was the worst performer, shedding 50.98 points (-0.82%) to 6188.03. The S&P 500 lost 16.43 points (-0.67%) to 2437.03, while the Dow Jones Industrial Average declined 61.85 points (-0.29%) to 21467.14.
The Technology (XLK 55.62, -0.45 -0.80%) space again turned in a tough session, finishing near lows. Component Advanced Micro (AMD 12.64, +0.71 +5.95%) was one of the names bucking the overall down trend today, finishing with impressive gains. The US Telecom IYZ -1.80% space was the worst performer today, followed by XLE -1.28%, XLY -1.25%, XLI -1.07%, XLF -0.86%, XLB -0.55%, XLP -0.39%, XLRE -0.18%, XLU +0.06%, XLV +0.33%.
In the S&P 500 Information Technology (954.87, -7.50 -0.78%) space, trading fell to lows in the final moments. Component Microchip (MCHP 80.35, -2.26 -2.74%) was one of the worse performing Semi (SOX 1074.89, -13.03 -1.20%) names today. Other names in the space which were hard hit included FSLR -2.48%, TXN -2.27%, QRVO -2.21%, SWKS -2.16%, AMAT -2.10%, STX -1.89%, PAYX -1.83%, INTC -1.83%.
Other notable news items among sector components:
Glu Mobile (GLUU 2.60, +0.07 +2.77%) entered into multi-year agreement with WWE (WWE 20.15, -0.55 -2.66%) to develop a mobile game featuring WWE Superstars, logos and marks.
Norsat (NSAT 11.37, +0.05 +0.44%) agreed to be acquired by Hytera Communications for $11.50 per share in cash.
Agilysys (AGYS 9.95, +0.12 +1.22%) appointed Tony Pritchett CFO; Mr. Pritchett has been serving as Agilysys's Interim CFO since November 2016.
Autodesk (ADSK 104.93, -1.23 -1.16%) appointed interim co-CEO and chief marketing officer Andrew Anagnost as the company's new president and CEO, effective immediately.
Intelsat (I 3.11, flat) priced a private offering of $1.5 billion Senior Notes due 2025; will bear interest at a rate of 9.750% per annum.
Orange (ORAN 16.06, -0.16 -0.99%) completed the sale of BT (BT 18.27, -0.40 -2.14%) shares; secured financing at a negative interest rate.
Analyst actions:
VSLR was upgraded to Buy from Neutral at Goldman,
MRVL was upgraded to Overweight from Sector Weight at Pacific Crest,
NVDA was upgraded to Sector Weight from Underweight at Pacific Crest,
ENPH was upgraded to Hold from Sell at Deutsche Bank;
CSOD was downgraded to Underweight from Equal Weight at Barclays,
ON was downgraded to Sector Weight from Overweight at Pacific Crest,
ADP was downgraded to Neutral at Goldman,
PAYX was downgraded to Neutral from Buy at Goldman;
ITRI and SSNI were both initiated with Buy ratings at Guggenheim
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