From Briefing.com: 4:35 pm Closing Market Summary: Health Care & Tech Stocks Keep Losses to a Minimum (:WRAPX) :
The S&P 500 (-0.1%) bounced around its unchanged mark throughout the midweek session as the solid performances of the heavily-weighted health care (+1.2%) and technology (+0.7%) sectors helped keep the broader market's loss in check. The Dow (-0.3%) finished a tick behind the benchmark index while the tech-heavy Nasdaq (+0.7%) outperformed.
Biotechnology stocks were bullish once again on Wednesday, pushing the iShares Nasdaq Biotechnology ETF (IBB 316.10, +12.51) to its third-consecutive victory. Led by names like Incyte (INCY 133.99, +9.41), Celgene (CELG 132.83, +6.61), Vertex Pharmaceuticals (VRTX 134.83, +8.50), and Regeneron Pharmaceuticals (REGN 522.02, +26.69), the IBB climbed 4.1%, extending its week-to-date advance to 8.0%.
This week's positive performance within the biotech industry hasn't been driven by any hard news. However, there have been two factors that have helped fuel the bullish bias, namely an emerging sense that the government's attempt to rein in drug prices might not be as harmful as originally thought and buying momentum on a technical breakout from multi-month trading ranges.
Not surprisingly, the heavily-weighted health care sector (+1.2%) settled at the top of the day's leaderboard. The top-weighted technology sector (+0.7%) also finished solidly in the green amid broad strength. Adobe Systems (ADBE 144.24, +3.33) and Red Hat (RHT 98.58, +8.62) were among the top-performers in the technology group, adding 2.4% and 9.6%, respectively, after both companies reported better than expected earnings/revenues and issued upbeat guidance. Chipmakers also had a solid showing, evidenced by the 1.2% increase in the PHLX Semiconductor Index.
The consumer discretionary sector (+0.1%) was the only other group to finish ahead of the benchmark index. Reports that Nike (NKE 52.59, +1.03) and Amazon (AMZN 1002.23, +9.64) are discussing a possible direct sales relationship weighed on retailers like Foot Locker (FL 47.82, -2.51), which slipped 5.0%. The SPDR S&P Retail ETF (XRT 38.81, -0.51) settled lower by 1.3%, extending its month-to-date loss to 4.8%.
At the bottom of the leaderboard, the energy sector (-1.6%) settled in the red for the third-consecutive session as crude oil continued to slide, dropping 2.3% to $42.51/bbl. The energy component was flat in pre-market action and then moved modestly higher on headlines out of Iran suggesting the possibility of further OPEC production cuts. However, these headlines were later negated by some OPEC delegates.
The real kicker to trading sentiment was crude oil's inability to hold a positive bias following the weekly inventory report from the Department of Energy, which showed a draw of 2.5 million barrels from oil stockpiles and a 0.6 million barrel draw from gasoline inventories. The energy component held up relatively well immediately following the report, but then moved sharply lower around noon ET.
Like energy, the heavily-weighted financial sector (-0.8%) also finished solidly lower, suffering from broad weakness. Out of the remaining laggards, the telecom services (-1.2%) and materials (-1.1%) sectors were the weakest performers while the rest of the sectors finished with losses between 0.2% (real estate) and 0.7% (industrials).
In the bond market, Treasuries settled Wednesday's session relatively flat across the curve with the benchmark 10-yr yield closing unchanged at 2.16%.
Reviewing today's economic data, which included May Existing Home Sales and the weekly MBA Mortgage Applications Index:
Existing home sales for May increased 1.1% from April to an annualized rate of 5.62 million units while the Briefing.com consensus expected a reading of 5.52 million. The prior month's reading was revised to 5.56 million from 5.57 million.
The key takeaway from the report remains the same: existing home sales are being impeded by a lack of affordable supply, particularly in the lower- and mid-market price ranges.
The weekly MBA Mortgage Applications Index, which was released earlier this morning, rose 0.6% to follow last week's 2.8% increase.On Thursday, investors will receive Initial Claims (Briefing.com consensus 240,000) and the April FHFA Housing Price Index at 8:30 ET and 9:00 ET, respectively.
4:06 pm Oracle beats by $0.11, beats on revs; will guide for Q1 EPS and revenues on conference call which begins at 17:00 ET (ORCL) :
Reports Q4 (May) earnings of $0.89 per share, excluding non-recurring items, $0.11 better than the Capital IQ Consensus of $0.78; Non-GAAP revenues rose 3.3% year/year to $10.94 bln vs the $10.45 bln Capital IQ Consensus. Without the impact of the U.S. dollar strengthening compared to foreign currencies, Oracle's reported GAAP Earnings Per Share would have been 2 cents higher, and non-GAAP Earnings Per Share would have been 1 cent higher.
For fiscal 2017, Cloud SaaS revenues were up 61% to $3.2 bln compared to fiscal 2016. Non-GAAP SaaS revenues were up 68% to $3.4 bln. Cloud PaaS and IaaS revenues were up 60% to $1.4 bln for both GAAP and Non-GAAP. Total cloud revenues were up 60% to $4.6 bln. Non-GAAP cloud revenues were up 66% to $4.7 bln. Cloud and on-premise software revenues were up 4% to $30.2 bln. Non-GAAP cloud and on-premise software revenues were up 5% to $30.4 bln.
"We continue to experience rapid adoption of the Oracle Cloud led by the 75% growth in our SaaS business in Q4. This cloud hyper-growth is expanding our operating margins, and we expect earnings per share growth to accelerate in fiscal 2018..."AT&T has agreed to migrate thousands of existing Oracle databases containing petabytes of data plus their associated applications workloads to the Oracle Cloud."Co will guide for Q1 EPS and revenues on conference call which begins at 17:00 ET.
Tech Stocks from Briefing.com
Ending in a split decision, the broader market was championed by the tech-heavy Nasdaq Composite which added 45.92 points (+0.74%) today to close 6233.95. The Dow Jones Industrial Average, by contrast, was the worst performer shedding 57.11 points (-0.27%) to 21410.03, while the S&P 500 lost 1.42 points (-0.06%) to 2435.61.
U.S. Treasuries were mostly unchanged today but the yield curve flattened a bit as WTI crude fell to a seven-month low. The U.S. economic data releases were limited and the big one -- May Existing Home Sales -- came out just slightly better than expected. Philadelphia Fed President Patrick Harker (FOMC voter) told the Financial Times in an interview published today that the Fed could formally announce its $4.5 billion balance sheet unwinding program at the September FOMC meeting but not if inflation fails to reverse its recent downturn.
Market data today included the existing home sales reading for May which increased 1.1% from April to an annualized rate of 5.62 million units, while the prior month's reading was revised to 5.56 million from 5.57 million. Also, the weekly MBA Mortgage Applications Index, which was released earlier this morning, rose 0.6% to follow last week's 2.8% increase.
The Technology (XLK 55.93, +0.31 +0.56%) space snapped the recent losing streak, ending higher today. Component CA Tech (CA 35.80, +4.22 +13.36%) was the best performer after reports circulated about potential M&A in the name. By contrast, the Energy XLE -1.61% space performed the worst today as commodities continued their recent slide; the remaining S&P sectors finished IYZ -1.34%, XLB -1.05%, XLF -0.82%, XLI -0.67%, XLU -0.59%, XLP -0.29%, XLRE -0.22%, XLY +0.16%, XLV +1.27%.
In the S&P 500 Information Technology (961.30, +6.43 +0.67%) space, trading finished near highs. Component Red Hat (RHT 98.58, +8.62 +9.58%) was one of the better performing names today after the company reported an impressive Q1 last night. Other names in the space which outperformed today included FSLR +5.02%, MU +3.83%, WDC +3.17%, ADBE +2.36%, AVGO +2.14%, PYPL +1.94%, TDC +1.93%, NVDA +1.52%, STX +1.51%, SWKS +1.46%, SYMC +1.37%, XLNX +1.32%, AKAM +1.32%, FB +1.09%.
Other notable news items among sector components:
CenturyLink (CTL 24.44, -0.26 -1.05%) entered into a credit agreement in connection with the pending acquisition of Level 3 Communications (LVLT 60.09, -0.37 -0.61%).
Adobe Systems (ADBE 144.24, +3.33 +2.36%) has acquired all SkyBox technology from Mettle, a global developer of best-in-class 360-degree and virtual reality software; Mettle co-founder Chris Bobotis to join Adobe.
Salesforce.com (CRM 87.56, +0.64 +0.74%) announced that Airbus (EADSY 20.87, -0.17 -0.81%) will deploy Salesforce Sales Cloud Einstein and Service Cloud Einstein as part of its global digital transformation strategy.
Western Digital (WDC 91.03, +2.80 +3.17%) issued a statement regarding Toshiba's (TOSBF 2.89, -0.07 -2.36%) Flash JV interest announcement that it selected consortium as a preferred bidder.
Synaptics (SYNA 58.04, +2.93 +5.32%) to offer $450 million aggregate principal amount of Convertible Senior Notes due 2022 in a private offering.
ARI Ntwrk Service (ARIS 6.99, +0.03 +0.43%) to be acquired by an affiliate of True Wind Capital Management for $7.10 per share in cash, or about $140 million.
Advanced Micro (AMD 13.98, +1.34 +10.60%) announced the launch of AMD EPYC 7000 series high-performance datacenter processors.
CA Tech (CA) shares performed strong today following potential M&A reports.
In reaction to quarterly results:
Adobe Systems (ADBE) reported better than expected Q2 EPS and revenues of $1.02 and $1.77 billion, respectively. For Q3, the company sees EPS and revenues ahead of market expectations at about $1.00 and about $1.815 billion, respectively.
Red Hat (RHT) reported better than expected Q1 EPS and revenues of $0.56 and $677 million, respectively. For Q2, the company sees EPS and revenues ahead of market expectations at $0.67 and $695-702 million, respectively. For FY18, management now sees EPS of $2.66-2.70 and revenues of $2.785-2.825 billion vs prior guidance of $2.60-2.64 and $2.72-2.76 billion.
Analyst actions:
RHT and VMW were upgraded to Buy from Hold at Stifel,
VRNS was upgraded to Equal Weight from Underweight at Morgan Stanley,
CDK was upgraded to Outperform from Market Perform at Wells Fargo,
PYPL was upgraded to Overweight from Sector Weight at Pacific Crest;
INTC was downgraded to Neutral from Buy at BofA/Merrill,
CYOU was downgraded to Underperform at Mizuho;
P was initiated with a Buy at Gabelli & Co,
DST was initiated with a Buy at DA Davidson
