From Briefing.com: 4:30 pm Closing Market Summary: S&P 500 Registers Modest Win on Wednesday (:WRAPX) :The benchmark S&P 500 (+0.2%) registered its second win of the week on Wednesday, settling near the top of its trading range, but activity was subdued with only 886.2 million shares changing hands at the NYSE floor following the July Fourth holiday. The Nasdaq (+0.7%) outperformed while the Dow (unch) lagged, finishing just a tick below its unchanged mark. Also of note, the small-cap Russell 2000 underperformed, settling lower by 0.5%.
Investors got their hands on the minutes from the June 13-14 FOMC meeting on Wednesday afternoon, but the initial reaction was muted as the minutes did little to change the market's rate-hike expectations; the fed funds futures market still points to the December FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 64.8%, which is slightly higher than Monday's reading of 62.2%.
In the minutes, Fed members seemed generally upbeat about economic activity and attributed the recent softness in inflation to idiosyncratic factors. In addition, Fed officials were divided on when to start unwinding the central bank's balance sheet; several preferred to start the process within a couple of months while others wanted to defer the decision until later in the year.
Looking ahead, inflation data, like the CPI Report and the average hourly earnings growth seen in the monthly employment reports, will take on an increasingly important role in guiding the market's thinking about when the Fed will next raise the target range for the fed funds rate and start reducing reinvestment of the Fed's securities holdings.
The Employment Situation Report for June (Briefing.com consensus 173,000), which includes average hourly earnings (Briefing.com consensus +0.3%), will be released on Friday morning at 8:30 ET.
In the equity market, the top-weighted technology sector (+1.0%) was able to reclaim all of Monday's slide on Wednesday, providing solid sector leadership from start to finish amid broad strength. Chipmakers showed notable strength, sending the PHLX Semiconductor Index higher by 2.1%, as did mega-cap names like Microsoft (MSFT 69.08, +0.91), Facebook (FB 150.34, +1.91), and Alphabet (GOOGL 932.26, +12.80).
Biotech names also had a solid showing, evidenced by the 1.4% increase in the iShares Nasdaq Biotechnology ETF (IBB 315.29, +4.34), helping to keep the influential health care sector (+0.5%) near the top of the day's leaderboard. The financials (+0.2%) and industrials (+0.3%) spaces also finished in positive territory.
The seven laggards--consumer discretionary (-0.2%), energy (-1.3%), materials (-0.4%), consumer staples (-0.1%), utilities (-0.4%), telecom services (-0.4%), and real estate (-1.2%)--put up a good fight, but were ultimately no match for the technology, health care, financials, and industrials sectors, which represent around 60.0% of the broader market combined.
Crude oil weighed heavily on the energy sector, dropping 4.2% to $45.10/bbl, following reports that Russia will oppose any proposals to deepen the existing production-cut agreement. In addition, news that OPEC exports increased by 450,000 barrels per day month-over-month in June also acted as a bearish catalyst. The loss ended the commodity's longest bull-run in more than five years.
In the bond market, the 10-yr yield slipped two basis points to 2.33% while the 2-yr yield settled unchanged at 1.41%. Treasuries gave back their modest gains immediately following the release of the FOMC minutes, but eventually closed in the green near their best marks of the day.
Reviewing Wednesday's economic data, which was limited to the Factory Orders Report for May:
The Factory Orders Report for May showed a decrease of 0.8%, which is below the Briefing.com consensus of -0.5%. The April reading was revised to -0.3% (from -0.2%).
The key takeaway from the report is that order and shipments activity for nondefense capital goods excluding aircraft were higher than first reported and will improve the expected contribution to Q2 GDP growth forecasts.
On Thursday, investors will receive a slew of economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, June Challenger Job Cuts at 7:30 ET, June ADP Employment Change (Briefing.com consensus 185,000) at 8:15 ET, the weekly Initial Claims Report (Briefing.com consensus 244,000) at 8:30 ET, May Trade Balance (Briefing.com consensus -$46.1 billion) at 8:30 ET, and June ISM Services (Briefing.com consensus 56.6) at 10:00 ET.
Nasdaq Composite +14.3% YTD
S&P 500 +8.7% YTD
Dow Jones Industrial Average +8.7% YTD
Russell 2000 +4.6% YTD
Tech Stocks from Briefing.com
Following the abbreviated Monday session and the off day on Tuesday, the markets opened surprisingly strong as volume eventually evened out on both the NYSE floor (886 mln vs average near 1,000 mln) and the NASDAQ floor (1,857 mln vs average near 1,999 mln). When all was said and done, the Nasdaq Composite was the best performer on Wednesday, adding 40.80 points (+0.67%) to 6150.86. The S&P 500 managed gains of 3.53 points (+0.15%) to 2432.54, while the Dow Jones Industrial Average lost about 1.10 points (-0.01%) to 21478.17.
The Technology (XLK 54.88, +0.54 +0.99%) space rebounded modestly today and was the best performing S&P sector. Component Advanced Micro (AMD 13.19, +1.04 +8.56%) was strong today on the back of an increased stake from Mubadala Investment Company. The Energy XLE -2.03% space got shredded today, followed by XLRE -1.20%, IYZ -0.86%, XLU -0.48%, XLB -0.33%, XLY -0.25%, XLP -0.11%, XLF +0.08%, XLI +0.29%, XLV +0.57%.
In the S&P 500 Information Technology (941.97, +9.68 +1.04%) space, trading finished just off highs but firmly in the green. Component Oracle (ORCL 49.46, +0.10 +0.20%) was modestly higher following a premarket upgrade of the stock to an Overweight rating at KeyBanc Capital Mkts. Other names in the space which outperformed today included MU +4.70%, PYPL +3.29%, ADSK +3.26%, QRVO +3.21%, MCHP +2.81%, AMAT +2.71%, NVDA +2.67%, INTC +2.63%, LRCX +2.33%, SWKS +2.30%, XLNX +2.29%, ADI +2.14%, ADBE +2.02%.
Other notable news items among sector components:
Diebold Nixdorf (DBD 21.60, -6.40 -22.86%) cut its FY17 guidance citing elongated conversion cycles for large orders in banking and the delay in systems rollouts in the service business. Sees non-GAAP EPS of $0.95-1.15 (down from $1.40-1.70) on revenues of $4.7-4.8 billion (down from $5.0 billion).
Ericsson's (ERIC 7.23, +0.10 +1.40%) Chairman to not make himself available for re-election in 2018; Nomination committee has initiated the search for a replacement.
Mercury (MRCY 43.26, +1.25 +2.98%) acquired Richland Technologies; terms not disclosed.
Xperi's (XPER 33.70, +1.20 +3.69%) Tessera Technologies confirmed more details today on its win against
Broadcom (AVGO 231.61, +1.85 +0.81%) and certain of its customers in the U.S. International Trade Commission.
Vantiv (VNTV 61.06, -1.45 -2.32%) and Worldpay Group plc (WDDYF 4.88, +0.83 +20.49%) agreed to key terms of possible offer.
Baidu.com (BIDU 183.83, +3.86 +2.14%) and NVIDIA (NVDA 143.05, +3.72 +2.67%) announced a broad partnership to bring the world's leading artificial intelligence technology to cloud computing, self-driving vehicles and AI home assistants.
Advanced Energy (AEIS 65.80, +1.27 +1.97%) acquired Excelsys Holdings for EUR 15.5 million.
DXC Technology (DXC 76.23, +0.28 +0.37%) acquired Tribridge; terms not disclosed.
Analyst actions:
ORCL was upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts,
TER was upgraded to Buy from Hold at Stifel,
FTNT was upgraded to Positive from Mixed at OTR Global;
MRVC was downgraded to Market Perform from Outperform at Northland Capital,
RATE downgraded to Hold from Buy at Needham,
CHU and CHL were both downgraded to Underweight ratings from Overweight at Morgan Stanley
