From Briefing.com: 4:37 pm Closing Market Summary: Stocks Settle Mixed Following Amazon Earnings (:WRAPX) :Equity indices finished Friday's session mixed; the Dow (+0.2%) advanced to a new record high for the third day in a row while the S&P 500 (-0.1%) and the Nasdaq (-0.1%) settled a tick below their unchanged marks. All three major averages finished near their best marks of the day. For the week, the S&P 500 finished flat.
The Nasdaq opened Friday's session with a sizable loss of 0.7% after one of its most influential components--Amazon (AMZN 1020.04, -25.96)--missed earnings expectations. The online retailer was down as much as 4.3% in early action, but, like the Nasdaq, the company was able to trim its loss a bit, eventually settling lower by 2.5%.
Amazon's negative performance took a toll on the consumer discretionary sector (-0.7%), which finished near the bottom of the day's leaderboard. In addition, coffee giant Starbucks (SBUX 54.00, -5.50) weighed on the consumer discretionary space--plunging 9.2% to its lowest level in six months--after the company missed top-line estimates and issued disappointing guidance.
The consumer staples sector (-0.9%) finished at the very bottom of the sector standings with tobacco giant Altria (MO 66.94, -7.02) leading the retreat. MO shares sold off sharply after the U.S. Food and Drug Administration announced a plan to reduce nicotine levels in cigarettes. Altria reclaimed a chunk of its initial decline, but still ended the day with a solid loss of 9.5%.
Meanwhile, the energy sector (-0.2%) settled roughly in line with the broader market despite a solid performance from crude oil, which climbed 1.4% to $49.74/bbl. For the week, WTI crude advanced 8.7%, which marks its biggest one-week rally of the year.
Within the energy sector, Dow components Exxon Mobil (XOM 79.60, -1.23) and Chevron (CVX 108.12, +2.01) saw a mixed response to their latest earnings reports; CVX jumped 1.9% after reporting better than expected revenues while XOM dropped 1.5% after missing earnings expectations.
The top-weighted technology sector (-0.1%) also finished roughly in line with the broader market. Intel (INTC 35.31, +0.34) advanced 1.0% after beating both top and bottom line estimates and issuing upbeat guidance. However, the PHLX Semiconductor Index dropped 0.4% despite Intel's positive performance.
In total, eight of the eleven sectors finished in the red with losses ranging from 0.1% to 0.9%. The health care (+0.5%), financials (unch), and industrials (+0.2%) spaces were the three advancers.
Merck (MRK 64.11, +0.42) helped the health care sector finish at the top of the leaderboard after the company reported better than expected earnings and revenues; MRK shares settled higher by 0.7%. It's also worth noting that the Senate failed to pass a 'skinny' repeal of the Affordable Care Act in a tight 49-51 vote.
As for industrials, transports bounced back on Friday after sending the Dow Jones Transportation Average on a 3.1% plunge in the prior session. The DJTA finished Friday higher by 0.4%.
It's also worth noting that North Korea launched another intercontinental ballistic missile (:ICBM) on Friday, marking Pyongyang's 11th ballistic missile test this year. Stocks did not react to the news.
Outside of the stock market, Treasuries rallied in a curve-flattening trade, leaving the 2-yr yield (1.36%) and the 10-yr yield (2.29%) lower by one basis point and three basis points, respectively. Meanwhile, the U.S. Dollar Index (93.15, -0.62) dropped 0.7% to a fresh 15-month low.
Reviewing Friday's economic data, which included the advance estimate for second quarter GDP, the second quarter Employment Cost Index, and the final reading of the University of Michigan Consumer Sentiment Index for July:
Advance second quarter GDP pointed to an expansion of 2.6%, while the Briefing.com consensus expected a reading of 2.8%. The second quarter GDP Deflator came in at 1.0%, which is below the Briefing.com consensus of 1.3%.
The key takeaway from the Q2 GDP report, then, is that the average for the first half of 2017 was subpar at 1.9%, which should continue to keep any concerns about the prospect of a near-term rate hike from the Fed under wraps.
The second quarter Employment Cost Index rose 0.5%, while the Briefing.com consensus expected an increase of 0.6%.
The key takeaway from the report is that there was a moderation in year-over-year growth rates for wages and salaries, reflecting the lack of wage-based inflation pressure that has helped keep consumer spending activity modest and overall inflation low.
The final reading of the University of Michigan Consumer Sentiment Index for July rose to 93.4 (Briefing.com consensus 93.1) from 93.1 in the preliminary reading.
Despite the small decline, the key takeaway from the report is the indication that the Sentiment Index is still higher in the first seven months of 2017 than in any other year since 2004.
On Monday, investors will receive just two pieces of economic data--July Chicago PMI (Briefing.com consensus 60) and June Pending Home Sales (Briefing.com consensus 1.1%). The two reports will be released at 9:45 ET and 10:00 ET, respectively.
Nasdaq Composite +18.4% YTDS&P 500 +10.4% YTDDow Jones Industrial Average +10.5% YTDRussell 2000 +5.3% YTD Week In Review: Up to the Ears in Earnings
Investors had a massive pile of earnings reports to work through this week. The results were generally positive, but equities still sold off in some instances as many companies rallied for several weeks in front of their reports, pricing in much of the good news beforehand. The S&P 500 finished the week just a tick below its flat line, the Nasdaq dropped 0.2%, and the Dow outperformed, climbing 1.2%.
The stock market began the week with a rather range-bound performance on Monday as small victories from the top-weighted technology and financials sectors roughly canceled out losses from the nine remaining groups. Alphabet (GOOGL) helped carry the tech space, muscling one more win ahead of its earnings report, which crossed the wires on Monday evening.
Alphabet reported better than expected earnings and revenues, but slid 2.9% on Tuesday nonetheless. In general, earnings continued to eclipse expectations on Tuesday with Caterpillar (CAT), McDonald's (MCD), DuPont (DD), and United Technologies (UTX) all beating earnings per share estimates. The positive results helped push the S&P 500 and the Nasdaq to modest victories and new record highs.
The Dow joined the record-high club in the midweek session, outpacing its peers on the back of Boeing (BA). The airplane maker surged 9.9% after reporting better than expected earnings and raising its earnings guidance for the fiscal year. Wireless giant AT&T (T) also moved solidly higher, adding 5.0%, following its latest quarterly report, which showed above-consensus earnings.
Investors took a break, albeit a short one, from earnings season on Wednesday afternoon when the Fed released its latest policy directive. However, the release largely turned out to be a nonevent. The FOMC decided to keep the fed funds target range at 1.00%-1.25%, as expected, and noted that it expects to begin paring its balance sheet "relatively soon", which was interpreted by many to mean September.
Earnings came back into focus on Thursday with Facebook (FB) headlining the lineup. The social media giant jumped to a new record high after reporting better than expected earnings and revenues, however, the company gave back a good portion of said advance as tech stocks began to sell off in the afternoon, pushing the technology sector to the bottom of the leaderboard.
Transports struggled mightily on Thursday, sending the Dow Jones Transportation Average lower by 3.1%. The DJTA's weakness was broad, but UPS (UPS) and Southwest Airlines (LUV) exhibited particular weakness despite beating earnings estimates. However, on a positive note, Verizon (VZ) surged 7.7% on better than expected revenues. Equity indices settled mixed with the S&P 500 losing 0.1%.
Moving into Friday's session, investor sentiment was down mildly after Amazon (AMZN) reported worse than expected earnings on Thursday evening. The e-commerce giant dropped 2.5%, but the broader market held up relatively well with the Dow settling at another record high, its third in a row. Also of note, the advance estimate of Q2 GDP came in slightly below expectations (2.6% actual vs 2.8% Briefing.com consensus).
Following this week's policy directive, the fed funds futures market now points to the January FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 50.8%. At this time last week, investors were anticipating the next rate hike to occur in December.
Tech Stocks from Briefing.com
The broader market slumped into the weekend, yet the Dow Jones Industrial Average managed modest gains of 33.76 points (+0.15%) to 21830.31. The S&P 500 declined about 3.32 points (-0.13%) to 2472.10, and the Nasdaq Composite shed about 7.51 points (-0.12%) to 6374.68. All told, this week's moves take the three major US indices to +10.5%, +10.4% and +18.4% YTD, respectively.
Market data today included the advance second quarter GDP reading which pointed to an expansion of 2.6%, while the second quarter GDP Deflator came in at 1.0%. The second quarter Employment Cost Index rose 0.5%, and the final reading of the University of Michigan Consumer Sentiment Index for July rose to 93.4 from 93.1 in the preliminary reading.
The Technology (XLK 57.44, -0.06 -0.10%) space tripped into the weekend, ending just under flat lines. Component Western Digital (WDC 84.97, -6.93 -7.54%) was the worst performing name in the ETF today despite announcing better than expected earnings. At US Telecoms IYZ -1.30% space was the worst performing sector on Friday, followed by XLP -0.84%, XLY -0.76%, XLB -0.36%, XLU -0.15%, XLE -0.08%, XLRE -0.06%, XLF +0.00%, XLI +0.23%, XLV +0.50%.
In the S&P 500 Information Technology (985.67, -0.88 -0.09%) space, trading was mostly flat today, albeit with minimal losses. Component Intel (INTC 35.31, +0.34 +0.97%) posted modest gains following its latest quarterly report. Other names in the space which trickled lower with the sector today included KLAC -5.53%, MU -3.17%, PAYX -3.15%, FLIR -1.99%, LRCX -1.92%, AMAT -1.72%, PYPL -1.58%, MSI -1.30%, TDC -1.19%, NTAP -1.18%, SWKS -1.16%, INTU -0.90%.
Other notable news items among sector components:
Expedia (EXPE 159.50, +5.25 +3.40%) and Traveloka Holding a leading Southeast Asian online travel company, announced today that Expedia made a $350 million primary minority investment in Traveloka. The company also declared quarterly cash dividend of $0.30/share, prior $0.28/share
Microsemi (MSCC 52.59, -1.06 -1.98%) announced a $250 million stock repurchase program.
Ultra Clean Holdings' (UCTT 24.36, -0.18 -0.73%) President and CEO Jim Scholhamer to take leave of absence starting July 31 for approximately 2 months to address a treatable medical condition.
SCANA Corp's (SCG 61.31, -4.33 -6.60%) South Carolina Electric & Gas and Santee Cooper entered definitive agreement for Toshiba (TOSBF 2.17, -0.23 -9.66%) to pay $2.168 billion for obligations of Westinghouse Electric Company.
Motorola Solutions (MSI 91.01, -1.20 -1.30%) will acquire Plant Holdings, Inc., which holds the Airbus DS Communications business; terms not disclosed and expected to be completed by end of 2017.
Verizon (VZ 47.93, +0.12 +0.25%) said to be in talks to acquire WideOpenWest's (WOW) Chicago fiber network, according to Reuters.
Sprint (S 8.22, +0.02 +0.24%) in talks with Comcast (CMCSA 39.52, +0.09 +0.23%) / Charter (CHTR 370.26, +3.36 +0.92%) for partnership / investment, according to Bloomberg.
In reaction to quarterly results:
Amazon (AMZN 1020.04, -25.96 -2.48%) reported worse than expected Q2 EPS of $0.40 on better than expected revenues of $37.95 billion. For Q3, the company sees in-line revenues of $39.25-41.75 billion on operating income of ($400)-300 million.
Intel (INTC) reported better than expected Q2 EPS and revenues of $0.72 and $14.76 billion, respectively. For Q3, the company sees EPS and revenues ahead of market expectations at $0.75-0.85 and $15.2-16.2 billion, respectively. For FY17, the company raised EPS and revenue guidance to $2.85-3.15 and $60.8-61.8 billion.
Baidu.com (BIDU 220.00, +19.00 +9.45%) reported better than expected Q2 EPS and revenues of $1.67 and $3.08 billion, respectively. For Q3, the company sees revenues ahead of market expectations at $3.412-3.503 billion.
Electronic Arts (EA 118.25, +0.65 +0.55%) reported Q1 EPS of $2.06 on better than expected revenues of $775 million. For Q2, the company sees a loss of $0.18 on revenues of $1.160 billion. The company also reaffirmed FY18 EPS guidance of $3.57 on revenues of $5.1 billion.
Western Digital (WDC) reported better than expected Q4 EPS of $2.93 on in-line revenues of $4.84 billion.
Expedia (EXPE) reported worse than expected Q2 EPS of $0.89 and better than expected revenues of $2.59 billion.
Analyst actions:
LOGM was upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts,
BIDU was upgraded to Overweight at Cantor Fitzgerald;
ELLI was downgraded to Neutral from Buy at Roth Capital,
ECHO was downgraded to Sell from Neutral at UBS,
TTMI was downgraded to Hold from Buy at Stifel,
PLT was downgraded to Neutral from Overweight at JP Morgan,
EGHT and PDFS were downgraded to Hold from Buy at Craig Hallum,
SHOR was downgraded to Market Perform from Outperform at Northland Capital,
MSTR was downgraded to Hold from Buy at Deutsche Bank;
SSTI was initiated with an Outperform at Imperial Capital,
APTI was initiated with an Outperform at Oppenheimer
