From Briefing.com: 4:20 pm : After tumbling 2.4% on average last Friday, the Dow, S&P 500, and Nasdaq bounced back in impressive fashion Monday as the belief that stocks are oversold on a short-term basis sparked a wave of bargain-hunting interest.
The Dow turned in its biggest point gain since October 2002, but the S&P 500 was the best performing major average as all 10 sectors finished noticeably higher. Advancers outpaced decliners on the NYSE by a mere 17-to-15 margin, however, while declining issues only outpaced advancing issues on the Nasdaq by a small margin.
With the very influential Financial sector down 12.7% year to date heading into today's action, 12.4% of which occurred over the prior three weeks, some encouraging developments in the space fueled a short-covering rally throughout the group. The S&P 500's most heavily weighted sector more than recouped all of the 3.9% it lost on Friday by soaring to the tune of 4.7%.
An analyst upgrade on Merrill Lynch (MER 74.50 +4.45) at UBS, which said the fallout from the mortgage and credit businesses is mostly discounted in MER's valuation, was the driving catalyst. Morgan Stanley saying insurance stocks are down unjustifiably and Wells Fargo (WFC 34.72 +1.91) approving a 50 mln share buyback intraday also helped restore confidence throughout the battered sector.
A day after recording its worst one-day decline (-3.2%) since October 2002, the KBW Bank Index (+5.4%) turned in its best performance in nearly five years. Regional Banks (+5.8%) and Diversified Banks (+5.8%) ranked No. 2 and No. 3 in terms of today's best performers.
Thrifts & Mortgage (+7.7%), one of this year's 10 worst performing S&P industry groups (-15.5%), was today's biggest winner. Talk that regulatory restrictions may be lifted lit a fire under the likes of Fannie Mae (FNM 62.41 +5.78) and Freddie Mac (FRE 59.99 +4.29).
Bear Stearns (BSC 112.95 +4.60) spiking into positive territory about an hour before the close, following upbeat analyst commentary, helped exacerbate the rebound in brokerage stocks. An S&P analyst said the market overreacted to Bear Stearns' outlook, that BSC's liquidity remains "solid", and that liquidity at the Big 5 brokers remains sound.
Crude oil prices closing near session lows and plunging 4.5% to $72.06/bbl, coupled with the Energy sector's ability to completely shrug off oil's downturn and analyst downgrades on several sector components, provided additional relief.
As a reminder, all eyes tomorrow will be on the FOMC meeting, which will conclude at 14:15 ET. The Fed is widely expected to leave the fed funds rate unchanged at 5.25% again, but what isn't a foregone conclusion is what the accompanying policy directive will imply about future rate decisions.
As reflected in today's relief rally, many on Wall Street are apparently hoping the accompanying directive reflects concern about credit conditions and provides assurances that policy makers will act to prevent serious disruptions. DJ30 +286.87 NASDAQ +36.08 SP500 +34.61 NASDAQ Dec/Adv/Vol 1614/1450/2.61 bln NYSE Dec/Adv/Vol 1558/1779/2.04 bln
5:26PM Qualcomm will appeal and seek stay on ITC ban on imports of future 3G mobile broadband handset models (QCOM) 41.78 +1.01 : Co announces that it will appeal and renew its request for a stay of the International Trade Commission ban on imports of future 3G mobile broadband handset models. QCOM maintains that none of Broadcom's (BRCM) patent claims are valid or were infringed upon by QCOM. The co made its announcement today in response to the lack of a Presidential reversal of the I.T.C order. In addition to pursuing the appeal and stay request with the Federal Circuit Court of Appeals (the stay had originally been denied solely on the procedural basis that it could not be heard by the appellate court until after a decision on the veto), the co affirmed its commitment to minimizing the impact of the I.T.C order and is working closely with its customers and the operators on the implementation of new software. While the acceptability of this new software is subject to challenges by BRCM, they are confident that it is outside the scope of the I.T.C order and they are confident in the technical performance of this software. Co says that customer acceptance has been strong.
5:02PM Maxim Integrated appoints Bruce Kiddoo, Vice President of Finance; will assume CFO post after restatement is complete (MXIM) 31.47 +0.97 : Co announces the appointment of Bruce Kiddoo as Vice President of Finance. He will assume the CFO title following the completion of the co's restatement.
4:49PM Broadcom issues press release in response to ITC decision (BRCM) 33.44 +0.48 : Co issued the following statement after a decision by the Bush Administration to let stand the U.S. International Trade Commission (ITC) order barring the importation of Qualcomm (QCOM) chips and certain cellular phones containing those chips that infringe a Broadcom patent. Co says, "We are gratified by the decision of U.S. Trade Representative Susan Schwab not to intervene in this case... In upholding the ITC remedy, the Administration is also encouraging a market-based solution to patent issues that is in the best interests of American consumers, U.S. companies and global patent protection." To date, Qualcomm (QCOM) has been found to infringe four different BRCM patents, one tried in the ITC and three others tried before a federal jury in May in Santa Ana, Calif. The Santa Ana jury found QCOM's infringement of the three Broadcom patents to be willful. An injunction hearing in that case, in which BRCM is seeking to bar future infringement by QCOM, is set for August 14. (See 16:32 comment for original report of the ITC decision)
4:33PM Rudolph Tech reports Q2 EPS in line, revs light (RTEC) 15.63 +0.30 : Reports Q2 (Jun) earnings of $0.19 per share, in line with the Reuters Estimates consensus of $0.19; revenues fell 15.9% year/year to $47.7 mln vs the $48.8 mln consensus.
3:59PM Market View: Strong recovery rally (TECHX) : Solid turnaround day for the market with the large cap Dow and S&P 500 the top performing indices. Sector strength came from the Financials with positive commentary on BSC (+1.5% and $10 off the low), an upgrade for MER (+5.6%) and a buyback in WFC (+5.5%) providing incentive for a wave of bargain hunting in this beleaguered sector (largest in the S&P 500). An afternoon rebound extension in Home Construction and Energy off the lows provided a secondary boost for the bounce allowing the Dow and S&P 500 to recoup the majority of losses from Friday's high to this morning's early low. Sector strength was also noted in Insurance +4.2%, Trucking +2.8%, REITS +2.6%, Tobacco +2.4%, Biotech +2.3%, Drug +2.3%, Retail +2.1% and Restaurant +1.7%. Some weakness was noted in Gold/Silver -1.6%, Airline -1.6%, Oil Service -1%. The S&P 500 held at its one year moving average (12 exp monthly) and the Nasdaq Comp reversed after testing its 200 ema/sma.
3:12PM Trident Microsystems reschedules Q4 of fiscal year 2007 conference call (TRID) 15.44 -0.08 : Co announces it has postponed their scheduled conference call to discuss financial results from today until tomorrow 2:00 p.m. Pacific Time on Tuesday, August 7, 2007. The co will release financial results after the market close on the same day. Co says "... unfortunately due to a delay in the process of preparing our restated Annual Report for Fiscal year 2006 on SEC Form 10K, we have taken a decision to delay today's scheduled financial results press release and conference call until tomorrow August 7, 2007..."
09:37 am Sigma Designs: Roth Capital reiterates Buy. Target $40 to $42. Roth raises their Q2 & FY08-09 ests and raises their tgt on SIGM to $42 from $40, saying their checks reveal that SIGM has been designed into Blu Ray DVD players from Samsung and Mitsubishi. Firm also thinks that Q2 revs are tracking ahead of expectations.
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