From Briefing.com: 4:20 pm : A batch of better-than-expected economic data induced broad-based buying for the first part of the session, but the upbeat tone fell apart as stocks pushed through intraday support levels and a Treasury auction produced disappointing results. However, an underlying bid emerged late in the session, setting off a rally in the last few minutes of trading.
The latest durable goods orders data and new home sales figures both turned out to be better than expected.
February durable goods orders increased 3.4%, marking the first time in six months that orders increased. Excluding transportation, orders increased 3.9%. Economists expected respective declines of 2.5% and 2.0%.
February new home sales increased 4.7% month-over-month to an annualized rate of 337,000. Economists predicted a 2.9% decline.
The upbeat data helped the financial sector build on early strength. Financials had climbed as high as 6.5%, led by diversified financial services stocks (+7.4%). Bank of America (BAC 7.70, +0.48) was a top performer after a report indicated the company plans to soon repay federal aid. Financials turned sharply lower amid a broad-based, afternoon selling effort, which took the sector to a loss of 2.5%, but financials rebounded to close with a 4.6% gain.
The afternoon's selling effort gained momentum after the S&P 500 failed to find support at the 818 level, which had provided intraday support in the early going. Selling intensified after weak demand for a government auction of 5-year Treasuries led to a jump in yields. The disappointing auction followed an auction of Gilts, or British debt securities, by the United Kingdom that failed to attract enough buyers.
The weak auctions suggest investor appetite for government debt carrying low interest rates is waning, which will bring future auctions into closer focus. As such, tomorrow's auction of 7-year notes now has a much higher level of importance.
Sellers took the stock market to a loss of 1.8%, but a late, broad-based rally effort helped stocks close the session with a solid gain. The blue chip Dow Jones Industrial Average outperformed the other headline indices by closing 1.2% higher, but the Small-Cap Russell 2000 fared even better by putting together a 2.3% gain. The Nasdaq 100, which is rich in large-cap tech names, lagged by closing just 0.2% higher.
Tech giant IBM (IBM 97.89, -0.41) closed lower after an article from The Wall Street Journal stated the company is planning layoffs, despite its profile as a strong company. The announcement comes as a reminder that near-term economic prospects haven't improved materially.
On a related note, Automatic Data Processing (ADP 35.62, -0.81) lost ground after trimming its outlook. The company expects revenue for fiscal 2009 to grow from 1% to 2%, which is down from the prior range of 2% to 3%. The company also expects earnings growth from continuing operations to come in at the low end of the range 10% to 14%.
The final fourth quarter GDP reading is due tomorrow morning, as are weekly jobless claims (8:30 AM ET). Best Buy (BBY 33.46, +0.22), ConAgra (CAG 15.56, +0.14), and GameStop (GME 26.84, -0.21) also report before Thursday's opening bell.DJ30 +89.84 NASDAQ +12.43 NQ100 +0.2% R2K +2.3% SP400 +1.2% SP500 +7.76 NASDAQ Adv/Vol/Dec 1692/2.15 bln/979 NYSE Adv/Vol/Dec 2137/1.77 bln/923
4:59PM Amkor reported that Q1 net sales are tracking to a sequential decline of 30% to 34% YoY, within the favorable end of the range of the co's previously announced guidance (AMKR) 2.59 +0.033 : Co reported that first quarter net sales are tracking to a sequential decline of 30% to 34% from the quarter ended December 31, 2008, which is within the favorable end of the range of the co's previously announced guidance. The co also noted that gross margin for Q1 is expected to be 8-12% of net sales, which is above its previously announced range of 5% to a negative 2%. Gross margin for Q1 is expected to benefit from reductions in labor and other costs and foreign government subsidies of employee wages, as well as the strength of the U.S. dollar against certain foreign currencies. However, gross margin is affected by a number of estimates and other factors which will be reviewed after the end of the quarter and the final gross margin for Q1 could vary from our current estimate. AMKR estimates that its current global cash balance has declined to ~$275 mln, reflecting payments relating to a patent license dispute, employee benefit and severance payments and the repurchase of outstanding notes due in 2011. It is too early for the co to provide other 2009 Q1 financial information and therefore, it is neither updating nor reaffirming its prior guidance regarding net income.
4:59PM Amkor proposes to offer $240 million convertible senior subordinated notes due 2014 (AMKR) 2.59 +0.03 : Co announces that it proposes to offer $240 mln aggregate principal amount of convertible senior subordinated notes. The notes would be due in 2014 and are to be offered and sold to qualified institutional buyers and to James J. Kim, Chairman and Chief Executive Officer of Amkor and Amkor's largest shareholder, and certain entities controlled by Kim. Kim and his affiliates have agreed to purchase at least $150 mln of the notes and up to an additional $50 mln of the notes, depending on market demand. In connection with such investment, Kim and his affiliates will agree to enter into a voting agreement with Amkor restricting the voting of shares of Amkor acquired by Kim or his affiliates upon conversion of the notes. Amkor also intends to grant to the initial purchasers of the notes an option to purchase up to an additional $10 mln aggregate principal amount of notes solely to cover over-allotments.
RF Micro Devices (RFMD) announces that the co has been selected by a "leading manufacturer" of smartphones to supply its high performance RF1450 single-pole 4-throw switch into an upcoming multi-featured CDMA smartphone device. No terms given.
08:10 am Jabil Circuit (JBL)
Jabil Circuit (JBL 3.81) reported better-than-expected earnings for its fiscal second quarter, but the company issued downside guidance for the current quarter, saying its end-markets "remain difficult with limited visibility."
For its fiscal second quarter, Jabil reported earnings of $0.13 per share, excluding nonrecurring items, a penny better than the First Call consensus of $0.12.
Revenues fell 5.6% year-over-year to $2.89 billion, slightly better than the consensus that expected $2.81 billion.
Due to further deterioration of the macro-economic environment and the continued decline of its stock price, Jabil said it is currently performing a goodwill impairment analysis, likely to be completed in early April. The company said that it will take a non-cash charge that is "likely to be significant" if it determines its goodwill is impaired in whole or part.
The company issued downside guidance for its third quarter, saying it expects to post earnings ranging from a loss of $0.08 to a profit of $0.08; the consensus currently stands at $0.11. Jabil expects revenues to range from $2.5 billion to $2.7 billion vs. a consensus of $2.75 billion.
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