From Briefing.com: 4:30 pm : Weakness underscored the first part of the session as little attention was given to the latest dose of economic data, but a positive tone emerged in afternoon trading as select financial stocks were squeezed higher and a sudden drop by the U.S. dollar helped lift energy and materials stocks. Their combined strength helped lead a midday recovery effort that gave the Dow its eighth straight advance, a feat that hasn't been accomplished in years.
The preliminary second quarter GDP report caused little stir among participants, though the headline number showed a better-than-expected 1.0% annualized decline, unchanged from the advance reading. Consumer spending during the second quarter also topped expectations by contracting 1.0%, which was an improvement from the 1.2% decline that was previously reported.
The latest batch of initial jobless claims came in 570,000, which is down 10,000 from the previous week and essentially in-line with expectations. Meanwhile, continuing claims came in at 6.13 million, below expectations and down more than 100,000 from the previous week as more unemployed workers lost their jobless benefits.
The reports neither drove selling pressure in the early going nor provided support to the broader market. Instead, the lack of drivers in the early going left stocks to slip in broad fashion so that all 10 major sectors traded with losses, but a short term floor offered support for stocks to rebound. The move from session lows was made easier by the lack of trading volume, which has exacerbated the market's ability to swing meaningfully despite a lack of catalysts in recent sessions.
Nonetheless, the emergence of buyers proved particularly beneficial to the financial sector, which swung from a loss of nearly 1% at its low to finish with a gain of 1.0%. AIG (AIG 47.84, +10.15) surged as short-sellers scrambled to cover their positions in the holding, while banks also provided support. Their advance came in the face of news that the FDIC's Problem List of banks has expanded to a 15-year high and that noncurrent loans and leases increased for a 13th consecutive quarter. However, loans between 30-89 days past due declined by a record amount.
Dollar-sensitive stocks in the materials and energy sectors garnered support as the Dollar Index fell from positive territory to a 0.7% loss late in the session. In turn, materials stocks finished with a 0.6% gain and energy stocks cut their loss to 0.4% after being down roughly 2% as crude oil prices swung from a loss in excess of 1% to settle with a 1.5% gain at $72.49 per barrel.
Industrial stocks traded with relative strength for the entire session and settled with a 0.8% gain. Boeing (BA 51.82, +4.00) buoyed the sector after the company said it plans to deliver the highly-anticipated 787 Dreamliner aircraft in late 2010 and stated that it expects to incur a noncash charge of some $2.5 billion in the third quarter.
Treasuries had a relatively quiet session, which concluded with the benchmark 10-year Note down some 8 ticks following an auction of 7-year Treasuries that was met with a bid-to-cover ratio of 2.74 and a high yield of just 3.09%.DJ30 +37.11 NASDAQ +3.30 NQ100 +0.2% R2K +0.0% SP400 +0.4% SP500 +2.86 NASDAQ Adv/Vol/Dec 1271/2.15 bln/1368 NYSE Adv/Vol/Dec 1612/1.16 bln/1368
5:14PM Marvell sees Q3 EPS of $0.18-0.26 vs $0.17 First Call consensus (MRVL) 14.63 +0.23 :
5:13PM Marvell sees Q3 gross margins of 55% +/- 50 bps vs 52.31% First Call Consenus (MRVL) 14.63 +0.23 :
5:11PM Marvell sees Q3 revs of $680-730 mln vs $648.39 mln First Call consensus (MRVL) 14.63 +0.23 :
4:08PM Marvell beats by $0.04, beats on revs (MRVL) 14.57 +0.17 : Reports Q2 (Jul) earnings of $0.18 per share, excluding non-recurring items, $0.04 better than the First Call consensus of $0.14; revenues fell 24.0% year/year to $640.6 mln vs the $619.8 mln consensus. MRVL reports gross margins of 55.3 % vs Street expectations of ~ 52.15%. Co said, "Our sequential revenue growth reflects both an improving economy and the acceptance by customers of our new and existing products. Additionally, the financial discipline we have adopted continued to deliver positive benefits during the Q2, allowing us to achieve our long-term profitability and cash flow targets well ahead of schedule."
4:10PM OmniVision beats by $0.03, beats on revs; guides Q2 EPS above consensus, revs above consensus (OVTI) 13.30 +0.00 : Reports Q1 (Jul) loss of $0.08 per share, $0.03 better than the First Call consensus of ($0.11); revenues rose 18.5% year/year to $105.6 mln vs the $99.1 mln consensus. Co issues upside guidance for Q2, sees EPS of $0.10-0.20 vs. ($0.04) consensus; sees Q2 revs of $155-170 vs. $111.81 mln consensus. Gross margin for the first quarter of fiscal 2010 was 22.4% vs. the 24.2% consensus, as compared to 17.0% for the fourth quarter of fiscal 2009 and 25.2% for the first quarter of fiscal 2009. The sequential increase in gross margin resulted primarily from the shipment of fresh inventory at the completion of the Company's inventory reduction effort, combined with an increase in average selling prices due to a more favorable product mix.
3:59PM Dell beats by $0.04, beats on revs and gross margins (DELL) 23.11 +0.86 : Reports Q2 (Jul) earnings of $0.28 per share, excluding pretax expenses of $87 mln, or four cents per share, for organizational effectiveness actions, $0.04 better than the First Call consensus of $0.23; revenues rose 3.4% sequentially (down 22% YoY) to $12.76 bln vs the $12.59 bln consensus. DELL reports Q2 gross margins of 18.7% vs. 17.7% consensus, 17.6% last quarter. Co attributes higher gross margins to strong improvement in cost of goods sold, disciplined pricing, a sequential increase in sales from enterprise products, and a $69 million buyout of a revenue-sharing agreement by a vendor offset previously highlighted pressure from component costs, competitive pricing and revenue mix in client systems... In the third quarter, the company expects seasonal demand improvements from the Consumer and U.S. federal government businesses, but the quarter is also generally a period of slower demand from large commercial customers in the U.S. and Europe. Dell believes a refresh cycle in commercial accounts is more likely to occur in 2010, with IT spending improving first in the U.S. The company continues to see pressure in the form of component costs and areas of aggressive pricing in the near term, and continues to take actions to offset these items. The company will continue to focus on implementing cost improvements and strategic investments to improve operations for the long term.
9:34AM Seagate Tech trades up 2% after the co's CEO discloses a big stock purchase near 11-month highs (STX) 12.37 +0.24 : In a filing out last night, STX's CEO Stephen Luczo disclosed that he bought 100K shares at $12.38 per share on Tuesday, worth $1.2 mln. We'd note that this is the first purchase by Luczo since he bought 1 mln shares back in late Jan/early Feb after he was appointed CEO on Jan 12 (he was previously the co's Chairman, and continues to hold that position as well). Those purchases took place at $3.55-4.45, worth ~$4 mln... Additionally, this week's purchase is the first insider purchase in STX since an SVP bought 150K shares back in May, at $8.24 per share... Luczo's latest purchase is especially noteworthy as it comes with STX near 11-month highs of 12.78.
7:30AM Cray acquires PathScale Compiler Suite assets from SiCortex (CRAY) 7.71 : Co announces it has acquired the PathScale Compiler Suite assets from SiCortex. Financial terms of the deal were not disclosed. Cray plans to leverage some of the PathScale intellectual property to enhance Cray's own compiler offerings over time.
7:28AM Microsoft confirms Xbox 360 price drop (MSFT) 24.55 : Co announces that beginning Aug. 28, the price of an Xbox 360 Elite console will drop by $100, now priced at $299.99 estimated retail price in the United States. The Xbox 360 Pro console will now be priced at $249.99, reflecting a price reduction of $50 and $199.99 for the Xbox 360 Arcade console.
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