From Briefing.com: 4:25 pm : A falling dollar drove buying in commodities and commodity-related stocks to help the broader market start the session on positive footing, but it was the financial sector that emerged to provide the most leadership.
In complete contrast to the previous session, the S&P 500 spent the entire session trading in positive territory. Early gains were led by the energy sector (+1.4%), materials sector (+1.2%), and financial sector (+2.3%) after the trio had lagged in the previous session.
Advances by energy stocks and materials stocks were underpinned by sharp gains among commodity prices. Specifically, crude oil futures prices climbed 2.6% to $71.78 per barrel, while gold gained 1.1% to settle at $1015.80 per ounce.
The strong bounce by commodities came as the U.S. dollar slumped. That left the Dollar Index to drop 0.9%, which is its worst single-session percentage loss in nearly two months. However, the Dollar Index could not fully penetrate the 2009 lows that it set last week.
Despite a compelling case for commodities, buyers scooped up financials with conviction. That gave the financial sector a gain of more than 2%, the best of any major sector, and helped it settle near session highs.
Real estate trusts saw some of the sharpest moves as momentum buying took the holdings higher ahead of several REIT initial public offerings, but the influence of diversified financial services stocks (+3.5%) had the most impact on the broader financial sector. Shares of Bank of America (BAC 17.61, +0.36) traded as leaders after the stock had its price target raised by influential bank analyst Richard Bove.
Even though there was plenty of leadership from the financial sector, the broader market was range bound for nearly the entire afternoon. That left it to settle a few points off of session highs.
Treasuries saw strength at the long end of the yield curve after the results from a $43 billion auction of 2-year Treasuries showed a bid-to-cover ratio of 3.2 and a high yield of 1.03%. The 2-year Note tacked on 2 ticks to yield 0.95%, but the benchmark 10-year Note gained 9 ticks to yield 3.44% and the 30-year Bond climbed 21 ticks to yield nearly 4.20%. DJ30 +51.01 NASDAQ +8.26 NQ100 +0.1% R2K +0.8% SP400 +0.7% SP500 +7.00 NASDAQ Adv/Vol/Dec 1526/2.50 bln/1155 NYSE Adv/Vol/Dec 2168/1.27 bln/873
4:10PM MEMC Elec confirms it entered into amendment to solar wafer supply agreement between Gintech - 8-K (WFR) 19.03 +0.40 : In an 8-K filing, co entered into Amendment Number 4 to Solar Wafer Supply Agreement between Gintech Energy Corporation and the Company's subsidiary, MEMC Singapore, dated October 25, 2006, pursuant to which the Company had agreed to sell solar grade silicon wafers to Gintech over a ten-year period. Similar to amendments effected for the Company's other long-term solar wafer supply agreements, the Amendment provides that aggregate revenues to the Company over the ten-year life of the Agreement will remain unchanged, but additional price reductions for the remainder of 2009 and an increase in the minimum quantity of wafers required to be purchased by Gintech in 2009 have been effectuated. The Amendment also provides a mechanism to defer potential purchase shortfalls for a particular contract year resulting from the increased volume commitment if certain conditions are met.
4:06PM Seagate Tech sees revs at or slightly above high end of original guidance; guides margins above consensus (STX) 15.68 +0.23 : Co announces that it now expects revenue to be at or slightly above the high end of its original guidance of $2.4-$2.6 bln (consensus is for $2.54 bln in revs). In the event OEM demand is stronger than co anticipates during the last two weeks of the quarter, as occurred last quarter, revenue for the first fiscal quarter could be greater than the revised guidance. "As a result of our rapid transition to market leading notebook and desktop products, as well as improving factory efficiencies and utilization, gross margin as a percent of revenue is now expected to be approximately 23-24%." Consensus is for gross margin of 20.3%. Seagate believes disk drive inventory in all channels continues to be at appropriate levels, with supply in balance with demand. The demand and pricing environment during the remaining weeks of the quarter will be key factors in determining the operating results for the first fiscal quarter of 2010.
7:30AM Applied Materials awarded multi-year service contract from ENN Solar Energy (AMAT) 12.66 : Co announces that it has signed a five-year contract with ENN Solar Energy to support ENN's solar photovoltaic module manufacturing facility in Langfang, China, which features an Applied SunFab Thin Film Line. Through its highly flexible SunFab Performance Service program, Applied will provide ENN with continuous operating cost reductions while enabling optimal performance from the SunFan production line at a predictable cost that scales with factory loading. Applied's SunFab Performance Service program has been selected by all of Applied's customers currently producing single and tandem junction modules on SunFab lines. Under the agreement, Applied will leverage its dedicated, world-class service infrastructure to provide ENN's SunFab Thin Film Line with preventive and corrective maintenance, spare parts management, and analytical services.
09:46 am Newport resumed with a Buy at Needham; tgt $11: . Needham resumes coverage of NEWP with a Buy and sets target price at $11 saying the co has made significant progress lowering its breakeven and addressing its under-performing laser business. Firm says in July, NEWP completed a strategic exchange with Oclaro of its struggling diode laser manufacturing operation in Tucson in return for acquiring the New Focus photonics components business. As a result of these initiatives, they believe NEWP will emerge from the economic downturn in stronger shape, although they acknowledge the execution risk, particularly in the current economic environment.
09:46 am SanDisk ests and tgt raised at Caris on contract pricing and royalties: .
Caris is increasing SNDK ests for 3Q09 and 4Q09 reflecting an upward revision to 2H09 contract pricing outlook and the positive implications for SNDK royalty revs and product sales and gross margins. The move follows through on late-August Caris checks signaling strong 3QTD product pricing in Asia and occurs against a backdrop of multiple co-specific positives including mgmt's Samsung royalty re-negotiation, a Toshiba manufacturing JV restructuring, and strong C09 OpEx reduction. Overall, its C09E/10E/11E EPS rise to $0.83/$1.00/$1.54 from $0.51/$0.65/$1.42 while tgt increases to $20 from $17.
09:45 am Research In Motion: Credit Suisse previews F2Q Thursday after the close; sees in-line qtr: . For F2Q Credit Suisse expects revs/EPS of $3.6 bln/$0.99 in-line with the mid-pt of guidance ($3.6 bln/$0.99) and consensus. Ests are based on units/ASPs of 8.4 mln units (+8% qoq)/$345 vs consensus of 8.5 mln/$344. Despite competitive launches (iPhone 3GS, Pre) during the qtr, firm believes RIMM's volumes held up, driven by the Tour at Verizon/Sprint, as well as the reinstatement of the "BOGO" offer at Verizon. For F3Q (Nov), firm remains comfortable with unit/ASP ests of 9.0 mln (+7% qoq)/$338, driven by new product launches (Storm 2, Onyx), continued momentum of recently launched products (Tour, 8520, 8900), and timing of competitive launches (CLIQ, Pixi). Rev/EPS ests are $3.8 bln/$1.04 vs street at $3.9 bln/$1.05.
09:45 am Apple: Barclays Capital sees big enterprise opportunity for iPhone: . Barclays Capital believes the enterprise smartphone mkt represents a major incremental opportunity for Apple. While penetration into this mkt could be gradual, signs are pointing toward a few players emerging as leaders, including Apple and RIMM. Checks indicate continued pent-up demand for the iPhone globally, with a strong new product pipeline overall. Firm views the enterprise as an incremental market for AAPL and an interesting development for the handset industry. The key takeaway from firm's call on the subject is that the smartphone industry has major growth potential and that the iPhone should get its fair share of this mkt over time given its consumer appeal and industry leading apps.
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