From Briefing.com: 4:30 pm : There were plenty of trading catalysts this session, but participants were generally subdued and left stocks to trade with moderate losses in light volume ahead of the Thanksgiving holiday.
The stock market spent virtually the entire session in negative territory after stocks had logged solid gains in the previous session. Unlike the previous session, though, the dollar bounced between moderate gains and losses before it finished flat. Overseas markets also offered little support as they were hampered with weakness; the Shanghai Composite closed 3.5% lower due, in part, to concern for a lack of market-supportive measures from the country's officials.
Upon a second look, U.S. GDP was determined to have expanded at a 2.8% rate in the third quarter. That was in step with expectations, but it marked a considerable downward revision to the 3.5% increase that was posted as part of the advance GDP estimate.
Despite expectations for the downward revision, the Fed raised its GDP target for 2009 to the range -0.4% to -0.1% from the range -1.5% to -1.0%, according to the minutes from the November 4 FOMC meeting.
Though there is no empirically proven corollary between consumer confidence and spending, participants showed a short-lived, positive response to news that the November Consumer Confidence Index improved to a better-than-expected reading of 49.5. Retailers showed some strength early, but settled the session flat.
However, American Eagle Outfitters (AEO 15.01, +0.47) was a strong performer after it posted third quarter adjusted earnings that met expectations. Discount retailer Dollar Tree (DLTR 51.33, +2.23) brought in better-than-expected earnings and issued in-line guidance.
The biggest earnings announcement came from Dow component Hewlett-Packard (HPQ 50.19, -0.83), however. The company posted in-line earnings that reflected its preannouncement and affirmed an in-line outlook, which it had recently raised. Still, the lack of positive surprises in the report left it to lag for the entire session.
Financials proved to be the biggest drag on trade, though. The sector fell 0.8%. Bank stocks had been under pressure in the early going after Financial Times reported that the Federal Reserve has asked nine of the nation's largest banks to outline how they intend to repay TARP. Though regional banks (-0.3%) and diversified banks (-0.4%) were able to limit their losses, diversified financial services institutions (-1.5%) suffered. Even Bank of America (BAC 16.10, -0.19) couldn't be helped by news that analysts at Fitch placed the lender's Individual Rating on Rating Watch Positive.
At the other end of the performance scale was telecom. The sector finished 1.0% higher, but its lack of weight in the broader market kept it from providing any real leadership. Nonetheless, its gains extended its 2.6% advance in the previous session.
Health care was also a solid performer. The sector closed with a 0.8% gain. Dow component Merck (MRK 36.22, -0.20) failed to participate in the advance, but announced to investors a new $3 billion share repurchase program.
Treasuries found support after a directionless start. In turn, the benchmark 10-year Note advanced 12 ticks, which lowered its yield to 3.30%. The advance followed results from an auction of 5-year Treasuries. The auction fetched a bid-to-cover ratio of 2.81, which is the highest bid-to-cover of the year for the maturity.
Trading volume on the NYSE failed to eclipse 1.0 billion shares for the second straight session. The low level of participation is expected to continue through this week, due to the observance of Thanksgiving on Thursday.
Advancing Sectors: Telecom (+1.0%), Health Care (+0.8%), Energy (+0.4%), Utilities (+0.3%), Consumer Staples (+0.1%)
Declining Sectors: Financials (-0.8%), Tech (-0.5%), Industrials (-0.3%), Materials (-0.3%), Consumer Discretionary (-0.2%)DJ30 -17.24 NASDAQ -6.83 NQ100 -0.4% R2K -0.4% SP400 -0.3% SP500 -0.59 NASDAQ Adv/Vol/Dec 1096/1.87 bln/1584 NYSE Adv/Vol/Dec 1386/952 mln/1628
5:09PM Microsoft CFO to leave co Dec. 31; Peter Klein assuming CFO role (MSFT) 29.91 -0.03 : Co announced that Chris Liddell will be leaving the company at the end of 2009, and named Peter Klein as the company's new chief financial officer. "Chris and his finance team have accomplished a great deal over the past four and a half years. The team is deep and strong, and has an excellent record of building value for our shareholders," said Steve Ballmer, Microsoft chief executive officer. "Peter brings great finance and operations expertise and a deep understanding of the company, and I am looking forward to a smooth transition that continues our commitment to cost containment and finance excellence."
4:05PM NVIDIA: U.S. Patent Office rejects all 17 claims in three Rambus patents asserted against NVIDIA in International Trade Commission action (NVDA) 12.92 -0.08 : The co announces that the assigned patent examiner at the U.S. Patent and Trademark Office (USPTO) has rejected all 17 claims in three Rambus (RMBS) patents that the company had asserted against NVIDIA in the International Trade Commission (ITC). The action, known as filing an action closing prosecution, follows preliminary rejection of the claims earlier this year by the USPTO. "This continues our string of victories against Rambus patents in the USPTO," said David Shannon, NVIDIA executive vice president and general counsel. "We believe these patents are invalid and are confident that a similar decision will be made on the patents that continue to be examined." There are still eight claims in two other patents involved in the case, which the USPTO has yet to finally determine but which it had preliminarily rejected.
4:01PM Ultra Clean Holdings Acquires Facility in Singapore (UCTT) 6.20 +0.17 : Co announces the launch of its new manufacturing operation in Singapore at the Spectrum 1 complex in the Woodlands Industrial Estate. Ultra Clean took over the 35,000 sq. ft. facility from Allegro Manufacturing in early November 2009. In addition to acquiring the facility and installed equipment, Ultra Clean has taken over ongoing systems integration business in the facility.
8:52AM Analog Devices upgraded to Buy at Broadpoint AmTech Research; tgt raised to $35 (ADI) : Broadpoint AmTech Research upgrades ADI to Buy from Neutral and raises their tgt to $35 from $32 following the co's beat and raise report. The firm notes that although the co's revenue recovery is in-line with peers, the firm admits that they under-estimated the EPS power of a faster than expected revenue and gross margin recovery. Though not the firm's favorite "Buy" in Analog, the firm raises their FY10 EPS estimate to $1.74 from $1.37 (consensus $1.32) and raises their tgt to $35 from $32. The firm believes that they have been accurately modeling ADI's leverage; however, they feel further multiple compression is unlikely as focus shifts toward increased absolute earnings, not growth rates.
09:09 am Hewlett-Packard (HPQ)
Hewlett-Packard (HPQ 51.02) reported fiscal fourth quarter results Monday evening that matched its preannouncement from Nov. 11 and reaffirmed its recently raised fiscal 2010 outlook.
Hewlett-Packard reported fourth quarter earnings of $1.14 per share, matching the Nov. 11 preannouncement and a penny better than the $1.13 consensus.
Revenues fell 8% year-over-year to $30.8 billion, also matching the preannouncement but slightly ahead of the $30.36 billion consensus.
HP said revenue for Q4 was down 17% in Europe, the Middle East and Africa and 1% in Asia Pacific to $11.7 billion and $5.4 billion, respectively. When adjusted for the effects of currency, revenue was down 1% in the Americas while declining 10% in Europe, the Middle East and Africa and 1% in Asia Pacific versus the prior-year period.
Revenue from outside of the United States in the fourth quarter accounted for 64% of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) declining 4% over the prior-year period while accounting for 10% of total HP revenue. China revenue increased more than 20% from the prior year.
HP reaffirmed its outlook for its fiscal first quarter. The company expects earnings to range from $1.03 to $1.05 per share; the consensus expects $1.04. HP projects first quarter revenues ranging from $29.6 billion to $29.9 billion; the consensus currently expects $29.70 billion.
HP also reaffirmed its full year 2010 guidance, saying that it expects non-GAAP earnings of $4.25 to $4.35 per share (consensus at $4.31) on revenues of $118 billion to $119 billion (consensus $119.06 billion).
Shares of HPQ are 40.6% higher year-to-date.
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