From Briefing.com: 4:30 pm : A better-than-expected GDP report couldn't keep stocks from selling off and logging their third straight weekly loss, which has left the stock market down nearly 4% since the start of the new year.
Stocks started the session in positive territory and even made their way to a gain of more than 1%. The move was underpinned by an advance fourth quarter GDP reading that showed annualized quarter-over-quarter growth of 5.7%, which was considerably stronger than the 4.7% rate of expansion that had been widely forecast. Core personal consumption expenditures (PCE) increased at an annualized quarter-over-quarter rate of 1.4%, which is slightly stronger than the 1.3% increase that had been expected.
Though Fed member Kohn indicated in a speech that interest rates are likely to stay near zero for an extended period if the economy follows the trajectory expected by the Fed, signs of strong economic growth brought back speculation that interest rates will be hiked sooner than later. That notion drove the dollar 0.7% higher against competing currencies and put the Dollar Index at a fresh five-month high.
The notion of a stronger economy also looked like it would reheat the reflation trade as commodities and natural resource stocks climbed sharply. The energy sector climbed to a 1.7% gain, while the materials sector made its way to a 2.1% gain. However, both commodities and natural resource stocks rolled over, which culminated in a 1.4% loss for both energy stocks and materials stocks. The two sectors had been the best performers in the early going, but ended the session among the worst performers.
Tech dropped 2.1% to finish the session with the steepest loss, though. Microsoft (MSFT 28.18, -0.98) led other large-cap tech lower as participants reacted in a sell-the-news manner to the computer giant's better-than-expected earnings report. Given that tech carries more market weight than any other sector, its weakness in recent sessions has caused a considerable drag on the broader market. During the course of the past 10 sessions tech stocks have dropped more than 9%, leaving the S&P 500 to lose 6.5% over the same period.
The drag of tech on the broader market was also seen in shares of Amazon.com (AMZN 125.41, -0.62), which tested three-week highs after the company posted an upside earnings surprise and issued upside guidance. But the stock rolled over to log a loss.
In a sign of conviction, trading volume on the NYSE surpassed 1.5 billion shares. That was the most action in one month.
Advancing Sectors: (None)
Declining Sectors: Tech (-2.1%), Energy (-1.4%), Materials (-1.4%), Industrials (-1.0%), Financials (-0.7%), Consumer Discretionary (-0.6%), Utilities (-0.6%), Health Care (-0.5%), Telecom (-0.4%), Consumer Staples (-0.2%)DJ30 -53.13 NASDAQ -31.65 NQ100 -1.7% R2K -1.0% SP400 -1.4% SP500 -10.66 NASDAQ Adv/Vol/Dec 929/3.10 bln/1729 NYSE Adv/Vol/Dec 955/1.58 bln/2065
4:01PM Atmel: Court preliminarily approves partial settlement of 'in re atmel corporation derivative litigation' (ATML) 4.64 -0.12 : The co announces that the United States District Court for the Northern District of California has preliminarily approved a settlement agreement (the "Agreement") to settle previously disclosed litigation related to Atmel's historical practices regarding the timing of stock option grants. The Agreement provides, on behalf of all current Atmel shareholders, for the full settlement and release of all claims against all of the defendants, except Atmel's former general counsel, James Michael Ross, related to the allegations and/or matters set forth in three consolidated shareholder derivative actions and two actions to compel production of company books and records, currently pending in the U.S. District Court for the Northern District of California, the Superior Court of the State of California, County of Santa Clara, and the Court of Chancery of the State of Delaware... The terms of the Agreement provide for: (i) a direct financial benefit to Atmel of $9.65 million; (ii) the adoption and/or implementation of a variety of corporate governance enhancements, particularly in the way Atmel grants and documents grants of employee stock option awards; (iii) the payment by Atmel of plaintiffs' counsels' attorneys' fees, costs, and expenses in the amount of $4.94 million; and (iv) the dismissal with prejudice of all claims by and between the settling parties and releases of all claims against the settling defendants.
9:01AM Atmel will continue to explore the potential sale of the Company's Smart Card business (ATML) 4.76 : Co announced that following a comprehensive review of alternatives for its ASIC business, it will continue to explore the potential sale of the Company's Smart Card (SMS) business located in Rousset, France and East Kilbride, UK and that it intends to discontinue potential sale discussions for its Customer Specific Products (CSP) and Aerospace businesses. As previously announced, Atmel has entered into an exclusivity agreement with LFoundry GmbH for the potential sale of this fab business. Atmel has been pursuing strategic alternatives for the ASIC business and related manufacturing assets as part of its transformation plan, which is aimed at focusing on the Company's high-growth and high-margin businesses.
08:46 am Microsoft (MSFT)
Microsoft (MSFT 28.93) reported solid profit growth driven by cost cutting measures and strong demand for Windows 7.
Microsoft reported fiscal second quarter earnings of $0.60 per share. The reported figure excludes a $0.14 per share positive impact from the recognition of $1.71 billion of deferred revenue relating to the Windows 7 Upgrade Option Program and presales of Windows 7 to OEMs and retailers before general availability.
Operating income of $8.51 billion and net income of $6.66 billion represented year-over-year increases of 43% and 60%, respectively.
Revenues rose 14.4% year-over-year to $19.02 billion (including the $1.71 billion deferred revenue); the consensus called for $17.84 billion.
"Exceptional demand for Windows 7 led to the positive top-line growth for the company," said Peter Klein, chief financial officer at Microsoft. "Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth."
Microsoft said it sold over 60 million Windows 7 licenses, making it the fastest selling operating system in history.
Shares of MSFT are about 2.8% higher ahead of Friday's opening bell.
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