From Briefing.com: 4:30 pm : Sentiment turned decidedly negative today, resulting in the stock market's worst single-session loss in about two months.
The threat of contagion caused market participants to pare risk today. Efforts were spurred primarily by the continual climb in Italy's debt yields, indicative of dwindling confidence in the country's ability to get a grip on precarious macro conditions. Market pundits have already made it known that Italy's economy is far too large to be aided by a bailout.
Market participants also continue to await the announcement of Greece's new prime minister, who is hoped to lead the country's reform efforts.
Few stocks were spared from the sell-off. Financials fell especially sharply. Their 5% loss came as various banks and financial services firms were pommeled for fear of their exposure to Europe.
Making the beatdown suffered by bank stocks look modest, online jewelry retailer Blue Nile (NILE 32.82, -15.99) lost about a third of its market cap after as traders reacted to disappointing earnings, mixed guidance, and negative analyst commentary.
In addition to broad market weakness, General Motors (GM 22.31, -2.73) and Macy's (M 30.45, -1.71) were undone by weak forecasts, which overshadowed positive earnings surprises from the pair.
Best Buy (BBY 27.22, +0.38) was one bright spot. It settled with a gain of more than 1%, making it one of the best individual performers in the broad market.
In the presence of fear-driven selling, the Volatility Index surged more than 30%. Prior its surge today, the "Fear Gauge" had ended lower for five straight sessions.
The aggressive selling and surge in volatility drove many traders to seek safety in the dollar, which rallied 1.6% against a collection of major currencies. Most of the greenback's gain came against the euro, which tumbled 2.0% to $1.355, a one-month low.
To little surprise, Treasuries also attracted buyers. That sent the yield on the benchmark 10-year Note back below 2.0%. Strength in the 10-year Note was briefly challenged following relatively lackluster auction results this afternoon, but it eventually reclaimed its gains.
Advancing Sectors: (None)
Declining Sectors: Telecom -1.9%, Utilities -2.2%, Consumer Staples -2.3%, Health Care -2.8%, Consumer Discretionary -3.6%, Tech -3.6%, Industrials -3.8%, Energy -4.3%, Materials -4.7%, Financials -5.4%DJ30 -389.24 NASDAQ -105.84 NQ100 -3.6% R2K -4.8% SP400 -4.3% SP500 -46.82 NASDAQ Adv/Vol/Dec 327/2.14 bln/2238 NYSE Adv/Vol/Dec 284/1.11 bln/2771
4:07PM Cisco Systems beats by $0.04, beats on revs (CSCO) 17.61 -0.70 : Reports Q1 (Oct) earnings of $0.43 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $0.39; revenues rose 4.7% year/year to $11.26 bln vs the $11.03 bln consensus. During the first quarter of fiscal 2012, Cisco repurchased 100 million shares of common stock under the stock repurchase program at an average price of $15.37 per share for an aggregate purchase price of $1.5 billion. Days sales outstanding in accounts receivable (DSO) at the end of the first quarter of fiscal 2012 were 35 days, compared with 38 days at the end of both the fourth quarter of fiscal 2011 and first quarter of fiscal 2011. Non-GAAP inventory turns were 10.9 in the first quarter of fiscal 2012, compared with 11.4 in the fourth quarter of fiscal 2011, and compared with 10.8 in the first quarter of fiscal 2011. "We delivered a solid quarter... Even in times of limited capital spending, intelligent networks are being deployed to drive new business, revenue and consumption models, enable new customer and employee experiences, and drive efficiencies. Cisco's leadership in networking, video, collaboration and cloud, offered together in an integrated architectural approach, uniquely positions Cisco as a strategic business partner."
Broadcom Corporation (BRCM), NXP Semiconductors (NXPI), Freescale Semiconductor (FSL), and Harman International (HAR) announced the formation of a special interest group established to drive wide scale adoption of Ethernet-based automotive connectivity.
8:13AM Suntech Power sees Q3 revenues of $800 mln, Capital IQ consensus $774 mln; reafirms Q3 shipment guidance (STP) 2.77 : Suntech expects shipments for the third quarter of 2011 to increase by over 15% from the second quarter of 2011, in line with previous guidance. Revenues in the third quarter of 2011 are expected to exceed $800 million. Gross margin is expected to be approximately 13%, at the high end of the previously guided range of 11% to 13%. As a result of the effort to reduce operating expenses, Suntech expects to incur up to $10 million of severance expenses in the second half of 2011. Due to the volatility of the Euro to US dollar exchange rate, particularly in September, Suntech expects to incur a significantly larger than expected non-cash foreign exchange translation loss in the third quarter of 2011.
11:12 am S&P Tech Sector Down Over Two Percent, In-line With The Broader Market (CSCO)
The tech sector is trading lower today along with losses in the broader market. Semiconductors are showing relative weakness in the tech space once again, with the Philly Semi Index trading only 3.0% lower. RBCN (-5.2%) is a notable laggard in the chip index following its earnings. Among other major indices, the S&P 500 is trading 2.3% lower, while the NASDAQ is trading 2.5% lower and the QQQ is trading 2.3% lower on the session. Among tech bellwethers, ORCL (-3.7%) is the notable underperformer.
In earnings last night, SGI (-6.6%) reported a beat with inline guidance, while PANL (+5.9%) and ATVI (-4.9%) posted beats and offered upside guidance. Also, SINA (-8.7%) posted a mixed Q3 with inline guidance and PLAB (-5.0%) lowered guidance.
In news, YHOO (+0.5%), MSFT (-2.1%) and AOL (-3.1%) announced agreements to improve the process of buying and selling premium online display inventory. Elsewhere, ADBE (-10.7%) restructured its business to align business around Digital Media and Digital Marketing.
Among rumors, we are hearing Alibaba and Softbank are seeking partners for a YHOO (+0.5%) acquisition. Separately, there's an analyst out this morning suggesting a potential STX (-2.5%) for STEC (-14.3%) deal.
Among notable analyst upgrades this morning, Needham upgrades SWI (+0.8%) to Buy. In downgrades, DLB (-6.9%) was downgraded to Neutral at Piper Jaffray, DMAN (-4.6%) was downgraded to Underweight at Morgan Stanley, ADSK (-7.2%) was downgraded to Neutral at BofA/Merrill, NVDA (-3.0%) was downgraded to Market Perform at JMP Securities and, following earnings, ROVI (-33.5%) was downgraded at Collins Stewart, Brean Murray, and Credit Agricole.
CSCO (-2.6%) is the notable names in tech set to report results today after the close.
10:10 am Universal Display Tops Third Quarter Expectations; Guides In-line (PANL)
Universal Display (PANL $55.05 +5.61) reported third quarter earnings of $0.12 per share, $0.13 better than the Capital IQ Consensus Estimate of ($0.01), results for the third quarters of 2011 and 2010 included a non-cash gain of $240,000 and non-cash loss of $3.4 million, respectively, on stock warrant liability.
Revenues rose 208.8% year/year to $21.8 million versus the $11.62 million consensus.
For the fourth quarter, the company expects to see revenue below $21.8 million versus $15.64 mln Capital IQ Consensus Estimate. For fiscal year 2011, the company expects revenue to fall in the range of $58 million to $62 million versus the $49.50 million Capital IQ Consensus Estimate.
In fiscal year 2012, the company sees revenue of $90 million to $110 million versus the $103.76 million Capital IQ Consensus Estimate.
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