From Briefing.com: 4:30 pm : Stocks had looked like they would come rallying back from three straight losses, but the broad market's inability to overcome resistance in the early going prompted many participants to exit their positions. Stocks chopped along for the rest of the session and eventually settled with modest gains.
After watching the stock market descend more than 3% during the course of the past three sessions, buyers were finally brought back into the fold. Their interest was initially stirred because Europe's major bourses had been able to bounce on the back of a successful debt offering from Spain and news of improved eurozone manufacturing activity during December. Those themes also helped lift the euro off of the multi-month lows that it had set in the prior session. China reported overnight that it also experienced an improvement in manufacturing activity during December.
Market participants were also encouraged by domestic data. The latest initial weekly jobless claims tally fell to 366,000, which is the smallest count since May 2008. Economists polled by Briefing.com had generally expected a tally on the order of 390,000.
Overall producer prices increased in November by 0.3%, which came as a surprise since a more tepid increase of 0.1% had been generally expected. However, core producer prices increased by an in-line 0.1%.
The Empire State Manufacturing Survey improved to 9.5 for December. Many had expected a reading of just 3.0 for the Survey. The Philadelphia Fed Survey scored a reading of 10.3 in December, surpassing expectations for something closer to 4.5.
Industrial production data was a bit more blemished, but that was generally overlooked. It showed a 0.2% decline in overall activity, contrasting with the consensus call for a 0.2% increase. Industrial production last declined in April.
Although quarterly reports were limited in quantity, a couple of notable announcements featured solid overall results, even if the response to those announcements varied. The latest from FedEx (FDX 83.47, +6.18) featured a better-than-expected bottom line. Discover Financial Services (DFS 23.07, -0.75) had an upside earnings surprise of its own and even increased its quarterly dividend.
Even with all the encouraging headlines, the S&P 500 still couldn't overcome resistance in the 1225 region, which contains its 50-day moving average. The failure to build on opening gains made many skeptical of the stock market's strength. That prompted plenty of people to pocket profits and drive down the major averages. Although the broad market stayed in positive territory, stocks never returned to session highs.
Financials had been the biggest beneficiaries of the early bounce by breaking out to a 1.5% gain. By session's end all of that was dashed -- the sector finished flat.
Technology-related stocks lagged almost all session, causing the tech-rich Nasdaq to trail its counterparts. Tech stocks settled with a collective loss of 0.3%, which is the worst of the major sectors.
Defensive-oriented issues displayed strength for most of the session. That helped the consumer staples, health care, and utilities sectors all book gains of 1% or more. Utilities stocks are actually among this year's strongest performers; the sector is currently sitting on a year-to-date gain of about 11%, while the broad market is down about 3% this year.
Advancing Sectors: Utilities +1.4%, Health Care +1.1%, Consumer Staples +1.0%, Industrials +0.7%, Materials +0.6%, Consumer Discretionary +0.2%, Telecom +0.2%
Unchanged: Financials
Declining Sectors: Energy -0.2%, Tech -0.3%DJ30 +45.33 NASDAQ +1.70 NQ100 -0.3% R2K +1.1% SP400 +0.8% SP500 +3.93 NASDAQ Adv/Vol/Dec 1465/1.74 bln/1067 NYSE Adv/Vol/Dec 1872/860 mln/1108
4:23PM Research In Motion beats by $0.08, misses on revs; guides Q4 EPS, revs below consensus (RIMM) 15.13 +0.05 : Reports Q3 (Nov) earnings of $1.27 per share, $0.08 better than the Capital IQ Consensus Estimate of $1.19; revenues fell 5.9% year/year to $5.17 bln vs the $5.24 bln consensus. The rev breakdown for the quarter was ~79% for hardware, 19% for service and 2% for software and other revenue. During the quarter, RIM shipped ~14.1 million BlackBerry smartphones and ~150,000 BlackBerry PlayBook tablets; GAAP GM -1630 bps YoY to 27.3%; smartphone shipments +33% QoQ to 14.1 mln. Co issues downside guidance for Q4, sees EPS of $0.80-0.95 vs. $1.10 Capital IQ Consensus Estimate; sees Q4 revs of $4.6-4.9 bln vs. $5.05 bln Capital IQ Consensus Estimate. Gross margin percentage for the fourth quarter is expected to be ~38%. BlackBerry smartphone shipments are expected to be between 11-12 mln units. "Despite the challenges faced in the third quarter, the BlackBerry subscriber base grew to almost 75 mln customers around the world. In addition, RIM launched a range of new BlackBerry 7 based smartphones globally and introduced holiday promotions that helped drive growth in the installed base of BlackBerry PlayBook users... As part of our commitment to improving our performance to better meet the expectations of shareholders and customers, we continue to evaluate ways to improve in several areas of the Company's operations. It may take some time to realize the benefits of these efforts and the platform transition that we are undertaking, but we continue to believe that RIM has the right set of strengths and capabilities to maintain a leading role in the mobile communications industry."
4:13PM Freescale Semi realigns product groups; creates two new strategic product groups - Networking & Multimedia Solutions and Automotive & Industrial Solutions (FSL) 12.17 +0.03 :
4:09PM Adobe Systems beats by $0.07, misses on revs; guides Q1 EPS in-line, revs in-line; guides FY12 EPS in-line, revs above consensus (ADBE) 26.46 -0.06 : Reports Q4 (Nov) earnings of $0.67 per share, $0.07 better than the Capital IQ Consensus Estimate of $0.60; revenues rose 14.4% year/year to $1.15 mln vs the $1087.23 mln consensus. Co issues in-line guidance for Q1, sees EPS of $0.54-0.59, excluding non-recurring items, vs. $0.57 Capital IQ Consensus Estimate; sees Q1 revs of $1.025-1.075 bln vs. $1.05 bln Capital IQ Consensus Estimate. Co issues mixed guidance for FY12, sees EPS of $2.37-2.47, excluding non-recurring items, vs. $2.43 Capital IQ Consensus Estimate; sees FY12 revs of $4.4-4.5 bln vs. $4.35 bln Capital IQ Consensus Estimate.
8:04AM Texas Instruments announced that it is transferring its stock exchange listing to The NASDAQ Global Select Market from The New York Stock Exchange, effective January 1, 2012 (TXN) 28.04 : Co announced that it is transferring its stock exchange listing to The NASDAQ Global Select Market from The New York Stock Exchange, effective January 1, 2012. TI shares will begin trading as a NASDAQ-listed security on January 3, 2012, and will continue to trade under the symbol TXN.
Poynt Corporation announced an agreement with Nokia (NOK) to preload its mobile platform, timesPoynt and Times Internet Limited on all Nokia Lumia 710 and Nokia Lumia 800 smartphones in India.
09:27 am Magma Design downgraded to Underperform at Needham: . Needham downgrades LAVA to Underperform from Buy saying the shares are within 2% of the offer price from Synopsys with likely several more months until the close. More significantly, however, firm says their analysis of LAVA's recently filed 10-Q and earlier filings reveals that the company has seen a sharp spike in up front revenue in 2 of the last 3 quarters, which they think suggests the company's sustainable revenue run rate could be materially below recent and projected levels if it were to adhere to its targeted 10% up front model. They note Magma will have to report at least one more quarter before the expected closure of its acquisition by SNPS.
11:02 am S&P Tech Sector Is Down Modestly, While The S&P 500 Is In Positive Territory
The tech sector is trading slightly lower today, trailing gains in the broader market. Semiconductors are showing relative strength in the tech space, however, with the Philly Semi Index trading 0.5% higher. NVLS (+21.8%) is lifting the chip index after it was acquired. Among other major indices, the S&P 500 is trading 0.4% higher, while the NASDAQ is trading flat and the QQQ is 0.2% lower on the session. Among tech bellwethers, CSCO (-2.7%) is a notable underperformer.
In earnings last night, PAY (-7.1%) reported Q4 beat and provided mixed Q1 guidance, but upside FY12 guidance.
In news last night, LRCX (-3.2%) announced it entered into a merger agreement to acquire NVLS (+21.8%) in an all-stock transaction valued at ~$3.3 billion.
Among notable analyst ratings changes this morning, LEAP (+7.2%) and PCS (+4.3%) were upgraded to Buy at Mizuho, SWKS (+2.5%) was upgraded to Buy at Deutsche Bank, BRCM (+0.5%) was upgraded to Outperform at Wells Fargo. Also, AAPL (0.0%) was named a long Research Tactical Idea at Morgan Stanley.
ACN (+0.8%), RIMM (-0.2%), and ADBE (+0.8%) are the notable names in tech scheduled to report results today after the close.
10:49 am FedEx Up 5% Following Earnings/Guidance Results This Morning (FDX)
FedEx (FDX $81.23 +3.94) is trading notably higher this morning earnings/guidance results and is currently about a half of a point below its session high of $81.65.
Earlier, the company reported earnings of $1.57 per share, $0.04 better than the Capital IQ Consensus Estimate of $1.53.
Revenues rose 10.0% year/year to $10.59 billion versus the $10.61 billion consensus.
For the third quarter, the company expects to see earnings in the range of $1.25 to $1.45 versus $1.31 Capital IQ Consensus Estimate. For its fiscal year 2012, the company reaffirmed earnings guidance at $6.25 to $6.75 versus $6.30 Capital IQ Consensus Estimate.
In order to continue the modernization of the co's aircraft fleet, FedEx Express has signed an agreement with Boeing (BA) to purchase 27 new 767-300F aircraft, with three arriving in fiscal 2014 and six per year in fiscal 2015-2018. "FedEx Express took action during the quarter to adjust its network, particularly in Asia, as recent inventory destocking trends have impacted demand for our FedEx Express services. The deferral of our 777 aircraft deliveries is a continuation of those efforts, enabling us to make appropriately-timed international 777 capacity additions over the next decade. With these actions, we expect fiscal 2013 capital expenditures to moderate to ~$3.8 billion."
10:17 am Philly Fed Business Outlook Improves in December
Manufacturing conditions in the Philadelphia Fed region improved in December as the Philadelphia Fed's Business Outlook increased from 3.6 in November to 10.3 in December.
New and unfilled orders both strengthened in December. The New Orders Index increased from 1.3 in November to 9.7 in December. Unfilled orders returned to an expansion mode, increasing from -1.5 in November to 7.2 in December.
In a slightly unusual twist, the gains in orders did not immediately affect growth in shipments. While shipments continued to expand in December, the rate of expansion softened slightly as the respective index fell from 7.3 in November to 6.7. The drop was most likely the result of the pickup in unfilled orders and should lead to stronger growth over the next few months.
The employment outlook weakened in December. The Number of Employees Index fell from 12.0 in November to 10.7 in December. At the same time, the Average Employees Workweek Index dropped from 11.0 to 2.5.
10:06 am Industrial Production Declines for the First Time Since April
Industrial production declined 0.2% in November after increasing 0.7% in October. The Briefing.com consensus expected industrial production to increase 0.2%.
After increasing 0.5% in October, manufacturing production fell 0.4% in November.
While the decline in manufacturing is disappointing, the sector had been running hot for the past few months. In this situation, a slight pullback is not unusual or a sign of trending weakness. In fact, the New York Fed's Empire Manufacturing Survey already showed a pickup in manufacturing activities in December. Our expectation is that solid growth across the manufacturing sector will return next month.
Half of the decline in manufacturing production in November can be attributed to weakness in motor vehicle production.
Motor vehicle assemblies fell from 9.15 mln SAAR in October to 8.66 mln SAAR in November. That is the lowest number of assemblies since July. Auto assemblies declined from 3.17 mln SAAR in October to 3.11 mln SAAR in November. Truck assemblies declined from 5.71 mln SAAR to 5.29 mln SAAR.
Outside of the motor vehicle sector, most manufacturing sectors edged downward, which was in-line with the weakness seen in the November Fed regional manufacturing surveys.
Mining production, which increased 2.1% in October, slowed and increased only 0.1% in November. Utilities production rebounded and increased 0.2% in November after declining in each of the previous three months.
10:01 am PPI Inches Higher on a Stronger-than-Expected Increase in Food Price
Producer prices increased 0.3% in November after declining 0.3% in October. The Briefing.com consensus expected the PPI to increase 0.1%.
Almost the entire gain can be attributed to a 1.0% gain in food prices, which specifically came from an 11.5% price jump in fresh and dry vegetables. As expected, energy price growth remained soft and increased only 0.1% in November.
Excluding food and energy, core prices increased 0.1% and matched consensus expectations.
There were no unusual trends in core growth.
Pricing pressures down the manufacturing pipeline remain weak in November. Core intermediate prices declined for the third time since August while core crude prices declined for the second consecutive month.
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