Sector Investing

[ReturntoSender]

From Briefing.com: Weekly Recap - Week ending 07-Sep-12

Dow +14.64 at 13311.82, Nasdaq +0.61 at 3136.42, S&P +5.80 at 1437.92

Stocks got off to a mixed start after this morning's jobs data proved to be a disappointment. The anemic numbers turned into yet another argument in favor of additional easing while lower guidance from a technology bellwether contributed to a divergence in the major averages. The S&P 500 finished higher by 0.4% while the Nasdaq ended flat.

Nonfarm payrolls were reported at 96K versus the 130K Briefing.com consensus. The prior reading was revised down to 141K from 163K. In addition, nonfarm private payrolls added 103K against the 144K consensus. Separately, the unemployment rate was reported at 8.1% versus the 8.3% consensus estimate as the dip in the unemployment rate was attributed to more people leaving the workforce.

Major financials rallied after disappointing jobs data sparked another round of quantitative easing hopes. The SPDR Financial Select Sector ETF (XLF 15.68, +0.16) advanced 1.0% as Bank of America (BAC 8.80, +0.45) and Morgan Stanley (MS 17.08, +0.83) gained over 5.0% each. Other major names showed less robust advances as Citigroup (C 32.06, +0.94) and Goldman Sachs (GS 116.33, +2.79) added 3.0% and 2.5%, respectively. Meanwhile, European financials continued their exuberance for the second day in a row. Barclays (BCS 13.17, +0.86) and Deutsche Bank (DB 40.20, +2.59) jumped near 7.0% each.

Stocks listed in the Dow underperformed the broader market as two notable components showed weakness. Kraft Foods (KFT 39.99, -2.32) slid 5.5% after providing an update on its planned spin-off. Beginning October 1, 2012 the company will separate into two entities. Kraft Foods Group which will hold the North America grocery business will begin trading under the ticker ‘KRFT' while Kraft Foods will be renamed Mondelez International and trade under the symbol ‘MDLZ.' Today's weakness came after the company announced it expects Kraft Foods full-year 2013 earnings at $2.60 per share. Meanwhile, technology companies within the index are slumped after Intel (INTC 24.19, -0.90) cut its third quarter guidance below consensus. The technology bellwether slid 3.6% while Cisco (CSCO 19.56, -0.16), Microsoft (MSFT 30.95, -0.39), and Hewlett-Packard (HPQ 17.42, -0.17) lost between 0.8% and 1.5%.

Technology stocks outside of the Dow were also under pressure after Intel's guidance cut. Peer AMD (AMD 3.45, -0.21) slumped 5.7% while related names, NVIDIA (NVDA 13.40, -0.33) and Micron (MU 6.42, -0.25) slipped 2.4% and 3.8%, respectively.

The materials sector settled higher by 2.0% as it outperformed other sectors. Over the past two days, China announced plans to increase infrastructure spending which may bode well for basic materials demand. Iron and steel names showed biggest gains as Cliffs Natural Resources (CLF 39.91, +5.05) jumped 14.5%. Meanwhile, United States Steel (X 20.89, +1.68), AK Steel (AKS 5.78, +0.41), and Freeport-McMoRan (FCX 39.43, +3.09) posted advances near 8.0%.

Within the healthcare space, biotechnology stocks weighed on the rest of the sector. The SPDR S&P Biotech ETF (XBI 91.59, -0.43) slipped 0.5%. Spectrum Pharmaceuticals (SPPI 12.01, -0.59) posted the biggest loss within the group as it finished lower by 4.7%. Meanwhile, Medivation (MDVN 105.65, -2.97) and Theravance (THRX 23.91, -0.28) fell 2.7% and 1.2%, respectively. On the upside, pharmaceutical company Peregrine (PPHM 4.50, +1.43) surged 46.6% after reporting that its Bavituximab drug has doubled the median overall survival rate in lung cancer patients who are taking part in the company's phase II trial.

Internet radio provider Pandora (P 10.47, -2.10) slumped 16.7% after reports suggested Apple (AAPL 680.44, +4.17) may include internet radio on its devices and integrate the service into its iTunes store. Apple finished higher by 0.6% after marking a fresh all-time high at $681.50 while today's selling has dropped shares of Pandora back to levels last seen before its August 30 earnings report.

Week in Review: Mario Draghi Press Conference Highlights the Week

On Monday, stocks got off to a strong start before stumbling slightly when Federal Reserve Chairman Ben Bernanke did not hint at additional easing, but instead reaffirmed his commitment to act if economic conditions worsen. Mr. Bernanke commented on the stagnation of the labor market, calling it a "grave concern" which bears monitoring. As a result, the S&P 500 finished higher by 0.5%. European financials saw broad advances as plans to create a Spanish "bad bank" surfaced. Banco Bilbao Vizcaya Argentaria (BBVA 8.27, +0.23) gained 5.0%.

On Tuesday, stocks opened unchanged before falling into the red after economic data missed expectations. The August ISM Index was reported at 49.6 versus the 50.0 Briefing.com consensus, while July construction spending fell 0.9% month-over-month, against the expected increase of 0.5%. After reaching session lows 90 minutes after the open, stocks staged a slow climb higher which was punctuated by a broad-based mid-afternoon rally. Stocks rallied back near the flat line where they remained until the end of the day. As a result, the S&P 500 slipped 0.1% while Nasdaq gained 0.3%. NVIDIA (NVDA 13.40, -0.33) slid 5.4% after being downgraded from ‘equal weight' to ‘underweight' by Evercore.

Wednesday's session was spent mostly around the unchanged line. The early morning volatility coincided with a Bloomberg TV report which indicated the European Central Bank bond purchase program was said to pledge unlimited, sterilized buying of bonds. However, the exuberance was short-lived as European Central Bank officials declined to comment, and reports out of Germany suggested Chancellor Angela Merkel would only support the program in the near-term. Afternoon trade was mostly quiet as the S&P 500 remained in a narrow range before closing lower by 0.1%. FedEx (FDX 87.38, -0.16) shed 2.0% after lowering its first quarter guidance, citing weaker global demand.

On Thursday, equities began sharply higher, and added to their gains throughout the opening hour of trade. The remainder of the day was spent hovering near session highs. The bullish sentiment was sparked after Mario Draghi confirmed Thursday's reports of a European Central Bank plan to buy bonds of troubled sovereigns who ask for aid. The program will be limited to bonds maturing within three years. Better-than-expected U.S. economic data also added to the upbeat tone which resulted in a broad market rally. The Nasdaq closed at a 12-year high while the S&P 500 settled at levels not seen since January 2008. The two indices finished higher by 2.2% and 2.0%, respectively. The SPDR Financial Select Sector ETF (XLF 15.68, +0.16) added 2.4%.

 
 Index     Started Week  Ended Week  Change  %Change  YTD % 
 DJIA	    13090.84	 13306.64   215.80    1.6    8.9 
 Nasdaq	     3066.96	  3136.42    69.46    2.3   20.4 
 S&P 500	1406.58	  1437.92    31.34    2.2   14.3 
 Russell 2000  812.09	   842.27    30.18    3.7   13.7

11:02AM ASML shareholders approve Customer Co-Investment Program (ASML) 56.26 -1.61 : Co announced that it has received the approval by the Extraordinary General Meeting of shareholders of its Customer Co-Investment Program and that the US anti-trust clearance process is complete. The essential elements of the Customer Co-Investment Program are now final. The EGM also approved the proposal to authorize the Board of Management for the period from 7 September 2012 through 25 October 2013 to (i) issue additional shares or rights to subscribe for shares in the capital of the Company, limited to 5% of the issued share capital at 25 April 2012; issue an additional 5% of the issued share capital at 25 April 2012, which 5% can only be used in connection with mergers, acquisitions and/or alliances; and restrict or exclude the pre-emption rights in connection with any such issuances, in each case subject to the approval of the Supervisory Board. This authorization replaces the corresponding authorization granted at the AGM held on 25 April 2012. ASML expects to execute the Synthetic Buyback in late November 2012, with the expected ex-entitlement date on 26 November 2012, the record date expected to be 28 November 2012 and the cash payment date expected to be 3 December 2012. Following the issuance of new shares to Intel (INTC), TSMC (TSM) and Samsung Electronics (SSNLF) in connection with the program, and subject to statutory requirements, ASML intends to implement the Synthetic Buyback as follows. The cash capital repayment will be EUR 9.18 per share and the reverse share split will be 77 for 100.

11:01AM Agilent signs exclusive supply agreement to provide components for Liposcience's Vantera Clinical Analyzer (A) 38.31 +0.83 : Co announced that it has entered into an exclusive supply agreement with LipoScience Inc. to provide nuclear magnetic resonance (NMR) components for LipoScience's Vantera Clinical Analyzer. The analyzer is the first fully-automated NMR diagnostic platform designed specifically for the clinical laboratory and cleared by the U.S. Food and Drug Administration.

10:36AM Amazon.com: AMZN now trades +3% into new multi-year highs @ 259.00 (AMZN) :

10:19AM Apple: AAPL +0.60% sets new all-time highs @ 681.50 (AAPL) 680.51 +4.21 :

Marvell (MRVL) and ZeroDesktop announced they are collaborating to deliver a cost-effective alternative to traditional PC-based computing.

8:07AM Intel lowers Q3 rev guidance by 7.7%, below consensus (INTC) 25.10 :

Co issues downside guidance for Q3 (Sep), lowers Q3 (Sep) revs to $12.9-13.5 bln from $13.8-14.8 bln vs. $14.23 bln Capital IQ Consensus Estimate.
Co cites weaker than expected demand in a challenging macroeconomic environment.
Co is seeing customers reducing inventory in the supply chain vs. the normal growth in Q3 inventory; softness in the enterprise PC market segment; and slowing emerging market demand.
The data center business is meeting expectations.
Co lowers/narrows Q3 gross margin guidance 100 bps to 62%, plus or minus one percentage point; vs. the previous expectation of 63%, plus or minus a couple of percentage points. Expectations for R&D and MG&A spending and depreciation in the third quarter remain unchanged. Full-year capital spending is expected to be below the low-end of the co's previous outlook of $12.1-12.9 bln, as the co accelerates the re-use of existing equipment to the 14nm node.

Advantech, eInfochips, and Texas Instruments (TXN) have developed the HTTP Live Streaming protocol stack for high-performance video streaming application server deployments.

Broadcom (BRCM) announced the industry's first 5G WiFi DOSCIS 3.0 cable gateway platform. Co also announced it is the first to integrate Community Wi-Fi software on all DOCSIS 3.0 cable modem and gateway platforms.
Rovi (ROVI) and Broadcom (BRCM) announced that Broadcom's latest IPTV platforms will support DivX Plus Streaming.

Cisco (CSCO) revealed its expanded and enhanced content delivery network portfolio, branded as the Cisco Videoscape Distribution Suite

Broadcom (BRCM) announced the release of validated drivers for OpenTV 5, the latest, most open and most powerful set-top box middleware from NAGRA.

Cantor Fitzgerald downgrades Nvidia (NVDA $13.45 -0.28) to Hold from Buy and lowers their tgt to $13.50 from $20. While Nvidia continues to do well in these segments, the firm expects little to no growth over the next several years. The remaining 20% of revenues are coming primarily from sales of GPUs into the non-Apple (AAPL) tablet market and to a lesser extent into the handset market. In the firm's opinion, NVDA success in the tablet market is already reflected in the share price. Furthermore, in the medium to long term, they believe that APs and GPUs will be completely absorbed into the baseband processors (ala Qualcomm (QCOM) and Broadcom (BRCM).

Intel (INTC $24.14 -0.95) issued downside guidance for the third quarter with revenues to $12.9-13.5 billion from $13.8-14.8 billion versus the $14.23 billion consensus The company cites weaker than expected demand in a challenging macroeconomic environment. The company is seeing customers reducing inventory in the supply chain versus the normal growth in Q3 inventory; softness in the enterprise PC market segment; and slowing emerging market demand. The data center business is meeting expectations. The company lowers/narrows Q3 gross margin guidance 100 bps to 62%, plus or minus one percentage point; versus the previous expectation of 63%, plus or minus a couple of percentage points. Expectations for R&D and MG&A spending and depreciation in the third quarter remain unchanged. Full-year capital spending is expected to be below the low-end of the co's previous outlook of $12.1-12.9 billion, as the company accelerates the re-use of existing equipment to the 14nm node.