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From Briefing.com: Weekly Recap - Week ending 14-Sep-12

Dow +53.51 at 13598.55, Nasdaq +28.12 at 3183.95, S&P +5.78 at 1465.77

Today's session started on a positive note as stocks appeared poised for a second day of broad post-FOMC gains. However, the major averages marked their respective session highs during the first hour of trade and headed lower since. The Nasdaq was able to outperform as it held the bulk of its gains throughout the day. Afternoon selling pressure increased slightly after Egan Jones lowered the credit rating of the U.S. from ‘AA' to ‘AA-.‘ Looking at the major indices, the Nasdaq led the way with a 0.9% gain while the Dow and S&P 500 added 0.4% each.

Financial stocks continued to rally after yesterday's news. The SPDR Financial Select Sector ETF (XLF 16.28, +0.13) closed higher by 0.8% as most major names advanced. The ETF has seen a 4.0% rally since the Fed's announcement. Bank of America (BAC 9.55, +0.15), Morgan Stanley (MS 18.24, +0.34), and Wells Fargo (WFC 36.13, +0.58) all posted gains near 1.5%. European financials were also in focus as monetary easing in the U.S. carries global implications. Barclays (BCS 14.81, +0.46), Deutsche Bank (DB 44.28, +1.41), and UBS (UBS 13.48, +0.46) all gained near 3.5%.

Stocks within the defensive telecom space were lower as the sector underperformed the broader market. Verizon (VZ 44.53, -1.05) and AT&T (T 37.26, -0.89) both slid near 2.3%. The two telecom giants saw relative weakness after Stifel Nicolaus downgraded both stocks from ‘buy' to ‘hold.' With the majority of the sector sliding, Sprint (S 5.26, +0.06) and MetroPCS (PCS 10.63, +0.15) were able to buck the trend and post respective gains of 1.2% and 1.4%.

AK Steel (AKS 5.87, -0.57) slumped 8.9% after lowering its third quarter guidance on expectations of a 7% quarterly decrease in the price of steel. Following the announcement, AK Steel was downgraded by Credit Agricole. Other steelmakers continued to rally along with producers of basic materials. Steel Dynamics (STLD 13.01, +0.61) added 4.9%, while Cliffs Natural Resources (CLF 45.55, +2.37) advanced 5.5%.

Office supply retailer OfficeMax (OMX 8.15, +1.04) surged 14.6%. Earlier, the company confirmed it would extinguish a non-recourse liability which is related to Lehman-backed timber notes. Because of this, OMX will recognize a non-cash, pre-tax gain of $671.1 million in the third quarter. Today's buying lifted the stock to a 21.2% gain on the week. Meanwhile, peer Staples (SPLS 12.21, +0.25) advanced 2.1% following recent rumors of a possible private equity buyout.

Western Digital (WDC 41.06, -1.51) fell 3.6% after lowering its revenue guidance for the first quarter. Shares of the hard drive producer have been in a downtrend since the stock reached a 2-year high at $45.48 on August 17.

Social media stocks were on the rise. Facebook (FB 22.00, +1.28) jumped 6.2% following reports which suggested the company is set to introduce a real-time ad program. FB's peer Zynga (ZNGA 3.18, +0.22) surged 7.4% after the company hired an online-gambling executive, Maytal Olsha as its new Chief Operating Officer. Elsewhere, Groupon (GRPN 5.27, +0.51) soared 10.7% as the stock of the online deals site continues rebounding after reaching an all-time low of $4.00 on September 4.

A slew of economic data points hit the wires today.

Consumer prices increased by 0.6% during August, which was in-line with the 0.6% gain that had been generally expected. Core prices increased by 0.1%, which was slightly short of the 0.2% increase expected by economists polled by Briefing.com.

Separately, retail sales rose during August by 0.9%, which was better than the 0.7% increase that had been broadly expected. The prior month's reading was revised down to show an increase of 0.6%. Excluding autos, retail sales rose by 0.8%, which was in-line with the Briefing.com consensus call.

Industrial production decreased during August by 1.2%, which was worse than the 0.2% decrease that had been widely expected. The reading followed the revised 0.5% increase experienced in the prior month. Capacity utilization hit 78.2%, which was worse than the 79.2% that had been expected and down from the revised prior month reading of 79.2%.

The preliminary University of Michigan Survey for September came in at 79.2, which was ahead of the prior month's 74.3, and better than the reading of 73.5 that had been widely expected.

Lastly, monthly business inventory data for July showed an inventory build of 0.8% for the month which was slightly above the 0.4% that had been expected.

On Monday, the Empire Manufacturing Index will be released at 8:30 ET.

Week in Review: Focus Turns to Federal Reserve as QE3 is Launched

Monday's session was mostly uneventful, as the range-bound trading day concluded with a late-afternoon push to session lows. The major averages saw a notable divergence as the Dow slipped 0.4% while the S&P 500 and Nasdaq slid 0.6% and 1.0%, respectively. Airlines were stronger as United Continental (UAL 20.06, -0.03) advanced 1.8%.

On Tuesday, equities were broadly higher throughout the day before late afternoon selling sent the Nasdaq into negative territory. The dip also pushed the other indices lower, but they were able to hold most of their gains. The Dow finished higher by 0.5% while the Nasdaq ended flat. Groupon (GRPN 5.27, +0.51) finished higher by 8.0% after a reported increase in site traffic during the month of August.

On Wednesday, stocks started the day higher but were only able to hold a portion of their gains in a session which saw two pullbacks to the unchanged line. After spending most of the day in the black, the S&P 500 ended higher by 0.2%. The Dow Jones Transportation Average, which has been on a steady rise over the past week, added 0.8%.

Thursday's session was highlighted by a risk rally sparked by the Federal Reserve's decision to increase policy accommodations by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The program is open-ended by design, which allows the Federal Reserve to terminate it once the employment picture shows substantial improvement. The S&P 500 was the best performing index and it settled higher by 1.6%. Financials rallied on the news and Bank of America (BAC 9.55, +0.15) led all majors with an advance of 4.8%.

 
 Index     Started Week  Ended Week  Change  %Change  YTD % 
 DJIA	    13306.64	 13593.37   286.73    2.2   11.3 
 Nasdaq	     3136.42	  3183.95    47.53    1.5   22.2 
 S&P 500	1437.92	  1465.77    27.85    1.9   16.6 
 Russell 2000  842.27	   864.70    22.43    2.7   16.7

8:01AM Chipmos Technology August revenue declines 0.4% MoM (IMOS) 15.02 : Co reported its unaudited consolidated revenue for the month of August 2012. Revenue for the month of August 2012 was NT$1,740.6 mln or US$58.3 mln, a decrease of 0.4% from the month of July 2012 and an increase of 18.1% from the same period in 2011.

Tessera Tech (TSRA $14.90 +0.00) reported that Q3 2012 total revenue is expected to range between $66.5-69.0 mln, an increase of approximately 8% to 12% from the prior quarter. Revenue from the Intellectual Property segment is expected to range between $53.0 million and $54.0 million, and includes the payment of approximately $20 million related to the interim award the International Court of Arbitration of the International Chamber of Commerce (ICC) issued on July 6, 2012, in favor of Tessera in its dispute with Amkor Technology (AMKR). This payment will be reflected in two income statement categories, approximately $16.0 million to $17.0 million in royalty and license fees and approximately $3.0 million to $4.0 million in other income. Non-GAAP operating expenses for the third quarter 2012, excluding litigation expenses, are expected to range between $57.0 million and $59.0 million, which compares to $43.3 million in the prior quarter and includes expenses related to both the operations of the DigitalOptics Corporation's Zhuhai based camera module facility and to the new lens manufacturing facility in Taiwan, which will require an initial investment of approximately $30 million.

Western Digital (WDC $43.39 +0.81) announced at its Investor Day a capital allocation plan that includes the adoption by its Board of Directors of a cash dividend policy and an increased authorization of $1.5 billion under its share repurchase program. At its webcast Investor Day, the company indicated that beginning in its current fiscal year 2013, it is targeting a return to shareholders of approximately 50% of its free cash flow through a mix of cash dividends and share repurchases. Under the dividend policy, the company intends to pay a quarterly cash dividend on its common stock beginning with the quarter ending Sept. 28, 2012. Directors declared today a dividend of $0.25 per common share, payable on Oct. 15, 2012, to the company's shareholders of record as of Sept. 28, 2012. The additional repurchase authorization is effective immediately. The company also announced that it now expects the industry's total available market (TAM) for hard drives in the September quarter to be approximately 140 million units versus its earlier forecast of 157 million units, due to muted demand and inventory rebalancing. As a result, the company now expects revenue for its first quarter ending Sept. 28, 2012, will be approximately $3.9 billion to $4.0 billion, compared with its previous expectation of $4.2 billion to $4.3 billion (Capital IQ Consensus Estimate is $4.28 bln). The company continues to estimate its gross margin for the September quarter to be approximately 30 percent on a non-GAAP basis. The company reiterated its non-GAAP $10 earnings per share target for the fiscal year ending June 28, 2013 (Capital IQ Consensus Estimate is $9.39).

09:22 am Analogic upgraded to Buy at Needham; tgt $85: . Needham upgrades ALOG to Buy from Hold and sets target price at $85 following earnings. The firm notes, Security revenue at $28.3M was about double the firm's estimate and at its highest level since management began to break it out in 2006. While they don't expect a repeat of this excellent performance next quarter they think this business segment may finally be ready to realize its potential. This quarter was helped by the initial shipments of the high-throughput scanners and they see additional launches of the TSA replacement program and Smith's new scanner in F2H13 that could build the momentum.

09:23 am AT&T and Verizon: . Stifel says while they continue to believe both Verizon (VZ) and AT&T will dominate the U.S. telecom sector, with market share gains in wireless growing ever wider, they also believe that given current valuation levels, the two mega-caps could be used as a near-term source of funds for investors as EPS numbers get adjusted because of a strong iPhone 5 launch and as the QE3/risk-on trade becomes more prevalent. As such, they are lowering their ratings on both names to Hold from Buy.
09:59 am S&P Information Technology trading higher today; outpacing broader market

The tech sector is trading higher today, ahead of gains in the broader market. Semiconductors are showing relative strength as well with the SOX trading 1.6% higher. Within the chip index, CRUS (+6.1%) is a notable standout. Among other major indices, the SPY is trading 0.6% higher today, while the QQQ is up 0.9% and the NASDAQ is trading 0.8% higher on the session. Among tech bellwethers, FB (+3.0%) is showing strength, while VZ (-1.3%) is under pressure.

In tech earnings last night, TSRA (+0.4%) guided Q3 revenues above consensus, although it does include a $20 mln payment related to an arbitration award. In news, AAPL's (+1.6%) iPhone 5 pre-sales sold out in an hour late last night. There were no notable analyst upgrades this morning in the tech space. Among downgrades, however, SYNA (-1.8%) was downgraded to Neutral at Lazard, LVLT (-1.6%) was downgraded to Underperform at Raymond James, and T (-0.9%) & VZ (-1.3%) were downgraded to Hold at Stifel.

09:17 am Tessera Tech shares little changed following upside guidance

Tessera Tech (TSRA $14.90 +0.00) reported that the third quarter 2012 total revenue is expected to range between $66.5-69.0 million, an increase of approximately 8% to 12% from the prior quarter. Revenue from the Intellectual Property segment is expected to range between $53.0 million and $54.0 million, and includes the payment of approximately $20 million related to the interim award the International Court of Arbitration of the International Chamber of Commerce issued on July 6, 2012, in favor of Tessera in its dispute with Amkor Technology (AMKR). This payment will be reflected in two income statement categories, approximately $16.0 million to $17.0 million in royalty and license fees and approximately $3.0 million to $4.0 million in other income. Non-GAAP operating expenses for the third quarter 2012, excluding litigation expenses, are expected to range between $57.0 million and $59.0 million, which compares to $43.3 million in the prior quarter and includes expenses related to both the operations of the DigitalOptics Corporation's Zhuhai based camera module facility and to the new lens manufacturing facility in Taiwan, which will require an initial investment of approximately $30 million.

09:13 am Western Digital shares spike 2% following new dividend and increase in share repurchases

Western Digital (WDC $43.40 +0.82) announced at its Investor Day a capital allocation plan that includes the adoption by its Board of Directors of a cash dividend policy and an increased authorization of $1.5 billion under its share repurchase program. At its webcast Investor Day, the company indicated that beginning in its current fiscal year 2013, it is targeting a return to shareholders of approximately 50% of its free cash flow through a mix of cash dividends and share repurchases. Under the dividend policy, the company intends to pay a quarterly cash dividend on its common stock beginning with the quarter ending Sept. 28, 2012.

Directors declared today a dividend of $0.25 per common share, payable on Oct. 15, 2012, to the company's shareholders of record as of Sept. 28, 2012. The additional repurchase authorization is effective immediately. The company also announced that it now expects the industry's total available market (TAM) for hard drives in the September quarter to be approximately 140 million units versus its earlier forecast of 157 million units, due to muted demand and inventory rebalancing. As a result, the company now expects revenue for its first quarter ending Sept. 28, 2012, will be approximately $3.9 billion to $4.0 billion, compared with its previous expectation of $4.2 billion to $4.3 billion (Capital IQ Consensus Estimate is $4.28 bln). The company continues to estimate its gross margin for the September quarter to be approximately 30 percent on a non-GAAP basis. The company reiterated its non-GAAP $10 earnings per share target for the fiscal year ending June 28, 2013 (Capital IQ Consensus Estimate is $9.39).