From Briefing.com: 4:20 pm : The S&P 500 jumped 1.2%, closing at a record high of 1,725.52 after the Federal Open Market Committee failed to announce plans to reduce the pace of its asset purchases, as many had expected.
Although the Federal Reserve did not make a tapering announcement, the policy statement did contain updated economic projections. Notably, the forecast for 2013 and 2014 GDP was lowered with the Committee expecting this year's growth between 2.0% and 2.3% (2.3%-2.6% June forecast) and 2014 growth ranging between 2.9% and 3.1% (3.0%-3.5% June projection).
During his press conference, Mr. Bernanke said economic data received since June has not been strong enough to justify scaling back asset purchases just yet. The Fed Chairman also said that recent tightening of financial conditions, as well as the ongoing fiscal uncertainty, played a part in the decision to maintain asset purchases at a pace of $85 billion per month ($40 billion in mortgage-backed securities, $45 billion in Treasuries).
Similar to equities, Treasuries and precious metals welcomed the lack of a tapering announcement. The 10-yr note rallied more than a point, pushing its yield down 14.5 basis points to 2.71%. This marked the lowest close for the benchmark yield since August 12.
Meanwhile, gold spiked 4.4% and silver surged 6.1% to their respective $1366.30 and $23.13 per troy ounce. Miners also received an afternoon boost, and the Market Vectors Gold Miners ETF (GDX 28.25, +2.32) settled higher by 9.0%. On a related note, the materials space ended ahead of the remaining cyclical sectors, posting a gain of 2.3%.
The other commodity-related sector, energy (+1.2%), settled in-line with the S&P even as crude oil surged 2.6% to $108.12 per barrel. Transportation companies appeared largely unaffected by the sharp gain in crude as the Dow Jones Transportation Average climbed 1.5%. FedEx (FDX 116.25, +5.57) spiked 5.1% after reporting an earnings beat and announcing plans to increase its shipping rates by an average of 3.9% next year.
Five of six cyclical sectors ended ahead of the broader market while financials (+1.0%) underperformed. Although major banks fared relatively well, the sharp drop in rates pressured brokerage names like TD Ameritrade (AMTD 26.93, -1.12) and Charles Schwab (SCHW 21.36, -1.28).
Countercyclical sectors ended in mixed fashion as health care (+0.7%) and telecom services (+0.4%) lagged while consumer staples (+1.3%) and utilities (+3.0%) outperformed.
Trading volume reached a one-month high as 820 million shares changed hands on the floor of the New York Stock Exchange.
Today's economic data focused on housing. The weekly MBA Mortgage Index jumped 11.2% to follow its recent string of declines including last week's 13.5% slide.
Separately, housing starts increased 0.9% in August to a seasonally adjusted annual rate of 891,000. That was a bit below the Briefing.com consensus estimate of 910,000, yet that sting was mitigated by the understanding that single-family starts increased a solid 7.0% to 628,000. That was the highest level of single-family starts since February.
Building permits declined 3.8% from July to a seasonally adjusted annual rate of 918,000 (Briefing.com consensus 943,000). That disappointment notwithstanding, the housing starts report carried positive implications for Q3 GDP as the number of units under construction increased 2.2% to 654,000.
Tomorrow, weekly initial claims and the second quarter current account deficit will be reported at 8:30 ET while August existing home sales, August Leading Indicators, and the September Philadelphia Fed Index will all be reported at 10:00 ET.DJ30 +147.21 NASDAQ +37.94 SP500 +20.76 NASDAQ Adv/Vol/Dec 1622/1.78 bln/904 NYSE Adv/Vol/Dec 2644/819.7 mln/443
3:30 pm :
Oct crude oil advanced for the first time in four sessions, gaining support from strong inventory data and the Federal Reserve decision to maintain its current monetary stimulus. The Dept. of Energy reported that for the week ending Sep 13, crude oil inventories had a draw of 4.368 mln barrels when consensus called for a draw of 1.2-1.4 mln barrels. The energy component trended higher after lifting from its session low of $105.60 per barrel. It pushed above the $108.00 per barrel level moments before closing at $108.14 per barrel, or 2.6% higher
Oct natural gas, however, spent its entire session in the red. It slipped to a session low of $3.67 per MMBtu in morning pit action and eventually settled with a 0.8% loss at $3.71 per MMBtu
Dec gold spent most of today's floor trade in negative territory as many investors speculated that the Federal Reserve would announce a modest tapering to the stimulus program. The yellow metal dipped below the $1300 per ounce level but rallied to a session high of $1313.40 per ounce ahead of the close. Unable to hold the gain, it settled 0.1% lower at $1307.40 per ounce
Dec silver also chopped around in the red, slumping to a session low of $21.23 per ounce in late morning action. It managed to inch slightly higher in afternoon pit trade and settled with a 0.9% loss at $21.58 per ounce. The precious metals rallied sharply on the lack of a tapering announcement in electronic trade and continue to push to new HoDs.
4:05PM Oracle beats by $0.03, misses on revs (ORCL) 33.87 +0.61 : Reports Q1 (Aug) earnings of $0.59 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.56; revenues rose 2.1% year/year to $8.38 bln vs the $8.48 bln consensus; non-GAAP new software licenses and cloud software subscriptions revenue growth +4% vs. +0-8% guidance.
Both GAAP and non-GAAP software license updates and product support revenues were up 7% to $4.4 billion. Hardware systems products revenues were $669 million. Non-GAAP operating income was up 4% to $3.7 billion, and non-GAAP operating margin was 45%.
"Engineered systems had its best ever Q1 in terms of unit sales, growing over 60% compared with the same quarter last year. New software license results were especially strong in the Americas, which saw 15% growth in constant currency. Next week at Oracle OpenWorld, we will announce the In-Memory Option for the Oracle database. Virtually every existing application that runs on top of the Oracle database will run dramatically faster by simply turning on the new In-Memory feature. Our customers don't have to make any changes to their applications whatsoever; they simply flip on the in-memory switch, and the Oracle database immediately starts scanning data at a rate of billions or tens of billions of rows per second."
Large Cap Gainers
ADBE (51.69 +7.37%): Missed quarterly EPS by $0.02 ($0.32 ex items vs $0.34 estimate), revs fell 8.0% yoy to $995 mln vs $1.01 bln estimate; co exited Q3 with ~1 mln paid Creativ eCloud Subscriptions, an increase of 331k over prior quarterl; sees Q4 EPS of $0.28-0.34 vs $0.41 estimate, revs of $1.0-1.05 bln vs $1.08 bln estimate; target raised to $57 from $50 at Macquarie
NOK (6.58 +4.94%): Upgraded to Outperform from Neutral at Credit Suisse
REGN (306.33 +3.27%): Mentioned positively by Jim Cramer; co is scheduled to present Phase 3 data for EYLEA Injection at upcoming Retina Society meeting
Large Cap Losers
CTRX (52.98 -4.30%): Walgreens (WAG) announced it will provide more than 160k eligible employees with employer-sponsored health insurance coverage in 2014; Catamaran is Walgreens' current pharmacy benefit manager; Other health care plan providers seeing weakness: ESRX, CI, HUM, WLP
HTZ (26.57 -2.96%): Co said Hertz Brand U.S. airport volume remains soft in presentation at Citi US and European Industrials Conference
LUK (27.46 -2.10%): Continued weakness following yesterday afternoon's reporting of results for Jefferies subsidiary; Jefferies net earnings decreased 83% to $11.7 million, revenues decreased 30% yoy to $517 mln
Mid Cap Gainers
SOHU (74.38 +9.77%): Announced its majority-owned seach subsidiary Sogou paid a special dividend in the aggregate amount of ~$300.9 mln; the amount received by Sohu Search was ~$161.2 mln
VIPS (53.31 +8.78%): Upgraded to Buy from Hold at Deutsche Bank
NOW (51.13 +3.63%): Upgraded to Overweight from Equal-Weight at Morgan Stanley
Mid Cap Losers
CZR (22.69 -12.50%): Disclosed it has begun a refinancing process for its outstanding mortgage loans; Bloomberg reporting that co is raising $4.85 bln in bonds and loans
TGI (71.04 -9.62%): Announced that it expects to record pre-tax additional program costs during fiscal year 2014 totaling approximately $68.0 million, or $0.83 per diluted share, primarily associated with the 747-8 program
FIVE (45.73 -5.71%): Announced secondary offering of 7.1 mln shares by selling stockholders; Executive Chairman to sell 100k shares
Riverbed Technology (RVBD) has expanded its Whitewater cloud storage appliance family with the addition of new hardware models and upgrades to its operating system.
10:50 am Technology
The tech sector is trading higher today, ahead of modest losses in the broader market. Semiconductors are showing relative weakness with the SOX trading 0.2% lower. Within the chip index, ALTR (-1.5%) is a notable laggard. Among other major indices, the SPY is trading 0.2% lower today, while the QQQ is up 0.2% and the NASDAQ is trading 0.1% higher on the session. Among tech bellwethers, AAPL (+2.0%) is showing notable strength, while VZ (-1.0%) is under pressure.
In tech earnings last night, ADBE (+7.3%) posted a miss and offered downside guidance, but did top the Creative Cloud sub estimates. Elsewhere, AFOP (+7.3%) raised Q3 rev guidance above consensus.
In news, EA (-2.7%) named Andrew Wilson as its next CEO. WDAY (+1.8%) and CRM (+3.7%) announced plans to integrate the entire Salesforce and Workday product line.
Among M&A in the tech space, CIS (+5.0%) entered into a merger agreement for a 'going private' transaction, in which the Parent will acquire the co for $0.5125 per ordinary share of the co or $2.05 per ADS, each representing 4 Shares.
In IPOs, BNFT (hasn't traded yet) priced its upsized 4.935 mln share IPO at $26.50 per share, above the $21.50-24.50 expected range.
In rumors, GTAT (+6.9%) is higher on reports that AAPL (+2.0%) may introduce Sapphire touch screen, which GTAT may supply, for iPhone 6.
Among notable analyst upgrades in tech this morning, CTSH (+2.2%) was upgraded to Overweight at Barclays, NOK (+3.7%) was upgraded to Outperform at Credit Suisse, MKTG (+6.7%) and NOW (+4.2%) were upgraded to Overweight at Morgan Stanley, MXWL (+4.7%) was upgraded to Overweight at Piper, and SNCR (+2.1%) was upgraded to Neutral at Goldman. Also of note, AAPL (+2.0%) saw estimate increases at a couple firms and TSS (+1.0%) was added to Focus List at Citigroup.
In downgrades, INTU (-1.4%) was downgraded to Underweight at Morgan Stanley.
ORCL (+0.1%) is the only notable name in tech scheduled to report after the close.
07:41 am Alliance Fiber Optic shares soar 13% following upside guidance
Alliance Fiber Optic (AFOP $23.00 +2.76) issued upside guidance for the third quarter with revenues of $22 million which ahead of expectations, exceeding the previously stated revenue guidance of $19.5 to $20.5 million provided in the second quarter, 2013 conference call. This revenue level represents a 16% and 78% increase on a sequential and year over year basis respectively.
"With increased demands for datacomm applications, customer orders have been stronger than expected, since the last conference call. We are excited with this development and the opportunity to deliver another record quarterly financial milestones the third quarter. We will continue our capacity expansion efforts to support our customers' growing requirements and to increase AFOP market share in this emerging industry growth cycle," Detailed financial results for the third quarter as well as the outlook for the fourth quarter of 2013 will be provided, when complete third quarter end results are announced on a conference call to be held in October, 2013.
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