From Briefing.com: 4:20 pm : The S&P 500 fell 0.9% as the government shutdown continued for the third day without any strong indications a resolution to the stalemate may be on the horizon.
Even though stocks appeared largely unconcerned during the first two days of the shutdown, today's session featured a reminder from the Treasury, saying the consequences of a default could be worse than the events of 2008.
Equities retreated throughout the morning before finding support in the early afternoon following an article in The New York Times indicating Speaker of the House John Boehner told Republicans he would not allow a default to take place. The story was followed by a statement from the Speaker's office, which said this has always been Mr. Boehner's stance.
Thanks to the rebound, the S&P was able to erase a third of its losses, but could not close above its 50-day moving average (1680). The index endured an afternoon slip in reaction to shots fired near the U.S. Capitol. The scare caused a 30-minute lockdown of the Capitol building, and the suspect was reported dead on the scene.
All ten sectors ended in the red with influential groups like consumer discretionary (-1.0%), industrials (-1.1%), and technology (-1.0%) leading to the downside.
Notably, industrials finished near the bottom of the leaderboard for the second consecutive day. Like yesterday, defense contractors weighed on the sector as the PHLX Defense Index fell 1.0%.The largest index component, General Electric (GE 24.10, -0.23), also lost 1.0%.
The Dow Jones Transportation Average also underperformed, slumping 1.1%, even as airlines displayed relative strength. United Continental (UAL 31.65, +0.72) settled higher by 2.3%.
Elsewhere, the technology sector saw its top components, Apple (AAPL 483.41, -6.15), Google (GOOG 876.09, -11.90), and Qualcomm (QCOM 67.11, -0.57), lose between 0.8% and 1.4% while chipmakers outperformed. The PHLX Semiconductor Index shed 0.3%.
Countercyclical groups ended mixed as consumer staples (-0.5%) and telecom services (-0.4%) finished ahead of the S&P while health care (-1.0%) and utilities (-1.2%) lagged.
Treasuries registered modest gains, and the benchmark 10-yr yield slipped two basis points to 2.61%.
Today's trading volume was a bit below average as 703 million shares changed hands on the floor of the NYSE.
The weekly initial claims level increased to 308,000 from an upwardly revised 307,000 (from 305,000) while the Briefing.com consensus expected a rise to 315,000. After a couple weeks of unreliable claims data, the initial claims level has settled at a little over 300,000. This marks a vast improvement from August when claims were around 330,000.
Normally, this level of claims would suggest a strong gain in nonfarm payrolls. However, over the last couple of months, the strengthening in the claims level had no effect on payroll growth. Employers appear to be content with their workforce; hence, we have seen the drop in layoffs, but not a corresponding spike in hiring activity.
Separately, the September ISM Non-Manufacturing Index fell to 54.4 from 58.6 while the Briefing.com consensus expected the index to drop to 57.2. Last month's reading of the ISM Non-Manufacturing Index was the highest since December 2005 and was expected to pullback in September. The size of the pullback; however, was very unusual.
The non-manufacturing index normally lacks significant monthly volatility and moves in a nice smooth trend. September marked a departure as the index dropped by an unusually large 4.2 points. That was the biggest decline since November 2008. The index has moved at least 4.2 points in a single month only nine times since its inception in 1997.
Tomorrow's September nonfarm payrolls report will not be released due to the ongoing government shutdown.
Large Cap Gainers
CHU (16.88 +7.79%): Trading higher following strength in overseas trading.
YNDX (38.34 +1.56%): Initiated with a Buy at Citigroup; tgt $46.
VRX (110.61 +0.74%): Announced approval of Jublia for the treatment of onychomycosis in Canada; co's Bausch + Lomb Receives FDA clearance for novel monthly disposable Contact Lens.
Large Cap Losers
TSLA (168.85 -6.69%): Continued weakness on yesterday's reports of a car fire; NYTimes.com article discussed that TSLA said fire started in battery after crash.
LLY (48.79 -3.46%): Co detailed progress on strategic business goals; reaffirmed its near-term goals of $20 bln in revs and $3 bln in net income through 2014; announced share repurchase plans; single-agent ramucirumab significantly improves overall survival in advanced gastric cancer patients.
VMW (79.61 -3.43%): Upgraded to Outperform from Sector Perform at FBN Securities; tgt raised to $100 from $90.
Mid Cap Gainers
RAD (5.2 +3.69%): Reported Sept comps +1.9% vs +1% Retail Metrics Consensus.
CREE (70.48 +2.76%): Canaccord Genuity confirmed Cree bulb already receiving utility rebates.
PVH (120.39 +2.42%): Sold GH Bass business to G-111 Apparel (GIII); updated Q3 EPS guidance above consensus; reaffirmed FY13 EPS.
Mid Cap Losers
OIBR (1.79 -10.05%): Upgraded to Overweight from Underweight at Barclays.
HLF (68.43 -6.38%): Bill Ackman has converted 40% of his HLF short into long dated puts, according to reports.
EQIX (166.7 -5.08%): Amended senior credit facility.
Texas Instruments (TXN) announced that the Sitara AM335x ARM Cortex-A8 processor has been selected to power the newest Arduino board, the Arduino TRE.
MLNX +3.8% (upgraded to Buy from Hold at Craig Hallum),
Intel (INTC) CEO Brian Krzanich announced a collaboration agreement with Arduino. Krzanich also unveiled the Intel Galileo board, the first product in a new family of Arduino-compatible development boards featuring Intel architecture.
7:00AM Benchmark Elec completes acquisition of the EMS segment Of CTS Corporation (CTS); The total purchase price is ~$75 mln (BHE) 22.81 : BHE announced that the Company has completed an acquisition of the full-service Electronics Manufacturing Solutions segment of CTS (CTS). The acquired business is strategically focused on complex, high-mix and low-volume manufacturing in the Industrial, Aerospace & Defense, Medical, and Communications markets. The business acquired has a footprint of five locations. The total purchase price is ~$75 mln. The transaction is expected to generate annual revenues in excess of $200 mln and be accretive to earnings in 2014.
6:57AM Canadian Solar announces the sale of two utility scale solar power plants to a fund managed by BlackRock (BLK) (CSIQ) 18.56 : Co announced that its subsidiary, Canadian Solar Solutions, entered into an agreement with a fund managed by BlackRock (BLK), whereby BlackRock acquired from Canadian Solar two utility-scale solar power plants totaling 20MW (AC) on September 30th, 2013 at a valuation comparable to other recent project sales completed by Canadian Solar on a per megawatt basis in the Ontario market.
07:47 am CalAmp shares spike 9% following better than expected earnings
CalAmp (CAMP $20.35 +1.66) reported second quarter earnings of $0.19 per share, which is better than expected, while revenues rose 33.6% year/year to $58.8 million which is higher than expected. Wireless Datacom revenue increased to $47.2 million from $34.2 million in the same period last year, and Satellite revenue was $11.6 million compared to $9.8 million in the second quarter last year. The consolidated gross margin was 33.7% in the fiscal 2014 second quarter, up from 32.1% in the second quarter last year.
The increase in consolidated gross margin reflects the higher proportion of total revenues represented by the Wireless Datacom segment in fiscal 2014 versus the prior year and, within Wireless Datacom, the shift in revenue mix toward higher margin subscription-based revenues associated with the Wireless Matrix acquisition. The company issued third quarter guidance with EPS of $0.19-0.23 which is line with expectations with revenues of $59-63 million which is in line with expectations.
"Our focused execution coupled with continued strong customer demand for our products and services resulted in a 38% year-over-year increase in Wireless Datacom revenue during the second quarter. This growth was driven to a large extent by our Mobile Resource Management (MRM) products business, which benefited from significant channel demand for stolen vehicle recovery products, along with continued strength in fleet management and asset tracking. Our Wireless Networks business, which comprises the remainder of our Wireless Datacom segment, also generated strong year-over-year growth. The acquired operations of Wireless Matrix, along with growth in the Energy vertical, more than offset a year-over-year reduction in Rail revenue resulting from the completion of our Positive Train Control development project in the second quarter last year. In addition, our Satellite segment once again generated meaningful operating cash flow and contributed to our bottom-line profitability. We believe CalAmp's strong momentum exiting the second quarter and healthy pipeline of new opportunities, driven by an expanding network of global channel partners and a robust portfolio of innovative products, provide the Company with a strong tailwind as we enter the second half of fiscal 2014."
Advances 659 (21%) 651 (25%)
Declines 2,419 (77%) 1,838 (71%)
Unchanged 84 (3%) 92 (4%)
Up Vol* 642 (20%) 399 (22%)
Down Vol* 2,559 (78%) 1,407 (77%)
Unch. Vol* 77 (2%) 29 (2%)
New Hi's 107 147
New Lo's 99 21
*in millions
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