From Briefing.com: 4:20 pm : The major averages ended on their lows after early gains turned into afternoon losses. The late decline occurred in reaction to the October FOMC minutes, which mentioned the possibility of tapering in the 'coming months.' It should be noted that despite today's 0.4% decline, the S&P 500 remains higher by 7.5% since October 9.
Stocks held modest gains through the bulk of the session after a better-than-expected October retail sales report set the stage for an upbeat open. The report pointed to an increase of 0.4% while the Briefing.com consensus expected a more modest uptick of 0.1%. More importantly, the report indicated the government shutdown had essentially no effect on consumer spending.
The above-consensus data helped retailers outperform the broader market as the SPDR S&P Retail ETF (XRT 86.87, +0.03) ended flat. Among individual names of note, J.C. Penney (JCP 9.44, +0.73) surged 8.4% after its upbeat-sounding guidance overshadowed its bottom-line miss.
As the opening hour drew to its close, stocks spiked amid reports the European Central Bank will weigh implementing negative deposit rates if more easing is needed. The euro weakened on the news, falling below 1.3500 against the dollar. It is worth mentioning that negative rates have been discussed in recent weeks. In fact, just yesterday, ECB Executive Board member Joerg Asmussen said the central bank could implement negative deposit rates if the 2.0% inflation target remains elusive. However, Mr. Asmussen added he would be 'very, very careful' with regards to deploying the policy tool.
Equity indices then returned to their earlier levels after St. Louis Fed President James Bullard said that a strong November jobs report would increase the chances of tapering in December.
Taper talk resurfaced this afternoon when the minutes from the October FOMC meeting indicated tapering is 'likely in the coming months.' The rest of the statement struck a familiar tone as the FOMC said the economy is expanding at a moderate pace while some downside risks remain.
The market's reaction was consistent with what transpired after previous mentions of tapering by the Fed. Equities, Treasuries (10-yr yield +8 bps to 2.79%), and gold futures (-2.3% to $1245.50/ozt) sold off while the Dollar Index (+0.4% to 81.02) rallied.
Even though the market received tapering hints from Mr. Bullard and the October minutes, it should be noted the labor situation represents just one half of the picture. The Federal Reserve has also committed to maintaining annual inflation close to 2.0%, but has struggled in achieving this target. Today's CPI report spoke to that point as October prices slipped 0.1% while the Briefing.com consensus expected no change. Core prices increased 0.1%, below the 0.2% expected by the Briefing.com consensus. On an annualized basis, CPI came in at 1.0% while core CPI was reported at 1.7%.
When the dust settled, the health care sector (+0.3%) was the only group left in positive territory while the other sectors ended with losses between 0.3% and 1.2%. Rate-sensitive utilities (-1.1%) and telecom services (-0.8%) ended at the bottom of the leaderboard as elevated rates weighed.
Participation was on the light side as only 622 million shares changed hands on the floor of the New York Stock Exchange.
Looking back at today's remaining economic data, business inventories rose 0.6% in September after increasing 0.4% in August. The Briefing.com consensus expected inventory levels to increase 0.4%.
Separately, existing home sales fell 3.2% to 5.12 million in October from an unrevised 5.29 million in September. The Briefing.com consensus expected home sales to fall to 5.20 million. Surprisingly, the National Association of Realtors did not blame the government shutdown for the drop in sales. The shutdown left many banks unable to verify income through the IRS before closing. That was one of the main reasons why mortgage purchase applications fell during the month. We expected the delays in the mortgage approval process to push a number of home purchases that would have occurred in October into November.
Tomorrow, weekly initial claims and October PPI will be reported at 8:30 ET while the November Philadelphia Fed survey will be released at 10:00 ET.
Nasdaq +29.9% YTD
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DJIA +21.3% YTD
DJ30 -66.21 NASDAQ -10.28 SP500 -6.50 NASDAQ Adv/Vol/Dec 1170/1.67 bln/1372 NYSE Adv/Vol/Dec 1006/622.4 mln/2012 3:35 pm : Commodities continued to remain pressured given the strength in the dollar index.
The dollar index spiked this morning after headlines said ECB to weigh -0.1% deposit rate if more easing is needed. Also, St. Louis Fed President came out suggested that a strong November jobs report would increase the likelihood the Fed would begin tapering its bond-buying program, which influenced the dollar index. And then, Fed minutes were released, which caused the dollar index to spike to a new session high.
All of this weighed on the commodity complex, but mostly on the metals. Natural gas futures were strong all session and rose as high as $3.68. At the end of floor trading, Dec nat gas closed $0.12 higher at $3.67/MMBtu.
Jan crude oil ended the day $0.07 lower at $93.86/barrel after a mixed session.
Metals were the worst performers today, led by precious metals. Each fell over 2% today and are near session lows in electronic trade. Dec gold ended $15.40 lower at $1257.80/oz, while Dec silver lost $0.25 at $20.05/oz.
5:18PM First Solar announces major supply contract to IXL Group (FSLR) 60.88 +0.46 : Co has awarded a contract to the IXL Group (IXL) of companies based in Geelong to manufacture and deliver the framing system for the 155 MW (AC) utility-scale solar photovoltaic (PV) projects at Nyngan and Broken Hill in New South Wales. AGL engaged First Solar to construct the solar projects which are expected to produce approximately 360,000 megawatt hours of electricity each year - enough to meet the needs of over 50,000 average homes in NSW.
4:07PM Ixia receives notice regarding non-compliance with Nasdaq Listing Rules due to the previously announced delay in the filing of its Quarterly Report on Form 10-Q for the quarter (XXIA) 13.48 +0.01 :
Large Cap Gainers
ETE (74.37 +7.22%): Co and Energy Transfer Partners (ETP) announced agreement for ETE to acquire Trunkline LNG Company from ETP in exchange for the redemption by ETP of 18.71 mln ETP units held by ETE; represents an effective purchase price of ~$1 bln
VRTX (66.38 +6.41%): Announced that it has sold its product royalty rights relating to INCIVO (telaprevir) to Janssen Pharmaceutica, a Johnson & Johnson (JNJ) company, for $152 mln; co also increased its FY13 year-end guidance for cash, cash equivalents, and marketable securities to in excess of $1.4 bln
PCLN (1158.11 +3.55%): Added to Conviction Buy List at Goldman
Large Cap Losers
SJM (101.69 -6.35%): Missed quarterly EPS by $0.08 ($1.52 ex items vs $1.60 estimate), revs fell 4.2% yoy to $1.56 bln vs $1.61 bln estimate; reaffirmed FY14 EPS of $5.72-5.82 ex items vs $5.85 estimate, lowered FY14 rev guidance to -2% (from -1%) which calculates to ~$5.78 bln vs $5.87 bln estimate
LOW (48.09 -4.66%): Missed quarterly EPS by $0.01 ($0.47 vs $0.48 estimate), revs rose 7.3% yoy to $12.96 bln vs $12.72 bln estimate; comparable sales increased 6.2%; sees FY14 EPS of ~$2.15 (raised from $2.10) vs $2.19 estimate, revs +6% (raised from +5%) or ~$53.55 bln vs $53.09 bln estimate
TSLA (121.2 -3.88%): Target lowered to $120 from $141 at Barclays
Mid Cap Gainers
BMRN (69.55 +3.95%): Confirmed FDA Advisory Committee recommended approval for Vimizim for the treatment of patients with Morquio A syndrome
MYGN (28.6 +3.66%): Announced a research collaboration with BioMarin that will use Myriad's novel Homologous Recombination Deficiency test to identify tumor types that may be sensitive to BioMarin's investigational product candidate, BMN-673
JAZZ (112.64 +2.4%): Mentioned as potential M&A candidate in blog article
Mid Cap Losers
SQM (26.31 -6.73%): Reported Q3 earnings per ADS of $0.53 vs $0.46 two analyst estimate, revs $521.1 mln vs $548.4 mln single analyst estimate
DKS (54.99 -2.05%): Downgraded to Underperform from Market Perform at BMO Capital Markets; target raisd to $65 from $57 at Moness Crespi & Hart
GFI (4.45 -1.66%): Reported Q3 earnings from continuing operations of $9 mln vs a net loss of ($129) mln in prior quarter and gain of $122 mln in prior year;
Wind River, a subsidiary of Intel (INTC) announced that AgustaWestland, a Finmeccanica co, is using Wind River VxWorks 653 Platform for its revolutionary "Project Zero" tilt rotor technology incubator.
Mellanox Technologies (MLNX) announced that the co continued its leadership as the global interconnect solution provider for the TOP500 list of supercomputers. Overall, the number of Mellanox FDR InfiniBand connected systems grew 1.8X from Nov 2012 to Nov 2013.
Microsemi (MSCC) announced that its SmartFusion2 SoC FPGAs and IGLOO2 FPGAs have achieved PCI Express 2.0 endpoint specification certification and are now included on the PCI SIG Integrators List.
Mattson Technology (MTSN) announced that its new paradigmE XP etch system has been qualified for advanced DRAM device technologies.
Methode's Data Solutions Group, a division of Methode Electronics (MEI), announced its collaboration to provide a turn-key DCIM solution that integrates Methode hardware with Norlinx software.
Photronics (PLAB) announced an agreement with Dai Nippon Printing to merge Photronics Semiconductor Mask, a majority owned subsidiary of Photronics, with DNP Photomask Technology Taiwan, a subsidiary of DNP, to form a JV focused on serving semiconductor manufacturers in Taiwan.
6:03AM ReneSola provides 1MW of PV modules to Hecate Energy in entrance into southeastern U.S. (SOL) 4.39 : Co announced it has delivered 1MW of its 305W Virtus II PV modules to Hecate Energy, a U.S. based developer of power projects. The 3,280 1000V modules will power a project being built by Hecate Energy in Georgia of southeastern U.S.
LSI Corporation (LSI) announced it has extended the Nytro portfolio of PCIe flash cards to include the Nytro XP6200 series. The Nytro XP6200 series provides hyperscale cloud datacenters with accelerated performance for read-intensive applications, optimized power and thermals, and an overall lower cost per gigabyte PCIe flash solution.
Yahoo (YHOO) announced that it proposes to offer $1.0 billion aggregate principal amount of its convertible senior notes due 2018 in a private placement. Yahoo intends to use a portion of the net proceeds to pay the cost of the convertible note hedge transactions described below (after such cost is partially offset by the proceeds from the sale of warrants pursuant to the warrant transactions described below). Yahoo may use up to $200.0 million of the net proceeds from this offering to repurchase shares of its common stock from purchasers of notes in the offering in privately negotiated transactions effected through one of the initial purchasers or its affiliate as Yahoo's agent. Yahoo expects the purchase price per share in such transactions to equal the closing price per share of Yahoo's common stock on the date of pricing of the offering. The remaining net proceeds from the offering will be used for general corporate purposes, including, but not limited to, acquisitions or other strategic transactions, additional repurchases of common stock and working capital. However, Yahoo has not designated any specific uses of the net proceeds and has no current agreements or commitments with respect to any material acquisition or strategic transaction. Pending any specific application, Yahoo may invest the remaining net proceeds in short- and long-term marketable securities. Repurchases of common stock from purchasers of notes in the offering, as well as any additional repurchases of common stock by Yahoo, could increase, or prevent a decline in, the market price of Yahoo's common stock or the notes.
Yahoo (YHOO) also announced that it has increased its share buyback authorization by $5.0 billion.
ReneSola (SOL) announced it has delivered 1MW of its 305W Virtus II PV modules to Hecate Energy, a U.S. based developer of power projects. The 3,280 1000V modules will power a project being built by Hecate Energy in Georgia of southeastern U.S.
Model N (MODN) reported fourth quarter earnings of $0.15 per share, excluding non-recurring items, which is higher than expected, while revenues rose 19.8% year/year to $27.8 million which is in line with consensus. The company issues guidance for the first quarter with EPS of ($0.13)-(0.10) which is below expectations with revenues of $21.0-21.5 million from $20-21 million which is above consensus. The company issued guidance for fiscal year 2014 with EPS of ($0.96)-(0.80) which is below expectations with raised fiscal year 2014 revenues to $72-80 mililon from $70-80 million which is line with expectations.
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