From Briefing.com: 4:20 pm : The drive for five continued today and it was a success. For the fifth straight session, the S&P 500 ended lower. Like the previous four sessions, though, the losses were fairly modest in scope. The S&P 500 declined 0.4%, bringing its total loss for the five sessions to 22 points or 1.2%. All in all, that still qualifies as a pretty tame slide considering the S&P 500 had risen 150 points, or 9.1%, over the previous eight weeks.
Today's retreat came on moderate volume of 700 mln shares at the NYSE and was blamed on concerns the Fed might taper its asset purchase program as early as this month following some better-than-expected initial claims and Q3 GDP data. The headline print for each certainly aided such thinking. Initial claims for the week ending November 30 checked in at just 298,000 (Briefing.com consensus 330,000) while the second estimate for Q3 GDP jumped to 3.6% (Briefing.com consensus 3.0%) from 2.8%.
The headlines had an undeniably encouraging feel to them. That was the first sub-300,000 print for initial claims since early September and the 3.6% growth in Q3 GDP was the strongest since the second quarter of 2010. Upon closer review, though, the headlines were a little misleading.
The Department of Labor acknowledged that seasonal adjustment problems biased the claims number lower (which means we are likely to see a higher print in subsequent weeks) while the change in private inventories accounted for 1.68 percentage points of Q3 GDP growth. Take the change in inventories out of the equation and real final sales were up just 1.9% versus 2.0% in the first estimate. Furthermore, the 1.4% growth rate in personal consumption expenditures was the lowest rate since the fourth quarter of 2009.
A big jump in inventories and a deceleration in personal spending isn't exactly a combination befitting a robust growth picture. In that context, the tapering trade in our estimation probably had more to do today with the angst surrounding the November employment report on Friday than it did with a true read of today's data.
Following the strong ADP Employment Change report on Wednesday, there is a presumption that the nonfarm payrolls number on Friday will also produce a positive surprise. The Briefing.com consensus estimate for nonfarm payrolls is set at 188,000 and at 200,000 for nonfarm private payrolls.
Some of that angst was reflected in the Treasury market today, which spent the entire session on the defensive. The 10-yr note dipped eight ticks and its yield rose three basis points to 2.87%. That bump in long-term rates weighed on rate-sensitive sectors in the stock market, like the financials sector (-0.9%), and particularly those sectors known for their higher dividend yields -- telecom services (-1.0%), utilities (-0.7%), and consumer staples (-0.9%).
Today's profit-taking action was centered primarily on large-cap issues. The Dow Jones Industrial Average, S&P 500, and Nasdaq 100 all finished lower while the Russell 2000 (+0.1%) and S&P 400 Midcap Index (+0.1%) scored small gains.
Gains in a handful of influential large-cap stocks like Apple (AAPL 567.90, +2.90), Boeing (BA 132.72, +1.22), 3M (MMM 126.84, +0.38), Intel (INTC 24.27, +0.53), and Tiffany & Co. (TIF 89.71, +1.13) helped limit today's losses, yet every sector in the S&P still finished in red figures with the exception of the industrials sector which was unchanged.
Another laggard of note today was the US Dollar Index (80.27, -0.35). It got clipped largely on account of the euro taking off after the ECB elected to keep its main lending rate unchanged and ECB President Draghi avoided any telltale hint at his press conference that further easing measures would be implemented in the very near future. The euro crossed at 1.3669 against the dollar, up 0.6% from yesterday.
The dollar weakness did not benefit commodities much and it certainly didn't help gold prices, which slipped 1.7% to $1225.80/oz.
Friday's action is sure to be dictated by the details of the November employment report and the direction long-term interest rates take in its wake.
Nasdaq +33.6% YTD
Russell 2000 +32.1% YTD
S&P 500 +25.2% YTD
DJIA +20.8% YTD
DJ30 -68.26 NASDAQ -4.84 SP500 -7.78 NASDAQ Adv/Vol/Dec 1168/1.82 bln/1389 NYSE Adv/Vol/Dec 1032/700 mln/1984
3:30 pm : Precious metals pared yesterday's gains following encouraging economic data. Despite resuming their downtrend, both gold and silver futures closed near a (pit trade) session high. February gold futures fell 1.2% to $1227.10/oz while March silver futures fell 1.3% to $19.57/oz. The Market Vectors Gold Miners ETF (GDX 20.63, -0.59) hit a new five-year low today.
January crude oil futures rose again today and made a one month, settling up 0.2% at $97.39/barrel. January natural gas futures rose 4.3% to a near two month high at $4.13/MMBtu following bullish EIA storage.
4:32PM Photronics enters into new $50 mln credit facility and replays $21.3 mln term loan (PLAB) 8.11 +0.04 : Co announced that it has entered into a new five-year revolving credit facility with its existing lenders in the amount of $50 million, with an expansion capability to $75 million, replacing its existing $30 million revolving credit facility due to mature in April 2015. JP Morgan Chase Bank, N.A. will serve as administrative and collateral agent for this facility with TD Bank, N.A., and RBS Citizens, National Association as syndication agents. In connection therewith, Photronics repaid all outstanding amounts of its previously existing $21.3 million term loan due to mature in March 2017. The new credit agreement provides for increased financial flexibility, reduced interest rates and relaxed covenants.
4:07PM Finisar beats by $0.04, beats on revs; guides JanQ EPS above consensus, revs above consensus (FNSR) 21.76 +1.22 : Reports Q2 (Oct) earnings of $0.43 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $0.39; revenues rose 25.3% year/year and 9.3% sequentially to $290.7 mln vs the $285.7 mln consensus. Co issues upside guidance for Q3 (Jan), sees EPS of $0.43-0.47, excluding non-recurring items, vs. $0.38 Capital IQ Consensus Estimate; sees Q3 revs of $290-305 mln vs. $289.8 mln Capital IQ Consensus Estimate.
4:07PM Mitel Networks beats by $0.02, reports revs in-line; guides Q3 revs in-line (MITL) 9.02 +0.42 : Reports Q2 (Oct) earnings of $0.22 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.20; revenues fell 0.4% year/year to $144.9 mln vs the $146.22 mln consensus. Gross margin for the second quarter of fiscal 2014 was 58.2%.
Co issues in-line guidance for Q3, sees Q3 revs of $145 to $150 mln, excluding non-recurring items, vs. $146.77 mln Capital IQ Consensus Estimate. Gross margin percentage is expected to be in the range of 57.5 percent to 58.5 percent.
Large Cap Gainers
AVGO (46.77 +5.1%): Beat on EPS by $0.06, reported revs in-line; guided Q1 revs above consensus; target raised to $53 at RBC Capital Mkts; JP Morgan raised its target to $40 from $32; Canaccord Genuity raised its AVGO tgt to $54 from $53.
DG (59.48 +5.52%): Beat on EPS by $0.02, reported revs in-line; raised low end of FY14 EPS, lowered high end of FY14 sales/comp guidance; added $1 bln to share repurchase.
GGP (21 +3.57%): Co will replace Molex (MOLX) in the S&P 500 after the close of trading on Dec 9.
Large Cap Losers
KR (39.72 -4.34%): Reported EPS in-line, revs in-line; reaffirmed FY14 guidance.
CAJ (31.7 -2.76%): Downgraded to Sell from Neutral at Goldman.
MS (30.41 -2.31%): Downgraded to Hold from Buy at Deutsche Bank.
Mid Cap Gainers
CONN (66.47 +13.7%): Beat on EPS by $0.07, beat on revs; raised FY14 EPS above consensus; raised FY14 comp guidance; guided FY15 EPS above consensus; Q3 comps +35% YoY.
SCTY (54.85 +5.14%): Co introduced energy storage for businesses with developed with advanced battery technology from Tesla (TSLA).
LNG (43.6 +4.83%): Co and Pertamina signed 20-year LNG sale and purchase agreement.
Mid Cap Losers
PDS (8.72 -9.41%): Co announced Alberta Investment Management sold its entire equity position, ~56 mln shares.
JCP (8.78 -9.12%): Kyle Bass of Hayman Capital reportedly does not own JCP anymore, according to Bloomberg TV interview; firm held ~5.7 mln shares as of 9/30.
CCO (9.25 -5.71%): Downgraded to Sell at B. Riley & Co.; tgt lowered to $8.30.
9:40AM Apple: AAPL +1.5% pushes to new 52-wk highs, now @ 574.05 (AAPL) 573.29 +8.29 :
Reliance Globalcom and Ciena (CIEN) have upgraded Reliance Globalcom's FA-1 North submarine cable system with 100G wavelengths.
Plexus (PLXS) announced a $3 mln investment to expand operations in its Boise Microelectronics Center of Excellence in Nampa, Idaho.
Voxer has collaborated with Intel (INTC) to optimize both the free Voxer app and Voxer Business app on Intel's latest Android x86 platform for tablet devices.
Broadcom (BRCM) announced a new Automotive Bluetooth software stack, enabling seamless in-car connectivity with Android-powered devices.
SunPower (SPWR) is designing and building high efficiency SunPower solar power systems for 16 schools in the Oakland Unified School District in Oakland, Calif.
NUAN +2% (Carl Icahn increases stake in Nuance to 18.72% from $16.9%), AAPL +1.4% (China Mobile has signed Apple (AAPL) iPhone deal, according to reports)
Apple (AAPL 574.00, +9.00): up 1.6% on news it signed agreement with China Mobile to distribute iPhones over China Mobile network
6:59AM SolarCity introduces energy storage for businesses with developed with advanced battery technology from Tesla (TSLA) (SCTY) 52.17 : SolarCity (SCTY) has unveiled a smart energy storage system to address two major pain points for business: rising utility demand charges and increasing grid outages. SolarCity DemandLogic can allow businesses to reduce energy costs by using stored electricity to reduce peak demand, and can also provide backup power during grid outages. Developed with advanced battery technology from Tesla (TSLA), SolarCity DemandLogic storage includes learning software that automates the discharge of stored energy to optimize utility charge savings for customers.
SolarCity storage systems are available to new solar power customers through 10 year service agreements including monthly payments, with no upfront cost required. SolarCity will customize the system size to make it possible for businesses to save money immediately by saving more on energy costs than they spend for the storage service. Unlike load shifting approaches to demand management, this product requires no change in operations for the business and is fully automated. SolarCity DemandLogic can also power IT functions, security systems, cash registers and other critical business systems during power outages. SolarCity analyzes each organization's energy usage to design a storage system that can offset peak load and support high priority backup functions.
5:25AM Nokia Italia partners with Sky and Microsoft (MSFT) for the global debut of Sky Go on Nokia Lumia devices (NOK) 7.90 : Sky Italia, Nokia (NOK) and Microsoft (MSFT) have announced the global debut on Windows Phone of Sky Go, the service that allows users to view 30 pay-TV channels on the go. Thanks to this agreement, one of the most loved applications - already chosen by 1.9 million Sky subscribers - will be coming to the entire Nokia Lumia family in Italy starting from the middle of December.
The agreement allows Sky to enhance its mobile service by offering some of its most prestigious content to owners of Windows Phone 8 Lumia smartphones, which are increasingly widespread in Italy, in addition to allowing Nokia to enrich its cutting-edge models with the application that truly allows TV to be taken outside the home.
Synopsys (SNPS) reported fourth quarter earnings of $0.56 per share, which is higher than expected, while revenues rose 11.2% year/year to $504.9 million which is in line with expectations. The company issued guidance for the first quarter with EPS of $0.51-0.53 and revenues of $475-485 million which are both below expectations. The company issued fiscal year 2014 with EPS of $2.55-2.60 which is in line with consensus with revenues of$2.060-2.085 billion which is line with expectations.
Mavenir Systems (MVNR) reported third quarter loss of $0.16 per share, which is higher than expected, while revenues rose 52.0% year/year to $26 million which is line with expectations. Guidance: The company issues upside guidance for the fourth quarter with EPS of ($0.14)-($0.09) which is above estimates with revenues $26-$27 million which is line with higher than expected. The company sees Non-GAAP gross margin of 56-58%. Commentary: "Mavenir delivered another solid quarter, reporting revenue at the high end of our expectations. Our business momentum continued to strengthen with record quarterly revenue and an expanded customer base, both of which are a direct result of our highly differentiated technology. Migration to 4G LTE is accelerating, increasing the demand for our Voice over LTE (VoLTE) and Rich Communication Services (RCS) products and we see a substantial market opportunity ahead of us."
Symantec (SYMC) announced the appointment of Amit Mital as chief technology officer, responsible for driving the company's technology strategy with a focus on accelerating innovation, product development and R&D. Mital will report directly to Symantec CEO Steve Bennett. Mital joins Symantec after 20 years with Microsoft (MSFT), most recently as the corporate vice president for the company's Startup Business Group. Steve Trilling, Symantec's current CTO, will be moving to an operational senior leadership role in the company.
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