From Briefing.com: 4:15 pm : The S&P 500 settled higher by 0.6%, snapping its four-day losing streak. Despite today's gain, the benchmark index remains lower by 1.1% in December.
The bulk of today's advance occurred shortly after the open as the Dow, Nasdaq, and S&P 500 notched their highs during the initial 30 minutes. Small-caps were a notable exception as the Russell 2000 (+1.2%) climbed throughout the day, trimming its month-to-date loss to 2.0%.
Nine of ten sectors registered gains with cyclical groups maintaining their lead throughout the session. The energy sector (+1.0%) displayed strength from the open after its largest component, Exxon Mobil (XOM 97.22, +1.91), was upgraded to 'Buy' from 'Neutral' at Goldman Sachs. Crude oil, which added 0.9% to $97.47/bbl, also played a part in the sector's strength.
Elsewhere, the industrial sector (+1.0%) assumed the lead in afternoon trade as defense contractors and transports rallied. The PHLX Defense Index settled higher by 1.2% while the Dow Jones Transportation Average climbed 0.9%.
Although heavily-weighted financials (+0.6%) and health care (+0.2%) were a bit tentative in today's advance, the largest S&P 500 sector, technology (+1.0%) picked up the slack. The sector received support from chipmakers after Avago (AVGO 50.10, +4.45) agreed to acquire LSI Logic (LSI 10.96, +3.05) for $11.15 per share. The broader PHLX Semiconductor Index ended higher by 1.3%.
Even though equities registered solid gains, all ten sectors remain in the red for the month. Countercyclical consumer staples, health care, telecom services, and utilities are down between 1.0% and 2.7% in December while losses among cyclical groups are limited to no more than 1.2% (consumer discretionary and financials).
Despite today's advance, the CBOE Volatility Index (VIX 16.06, +0.30) climbed for the fourth session in a row, ending at a two-month high.
Treasuries registered modest losses as the 10-yr yield ticked up one basis point to 2.88%.
Today's participation was on the light side as only 669 million shares changed hands on the floor of the New York Stock Exchange.
On the economic front, revised productivity data for the third quarter showed an increase of 3.0%, which was above the 2.7% increase that had been expected by the Briefing.com consensus. Unit labor costs for the third quarter were revised lower to reflect a decrease of 1.4% (from -0.6%). The consensus expected the reading to reflect a decrease of 1.3%.
Separately, the Empire Manufacturing Survey for December registered a reading of 1.0, which was up from the prior month's reading of -2.2. However, the reading came in below the 5.0 expected by the Briefing.com consensus.
November industrial production increased 1.1% while the Briefing.com consensus expected an uptick of 0.4%. Meanwhile, capacity utilization hit 79.0%, which was better than the 78.4% expected by the consensus.
Lastly, the October net long-term TIC flows report reflected an inflow of $25.5 billion into U.S. denominated assets. This followed the prior month's $25.5 billion inflow.
Tomorrow, November CPI, core CPI, and the third quarter current account balance will all be reported at 8:30 ET. Separately, the NAHB Housing Market Index for December will be released at 10:00 ET.
Nasdaq +33.5% YTD
Russell 2000 +31.9% YTD
S&P 500 +25.3% YTD
DJIA +21.2% YTD
DJ30 +129.21 NASDAQ +28.54 SP500 +11.22 NASDAQ Adv/Vol/Dec 1749/1.82 bln/817 NYSE Adv/Vol/Dec 2048/668.9 mln/1008 3:35 pm : Commodities ended the mostly higher with metals higher, excluding platinum futures, energy mixed (WTI crude oil, RBOB and heating oil higher, while Brent crude oil and U.S. nat gas declined) and ag mixed (grains mostly higher, softs mostly lower).
Crude oil futures are higher this morning, which follows an upbeat euro zone PMI report and unrest in Libya. Libya so far refuses to reopen the oil ports in the east of Libya, creating smaller exports to the market. Jan crude oil finished pit trading +$0.94 higher at $97.47/barrel.
Natural gas futures sold off today as more moderate weather conditions in the U.S. weighed on prices. At the end of today's session, Jan nat gas lost 10 cents at $4.26/MMBtu.
Gold and silver rallying this morning, but began to trend lower off those highs for the day. Feb gold erased about $10 of gains and ended up $9.20 at $1244.30/oz, while silver erased about half of its gains and finished $0.49 higher at $20.09/oz.
4:05PM Juniper Networks to acquire WANDL for ~$60 mln (JNPR) 21.04 +0.37 : The transaction is expected to close in January 2014, subject to customary closing conditions.
Large Cap Gainers
AVGO (49.79 +9.07%): To acquire LSI Corporation (LSI) for $11.15 per share in an all cash transaction valued at $6.6 bln; expected to be significantly and immediately accretive to Avago's non-GAAP free cash flow and earnings per shareYPF (31.24 +6.95%): Mentioned positively in Barron's article
TI (9.47 +5.57%): Reuters reporting that BlockRock has become the second-largest shareholder in the company, approximately doubling its stake to 10.1% from 5.1%
Large Cap Losers
EC (41.04 -3.93%): Announced $10.595 bln Capex budget for 2014; downgraded to Sell at Citigroup
TMUS (26.56 -3.91%): Reuters reporting that Sprint (S) is considering making a bid for the company
TWTR (57.3 -2.88%): Downgraded to Underperform from Market Perform at Wells Fargo; downgraded to Neutral from Buy at Sun Trust Rbsn Humphrey
Mid Cap Gainers
LSI (10.97 +38.62%): To be acquired by Avago Technologies (AVGO) for $11.15 per share in an all-cash transaction valued at $6.6 bln
AER (33.09 +32.73%): Entered into agreement to buy 100% of the common stock of American International Group's (AIG) subsidiary International Lease Finance Corporation for $3 bln in cash and ~97.6 mln AerCap shares
CBST (68.18 +8.60%): Announced positive top-line results from the Company's pivotal Phase 3 clinical trial of its antibiotic candidate ceftolozane/tazobactam in complicated intra-abdominal infections
Mid Cap Losers
YOKU (29.17 -5.54%): Weakness in Chinese internet stocks: QIHU, VIPS, YY also lower
ASX (4.55 -3.40%): Announced that steps have been taken to address the isolated case of industrial wastewater discharge at ASE Kaohsiung K7 facility on October 1st; Kaohsiung K7 facility continues to adhere to the standards of the national effluent guidelines and currently remains in normal operation
JAZZ (111.19 -2.92%): Downgraded to Neutral from Buy at Goldman
STMicroelectronics (STM) has been an early bird in introducing its LSM303D accelerometer and magnetometer combo module to Xiaomi (Mi1S) and other emerging mobile phone makers in China.
Mellanox (MLNX) announced that its dual port ConnectX-3 10/40GbE Network Interface Cards are now fully compatible with qualified Dell PowerEdge servers and Dell networking solutions.
Marvell (MRVL) announced the expansion of its broad 4G LTE portfolio with the introduction of its high performance ARMADA Mobile PXA1088LTE Pro unified platform to support the issuing of 4G TD-LTE licenses in China and operators worldwide.
Spreadtrum Communications (SPRD) announced the introduction of its portfolio of quad-core smartphone chipsets supporting both WCDMA and TD-SCDMA 3G standards for mid-range and high performance smartphones
8:01AM LSI Logic acquired by AVGO for $11.15/share in cash (41% premium); AVGO sees deal significantly and immediately accretive to earnings -- both stocks are halted (LSI) 7.91 : Avago will acquire LSI for $11.15 per share in an all-cash transaction valued at $6.6 billion. The acquisition creates a highly diversified semiconductor market leader with ~ $5 billion in annual revenues by adding enterprise storage to Avago's existing wired infrastructure, wireless and industrial businesses. The combined co will be strongly positioned to capitalize on the growing opportunities created by the rapid increases in data center IP and mobile data traffic. The transaction is expected to be significantly and immediately accretive to Avago's non-GAAP free cash flow and earnings per share. Avago currently anticipates achieving annual cost savings at a run rate of $200 million by the end of the fiscal year ending November 1, 2015, the first full fiscal year after closing.
Avago intends to fund the transaction with $1.0 billion of cash from the combined balance sheet and fully-committed financing from the following sources: A $4.6 billion term loan from a group of banks; and A $1 billion investment from Silver Lake Partners, which is expected to be in the form of a seven year 2% convertible note with a conversion price of $48.04 per share or preferred stock with equivalent economic terms.
The transaction has been approved by the boards of directors of both cos and is subject to regulatory approvals in various jurisdictions and customary closing conditions, as well as the approval of LSI's stockholders.
"we expect to drive LSI's operating margins toward Avago's current levels, creating significant additional value for stockholders."
8:00AM Spreadtrum Comms announces receipt by Tsinghua Unigroup of regulatory approvals for merger (SPRD) 30.83 : Co announced that it has been informed by Tsinghua Unigroup Ltd. that Tsinghua Unigroup has now obtained all PRC regulatory approvals required to proceed with its acquisition of Spreadtrum. As previously announced on July 12, 2013, Spreadtrum and Tsinghua Unigroup entered into a definitive merger agreement pursuant to which the Company will become a subsidiary of Tsinghua Unigroup and each American depositary share (representing three ordinary shares) will be converted into the right to receive thirty one U.S. dollars (US$31.00) in cash and each ordinary share will be converted into the right to receive ten and one-third U.S. dollars (US$10.33) in cash. With Tsinghua Unigroup's receipt of regulatory approvals, the Merger is expected to be completed during the week commencing December 23, 2013, subject to the satisfaction or waiver of the conditions set forth in the merger agreement.
6:33AM Advanced Semi provides an update related to its Kaohsiung facilities; ASE Kaohsiung K7 facility continues to adhere to the standards of the national effluent guidelines and currently remains in normal operation (ASX) 4.71 : Co announced the steps that the co have taken to address the isolated case of industrial wastewater discharge at ASE Kaohsiung K7 facility on Oct 1st, 2013 and subsequent developments. Immediately after the incidents, ASE enlisted the help of industry experts to thoroughly investigate the root cause, and tightened its monitoring systems and reporting procedures. The ASE Kaohsiung K7 facility continues to adhere to the standards of the national effluent guidelines and currently remains in normal operation.
ASE sincerely apologizes for the high level of public concerns due to the recent incidents and intense media scrutiny. However, ASE firmly denies all allegations that the co had deliberately discharged contaminated wastewater and illegally installed underground piping within its facilities. The co is cooperating fully with Taiwan's Ministry of Economic Affairs, the Kaohsiung City Environment Protection Bureau and other related departments in support of their investigations. Co has also heightened our review of all our manufacturing facilities' environmental management and program implementation.
Moving forward, ASE will execute a two-prong approach to environmental protection and pollution prevention.
IBM's (IBM) Senior Vice President and General Counsel Robert Weber announced that, "Yesterday, IBM (IBM) learned of a lawsuit pushing a wild conspiracy theory. This lawsuit seeks to confuse IBM's support for a U.S. cybersecurity legislative proposal -- which has yet to be enacted - with the completely unrelated NSA surveillance program called PRISM. Even a cursory reading of the legislative proposal, known as CISPA, makes clear that it has nothing to do with the recently disclosed NSA surveillance program. The legislation is designed to help protect companies from cyber attacks by encouraging the sharing of technical cyber threat information, such as malware code. The ability for those under attack to work together to help prevent cybercrime is a modern business requirement and an important goal, which is why many companies, including IBM, support such legislation. This bill does not refer to China, and it does not authorize government surveillance, facts that the plaintiff and its attorneys could have easily determined had they bothered to do the slightest fact checking. Starting from this fictitious connection between CISPA and PRISM, the complaint proceeds to make numerous specious and false accusations, and IBM calls upon the law firm that filed this action to do the right thing and dismiss this action immediately. To fail to do so is a profound disservice to the judicial system, to the public, and in this case, to IBM. IBM will vigorously fight this baseless lawsuit."
Wi-LAN (WILN) has entered into a patent assignment agreement with Panasonic (PCRFY) under which Panasonic will assign to Collabo Innovations, a new WiLAN subsidiary, certain patents from Panasonic Automotive & Industrial Systems, one of Panasonic's internal companies. As part of the agreement, Panasonic will transfer over 900 patents and applications to the new WiLAN subsidiary relating to a broad range of technologies in the field of semiconductor devices, which are part of semiconductor patents that Panasonic owns. WiLAN believes the Semiconductor Portfolio has current applicability to a wide range of products including CMOS image sensors, microcontrollers and semiconductors used in optical drives.
Tableau Software (DATA 65.29); target $60 and Qlik Tech (QLIK 24.56), target $25 initiated with Neutral at Mizuho. The firm notes that while they are positive about the end markets and believe that these companies do command strong product leadership in the space, certain company-specific factors keep us on the sidelines. For QLIK, they think execution challenges will continue into 2014 and things could worsen before they improve, which would offer headwinds while low valuation would offer support. For DATA, they believe there is upside to estimates but the company's high valuation offers headwinds.
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