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From Briefing.com: Weekly Recap - Week ending 20-Dec-13

Dow +42.00 at 16221.08, Nasdaq +46.61 at 4104.74, S&P +8.71 at 1818.31

The major averages capped a solid week with a broad advance. The S&P 500 added 0.5%, extending its weekly gain to 2.7%.

Equities spent the entire session in a steady climb after the final reading of third quarter GDP sparked a broad-based rally. The report pointed to growth of 4.1%, which was the strongest reading since the economy expanded by 4.9% in the fourth quarter of 2011, and well above the 2.5% gain reported in the second quarter. Real final sales, which exclude inventory growth, increased 2.5%. That was up from a 1.9% gain reported in the second estimate, and was the largest gain since a 3.4% increase was observed in Q4 2011.

Even though all the key indices rallied, the small-cap Russell 2000 (+1.9%) had the best showing. Meanwhile, the S&P 500 posted a more modest gain as nine of ten sectors finished in the green.

The largest S&P 500 sector, technology (+0.9%) played a significant part in the rally. The group received support from large-cap names like Apple (AAPL 549.02, +4.56), Google (GOOG 1100.62, +14.40), and Microsoft (MSFT 36.80, +0.55). Chipmakers also chipped in as the PHLX Semiconductor Index gained 0.8%.

On a related note, the tech sector's strength contributed to the outperformance of the Nasdaq (+1.2%), which also received noteworthy support from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 223.70, +5.71) surged 2.6%.

In turn, biotechnology gave a boost to the health care sector (+0.5%), which kept pace with the S&P 500 throughout the session.

Another influential group, financials (+0.5%) lagged for the majority of the session, but caught up to the broader market in the late afternoon.

Although most sectors had a strong showing, energy (+0.1%) and materials (+0.3%) struggled to gain traction. The energy sector underperformed as two large members, Chevron (CVX 122.78, -0.44) and Exxon Mobil (XOM 98.68, -0.75) spent the day in the red. The pair of Dow components also factored into the underperformance of the Dow Jones Industrial Average (+0.3%).

On the downside, the telecom services sector (-0.6%) was the lone decliner.

Today's participation was well above average as nearly two billion shares changed hands on the floor of the New York Stock Exchange. The final tally was aided by additional activity associated with quadruple witching and quarterly rebalancing that took place today.

Treasuries ended on their highs after staging an intraday reversal. The 10-yr yield tested resistance earlier this morning at 2.95% (September closing high). Despite the stronger-than-expected Q3 GDP revision, the 10-yr came barreling back in a surprising manner that probably stirred some short-covering activity that has exacerbated today's gains. The 10-yr note settled higher by 11 ticks with its yield down four basis points at 2.89%.

On Monday, November personal income, personal spending, and core PCE prices will all be reported at 8:30 ET while the final reading of the Michigan Consumer Sentiment Survey will be released at 9:55 ET.

Week in Review: Taper Arrives But Stocks Party On

On Monday, the S&P 500 settled higher by 0.6%, snapping its four-day losing streak. The bulk of the 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, 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.

Equities spent the bulk of the Tuesday session in the red, but afternoon buying interest helped the major averages end just below their respective flat lines. The S&P 500 shed 0.3% as eight of ten sectors registered losses. Meanwhile, the Dow (-0.1%) traded ahead of its peers all session long as some of its top components provided support. 3M (MMM 136.72, +0.31) and Boeing (BA 136.67, +1.50) posted respective gains of 2.9% and 0.9% after both increased their quarterly dividends. The price-weighted index also received notable support from its top member, Visa (V 215.97, -0.11), which advanced 2.7%.

Wednesday saw equities settle on their highs after dovish forward guidance from the Federal Reserve offset the immediate impact of a tapering announcement. Although the Federal Open Market Committee reduced the size of its monthly asset purchases from $85 billion to $75 billion, it pledged to keep the target Fed Funds Rate near its current levels 'well past the time that the unemployment rate declines below 6.5%.' The dovish guidance was also the likely reason for Treasuries retracing all of their post-announcement losses. The benchmark 10-yr yield ended with a five basis point gain at 2.89%, which is essentially where it traded before the afternoon announcement.

The stock market followed the Wednesday surge with a quiet Thursday session, which featured the added news that the Senate passed the two-year budget agreement. After some early gyrations, the major indices held to pretty tight trading ranges throughout the session and ended the day little changed. All in all, it was a pretty good showing given the scope of Wednesday's advance and considering the yield on the 10-yr note went as high as 2.95% before settling back down to 2.93%. A lack of concerted leadership and some buying exhaustion were to blame for the inability to log another record closing high for the S&P 500. It challenged Wednesday's high on two occasions, but each time it was greeted with renewed selling interest that held it in check. The Dow, though, eked out another record close.

 
 Index	    Started Week  Ended Week   Change  % Change  YTD % 
 DJIA	     15755.36	   16221.14    465.78	  3.0	23.8 
 Nasdaq	      4000.98	    4104.74    103.76	  2.6	35.9 
 S&P 500	1775.32	    1818.31	42.99	  2.4	27.5 
 Russell 2000  1107.05       1146.40	39.35	  3.6	35.0

2:59PM Index Change Reminder (INDXCH) : The following index changes will be effective after the close of trading today:

Facebook (FB) will replace Williams Companies (WMB) in the S&P 100, and Facebook will replace Teradyne (TER) in the S&P 500. Teradyne will replace Scholastic (SCHL) in the S&P MidCap 400, and Scholastic will replace Lincoln Education Services (LINC) in the S&P SmallCap 600. The Williams Company will remain in the S&P 500.
Alliance Data Systems (ADS) and Mohawk Industries (MHK) will replace Abercrombie & Fitch (ANF) and JDS Uniphase (JDSU) in the S&P 500, and, likewise, Abercrombie & Fitch and JDS Uniphase will replace Alliance Data Systems and Mohawk Industries in the S&P MidCap 400.
Old Dominion Freight Line (ODFL) and Brunswick (BC) will replace Arch Coal (ACI) and Regis (RGS) in the S&P MidCap 400, and likewise, Arch Coal and Regis will replace Old Dominion Freight Line and Brunswick in the S&P SmallCap 600.
The following five securities will be added to the NASDAQ-100 Index: DISH Network (DISH), Illumina (ILMN), NXP Semiconductors (NXPI), TripAdvisor (TRIP) and Tractor Supply (TSCO). The following five securities will be removed from the Index: Fossil Group (FOSL), Microchip Technology (MCHP), Nuance Communications (NUAN), Sears Holdings (SHLD) and DENTSPLY International (XRAY).

Large Cap Gainers

STX (54.7 +4.21%): Target raised to $70 from $55 at Brean Capital
MU (22.53 +4.20%): Mentioned positively in blog article
AGN (108.1 +4.18%): Continued strength following reported patent filings for Restasis, the company's treatment for dry eye syndrome; mentioned positivly and targets raised at multiple research firms

Large Cap Losers

KMX (48.46 -8.66%): Missed quarterly EPS by $0.01 ($0.47 vs $0.48 estimate), revs rose 13.0% yoy to $2.94 bln vs $2.9 bln estimate; total used vehicle unit sales grew 15% and comarable store used units grew 10%
FAST (45.69 -4.83%): Co anticipates it will miss the average analyst net earnings expectations for Q4 EPS of $0.36 per share; During the last three months co's daily sales growth was 5.7% (September), 7.7% (October), and 8.2% (November)
SYMC (22.46 -2.31%): Announced departure of Andrew Del Matto, co's current actiong CFO and CAO; Don Rath, vice president of global tax, named interim CFO and CAO

Mid Cap Gainers

RHT (57.96 +18.29%): Beat quarterly EPS by $0.07 ($0.42 ex items vs $0.35 estimate), revs rose 15.4% yoy to $396.5 mln vs $383.06 mln estimate; subscription revenue rose 17% in the U.S. to $343 mln; sees Q4 adjusted EPS of $0.36-0.38 vs $0.36 estimate; upgraded at UBS and Raymond James
BBRY (6.97 +11.52%): Missed analyst estimates on top and bottom line; announced five-year strategic partnership with Foxconn, which will jointly develop and manufacture certain new devices
ARRS (23.79 +9.03%): Upgraded to Buy from Hold at Jefferies, target $30

Mid Cap Losers

TIBX (21.05 -14.01%): Beat quarterly EPS by $0.03 ($0.42 ex items vs $0.39 estimate), revs rose 6.4% yoy to $315.5 mln vs $312.47 mln estimate; sees Q1 revs of $247-253 mln vs $255.57 mln estimate, adjusted EPS of $0.17-0.18 vs $0.21 estimate; downgraded to Neutral from Buy at UBS
RAD (4.83 -6.58%): Continued weakness following earnings announced before the open on December 19 (co lowered FY14 EPS guidance to $0.17-0.23 from $0.18-0.27)
SWFT (22.33 -5.22%): Lowered Q4 EPS guidance to $0.33-0.36 (from ~$0.40) vs $0.41 estimate

8:04AM SolarCity announced that it has increased the size of its corporate revolver to $200 mln (SCTY) 56.90 : announced that it has increased the size of its Corporate Revolver to $200 million. This three-year credit facility bears interest of 2.25% over Base Rate or 3.25% over LIBOR. Bank of America Merrill Lynch is the Sole Lead Arranger and Sole Bookrunner, with an additional five participating lenders.

The expanded credit facility will be used primarily to fund SolarCity's growth. The company has set a goal to surpass 1 million customers in 2018.

n U.S. corporate news:

BlackBerry (BBRY 5.90, -0.35): -5.6% after the company reported disappointing quarterly results.
Carnival (CCL 39.41, +1.36): +3.6% after receiving upgrades from Credit Suisse and UBS.
Finish Line (FINL 28.30, +2.16): +8.3% following its bottom-line beat on above-consensus revenue.
Nike (NKE 78.30, +0.04): +0.1% after the company beat earnings estimates by one cent.
Red Hat (RHT 55.80, +6.80): +13.9% after UBS upgraded the stock to 'Buy' from 'Neutral.'
Walgreens (WAG 58.00, +1.06): +1.9% after reporting results in-line with its December 4th preannouncement.

7:13AM BlackBerry misses by $0.24, misses on revs; announces five-year strategic partnership with Foxconn, which will jointly develop and manufacture certain new BBRY devices (BBRY) 6.25 : Reports Q3 (Nov) adjusted loss of $0.67 per share (*see below), $0.24 worse than the Capital IQ Consensus Estimate of ($0.43); revenues fell 56.3% year/year to $1.19 bln vs the $1.62 bln consensus.

The revenue breakdown for the quarter was ~40% for hardware, 53% for services and 7% for software and other revenue.
During Q3, the co recognized hardware revenue on ~1.9 million BlackBerry smartphones compared to ~3.7 million BlackBerry smartphones in the previous quarter. Most of the units recognized were BlackBerry 7 devices.
During the quarter, ~4.3 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the third quarter and which reduced the Company's inventory in channel. Of the BlackBerry smartphones sold through to end customers in the third quarter, ~3.2 million were BlackBerry 7 devices.
Company begins transition to operating unit structure: Enterprise Services, Messaging, QNX Embedded business and the Devices business -- New organizational structure to drive greater focus on services and software, while establishing a more efficient business model for the Devices business
Enterprise Services: Co sees increasing penetration of BlackBerry Enterprise Service 10 (BES10) with over 30,000 commercial and test servers installed to date, up from 25,000 in September 2013; Company remains a mobile device management leader with global enterprise customer base exceeding 80,000
Messaging: Over 40 million newly registered iOS/Android users in the last 60 days; more than a dozen Android OEMs to preload BBM, including most recently LG; over 250,000 BBM Channels created by global user base since launch of BBM Channels on BlackBerry, including large brands such as Coke Indonesia and USA Today; BBM is the most secure mobile messaging service for use in regulated enterprises
QNX Embedded Business: QNX to unveil new technology in automotive and cloud services at the 2014 International Consumer Electronics Show in January.
The total of cash, cash equivalents, short-term and long-term investments was $3.2 billion as of November 30, 2013, compared to $2.6 billion at the end of the previous quarter. Cash flow used in operations in the third quarter was ~ $77 million. Cash flows provided by financing activities in the third quarter were ~$991 million, including the proceeds from the issuance of debt.

In Q4, the co anticipates maintaining its strong cash position and further reducing operating expenses as it continues to implement its previously-announced cost reduction program.

The co announced that it has entered into a five-year strategic partnership with Foxconn, the world's largest manufacturer of electronic products and components. Under this new relationship, Foxconn will jointly develop and manufacture certain new BlackBerry devices and manage the inventory associated with those devices. The initial focus of the partnership will be a smartphone for Indonesia and other fast-growing markets targeting early 2014.

*Adj. EPS excludes the impact of the LLA Impairment Charge of ~$2.7 billion ($2.5 billion after tax), the Q3 14 Inventory Charge of ~$1.6 billion ($1.3 billion after tax) and pre-tax restructuring and legal and financial advisory charges of ~$266 million ($225 million after tax) related to the CORE program and strategic review process incurred in Q3.

7:05AM Plug Power receives a letter from The NASDAQ Stock Market advising that the co has regained compliance with NASDAQ's minimum bid price listing requirement (PLUG) 1.80 :

TIBCO Software (TIBX) reported second quarter earnings of $0.42 per share, excluding non-recurring items, which is higher than expected, while revenues rose 6.4% year/year to $315.5 million which is in line with estimates. "We saw strong, accelerating growth in the Americas and a return to growth in Asia this quarter, while closing a record 31 deals over $1 million in license revenue worldwide," said Vivek Ranadiv , TIBCO Chairman and CEO. "We are building momentum as we enter 2014, and I am very optimistic about our prospects in the year ahead." The company sees first quarter revs of $247-253 million which is below estimates with adjusted EPS of $0.17-0.18 which is worse than expected.

Red Hat (RHT) reported third quarter earnings of $0.42 per share, excluding non-recurring items, which is higher than expected, while revenues rose 15.4% year/year to $396.5 million which is higher than expected. Subscription revenue for the quarter was $343 million, up 17% in U.S. dollars year-over-year, or 18% measured in constant currency. At quarter end, the co's total deferred revenue balance was $1.12 billion, an increase of 14% on a year-over-year basis. Total cash, cash equivalents and investments as of November 30, 2013 was $1.33 billion after repurchasing ~$40 million of common stock, or ~920 thousand shares, in the third quarter. Red Hat has repurchased ~$239 million of common stock, or approximately 5.0 million shares, during the first nine months of fiscal 2014. "We experienced an acceleration in our billings proxy growth in Q3, both year-over-year and sequentially, due in part to the strengthening of our European and U.S. federal government businesses. The billings proxy, which we define as total revenue plus the change in deferred revenue found on the Statement of Cash Flows, was $453 million, up 19% in U.S. dollars and 21% in constant currency compared to last year." The company sees Q4 adjusted EPS of $0.36-0.38 which is line with estimates. The company sees fiscal year 2014 revenues of $1.531-1.534 billion (raised from $1.51-1.52 billion) which is higher than expected.

DealerTrack (TRAK) and Dealer.com announced a definitive agreement for Dealertrack to acquire Dealer.com, a leading provider of marketing and operations software and services for the automotive industry. Through the combination, the companies expect to realize their shared vision to transform automotive retail by delivering the most advanced solutions for dealers, OEMs, lenders and car shoppers. Under the terms of the agreement, Dealertrack will acquire all the equity of Dealer.com for approximately 8.7 million shares of Dealertrack's common stock and $620 million in cash, subject to customary post-closing adjustments. Dealertrack expects to finance the cash portion of the purchase price through cash on hand and with fully committed debt financing. The deal is expected to close in the first quarter of 2014, subject to regulatory approval, and the transaction is expected to be accretive to Dealertrack's standalone multi-year organic growth profile to Dealertrack's diluted adjusted net income per share.