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From Briefing.com: Weekly Recap - Week ending 24-Jan-14

Dow -318.24 at 15879.11, Nasdaq -90.70 at 4128.17, S&P -38.17 at 1790.29

Equities endured a rough end to the abbreviated week with the S&P 500 seeing its largest weekly loss since June 2012. The benchmark index fell 2.1%, extending its January decline to 3.1%.

The market spent the entire session in a steady slide amid continued concerns regarding China. Furthermore, participants kept a close eye on the foreign exchange market where emerging market currencies weakened while the Japanese yen saw its second consecutive day of gains. Dollar/yen fell below the 102.50 level after trading near 104.50 on Wednesday. The yen strength came about after Bank of Japan officials said the Japanese economy remains on track and there is no need for additional easing at this time. In turn, this posed a headwind to yen-based carry trades, which played a significant part in last year's market rally.

Like yesterday, the weakness began overnight; however, unlike yesterday, the aggressive selling did not start until the European session kicked off. Regional indices saw broad losses with peripheral markets leading the slide. Spain's IBEX plunged 3.6% while Italy's MIB fell 2.3%.

The overseas weakness set the tone for a lower start in U.S. equities with cyclical sectors leading the decline. Consumer discretionary (-1.9%) and technology (-2.1%) finished just ahead of the broader market thanks to the relative strength of Starbucks (SBUX 74.98, +1.59) and Microsoft (MSFT 36.80, +0.75) after both beat their bottom-line estimates.

Staying on the earnings theme, most of the reports received between yesterday's close and today's open were ahead of expectations but that mattered little to the broader market. However, Kansas City Southern's (KSU 99.49, -17.79) seven-cent miss mattered quite a bit as the stock plunged 15.2% while also weighing on the Dow Jones Transportation Average, which tumbled 4.1%. This marked the largest one-day loss for the bellwether complex since September 2011 as the broad liquidation resulted in 17 of 20 components posting losses in excess of 2.0%. Due to the sharp losses, the industrial sector (-3.1%) ended at the bottom of the leaderboard.

Elsewhere, financials (-2.3%) and materials (-2.7%) lagged while energy (-2.1%) ended in-line.

Meanwhile, defensive sectors-sans health care-outperformed with losses between 0.9% and 1.1%. Procter & Gamble (PG 79.18, +0.94) contributed to the relative strength of the consumer staples sector after reporting a one-cent beat. For its part, the health care sector lost 2.3%.

Treasuries booked gains with the 10-yr yield ending lower by five basis points at 2.73%.

The aggressive selling fueled strong demand for volatility protection as indicated by a 30.0% surge in the CBOE Volatility Index (VIX 17.89, +4.12), which ended at its highest level since October 15.

For the second day in a row, the selloff was accompanied by above-average volume as 902 million shares changed hands at the NYSE.

Monday's data will be limited to the December New Home Sales report, which will be released at 10:00 ET.

Week in Review: From Highs to Lows in Less Than a Week

On Monday, bond and equity markets were closed for Martin Luther King Jr. Day.

Tuesday saw the major averages begin the abbreviated week on a mixed note as the Nasdaq added 0.7% while the Dow Jones Industrial Average shed 0.3%. For its part, the S&P 500 rose 0.3% as eight of ten sectors finished in the green. Stocks began the day with solid gains but the early strength faded quickly when the S&P 500 was unable to extend above the 1850 level during the opening minutes. That rejection emboldened sellers, who promptly drove the indices to their lows. Adding insult to injury was the fact that mostly better-than-expected earnings reported ahead of the opening bell failed to entice buyers.

The market endured an uninspiring Wednesday session, which unfolded in similar fashion to Tuesday's affair. Once again, the major averages ended mixed with the Dow Jones Industrial Average (-0.3%) coming out on the losing end while the Nasdaq (+0.4%) and S&P 500 (+0.1%) eked out modest gains. The price-weighted Dow spent the entire session in the red as 19 of its 30 components registered losses. Most notably, the second-largest index member, IBM (IBM 179.64, -3.09), plunged 3.3% after beating its Capital IQ earnings estimate by 13 cents on below-consensus revenue. Despite the bottom-line beat, the report was scrutinized due to the company accounting for a lower tax rate than in previous quarters.

On Thursday, the S&P 500 snapped its modest two-day win streak with its second-largest decline of the month. The index lost 0.9% as nine of ten sectors registered losses. Although stocks sold off throughout the day, the weakness actually started during the overnight futures session when three China-related developments began fueling the risk-off sentiment:

The HSBC flash PMI reading for January was below expectations at 49.6. The sub-50 reading is indicative of manufacturing activity contracting; and the January reading marked a six-month low for the series.
A Financial Times report indicated Chinese authorities are working to prevent a default of a $500 million high-yield investment trust, failure of which could trigger an unnerving fallout in China's shadow banking system.
An SEC administrative law judge issued a ruling that censures the accounting arms of the "Big Four" in China for six months due to their unwillingness to turn over requested documents involving US-listed Chinese companies under investigation for accounting fraud.

The three developments did enough damage to sentiment that a slate of mostly better-than-expected earnings could not halt the day-long slide. The discretionary sector (-0.7%) finished just ahead of the broader market after last year's top S&P 500 component, Netflix (NFLX 386.08, -2.64), surged 16.5% in reaction to its bottom-line beat and above-consensus guidance.

 
 Index	   Started Week	 Ended Week  Change  % Change	 YTD % 
 DJIA	     16458.56	 15879.11   -579.45	-3.5	-4.2 
 Nasdaq	      4197.58	  4128.17    -69.41	-1.7	-1.2 
 S&P 500	1838.70	  1790.29    -48.41	-2.6	-3.1 
 Russell 2000  1168.43	  1144.13    -24.30	-2.1	-1.7

4:26PM This week's biggest % gainers/losers (SCANX) : The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

This week's top 20 % gainers

Technology: GAME (5.64 +27.66%), SMCI (20.98 +27.05%), BBRY (9.89 +21.94%), CCIH (16.23 +21.57%), NTCT (35.68 +18.13%)
Healthcare: STML (26.52 +42.27%), PRAN (8.99 +39.59%), SRPT (25.44 +37.94%), CTIC (4 +35.41%), GERN (5.63 +26.89%), CCXI (7.02 +26.23%), PACB (6.99 +22.91%), RLYP (38.03 +20.02%), TSRO (35.14 +19.86%), ILMN (138.62 +18.97%), RGEN (14.28 +18.46%)
Basic Materials: RBY (1.23 +23.53%), CENX (11.5 +19.36%), FSM (3.67 +18.21%)

This week's top 20 % losers

Technology: SSNI (15.96 -28.81%), AMD (3.47 -19.02%), INFN (7.33 -18.95%), SINA (70.03 -14.29%), WUBA (35.89 -14.08%)
Services: BBY (25.02 -30.61%), PFMT (8.92 -17.37%)
Healthcare: SGNT (20.03 -16.3%), ONVO (9.12 -15.07%), HRC (37.38 -14.73%)
Financial: QIWI (37.31 -15.08%), SLM (23.01 -14.35%)
Consumer Goods: NUS (76.89 -29.22%), RDEN (27.17 -20.63%), HLF (60.06 -16.96%), ACAT (43.27 -15.06%)
Basic Materials: AGI (9.07 -25.54%), YPF (23.02 -24.09%), HERO (5.11 -17.01%), PWE (7.36 -14.11%)

12:25PM Notable movers of interest (SCANX) : The following are some of today's most notable movers of interest, categorized by market capitalization (large cap over $10 billion and mid cap between $2-10 billion) and ranked by % change (all stocks over 100K average daily volume).

Large Cap Gainers

JNPR (27.75 +6.69%): Beat quarterly EPS by $0.06 ($0.43 ex items vs $0.37 estimate), revs rose 11.7% yoy to $1.27 bln vs $1.22 bln estimate; sees Q1 EPS of $0.27-0.30 ex items vs $0.29 estimate, revs of $1.12-1.16 bln vs $1.14 bln estimate; upgraded to Outperform from Market Perform at William Blair; upgraded to Neutral from Sell at Goldman
DFS (54.87 +4.71%): Beat quarterly EPS by $0.05 ($1.23 vs $1.18 estimate), revs rose 5.6% yoy to $2.13 bln vs $2.1 bln estimate; total loans grew $3.2 bln (5%)
PG (80.78 +3.25%): Beat quarterly EPS by $0.01 ($1.21 vs $1.20 estimate), revs rose 0.5% yoy to $22.28 bln vs $22.36 bln estimate; reaffirmed FY14 EPS guidance of +5-7% to ~$4.25-4.33 bln vs $4.27 bln estimate, revs +1-2% to ~$85.01-85.85 bln vs $85.84 bln estimate

Large Cap Losers

KSU (102.15 -12.90%): Missed quarterly EPS by $0.07 ($1.03 ex items vs $1.10 estimate), revs rose 8.4% yoy to $616 mln vs $616.62 mln estimate
MPEL (39.5 -5.35%): Weakness in numerous Chinese stocks following SEC ruling that Big Four accounting firms China units' should be suspended in the US for six months
ISRG (415.67 -5.31%): Trading lower following Q4 results in-line with pre-announcement; co said it will not be providing FY14 revenue guidance, sees FY14 procedures growth of 9-12%

Mid Cap Gainers

OTEX (101.4 +11.90%): Beat quarterly EPS by $0.08 ($1.58 vs $1.50 estimate), revs rose 3.2% yoy to $363.5 mln vs $352.29 mln estimate; target raised to $125 from $95 at The Benchmark Company; target raised to $120 from $110 at RBC Capital Markets
SIVB (118.9 +7.84%): Upgraded to Overweight from Equal Weight at Evercore
PB (65.43 +5.70%): Beat quarterly EPS by $0.07 ($0.98 ex items vs $0.91 estimate)

Mid Cap Losers

IGT (15.46 -12.41%): Missed quarterly EPS by $0.05 ($0.25 ex items vs $0.30 estimate), revs rose 2.0% yoy to $541 mln vs $553.59 mln estimate; co sees FY14 EPS at low end of previously announced guidance, with potential further downside risk; downgraded to Neutral from Buy at Sterne Agee, target lowered to $18 from $21.50
FNFG (9.32 -9.86%): Reported Q4 EPS of $0.20 (in-line); Q4 net interest income rose 1% from prior quarter to $280 mln
FEYE (67.45 -7.82%): Downgraded to Equal Weight from Overweight at Barclays

Broadcom (BRCM) announced that Teracom has selected Broadcom silicon to demonstrate 4K Ultra HD and DVB-T2 broadcast capabilities with Boxer TV at its TV-Puls event on Jan 23, 2014.

Juniper Networks (JNPR 27.60, +1.59): +6.1% after beating on earnings and revenue. Following its earnings beat, the stock was upgraded at Barclays, Goldman Sachs, and William Blair.

5:37AM Samsung Elect reports Q4 results; beats slightly on revs (SSNLF) 1275.00 : Co reports FY13 operating profit down 18% QoQ to KRW8.31 trln; revs increased 14% YoY to KRW59.3 trln vs KRW59.1 trln CIQ est. This was in-line with co's pre-announcement on Jan 7 of Q4 Consolidated operating profit of ~KRW8.3 trln and Q4 revs of~KRW59 trln

'14 Outlook

DRAM : Expect server/graphic DRAM demand to remain solid amid limited su pply growth; tablet and mid-to low-end smartphone
Handset : Expect price/product competition to intensify amid pp y g ; p accelerated replacement from feature-phones to smartphones to drive demand for mobile devices
NAND : Expect demand to remain solid led by increased SSD adoption by datacenter and content growth in mobile devices
LSI : Expect to introduce 20 ? -class mobile AP and to expand new customer base; Expect to enhance competitiveness of accelerated replacement from feature phones to smartphones
Smartphone : Expect demand growth to continue with LTE service expansion in Europe/China and solid demand growth in emerging markets
Expect diverse mid to high-end products to address different new customer base
Expect to enhance competitiveness of customer needs LSI products such as high-pixel
CIS ? 1Q : Expect more balanced market despite low seasonality while demand for server/game cons oles/SSD to be relatively solid Expect low demand of S.LSI due to weak seasonality and customer needs
Tablet : Expect launch of various new products and intensified price competition, amid developed and emerging markets to continue rapid growth =1Q : Expect smartphone/tablet demand to decrease QoQ C E inventory adjustment by customers
LCD : Expect better supply demand than 2013; TV demand under weak seasonality
TV : Expect demand to grow led by W or ld C up impact and expansion of UHD TV sales Rapid growth expected in UHD TV ( '14: 12.7M, D.Search)
Digital Appliances : Expect over all demand to grow modestly YoY amid economic recovery in developed markets
LCD : Expect better supply-demand than 2013; TV demand to increase led by UHD penetration and global sports events impact; solid demand growth of tablet to continue
UHD TV : Expect growth of mass market segment in addition to premium market segment 5 y p ? 1Q : TV demand expect to decline QoQ entering off-season, but slightly increase YoY
OLED : Expect market growth led by expansion of OLED adoption by broader products, including mid-end smartephone, tablets, etc
1Q : Expect weaker panel demand under seasonality

Microsoft (MSFT) reported second quarter earnings of $0.78 per share, while revenues rose 14.3% year/year to $24.52 billion which are both higher than expected . Devices and Consumer revenue grew 13% to $11.91 billion. Windows OEM revenue declined 3%, reflecting strong 12% growth in Windows OEM Pro revenue, offset by continued softness in the consumer PC market. Surface revenue more than doubled sequentially, from $400 million in the first quarter to $893 million in the second quarter. The company sold 7.4 million Xbox console units into the retail channel, including 3.9 million Xbox One consoles and 3.5 million Xbox 360 consoles. Bing search share grew to 18.2% and search advertising revenue grew 34% Commercial revenue grew 10% to $12.67 billion. SQL Server continued to gain market share with revenue growing double-digits. System Center showed continued strength with double-digit revenue growth. Commercial cloud services revenue more than doubled. Office 365 commercial seats and Azure customers both grew triple-digits. "Our Commercial segment continues to outpace the overall market, and our Devices and Consumer segment had a great holiday quarter... We significantly outpaced enterprise IT spend as we continue to take share from our competitors by delivering the devices and services our customers need as they transition to the cloud.

Synaptics (SYNA) reported second quarter earnings of $0.86 per share, which is worse than expected, while revenues rose 43.9% year/year to $205.8 million which is higher than expected. The company issued guidance for the third quarter with EPS of $180-200 million which is line with expectaitons. "Excluding the impact of the acquisition of Validity, which closed in early November, our financial performance for the December quarter was above the mid-point of our guidance as we experienced strong year-over-year revenue growth in touchscreen and touchpad products," stated Rick Bergman, President and CEO. "As we enter the second half of fiscal 2014, we expect to benefit from continued strong organic growth, further augmented by growing contributions from our acquisitions and new product innovations. In addition, we are very excited with the progress of our new Fingerprint ID business and expect the acquisition to be accretive by the end of the fiscal year, earlier than previously anticipated." The company sees Q3 adjusted EPS of $0.44-0.64 which is line with expectations.
Juniper Networks (JNPR) reported fourth quarter earnings of $0.43 per share, excluding non-recurring items, which is better than expected, while revenues rose 11.7% year/year to $1.27 billion which is higher than expected. The company issued guidance for the first quarter with EPS of 0.27-0.30, excluding non-recurring items, and revenues of 1.12-1.16 which is line with expectations. Q1 Non-GAAP gross margin will be 64.0%, plus or minus 0.5% (Street at 64.3%); Non-GAAP operating margin for the first quarter will be roughly 17.0% at the midpoint of revenue guidance.
KLA-Tencor (KLAC) reported second quarter earnings of $0.85 per share, which is better than expected, while revenues rose 4.8% year/year to $705 million which is line with expectations. KLAC will guide on their conference call, which begins at 5:00 ET. "KLA-Tencor's strong shipments, revenue and earnings during the second quarter demonstrate our market leadership and robust business model," commented Rick Wallace, President and CEO of KLA-Tencor. "As we begin 2014, the prevailing outlook is for growth in the semiconductor equipment industry, with leading device manufacturers increasing their capital expenditures to adopt complex new device architectures and process technologies at the leading edge. The heightened yield challenges associated with these transitions are driving demand for process control and positioning KLA-Tencor for continued future success as a critical business partner to our customers." The company sees third quarter EPS between $1.00-1.20 and revenues of $790-850 million which are both in line with expectations. The company sees Q3 bookings of $700-900 million.