Sector Investing

[ReturntoSender]

From Briefing.com: 4:15 pm : The major averages finished the Thursday session on an upbeat note with the Dow Jones Industrial Average (+0.7%) in the lead. Small caps underperformed with the Russell 2000 adding 0.1% while the S&P 500 settled higher by 0.6% with nine sectors posting gains.

Stocks began the day on the defensive amid cautious action overseas, but were quick to erase their early losses. The S&P 500 climbed out of the red during the first hour of action with most European indices following suit.

The early advance was powered by the heavily-weighted financial (+1.7%) and technology (+0.7%) sectors, both of which continued their outperformance into the close. Outside of the two, the telecom services sector (+2.5%) was the only other area of relative strength, but it bears noting the group accounts for just 3.0% of the entire S&P 500.

Financials began the trading day ahead of the remaining cyclical groups and never relinquished their standing. Major sector components posted solid gains with JPMorgan Chase (JPM 60.11, +1.81) and Morgan Stanley (MS 32.79, +0.98) ending in the lead. The significant strength of the sector reflected the expected benefit from higher rates and a presumption that stress test results would show that most banks meet the Fed's capital ratio standards. Accordingly, the results, which were released after the close indicated that 29 of 30 banks passed while Zions Bancorp (ZION 32.99, +1.02) failed.

For its part, the technology sector was powered by chipmakers. Intel (INTC 25.42, +0.41) jumped 1.6% while the broader PHLX Semiconductor Index surged 1.9%. Even though most large components outperformed, that was not the case with the largest sector member-Apple (AAPL 528.70, -2.56)-which lost 0.5%.

The underperformance of Apple weighed on the Nasdaq (+0.3%) as the index could not keep up with the broader market. Biotechnology also pressured the Nasdaq Composite as indicated by a 0.5% decline in the iShares Nasdaq Biotechnology ETF (IBB 258.25, -1.22).

Elsewhere, biotechnology also factored into the underperformance of the health care sector (-0.02%), which spent the day in negative territory. Outside of health care, industrials (+0.2%) and utilities (+0.1%) spent the bulk of the session in the red, but erased their losses ahead of the close.

The industrial sector underperformed amid weakness in transports. The Dow Jones Transportation Average shed 0.1% with FedEx (FDX 136.50, -1.88) trailing the remaining index components. The stock ended lower by 1.4% despite being upgraded to 'Market Outperform' at Avondale this morning. Interestingly, the logistics company reported disappointing earnings ahead of Wednesday's open, but the stock ended yesterday's session little changed.

Meanwhile, the utilities sector lagged as higher rates weighed. Elevated rates also took a bite out of homebuilders, sending the iShares Dow Jones US Home Construction ETF (ITB 24.57, -0.41) lower by 1.6%.

Treasuries spent the entire session in a narrow range with the benchmark 10-yr yield ending unchanged at 2.77%.

Also of note, President Obama announced additional sanctions on 16 Russian officials as well as individuals with close ties to Vladimir Putin while also targeting Bank Rossiya, which is believed to have close ties to the Kremlin. The president also signed an executive order that permits the use of sanctions against specific sectors of the Russian economy. In a swift response, Russia announced sanctions of their own against ten U.S. officials.

Economic data included weekly initial claims, February existing home sales, February Leading Indicators, and the March Philadelphia Fed Survey:

The weekly initial claims level increased to 320,000 from an unrevised 315,000 while the Briefing.com consensus expected the claims level to increase to 330,000. Prior to the last couple weeks, the initial claims level-absent unexpected seasonal biases-was bounded between 330,000 and 340,000. The latest data show a slight downward move from that range, which could be the start of another stage in the improvement in labor market conditions.
Existing home sales fell to a seasonally adjusted annualized rate of 4.60 million in February from an unrevised 4.62 million in January. That was exactly what the Briefing.com consensus expected. For the second consecutive month, the National Association of Realtors blamed extreme winter weather conditions as a primary catalyst for the weakness in sales demand. While sales did drop in winter weather-related areas like the Northeast and Midwest, sales in the South and West still remain well below their December levels. Even if sales recover in the weather-affected areas, overall demand remains below the 5.1 million - 5.3 million that was seen last spring and summer.
The Leading Indicators report for February increased 0.5%. That followed a 0.1% increase in January, and was better than the 0.3% uptick expected by the Briefing.com consensus.
Manufacturing activity in the Philadelphia region ended a temporary contraction in March as the Philadelphia Fed's Business Outlook Survey increased to 9.0 from -6.3 in February. The Briefing.com consensus expected the index to increase to 2.0.

There is no economic data of note on tomorrow's schedule but it is worth mentioning that quadruple witching will be taking place.

Nasdaq Composite +3.4% YTD
Russell 2000 +3.3% YTD
S&P 500 +1.3% YTD
Dow Jones Industrial Average -1.5% YTD

DJ30 +108.88 NASDAQ +11.68 SP500 +11.24 NASDAQ Adv/Vol/Dec 1430/1.72 bln/1248 NYSE Adv/Vol/Dec 1481/620.5 mln/1556

3:30 pm :

Precious metals were under pressure today as the dollar index traded higher in response to yesterday's mentions of sooner-than-expected rate increases from the new FOMC Chair, Janet Yellen. She said interested rates could rise in "probably six months" following completion of the stimulus program.
Apr gold fell for a fourth consecutive session, brushing a session low of $1320.80 per ounce in early morning pit trade. It eventually settled with a 0.8% loss at $1330.20 per ounce.
May silver slipped to a session low of $20.14 per ounce moments after floor trade opened. It inched slightly higher for the remainder of the session and settled at $20.43 per ounce, cutting losses to 1.9%.
May crude oil fell for the first time in three sessions as the dollar index traded higher. The energy component dipped to a session low of $98.09 per barrel after trading as high as $99.45 per barrel in morning action. It settled at $98.87 per barrel, or 0.3% lower.
Apr natural gas traded lower as inventory data showed a draw of 48 bcf when a draw of 53-59 bcf was anticipated. It pulled back from its session high of $4.44 per MMBtu and brushed a session low of $4.35 per MMBtu. Unable to gain momentum, it settled with a 2.7% loss at $4.37 per MMBtu.

12:47PM 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

AKAM (62.14 +3.38%): MKM Partners out positive on co; notes AKAM is one of its top picks for 2014.
STX (53.44 +3.43%): Mentioned positively at Longbow.
CX (12.66 +2.43%): Upgraded to Buy from Neutral at Longbow.

Large Cap Losers

CHL (43.51 -2.52%): Reported FY13 EBITDA was CNY240.4 bln, down 5.2% y/y; beat on revs.
WMB (40.97 -1.61%): Downgraded to Hold from Buy at Jefferies.
BP (46.61 -1.5%): Co has begun bidding for Gulf of Mexico leases, according to reports.

Mid Cap Gainers

GTE (7.57 +6.4%): Upgraded to Buy from Hold at TD Securities.
FSLR (72.72 +4.79%): Tgt raised to $70 from $50 at Deutsche Bank; tgt raised to $75 from $64 at JP Morgan; tgt raised to $51 from $31 at Northland Capital; tgt raised to $48 from $47 at RBC; tgt raised to $87 from $67 at Robert W. Baird; tgt raised to $70 at Credit Suisse; tgt raised to $72 from $55 at UBS.
SUNE (21.6 +4.43%): Announced private placement of shares to Samsung (SSNLF) in connection with SunEdison Semiconductor IPO.

Mid Cap Losers

GES (27.36 -4.87%): Beat on EPS by $0.04, reported revs in-line; guided Q1/FY15 EPS and rev below consensus; raised dividend 12.5%; tgt lowered to $26 from $30 at Mizuho; tgt lowered to $27 from $29 at Jefferies.
BYI (66.69 -3.14%): Downgraded to Sell from Neutral at Goldman.
APO (31.86 -2.09%): Announced that Marc Spilker will be stepping down as President.

12:07PM Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (166) outpacing new lows (36) (SCANX) : Stocks that traded to 52 week highs: ADEP, ADI, AET, AMAT, AMTD, ASBC, ASGN, ASTE, AVGO, AXDX, BAC, BBCN, BBT, BGMD, BOKF, BONE, BRCD, BRKS, BXS, CAVM, CBF, CBT, CFR, CHE, CHKE, CKSW, CMA, CMG, CNO, CNTY, COLB, CORT, COWN, CRS, CRVL, CRZO, CVD, CYBE, DFRG, DMND, DRTX, DVA, EGBN, ELY, ETFC, EWBC, FBNC, FFBC, FITB, FLML, FNB, FNSR, FSLR, FTK, FTR, GNW, GPRE, GSAT, GSIG, GSM, GTAT, GVA, HAR, HASI, HBAN, HBHC, HPQ, HRTX, HUM, IBKC, ICGE, IHS, INDB, IPHI, ISIG, ISR, ISSI, KEY, KLAC, KONA, LXK, MCHP, MCRL, MCS, MEAS, MKTY, MLHR, MPWR, MSA, MSFT, MTX, NBCB, NBR, NTK, NTRS, NVDQ, OMN, ORBK, OZRK, PAY, PDS, PES, PFSW, PJC, PLL, PNC, PNFP, PRI, PRMW, PRTA, PTN, PTX, PVA, PVTB, QCOM, QUMU, RCL, REPH, REX, RF, RFMD, RGA, RUSHB, SAVE, SCHW, SF, SFBC, SGK, SGY, SIVB, SNDK, SQBG, STI, SVA, SWKS, SWN, SXT, TARO, TCBI, TFSL, TPC, TRCB, TSEM, UBFO, UBNT, UCBI, UNH, UNT, URI, USB, USEG, VMW, VPFG, VSB, VTNR, WFC, WG, WIBC, WLB, WNC, WSCI, WTFC, XLNX, YDKN, ZION, ZIOP

Stocks that traded to 52 week lows: AKO.A, AKO.B, ANR, AVNW, BODY, CHKR, CHL, COVS, CSBK, CZZ, ED, GLMD, GMAN, GMET, HMC, HSBC, JONE, KMI, KMP, KMR, LIQD, MCGC, MTU, NEWL, PBPB, PCL, PSO, RELL, REN, SDR, SDT, SVM, TCRD, VLRS, VTUS, WLT

ETFs that traded to 52 week highs: EGPT, GULF, IGN, IHF, KBE, KRE, SMH, SOXX

ETFs that traded to 52 week lows: FXC, TAO

SUNE +0.6% (announces private placement of shares to Samsung in connection with SunEdison Semiconductor IPO)

7:45AM Hewlett-Packard Board increases quarterly dividend by 10.2% to $0.16/share (HPQ) 31.62 : The increase in the amount of the dividend will be effective when the HP board of directors declares HP's next dividend, which is expected to occur in May. HP's previously announced dividend, payable on April 2, 2014, to stockholders of record on March 12, 2014, will not be increased and will remain at 14.52 cents per share.

7:02AM SunEdison announces private placement of shares to Samsung (SSNLF) in connection with SunEdison Semiconductor IPO (SUNE) 20.68 : Co announced a series of transactions that are expected to occur concurrent with the initial public offering (IPO) of its semiconductor division, SunEdison Semiconductor, including:

Samsung Fine Chemicals will purchase $100 million of SSL's ordinary shares at the IPO price through a private placement concurrent with SSL's IPO.
Samsung Fine Chemicals has entered into an agreement with SunEdison pursuant to which SunEdison will purchase from Samsung Fine Chemicals shares representing a 35% interest in SMP, a joint venture between Samsung Fine Chemicals and SunEdison, and SunEdison will contribute those shares to SSL. Samsung Fine Chemicals will continue to be invested in SMP, owning 15% of SMP following the completion of the transaction. SMP is the low-cost fluidized bed reactor (FBR) based polysilicon joint venture under construction in Ulsan, Korea. The facility is expected to be completed in the second half of 2014 and will provide solar grade polysilicon to SunEdison with the potential to provide electronic grade polysilicon to SSL in the future.
Samsung Electronics (SSNLF) has entered into an agreement with SSL pursuant to which SSL will purchase Samsung Electronics' remaining 20% interest in MEMC Korea Company, in exchange for the issuance by SSL to Samsung Electronics of ordinary shares through a private placement concurrent with SSL's IPO. Upon completion of these transactions, SSL will own 100% of MEMC Korea Company.
Samsung Electronics and SSL have entered into a long-term agreement for Samsung Electronics to purchase semiconductor wafers from SSL. As a result, SSL's market share with Samsung Electronics is expected to increase in each of the next three years.

6:29AM Tessera Tech announces settlement with Renesas; new patent license agreements entered into with Renesas (TSRA) 23.33 : Co announced that its Tessera and Invensas subsidiaries entered into an agreement to settle their pending cases against Renesas Electronics and Renesas Electronics America. In conjunction with the settlement, Renesas entered into new multi-year patent license agreements with Tessera, Inc. and Invensas and transferred over 200 U.S. patents and their counterparts to a subsidiary of Tessera. The companies did not disclose the specific financial terms of the agreements.

5:57AM Tower Semicon signs definitive agreements with its existing institutional bondholders to strengthen its balance sheet (TSEM) 8.73 : Co announces that it has signed definitive agreements with certain existing US and offshore institutional holders, pursuant to which Jazz Technologies, will issue new un-secured bonds due December 2018 in exchange for ~$45 million in aggregate principal amount of the ~$94 million aggregate principal amount of 8% senior bonds due June 2015. The new bonds will be unsecured and are therefore structurally subordinated to the Wells Fargo credit line of up to $70 million due 2018, as are the currently outstanding bonds due June 2015.

Jabil Circuit (JBL) reported second quarter earnings of $0.10 per share, which is worse than expected, while revenues fell 14.1% year/year to $3.58 billion which is lower than expected. The company issued guiadnce for the third quarter with EPS of ($0.20)-0.00 which is below estimates with reveneus of $3.5-3.7 billion which is line with estimates. The company issued guidance for the fiscal year 2015 with EPS of $1.65-1.95 which is line with estimates.

eBay (EBAY) announces it continues to believe PayPal and Ebay are better together. "PayPal and eBay are better together. That's been true for the past five years, during which time PayPal and eBay have generated a 441% increase in share price for our investors, significantly outpacing NASDAQ and the S&P. And we continue to believe PayPal and eBay together is the best path to creating sustainable, long-term shareholder value in the future. As the lines between online and offline commerce continue to blur, the competitive advantages of PayPal and eBay together are more important than ever...A partial separation of PayPal is not a new idea, and we're glad to see that Mr. Icahn now seems to agree that a full separation of PayPal is not a good idea. Our board regularly evaluates strategic options for the company, looking at the best ways to enhance our competitiveness, accelerate growth and deliver sustainable shareholder value...We are fully committed to always acting in the best long-term interests of our shareholders...In the future, our board will continue to evaluate all strategic options and make the right decisions for shareholders. But today, PayPal and eBay are better together."

Tessera Tech (TSRA) announced that its Tessera and Invensas subsidiaries entered into an agreement to settle their pending cases against Renesas Electronics and Renesas Electronics America. In conjunction with the settlement, Renesas entered into new multi-year patent license agreements with Tessera, Inc. and Invensas and transferred over 200 U.S. patents and their counterparts to a subsidiary of Tessera. The companies did not disclose the specific financial terms of the agreements.