From Briefing.com: The roller-coaster ride the stock market has been on in 2015 continued on Tuesday. The major indices fell noticeably, pressured by a batch of developments that included a 4.1% decline in China's Shanghai Composite, a sharp spike in European bond yields, rising bond yields in the U.S., and a wider than expected trade deficit for March that will likely lead to a downward revision to Q1 GDP with the second estimate.
The Dow Jones Industrial Average fared the best of the major indices, shedding 0.8%. The S&P 500, Nasdaq Composite, Russell 2000, and S&P Midcap 400 all dropped at least 1.2%.
The retreat featured declines for all ten economic sectors of the S&P 500 and was influenced by renewed weakness in former leadership groups/stocks like the transports, biotechnology, semiconductors, small-caps, and Apple (AAPL 125.83, -2.87, -2.2%).
The utilities sector (-2.2%) fared the worst with the jump in market rates, but it was the S&P 500 information technology sector (-1.6%) that carried the most influence in driving the market lower.
Out of the 66 sector components, only seven ended the day higher, and only one -- Salesforce.com (CRM 72.75, +1.15, +1.6%) -- gained in excess of 1.0%. That move was aided by reports of potential buyout interest in the company.
Notable news items from sector components included the following:
Apple (AAPL 125.83, -2.87, -2.2%): A Digitimes article highlighted the possibility that shipments of Apple iPad products could be down over 20% on year in 2015 as demand for large-sized smartphones increases
Electronic Arts (EA 59.16, -0.15, -0.3%): After Tuesday's close, reported Q4 (Mar) earnings of $0.39 per share, excluding non-recurring items, which was ahead of analysts' average expectation. Revenues fell 2.0% year/year to $896 mln, but were well ahead of expectations. For Q1, sees EPS of approximately $0.00, excluding non-recurring items, and revenues of approximately $640 mln . Both estimates are below analysts' average expectations. For FY16, sees EPS of approximately $2.75, excluding non-recurring items, and revenues of approximately $4.4 bln, excluding non-recurring items. Separately, EA announced that its Board of Directors has authorized a new program to repurchase up to $1 billion of EA's common stock. This new stock repurchase program, which expires on May 31, 2017, supersedes and replaces the existing stock repurchase authorization approved by a special committee of EA's Board of Directors in May 2014.
Facebook (FB 77.56, -1.25, -1.6%): A Financial Times article reported that North Star Asset Management continues to press its case against Facebook's dual-class ownership system ahead of the company's annual shareholder meeting in June
Fiserv (FISV): After Tuesday's close, reported Q1 (Mar) earnings of $0.89 per share, which was ahead of analysts' average expectation. Revenues rose 3.3% year/year to $1.27 bln. For FY15, sees EPS of $3.73-3.83, in-line with estimates, and continues to expect 2015 internal revenue growth in a range of 5 to 6 percent
Harris (HRS 79.27, -1.20, -1.5%): Before Tuesday's open, reported Q3 (Mar) earnings of $1.32 per share, which was ahead of analysts' average expectation. Revenues fell 6.1% year/year to $1.19 bln, which was in-line with estimates. For FY15, sees EPS of $5.00-5.10 and revenues declining about 4%, in-line with expectations.
IBM (IBM 173.08, -0.89, -0.5%): Announced that it will collaborate with Epic and Mayo Clinic by applying the cognitive computing capabilities of Watson to electronic health records
Micron (MU 28.06, -0.61, -2.1%): Micron announced appointment of Ernie Maddock as Chief Financial Officer, effective June 1, 2015. Maddock will join Micron after having served as Executive Vice President and Chief Financial Officer at Riverbed Technology
Salesforce.com (CRM 72.75, +1.15, +1.6%): Bloomberg, citing people with knowledge of the matter, reported that Microsoft (MSFT 47.80, -0.44, -0.9%) is evaluating a bid for the company
Elsewhere in the technology space:
Amazon.com (AMZN 421.19, -1.85, -0.4%): Company and JetBlue announced that they will bring unlimited, on-demand internet access to airline travel later this year through JetBlue's free high-speed Fly-Fi broadband internet.
Groupon (GRPN 6.84, -0.20, -2.8%): After Tuesday's close, reported Q1 (Mar) earnings of $0.03 per share, which was slightly ahead of analysts' average expectation. Revenues rose 3.0% year/year to $750.4 mln, which was shy of estimates. For Q2, sees EPS of $0.01-0.03 and revenues of $700-$750 mln. This guidance anticipates approximately 800 basis points of unfavorable impact on the year-over-year growth rate from changes in foreign exchange rates. For FY15, sees revenues of $3.15-3.30 bln vs. $3.27 bln. Sees Adjusted EBITDA for the full year 2015 of greater than $315 million.
Kulicke & Soffa (KLIC 13.52, -2.06, -13.2%): Before Tuesday's open, reported Q2 (Mar) earnings of $0.10 per share, which was shy of analysts' average expectation. Revenues rose 27.0% year/year to $145 mln, which was ahead of estimates. For Q3, sees revenues of $160-170 mln. The high end of the range is well below analysts' average expectation.
NetSuite (N 97.26, +2.77, +2.7%): The company announced it has entered into a strategic cloud alliance with Microsoft (MSFT 47.80, -0.44, -0.9%) to create new, innovative and future-proof solutions that connect NetSuite's cloud ERP to Microsoft Office 365, Windows and Microsoft Azure.
Nokia (NOK 6.38, 0.00, 0.0%): According to a report in The Wall Street Journal, the company's mapping unit is attracting interest from several car makers
NXP Semi (NXPI 97.41, -2.72, -2.6%): Company announced that Qualcomm Technologies, a subsidiary of Qualcomm (QCOM 68.37, -0.68, -1.0%), will integrate NXP's near field communication (NFC) and embedded secure element (eSE) solutions across Qualcomm Snapdragon 800, 600, 400 and 200 processor based platforms.
VMware, Inc. (VMW 87.70, +0.01): Announced the VMware vCloud for NFV platform has been deployed by Vodafone (VOD 34.74, -0.28, -0.7%) Germany to support Voice-over-LTE services over Germany's most modern wireless network.
Analyst Action:
Akamai Tech (AKAM 75.36, +0.26, +0.4%): target raised to $77 from $75 at Macquarie
Alcatel-Lucent (ALU 3.47, +0.07, +1.5%): upgraded to Buy from Neutral at Citigroup
Baidu (BIDU 194.74, -8.96, -4.5%): downgraded to Neutral from Overweight at JP Morgan; target lowered to $215 from $240
Cisco Systems (CSCO 28.89, -0.28, -0.9%): target raised to $32 from $30 at Oppenheimer; Outperform
Cognizant Tech (CTSH 61.00, -1.78, -2.8%): target raised to $70 from $73 at Oppenheimer; Outperform... target raised to $70 from $68 at Monness Crespi & Hardt; Buy... target raised to $76 from $67 at Needham; Buy
Integrated Device (IDTI 19.33, +0.96, +5.1%): target raised to $15 from $14 at Barclays; Underweight
Motorola Solutions (MSI 58.59, -2.09, -3.6%): downgraded to Sell from Neutral at Goldman Sachs; target lowered to $57 from $66
Qualys (QLYS 37.11, -17.97, -32.3%): Robert W. Baird upgrades to Outperform from Neutral and sets target price at $50... RBC Capital Markets lowers target to $38 from $47
TripAdvisor (TRIP 77.72, -2.19, -2.7%): downgraded to Sector Perform from Outperform at RBC Capital Markets; target $91
Veeco Instruments (VECO 28.49, -1.57, -5.1%): downgraded to Outperform from Buy at Credit Agricole
(Disclosure: Briefing.com has a business relationship with Microsoft)
4:53 pm Alpha and Omega Semi reports Q3 results; guides Q4 in line (AOSL) : Reports Q3 EPS of ($0.12) vs ($0.14) Capital IQ Consensus Estimate; revs $76.9 mln vs $78.07 mln Capital IQ Consensus Estimate; sees Q4 revenue of $80.5-84.5 mln vs $83.60 mln Capital IQ Consensus Estimate.
4:52 pm 3D Systems has entered into a reseller agreement with HK 3D, a supplier of 3D printers and additive manufacturing in the UK and Ireland (DDD) :
4:47 pm Lumos Networks beats by $0.01, beats on revs; reaffirms FY15 revs guidance (LMOS) : Reports Q1 (Mar) earnings of $0.12 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.11; revenues rose 0.8% year/year to $50.5 mln vs the $49.84 mln consensus.
Co reaffirms guidance for FY15, sees FY15 revs of $202 mln vs. $202.53 mln Capital IQ Consensus Estimate, Adjusted EBITDA of approximately $92 million and capital expenditures of approximately $112 million.
4:28 pm Cray beats by $0.11, reports revs in-line; guides Q2 revs above consensus; guides FY15 revs in-line (CRAY) : Reports Q1 (Mar) loss of $0.28 per share, $0.11 better than the Capital IQ Consensus Estimate of ($0.39); revenues rose 44.5% year/year to $79.6 mln vs the $79.97 mln consensus.
Overall gross profit margin for the first quarter of 2015 was 30%, compared to 33% for the first quarter of 2014. Total non-GAAP gross profit margin for the first quarter of 2015 was 31%, compared to 34% for the first quarter of 2014.
Guidance: Co issues upside guidance for Q2, sees Q2 revs of $130 mln vs. $114.48 mln Capital IQ Consensus Estimate.
Co issues in-line guidance for FY15, sees FY15 revs of $715 mln vs. $716.40 mln Capital IQ Consensus Estimate. Non-GAAP gross margin for 2015 is expected to be about 35%. Total non-GAAP operating expenses for the year are anticipated to be about $195 million. Based on this outlook, CRAY expects to improve GAAP and non-GAAP operating profit margin significantly for 2015. 4:21 pm Ixia beats by $0.02, beats on revs (XXIA) :
Reports Q1 (Mar) earnings of $0.12 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.10; revenues rose 6.4% year/year to $121 mln vs the $117.37 mln consensus.
"We are very pleased with our first quarter financial results as revenue exceeded our guidance for the second consecutive quarter. Revenue for our visibility solutions grew 47 percent year-over-year and included a strong quarter from our largest service provider customer. From a market perspective, we added over 200 new enterprise customer accounts and continued to build momentum across the portfolio as customers turn to Ixia to enhance application performance and ensure security resilience."
4:15 pm Axcelis Tech beats by $0.02, beats on revs; guides Q2 EPS above consensus, revs above consensus (ACLS) : Reports Q1 (Mar) earnings of $0.02 per share, $0.02 better than the Capital IQ Consensus Estimate of ($0.00); revenues rose 20.4% year/year to $73.28 mln vs the $66.43 mln consensus.
Co issues upside guidance for Q2, sees EPS of $0.02-0.04 vs. $0.02 Capital IQ Consensus Estimate; sees Q2 revs of $64-74 mln vs. $65.46 mln Capital IQ Consensus Estimate.
4:07 pm Anadigics beats by $0.01, reports revs in-line (ANAD) : Reports Q1 (Mar) loss of $0.04 per share, $0.01 better than the Capital IQ Consensus Estimate of ($0.05); revenues fell 21.0% year/year to $18.4 mln vs the $18.44 mln consensus.
Co sees a sequential revenue decline of 10-15% driven principally by a decline in Mobile of approximately 20-25% in accordance with our shift to Infrastructure. Consensus calls for an increase of around 9%. Infrastructure revenues are expected to decline sequentially by 7-9% following higher-than-expected growth in Q1 2015. Non-GAAP gross margin is expected to decline sequentially by 100-300 basis points on the lower expected revenue. Operating expenses are expected to be 5-7% lower, sequentially.
4:10 pm : The stock market ended the Tuesday session on a sharply lower note following a daylong retreat that was paced by the Nasdaq Composite (-1.6%). For its part, the S&P 500 lost 1.2% with all ten sectors ending in the red.
The Tuesday selloff in U.S. equities followed an overnight session that featured a 4.1% drop in China's Shanghai Composite after some equity brokers increased their margin requirements, which led to forced selling. Furthermore, markets across Europe also struggled with Germany's DAX diving 2.5% amid spiking yields. To that point, Germany's 10-yr bund yield surged 13 basis points to 0.52% after hovering near 0.16% as recently as last week while Italy's 10-yr yield soared 34 basis points to 1.83%.
Rising interest rates were not unique to Europe as the U.S. 10-yr note registered its sixth consecutive decline, sending its yield higher by three basis points to 2.17%. The benchmark yield hit its highest level since early March and spent the day near its 200-day moving average, representing the first appearance near that level in more than a year.
To be sure, U.S. and European yields remain at depressed levels, but that masks the sharp pace at which rates have been increasing as of late. In turn, the sharp rally in yields has made equities less attractive versus Treasuries, which was on full display today with the rate-sensitive utilities sector (-2.3%) leading the stock market lower. Including the decline, the utilities sector is down 7.4% for the year.
Other countercyclical groups ended a bit closer to their flat lines with the health care sector (-1.2%) settling in-line with the broader market even as biotechnology displayed relative weakness. The iShares Nasdaq Biotechnology ETF (IBB 338.00, -7.19) fell 2.1%, distancing itself from the 50-day moving average (349.00), which provided resistance yesterday.
Biotechnology contributed to the underperformance of the Nasdaq while the technology sector (-1.6%) also pressured the index. Large cap names like Apple (AAPL 125.80, -2.90) and Google (GOOGL 543.04, -9.80) both lost near 2.0% while Microsoft (MSFT 47.60, -0.64) climbed off its low after Bloomberg reported the company is interested in Salesforce.com (CRM 72.75, +1.15). Microsoft ended lower by 1.3% while Salesforce.com gained 1.6%.
Similar to technology, the industrial sector (-1.3%) underperformed while consumer discretionary (-1.0%), financials (-0.8%), energy (-1.1%), and materials (-1.1%) ended just ahead of the S&P 500.
Notably, the energy sector spent the bulk of the day in positive territory thanks to crude oil, which rose 2.5% to $60.38/bbl., making its first appearance above $60/bbl since December.
Today's participation was ahead of recent averages with more than 770 million shares changing hands at the NYSE floor.
Economic data was limited to Trade Balance and ISM Services:
The U.S. trade deficit widened to $51.40 billion in March from an upwardly revised $35.90 billion (from $35.40 billion) in February while the Briefing.com consensus expected an increase to $40.00 billion
The BEA assumed a March trade deficit of roughly $48.50 billion in the advance Q1 2015 GDP report, but the actual deficit was much larger than expected and will likely lead to a downward revision to GDP growth
The goods deficit increased to $70.60 billion in March from $55.70 billion, a gain of $14.90 billion, while the services surplus declined by $600 million to $19.20 billion in March
The spike in the trade deficit shouldn't be too concerning, considering the West Coast port strike caused a pileup of containerships that needed to be unloaded. As dockworkers returned, imports that normally would have come in February were unloaded in March
The ISM Non-manufacturing Index increased to 57.8 in April from 56.5 in March while the Briefing.com consensus expected a decrease to 56.3
Production activities improved as the related index increased to 61.6 in April from 57.5 in March
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while April ADP Employment Change (Briefing.com consensus 189K) and Q1 Productivity/Unit Labor Cost Data will be released at 8:15 ET and 8:30 ET, respectively.
Nasdaq Composite +4.3% YTD
S&P 500 +1.5% YTD
Russell 2000 +1.0% YTD
Dow Jones Industrial Average +0.6% YTD
DJ30 -142.20 NASDAQ -77.60 SP500 -25.03 NASDAQ Adv/Vol/Dec 691/1.87 bln/2698 NYSE Adv/Vol/Dec 622/772.7 mln/2468
3:40 pm :
Oil prices rallied today, pushing WTI crude oil prices above $61/barrel level
Front-month crude ultimately ended +$1.46 to $60.38/barrel
June natural gas lost $0.04 to $2.78/MMBtu
Metals rose today, but just modestly
June gold gained $6.50 to $1193.40/oz, while July silver rose $0.16 to $16.57/oz
July copper +$0.02 to $2.93/lb
12:09 pm Stocks/ETFs that traded to new 52 week highs/lows this session - New lows (90) outpacing new highs (74) (:SCANX) : Stocks that traded to 52 week highs: AAWW, ABMD, AEC, AFSI, ALDW, AMCX, AVY, AYI, BAMM, BCO, BFAM, BK, BKMU, BLBD, BLKB, BX, CFG, CLBH, CORI, CYNO, DIS, DLPH, DOVR, DRC, ECF, EL, ELNK, ELOS, ENR, FAC, FIX, GGAC, GTIM, GTN, GTN.A, GTWN, HOLX, HRC, HW, IBKR, IMH, INBK, JNPR, JPM, KALU, KEY, LMAT, LVLT, LYV, MAS, MATX, MIC, NCOM, NFLX, NGHC, NLS, NOM, NTRS, OSBC, PNFP, PRMW, QTM, SCHW, SHAK, SQNM, SUM, SWK, TASR, TAST, TDS, TMK, TRQ, VKTX, WX
Stocks that traded to 52 week lows: ACRX, ACTA, AGYS, AHC, AJX, AMCF, AP, ASND, BABA, BDSI, BWINB, CBLI, CCD, CECO, CIM, CKP, CLDN, CLI, CPLA, CTRL, CUZ, DCI, DDD, DEST, DSS, EGL, EGP, ERIC, ESBK, ESIO, FDML, FORR, FPO, FTD, GALT, GOV, GYRO, HI, HOV, HWCC, IKAN, INF, INTX, IPHS, IRT, ISH, LXP, MHGC, MNI, MPEL, MTGE, NOK, NSM, NUO, OFG, ONTY, PCH, PCO, PDLI, PKY, PNX, PRGN, PSB, PSEC, PTNT, QUIK, RBCN, RCAP, ROKA, ROVI, SALM, SCON, SGI, SIF, SJI, SNH, SNR, SRET, STRI, TAX, TTF, UE, UNXL, VPG, VSH, WPG, XONE, YRCW, YUMA, ZU
ETFs that traded to 52 week highs: KBE
ETFs that traded to 52 week lows: JJA
12:01 pm NXP Semi announces that Qualcomm (QCOM) will integrate NXPI's near field communication and embedded secure element solutions across its Snapdragon platforms (NXPI) : Co announced that Qualcomm Technologies, a subsidiary of Qualcomm (QCOM), will integrate NXP's near field communication (:NFC) and embedded secure element (eSE) solutions across Qualcomm Snapdragon 800, 600, 400 and 200 processor based platforms.
Mellanox Technologies (MLNX) announced a storage replication solution over long distance collaboration with Microsoft at the Ignite 2015 conference. The collaboration utilizes Microsoft's Windows Server 2016 Storage Replica technology over Mellanox's MetroX long-haul system and end-to-end FDR 56Gb/s InfiniBand interconnect solution
IXYS Corporation (IXYS)announced the development and availability of its IXOLAR solar panel: the SLPN005H10L. The panel is a 5 watt, mobile photovoltaic panel with an integrated sun-angle adjuster
8:02 am Micron announces appointment of Ernie Maddock as Chief Financial Officer, effective June 1, 2015 (MU) : Maddock will join Micron after having served as Executive Vice President and Chief Financial Officer at Riverbed Technology (RVBD)
7:36 am Vishay beats by $0.01, misses on revs; guides Q2 revs below consensus (VSH) : Reports Q1 (Mar) earnings of $0.21 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.20; revenues fell 1.5% year/year to $593.4 mln vs the $604.16 mln consensus.
Co issues downside guidance for Q2, sees Q2 revs of $600-640 mln vs. $640.14 mln Capital IQ Consensus Estimate."During the first quarter 2015, we recorded a book-to-bill above parity for all regions, all sales channels, all end markets and nearly all business segments. The overall price pressure remained at a low level. Excluding exchange rate effects, sales of Vishay products by its distributors to end customers increased slightly sequentially and inventories of Vishay products at its distributors decreased."
7:33 am Vishay Precision misses by $0.06, misses on revs; guides Q2 revs in-line (VPG) : Reports Q1 (Mar) earnings of $0.05 per share, excluding non-recurring items, $0.06 worse than the Capital IQ Consensus Estimate of $0.11; revenues fell 7.2% year/year to $56.6 mln vs the $57.39 mln consensus.
Co issues in-line guidance for Q2, sees Q2 revs of $56-61 mln vs. $60.85 mln Capital IQ Consensus Estimate.
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