From Briefing.com: Weekly Recap - Week ending 01-Jul-16The stock market frolicked higher throughout the week, recovering the vast majority of a drop that resulted in the S&P 500 losing 5.3% between Friday and Monday. The S&P 500 gained 3.2% for the week, ending in-line with the Dow Jones Industrial Average (+3.2%), and just behind the Nasdaq Composite (+3.3%).
The rebound in equities was attributed to multiple things as the week went on. At first it was described as a function of oversold conditions on a short-term basis, then it was extended by hopes for stimulus from global monetary authorities like the Bank of England and European Central Bank. Thursday's 1.4% gain, which put the S&P 500 near its opening level from last Friday, occurred amid month-end and quarter-end flows.
Stocks displayed modest strength on Friday, but the bullish attitude was not shared by other markets. For instance, the dollar/yen pair retreated into Friday and remained near its low throughout the Wall Street session. The currency pair ended the week near 102.50, wiping out more than two days of slight gains. Treasuries ended the week with solid gains, pressuring the 10-yr yield to a Friday test of an all-time low near 1.381%. Gold was also a noteworthy winner, posting its fifth consecutive weekly gain and closing at a two-year high at $1338.90.
The rising hopes for global stimulus relegated rate hike expectations to an afterthought. The fed funds futures market is pricing in just an 18.2% chance of a rate hike in December or February.
Index Started Week Ended Week Change % Change YTD %
DJIA 17400.75 17949.37 548.62 3.2 3.0
Nasdaq 4707.98 4862.57 154.59 3.3 -2.9
S&P 500 2037.41 2102.95 65.54 3.2 2.9
Russell 2000 1127.54 1156.90 29.36 2.6 1.8
Equity indices began the day on a flat note as investors ruminated over disappointing economic data out of China and Japan. China's state-issued Manufacturing PMI for June (50.0; last: 50.1) showed no improvement while Caixin Manufacturing PMI signaled an accelerated contraction (48.6; last: 49.2) in the world's second largest economy. Global equity markets steadily advanced despite the news, encouraged by signals that the Bank of England and other leading central banks would provide more policy stimulus.
The first day of the third quarter, and incidentally the first day of July, closed modestly higher. A slight sell-off into the close took stocks off a bit, but all three major US indices ultimately ended in the green. Action was led higher by the Nasdaq Composite which turned in a 19.90 point (+0.41%) advance to end 4862.57. The S&P 500 was up 4.09 points (+0.19%) to 2102.95, and the Dow Jones Industrial Average added 19.38 points (+0.11%) to 17949.37. This week's action takes the three major indices -2.9%, +2.9% and +3.0% YTD, respectively.
Domestic economic data was minimal today, with only the ISM Index for June, which produced a nice headline surprise, checking in at 53.2 and the total construction spending reading, which displayed a decline of 0.8% in May after a downwardly revised 2.0% decline (from -1.8%) in April were released to investors today.
Technology (XLK 43.47, +0.11 +0.25%) in comparison held up fairly well as the sector closed near the middle on the daily range with component Micron (MU 12.50, -1.26 -9.16%) ending notably weaker following mixed Q3 results and the announcement of a restructuring plan. Other sectors as measured by the S&P ended Friday XLY +1.04%, XLV +0.63%, XLE +0.53%, XLI +0.32%, XLB +0.04%, XLU +0.02%, IYZ -0.03%, XLP -0.47%, XLF -0.50% with Consumer Discretionary and Healthcare posting a strong close to the week.
In the S&P 500 Information Technology (713.95, +0.91 +0.13%) sector, trading was left with only modest gains despite enjoying a broad advance for the majority of the day. Components Qorvo (QRVO 54.50, -0.76 -1.38%) and Skyworks (SWKS 62.60, -0.68 -1.07%) were among the worst performers today following premarket downgrades of both names at Mizuho to a Neutral rating from a Buy. Other names in the space which closed modestly higher with the broader market today included EBAY +1.58%, HPQ +1.35%, HPE +1.20%, YHOO +1.14%, FIS +1.11%, GOOG +1.03%, ADP +0.96%, GOOGL +0.96%, MA +0.90%, WU +0.89%.
Other notable news items among sector components:
In addition to reporting quarterly results, Micron (MU) announced details of a restructuring plan including: plans to implement a cost savings program in which it expects to save approximately $80 million per quarter in fiscal 2017; expectations to incur charges of $70 million, substantially all in cash expenditures, the majority of which is expected to be incurred in the fourth quarter of fiscal 2016, with the remainder in the early part of fiscal 2017.
NIKE (NKE 55.61, +0.41 +0.74%) announced that Chairman Phil Knight has retired from the Board and that CEO Mark Parker will be his replacement effective immediately. Also, NKE disclosed that Apple (AAPL 95.89, +0.29 +0.30%) CEO, Tim Cook, has been appointed lead independent Director of the Board effective immediately.
Xerox (XRX 9.35, -0.14 -1.48%) filed its initial Form 10 registration statement in connection with the separation of Xerox into two independent, publicly traded companies.
According to a Wall Street Journal report, Apple (AAPL) in said to be in talks to acquire Jay Z's Tidal music service.
Oracle (ORCL 40.86, +0.08 +0.20%) issued a statement regarding Itanium microprocessor dispute with HP. The company intends to appeal rulings.
Mobileye N.V. (MBLY 47.11, +0.97 +2.10%), BMW Group (BAMXY 24.54, +0.09 +0.39%) and Intel (INTC 32.75, -0.05 -0.15%) confirmed their partnership to bring fully autonomous driving to streets by 2021.
Elsewhere in the tech space:
Tesla Motors (TSLA 216.50, +4.22 +1.99%) confirmed a NHTSA investigation in a blog post following the recent fatal crash that occurred in a Model S.
ViaSat (VSAT 70.88, -0.52 -0.73%) was awarded a $48 million US Navy contract.
Leidos (LDOS 48.69, +0.82 +1.71%) and CACI Intl (CACI 90.77, +0.48 +0.53%) were awarded part of a $480 million US Army contract.
ChinaCache (CCIH 6.51, +0.03 +0.46%) announced that Naijiang Zhou will assume the role of CFO after current CFO Ms. Jing An leaves to pursue other opportunities.
In reaction to quarterly results:
Micron (MU) reported a better than expected Q3 loss per share of $0.08 on revenues which missed expectations and fell 24.8% versus last year to $2.9 billion.
Companies scheduled to report quarterly results next week: Tuesday after hours - ITRI; Wednesday after hours - MRVL; Thursday after hours - CUDA
Analyst actions:
QCOM was downgraded to Hold from Buy at Evercore ISI,
SCTY was downgraded to Neutral from Outperform at Credit Suisse,
SWKS and QRVO were downgraded to Neutral from Buy at Mizuho;
NFLX was initiated with a Buy at Canaccord Genuity,
CSOD was initiated with an Overweight at First Analysis Sec
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