From Briefing.com: 4:15 pm : The stock market finished Tuesday on a broadly higher note as equities rebounded alongside European bourses. The major averages drifted to the upside today as investors abandoned their risk-off posture, bidding oil, oversold currencies, and the heavily-weighted financial (+2.5%), technology (+2.0%), health care (+2.0%), and consumer discretionary (+1.9%) sectors. The Nasdaq Composite (+2.1%) ended its day ahead of the S&P 500 (+1.8%) and the Dow Jones Industrial Average (+1.6%). The major U.S. averages began the day on a higher note as participants eyed a rebound in European equity markets. The Euro Stoxx 50 Index climbed 2.1%, rebounding from an 11.2% decline over the last two sessions. European banking names helped lead the gains as investors shifted their attention to a two-day EU Summit in Brussels. News flow from the Summit has been relatively light, but comments from German Chancellor Angela Merkel indicated that EU membership remains an all or nothing endeavor. Ms. Merkel said that Britain cannot simply pick and choose elements of membership.
Equities pulled back in the late morning, which corresponded to some late selling interest in the European market. The S&P 500 (+1.8%) found support near the 2020 price level, vacillating near that area until the final ninety minutes of trade. The major averages notched fresh session highs in the final hour of trade, finishing the day at their best levels. In front of the pack, commodity-sensitive energy (+2.6%) led heavily-weighted financials (+2.5%), technology (+2.0%), health care (+2.0%), and consumer discretionary (+1.9%). Conversely, countercyclical telecom services (+0.3%), utilities (+0.3%), and consumer staples (+0.6%) finished with the slimmest gains.
The energy sector (+2.6%) ended its day broadly higher, responding to a 3.1% ($47.92/bbl; +$1.44) gain in oil. In the group, Pioneer Natural Resources (PXD 149.71, +3.10) outperformed after updating its guidance. The company estimated that production growth will increase 12.0% through fiscal year 2016 while maintaining that its capital program is funded through 2018. The American Petroleum Institute will release its weekly inventory data this evening.
In the financial sector (+2.5%), money center banks demonstrated relative strength as Bank of America (BAC 12.70, +0.52) and Citigroup (C 40.44, +1.96) gained 4.3% and 5.1%, respectively. On a side note, after the close on Wednesday, the Fed will release results from its Comprehensive Capital Analysis and Review (CCAR). Expectations remain high that most banks will be granted approval to increase their respective capital return programs. Separately, Dow component Travelers (TRV 114.13, +3.78) ended its day atop of the price-weighted index.
Biotechnology outperformed in the health care space (+2.0%), evidenced by the 3.8% rebound in the iShares Nasdaq Biotechnology ETF (IBB 250.66, +9.17). The sub-group traded higher alongside large caps Gilead Sciences (GILD 82.31, +4.06) and Allergan (AGN 227.72, +10.24). For the month, the ETF has lost 10.4%.
The PHLX Semiconductor Index (+2.7%) demonstrated relative strength, trimming its monthly loss to 4.8%. In the index, Skyworks (SWKS 60.26, +2.25) jumped 4.3% after Craig Hallum provided bullish commentary on the name. The firm maintained its "Buy" designation on the stock, citing industry-leading margins. In the broader technology space (+2.0%), Facebook (FB 112.70, +3.73) rallied 3.4%, erasing yesterday's loss.
The U.S. Dollar Index (95.96, -0.58) slipped today as the euro and the pound rebounded against the dollar. The euro/dollar pair ended higher by 0.6% (1.1089) while sterling jumped 1.0% (1.3354) against the buck. Conversely, the dollar gained 0.6% against the safe haven yen (102.64).
The Treasury complex finished modestly lower as the yield on the 10-yr note rose two basis points to 1.46%.
Today's participation was above the recent average as more than one billion shares changed hands on the NYSE floor.
Today's economic data included the third estimate of first quarter GDP and GDP deflator, the Case-Schiller 20-city index for April, and Consumer Confidence for June:
The third estimate for first quarter GDP showed output increasing at an annual rate of 1.1% (Briefing.com consensus 1.0%), up from the second estimate of 0.8% and the advance estimate of 0.5%.
The third estimate for first quarter GDP should not be regarded as the basis for any change in economic sentiment this morning for a number of reasons.
First, the report is very dated considering it is being released two days before the end of the second quarter.
Second, the report featured a downward revision to personal spending.
Third, it still points to a very weak period of growth in the first quarter.
And fourth, it is virtually meaningless for a market that is now consumed with what the third and fourth quarters will look like following the Brexit vote.
The upward revision in the third estimate was driven largely by exports increasing more than previously estimated.
That boosted the contribution from net exports to the change in GDP from -0.21 percentage points to 0.12 percentage points.
That negated the drag from the revised contribution level for personal spending from 1.29 percentage points to 1.02 percentage points.
Small upward revisions to government spending, the change in private inventories, and fixed investment helped account for the remaining difference.
Final sales of domestic product, which exclude the change in inventories, increased from 1.0% to 1.3% with the third estimate.
The Case-Shiller 20-city Home Price Index for April rose to 5.4%, which was below the Briefing.com consensus of 5.5%. This followed the previous month's revised reading of 5.5% (from 5.4%).
The Conference Board's Consumer Confidence Index increased to 98.0 in June from a downwardly revised 92.4 (from 92.6) in May.
The June reading was well ahead of the Briefing.com consensus estimate, which was pegged at 93.1, and is the highest level for the index since last September.
The uptick in June was driven by an improvement in both the Present Situation Index, which increased from 113.2 to 118.3, and the Expectations Index, which rose from 78.5 to 84.5.
The Conference Board noted that expectations regarding business and labor market conditions, as well as personal income prospects, improved moderately.
This report offers a nice headline surprise, although its relevance is diminished considering the survey was mailed and responses were collected prior to the Brexit vote and its aftermath.
The latter consideration will lend more relevance to the consumer confidence reading for July.
Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index. Meanwhile, Personal Income (Briefing.com consensus 0.3%), Personal Spending (Briefing.com consensus 0.3%), and Core PCE Prices (Briefing.com consensus 0.2%) for May will cross the wires at 8:30 ET. Finally, the day's data will be capped off with Pending Home Sales for May (Briefing.com consensus -1.4%), which will be released at 10:00 ET.
Nasdaq Composite -6.3% YTD
Russell 2000 -2.6% YTD
S&P 500 -0.4% YTD
Dow Jones -0.1% YTD
DJ30 +269.48 NASDAQ +97.42 SP500 +35.55 NASDAQ Adv/Vol/Dec 2581/1.873 bln/587 NYSE Adv/Vol/Dec 2655/1.050 bln/447 3:30 pm :
The dollar index holds onto its morning losses, down -0.3% around the 96.25 level, boosting commodities
Commodities, as measured by the Bloomberg Commodity Index, are up +1.9% at 88.30
Crude oil sees an early afternoon reversal and closes near its high of the day as dollar momentum wanes
August crude oil futures rose $1.44 (+3.1%) to $47.92/barrel
API data is scheduled to be released today at 4 pm ET
EIA petroleum inventory data is scheduled to be released tomorrow at 10:30 am ET
Monthly IEA data is scheduled to be released on July 13th
The Baker Hughes rig count will be released this Friday at 1 pm ET
Natural gas surges to fresh highs of 2016 after reports surface over an Enterprise Products natural gas plant explosion in Mississippi
August natural gas closed $0.15 higher (+5.5%) at $2.89/MMBtu
EIA natural gas inventory data is scheduled to be released at 10:30 am ET
In precious metals, gold sees an afternoon of consolidation, snapping its 2-session streak of gains to close lower
August gold ended today's session down $6.80 (-0.5%) to $1317.80/oz
Silver trades sideways in afternoon trade, inching higher into the close as the dollar weakens
July silver closed today's session $0.08 higher (+0.5%) at $17.83/oz
Base metal copper rallies to close notably higher, recovering its initial pre-Brexit gains
September copper closed $0.05 higher (+2.4%) at $2.17/lb
Copper futures have changed their front month to September from July, as indicated by the active amount of volume in the contracts.
Futures rallied overnight, lifted by a rebound in European regional indices. European bourses have been under substantial pressure recently as investors ruminate over the potential implications of the United Kingdom's exit from the European Union. The Euro Stoxx 50 index (+2.64%) tumbled 11.2% in the prior two sessions while the pound/dollar pair plunged 11.1% over that same time. Investors are eyeing developments from a two-day EU Summit in Brussels, looking for clues to the timing and terms of the official breakup.
The broader market took a brief breather from recent weakness as all three major US indices closed the day near highs. The positive influence was driven by the Nasdaq Composite which added 97.42 points (+2.12%) to 4691.87. The S&P 500 took back some of the prior two sessions' losses, advancing 35.55 points (+1.78%) to 2036.09, and the Dow Jones Industrial Average was higher by 269.48 points (+1.57%) to 17409.72.
Technology (XLK 42.23, +0.81 +1.96%) too was strong today amid broad positive bias as component Seagate Tech (STX 22.53, +1.66 +7.95%) nabbed a strong session following the naming of William Mosley as President and COO. Other sectors as measured by the S&P closed Tuesday XLE +2.78%, XLF +2.56%, XLY +1.99%, XLV +1.95%, XLI +1.69%, XLB +0.85%, XLP +0.63%, XLU +0.37%.
In the S&P 500 Information Technology (694.07, +13.84 +2.03%) sector, trading was decidedly higher as a general recovery from post-Brexit weakness permeated the sector. Component Cisco Systems (CSCO 27.79, +0.48 +1.76%) was modestly higher today as the company announced the acquisition of privately held cloud security firm CloudLock for $293 million. Other names in the space which closed the session higher included MU +6.21%, FSLR +4.84%, WDC +4.57%, AVGO +4.27%, QRVO +4.06%, FIS +3.92%, SWKS +3.88%, AKAM +3.69%, FB +3.42%.
Other notable news items among sector components:
Cisco (CSCO) announced its intention to acquire CloudLock Inc., a privately held cloud security company. CloudLock specializes in cloud access security broker (CASB) technology that provides enterprises with visibility and analytics around user behavior and sensitive data in cloud services, including SaaS, IaaS and PaaS. Under the terms of the agreement, Cisco will pay $293 million in cash and assumed equity awards, plus additional retention-based incentives for CloudLock employees who join Cisco. The acquisition is expected to close in the first quarter of fiscal year 2017.
Corning (GLW 19.38, +0.32 +1.68%) announced its investment in Versalume LLC. Versalume will focus on developing smart, integrated products and solutions based on Corning Fibrance Light-Diffusing Fiber. Fibrance is an optical fiber created from a unique glass composition for maximum flexibility - it can be bent, curved and wrapped around almost anything, while maintaining bright, beautiful, and uniform light.
Seagate Tech (STX) named William Mosley as President and Chief Operating Officer.
Xerox (XRX 9.07, +0.19 +2.11%) announced an agreement with Carl Icahn. Icahn Capital LP's Managing Director, Jonathan Christodoro, will be appointed to the Board effective immediately.
Adobe (ADBE 92.46, +1.61 +1.77%) announced the Cloud Signature Consortium, a group comprised of leading industry and academic organizations committed to building a new open standard for cloud-based digital signatures across mobile and web -- so anyone can digitally sign documents from anywhere.
Norton by Symantec (SYMC 20.13, +0.18 +0.90%) introduced Norton WiFi Privacy, a mobile app that helps shield consumers' information from hackers snooping on unsecured wireless (Wi-Fi) networks.
Cognizant (CTSH 56.00, +0.52 +0.94%) announced Biogen (BIIB 228.52, +3.92 +1.75%) has selected Cognizant's SmartTrials platform to aggregate and store clinical trial operational and patient data.
Western Union (WU 18.70, +0.59 +3.26%) Business Solutions announced a new agreement with DriveWealth to give individual investors greater access to the U.S. stock market. The new partnership will allow individual investors to fund their DriveWealth U.S. investment accounts from their domestic or international bank accounts in many available currencies, at the touch of a button.
Elsewhere in the tech space:
SolarCity's (SCTY 23.75, +1.13 +5.00%) Board formed a special committee of independent directors to evaluate the June 20 acquisition proposal from Tesla Motors (TSLA 201.79, +3.24 +1.63%).
MeetMe (MEET 5.22, +0.55 +11.78%) to acquire Skout for $28.5 million in cash and 5.37 million common shares, implying an enterprise value of about $54.6 million. The company expects earnings accretion in first 12 months post-closing, and additionally announced the retirement of Chairman John Abbott.
Gartner (IT 93.78, +1.41 +1.53%) acquired SCM World. Financial terms of the deal were not disclosed.
Agilent (A 43.11, +0.84 +1.99%) will acquire substantially all of the assets of iLab. Financial terms of the deal were not disclosed.
Splunk (SPLK 53.34, +2.37 +4.65%) and Groupon (GRPN 3.11, +0.13 +4.36%) have agreed to a multi-year Enterprise Adoption Agreement for its Enterprise and Splunk Enterprise Security.
ComScore (SCOR 23.83, -5.57 -18.96%) updated investors regarding the audit committee's investigation. The company said it requires further time to evaluate the information collected and to reach and evaluate final conclusions.
Earnings:
FactSet (FDS 153.01, +1.67 +1.10%) reported better than expected Q3 EPS of $1.64 on in-line revenues which rose 13.0% versus a year ago to $287.5 million. The company also issued in-line guidance for Q4 EPS of $1.68-1.72.
Analyst actions:
SCTY was upgraded to Mkt Outperform from Mkt Perform at Avondale,
AMAT was upgraded to Neutral from Negative at Susquehanna,
BT was upgraded to Neutral from Underperform at Macquarie,
RNET was upgraded to Buy from Neutral at Sidoti,
LPL was upgraded to Neutral from Reduce at Nomura;
TSM, TEF and MBLY were downgraded to Neutral from Buy at Goldman,
TRMB was downgraded to Neutral from Overweight at JP Morgan,
AMTD was downgraded to Neutral from Buy at BofA/Merrill,
SCOR was downgraded to Market Perform from Outperform at Telsey Advisory Group;
RP was initiated with a Buy at The Benchmark Company,
PMTS was initiated with a Buy at Craig Hallum
4:08 pm CalAmp beats by $0.09, beats on rev; guides Q2 EPS in-line, revs below consensus; announces $25 mln buyback (CAMP) :
Reports Q1 (May) earnings of $0.30 per share, $0.09 better than the Capital IQ Consensus of $0.21; revenues rose 39.3% year/year to $91.1 mln vs the $80.75 mln Capital IQ Consensus. Revenue included $27.9 million from the LoJack acquisition and $8.4 million from the Satellite segment. Though the Satellite business is currently in the process of winding down, current accounting rules require that the financial results of this business be included with the Company's continuing operations until the shutdown process is complete.Co issues guidance for Q2, sees EPS of $0.25-0.31, excluding non-recurring items, vs. $0.29 Capital IQ Consensus; sees Q2 revs of $90-95 mln vs. $96.48 mln Capital IQ Consensus Estimate. "We remain cautious in the very near term as macro conditions in North America have resulted in softer than expected demand from key customers for MRM telematics products. We believe that as certain customers work off their inventory overhang, this part of our business should see a solid recovery. We expect the second half of the year to be stronger than the first half, with consolidated revenue reaching a $100 million quarterly run rate later in the year." CalAmp's Board of Directors has authorized a $25 million, 12-month share repurchase plan, underscoring confidence in our business prospects. "We executed on a number of key business initiatives that set the foundation for long-term revenue growth, margin expansion and earnings leverage. We are very pleased that we are seeing early success with LoJack, which was acquired in mid-March, and was a strong contributor in the quarter on multiple fronts, from revenue growth to operating leverage. The integration of LoJack is going smoothly and we are realizing revenue synergies earlier than expected."
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