Replies to post #8585 on Sector Investing

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From Briefing.com: Weekly Recap - Week ending 29-May-09The major averages finished higher on this holiday-shortened week -- S&P 500 +3.6%, Dow +2.7%, Nasdaq Comp +4.9%, Russell 2000 +5.0%. It was an extremely light week in terms of news flow and volume, with the biggest volatility due to gyrations in the bond market on Wednesday and Thursday.

Given the lack of news in the early going on Tuesday, investors looked to a much better-than-expected May Consumer Confidence reading of 54.9 (consensus 42.6) for guidance. It gave them more anecdotal evidence that economic conditions may be improving, and led to a 2.6% advance in the S&P.

The market looked to hold those gains on Wednesday, and did through morning and midday trade. But around 13:30ET bond yields began surging higher, which led to an aggressive sell-off in the stock market. The S&P ended down 1.9%.

The surge in yields occurred approximately 30 minutes after a successful 5-year notes offering. Though the auction itself was solid, mortgage origination sellers moved to hedge their positions and pressured the long-end of the yield curve. That sent the benchmark 10-year note more than one point lower, which pushed its yield above 3.70% to a fresh 2009 high. The higher borrowing costs associated with higher yields undermine the government's efforts to keep rates down in order to help along an economic recovery.

Treasury auctions remained on investors' minds on Thursday. After seeking direction in morning trade, the stock market managed to regain some of the prior day's declines after a successful 7-year notes offering that contained no surprises. The S&P ended 1.5% higher on the day.

There was some mixed economic data that morning worth mentioning. Durable Goods Orders came in at a better-than-expected 1.9% in April (consensus 0.5%), but that was offset by a downward revision in March to -2.1% from -0.8%. Initial Jobless Claims continued to show that the pace of layoffs is slowing, as their four-week moving average fell to 626,750 from 629,750, but Continuing Claims continued to indicate that the pace of hiring hasn't picked up, as they hit yet another record high of 6.788 million (consensus 6.750 million).

The major averages finished regaining Wednesday's losses today, including a spike in the final moments of trade to the highs of the session. The S&P advanced 1.4%. Otherwise it was listless trading on Friday, especially since the Preliminary reading for first quarter GDP had little impact, coming in at -5.7% vs. the -5.5% consensus estimate and the -6.1% Advanced reading.

One catalyst overhanging trade throughout the week was General Motors (GM), who completed several steps on its road to bankruptcy. After agreeing to a restructuring deal late Tuesday with the United Autoworkers, where the union would take a significantly smaller stake in the company and the U.S. government would take a significantly larger one (as much as 70%), the company disclosed on Wednesday that it would not consummate its exchange offers as the principal amounts of notes tendered were substantially less than the amount required.

However, the company's bondholders agreed to an amended deal on Thursday, which would allow GM to move forward with bankruptcy. Reports indicate the Obama administration plans to usher the company into bankruptcy on Monday (6/1).

Besides GM's upcoming deadline, expect news flow to be extremely light in the first week of June. But, as always, the first Friday of the month (6/5) will bring the highly-anticipated Nonfarm Payrolls figure and Unemployment rate.

 
 Index    Started Week Ended Week Change % Change YTD % 
 DJIA	     8277.32   8500.33	 223.01    2.7	-3.1 
 Nasdaq	     1692.01   1774.33	 82.32	   4.9	12.5 
 S&P 500	      887.00	919.14	 32.14	   3.6	 1.8 
 Russell 2000  477.62	501.58   23.96	   5.0	 0.4

7:30AM Flextronics announces partial tender offer and consent solicitation for its 6 1/2% and 6 1/4% senior subordinated notes (FLEX) 3.65 : Co announces that it is commencing a cash tender offer to purchase up to $100 mln of the aggregate principal amount outstanding of its 6 1/2% Senior Subordinated Notes due 2013, and up to $100 mln of the aggregate principal amount outstanding of its 6 1/4% Senior Subordinated Notes due 2014. The Offer will expire at 12:00 midnight, ET, on June 25, 2009, unless extended or earlier terminated (such date and time, as the same may be extended, the "Expiration Time"). If the aggregate principal amount of 6 1/2% Notes or 6 1/4% Notes tendered exceeds the $100 mln maximum acceptance amount of such Notes, tendering holders of the oversubscribed series of Notes will be subject to proration.

3:12AM First Solar announces multi-year supply contract with Pfalzsolar (FSLR) 183.75 : Co and Pfalzsolar, GmbH, a German solar project developer owned by Pfalzwerke AG, a public utility in the state of Rhineland-Palatinate, announce the signing of a new long-term supply agreement.

08:28 am Marvell Technology Group (MRVL)

Marvell Technology Group (MRVL 11.69) reported first quarter earnings per share that matched the expectations of analysts and the company's CEO said "recent trends indicate an improvement in near term order patterns."

Marvell reported first quarter earnings of $0.05 per share, excluding nonrecurring items. The results matched the First Call consensus of $0.05. Non-GAAP net income was $31.9 million, a decrease of 2% sequentially and a 79% drop year-over-year.

Revenues rose 1.7% year-over-year to $521.4 million, topping the $517.4 million consensus.

"We are pleased with the sequential improvement in revenue during our first fiscal quarter of 2010," said Dr. Sehat Sutardja, Marvell Chairman and Chief Executive Officer. "We also delivered improved profitability and cash flow during the first quarter, a positive reflection of the actions we undertook in recent quarters to control costs and expenses as well as tightly managing our working capital."

On the conference call, Marvell said it expects second quarter non-GAAP earnings of $0.07 to $0.13 per share; the First Call consensus currently stands at $0.07. The company projects revenues ranging from $540 million and $580 million; the consensus calls for $532.16 million.

Shares of MRVL are up 75% year-to-date but are down 2.5% about an hour ahead of the opening bell.

08:11 am Dell (DELL)

Revenues and profits at computer maker Dell (DELL 11.48) plunged from last year, but the company still managed to beat analyst's earnings expectations for the first quarter.

Dell reported first quarter earnings of $0.24 per share, excluding a $0.09 charge for organizational effectiveness actions. The results were a penny better than the First Call consensus of $0.23. Operating income of $414 million was down 54% year-over-year.

Revenues fell 23.2% year-over-year to $12.34 billion, shy of the $12.66 billion consensus.

Dell said operating expenses were down $101 million from the previous quarter and down $312 million from last year's first quarter. CEO Michael Dell said, "We're continuing to transform the company on the cost side and delivering strong cash flow."

Dell said signals about the demand environment are mixed, but the company is preparing for what it believes will be a "powerful replacement cycle."

The company did not provide a specific financial outlook, other than to say "Indicators of global IT demand remain mixed, and the broader environment is still challenging."

Shares of DELL are up 12.1% year-to-date and are 1.2% higher in premarket trade ahead of Friday's opening bell.