From Briefing.com: 4:15 pm : The major averages finished the Wednesday session on a cautious note with the S&P 500 falling 0.7%. The Dow Jones Industrial Average (-0.6%) outperformed while small caps bore the brunt of the pressure. The Russell 2000 declined 1.9% while the Nasdaq Composite fell 1.4%.
Equity indices began the day on an upbeat note, but the financial sector (-0.9%) served up an early warning by not taking part in the opening rally. One industry group that briefly participated in the early advance was the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 235.09, -4.35) was up as much as 1.1% during the first hour of action, but faded from the early high, taking the market lower. Interestingly, the broader health care sector (+0.1%) finished the day ahead of the remaining nine groups.
Outside of the relative weakness in biotechnology, the lack of upward momentum in the likes of Amazon.com (AMZN 343.41, -11.30), Facebook (FB 60.38, -4.51), Priceline.com (PCLN 1188.77, -34.93), and Tesla (TSLA 212.96, -7.48) kept the tech-heavy Nasdaq behind the other indices. Facebook was the weakest performer out of the bunch, falling 6.9% after announcing the acquisition of Oculus VR for roughly $2 billion in cash and stock.
Staying on the technology theme, the maker of the "Candy Crush" game, King Digital Entertainment (KING 19.00, -3.50), had a forgettable market debut, falling 15.6% in its first session. Although the stock itself holds no sway over the broader market, the disappointing debut likely contributed to the defensive sentiment.
Elsewhere, another influential sector-industrials (-0.9%)-ended among the laggards as transports displayed broad weakness. The Dow Jones Transportation Average lost 1.6% after being unable to take out its 2014 closing high of 7592.36. All 20 index components posted losses with shipper Kirby (KEX 98.78, -3.71) leading the slide with a 3.6% loss.
Equities notwithstanding, the foreign exchange market also reflected a defensive posture as the Japanese yen strengthened, sending the dollar/yen pair below the 102.00 level.
Similarly, Treasuries rallied throughout the session while receiving a boost from a strong $35 billion 5-year note auction. The benchmark 10-yr yield fell five basis points to 2.69%.
With stocks ending on their lows, participants displayed demand for volatility protection, sending the CBOE Volatility Index (VIX 15.20, +1.18) higher by 8.4%.
Trading volume was a bit above average with nearly 738 million shares changing hands at the NYSE.
Today's economic data was limited to just two reports:
Durable goods orders increased 2.2% in February after falling a downwardly revised 1.3% (from -1.0%) in January. The Briefing.com consensus expected durable goods orders to increase 1.0%. The upward headline surprise does not represent a strengthening in demand from the manufacturing sector. A 6.9% increase in transportation goods provided most of the increase in February demand. Much of that was already known, as Boeing (BA 123.53, -0.49) reported 74 aircraft orders in February, up from 38 in January. Altogether, defense and nondefense aircraft orders increased 15.2%. Excluding transportation, durable goods orders increased a minor 0.2% in January. That was down from a downwardly revised 0.9% (from 1.1%) increase in January. The consensus expected these orders to increase 0.3%.
The weekly MBA Mortgage Applications Index fell 3.5% to follow last week's uptick of 0.2%.
Tomorrow, weekly initial claims (Briefing.com consensus 330K) and the third estimate of Q4 GDP (consensus 2.6%) will be released at 8:30 ET while the Pending Home Sales report for February (expected -0.2%) will cross the wires at 10:00 ET.
S&P 500 +0.2% YTD
Nasdaq Composite -0.1% YTD
Russell 2000 -0.6% YTD
Dow Jones Industrial Average -1.9% YTD
DJ30 -98.89 NASDAQ -60.69 SP500 -13.06 NASDAQ Adv/Vol/Dec 588/2.15 bln/2247 NYSE Adv/Vol/Dec 1029/738.2 mln/2045 3:30 pm : Commodities ended mostly lower today.
Metals all posted losses, excluding iron ore futures, which rose six cents to $111.61/ton
Copper futures pulled back from a 2-week high as concerns in China remain. May copper closed 4 cents lower at $2.97/lb today
Gold and silver sold off today. Apr gold managed to not break below $1300/oz and closed $7.80 lower at $1303.40/oz. May silver fell 21 cents to $19.77/oz.
Crude oil climbed higher today to post another session of gains. In the last 12 minutes of pit trading, crude found more buyers, which pushed it back above $100/barrel and floor trading came to a close. May crude ended 67 cents higher at $100.24/barrel.
4:02PM Fed announces second round of CCAR results (XLF) :
The Federal Reserve on Wednesday announced it has approved the capital plans of 25 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). The Federal Reserve objected to the plans of the other five participating firms--four based on qualitative concerns and one because it did not meet a minimum post-stress capital requirement.
Strong capital levels help ensure that banking organizations have the ability to lend to households and businesses and to continue to meet their financial obligations, even in times of economic difficulty. Now in its fourth year, the Federal Reserve in CCAR evaluates the capital planning processes and capital adequacy of the largest bank holding companies, including the firms' proposed capital actions such as dividend payments and share buybacks and issuances.When considering an institution's capital plan, the Federal Reserve considers both qualitative and quantitative factors. These include a firm's capital ratios under severe economic and financial market stress and the strength of the firm's capital planning process. After the Federal Reserve objects to a capital plan, the institution may only make capital distributions with prior written approval from the Federal Reserve.
"The Federal Reserve's annual capital plan assessment provides a structured and comparative way to promote and assess the capacity of large bank holding companies to understand and manage their capital positions," Federal Reserve Gov. Daniel Tarullo said. "With each year we have seen broad improvement in the industry's ability to assess its capital needs under stress and continuing improvements to the risk-measurement and -management practices that support good capital planning. However, both the firms and supervisors have more work to do as we continue to raise expectations for the quality of risk management in the nation's largest banks."The Federal Reserve can object to a capital plan based on qualitative or quantitative concerns, or both. The Federal Reserve can require a new capital plan from an institution outside of the annual review at any time if there is a material change in the condition of an individual institution or in the economy or financial markets that could potentially lead to a change in a firm's capital position.
The Federal Reserve did not object to the capital plans for Ally Financial Inc.; American Express Company; Bank of America Corporation; The Bank of New York Mellon Corporation; BB&T Corporation; BBVA Compass Bancshares, Inc.; BMO Financial Corp.; Capital One Financial Corporation; Comerica Incorporated; Discover Financial Services; Fifth Third Bancorp; The Goldman Sachs Group, Inc.; Huntington Bancshares Incorporated; JP Morgan Chase & Co.; Keycorp; M&T Bank Corporation; Morgan Stanley; Northern Trust Corporation; The PNC Financial Services Group, Inc.; Regions Financial Corporation; State Street Corporation; SunTrust Banks, Inc.; U.S. Bancorp; UnionBanCal Corporation; and Wells Fargo & Company. Bank of America Corporation and The Goldman Sachs Group, Inc., met minimum capital requirements after submitting adjusted capital actions.Based on qualitative concerns, the Federal Reserve objected to the capital plans of Citigroup Inc.; HSBC North America Holdings Inc.; RBS Citizens Financial Group, Inc.; and Santander Holdings USA, Inc.
The Federal Reserve objected to the capital plan of Zions Bancorporation because the firm did not meet the minimum, post-stress tier-1 common ratio of 5 percent.U.S. firms have substantially increased their capital since the first set of government stress tests in 2009.
The aggregate tier 1 common equity ratio, which compares high-quality capital to risk-weighted assets, of the 30 bank holding companies in the 2014 CCAR has more than doubled from 5.5 percent in the first quarter of 2009 to 11.6 percent in the fourth quarter of 2013, reflecting an increase in tier 1 common equity of more than $511 billion to $971 billion during the same period.That trend is expected to continue.
All but two of the 30 participants in this year's CCAR are expected to build capital from the second quarter of 2014 through the first quarter of 2015. In the aggregate, the firms are expected to distribute 40 percent less than their projected net income during the same period. The 30 institutions in CCAR this year have a combined $13.5 trillion in assets, or approximately 80 percent of all U.S. bank holding company assets.
3:00PM Microsoft and Dell sign patent licensing agreement (MSFT) 40.00 -0.34 : Co and Dell announced a patent licensing agreement allowing the companies to share technology and build on each other's innovations. It is the continuation of a nearly 30-year business relationship between Microsoft and Dell to deliver world-class technologies to consumers. Through this arrangement, Microsoft and Dell have agreed to license each company's applicable intellectual property related to Android and Chrome OS devices and Xbox gaming consoles. Under the terms of the agreement, they agreed on royalties for Dell's products running the Android or Chrome platforms and on consideration to Dell for a license from Microsoft for Xbox gaming consoles
2:10PM Floor Talk (TALKX) : The stock market used the thought of more policy stimulus potentially coming out of China and the ECB as a foundation to push higher at the start of today's trading. That foundation, however, cracked on the back of a series of developments that suggested there wasn't a lot of conviction behind the early buying efforts. In particular:
The iShares Nasdaq Biotechnology ETF (IBB 236.86, -2.58) has been unable to cement a recovery effort
The King Digital Entertainment (KING 19.64, -2.86) IPO has been a bust so far
The financial sector (-0.4%) continued to underperform
The Dow Jones Transportation Average (-1.1%) came under broad-based selling pressure without any clear catalyst
The small-cap Russell 2000 (-1.5%) continued to get hit with profit taking activity
The yen pivoted from a position of weakness to a position of strength against the dollar
The Nasdaq Composite dropped below its 50-day moving average
Altogether this compilation has stood as a signpost that the stock market has lost some momentum zest. In doing so, it is triggering a move to take some money off the table by accounts that have ridden some of the speculative excess to some handsome price gains.
Not surprisingly, with the momentum trade in question, the Treasury market is getting a boost from some safe-haven action. Following a strong 5-yr note auction, the 10-yr note rose to its best levels of the day (+13/32, 2.699%) as the major stock indices faded to their worst levels of the session.
12:25PM 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
NXPI (58.74 +3.14%): Upgraded to Overweight from Equal-Weight at Morgan Stanley
TM (111.65 +2.94%): Bloomberg reporting that co plans to spend JPY 360 bln on a share buyback; Reuters reporting that co will introduce fuel cell cars next year
GRMN (56.02 +2.86%): Upgraded to Buy from Neutral at Citigroup, target raised to $65 from $60
Large Cap Losers
WDAY (90.33 -4.33%): Mentioned by Jim Cramer as stock that will continue to face challenges as long as IPO market remains lucrative
FB (62.57 -3.58%): Announced acquisition of Oculus VR for ~$2 bln
TWTR (46.45 -2.99%): Continued weakness on concerns regarding ban of service in Turkey; co has filed a lawsuit to lift the ban
Mid Cap Gainers
FIVE (42.94 +13.01%): Beat quarterly EPS by $0.02 ($0.47 ex items vs $0.45 estimate), revs rose 22.1% yoy to $212 mln vs $207.86 mln estimate; issued in-line guidance for Q1 and FY15
CLVS (78.76 +6.62%): Optimism ahead of release of clinical data from co's Phase 1 trial of CO-1686 for the treatment of non-small cell lung cancer tomorrow at the 4th European Lung Cancer Conference
YOKU (29.47 +6.20%): The China Perspective reporting that Tencent has taken a 20% stake in the company
Mid Cap Losers
IGT (13.61 -8.32%): Sees Q2 EPS of $0.17-0.19 vs $0.2 estimate; sees FY14 EPS of $1.00-1.10 vs $1.20 estimate; target lowered to $13 from $17 at Telsey Advisory Group
OIBR (1.4 -6.33%): Receied unfavorable regulatory ruling in Brazil
PNRA (174.63 -6.02%): Reaffirmed Q1 EPS guidance of $1.49-1.55 vs $1.52 estimate; reaffirmed FY14 EPS guidance of $6.80-7.05 vs $6.95 estimate; downgraded to Hold from Buy at Wunderlich, target lowered to $190 from $205; also mentioned cautiously at Telsey Advisory Group 1
1:46AM Nasdaq Comp -6.7 is hovering near its morning low, Dow +17 and S&P +2.4 are back near their pullback lows (TECHX) : Biotech IBB, Health XLV, Housing XHB, Semi SMH, Industrial XLI, Transports IYT, Casino BJK, Software IGV, Networking IGN have displayed relative weakness in recent action.
11:42AM Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (112) outpacing new lows (30) (SCANX) : Stocks that traded to 52 week highs: AIQ, AMKR, AR, ARW, ARX, ATI, AVAV, AVT, AXDX, BAH, BAS, BBT, BRCD, CAT, CBT, CHMI, CLD, CNQ, CRT, CVS, CXDC, DFRG, DHIL, DPS, ECA, EIX, EMC, EMCI, EOG, EPE, ETE, EXH, FFIC, FII, FMNB, FNHC, FRP, FSL, GAIA, GLNG, GLW, GRMN, HAL, HBI, HDS, HIL, HP, HPQ, HRL, HTM, IFN, ISSI, ITC, ITRN, JNJ, KLAC, KND, LANC, LM, LNG, LNT, LUX, LVLT, MCRL, MEAS, MET, MGPI, MITL, MLHR, MSA, MTX, NBR, NEU, NOA, NP, NRG, NSC, OMN, OPOF, PBA, QLGC, RAND, RCAP, RES, REX, RLJ, RMBS, RTRX, RYAAY, SFE, SGY, SLB, SNAK, SONC, SPNS, SSL, ST, SYX, TDG, TFX, UFS, USB, VE, VET, VSEC, WDC, WEC, WHG, WLB, WLFC, WSTG, YONG
Stocks that traded to 52 week lows: AHP, AMBT, APP, ARO, BODY, BXC, CTC, DRL, DSWL, ELNK, EXEL, FLL, GLMD, IGT, KID, KIOR, MLVF, NEWL, OIBR, OIBR.C, PMCT, RALY, RSE, SMLR, STRM, TLOG, VEEV, VHC, VLRS, WPRT
ETFs that traded to 52 week highs: BAL, SMH
ETFs that traded to 52 week lows: none
NXPI +2.3% (upgraded to Overweight from Equal-Weight at Morgan Stanley)
BBRY +1% (target raised to $8 from $4 at Citigroup)
8:04AM Tessera Tech announces LOI with O-Film for the sale of certain patents and equipment assets related to Tessera's subsidiary DigitalOptics; total consideration for this transaction is $50 mln (TSRA) 23.30 :
Co announced that it has entered into a non-binding letter of intent (LOI) with Shenzhen O-Film Tech Co., LTD. ("Shenzhen O-Film," together with affiliates, collectively, "O-Film") for the sale of certain patents and equipment assets related to Tessera's wholly-owned subsidiary DigitalOptics Corporation ("DOC").
In addition, the LOI contemplates a patent license agreement related to MEMS and camera module technology, as well as a license agreement related to certain software features of Tessera's FotoNation business. The LOI also contemplates that O-Film will assume or sublease DigitalOptics' facility lease in Arcadia, California.
Additionally, both Tessera and O-Film are working towards establishing a long-term collaborative relationship between the two companies. Pursuant to the terms of the agreement, the total consideration for this transaction is $50 mln.
O-Film made an initial deposit of $5 mln in connection with the signing of the LOI, which will be credited towards the total consideration. The balance of $45 mln is to be paid upon closing of the transaction. O-Film will pay the purchase price with its cash at hand.
7:04AM Integrated Silicon and Spansion (CODE) sign license agreement that gives ISSI access to Spansion's patent portfolio to develop and produce specialized flash memory products (ISSI) 14.21
6:12AM ReneSola announces it has been selected as one of the respondents in the United States Department of Commerce's anti-dumping investigation on certain crystalline silicon photovoltaic products from China (SOL) 3.92 : Co says "We intend to fully cooperate with the investigation proceedings. We have temporarily halted shipments to the United States that fall within the scope of the investigation that began this March. At the same time, we continue to deploy our distinctive OEM strategy to meet the increasing demand for solar PV modules in the United States."
1:23AM Entegris $360 mln of senior unsecured notes related to financing of proposed acquisition of ATMI (ENTG) 12.16
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