From Briefing.com: 4:30 pm : Better-than-expected domestic manufacturing data gave stocks a boost in the early going, but resistance triggered selling pressure that eventually intensified amid a weakened financial sector.
The first few minutes of trade lacked leadership. Participants were taking into account the latest initial jobless claims tally, which totaled 409,000. That was in stride with the 407,000 claims that had been widely anticipated. An upward revision to the prior week's count helped inflate the four-week moving average to 410,250.
Revised unit labor costs for the second quarter were also released ahead of the open. They showed a 3.3% increase, down from the 6.2% increase that had been posted in the preliminary report. A 2.4% hike had been expected.
A 1.3% decline in construction spending during July contrasted with the consensus call for no change, but that was ignored amid the ISM Manufacturing Index for August. The Index fell to 50.6 from 50.9 in the prior month, but it still bested the 48.5 that had been expected, on average, among economists polled by Briefing.com. Although the health of domestic manufacturing exceeded what had been anticipated, PMI Manufacturing readings from both Germany and France disappointed.
Stocks reacted positively to the ISM's upside surprise, but the broad market was quickly brushed back when the S&P 500 failed to break through resistance near the 1230 region, which represents the 50% retracement level of the July high to August low. Stocks then hugged the neutral line for a few hours before drifting into the red.
The major averages fell another leg lower and drifted downward into the close after it was learned that Goldman Sachs (GS 112.16, -4.06) is the target of a formal enforcement action by the Fed regarding residential mortgage loan servicing and foreclosure processing. Financials, which had already been lagging, suffered a 2.4% loss as a result of pressure against investment banks and brokerages.
Retailers were also pressured sharply. Their collective loss totaled more than 2%, as measured by the SPDR S&P Retail ETF (XRT 48.50, -1.10), in the wake of the latest round of same-store sales results. The majority of retail players reported stronger-than-expected results, but that mattered little amid broad market weakness.
Participants were generally unwilling to offer support into the close. Their caution comes as some begin to wonder if stocks are due for some selling after they entered today's trade riding an upward trend that led to seven gains in eight sessions. What's more, there is a sense of uncertainty related to the latest non-farm payrolls report, which is due tomorrow. Even though the ADP Employment Change proved solid when it was released earlier this week, many traders remain cautious about what may be in store for tomorrow.
Advancing Sectors: (None)
Declining Sectors: Financials -2.4%, Industrials -1.6%, Consumer Discretionary -1.3%, Materials -1.3%, Tech -1.1%, Telecom -1.0%, Energy -0.9%, Health Care -0.7%, Utilities -0.6%, Consumer Staples -0.4%DJ30 -119.96 NASDAQ -33.42 NQ100 -1.0% R2K -2.5% SP400 -1.7% SP500 -14.47 NASDAQ Adv/Vol/Dec 516/1.74 bln/2026 NYSE Adv/Vol/Dec 801/1.02 bln/2227
4:10PM Intersil announces $325 million credit agreement (ISIL) 11.12 -0.11 : Co announced that it has executed a new five year $325 mln revolving credit agreement, which replaces the current long-term debt. The after-tax interest rate will be ~2%. Q3 2011 GAAP earnings will be impacted by ~$8 mln in non-cash costs associated with the early retirement of our existing long term debt.
4:10PM Rambus' Cryptography Research announced that Verimatrix has licensed Cryptography Research's CryptoFirewall (RMBS) 11.31 -0.30 : Cryptography Research, a division of Rambus, and Verimatrix, announced that Verimatrix has licensed Cryptography Research's CryptoFirewall security core technology to help build advanced solutions protecting video delivery revenue streams.
9:15AM Microsemi: Zarlink (ZARLF) recommends rejection of Microsemi's offers; Board believes it is likely a superior transaction will emerge from strategic process (MSCC) 15.53 : Zarlink's Board of Directors unanimously recommends that shareholders and debentureholders reject the unsolicited offers of August 17, 2011 by Microsemi Corporation's wholly-owned subsidiary to purchase all of the Company's outstanding common shares at CDN$3.35 per Share and all of the co's outstanding 6% unsecured, subordinated convertible debentures maturing Sept 30, 2012 at CDN$1,367.35 per CDN$1,000 principal amount of Debentures. "The Microsemi Offers significantly undervalue Zarlink, are highly opportunistic as they come at an inflection point in Zarlink's financial, technological and operational repositioning and do not provide our shareholders and debentureholders with the value of our repositioning.. the Board believes, based on the level of interest which has been expressed to date, that it is likely that a transaction will emerge from the Board's strategic process which is superior to the Microsemi Offers."
First Solar (FSLR) announced its solar modules satisfy requirements for a 10% feed-in tariff premium in Italy after passing a thorough factory inspection.
09:31 am Ciena Guides Fourth Quarter Revenue Below Consensus (CIEN)
Ciena (CIEN $13.96 +1.72) reported third quarter earnings of $0.08 per share, excluding non-recurring items, $0.17 better than the Capital IQ Consensus Estimate of ($0.09).
Revenues rose 11.7% year/year to $435.3 million versus the $443.9 million consensus.
The company said, "Our third quarter results, which included a favorable product mix and reduced operating expense to achieve an as-adjusted operating profit, demonstrate our early progress in delivering additional operating leverage from the business."
In its fourth quarter, the company expects revenue to be $440 million to $460 million versus the $474.71 million Capital IQ Consensus Estimate, with an adjusted gross margin percentage in the low 40s range, adjusted operating expense in the upper $170s million range.
Novellus (NVLS $27.21 -0.76) narrowed revenue guidance to low end. The company sees bookings down 15 to 30% year over year (previously expected down 5-7%). The company is narrowing guidance to $300-320 million ($300-340 million previous guidance) versus the Capital IQ consensus of $322 million. Gross margin guidance was unchanged at 48-50% |
