From Briefing.com: Weekly Recap - Week ending 01-Jun-12Dow -274.88 at 12118.57, Nasdaq -79.86 at 2747.48, S&P -32.29 at 1278.04
Domestic markets were closed on Monday in observance of Memorial Day so trade this week started on Tuesday, when stocks advanced more than 1% amid speculation that plans for new spending in China were a sign of further stimulus from the country. Comments that political leaders in Greece want to remain with the euro also stirred a positive response.
Data on Tuesday came with little consequence. The Consumer Confidence Index for May fell to 64.9 from a downwardly revised 68.7 in the prior reading. The University of Michigan had posted the strongest Consumer Sentiment Survey in four years just one week before.
Sentiment among market participants soured by Wednesday, when the major equity averages fell in excess of 1% in response to renewed worries about the health and fate of the eurozone. Rumors regarding European bank recapitalizations were shrugged off.
News of a 5.5% drop in pending home sales during April failed to improve the mood since a 0.6% increase had been broadly expected.
The flow of data picked up on Thursday, but the underwhelming nature of the numbers forced the S&P 500 down to the 1300 line before buyers stepped in to provide support.
First quarter GDP was revised downward to reflect growth of 1.9%. Many economists had thought that the 2.2% increase featured in the preliminary reading would be revised to reflect growth of 2.0%.
Market participants were given a preview of the jobs picture via the latest ADP Employment Change. It showed that private payrolls increased during May by 133,000, which is less than the increase of 157,000 that had been expected, on average, among economists polled by Briefing.com.
The latest weekly initial jobless claims count increased to 383,000, which is more than the tally of 368,000 that many had come to expect following several straight weeks with initial claims staying near 370,000.
Trading volume on the NYSE surged to more than 1 billion shares on Thursday, which marked the final day of May. During the course of the month the S&P 500 sank more than 6% for its worst monthly performance since September.
Participants were compelled to sell on Friday by another round of disappointing data.
As if to compound concerns about the eurozone’s fiscal, financial, and economic conditions, a batch of banal PMI numbers were released by Europe after a lackluster PMI reading from China. They were followed by one of the worst US payrolls reports of the past year.
Official numbers indicate that nonfarm payrolls increased in May by 69,000, which is far less than the increase of 150,000 that had been expected, on average, among economists polled by Briefing.com. Nonfarm private payrolls increased by a mere 82,000, which is also hardly half of what had been broadly forecasted – the Briefing.com consensus had called for an increase of 168,000.
What’s more, the headline unemployment rate ticked up to 8.2%. Most economists expected it to remain at 8.1%.
Manufacturing data also proved uninspiring as the ISM Index declined during May to 53.5 from 54.8 in the prior month, missing the reading of 54.0 that had been expected for the latest reading.
Generally on par with what had been projected, personal spending and income increased in April by 0.3% and 0.2%, respectively, while core personal consumption expenditures increased by 0.1%. Construction spending increased during April by 0.3%, which is less than the 0.5% increase that many had come to expect.
While the data likely increased the probability of further Fed action, including another round of quantitative easing, it failed to prevent a steep sell-off. The efforts of sellers resulted in the worst one-day percentage drop for the S&P 500 since December, and left it to trade at a multi-month low beneath its 200-day moving average. The broad market measure hasn’t closed below that key technical line since the very end of 2011.
Gold garnered strong buying interest as traders turned defensive. The yellow metal’s price pushed up from an early morning loss to a session high of $1624 per ounce before it closed with a 3.6% gain at $1621.40 per ounce. Prior to today’s surge, gold was mired near the multi-month lows that had followed a few weeks of selling.
In contrast, oil prices extended their downtrend by dropping 3.9% to close pit trade at $83.17 per barrel. Along the way they logged their lowest level in more than seven months at $82.27 per barrel.
Oil’s slide played a part in Energy’s many poor performances this week. The sector fell more than 2% on Friday, and roughly 4.5% for the week.
Defensive in nature, Telecom and Utilities had the best week in that they were the only two major sectors that limited weekly losses to less than 1%.
Treasuries, a favorite safe haven among investors, traded higher once again. In fact, the yield on the benchmark 10-year Note dropped to a record low near 1.44% amid aggressive selling in the early going. It gradually eased up from that mark as trade progressed.
The dollar forfeited and early gain to end the session with a loss of about 0.2% against a basket of major foreign currencies, namely the euro, which rallied to a 0.5% gain against the greenback. The euro’s bounce came after it briefly fell beneath $1.23 to set its lowest level in nearly two years.
Although the Volatility Index eventually eased back, it pushed up to a 2012 high narrowly above 26 amid the stock market’s initial flush.
..Nasdaq 100 -2.6%. ..S&P Midcap 400 -3.2%. ..Russell 2000 -3.1%.
| Index | Started Week | Ended Week | Change | % Change | YTD % | | DJIA | 12454.83 | 12118.57 | -336.26 | -2.7 | -0.8 | | Nasdaq | 2837.53 | 2747.48 | -90.05 | -3.2 | 5.5 | | S&P 500 | 1317.82 | 1278.04 | -39.78 | -3.0 | 1.6 | | Russell 2000 | 766.41 | 737.42 | -28.99 | -3.8 | -0.5 |
4:09PM Kulicke & Soffa repays remaining subordinated convertible notes; company now debt free ( KLIC) 9.94 -0.58 : Co announced it has repaid the entire remaining balance of its 0.875% Convertible Subordinated Notes, at the June 1, 2012 maturity date. The Notes had a remaining outstanding principal balance of approximately $110.0 mln at par plus interest. Kulicke & Soffa expects annual expenses relating to these Notes to be reduced by approximately $8.0 mln. Bruno Guilmart, Chief Executive Officer, stated "Eliminating the remaining debt obligation is the latest signal to underscore the strength of our balance sheet and business model. With a remaining net cash position of $316 million, we will continue to strategically invest in product development and efficiency improvements to expand our market leadership and further strengthen our competitive advantage, while also pursuing areas that can reduce the cyclicality in our business."
2:43PM EXFO (Halted, will resume trading at 15:10) lowers Q3 guidance ( EXFO) 6.16 +0.05 : Co lowers Q3 guidance, sees GAAP EPS below prior guidance of $0.01-0.05 vs $0.04 Capital IQ Consensus Estimate; lowers rev to $60 mln from $68-73 mln vs $70.15 mln Capital IQ Consensus. "Challenging macro-economic conditions, coupled with the tightening of capital spending among network operators during the first half of calendar 2012, have rendered EXFO's end-markets very difficult for the short term. Europe turned out to be more impacted than expected, the anticipated pick-up of spending in the Americas did not materialize - especially with Tier-I operators - while spending in China has been sluggish. We believe this is not a co-specific issue, but rather a short-term industry spending pattern, since the requirement for wireline and wireless operators to invest in their networks in order to attract growing data revenue remains intact. We see a growing funnel of serious opportunities, but unfortunately they are being delayed and are taking longer to close."
8:50AM Microsoft announced for Q4 of FY12, MSFT will defer an estimated $450 mln to $550 mln of revenue in association with the Windows Upgrade Offer ( MSFT) 29.20 : Co announced the availability of the Windows Upgrade Offer. In association with the Windows Upgrade Offer, Microsoft will defer revenue from eligible sales under the program to the earlier of the fulfillment date or the program's expiration date. For Q4 of FY12, MSFT will defer an estimated $450 mln to $550 mln of revenue. The deferral only impacts the timing of revenue recognition and will not impact cash flows from operations.
8:37AM QuickLogic prices public offering of units consisting of common stock and warrants at $2.50 per unit ( QUIK) 2.98 : Co announced the pricing of its underwritten public offering of an aggregate of 4,500,000 newly issued shares of common stock, $0.001 par value, together with warrants to purchase up to 2,025,000 shares of common stock. The common stock and warrants will be sold in units, with each consisting of (i) one share of common stock and (ii) a warrant to purchase 0.45 of a share of common stock, at a price of $2.50 per Unit. The warrants are exercisable any time after the date of issuance until the 5-year anniversary of the date of issuance, and will be exercisable at a price of $2.98 per share. The Company expects to receive gross proceeds of $11.25 mln.
8:27AM Lam Research and Novellus (NVLS) merger obtains final regulatory approval ( LRCX) 37.30 : Cos announced that they have now secured all of the approvals required to proceed with the planned merger of the two companies. The transaction is expected to close after market trading hours on June 4, 2012, subject to customary closing conditions.
OmniVision (OVTI $14.20 -1.99) reported fourth quarter earnings of $0.20 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of $0.22, while revenues fell 15.4% year/year to $218.5 million versus the $205.39 million consensus. The company issued mixed guidance for the first quarter EPS of $0.16-0.27, excluding non-recurring items, versus the $0.27 consensus and revenues of $235-255 million versus the $219.20 million consensus. "For the second consecutive quarter, we are pleased to report revenues that exceeded the high-end of our guidance as demand for our image sensors continued to strengthen..As we enter fiscal 2013, our focus on developing new technology remains a key element of our growth strategy, and we are as committed as ever to regaining our business momentum." GAAP gross margin for the fourth quarter of fiscal 2012 was 22.5%, as compared to 24.2% for the third quarter of fiscal 2012 and 30.7% for the fourth quarter of fiscal 2011. The sequential decrease in fourth quarter gross margin reflected the unfavorable impact of a decrease in revenues recorded on the sale of previously written-down inventory combined with an increase in inventory valuation allowances.
10:26 am Technology sector trading lower on broad market declines
The tech sector is trading lower today, along with broad losses in the overall market. Semiconductors are also showing relative weakness with the Philly Semi Index trading 2.0% lower. AMD (-5.2%) is a notable laggard in that chip index, while LCRX (+0.0%) is showing relative strength. Among other major indices, the SPY is trading 1.5% lower today, while the QQQ and the NASDAQ are trading 1.6% lower on the session. Among tech bellwethers, FB (-3.8%) is showing notable weakness. In earnings last night, OTVI (-11.6%) posted a Q4 miss, while Apple (AAPL)
In news, QUIK (-24.8) priced a public offering of units consisting of common stock and warrants at $2.50 per unit and also reported a disappointing quarter.
In Broker Research, SYNC (-12.5%) was downgraded to Hold at Stifel Nicolaus. ZNGA (-3.2%) was upgraded to Neutral from Underperform at Sterne Agee. TSM (-3.0%) was downgraded to Underperform from Hold at Jefferies. HPQ (-4.7%) was downgraded to Hold from Buy at Jefferies There are no notable names in tech scheduled to report quarterly results today after the close.
09:50 am Omnivision shares plunge over 11% following miss on earnings
OmniVision (OVTI $14.19 -1.97) reported fourth quarter earnings of $0.20 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of $0.22, while revenues fell 15.4% year/year to $218.5 million versus the $205.39 million consensus. The company issued mixed guidance for the first quarter EPS of $0.16-0.27, excluding non-recurring items, versus the $0.27 consensus and revenues of $235-255 million versus the $219.20 million consensus. "For the second consecutive quarter, we are pleased to report revenues that exceeded the high-end of our guidance as demand for our image sensors continued to strengthen..
As we enter fiscal 2013, our focus on developing new technology remains a key element of our growth strategy, and we are as committed as ever to regaining our business momentum." GAAP gross margin for the fourth quarter of fiscal 2012 was 22.5%, as compared to 24.2% for the third quarter of fiscal 2012 and 30.7% for the fourth quarter of fiscal 2011. The sequential decrease in fourth quarter gross margin reflected the unfavorable impact of a decrease in revenues recorded on the sale of previously written-down inventory combined with an increase in inventory valuation allowances. |
