From Briefing.com: 4:20 pm : Not much has changed over the course of the afternoon, with quiet trading conditions ahead of tomorrow's employment report. As mentioned earlier, equities started the day lower despite some better-than-expected employment data and central bank easing in Europe and China. Stocks made lows a half-hour after the open on slightly worse than expected ISM services data, but managed to show some improvement off the lows, with the retail and technology sectors outperforming throughout the day.
To recap the central bank activity this morning, China cut interest rates for the second time in a month and the Bank of England expanded its asset purchase program. Then the ECB cut rates by 0.25%. The Bank of England and ECB moves were in-line with expectations, so the biggest surprise this morning was China's rate cut. However, many had expected China to continue to ease, so while the timing may be surprising, the policy move itself isn't.
In U.S. economic data, the June ADP Employment reading helped futures move back into positive territory, as it showed an increase of 176K jobs from May to June on a seasonally adjusted basis. This was much better than the 105K Briefing.com consensus. However, markets saw little reaction to the weekly initial jobless claims reading of 374K, which was better than the 385K Briefing.com consensus. The ISM services index was reported at 52.1, which was slightly below the 53.0 Briefing.com consensus, and a decline from May's 53.7 reading.
European markets turned negative following ECB and BoE actions that were generally in-line with expectations. The euro weakened in the wake of the ECB rate cut and with a lowered growth outlook from ECB President Draghi. Germany's DAX finished down 0.5% while the UK's FTSE finished marginally higher by 0.1%.
In Asia, China's Shanghai Composite underperformed with a 1.2% decline, while Japan's Nikkei fell 0.3% and Hong Kong's Hang Seng rose 0.5%. Those markets were closed prior to the Chinese rate cut.
Retailers are one of the strongest sectors in the market, gaining more than 1% on average vs. a 0.5% decline in the broader market despite weaker than expected June comparable store sales results. Of the 20 that have reported, 14 retailers missed expectations while six beat. This is the largest number of misses since last May.
The technology sector was also an area of strength, with a 0.1% gain in the Nasdaq 100 vs. the 0.5% loss in the broader market. The biggest gainer in the Nasdaq 100 is Netflix (NFLX 81.72, +9.68), which closed +13% after the company's CEO said its streaming service had its highest month of content consumption. A 2% gain in Apple (AAPL 609.94, +10.53) also helped the tech sector.
On the other hand, Financials (XLF, 14.59 -0.22) underperformed. Part of the weakness was attributed to the shadow cast by the Barclay's LIBOR probe. British officials are reportedly investigating multiple large banks for rate manipulation. JPMorgan (JPM 34.38, -1.50) was a notable laggard.
Volume was below average. However, there is the potential for heavier trading around tomorrow's June nonfarm payrolls report before the open, which is expected to show an increase of around 100K.DJ30 -47.15 NASDAQ 0.04 SP500 -6.44 NASDAQ Adv/Vol/Dec 1149/1.37 bln/1336 NYSE Adv/Vol/Dec 1329/684 mln/1695
3:30 pm : An advance by the dollar following central bank easing in Europe and China and better-than-expected employment data put pressure on precious metals and crude oil during today's pit trade. Gold tumbled to a pit session low of $1598.40 per ounce but was able to erase some losses as it inched slightly higher for the remainder of its session. It ultimately finished 0.7% lower at $1609.90 per ounce.
Silver also inched higher after sliding to a floor session low of $27.53 per ounce and eventually settled at $27.68 per ounce, or 2.2% lower. Crude oil fell to a session low of $86.58 per barrel, but stronger-than-anticipated inventory data that showed a draw of 4.27 mln barrels when a draw of 2.3 mln barrels was expected briefly pushed prices into positive territory to a session high of $88.06 per barrel.
The energy component pulled-back slightly in afternoon action and settled 0.7% lower at $87.13 per barrel... Natural gas, on the other hand, spent most of its floor session in the black. A rally heading into the close pushed prices higher so that nat gas settled with a 1.4% gain at $2.94 per MMBtu, just below its session high of $2.95 per MMBtu.DJ30 -22.14 NASDAQ +4.66 SP500 -4.00 NASDAQ Adv/Vol/Dec 1163/1123 mln/1289 NYSE Adv/Vol/Dec 1342/454 mln/1664
4:53PM Seagate Tech reports selected preliminary Q4 results: expects revenues of $4.5 bln (vs $4.87 bln Capital IQ Consensus Estimate) and non-GAAP gross margin of 33.6% (STX) 25.08 -0.05 : Co announced selected preliminary financial results for its fourth fiscal quarter of 2012, which ended on June 29, 2012. Seagate expects to report record revenue of approximately $4.5 billion (vs $4.87 bln Capital IQ Consensus Estimate) and non-GAAP gross margin of 33.6%. These preliminary results compare to the Company's previous expectations for revenue of at least $5 billion and non-GAAP gross margin of at least 34.5%. Seagate expects to report record unit shipments for the June quarter of approximately 66 million, reflecting approximately 45 exabytes of storage capacity and maintaining approximately 42% market share. During the quarter the company paid $1.2 billion to redeem over 45 million ordinary shares and exited June with 396 million basic shares outstanding. Cash, cash equivalents, restricted cash and short term investments totaled $2.2 billion at the end of the June quarter.
"Seagate expects to report another record quarter of revenue in the June quarter, however we did not meet our expected revenue and margin plan," said Steve Luczo, Seagate chairman and chief executive officer. "The June quarter's shortfall was due primarily to two factors. First, we did not achieve our planned market share growth as we reduced shipments in response to the industry's faster than expected recovery from their supply chain disruption. Second, we experienced an isolated supplier quality issue that affected one of our enterprise product lines. This product issue impacted enterprise product unit shipments by approximately 1.5 million units and drove our non-GAAP gross margin below our targeted plan. While this disruption to our business was disappointing, we acted quickly and conservatively by suspending shipments of the affected products. We have resolved the issue and have resumed fulfilling our supply commitments to customers." Luczo continued, "Based on the macro-economic concerns indicated by a broad base of customers, we are approaching the September quarter conservatively and aligning our business for a relatively flat addressable market and modest improvements in our product mix. We are adjusting our production and inventory planning accordingly, and we expect average selling prices and margins to remain relatively stable in the September quarter. We also continue to expect to exit the calendar year with non-GAAP gross margins exceeding 30%."
4:00PM Broadcom and Emulex (ELX) reach partial settlement and worldwide patent agreement (BRCM) 33.69 : Broadcom and Emulex (ELX) announced that the companies have entered into a partial settlement and worldwide patent license agreement relating to the patent litigation in the U.S. Federal District Court in Santa Ana, California. The agreement will result in the dismissal of certain of Broadcom's infringement claims against Emulex. Emulex also receives a license to Broadcom U.S. Patents Nos. 7,471,691; 7,058,150; 6,424,194 and related families for certain fields of use including Fibre Channel applications. The fields of use licensed to Emulex are related, in part, to the Emulex XE201 (Lancer) ASICs, that are capable of Fibre Channel and Ethernet, 16Gbps Fiber Channel HBAs, Fibre Channel SOCs and other FC products. Emulex will pay to Broadcom a release and license fee of $58 million in cash.
Sterne Agee downgraded Avanced Micro (AMD $5.90 -0.13) to Neutral from Buy and sets target price at $8.50 as material upside to consensus might be limited given PC transition and competitive headwinds. While the firm has been positive on AMD for a long time, and AMD is executing well, and taking Desktop-graphics market share with its Trinity and Radeon 7970 platforms, they believe the slowing PC market limits upside. The firm's checks with PC ODMs are showing JunQ has trended modestly lighter and current July-Aug builds are tracking flat q/q ahead of the Win8 transition.
10:34 am Information Technology sector is trading lower today with the market
The tech sector is trading lower today, slightly outpacing losses in the broader market. Semiconductors are also showing relative weakness, however, with the Philly Semi Index trading 1.8% lower. NXPI (-3.8%) and STM (-3.7%) are notable laggards in that chip index. Among other major indices, the SPY is trading 0.6% lower today, while the QQQ and the NASDAQ are trading 0.4% lower on the session. Among tech bellwethers, AAPL (+1.0%) is showing notable strength, while INTC (-1.7%) is under pressure.
In earnings. late Tuesday night, SMSC (-0.2%) posted a Q1 beat. In news, RNWK (-6.2%) announced its CEO has resigned. Among rumors, there are multiple reports out indicating that AAPL (+1.0%) is preparing for a launch of a smaller iteration of its iPad. Among notable analyst upgrades this morning, CHU (+7.2%) was upgraded to Neutral at HSBC and YNDX (+2.8%) was upgraded to Buy at BofA/Merrill. While in downgrades, Sterne Agee downgraded AMD (-3.0%) to Neutral. There are no notable names in tech scheduled to report quarterly results today after the close. |
