From Briefing.com: There were two markets on Wednesday: the one before the Federal Open Market Committee (FOMC) policy decision at 2:00 p.m. ET and the one after the FOMC decision at 2:00 p.m. ET.
The one before the decision was weak. The one after the decision was decidedly strong.
Stocks, bonds, and commodities all rallied sharply after the release of the policy directive, which didn't contain the word "patient" in it, but nonetheless still sounded quite dovish in its totality when also taking into account committee members' lowered central tendency projections for real GDP and PCE inflation for the next two years and the potential path of the fed funds rate this year.
The first impression of things is that market participants are not fearing a rate hike in the near future. That was evident in the 2-yr note yield dropping 13 basis points to 0.54% and the U.S. Dollar Index getting crushed as the euro and the yen soared.
The S&P 500, which was trading at 2161 just before the release, ended Wednesday at 2099. Every sector participated in the advance, with energy (+2.9%) and utilities (+2.7%) at the front of the pack. The information technology sector (+1.3%) outperformed the S&P 500 (+1.2%) by a slim margin.
Notable news from sector components included the following:
Adobe Systems (ADBE 76.89, -2.77, -3.5%): Reported Q1 (Feb) earnings of $0.44 per share, excluding non-recurring items, which was ahead of analysts' average expectation. Revenues rose 10.9% year/year to $1.11 bln, which was also ahead of estimates. Company sees Q2 revenue in the range of $1.125-1.175 bln and EPS in the range of $0.41-0.47, excluding items.
Apple (AAPL 128.47, +1.43, +1.2%): Digitimes details news that Apple iPhone 6 shipments may reach 53 mln in Q1
Motorola Solutions (MSI 66.65, +1.33, +2.0%): A new $26 mln Project 25 communications system from Motorola Solutions has now been implemented by Las Vegas Metropolitan Police Department to help officers communicate
Oracle (ORCL 44.13, +1.26, +3.0%): Reported Q3 (Feb) earnings of $0.68 per share, in-line with estimates. Revenues rose 0.2% year/year to $9.33 bln, which was slightly below expectations. Without the strengthening of the U.S. dollar, total revenues would have been up 6% as measured in constant currency. Said currencies continue to remain volatile so it is only providing outlook in constant currency (which is not comparable to estimates. Sees Q4 revenue growth of 1-6% in constant currency, non-GAAP EPS of $0.90-0.96, and GAAP EPS of $0.76-0.82. Separately, Oracle announced that its Board of Directors declared a quarterly cash dividend of $0.15 per share of outstanding common stock, reflecting a 25% increase over the current quarterly dividend of $0.12.
Qualcomm (QCOM 70.23, +0.42, +0.6%): Announced its DragonBoard 410c product's support of Windows 10; support targeted at IoT devices and Internet of Everything (IoE) applications Xilinx (XLNX 41.60, +0.62, +1.5%): Announced availability of its 100G IEEE 802.3bj Reed-Solomon FEC IP for data center, service provider, and enterprise applications.Elsewhere in the technology space:
Agilent (A 42.12, +0.54, +1.3%): Announced Mike McMullen, President and COO of the company, has been elected CEO by its board of directors, effective immediately. McMullen succeeds William (Bill) Sullivan, who becomes a company advisor until he retires on Oct. 31, 2015.
Microsemi Corporation (MSCC 34.68, +0.82, +2.4%): Announced it will acquire Vitesse Semiconductor (VTSS 5.34, +1.45, +37.3%) for $5.28 per share through a cash tender offer; total transaction value is ~$389 mln; Under terms, VTSS has 21 day go-shop-period to solicitsuperior proposals. Based on current assumptions, Microsemi expects the acquisition to be $0.16 to $0.20 per share accretive in its first full fiscal year ending September 30, 2016. Separately, Microsemi said as of this date it remains comfortable with its Jan. 22, 2015 non-GAAP guidance for its second fiscal quarter of 2015, ending March 29, 2015.
TripAdvisor (TRIP 84.31, +0.92, +1.1%): Unveiled an online travel review guide with review-writing tips based on a survey of more than 100,000 travelers and hospitality business owners.Analyst Action:
Apple (AAPL 128.50, +1.46, +1.2%): target raised to $130 from $124 at Jefferies; Hold
FLIR Systems (FLIR 31.51, -0.43, -1.4%): downgraded to Outperform from Strong Buy at Raymond James; target lowered to $38 from $41
Micron (MU 28.15, +0.49, +1.8%): target lowered to $40 from $45 at Jefferies; Buy
Oracle (ORCL 44.13, +1.26, +2.9%): target raised to $50 from $47.50 at Credit Suisse; Outperform
Priceline (PCLN 1181.69, +28.12, +2.4%): Piper Jaffray reiterates Overweight rating4:15 pm : The stock market spent the first half of the Wednesday session in the red, but surged into the green following the latest policy statement from the Federal Open Market Committee. The S&P 500 settled higher by 1.2% with all ten sectors ending in the green.
Over the past few days, much of the discussion centered around today's FOMC Statement with participants speculating whether the central bank was going to remove its call for patience. Although the Fed took out "patient," the statement remained quite dovish as the Fed lowered its 2015 GDP forecast range to 2.3%-2.7% from 2.6%-3.0% that was expected in December. Furthermore, the central bank lowered its inflation forecast range to 0.6%-0.8% from 1.0%-1.6%.
Staying on the inflation theme, the committee noted that it needs to be "reasonably confident" that inflation will move back towards the 2.0% objective before hiking rates.
The S&P 500 spiked about 20 points immediately following the statement and continued its advance as the afternoon progressed. Similarly, Treasuries surged in reaction to the diminished likelihood of June rate hike with the 10-yr yield falling 10 basis points to 1.95%. The benchmark note continued its advance during electronic trading, pressuring its yield to the lowest level since early February (1.92%).
Conversely, the dovish tone weighed on the greenback, sending the Dollar Index (97.48, -2.11) lower by 2.2% to last week's levels. Notably, the euro jumped nearly 3.0% to 1.0900, and the pullback in the dollar gave a boost to commodities. Gold futures spiked 1.7% to $1168.20/ozt while crude oil rallied 3.0% to $44.77/bbl. In turn, the energy sector (+2.9%) finished the day in the lead while the utilities sector (+2.7%) led the countercyclical side.
The utilities sector solidified its spot atop this week's leaderboard (+4.3% week-to-date) while the top-weighted countercyclical group-health care (+1.3%)-settled in-line with the market. Interestingly, biotechnology struggled to keep pace with the iShares Nasdaq Biotechnology ETF (IBB 358.14, +1.89) climbing 0.6%. To be fair, the biotech ETF still managed to register its fifth consecutive gain while setting a fresh record high.
Switching back to the cyclical side, the top-weighted technology sector (+1.3%) finished just ahead of the broader market with Oracle (ORCL 44.13, +1.26) providing support. The sector heavyweight spiked 2.9% after reporting in-line earnings on below-consensus revenue; however, the company boosted its quarterly dividend by 25.0% to $0.15/share. In other sector earnings, Adobe (ADBE 76.89, -2.77) lost 3.5% after its cautious guidance for Q2 overshadowed a bottom-line beat.
Elsewhere, transport stocks underperformed after FedEx (FDX 173.30, -2.41) beat bottom-line estimates and guided below consensus estimates. Shares of FDX fell 1.4% while the broader Dow Jones Transportation Average added 0.4%. For its part, the industrial sector (+1.2%) settled in-line with the broader market.
Today's participation was ahead of average with more than 860 million shares changing hands at the NYSE floor.
Economic data was limited to the weekly MBA Mortgage Index, which fell 3.9% to follow last week's 1.3% decline.
Tomorrow, weekly Initial Claims (Briefing.com consensus 293K) and Q4 Current Account Balance (consensus -$105.00 billion) will be reported at 8:30 ET while February Leading Indicators (expected 0.2%) and March Philadelphia Fed Survey (consensus 6.9) will both be released at 10:00 ET.
- Nasdaq Composite +5.2% YTD
- Russell 2000 +3.9% YTD
- S&P 500 +2.0% YTD
- Dow Jones Industrial Average +1.4% YTD
DJ30 +227.11 NASDAQ +45.39 SP500 +25.07 NASDAQ Adv/Vol/Dec 1799/1.84 bln/1115 NYSE Adv/Vol/Dec 2552/862.8 mln/562 3:35 pm :
- Following the Fed statement, the dollar index swiftly dropped to a new low for today, which provided support to select commodities
- Gold and silver spiked as a result, while crude oil climbed higher
- Apr gold closed pit trading $3.20 higher at $1151.10/oz, but rallied above $1172/oz after the Fed statement
- May silver closed flat at $15.53/oz, but surged above $16/ox post-Fed
- Natural gas was already up notably ahead of tomorrow's EIA weekly storage report
- Apr nat gas closed $0.06 higher at $2.92/MMBtu
- Copper, on the other hand, was in the red all day. May copper finished the session $0.08 lower at $2.56/lb, but rallied as high as $2.61/lb post-Fed
4:16 pm Novatel Wireless Officers receive 30% of salary as company stock ( MIFI) : Co announced a new compensation structure for the Company's executive management. Each of the Company's executive officers has volunteered to receive 30% of their 2015 base salary in the form of stock, rather than cash.
Michael Newman, Executive Vice President and Chief Financial Officer, agreed to take 30% of his base salary in the form of restricted stock commencing with his hire in September 2014, and earlier this week, Dr. Slim Souissi, President and Chief Operating Officer, started receiving 30% of his 2015 base salary in the form of restricted stock.
4:08 pm Jabil Circuit beats by $0.05, reports revs in-line; guides Q3 EPS in-line, revs in-line; reaffirms FY15 EPS guidance, revs guidance ( JBL) : Reports Q2 (Feb) earnings of $0.50 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.45; revenues rose 20.5% year/year to $4.31 bln vs the $4.27 bln consensus.
Co issues in-line guidance for Q3, sees EPS of $0.43-0.55, excluding non-recurring items, vs. $0.47 Capital IQ Consensus Estimate; sees Q3 revs of $4.35-4.55 bln vs. $4.43 bln Capital IQ Consensus Estimate.
Co reaffirms guidance for FY15, sees EPS of $1.85-2.15, excluding non-recurring items, vs. $2.02 Capital IQ Consensus Estimate; sees FY15 revs of $17.5-18.5 bln vs. $18.02 bln Capital IQ Consensus Estimate.
"We are squarely on track to deliver targeted revenue and earnings for the fiscal year, all while continuing to invest for future growth."
12:52 pm 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
ZMH (117.38 +1.82%): Reports out that regulators may conditionally clear Biomet bid
BP (38.53 +1.88%): Up on M&A speculation.
Large Cap Losers
ADBE (76.26 -4.27%): Reported Q1 (Feb) earnings of $0.44 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of $0.39; revenues rose 10.9% year/year to $1.11 bln vs the $1.08 bln consensus; guided Q2 EPS and revs below consensus.
FDX (172.11 -2.05%): Beat Q3 consensus EPS estimates by $0.13, reported revs in-line; narrowed FY15 EPS, just below consensus; Lowered global growth outlook for 2015.
Mid Cap Gainers
HLF (37.31 +8.35%): Up following reports that a California judge has thrown out an investor lawsuit related to claims that the company is a pyramid scheme.
AKRX (48.21 +9.96%): Announced the filing of its previously outstanding financials, restated Q2 and Q3 statements due to an error in fair value allocation of assets acquired and liabilities assumed.
RAD (8.26 +4.82%): Heavy call activity seen followed by M&A speculation.
Mid Cap Losers
SQM (16.81 -23.94%): Under heavy pressure after Potash's (POT) representatives on SQM's board resigned after the Chilean Public Prosecutor made allegations of wrongdoing by SQM and its management.
NAV (28.13 -7.89%): Downgraded to Underweight from Equal-Weight at Morgan Stanley.
RSPP (25.4 -6.17%): Priced 5 mln shares of its common stock by the Company and 4 mln shares of its common stock by certain of the Company's stockholders at $25.80/share.
11:58 am Stocks/ETFs that traded to new 52 week highs/lows this session - New highs (167) outpacing new lows (113) (:SCANX) : Stocks that traded to 52 week highs: ABC, ACGL, ACT, AFMD, AIN, AKAM, ALGT, AMAG, AMOT, AMPE, AYI, BANR, BBC, BERY, BIB, BIIB, BKYF, BOH, BSFT, CACC, CAF, CAJ, CATY, CCBG, CEMP, CERU, CGI, CNC, CNK, CONE, CORT, CPF, CPIX, CPRX, CSFL, CSH, CTLT, CTSO, CUBI, CVGW, DGX, DK, EBIX, EBSB, EIG, ESLT, ESPR, ETFC, EWBC, FDS, FHN, FLKS, FRME, FRSH, FTNT, GFF, GGAL, GTT, HBAN, HCBK, HCC, HMHC, HMPR, HNT, HPTX, HTBK, HTLF, HUM, HW, HZNP, IBB, IBP, IIVI, INDB, INS, INSM, IPKW, IPXL, IRIX, IRS, ITG, JAZZ, JBL, JBLU, JEQ, JRN, KAI, KEY, KMG, KYO, LCI, LOGM, LTM, LVNTA, MATW, MDCO, MDGN, MDVN, MEI, MGLN, MLR, MMS, MNK, MNRO, MOH, MPWR, MRTX, MSCC, MSCI, MSO, MTSI, MVIS, MYL, NBIX, NCLH, NLNK, NTRS, NVDA, OLED, ONCE, PBIP, PCYC, PFPT, PFSI, PRGO, PUK, PVTB, QRVO, QUNR, REV, RGEN, RLH, RLI, RMD, ROG, RRGB, SCHL, SCI, SEMI, SIGI, SMMT, SPNC, SSP, STI, STMP, SUSQ, SYNC, SYNT, TA, TBNK, TGTX, TM, TROV, TSRO, TTMI, TYL, UAM, UBSI, UWN, VICR, VRTX, VTSS, WAL, WBS, WFC, WNR, ZAGG
Stocks that traded to 52 week lows: ACFN, ACTG, ANDE, ASCMA, ASPS, ATLS, AVP, AXPW, BALT, BBDO, BCH, BOCH, BPT, CIZN, CKH, CKP, CLF, COMT, CRK, CVEO, DAR, DNOW, DRYS, DWSN, DXR, EBIO, EGY, EJ, ESCR, ETAK, FAM, FCO, FMY, FREE, FTEK, FTGC, GEOS, GLBS, GLF, GORO, GULTU, IDI, IF, IPI, IRG, JOEZ, KBR, KEYW, KYE, LAYN, LEJU, LND, LODE, MAT, MCF, MDW, MGF, MICT, MIL, MIND, MTR, MX, NADL, NDRO, NOA, NOV, NTG, NTP, OMEX, ORMP, OTIV, OXY, PBT, PDBC, PDI, PFIE, PFMT, PHII, PICO, PLPC, PM, PRGN, PTY, RAS, ROYT, RYAM, SA, SFY, SGF, SMLP, SMM, SPEX, SQM, SRF, SRV, SSE, SVBL, SWSH, TGB, TGC, TORM, TRCH, TRX, TTF, UPIP, WG, WHZ, WRES, WTI, WYNN, XGTI, XPL, ZU
ETFs that traded to 52 week highs: EWJ, IAI, IBB, PPH
ETFs that traded to 52 week lows: AFK, DBA, DBC, DJP, FXB, FXS, GREK, JJA, OIL, PPLT, RJA, USO, VNM, XES
10:48 am Cadence Design and ARM ( ARMH) announce strategic IP interoperability agreement ( CDNS) : The multiyear agreement provides reciprocal access to relevant IP portfolios from the Cadence IP Group and ARM. Additionally, the agreement grants both companies rights to manufacture test chips containing Cadence IP and ARM IP and to provide development platforms to customers.
The IP Interoperability Agreement covers existing and future ARMCortex processors, ARM Mali GPUs, ARM CoreLink system IP, ARM Artisan physical IP, and ARM POP IP; Cadence Design IP including cores for PCI Express, MIPI, USB, HDMI, DisplayPort, Ethernet, analog, DDR/LPDDR PHY protocols |
