| | | From Briefing.com: On the final trading day of February, the markets closed with modest losses. A sell-off into the close, and negative action during the final two hours of the trading day, took stocks into the red. Action ended with the S&P 500 at the bottom, shedding 15.82 points (-0.81%) to 1932.23. The Dow Jones Industrial Average lost 123.47 points (-0.74%) to close 16516.50. The Nasdaq Composite posted the shallowest of losses, down 32.52 points (-0.71%) to close 4557.95.
Today, market data came as the Chicago Purchasing Managers Index registered a 47.6 reading for February. Also, Pending Home Sales for January ticked down by 2.5% as the December reading was revised to 0.9% from 0.1%.
Ahead of today's session, U.S. futures and global equity markets fell as pressure from China and Europe weighed. Concerns from China centered on a 2.9% loss in the Shanghai Composite after the G-20 summit yielded little joint action. Meanwhile, a negative reading in CPI growth from the eurozone echoed recent slowing growth and weakening inflation concerns. Futures and global markets received a reprieve after the Asian session when the People's Bank of China announced that it would be lowering its reserve requirement ratio by 50 basis points (to 17.0%) in order to boost liquidity in the Chinese banking system. As a result, futures lifted from their lows and the cash market was able to open higher.
In connection, Chinese tech (QQQC 19.73, -0.27 -1.35%) names were mostly lower as the Nikkei -1.0%, Hang Seng -1.3% and Shanghai -2.9% all finished in the red. Some QQQC components in the red today included WB -5.28%, SINA -3.04%, SOHU -2.80, SMI -2.59%, VNET -2.34%.
In the Technology (XLK 40.97, -0.29 -0.70%) sector, action was mostly indicative of the broader market as a sell-off into the close took the sector into negative territory. Shares of Broadsoft (BSFT 36.89, +5.42 +17.22%) were especially strong today as they company reported better than expected Q4 results this morning. Other sectors finished the session IYZ +1.47%, XLU +0.28%, XLP -0.33%, XLY -0.52%, XLB -0.62%, XLI -0.63%, XLF -1.08%, XLE -1.14%, XLV -1.59% with Telecoms leading the positive action, and Healthcare lagging the others.
Internet (FDN 65.33, -0.26 -0.40%) names were mostly strong today, albeit for the sell-off into the close. Component Ebix (EBIX 37.03, +2.76 +8.05%) reported better than expected Q4 EPS and revenues this morning before the open, and the stock was strong all session. Other FDN components which displayed relative strength included GRPN +6.46%, VEEV +3.98%, SONS +3.73%, LPSN +3.43%, N +2.76%, ELNK +2.73%, BV +2.28%, TRUE +2.07%, PYPL +1.73%, YHOO +1.34%.
The S&P 500 Information Technology sector (675.63, -4.54 -0.67%) was also higher for most of the session, until the final hour sell-off. Component SanDisk (SNDK 72.26, +0.18 +0.25%) was modestly higher today as ISS recommended in a report that stockholders of SNDK vote FOR the proposal to approve the adoption of the Agreement and Plan of Merger with Western Digital (WDC 43.53, -0.36 -0.82%). Shares were positive for the entire day, however, despite broader market action. Other components which closed the session lower with the broader sector included RHT -3.87%, CRM -2.83%, FISV -2.40%, AKAM -2.30%, FIS -2.08%, TSS -2.02%, MSI -1.83%, XLNX -1.79%, ADBE -1.67%, VRSN -1.62%, EBAY -1.57%.
Other notable news items among sector components:
Harris (HRS 78.02, +1.47 +1.92%) was one of three awardees of a multi-award IDIQ contract to supply HMS Manpack radios to the U.S. Army. The IDIQ contract consists of a five-year base and an additional five-year option and has a ceiling of $12.7 billion.- Also, HRS will sell aerostructures business to Albany International (AIN 36.62, +0.16 +0.44%) for $187 million in cash and the assumption of a $23 mln capitalized lease.
Western Union (WU 18.26, -0.20 -1.08%) appointed Jacqueline Molnar as Chief Compliance Officer, leading all of Western Union's global AML / CFT, Sanctions and Consumer Protection compliance programs.
Dell Inc. and EMC (EMC 26.13, +0.08 +0.31%) announced that the European Commission (EC) has granted unconditional clearance to the companies' proposed combination. The EC announced the clearance on Feb. 29, 2016.
IBM (IBM 131.03, -0.97 -0.73%) Security announced to acquire Resilient Systems, Inc. Financial terms of the deal were not disclosed.
SanDisk (SNDK) announced that Institutional Shareholder Services, ISS, has recommended in a report that stockholders of SNDK vote FOR the proposal to approve the adoption of the Agreement and Plan of Merger with Western Digital (WDC).
Elsewhere in the tech space:
In addition to reporting quarterly results, Tribune Media (TRCO 35.90, +2.93 +8.89%) initiated a process to explore the full range of strategic and financial alternatives to enhance shareholder value. The strategic and financial alternatives under consideration include, but are not limited to, the sale or separation of select lines of business or assets, strategic partnerships, programming alliances and return of capital initiatives.TRCO also authorized a new stock repurchase program under which the company may repurchase up to $400 mln of its outstanding Class A common stock. TRCO also entered into new and amended employment agreements with three senior executives. Peter Liguori, the Company's President and Chief Executive Officer, entered into a new two-year employment agreement. The Company named Chandler Bigelow as Executive Vice President and Chief Financial Officer. The Company also expanded the scope of responsibilities of Tribune Media's General Counsel, Eddie Lazarus, by naming him Chief Strategy Officer.RealPage (RP 20.05, +0.21 +1.06%) amended a credit facility, lender commitments increased to $325 million from $200 million.
Imation (IMN 0.86, -0.06 -6.72%) postponed its Q4 earnings release to March 15 from February 29.
II-VI (IIVI 21.95, +0.34 +1.57%) increased its offer price for Anadigics (ANAD 0.84, -0.00 -0.87%) to $0.85 per share (previous offer of $0.81) after co determined competing bidder's proposal of $0.85 per share to be 'superior offer' on Feb. 25.
TransAct Tech (TACT 7.24, -0.09 -1.23%) announced its Board of Directors has approved a $5.0 million stock repurchase program. TransAct is now authorized to repurchase up to $5.0 million of its outstanding shares of common stock from time to time on the open market, depending on market conditions, share price and other factors. The share repurchase authorization expires on December 31, 2017.
Youku Tudou (YOKU 27.38, -0.01 -0.02%) said proxy firms Institutional Shareholder Services and Glass Lewis & Co recommended shareholders vote for previously announced merger with Alibaba (BABA 68.81, +1.90 +2.84%) for $27.60 per share.
Avid Tech (AVID 7.65, +0.17 +2.27%) announced a new $105 million senior secured credit facility.
Fortinet (FTNT 28.40, +0.29 +1.03%) signed a cyber partnership agreement with NATO.
Trimble Navigation (TRMB 23.26, -0.31 -1.32%) sold its The Omega Group assets to TriTech Software Systems. Financial terms of the deal were not disclosed.
In reaction to quarterly results:
Tribune Media (TRCO) reported better than expected Q4 EPS of $0.63 on slightly better than expected revenues of $547.6 million. The company also guided for better than expected FY16 revenues of $2.25-2.28 billion.
Atmel (ATML 8.08, -0.01 -0.12%) reported worse than expected Q4 EPS of $0.06 and revenues which fell 24.5% to $261.3 million.
Broadsoft (BSFT) reported better than expected Q4 EPS and revenues of $1.04 and $89.6 million, respectively. The company also issued guidance for the Q1 period of EPS of $0.20-0.32 and revenues of $70-74 million. For FY16, BSFT expected EPS of $1.90-2.10 on revenues of $332-340 million.
Ebix (EBIX) reported better than expected Q4 EPS and revenues of $0.65 and $70.2 million, respectively.
Companies scheduled to report quarterly results tonight: ACTA APIC BZUN CKEC OPWR RNET TNET TUBE WDAY
Analyst actions:
SKYAY was upgraded to Buy from Neutral at Goldman;
EQIX was downgraded to Neutral from Overweight at JP Morgan,
SSP was downgraded to Market Perform from Outperform at Wells Fargo,
IM was downgraded to Underperform from Outperform at Credit Agricole,
SNDK was downgraded to Sector Weight from Overweight at Pacific Crest,
KEYW was downgraded to Sector Perform from Outperform at RBC Capital Mkts
4:31 pm Rambus signs licensing agreement with The Athena Group ( RMBS) : This agreement allows Athena customers to obtain, directly from Athena, advanced countermeasure solutions that rely on Rambus Cryptography Research patents to protect against side-channel attacks.
4:15 pm : The stock market ended its first session of the week and the last session of February under selling pressure as the heavyweight health care (-1.6%) and financial (-1.1%) spaces weighed on the broader market. Today's trade saw a brief departure from equities trading in tandem with oil, along with investors eyeing weaker than expected economic data at home and overseas. Meanwhile, a safe haven bid in the last hour of trade highlighted concerns ahead of a data-heavy week. The S&P 500 (-0.8%) ended its day behind both the Dow Jones Industrial Average (-0.7%) and the Nasdaq Composite (-0.7%). For the month, the S&P 500 shed 0.4% while the Nasdaq lost 1.1% and the Dow gained 0.3%.
The influential health care sector (-1.6%) underperformed throughout today's session as weakness from large-cap constituents as well as biotechnology dropped the group to the bottom of the leaderboard. The iShares Nasdaq Biotechnology ETF (IBB 254.09, -7.40) ended its session lower by 2.8%. For the month of February, the sub-group plummeted 4.9% while the broader sector ended lower by 0.7% over the same period. Elsewhere in the space, Valeant Pharmaceuticals (VRX 65.80, -14.85) tumbled 18.4% after CNBC reported that the SEC is investigating the company. Additionally, the company postponed its earnings release and call.
The economically-sensitive financial group (-1.1%) recovered from some early weakness and managed to trade in-line with the broader market for part of the afternoon, but lost traction as money center banks and investment brokerages weighed. On that note, Wells Fargo (WFC 46.92, -1.15) tumbled 2.4%. Conversely, Berkshire Hathaway (BRK.B 134.17, +2.25) climbed 1.7% after reporting better than expected operating earnings in Q4. The financial sector ended February lower by 3.2%, bringing its year-to-date decline to 11.9%.
The broader market received an early boost from a rally in crude oil, but was unable to maintain that momentum once the commodity's pit session ended. Even the commodity-sensitive energy (-1.2%) and materials (-0.6%) were unable to finish in the green after being up by as much as 0.6% and 1.2%, respectively. For its part, WTI crude ended its day higher by 3.3% at $33.82/bbl, finishing the month little changed.
In the energy group (-1.2%), independent oil and gas names posted some of the largest declines of the day with EOG Resources (EOG 64.74, -2.76) falling 3.8%. Separately, the space was hurt by a 4.5% decline in natural gas, which ended at $1.71/mmbtu.
Countercyclical utilities (+0.2%) outperformed today and consumer staples (-0.4%) followed on the leaderboard.
The Treasury complex was bid higher as equities slipped to their worst levels of the day. For its part, the yield on 10-yr note ended its session lower by three basis points at 1.74%.
On the currency front, the U.S. Dollar Index (98.16, +0.01) surrendered most of its gain as the greenback weakened against the yen. The dollar/yen pair ended lower by 1.1% at 112.80.
Today's participation was within the recent average with more than 1.266 billion shares changing hands at the NYSE floor.
Today's economic data included Chicago PMI for February and Pending Home Sales for January:
- The Chicago Purchasing Managers Index registered a 47.6 reading for February. That was below the Briefing.com consensus estimate of 52.0 and well below the prior month's reading of 55.6. A number below 50 denotes contraction.
- The last six readings for this index dating back to September have been 47.8, 52.6, 47.7, 42.9, 55.6, and 47.6, respectively, so what the February report reveals is that the strength in January was likely little more than a brief snapback in activity from a depressed base of readings in more recent months.
- The downturn in February saw four of the five barometer components decline versus January: New Orders (from 58.8 to 51.7), Production (from 62.5 from 44.0), Employment (from 48.9 to 45.2) and Prices Paid (from 43.7 to 41.1).
- The employment index, which saw its fifth straight monthly reading below 50.0, is at its lowest level since November 2009.
- The Prices Paid Index, meanwhile, is at its lowest level since July 2009 with falling oil and commodity prices playing a part there.
- Pending home sales for January ticked lower by 2.5% while the Briefing.com consensus expected an increase of 0.7%. Meanwhile the December reading was revised to 0.9% from 0.1%
Separately, New York Fed President and FOMC voting member William Dudley will speak at 23:30 ET.
Tomorrow's economic data will include Construction Spending for January (Briefing.com consensus +0.5%) and the ISM Index for February (Briefing.com consensus 49.0), which will both cross the wires at 10:00 ET. DJ30 -123.88 NASDAQ -32.52 SP500 -15.85 NASDAQ Adv/Vol/Dec 1378/1.784 bln/1637 NYSE Adv/Vol/Dec 1600/1.266 bln/1448
3:40 pm :
- The dollar index slid a little this afternoon to end near the unchanged mark
- Energy finished today's trading session mixed with oil posting gains, natural gas tanking and RBOB and heating oil rising
- Apr crude oil rose 3.3$ today to $33.82/barrel, while Apt natural gas slipped 5% to end the day at $1.71/MMBtu
- Copper recovered today, ending one cent higher at $2.13/lb
- In precious metals, Apr gold rose 1.2% today to $1234.60/oz, while May silver rallied 1.2% to $14.90/oz
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