From Briefing.com: 4:15 pm : A late-day rally lifted the S&P 500 into positive territory moments ahead of the close, but the index finished with fractional losses to close lower for a fifth straight session. The index rallied from session lows to session highs in the final 90 minutes of trading on a somewhat mysterious move before slipping back below the flat line ahead of the close. Selling also dropped the Dow and Nasdaq 0.4% and 0.5% respectively.
This afternoon’s FOMC Minutes failed to mention more quantitative easing by the Fed, but suggested ‘further policy stimulus likely would be necessary to promote satisfactory growth,’ and that the Fed should study ‘new tools’ for easing. Several members also suggested the potential for a ‘significant slowdown’ in China. Both the trade deficit and wholesale inventories were released this morning with relatively in-line readings having a muted impact on trade.
Asian markets rallied into their respective closes after Chinese Premier Wen Jiabao suggested it is “important to promote a reasonable growth in investment” Elsewhere, Spanish Prime Minister Mariano Rajoy announced new austerity measures which are expected to trim the country’s deficit by EUR65 billion. Spain’s IBEX outperformed with a 1.2% advance as the Spanish 10-yr yield eased 16 basis points 6.58%.
Luxury goods maker Burberry (BURBY 37.05, -2.55) fell sharply after announcing disappointing earnings. The company said sales increased 11.0% for the quarter to GBP408 mln, but that number fell short of the GBP418 mln Capital IQ Consensus Estimate. U.S. rival Coach (COH 55.84, -1.08) lost 1.9% as it piggybacked the move.
Jeans makers were hit after privately held Levi Strauss announced weak second quarter results. The company stated that while it experienced growth in the U.S., both its Asian and European businesses were weak. High cotton prices and the stronger dollar also played a role in the disappointing quarter. Guess (GES 26.91), True Religion Apparel (TRLG 26.78, -1.86), and V F Corp. (VFC 135.69, -1.55) all lost ground on the news.
Shares of teen retailer Abercrombie & Fitch (ANF 34.12, +1.35) surged following a New York Times report suggesting the company is planning a ‘massive’ share buyback.
Regional consumer electronics retailer hhgregg (HGG 7.34, -4.20) hit a three and a half-year low after the company guided its fiscal first quarter results below consensus and lowered its full-year 2013 outlook. Peer Best Buy (BBY 19.37, -1.77) slid in response.
Second quarter earnings reports remain light in terms of volume, but the early negative results against low expectations are providing credibility to the negative sentiment in markets. Last night Adtran (ADTN 23.01, -4.18), OCZ Technology (OCZ 4.50, -0.95), and Voxx International (VOXX 8.04, -1.73) all missed top and bottom line expectations. That brings the Briefing.com calendar results to 10 misses, two in-lines, and one beat thus far for earnings.
Treasuries finished the day flat despite this afternoon’s superb 10-yr reopening. The auction drew a record low at-auction yield of 1.459% and a strong 3.61x bid/cover were reached as direct bidders took down an extremely high 45.4% of the offering. Sellers immediately faded the rally and dropped the complex back to pre-auction levels where it sat for the remainder of the session. The long bond saw slight performance, ending the day up 7/32 at 108 13/32 as its yield slid 0.5 bps to 2.589%. A flat session for the 10-yr note caused its yield to hold steady at 1.498% after post-auction buying dropped it to a low of 1.452% (1.440% record low).
Tomorrow’s data is limited to initial and continuing claims and import/export prices which will be released 8:30 am ET, as well as the Treasury budget which is due out at 2 pm ET.DJ30 -48.59 NASDAQ -14.35 SP500 -0.02 NASDAQ Adv/Vol/Dec 1209/1.57 bln/1233 NYSE Adv/Vol/Dec 1608/768.0 mln/1433
3:30 pm : Crude oil began pit trade in positive territory and popped higher following stronger-than-expected inventory data that showed a draw of 4.696 mln barrels when a draw of 1.4 mln barrels was widely anticipated. It touched a session high of $86.49 per barrel but pulled-back slightly in afternoon action following FOMC minutes. Still, the energy component managed to book a gain of 2.3% as it closed at $85.89 per barrel.
Natural gas also advanced higher in today's pit trade. It opened at its session low of $2.77 per MMBtu and worked its way up to settle at its session high of $2.86 per MMBtu for a 4.4% gain.
Gold spent most of its pit session in negative territory. It came off its session low of $1569.60 per ounce set in morning action and traded a little higher in choppy fashion. Although the yellow metal broke into the black a few times, it was unable to sustain any gains and eventually settled the session 0.2% lower at $1575.90 per ounce. Silver, however, found buying support after it brushed a pit session low of $26.88 per ounce. It rose as high as $27.24 per ounce, but a pull-back heading into the close left silver with a 0.5% gain as it closed at $27.03 per ounce. Both metals tanked in electronic trade as the dollar rallied following the release of FOMC minutes, but silver has since recovered the loss.
Corn prices fell in today's pit trade and settled at $7.03 per bushel despite a bullish corn production forecast by the USDA due to dry/hot weather. CNBC suggested that one of the reasons for the slide was that the USDA will help farmers with the drought. As a result, corn futures fell as much as 8.4% off its session high for the day to $6.86.DJ30 -88.32 NASDAQ -26.03 SP500 -4.46 NASDAQ Adv/Vol/Dec 1046/1273.8 mln/1386 NYSE Adv/Vol/Dec 1330/504 mln/1693
4:57PM KEMET receives clearance from European Commission on acquisition of 34% interest in NEC Tokin (KEM) 5.47 -0.03 : Co announced that it received regulatory clearance from the European Commission under the European Union (EU) Merger Regulation for its proposed acquisition of a 34% interest in NEC Tokin by KEMET Electronics Corporation, its wholly owned subsidiary. As previously announced on March 12, 2012, KEMET entered into a definitive agreement to acquire this interest for $50 mln. The transaction remains subject to satisfaction of customary closing conditions, including receipt of required regulatory approval in China. While a definitive closing date cannot yet be determined, KEMET continues to expect that the transaction will close during its second fiscal quarter, ending September 30, 2012.
4:16PM Tessera Tech distributes mid-year CEO letter to stockholders; 'We are excited about the significant progress made with our digital imaging business' (TSRA) 14.98 -0.16 : Co's CEO stated: 'We are at various stages of the sales cycle with potential customers for additional portfolios we own, including for example those relating to DRAM circuitry. As discussed previously, the sales cycle for the long-term, running-royalty license agreements we pursue is largely driven by discussions among licensing teams and engineers from both parties and can take 18 months or longer to close... As we have said before, we may have disputes with our customers, some of which may involve litigation... we believe no single dispute-related event will have a long-term impact on the ability of our patent monetization...Because of the aggressive steps we have taken around the globe, DOC is now well positioned to provide a vertically integrated solution to the camera module market. Our near term business goal is to quickly become a key player in the camera module market, which today is fragmented and depends on older legacy technologies."
4:02PM Integrated Device announces extension of exchange offer expiration date in PLX Technology (PLXT) transaction (IDTI) 5.06 -0.10 : Co announced that it is extending the expiration date of its exchange offer for all outstanding shares of common stock of PLX Technology, Inc. (NASDAQ: PLXT). The exchange offer was previously scheduled to expire at the end of the day on July 12, 2012, at 12:00 midnight, New York City time. The exchange offer is now set to expire at the end of the day on August 9, 2012, at 12:00 midnight, New York City time, unless further extended. Approximately 15.7 million shares, or approximately 35.1% of PLX's outstanding common stock, had been tendered as of 12:00 midnight at the end of the day on July 10, 2012.
8:03AM PLX Tech announced Entropic Communications (ENTR) acquired specific direct broadcast satellite intellectual property and corresponding technologies from the co for $8 mln (PLXT) 5.90 : The purchased assets relate to the design and development of a digital channel stacking switch semiconductor product for up to $8 million. In addition to the asset purchase agreement, Entropic will pay a one-time $4 million licensing fee for intellectual property which is related to the acquired assets.
Juniper Networks (JNPR) announced that Telefonica Digital has selected Juniper Networks Junos Pulse Mobile Security Suite to create a branded mobile security service for its consumer customer base across Europe.
OCZ Tech (OCZ $4.48 -0.97) reported first quarter loss of $0.17 per share, $0.05 worse than the consensus of ($0.12), while revenues rose 53.9% year/year to $113.6 million versus the $115.6 mln consensus. The company issued in-line guidance for the second quarter with revenues of $130-140 million versus the $132.11 million consensus. The company reaffirmed guidance for fiscal year 2013 with revenues of $630-700 million versus the $653.20 million consensus. Non-GAAP gross margins are expected to increase in Q213 and to exit the year in excess of 30%, with typical sequential gross margin increases of 100 to 250 basis points per quarter throughout the fiscal year, subject to changes in product mix as the SSD landscape continues to evolve. "During the quarter, we achieved record bookings of nearly $140 million reflecting increased order activity associated with the transition to our new generation Everest 2 based Vertex 4 and Agility 4 product lines introduced during the quarter. As a point of reference, during the quarter we shipped over 100,000 units of these new Everest 2 based products with gross margins of over 30...We believe our ongoing investments in technology and sales and marketing provide a clear strategic advantage as we bring innovative SSD products to the market.
The Benchmark Company notes, after tracking below their $12.5 mln gross estimate for most of June, TravelZoo (TZOO $22.15 -0.02) Local Deals segment witnessed a greater-than-expected end of quarter surge, bringing estimated gross revenue to nearly $12 million. During the month, the firm also noted a significant increase in direct deals and deals without voucher counts, leaving them comfortable with their 2Q12 Local Deals revenue estimate of $32.5 million gross, or $9.4 million net. However, barring a few incremental market additions during the quarter, they have seen few other signs indicating that the proposed headcount ramp and subscriber reacceleration initiatives have yet to benefit results, with July pacing under $9 million gross.
Mizuho expects a slight shortfall in revenues and in-line EPS as Apple (AAPL $603.90 -4.38) has already started experiencing a slowdown due to the impending iPhone 5 launch. For F4Q12, iPads should enjoy strong momentum while iPhones could experience continued slowdown as the iPhone 5 is likely to be launched in early October. Guidance will likely be below consensus, which can move slightly lower but should remain meaningfully above guidance. Firm expects the iPhone 5 cycle to be a strong near-term driver of earnings and stock outperformance. Firm expects the co to ship around 27 million iPhones versus the consensus of approximately 29-30 million devices. |
