From Briefing.com: The first trading session of February brought a lot of red to begin the sessionbut not the kind February is known for. However, broader market action ended Monday split, as the Dow Jones Industrial Average and the S&P 500 both finished in the red, and the Nasdaq managed to stave off the selling as the markets closed. Leading the weakness, the Dow lost 17.12 points (-0.10%) to 16449.18. The S&P 500 was down less than 1 point (-0.04%) to 1939.38. The Nasdaq Composite, however, closed higher by 6.41 points (+0.14%) to 4620.37.
Market data today came in the form of the personal income reading which rose 0.3% in December while personal spending was unchanged. The PCE Price Index declined 0.1% month-over-month while the core PCE Price Index, which excludes food and energy, was unchanged. The January ISM Index was up 48.2 for January and construction spending increased just 0.1% in December.
Weaker with the broader market, Chinese Tech (QQQC 19.86, -0.37 -1.83%) names were down in the dumps as overnight, China released two unsurprisingly weak manufacturing figures with Manufacturing PMI coming in at 49.4 (expected 49.6) and the Caixin PMI survey hitting 48.4 (expected 48.0). Both data points showed further contractions in China's manufacturing sector and worked to move global growth concerns back to the forefront of the market. Component Sohu.com (SOHU 48.41, -1.98 -3.93%) reported a better than expected Q4 loss per share of $0.34 on better than expected revenues of $466.1 million. Other QQQC components which were seeing red today included BIDU -1.33%, VNET -0.42%, QIHU -0.03%.
Technology (XLK 41.39, +0.15 +0.36%) flirted with negative territory, but only just as action began the session in the red but losses would not last. Component Seagate Tech (STX 30.41, +1.36 +4.68%) posted another strong session following last week's quarterly results, edging higher today also. Other sectors finished XLU +0.95%, XLY +0.61%, IYZ +0.43%, XLB +0.41%, XLP +0.33%, XLV +0.15%, XLI -0.24%, XLF -0.41%, XLE -1.67% with Utilities leading and Energy lagging.
On the upside, Social Media (SOCL 18.50, +0.23 +1.26%) names were aflutter as shares of component Twitter (TWTR 17.91, +1.11 +6.61%) were optimistic (compared to prior sessions) with the name being the subject of M&A chatter as the day progressed. A Fortune report out after midday refuted the rumors Silver Lake was interested in the streaming-news company. Other SOCL names which had secret admirers today included LNKD +3.97%, WB +2.56%, FB +2.51%, JIVE +2.01%, YNDX +1.34%, ANGI +1.30%.
Investors were also in love with components of the S&P 500 Information Technology sector (687.49, +1.33 +0.19%), as action took the sector higher. Other components which displayed relative weakness today included EBAY +2.05%, ADSK +1.77%, QCOM +1.70%, FIS +1.57%, GOOGL +1.24%, GOOG +1.22%, LRCX +1.16%, PAYX +1.02%, SWKS +1.02%, QRVO +0.93%, INTU +0.90%.
Other notable news items among sector components:
Symantec (SYMC 19.75, -0.09 -0.45%) completed the sale of Veritas for $5.3 billion. The company also authorized a $2 billion increase to its capital return program.
Broadcom (BRCM 54.67, flat) completed its acquisition of Avago Technologies (AVGO 137.68, +3.97 +2.97%).
Marathon Patent Group (MARA 1.92, +0.12 +6.67%) announced the Patent Trial and Appeal Board of the USPTO issued a final decision upholding the patentability of certain asserted claims of Marathon subsidiary Clouding Corp.'s U.S. Patent No. 5,944,839 that were challenged by EMC Corporation (EMC 24.52, -0.25 -1.01%) in the inter partes review, IPR2014-01309.
MasterCard (MA 88.63, -0.14 -0.16%) announced the appointment of Alexander N.M. Niejelow as a SVP of public policy effective February 8, 2016.
IBM (IBM 124.83, +0.04 +0.03%) announced continuing momentum for its social business offerings with clients around the world ushering in the next era of collaboration with IBM Verse and Connections. IBM also announced expanded capabilities in its collaboration portfolio with new innovations that make it easier for clients to gain and share business insights across teams.
Texas Instruments (TXN 52.83, -0.10 -0.19%) introduced the first single-chip 100-V high-side FET driver for high-power lithium-ion battery applications, delivering advanced power protection and control.
Fiserv (FISV 94.37, -0.19 -0.20%) announced the $4.3 billion United Nations Federal Credit Union (UNFCU), based in New York City, has selected the DNA core account processing platform with integrated surround solutions from Fiserv.
According to a Wall Street Journal report, Yahoo! (YHOO 29.57, +0.06 +0.20%) is planning a 15% workforce reduction as part of a cost cutting plan.
Accenture (ACN 106.28, +0.74 +0.70%) has developed a virtual reality experience to demonstrate the potential of the technology for rugby fans, and potential applications outside of game-playing.
According to a Financial Times article, Apple (AAPL 96.43, -0.91 -0.93%) acquired virtual reality startup Flyby. Financial Times noted the secret research unit may develop a product to compete with Microsoft's (MSFT 54.71, -0.38 -0.69%) Hololens and Samsung's (SSNLF 1025, flat) Gear VR.
Elsewhere in the technology space:
Nokia (NOK 6.34, -0.86 -12.01%) received a favorable patent license award with Samsung (SSNLF). NOK then updated their outlook to include the award. The company expects to report net sales of about EUR 400 million in the fourth quarter 2015 and about EUR 1 020 million for the full year 2015. Also NOK expects to receive about EUR 1.3 billion of cash during years 2016 - 2018 related to its settled and ongoing arbitrations in Nokia Technologies, including this award.
Littelfuse (LFUS 102.32, +0.42 +0.41%) announced EVP and CFO Philip Franklin will retire after 17 years of service with the company. Meenal Sethna, SVP, finance, will succeed Franklin as CFO. Franklin will transition the CFO responsibilities to Ms. Sethna at the end of March and will remain with the company through July in an advisory role.
Ku6 Media (KUTV 0.86, +0.16 +22.86%) received a preliminary non-binding proposal to go private for $1.08 per share from Shanda Interactive Entertainment.
Virtusa (VRTU 45.08, +0.36 +0.81%) purchased multiple foreign currency forward contracts designed to hedge fluctuation in the Indian rupee against the U.S. dollar and U.K. pound sterling.
Analyst actions:
MU was upgraded to Neutral from Sell at Goldman,
MMS was upgraded to Outperform from Market Perform at Raymond James,
PTC was upgraded to Buy from Neutral at Sterne Agee CRT,
EXTR was upgraded to Buy from Hold at Needham,
KT was upgraded to Overweight from Neutral at JP Morgan;
XRX was downgraded to Equal Weight from Overweight at Morgan Stanley,
NOK was downgraded to Neutral from Buy at BofA/Merrill
5:10 pm Pixelworks sees Q4 EPS and revs below consensus; Bruce Walicek has resigned as President and CEO; Todd DeBonis appointed COO ( PXLW) :
Co issues downside guidance for Q4 (Dec), sees EPS of ($0.11) vs. ($0.09) Capital IQ Consensus Estimate; sees Q4 (Dec) revs of $13.5 mln vs. $13.99 mln Capital IQ Consensus Estimate. "Looking ahead, the challenging market environment continues to impact our results and will likely contribute to greater than normal seasonal weakness in the first quarter of 2016."Co also announced that effective immediately Bruce Walicek has resigned as President and Chief Executive Officer and as a Director from the board for personal reasons. Mr. Walicek will remain as a consultant to the Company for a period of up to six months. Pixelworks' Board of Directors has commenced efforts to promptly identify and select a candidate to succeed Walicek as CEO. Until such time that a permanent CEO is appointed, Stephen Domenik will assume these duties and serve as interim CEO. Domenik has served as a Director on Pixelworks' board since August 2010 and previously acted as a strategic consultant to the Company in 2013. Former worldwide sales executive of TriQuint, Todd DeBonis appointed COO.
4:09 pm Luminex reports Q4 (Dec) results, revs in-line; guides Q1 revs in-line; guides FY16 revs in-line ( LMNX) :
Reports Q4 (Dec) earnings of $0.56 per share, may not be comparable to the Capital IQ Consensus of $0.13; revenues rose 4.0% year/year to $60.45 mln vs the $60.22 mln Capital IQ Consensus.
263 multiplexing analyzers were shipped during the quarter, which included 78 MAGPIX systems, 137 LX systems, and 48 FLEXMAP 3D systems.Co issues in-line guidance for Q1, sees Q1 revs of $60-62 mln vs. $61.82 mln Capital IQ Consensus Estimate. Co issues in-line guidance for FY16, sees FY16 revs of $245-255 mln vs. $251.47 mln Capital IQ Consensus Estimate.
4:09 pm Integrated Device reports EPS in-line, beats on revs ( IDTI) :
Reports Q3 (Dec) earnings of $0.35 per share, excluding non-recurring items, in-line with the Capital IQ Consensus of $0.35; revenues rose 17.5% year/year to $177.6 mln vs the $175.0 mln Capital IQ Consensus.Co delivered its ninth consecutive quarter of YoY revenue growth, driven by strong demand for its communications infrastructure products. "With our continued focus on operational excellence, we achieved a non-GAAP operating margin of 29.4%, and record free cash flow of 30% of revenue on a trailing twelve-month basis." "The integration of recently acquired ZMDI is progressing well, and we are already leveraging the combined product portfolios into potent customer cross-selling opportunities. Additionally, as synergies are realized over the coming year, we expect the acquisition to provide meaningful revenue and EPS accretion, while supporting IDT's target operating model."
4:08 pm Alphabet beats by $0.58, beats on revs ( GOOG) :
Reports Q4 (Dec) earnings of $8.67 per share, $0.58 better than the Capital IQ Consensus of $8.09; revenues rose 18.5% year/year to $21.33 bln vs the $20.76 bln Capital IQ Consensus.Aggregate paid clicks- Q4 +31%; Q3 +23%. Paid Clicks on Google websites- Q4 +40%; Q3 +35%. Paid clicks on member sites- Q4 +2%; Q3 -5%. Aggregate cost per click- Q4 -13%; Q3 -11%. CPC on Google sites- Q4 -16%; Q3 -16%. CPC on member sites- Q4 -8%; Q3 -4%. Revenue SegmentsGoogle Website revenue +20% y/y Google Network Member websites +7% y/y Google Advertising +17% y/y Google Other Revenues +24% y/y Operating Expense as % of revenue 36% compared to 37% in prior year Free Cash Flow $4.31 bln compared to $2.81 bln in prior year TAC As a % of revenue 21% compared to 22% in prior year
4:06 pm Rudolph Tech beats by $0.01, reports revs in-line ( RTEC) :
Reports Q4 (Dec) earnings of $0.16 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.15; revenues rose 3.0% year/year to $51.1 mln vs the $51.3 mln Capital IQ Consensus.
4:20 pm : The major averages were able to end their first session of the week on a mixed note despite starting this morning under some selling pressure. Today's session saw a divergence with the recent tradition of equities trading in lockstep with the direction of oil, as the major indices staged a rally off their lows despite a larger loss in crude. The tech-heavy Nasdaq (+0.1%) was able to end ahead of the S&P 500 (UNCH) and the Dow Jones Industrial Average (-0.1%).
Equities charged back to their flat lines during afternoon action with the move stemming in part from an understanding that the coming week has a number of potential catalysts that could move the market. Conversely, a number of negative announcements were likely not bad enough to elicit a defensive response. Factors that contributed to today's action included:
- Fed Vice Chairman Fischer's speech which provided little additional insight on last week's policy statement
- The final member of F.A.N.G., Alphabet (GOOGL 770.77, +9.42) rallying ahead of its earnings report
- Non-farm payroll data is set to be released on Friday; and
- Weak economic data internationally and domestically which may delay additional rate hikes
China released two weak manufacturing figures overnight with Manufacturing PMI coming in at 49.4 (expected 49.6) and the Caixin PMI survey hitting 48.4 (expected 48.0). Both data points showed further contractions in China's manufacturing sector but were anticipated to be weaker. This data worked to depress global equity markets, U.S. futures, and oil prices. To be fair though, growing skepticism of potential production cuts from OPEC and non-OPEC states may have worked to further depress prices. WTI crude ended its pits session lower by 6.2% at $31.65/bbl.
Seven of ten sectors were able to finish their trading day in positive territory with countercyclical telecom services (+0.9%) and utilities (+1.0%) leading the pack. Meanwhile, energy (-1.9%) financials, (-0.6%), and industrials (-0.3%) were unable to move into positive territory.
The energy space underperformed during today's session as commodity prices continued to weigh on the group. While independent oil and gas companies like Anadarko Petroleum (APC 38.25, -0.84) faced larger headwinds, even large-cap Exxon Mobil (XOM 76.29, -1.56) felt pressure ahead of its earnings release tomorrow morning. Meanwhile, pipeline company Kinder Morgan (KMI 15.19, -1.26) declined 7.7% in the wake of oil's rout and a 6.5% decline in natural gas ($2.15/MMbtu).
Financials continued their decline from January as they underperformed on the possible inability for the broader market to support a rate hike. Money center banks underperformed in response, with Bank of America (BAC 13.96, -0.18) and JPMorgan Chase (JPM 58.86, -0.64) sliding 1.3% and 1.1%, respectively.
In the heavily-weighted technology space, Facebook (FB 115.09, +2.88) continued to outperform after disclosing its fourth quarter beat last week. Meanwhile, Alphabet showed relative strength as it climbed 1.2%.
On the merger and acquisition front, Alere (ALR 54.11, +16.91) climbed 45.5% on news that the company will be acquired by Abbott Laboratories (ABT 38.45, +0.60) for $56.00 a share. Elsewhere, Dominion (D 70.18, -1.99) agreed to acquire Questar (STR 24.99, +4.60) for $25 per share.
Today's participation was slightly below recent averages with less than a billion shares changing hands at the NYSE floor.
Treasuries ended their day near their lows as equities rallied. The yield on the benchmark note ended higher by three basis points at 1.95%.
Today's economic data has included PCE Prices for December, Construction Spending for December, and the January ISM Index.
- Personal income rose 0.3% in December (Briefing.com consensus +0.2%)
- Personal spending was unchanged (Briefing.com consensus +0.2%).
- Personal consumption expenditures decreased $0.7 billion, or less than 0.1%, so with rounding it gets logged in the report as 0.0 for the month-over-month change.
- The personal savings rate jumped to 5.5% from 5.3% in November and stands at its highest level in three years.
- PCE Price Index declined 0.1% month-over-month while the core PCE Price Index, which excludes food and energy, was unchanged (Briefing.com consensus +0.1%) after a 0.2% increase in November.
- December readings, the PCE Price Index is up 0.6% year-over-year versus 0.4% in November and the core PCE Price Index is up 1.4%, holding steady with the year-over-year reading for November.
- The January ISM Index, edged up to 48.2 for January (Briefing.com consensus 48.3)from a downwardly revised reading of 48.0 (from 48.2) for December.
- January marked the fourth straight month that the ISM Index has been below 50.0. (The dividing line between expansion and contraction). the manufacturing sector has been hurt by the dollar's strength, weak global demand, and falling commodity prices that have crimped investment spending.
- New orders and production indexes reached expansion territory. The new orders index increased to 51.5 from 48.8 while the production index rose to 50.2 from 49.9.
- The imports index also logged a notable increase, rising to 51.0 from 45.5. Conversely, the employment index fell to 45.9 from 48.0, and the export index dropped to 47.0 from 51.0.
- Construction spending increased just 0.1% in December (Briefing.com consensus +0.5%)
- Construction spending for November was revised down to a decline of 0.6% from a previously reported decline of 0.4%.
- Private construction spending was the big drag in December. It declined 0.6% month-over-month due to a 2.1% drop in nonresidential construction. Residential construction was up 0.9% month-over-month.
- Public construction spending, which accounted for 27% of total construction spending in December, increased 0.9% on the back of a 2.2% uptick in nonresidential spending.
There will be no economic data of note tomorrow.
- Russell 2000 -9.0%
- Nasdaq -7.7%
- Dow Jones -5.6%
- S&P 500 -5.1%
DJ30 -17.12 NASDAQ +6.41 SP500 -0.86 NASDAQ Adv/Vol/Dec 1436/1.845 bln/1477 NYSE Adv/Vol/Dec 1508/990 mln/1556
3:30 pm :
- Energy futures sold off today and held losses.
- Crude oil prices felt pressure on the weak economic data out of China and on daily news/updates that show a coordinated global oil production cut with OPEC and non-OPEC members are less likely to happen than a week ago.
- As a result, Mar WTI crude oil closed floor trading -6.2% at $31.65/barrel today
- Recent strength in natural gas prices came from the snowstorm that hit the Northeast, which was clearly quite unfavorable for the region
- However, recent weather forecasts have improved and is now basically weighing on prices today.
- At the end of pit trading, Mar natural gas closed 6.5% lower at $2.15/MMBtu
- In electronic trade, nat gas remains near today's low
- Given the weak dollar today, precious metals received some upside benefit. Apr gold gained $11.20 to close at $1128.10/oz, while Mar silver finished +0.5% at $14.34/oz. Mar copper, on the other hand, slipped one cent to close at $2.06/lb.
Advancers & Decliners
NYSE AMEX NASDAQ BB | Advancing Issues | 1,492 (48%) | 707 (50%) | 1,284 (48%) | 73 (33%) | | Declining Issues | 1,559 (50%) | 670 (47%) | 1,334 (50%) | 100 (46%) | | Unchanged Issues | 90 (3%) | 46 (3%) | 73 (3%) | 46 (21%) | | Total Issues | 3,141 | 1,423 | 2,691 | 219 | | New Highs | 75 | 13 | 23 | 5 | | New Lows | 37 | 19 | 96 | 32 | | Up Volume | 1,886,620,305 (44%) | 180,908,712 (24%) | 1,008,469,868 (52%) | 72,178,967 (20%) | | Down Volume | 2,336,953,528 (55%) | 565,115,320 (75%) | 910,580,330 (47%) | 186,856,876 (53%) | | Unchanged Volume | 57,823,457 (1%) | 8,933,643 (1%) | 27,005,970 (1%) | 93,732,149 (27%) | | Total Volume | 4,281,397,2901 | 754,957,6751 | 1,946,056,1681 | 352,767,9921 | |
