From Briefing.com: 4:10 pm : The stock market ended the Tuesday affair on a flat note as a rally in crude oil and a positive economic outlook from Fed Chair Yellen could not keep equities near their highs. Additionally, the Dow Jones Transportation Average (+1.1%) and the PHLX Semiconductor Index (+1.0%) each outperformed the S&P 500 (+0.1%). The Dow Jones Industrial Average (+0.1%) finished in-line with the benchmark index (+0.1%) while the Nasdaq Composite (-0.1%) underperformed.Equity indices opened above their flat lines as yesterday's remarks from Fed Chair Yellen stoked risk appetite. Ms. Yellen struck an optimistic tone yesterday when she reiterated an optimistic outlook despite a disappointing reading of the May jobs report. The Fed Chair maintained that further gradual increases in the federal funds rate are likely to be appropriate and conducive to meeting and maintaining the Fed's dual mandate.
The major averages climbed through the afternoon as the benchmark index notched a new 2016 intraday high (2119.22) and the Dow Jones Industrial Average briefly reclaimed the 18,000 price level. However, the S&P 500 tested and failed to clear resistance near the 2120/2122 price level and surrendered most of its gains through the final hour of trade. Six sectors ended in the green with energy (+2.1%) leading telecom services (+1.5%) and industrials (+0.4%). Conversely, health care (-0.7%), financials (-0.3%), and utilities (-0.3%) ended with the largest losses.
The energy sector (+2.1%) traded lockstep with crude oil as the energy component extended its 2016 advance. WTI crude ended its day higher by 1.3% ($50.38/bbl; +$0.65). The American Petroleum Institute will release its latest stockpile data this evening. Crude oil inventories are expected to decline by 3.50 million barrels. Additionally, the more influential inventory report from the Department of Energy will be released tomorrow morning at 10:30 ET.
The Dow Jones Transportation Average (+1.1%) outperformed as the index benefited from a rally in airline names. The U.S. Global Jets ETF (JETS 23.15, +0.52) ended its day higher by 2.3%. Elsewhere in the index, Avis Budget (CAR 34.26, +1.69) gained 5.2% while CSX (CSX 26.47, -0.03) underperformed in the rail sub-group. The Transportation Index has gained 4.6% in 2016, trailing the broader industrial sector (+0.4%; year-to-date +5.7%).
In the consumer discretionary space (+0.4%), the SPDR S&P Retail ETF (XRT 42.95, +0.30) gained 0.7% as Dow component Home Depot (HD 129.92, +0.73) rebounded 0.6%. The home improvement retailer also benefited from strength in the homebuilder sub-group. On that note, PulteGroup (PHM 19.37, +0.76) jumped 4.1% on news that Elliot Management took a 2.0% stake in the company. The broader iShares Dow Jones US Home Construction ETF (ITB 27.97, +0.45) gained 1.6%.
Biotechnology weighed on the broader health care space (-0.7%) and the tech-heavy Nasdaq (-0.1%). The iShares Nasdaq Biotechnology ETF (IBB 278.76, -7.31) lost 2.6% and is now down 0.4% for the month of June. The sub-group traded lower as Biogen (BIIB 252.86, -36.98) and Valeant Pharmaceuticals (VRX 24.64, -4.21) weighed.
The Treasury complex traded on a higher note throughout the session despite an uptick in equities. The yield on the 10-yr note finished its day lower by two basis points at 1.72%.
Today's participation was above the recent average as more than 844 million shares changed hands on the NYSE floor.
Today's economic data included the revised estimate for first quarter Productivity, Unit Labor Costs, and Consumer Credit for April:
- Nonfarm business sector labor productivity decreased at a 0.6% annual rate in the first quarter, as expected, versus an originally reported decrease of 1.0%.
- The revised productivity number was the result of output increasing 0.9% and hours worked increasing 1.5%. On a year-over-year basis, first quarter productivity increased a lowly 0.7%.
- While the upward revision to first quarter productivity is nice to see, the fact remains that productivity is weak.
- Unit labor costs, in turn, were revised higher, logging an increase of 4.5% (Briefing.com consensus 4.0%) versus an originally reported increase of 4.0%.
- The revised unit labor costs number flowed from the 0.6% decline in productivity and a 3.9% increase in hourly compensation. On a year-over-year basis, unit labor costs are up 3.0%.
- Total outstanding consumer credit increased by $13.4 billion in April after increasing a downwardly revised $28.4 billion (from $29.6 billion) in March. The Briefing.com consensus estimate for April was $18.5 billion.
- In the preceding 12-month period leading up to April, consumer credit had risen by an average of $18.3 billion.
- The growth in April was driven predominately by nonrevolving credit, which increased by $11.7 billion. Revolving credit increased by $1.7 billion.
- In April, consumer credit increased at a seasonally adjusted annual rate of 4.5%.
Tomorrow's economic data will include the weekly MBA Mortgage Index and the April Job Openings and Labor Turnover Survey, which will be released at 7:00 ET and 10:00 ET, respectively.
- Russell 2000 +3.9% YTD
- S&P 500 +3.3% YTD
- Dow Jones +3.0% YTD
- Nasdaq Composite -0.9% YTD
DJ30 +19.59 NASDAQ -6.96 SP500 +2.81 NASDAQ Adv/Vol/Dec 1482/1.595 bln/1404 NYSE Adv/Vol/Dec 1900/844.7 mln/1131 3:30 pm :
- The dollar index drifts lower in the afternoon, down -0.06% at the 93.84 level, boosting commodities
- Commodities, as measured by the Bloomberg Commodity Index, are up +0.2% at 88.29
- Crude oil closes at fresh highs of 2016 ahead of tomorrow's EIA data
- July crude oil futures rose $0.65 (+1.3%) to $50.38/barrel
- Baker Hughes announces that the international rig count for May 2016 was 955, a decrease of ~17.5% Y/Y.
- The international offshore rig count for May 2016 was 229, up 9 from the 220 counted in April 2016, and down 55 from the 284 counted in May 2015.
- The avg U.S. rig count for May 2016 was 408, down 29 from the 437 counted in April 2016, and down 481 from the 889 counted in May 2015.
- The avg Canadian rig count for May 2016 was 42, up 1 from the 41 counted in April 2016, and down 38 from the 80 counted in May 2015.
- API inventory data is scheduled to be released today after the bell
- Monthly IEA data is scheduled to be released June 14
- Natural gas closes pit trading unchanged for the day after seeing notable gains every day last week with the exception if Friday, when it closed unchanged also
- July natural gas closed flat at $2.47/MMBtu
- EIA crude oil inventory data is scheduled to be released Thursday at 10:30 am ET
- In precious metals, gold ends pit trading at this mornings support level where it staged a modest rally from, around the $1247.00 level
- August gold ended today's session down $0.40 (-0.03%) to $1247.00/oz
- Silver moves lower even as the dollar drops
- July silver closed today's session $0.06 lower (-0.4%) at $16.39/oz
- Base metal copper finishes pit trading notably lower after hitting 4-week highs yesterday
- July copper closed $0.07 lower (-3.3%) at $2.05/lb
4:05 pm VeriFone misses by $0.05, reports revs in-line; guides Q3 EPS below consensus, revs below consensus; guides FY16 EPS below consensus, revs below consensus, announces workforce reduction ( PAY) :
Reports Q2 (Apr) earnings of $0.47 per share, $0.05 worse than the Capital IQ Consensus of $0.52; revenues rose 8.6% year/year to $532 mln vs the $530.07 mln Capital IQ Consensus.Restructuring: PAY is currently conducting a disciplined strategic review to address underperforming businesses and reduce overall operating expense levels. In connection with these plans the company intends to reduce headcount and estimates that these activities in total will generate approximately $30 mln of savings in 2017. Co issues downside guidance for Q3, sees EPS of $0.40 vs. $0.59 Capital IQ Consensus Estimate; sees Q3 revs of $515 mln vs. $551.34 mln Capital IQ Consensus Estimate. Co issues downside guidance for FY16, sees EPS of $1.85 vs. $2.23 Capital IQ Consensus Estimate; sees FY16 revs of $2.1 bln vs. $2.16 bln Capital IQ Consensus Estimate.
Today's session started on an upbeat note as futures responded to a positive bias in global bourses. Equity indices ticked higher as investors shifted to a risk-on approach following yesterday's remarks from Fed Chair Yellen. Ms. Yellen voiced her confidence in the underlying stability of the U.S. economy in the wake of a disappointing May jobs report. Furthermore, the Fed Chair stated that it would be imprudent to assign too much significance to one monthly report.
Economic data today included the revised estimate for first quarter Productivity and Unit Labor Costs. Nonfarm business sector labor productivity declined at a 0.6% annual rate in the first quarter, as expected, versus an originally reported decrease of 1.0%. Unit labor costs, in turn, were revised higher, logging an increase of 4.5% versus an originally reported increase of 4.0%. Lastly, the April Consumer Credit report showed a mark of $13.4 billion after increasing a downwardly revised $28.4 billion (from $29.6 billion) in March.
Following yesterday's modestly higher close, Tuesday action ended mixed. The tech-heavy Nasdaq Composite was the lone laggard, shedding 6.96 points (-0.14%) today to end 4961.75. The S&P 500 was the best performer, adding 2.72 points (+0.13%) to 2112.13, and the Dow Jones Industrial Average was higher by 17.95 points (+0.10%) to 17938.28 when the day was done. The three major indices lost a bit of steam in the final hour of the session as a rally in crude oil and a positive economic outlook from Fed Chair Yellen could not keep equities near their highs.
Technology (XLK 44.20, +0.17 +0.39%), too, posted a modest advance for the second day as the broader market held up the sector. Component Western Digital (WDC 49.74, +1.72 +3.58%) was the second-best component today as the stock was upgraded ahead of the bell to a Buy rating from Neutral at Mizuho. Other sectors as measured by the S&P closed Tuesday XLE +2.26%, IYZ +1.48%, XLI +0.48%, XLY +0.13%, XLB +0.04%, XLU -0.08%, XLP -0.11%, XLF -0.21%, XLV -0.62% with Energy leading the charge higher, helped by a +1.3% advance in July Crude Oil Futures.
In the S&P 500 Information Technology (731.08, +1.19 +0.16%) sector, trading faded toward the end of the session but managed to stay out of the red. Component F5 Networks (FFIV 123.94, +13.90 +12.63%) was an out-performer today as late trade offered a catalyst in the form of M&A speculation; the company, according to reports, hired Goldman Sachs (GS 155.19, -1.87 -1.19%) after being approached by suitors. Other names in the space which closed higher today included STX +3.18%, MCHP +2.03%, TEL +1.85%, MU +1.80%, CTXS +1.37%, QRVO +1.24%, AVGO +1.23%, ADI +1.23%, EBAY +1.21%, FLIR +1.06%, EA +0.99%.
Other notable news items among sector components:
F5 Networks (FFIV) was notably higher in the afternoon session on the heels of reports that the company hired Goldman Sachs (GS) after being approached by suitors.
IBM (IBM 153.33, +0.60 +0.39%) signed a ten-year technology services agreement with Emirates Airline worth about $300 million. IBM will provide IT Infrastructure delivered as a service, allowing the airline to improve efficiency on its passenger support systems and functions.
Cogobuy Group announced that INGDAN.com, the company's intelligent hardware innovation platform, signed a cooperative agreement with Intel (INTC 31.88, +0.20 +0.63%) to partner in building a robotics ecosystem. The partnership is also expected to strengthen INGDAN.com's presence in the robotics industry.
According to the Wall Street Journal, Verizon (VZ 51.75, +1.04 +2.05%) is said to be bidding about $3 billion for Yahoo!'s (YHOO 36.73, -0.34 -0.92%) core internet assets.
Cisco (CSCO 29.07, -0.03 -0.10%) declared an unchanged quarterly dividend of $0.26 per share.
Elsewhere in the tech space:
Marvell (MRVL 10.10, +0.09 +0.90%) announced the appointment of Andy Micallef as COO effective immediately.
Silver Spring Networks' (SSNI 13.07, -0.61 -4.46%) CFO James Burns resigned effective June 10 to pursue another opportunity. The company also reaffirmed certain Q2/FY16 guidance. For Q2, SSNI sees EPS of ($0.09)-($0.05) on revenues of $65-69 million. For FY16, SSNI sees EPS of $0.05-0.20 on revenues of $290-310 million.
Pandora (P 12.08, -0.09 -0.74%) shares were active as CNBC reported Liberty Media's Greg Maffei was interested in a potential SIRI for P deal, but that Pandora CEO has no plans to sell the business.
On June 6, 2016, News Corp's (NWSA 11.87, -0.29 -2.38%) Move, Inc., the National Association of Realtors and certain related entities entered into a settlement agreement and release with Zillow (ZG 32.40, +1.62 +5.26%), Errol Samuelson and Curt Beardsley with respect to the lawsuit previously filed by the Plaintiffs against the Defendants. Under the terms of the Settlement Agreement, ZG will pay the Plaintiffs $130 million and the pending litigation will be dismissed. Pursuant to an agreement with Move, NAR is entitled to 10% of the settlement proceeds after deduction of Move's litigation-related costs and fees, with the remainder being paid to Move.
Aehr Test Systems (AEHR 1.59, +0.53 +50.00%) announced over $4.5 million in orders of its FOX-XP production test cell. The company noted revenues from these sales are expected to continue through early 2017.
Sapiens Int'l (SPNS 12.33, +0.20 +1.65%) to acquire Maximum Processing. SPNS did not disclose the deal value, but noted it is expected to be accretive to earnings.
Connecture (CNXR 1.20, -0.05 -4.00%) acquired ConnectedHealth. Financial terms of the deal were not disclosed.
KEYW Holding (KEYW 9.79, +0.07 +0.72%) sold its HawkEye G threat detection and response technology to WatchGuard Technologies for an undisclosed sum.
In reaction to quarterly results:
Sigma Designs (SIGM) reported a worse than expected Q1 loss per share of $0.12 on revenues which were in-line with expectations at $53.8 million. The company also guided for Q2 revenues of $60-63 million.
Xactly (XTLY) reported a better than expected Q1 loss per share of $0.09 on revenues which also came in ahead of expectations at $23.3 million. XTLY guided Q2 EPS and revenues ahead of expectations at ($0.15)-(0.13) and $23.2-23.7 million, respectively. For the FY17 period, XTLY now sees EPS of ($0.55)-(0.50), up from the prior ($0.62-0.57) on revenues of $95.5-97.0 million, up from the prior expectations for $94-95.5 million.
Companies scheduled to report quarterly results tonight: HQY, SEAC, PAY, VRNT
Analyst actions:
WDC was upgraded to Buy from Neutral at Mizuho,
AVT was upgraded to Neutral from Sell at Goldman,
ZG was upgraded to Equal Weight from Underweight at Barclays;
GDDY was downgraded to Neutral from Buy at Citigroup,
JBL was downgraded to Sell from Neutral at Goldman,
BR was downgraded to Mkt Perform from Outperform at Raymond James;
ACIA was initiated with a Buy at Needham, BofA/Merrill and Deutsche Bank and was initiated with a Neutral at Goldman,
MB was initiated with an Outperform at Imperial Capital,
FDC was initiated with an Outperform at Keefe Bruyette |
