Technology (+0.7%) finished the day in line with the benchmark index. Visa (V 86.08, +3.78) was the sector’s top performer thanks to better than expected earnings and revenue. However, lackluster performances from large-cap components like Apple (AAPL 129.08, +0.55), Facebook (FB 130.98, +0.14), and Alphabet (GOOGL 820.13, +1.87) held the sector’s gains in check.
On the countercyclical side, the health care, consumer staples, telecom services, and real estate sectors gained between 0.4% and 0.6%, while utilities (+0.1%) closed just a step behind.
Defensive spaces dominated the week with four of the five logging weekly gains. Comparatively, the financial (+0.2%) and technology (unch) sectors were the only cyclical groups to close the week higher.
Today’s economic data included January Employment Situation Report, January ISM Services, and December Factory Orders:
January Employment Situation Report
January nonfarm payrolls came in at 227,000 while the Briefing.com consensus expected a reading of 170,000. The prior month’s reading was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 while the Briefing.com consensus expected an increase of 175,000. The unemployment rate increased to 4.8% (Briefing.com consensus 4.7%).
Average hourly earnings increased 0.1% (Briefing.com consensus +0.3%), while the previous month’s reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 while the Briefing.com consensus expected a reading of 34.3. The previous month’s reading was revised to 34.4 (from 34.3).
The key takeaway is that this is one of those so-called “Goldilocks” reports since it is strong enough to keep participants thinking good things about the economy, but not strong enough to convince the market to think it means the Fed is now going to be in a hurry to raise the fed funds rate. The tempered growth in average hourly earnings, which dialed back year-over-year growth to 2.5% from 2.8% in December, is the focal point as it relates to the market’s perspective on the Fed.
January nonfarm payrolls came in at 227,000 while the Briefing.com consensus expected a reading of 170,000. The prior month’s reading was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 while the Briefing.com consensus expected an increase of 175,000. The unemployment rate increased to 4.8% (Briefing.com consensus 4.7%).
Average hourly earnings increased 0.1% (Briefing.com consensus +0.3%), while the previous month’s reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 while the Briefing.com consensus expected a reading of 34.3. The previous month’s reading was revised to 34.4 (from 34.3).
The key takeaway is that this is one of those so-called “Goldilocks” reports since it is strong enough to keep participants thinking good things about the economy, but not strong enough to convince the market to think it means the Fed is now going to be in a hurry to raise the fed funds rate. The tempered growth in average hourly earnings, which dialed back year-over-year growth to 2.5% from 2.8% in December, is the focal point as it relates to the market’s perspective on the Fed.
The ISM Services Index for January decreased to 56.5 while the Briefing.com consensus expected a downtick to 57.0. The prior month’s reading was revised down to 56.6 from 57.2.
The key takeaway from the report is that growth in the services sector, which accounts for a much bigger slice of economic activity than the manufacturing sector does, persisted for the 85th straight month.
The key takeaway from the report is that growth in the services sector, which accounts for a much bigger slice of economic activity than the manufacturing sector does, persisted for the 85th straight month.
The Factory Orders Report for December showed an increase of 1.3% while the Briefing.com consensus expected a increase of 1.4%. The November reading was revised up to -2.3% from -2.4%.
The key takeaway from the report is that the December increase was led entirely by orders for nondurable goods (+3.1%). Paced by a 2.5% decline in transportation equipment orders, durable goods orders fell 0.5% in December.
The key takeaway from the report is that the December increase was led entirely by orders for nondurable goods (+3.1%). Paced by a 2.5% decline in transportation equipment orders, durable goods orders fell 0.5% in December.
Investors will not receive any economic data on Monday.
Nasdaq Composite +5.3% YTD
SP 500 +2.6% YTD
Dow Jones Industrial Average +1.6% YTD
Russell 2000 +1.5% YTD
Week in Review: Holding Steady
After enjoying a solid 1.0% gain two weeks ago, the stock market returned to its range-bound ways. The SP 500 spent the week inside a 31-point range, ending the week higher by 0.1%.
The past week was rife with earnings, economic data, and commentary from two major central banks, but the market shrugged off the busy event calendar, remaining near record levels.
Most notably, the Federal Open Market Committee concluded its latest two-day meeting on Wednesday. The central bank maintained its policy stance and gave little indication that a rate hike could be announced at the next policy meeting in May.
Wednesday’s FOMC announcement followed the release of a stronger than expected ADP Employment Report for January (246,000; Briefing.com consensus 165,000). Friday’s release of the Employment Situation report also showed above-consensus headline growth (227,000; Briefing.com consensus 170,000), but average hourly earnings increased just 0.1% (Briefing.com consensus 0.3%) and last month’s growth was revised down to 0.2% from 0.4%. As a result, the year-over-year average hourly earnings growth rate slowed to 2.5% from 2.8% in December.
The combination of solid job growth and lackluster wage growth was welcomed by the stock market, considering it did not foreshadow an inflationary spike that would prompt a hawkish response from the Fed.
Rate hike expectations saw a moderate downtick. On Friday afternoon, the fed funds futures market pointed to a 63.5% implied likelihood of a June hike, down from last week’s 69.2%.
On the earnings front, investors received a set of results from heavyweights like Amazon (AMZN), Apple (AAPL), Facebook (FB), Visa (V), UPS (UPS), and others. Amazon and UPS missed estimates while Apple, Facebook, and Visa surpassed expectations. However, it is worth noting that while Apple reported above-consensus results, the company faced reduced competition during the quarter after the recall of Samsung’s Note 7 in early October.
4:14 pm Atwood Oceanics misses by $0.04, reports revs in-line (ATW) :
Reports Q1 (Dec) earnings of $0.15 per share, $0.04 worse than the Capital IQ Consensus of $0.19; revenues fell 48.8% year/year to $157.56 mln vs the $156.61 mln Capital IQ Consensus.
During the quarter ended December 31, 2016, the Company did not recognize any impairment.
2:59 pm Pulmatrix prices 950k common stock offering at $3.50/share –shares halted– (PULM) :
2:55 pm MYOS RENS Tech. commences $2.125 common stock offering; to sell 500k shares at $4.25/share (MYOS) : Co intends to use the net proceeds for general corporate purposes.
1:24 pm MiMedx Group comments on the FDA’s recently published 2017 calendar year guidance agenda (MDXG) :
The tissue-related Guidances to be finalized in calendar year 2017 do not include Guidances on Human Cells, Tissues, and Cellular and Tissue Based Products (HCT/Ps), including minimal manipulation and homologous use of HCT/Ps.
Co states, “There was a tremendous amount of data and scientific evidence presented to the FDA at last year’s hearings on HCT/Ps. The absence of any planned finalized Guidances on the key HCT/P guidance related documents is encouraging. Their absence on this year’s calendar gives us confidence that, when eventually finalized, these Guidances will have taken into consideration the valuable input of industry, academia, practitioners, patients, and the scientific community.”
1:06 pm Lockheed Martin confirms DoD agreement for 90 F-35 aircraft; agreement represents $728 mln in savings and a nearly 8% reduction in price over our last contract (LMT) :
“We’re pleased to have reached an agreement with the U.S. Department of Defense for the next 90 F-35 aircraft. The agreement represents $728 million in savings and a nearly 8 percent reduction in price over our last contract for the air vehicle delivered by Lockheed Martin and our industry partners. The increase in the number of aircraft in this agreement enables us to reduce costs by taking advantage of economies of scale and production efficiencies”
12:59 pm Midday Market Summary: Averages Hold Early Gains at Midday (:WRAPX) :
The market has forged solid gains in the first half of Friday’s session on the foundation of appeasing economic data and strong sector leadership. The SP 500 holds a 0.7% gain at midday.
The Employment Situation Report, which was released at 8:30 am ET this morning, came in just right; strong enough to keep participants thinking good things about the economy, but not strong enough to convince the market that the Fed is now going to be in a hurry to raise the fed funds rate. The 227,000 additions to nonfarm paryrolls (Briefing.com consensus 170,000) and the slight 0.1% uptick in average hourly earnings (Briefing.com consensus +0.3%) were the two main metrics driving the optimistic sentiment.
U.S. Treasuries ticked up immediately following report’s release and still hold those gains this afternoon. The benchmark 10-yr yield is three basis points lower at 2.45%.
The financial sector (+1.9%) continues to provide solid sector leadership. The space’s advance has stemmed from reports suggesting that President Trump will be acting on plans to reduce regulatory burdens on the financial sector today. Specifically, the movement will be aimed at scaling back the Dodd-Frank Act and reversing the Fiduciary Rule. This combination should improve the earnings prospects of the influential sector.
Conversely, the consumer discretionary sector sits at the bottom of today’s leaderboard in the wake of a tough stretch of reports. The first blow came yesterday evening after Amazon (AMZN 814.46, -25.56), the sector’s biggest component by market cap, reported worse than expected revenues and issued downbeat guidance. Elsewhere in the sector, Hanesbrands (HBI 19.30, -3.41), Chipotle (CMG 406.28, -17.01), and AutoNation (AN 50.77, -0.99) have also seen negative reactions to their latest earnings reports, while Macy’s (M 32.50, +1.81) has spiked 5.9% on reports that Canada’s Hudson’s Bay has approached the company about a possible takeover.
The top-weighted technology sector has performed in line with the broader market thus far. Visa (V 86.34, +4.07) represented the sector on the earnings front last night, beating on the top and bottom lines. The company’s shares have added 4.9% on the above-consensus results. The tech sector is fighting to end the week above its flat line, as the space currently holds a 0.1% week-to-date loss.
Today’s economic data included January Employment Situation Report, January ISM Services, and December Factory Orders:
January Employment Situation Report
January nonfarm payrolls came in at 227,000 while the Briefing.com consensus expected a reading of 170,000. The prior month’s reading was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 while the Briefing.com consensus expected an increase of 175,000. The unemployment rate increased to 4.8% (Briefing.com consensus 4.7%).
Average hourly earnings increased 0.1% (Briefing.com consensus +0.3%), while the previous month’s reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 while the Briefing.com consensus expected a reading of 34.3. The previous month’s reading was revised to 34.4 (from 34.3).
The key takeaway is that this is one of those so-called “Goldilocks” reports since it is strong enough to keep participants thinking good things about the economy, but not strong enough to convince the market to think it means the Fed is now going to be in a hurry to raise the fed funds rate. The tempered growth in average hourly earnings, which dialed back year-over-year growth to 2.5% from 2.8% in December, is the focal point as it relates to the market’s perspective on the Fed.
January nonfarm payrolls came in at 227,000 while the Briefing.com consensus expected a reading of 170,000. The prior month’s reading was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 while the Briefing.com consensus expected an increase of 175,000. The unemployment rate increased to 4.8% (Briefing.com consensus 4.7%).
Average hourly earnings increased 0.1% (Briefing.com consensus +0.3%), while the previous month’s reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 while the Briefing.com consensus expected a reading of 34.3. The previous month’s reading was revised to 34.4 (from 34.3).
The key takeaway is that this is one of those so-called “Goldilocks” reports since it is strong enough to keep participants thinking good things about the economy, but not strong enough to convince the market to think it means the Fed is now going to be in a hurry to raise the fed funds rate. The tempered growth in average hourly earnings, which dialed back year-over-year growth to 2.5% from 2.8% in December, is the focal point as it relates to the market’s perspective on the Fed.
The ISM Services Index for January decreased to 56.5 while the Briefing.com consensus expected a downtick to 57.0. The prior month’s reading was revised down to 56.6 from 57.2.
The key takeaway from the report is that growth in the services sector, which accounts for a much bigger slice of economic activity than the manufacturing sector does, persisted for the 85th straight month.
The key takeaway from the report is that growth in the services sector, which accounts for a much bigger slice of economic activity than the manufacturing sector does, persisted for the 85th straight month.
The Factory Orders Report for December showed an increase of 1.3% while the Briefing.com consensus expected a increase of 1.4%. The November reading was revised up to -2.3% from -2.4%.
The key takeaway from the report is that the December increase was led entirely by orders for nondurable goods (+3.1%). Paced by a 2.5% decline in transportation equipment orders, durable goods orders fell 0.5% in December.
The key takeaway from the report is that the December increase was led entirely by orders for nondurable goods (+3.1%). Paced by a 2.5% decline in transportation equipment orders, durable goods orders fell 0.5% in December.
12:55 pm Earnings Calendar for the week of February 6 (:SUMRX) :
Friday (February 3)
After-Hours: ATW
After-Hours: ATW
Monday (February 6)
Pre-Market: SYY, TSN, NWL, CNA, HAS, MCY, DO, BWP, FGL, HAE, AINV, NAT, SALT, AMSC, IRMD, L
After-Hours: FOXA, TSO, JLL, NOV, RE, YRCW, FMC, RBC, CTLT, ALSN, PINC, MOD, FN, TLLP, HMN, MAC, KN, PAHC, OTTR, etc…
Pre-Market: SYY, TSN, NWL, CNA, HAS, MCY, DO, BWP, FGL, HAE, AINV, NAT, SALT, AMSC, IRMD, L
After-Hours: FOXA, TSO, JLL, NOV, RE, YRCW, FMC, RBC, CTLT, ALSN, PINC, MOD, FN, TLLP, HMN, MAC, KN, PAHC, OTTR, etc…
Tuesday (February 7)
Pre-Market: BP, GM, CAH, ADM, CNC, ARW, PAG, OMC, ACM, ARMK, WCG, CDW, EMR, FIS, TEN, AGCO, MOS, ABG, KORS, SPGI, ICE, GPK, AME, VMC, etc…
After-Hours: DIS, GILD, MDLZ, GNW, ORLY, AIZ, FTV, CSRA, PXD, CNO, SCSC, MCHP, ATO, PNRA, TTWO, AKAM, BWLD, EEFT, NUAN, HCSG, WAIR, NTGR, JKHY, KFRC, COHR, LITE, etc…
Pre-Market: BP, GM, CAH, ADM, CNC, ARW, PAG, OMC, ACM, ARMK, WCG, CDW, EMR, FIS, TEN, AGCO, MOS, ABG, KORS, SPGI, ICE, GPK, AME, VMC, etc…
After-Hours: DIS, GILD, MDLZ, GNW, ORLY, AIZ, FTV, CSRA, PXD, CNO, SCSC, MCHP, ATO, PNRA, TTWO, AKAM, BWLD, EEFT, NUAN, HCSG, WAIR, NTGR, JKHY, KFRC, COHR, LITE, etc…
Wednesday (February 8)
Pre-Market: HUM, SNY, ABB, EXC, TWX, PFGC, AGN, CTSH, JEC, VOYA, ALK, OC, AXTA, BR, BCO, ARCB, CG, LPX, FLOW, GWR, etc…
After-Hours: PRU, SU, WFM, CTL, YUM, PPC, NSIT, FISV, CINF, CAA, GPRE, LGF.A, BGC, EFX, KS, UHAL, AHL, TBI, WGL, TTMI, BHE, ENS, HNI, TRMB, AEL, DNB, FLT, etc…
Pre-Market: HUM, SNY, ABB, EXC, TWX, PFGC, AGN, CTSH, JEC, VOYA, ALK, OC, AXTA, BR, BCO, ARCB, CG, LPX, FLOW, GWR, etc…
After-Hours: PRU, SU, WFM, CTL, YUM, PPC, NSIT, FISV, CINF, CAA, GPRE, LGF.A, BGC, EFX, KS, UHAL, AHL, TBI, WGL, TTMI, BHE, ENS, HNI, TRMB, AEL, DNB, FLT, etc…
Thursday (February 9)
Pre-Market: CVS, MFC, KO, BAM, CMI, TU, VIAB, TRI, OXY, DTE, COTY, BWA, WLTW, SEE, MAS, THS, NLSN, FAF, DAN, UFS, SON, ROP, GCI, TWTR, VSTO, CLF, BGCP, WOOF, TKR, TDC, etc…
After-Hours: ATVI, AGU, MHK, NWSA, NVDA, EXPE, NCR, WU, CERN, LPLA, CCJ, RGC, COLM, KMPR, ATR, ZAYO, BFAM, NE, P, CATM, VRSN, NUVA, VVI, JCOM, UBNT, YELP, ZNGA, etc…
Pre-Market: CVS, MFC, KO, BAM, CMI, TU, VIAB, TRI, OXY, DTE, COTY, BWA, WLTW, SEE, MAS, THS, NLSN, FAF, DAN, UFS, SON, ROP, GCI, TWTR, VSTO, CLF, BGCP, WOOF, TKR, TDC, etc…
After-Hours: ATVI, AGU, MHK, NWSA, NVDA, EXPE, NCR, WU, CERN, LPLA, CCJ, RGC, COLM, KMPR, ATR, ZAYO, BFAM, NE, P, CATM, VRSN, NUVA, VVI, JCOM, UBNT, YELP, ZNGA, etc…
Friday (February 10)
Pre-Market: CBG, AON, IPG, CPN, AXL, VTR, BPL, G, FSV, ESNT
After-Hours: KNL
Pre-Market: CBG, AON, IPG, CPN, AXL, VTR, BPL, G, FSV, ESNT
After-Hours: KNL
12:16 pm Areva SA approve terms of capital increases of AREVA SA and NewCo (ARVCF) :
The capital increase of 3 billion euros of NewCo has been authorized by the General Meeting of NewCo, also held today.
The State will subscribe to the reserved capital increases of AREVA SA and of NewCo in the amounts of 2 billion euros and of a maximum of 2.5 billion euros respectively, once the two preconditions laid down in the European Commission’s decision have been fulfilled.
11:55 am European Markets Closing Prices (:SUMRX) : European markets are now closed; stock markets across Europe performed as follows:
UK’s FTSE: + 0.7%
Germany’s DAX: + 0.2%
France’s CAC: + 0.7%
Spain’s IBEX: + 0.7%
Portugal’s PSI: + 2.8%
Italy’s MIB Index: + 1.2%
Irish Ovrl Index: + 0.6%
Greece ASE General Index: + 0.9%
11:49 am Currency Commentary: DXY Struggles to Hold 100 Post-Jobs (:SUMRX) :
The Dollar Index rallied in early trade, running as high as 100.26 following the release of the latest jobs numbers. But we would see it reverse course back below 100 as markets started to digest the miss on Hourly Earnings. The market saw a slew of inflation misses this week with PCE, Employment Cost, and Unit Labor also missing and the FOMC providing a relatively dovish statement compared to expectations. This has led to some weakness in the greenback which was already in a downward trend following some verbal jaw boning by the Trump Administration. BUt of note, Chicago Fed President Charles Evans, who is viewed as one of the most dovish members of the Fed, was the first member of the committee to speak and provided a surprisingly hawkish (for him) round of comments as he sees two rate hikes in 2017 and is comfortable with a third.
The euro was able to rally back to the 1.08 level on the dollar weakness. Markets continue to watch the trend line in the euro as it slowly climbs back from its recent multi-year lows. The 100-sma (1.0788) is showing some signs of holding resistance.
The pound saw a quick 60 pip drop in reaction to a miss in its Services PMI survey. Sterling was able to stabilize in the 1.2450-1.25 area. Sterling is seeing a potential downward swing after failing to break above 1.27.
The yen continues to hold in the 112-113 area. Overnight market participants were surprised to see yields in the 10-year bond move to 0.15% which suggested the central bank was not in buying. Markets will continue to watch these developments closely as it moves further away from the targfeted zero bound.
China was back open for business and saw its offshore (:CNH) yuan move to the high end of its recent range, touching 6.7929, a two week high. The mainland rate held steady at 6.83 (BONDX, FOREX).
11:33 am Notable movers of interest: DATA +16.6% on Q4 EPS and revenue beats, guidance (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
V (86.75 +5.41%): Reports Q1 earnings and revenues beat; reaffirms outlook while increasing FX headwind.
CLX (125.66 +4.51%): Shares rise on Q2 EPS beat.
AMGN (166.61 +4.41%): Reports Q4 EPS and revenue beats; reports positive Repatha data.
Large Cap Losers
CMG (410.59 -3%): Shares drop despite Q4 EPS beat; reaffirms outlook.
MMP (78.8 -1.52%): Shares fall despite Q4 EPS and revenue beats; co guides FY17 EPS below consensus.
TWTR (17.62 -0.9%): Shares drop after rising yesterday on report form Fox’s Gasparino that his banking sources think Twitter will be sold this year, but at a lower level.
Mid Cap Gainers
DATA (56.23 +16.64%): Beats on Q4 EPS and revenue; guides Q1 and FY17 revenues above consensus.
MDCO (44.31 +16.61%): Trades higher following Amgen (AMGN) positive Repatha data from last night.
FTNT (37.57 +13.23%): Shares rise on Q4 EPS and revenue beats; guides FY17 EPS above consensus.
Mid Cap Losers
FEYE (10.88 -16.11%): Reports Q4 revenue miss; guides Q1 EPS and revs below consensus; CFO resigns.
HBI (19.41 -14.53%): Shares fall on Q4 EPS and revenue misses; guides Q1 EPS and revenue below consensus.
ATHN (113.42 -10.44%): Reports Q4 revenue miss.
11:10 am MacQuarie Infrastructure expects that Free Cash Flow per share will increase by an average of between 10% and 15%, per year for 2017 and 2018, consistent with the previous outlook (MIC) :
Additionally, the co notes Senior MIC personnel added an aggregate 23,500 shares to their personal shareholdings this week.
Five individuals including Hooke and Chairman Martin Stanley acquired shares of MIC at Monday’s volume-weighted average price of $74.15 in purchases from the Company’s Manager.
Five individuals including Hooke and Chairman Martin Stanley acquired shares of MIC at Monday’s volume-weighted average price of $74.15 in purchases from the Company’s Manager.
11:07 am FibroGen announces results from its Phase 1/2 study of pamrevlumab in pancreatic cancer were published in the Journal of Cancer Clinical Trials; ‘results support a dose-related increase in survival in advanced pancreatic cancer’ (FGEN) :
In the 028 trial, the safety and efficacy of increasing doses of pamrevlumab were evaluated in combination with two chemotherapy agents, gemcitabine and erlotinib, in 75 patients with previously untreated Stage III or Stage IV pancreatic ductal adenocarcinoma.
Pamrevlumab was well tolerated with no dose-limiting toxicity observed and no dose-related trends observed in type or incidence of serious adverse events.
Plasma CTGF showed potential as a prognostic biomarker, as low baseline CTGF levels (10 ng/mL) were associated with improved OS (10.1 vs 4.4 months (=10 ng/mL), p=0.028).
11:03 am Beasley Broadcast to sell radio stations in the Greenville-New Bern-Jacksonville, North Carolina market, for $11 million in cash to Curtis Media Group (BBGI) :
Co intends to use proceeds from the divestiture to reduce debt. CMG Coastal Carolina, which is affiliated with Curtis Media Group, intends to spin-off WNCT-FM to Inner Banks Media, LLC.
The sale of the six Greenville-New Bern-Jacksonville stations, expected to be completed in 2Q17, is subject to FCC approval and other customary closing conditions.
11:02 am Daiichi Sankyo and Charleston Laboratories confirm that the FDA has issued a Complete Response Letter regarding the NDA for CL-108; letter stated that the NDA in its present form was not approved and provided guidance on information needed to resolve matters identified (DSNKY) : Charleston Laboratories, Inc. and Daiichi Sankyo, Inc. intend to work closely with the FDA to address the points raised in this action.
10:56 am Meridian Bioscience launches TruQuick rapid tests for the diagnosis of tropical, infectious, sexually transmitted, respiratory, gastrointestinal, cancer, and cardiac diseases in Asia Pacific (VIVO) :
10:40 am Goldman Sachs edges higher this morning towards last week’s high of 240.79 (GS) :
10:12 am Other retailers catching a bid on headline that Hudson’s Bay could be interested in possible Macy’s (M) acquisition (XRT) :
M spiked 5% on the headlines; others moving higher include SHLD, KSS, JWN, ANF, GPS, TIF, JCP, BBY all moving higher.
9:55 am Fortinet (FTNT +14%) leading security stocks higher (HACK +0.6%) after strong report/guidance (FTNT) :
FTNT +13.77% PANW +2.75% PFPT +2.65% ZIXI +1.69% QLYS +1.38% RPD +1.14% CUDA +1.12% SYMC +1.10% SCWX +1.04% MIME +0.75% HACK +0.56% CHKP +0.28% QQQ +0.14% IMPV -0.47% VRNS -0.34%
FEYE -16.62% hit an all time low after another disappointing quarter.
9:46 am 22nd Century Group ‘prevails again’ in the most recent phase of the lawsuit filed by Crede (XXII) :
Crede filed the lawsuit after the Company terminated its failed China joint venture arrangement with Crede and its principal, Terren Peizer, due to non-performance and other serious breaches by Crede and its principals.
The SDNY Court has now transferred the above-described portion of the case to the WDNY Court.
The SDNY Court has also scheduled a pre-trial conference with Crede and the Company to be held on February 21, 2017 to schedule the next steps forward in the claims relating to the Tranche 1-A warrant.
Co states, “We are very pleased that we continue to prevail against Crede in this matter and we look forward to a successful resolution of the cases in favor of 22nd Century. If the cases continue, however, the Company intends to file substantial counterclaims against Crede, against Terren Peizer, personally, and against their affiliates.”
9:45 am Opening Market Summary: Averages Open Friday Higher (:WRAPX) :
The stock market opened Friday’s session higher with all three major averages posting gains. The SP 500 is up 0.5%.
Financials (+1.3%) are the early leader, by a sizable margin, following reports that President Trump will be issuing an executive action to scale back the Dodd-Frank Act today. The move is expected to increase the earnings prospects for companies in the financial space.
Conversely, the consumer discretionary sector is at the bottom of the leaderboard after a negative reaction to Amazon’s (AMZN 812.99, -26.85) quarterly earnings report. The company, which is the sector’s largest component by weight, is down 3.2% in early action.
U.S. Treasuries are higher this morning following the release of the Employment Situation Report for January. The benchmark 10-yr yield is down three basis points at 2.45%.
9:29 am On The Wires (:WIRES) :
Freeport-McMoRan (FCX) that its subsidiary, PT Freeport Indonesia (PT-FI), continues to seek approval from Indonesian authorities for the export of its copper concentrates, consistent with its rights under its Contract of Work (COW). To date, this approval has not been granted. Richard C. Adkerson, FCX President and Chief Executive Officer, and Chappy Hakim, PT-FI President Director, said: “We have been actively engaged with Indonesian governmental authorities to enable full operations at PT-FI to continue without disruption. This would be in the best interests of all stakeholders, including the Government of Indonesia, our large work force, the local community, local suppliers and Freeport’s shareholders. We are disappointed that this matter remains unresolved and are concerned about the negative impacts for all stakeholders, especially for our workforce and the local economy. We encourage the Government to enable our full operations to continue without disruption and to provide the required assurances to support our long-term investment programs so these negative impacts can be avoided.”
The Board of Directors of Intesa Sanpaolo (ISNPY) passed a resolution authorising the sale of a stake representing a total of around 4.88% of the Bank of Italy’s share capital. The stake will be sold at its nominal value, which is equal to its carrying value, for an amount of around 366 million.
Energy XXI Gulf Coast (EGXG) announced that Michael S. Reddin has been appointed interim Chief Executive Officer and President, effective immediately. This follows the decision by John D. Schiller to depart from his roles as Director, CEO and President of EGC. Mr. Schiller has agreed to serve as an advisor to the Board during the transition. Further, EGC’s Chief Financial Officer Bruce Busmire will be departing to pursue other interests. Chief Accounting Officer Hugh Menown will become the interim CFO.
9:13 am SP futures vs fair value: +7.50. Nasdaq futures vs fair value: +1.10. (:WRAPX) :
The stock market is poised for a higher open as the SP 500 futures trade eight points (0.4%) above fair value.
The Employment Situation Report for January was released this morning and it was mixed as nonfarm payrolls beat consensus estimates, but average hourly earnings fell short of expectations.
Nonfarm payrolls came in at 227,000 while the Briefing.com consensus expected a reading of 170,000. The prior month’s reading was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 while the Briefing.com consensus expected an increase of 175,000. The unemployment rate increased to 4.8% (Briefing.com consensus 4.7%).
Additionally, average hourly earnings increased 0.1% (Briefing.com consensus +0.3%), while the previous month’s reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 while the Briefing.com consensus expected a reading of 34.3. The previous month’s reading was revised to 34.4 (from 34.3).
U.S. Treasuries have ticked up following the jobs report, while the U.S. Dollar Index (99.71, -0.12) has slipped 0.1%. The benchmark 10-yr yield is down four basis points at 2.43%.
On the earnings front, Amazon (AMZN 806.20, -33.75) has headlined this morning’s earnings activity after the company reported worse than expected earnings per share results and issued disappointing guidance after yesterday’s close. Shares of AMZN have retreated 3.8% in pre-market trade.
Conversely, banks are ticking up this morning after The Wall Street Journal reported that President Trump plans to sign an executive order to scale back the Dodd-Frank Act today. The action is part of a broader plan to reduce some of the regulations put in place following the financial crisis. JPMorgan Chase (JPM 86.23, +1.64), Wells Fargo (WFC 56.75, +1.00), and Bank of America (BAC 23.18, +0.46) are all up between 1.8% and 2.0%.
Friday’s economic data will also include December Factory Orders (Briefing.com consensus 1.4%) and ISM Services (Briefing.com consensus 57.0). Both reports will be released at 10:00 am ET.
9:01 am Interpace Diagnostics prices 1,200,000 share offering at $3.00/share (IDXG) : Interpace intends to use the net proceeds of the offering for working capital, repayment of indebtedness and other liabilities, and general corporate purposes.
9:01 am Dollar General intends to create approximately 10,000 new jobs in 2017 as the result of 1,000 planned new store openings and two new state-of-the-art distribution centers (DG) :
9:00 am On The Wires (:WIRES) :
Amyris (AMRS) provides an update on certain aspects of its business and financial results for 2016. “We are pleased to have achieved a record year of revenue growth, and of having completed all of the 2016 strategic milestones we set out to, and we continue to make good progress on our debt structure by having resolved our near-term debt maturity issues in pushing out approximately $44 million in debt as announced just before year end,” said John Melo, Amyris President CEO. “Also, we are meeting our expectations in securing collaborations that will result in future product sales and this is accelerating our growth rate.”
The Carlyle Group (CG) has acquired a minority interest in FS, a provider of value-added services, mobile applications and content in Brazil and Latin America. The funds for the investment came from the Carlyle South America Buyout Fund and the Carlyle Peru Fund. Terms of the transaction, which was completed on December 29, 2016, were not disclosed.
Ecopetrol S.A. (EC) hereby reports that representatives of the minority shareholders with the largest holdings of the Company’s shares have submitted a “Shareholders’ Agreement”, subscribed by five pension and retirement funds, in which such minority shareholders have nominated Mr. CARLOS GUSTAVO CANO SANZ as an independent member of the Board of Directors of the Company. Pursuant to the Majority Shareholder’s Declaration, the nomination of Mr. CANO as an independent member of the Board of Directors and selected by the minority shareholders is to be included as the ninth item in the program that will be submitted for consideration at the Extraordinary Shareholders’ Meeting.
8:55 am Standex International beats by $0.05, misses on revs; provides outlook (SXI) :
Standex reports Q4 diluted adj EPS from continuing operations of $1.01 vs. the $0.96 Capital IQ Consensus; revs were $173.9 mln, vs the $175.75 mln Capital IQ Consensus.
Organic sales decreased 4.9%, acquisitions contributed positive 4.1%, and the U.S. Roll, Plate and Machinery divestiture had a negative effect of 2.7% y/y.
“Second-quarter organic sales were primarily affected by soft refrigeration end market conditions as expected, as well as customer project push-outs in Engineering Technologies and Engraving,” said President and Chief Executive Officer David Dunbar. “At the same time, our continued focus on operational excellence mitigated the effect on our bottom line performance. GAAP operating profit declined by 120 basis points on the sales decline, and non-GAAP operating profit was essentially flat. In our Electronics business, we announced yesterday our intention to acquire OKI Sensor Device Corporation, a world-renowned Japanese manufacturer of reed switches. The acquisition expands our global reach in our Electronics business, and increases our ability to capitalize on new sensor opportunities in Asia.”
Organic sales decreased 4.9%, acquisitions contributed positive 4.1%, and the U.S. Roll, Plate and Machinery divestiture had a negative effect of 2.7% y/y.
“Second-quarter organic sales were primarily affected by soft refrigeration end market conditions as expected, as well as customer project push-outs in Engineering Technologies and Engraving,” said President and Chief Executive Officer David Dunbar. “At the same time, our continued focus on operational excellence mitigated the effect on our bottom line performance. GAAP operating profit declined by 120 basis points on the sales decline, and non-GAAP operating profit was essentially flat. In our Electronics business, we announced yesterday our intention to acquire OKI Sensor Device Corporation, a world-renowned Japanese manufacturer of reed switches. The acquisition expands our global reach in our Electronics business, and increases our ability to capitalize on new sensor opportunities in Asia.”
Outlook:
“We believe that we are now at the trough in Refrigeration and expect sales in the second half of the fiscal year to increase,” said Dunbar. “We also anticipate renewed growth at Engraving in the third and fourth quarters as a result of North American automotive program launches and growth in Europe and Asia. We will continue to capitalize on aviation opportunities in Engineering Technologies and focus on growth laneways in Hydraulics. In Electronics, we are focused on completing the new OKI Sensor Device acquisition. As we look to the future, our balance sheet is well positioned to fund growth, CAPEX and acquisitions as we continue to deploy the Standex Value Creation System.”
“We believe that we are now at the trough in Refrigeration and expect sales in the second half of the fiscal year to increase,” said Dunbar. “We also anticipate renewed growth at Engraving in the third and fourth quarters as a result of North American automotive program launches and growth in Europe and Asia. We will continue to capitalize on aviation opportunities in Engineering Technologies and focus on growth laneways in Hydraulics. In Electronics, we are focused on completing the new OKI Sensor Device acquisition. As we look to the future, our balance sheet is well positioned to fund growth, CAPEX and acquisitions as we continue to deploy the Standex Value Creation System.”
8:50 am SP futures vs fair value: +8.30. Nasdaq futures vs fair value: +3.60. (:WRAPX) :
The SP 500 futures trade eight points above fair value.
Equity indices in the Asia-Pacific region ended the week on a mixed note. The overnight session was fairly quiet, but the yen slumped to 113.15 against the dollar after the Bank of Japan intervened in the bond market to keep the 10-yr Japanese Government Bond yield below 0.11%. This marked the first intervention since the central bank stated its desire to keep the 10-yr yield around 0.0%. In China, the People’s Bank of China raised short-term interest rates at the conclusion of the Chinese Lunar New Year Golden Week.
In economic data:
China’s January Caixin PMI 51.0 (consensus 51.8; last 51.9)
Hong Kong’s January Manufacturing PMI 49.9 (last 50.3). December Retail Sales -2.9% year-over-year (last -5.5%)
South Korea’s December Current Account surplus expanded to KRW8.57 billion from KRW7.05 billion
New Zealand’s ANZ Commodity Price Index -0.1% month-over-month (last 0.7%)
India’s Nikkei Services PMI 48.7 (last 46.8)
China’s January Caixin PMI 51.0 (consensus 51.8; last 51.9)
Hong Kong’s January Manufacturing PMI 49.9 (last 50.3). December Retail Sales -2.9% year-over-year (last -5.5%)
South Korea’s December Current Account surplus expanded to KRW8.57 billion from KRW7.05 billion
New Zealand’s ANZ Commodity Price Index -0.1% month-over-month (last 0.7%)
India’s Nikkei Services PMI 48.7 (last 46.8)
—Equity Markets—
Japan’s Nikkei settled just above its flat line, ending the week lower by 2.8%. Apple supplier Fujikura surged 12.4% while Sony, Furukawa, Chiba Bank, Shinsei Bank, Suzuki Motor, and Komatsu climbed between 1.3% and 5.0%.
Hong Kong’s Hang Seng shed 0.2%, extending this week’s decline to 1.0%. Want Want China was the weakest performer, falling 1.7%. Financials were among the laggards with Bank of East Asia, BoC Hong Kong, HSBC, ICBC, and Ping An Insurance posting losses between 0.4% and 1.1%. China Life Insurance bucked the trend, climbing 1.7%.
China’s Shanghai Composite reopened after a week-long closure, surrendering 0.6%. Sinomach Automobile, Shanghai Material Trading, Jiangxi Copper, and Giti Tire lost between 2.9% and 3.9%.
India’s Sensex added 0.1%, extending its weekly gain to 4.5%. Most financials displayed strength with SBI, AXIS Bank, and HDFC Bank rising between 0.6% and 1.7% while ICICI Bank fell 1.5%.
Major European indices trade in the green with France’s CAC (+1.0%) showing relative strength. A pair of European Central Bank members, Peter Praet and Benoit Coeure, spoke about monetary policy, but neither gave much thought to the recent uptick in inflation. The euro (1.0742) and the pound (1.2490) are down 0.2% and 0.3%, respectively, against the dollar.
In economic data:
Eurozone December Retail Sales -0.3% month-over-month (expected 0.3%; last -0.6%); +1.1% year-over-year (consensus 1.8%; previous 2.5%). January Services PMI 53.7 (consensus 53.6; last 53.6)
Germany’s January Services PMI 53.4 (expected 53.2; last 53.2)
UK’s January Services PMI 54.5 (expected 55.8; previous 56.2)
France’s January Services PMI 54.1 (consensus 53.9; last 53.9)
Spain’s January Services PMI 54.2 (expected 54.8; previous 55.0)
Italy’s January Services PMI 52.4 (consensus 52.5; previous 52.3). January CPI +0.2% month-over-month, as expected (last 0.4%); +0.9% year-over-year, as expected (last 0.5%)
Eurozone December Retail Sales -0.3% month-over-month (expected 0.3%; last -0.6%); +1.1% year-over-year (consensus 1.8%; previous 2.5%). January Services PMI 53.7 (consensus 53.6; last 53.6)
Germany’s January Services PMI 53.4 (expected 53.2; last 53.2)
UK’s January Services PMI 54.5 (expected 55.8; previous 56.2)
France’s January Services PMI 54.1 (consensus 53.9; last 53.9)
Spain’s January Services PMI 54.2 (expected 54.8; previous 55.0)
Italy’s January Services PMI 52.4 (consensus 52.5; previous 52.3). January CPI +0.2% month-over-month, as expected (last 0.4%); +0.9% year-over-year, as expected (last 0.5%)
—Equity Markets—
Germany’s DAX is higher by 0.5%. Continental leads with a 4.2% gain while Deutsche Bank is up 1.8% after announcing plans to cut staff. Allianz and Munich Re are both up near 1.0% while Lufthansa, Daimler, and BASF lag. The three names are down between 0.1% and 0.3%.
UK’s FTSE has climbed 0.6% amid strength in financials. Barclays, Prudential, RBS, Lloyds Banking, RSA Insurance, and Standard Life are up between 1.2% and 3.1%. Miners trade in negative territory with Glencore, Rio Tinto, Antofagasta, and BHP Billiton down between 2.1% and 3.4%.
France’s CAC outperforms with a gain of 1.0%. Michelin has jumped 3.0% after announcing plans to raise European tire prices. Financials like AXA, BNP Paribas, Credit Agricole, and Societe Generale have added between 0.4% and 2.2%. ArcelorMittal lags, trading lower by 1.2%.
8:37 am FORM Holdings acquires Excalibur Integrated Systems as a bolt on to its Group Mobile subsidiary; Excalibur shareholders will receive 888,573 shares of FORM Holdings common stock (FH) :
Excalibur Integrated Systems is an end-to-end solutions provider of mobile hardware devices, wireless network security, data networking, mobile solutions application development and software solutions.
In 2016, Excalibur generated over $5 million in revenue.
Under the terms of the agreement, Excalibur shareholders will receive 888,573 shares of FORM Holdings common stock.
8:36 am Berry Plastics beats by $0.05, misses on revs; reaffirms FY17 cash flow from operations adj free cash flow guidance (BERY) :
Reports Q1 (Dec) earnings of $0.50 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.45; revenues fell 6.8% year/year to $1.5 bln vs the $1.56 bln Capital IQ Consensus.
The net sales decrease of $110 mln from the prior year quarter is primarily attributable to a $98 mln negative impact from the extra days in the prior year quarter, an unfavorable impact from currency translation, and a decline in selling prices.
The net sales decrease of $110 mln from the prior year quarter is primarily attributable to a $98 mln negative impact from the extra days in the prior year quarter, an unfavorable impact from currency translation, and a decline in selling prices.
“Our results this quarter were driven by growth in our Health, Hygiene, and Specialties division and strong operating performance in our Engineered Materials division.”
FY17 guidance:
Co reaffirms fiscal year 2017 projected cash flow from operations of $925 mln and adj free cash flow of $550 mln.
Estimates include the recent acquisition of AEP completed on Jan 20, 2017, the $60 mln tax receivable payment that was made in the first fiscal quarter and assumes net capex of $315 mn.
Cash interest expense is forecasted to be $275 mln for FY17. Co is also assuming $80 mln of cash used for other taxes within guidance, primarily related to state and international jurisdictions, and other cash uses of $60 mln related to items such as acquisition integration expenses and costs to achieve synergies.
“Looking ahead, we will continue our focus on reducing our leverage ratio to a goal of below 4, on or before the end of fiscal 2017. Additionally we remain excited about our recent acquisition of AEP, which closed on Jan 20th and believe our synergy targets are very achievable. The improvements as a result of the acquisition of AEP, we believe, will not only positively impact our Engineered Materials division but will also add scale benefits to each of our three operating divisions.”
Co reaffirms fiscal year 2017 projected cash flow from operations of $925 mln and adj free cash flow of $550 mln.
Estimates include the recent acquisition of AEP completed on Jan 20, 2017, the $60 mln tax receivable payment that was made in the first fiscal quarter and assumes net capex of $315 mn.
Estimates include the recent acquisition of AEP completed on Jan 20, 2017, the $60 mln tax receivable payment that was made in the first fiscal quarter and assumes net capex of $315 mn.
Cash interest expense is forecasted to be $275 mln for FY17. Co is also assuming $80 mln of cash used for other taxes within guidance, primarily related to state and international jurisdictions, and other cash uses of $60 mln related to items such as acquisition integration expenses and costs to achieve synergies.
“Looking ahead, we will continue our focus on reducing our leverage ratio to a goal of below 4, on or before the end of fiscal 2017. Additionally we remain excited about our recent acquisition of AEP, which closed on Jan 20th and believe our synergy targets are very achievable. The improvements as a result of the acquisition of AEP, we believe, will not only positively impact our Engineered Materials division but will also add scale benefits to each of our three operating divisions.”
8:34 am IntercontinentalExchange reports January 2017 ADV for futures was 5.6 million contracts, -11% Y/Y, Commodities ADV -11% Y/Y vs record volume in January 2016, NYSE cash equities ADV -32% Y/Y (ICE) :
8:33 am Nathan’s Famous EPS $0.17 vs. $0.10 last year; revenue -3% to $20 mln (no estimates) (NATH) :
8:33 am Jobs Report Beats Estimates … SP futures vs fair value: +2.00. Nasdaq futures vs fair value: -9.00. (:WRAPX) :
The SP 500 futures trade two points above fair value.
Just in, January nonfarm payrolls came in at 227,000 while the Briefing.com consensus expected a reading of 170,000. The prior month’s reading was revised to 157,000 from 156,000. Nonfarm private payrolls added 237,000 while the Briefing.com consensus expected an increase of 175,000. The unemployment rate increased to 4.8% (Briefing.com consensus 4.7%).
Average hourly earnings increased 0.1% (Briefing.com consensus +0.3%), while the previous month’s reading was revised to 0.2% (from 0.4%). The average workweek was reported at 34.4 while the Briefing.com consensus expected a reading of 34.3. The previous month’s reading was revised to 34.4 (from 34.3).
8:31 am Insignia Solutions announces that in connection w/ its proposed sale of Novatel Wireless, the parties have voluntarily withdrawn and re-filed the Joint Voluntary Notice; co still expects the closing of the Sale to occur in 1Q17 (INSG) :
The Parties and the Committee have been working cooperatively to finalize the terms of a National Security Agreement.
However, due in part to government personnel changes resulting from the recent change of Presidential administrations, the Committee and the Parties were unable to complete and execute the NSA within the time remaining in the initial investigation period.
Accordingly, with CFIUS’s consent, the Parties withdrew and re-filed the JVN, which will initiate a new period of review under the regulations.
During the renewed period, the Company expects that the Parties and CFIUS will diligently and in good faith negotiate to finalize a definitive mitigation agreement.
Co still expects the closing of the Sale to occur in 1Q17, subject to the timing and successful completion of the CFIUS process and assuming satisfaction or waiver of all other applicable conditions.
8:31 am Neos Therapeutics prices 5,000,000 share offering at $5.00/share (NEOS) :
8:30 am Gapping down (SCANX) :
Gapping down
In reaction to disappointing earnings/guidance:
DECK -20.7%, FEYE -18.3%, GIMO -14.3%, GPRO -13.7%, HBI -9.7%, ELY -8.9%, ATHN -8%, ACET -5.2%, AMZN -4.3%
MWA -3.9%, (Increases diviend 33%, Announces up to $250 mln share repurchase (Included prior repurchase); Names J. Scott Hall CEO)
GFI -2.8%, PMT -2.5%, VR -1.9%, HIG -1.7%, AN -1.7%, RTEC -1.5%, WY -1.4%, BRS -0.9%, PSX -0.7%, WETF -0.5%
Select metals/mining stocks trading lower:
VALE -4%, RIO -3.6%, BBL -3.4%, BHP -3%, CLF -2.2%, X -1.8%, MT -1.7%, FCX -1.5%, AKS -1.5%, AG -1.4%, SLW -1.4%, GOLD -1.2%, PAAS -1%, ABX -1%
Other news:
IDXG -21.3% (commences common stock offering)
XGTI -12.7% (intends to offer for sale shares of its common stock and warrants to purchase its common stock in an underwritten public offering; size not disclosed), NEOS -10.3% (provides corporate update in conjunction with today’s common stock offering; co sees Q4 revs just short of estimates; commences common stock offering; size not disclosed)
RUBI -6.3% (indicated lower following block trade pricing)
SBGL -4.2% (reports H1 gold production in-line with LY; also expressed its intention to raise a between a minimum of $750 mln and $1 bln dollars in the equity capital markets)
HTBX -4.1% (files prospectus supplement pursuant to which it may sell shares of its common stock having an aggregate offering price of up to $17.5 mln)
AMBA -2.6% (following GPRO earnings)
VOD -1% (continued weakne