23 July 2013 AMC

23 July 2013 AMC

Market Summary 

Market Internals

The Dow closed up 22 (+0.14%) at 15568, the S&P 500 closed down 3 (-0.19%) at 1692, and the Nasdaq closed down 21 (-0.59%) at 3579. Action came on below average volume (NYSE 624 mln vs. avg. of 777; NASDAQ 1551 mln vs. avg. of 1659), with mixed advancers/decliners (NYSE 1741/1322, NASDAQ 1148/1322) and new highs outpacing new lows (NYSE 263/28, NASDAQ 280/12). 

Relative Strength: 
Silver Miners-SIL +4.71%, Junior Gold Miners-GDXJ +4.23%, Copper Miners-COPX +3.63%, China 25 Index-FXI +2.75%, Metals and Mining-XME +2.61%, Coal-KOL +2.31%, Middle East and Africa-GAF +1.83%, Spain-EWP +1.67%, Peru-EPU +1.55%, South Africa-EZA +1.54%.

Relative Weakness: 
Grains-JJG -2.24%, Corn-CORN -2.06%, Biotechnology-IBB -1.71%, Biotechnology-XBI -1.49%, Insurance-KIE -1.26%, Switzerland-EWL -0.50%, India-INP -0.50%, Vietnam-VNM -0.31%, Indonesia-IDX -0.21%, Israel-EIS -0.15%.

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

16:15 ET Dow +22.19 at 15567.74, Nasdaq -21.11 at 3579.27, S&P -3.14 at 1692.39 : [BRIEFING.COM] The major averages ended in mixed fashion as the Dow Jones added 0.1% and the S&P 500 shed 0.2%. 

The Dow outperformed the broader market as the relative strength of United Technologies (UTX 105.16, +3.05) provided the price-weighted index with enough support to keep it in positive territory throughout the session. In addition, DuPont (DD 57.12, -0.05) displayed early strength, but ended in the red. Both companies reported bottom-line beats on below-consensus revenue and DuPont announced it will seek strategic alternatives for its Performance Chemical segment. 

Although DuPont settled on its lows, the materials sector finished in the lead. The space received support from miners after Freeport-McMoRan (FCX 29.99, +0.84) reported an earnings beat. On a related note, copper futures added 0.9% to $3.213 per pound while gold futures climbed 0.5% to $1342.20 per troy ounce. 

The materials sector was closely followed by yesterday's biggest laggard, energy. The growth-oriented space added 0.2% as crude oil rose 0.2% to $107.14 per barrel. 

Elsewhere, utilities and telecom services settled with respective gains of 0.3% and 0.4% while the remaining sectors ended in the red. 

Financials and technology spent most of the day in negative territory. In the financial sector, major banks displayed little change and insurer Travelers(TRV 82.21, -3.22) fell 3.8% despite beating on earnings. 

Tech shares displayed broad weakness, with the largest sector component,Apple (AAPL 418.99, -7.32), sliding 1.7% ahead of its after-hours earnings report. Meanwhile, chipmakers underperformed even after Texas Instruments (TXN 38.93, +1.51) reported a slight earnings beat on an 8.6% year-over-year decline in revenue. 

The underperformance of tech names weighed on the Nasdaq, which settled lower by 0.6%. In addition, the index was also pressured by Netflix (NFLX 250.26, -11.70) after the discretionary component reported in-line results, which did not justify the stock's July gain of 24.1%. 

Also of note, biotechnology weighed on the Nasdaq and the health care sector. The iShares Nasdaq Biotechnology (IBB 192.35, -3.34) settled lower by 1.7%. 

Similar to stocks, Treasuries were confined to a narrow range. The benchmark 10-yr yield ended higher by two basis points at 2.51%. 

Today's economic data was limited to the May FHFA Housing Price Index, which increased 0.7% to follow a 0.5% uptick observed during the prior month. 

Tomorrow, the weekly MBA Mortgage Index will be reported at 7:00 ET and June new home sales will be announced at 10:00 ET. On the earnings front, AmerisourceBergen (ABC 57.63, -1.36), Boeing (BA 107.79, +0.93), and Ford Motor (F 16.94, -0.10) will report their results before the opening bell. 

The U.S. Treasury will auction $35 billion in 5-yr notes. ..NYSE Adv/Dec 1711/1298. ..NASDAQ Adv/Dec 1149/1324.

Commodities

Currencies 

 10-Yr:-07/32..2.511%.. USD/JPY:99.55.. EUR/USD:1.3213
Dollar Sinks to 82.00: The Dollar Index holds on session lows near 82.00 as trade looks to post its worst close in a month. A breakdown of current levels sets up a test of 81.60 support that is aided by the 200-day moving average. 

• EURUSD is +30 pips at 1.3215 as trade tests near-term resistance in the area. The single currency jumped to its best levels of the session shortly ahead of news suggesting the next payment of Greek aid will be delayed until July 29, when the Troika report is released. Traders will be watching current levels closely as a breakout will likely result in a retest of the July highs near 1.3400. Eurozone data is heavy as Flash Manufacturing and Services PMI data from across the region is scheduled for release. 
• GBPUSD is +20 pips at 1.5375 as trade rallies for a sixth straight session. The six-day winning streak has tacked on almost 400 pips, with that run being extended to more than 500 pips dating back to the July 10 lows. The 1.5400 area should provide some resistance, but a test of the 200-day moving average (1.5580) cannot be ruled out. Britain’s CBI Industrial Order Expectations will be announced tomorrow. 
• USDCHF is flat at .9360 as action checks up on the 200-day moving average. The pair has lost roughly 400 pips over the past two weeks. 
• USDJPY is -5 pips at 99.55 as trade tests the 50-day moving average. Overnight, the Japanese government raised its economic for a third consecutive month, and suggested the recovery is self-sustaining. Near-term support comes into play near 99.00 while the 101.00 level continues to provide resistance. Japan’s trade balance will cross the wires tonight. 
• AUDUSD is +40 pips at .9280 as the pair rallies for a second day. The .9300 resistance level remains in focus as the pair looks to retake the mark for the first time in a month. Australian data is limited to CPI and Trimmed Mean CPI. China’s HSBC Flash Manufacturing PMI is due out tonight. 
• USDCAD is -40 pips at 1.0295 with trade coming under pressure following this morning’s better than expected Canadian retail sales data (1.9% MoM actual v. 0.4% MoM expected). Today’s selling has the pair looking to test its 100-day moving average (1.0265) as action remains on track to close at a one-month low. Trendline support off the September lows will come into play near 1.0200.

Treasuries

Treasuries Fall Amid Lackluster Session: Treasuries ended with modest losses amid a rather uneventful session. The complex slipped to its worst level of the session shortly after U.S. equities opened for business, but managed to pare those losses ahead of the noon hour. Maturities hovered in tight ranges for the remainder of the session, seeing little reaction to the in-line $35 bln 2-yr note auction. The auction drew 0.336% and a 3.08x bid/cover as a solid indirect bid (30.4%) helped offset a weak direct bid (16.4%). Primary dealers were left with almost 54.0% of the supply. Modest losses ran yields up as much as 3.5 bps as the 10-yr climbed to 2.516%. Current levels for the 10-yr will be under careful scrutiny as key support rests in the 2.450% area and important resistance resides near 2.550%. Today’s selling swung the yield curve steeper as the 2-10-yr spread widened to 219.5 bps. Meanwhile, precious metals ended near their best levels with gold climbing $7 to $1343 and silver slipping $0.10 to $20.40. Data remains light on Wednesday with the weekly MBA Mortgage Index (7) and new home sales (10). Treasury will hold a $35B 5-yr note auction.

Next Day In View 

On other news....

Norfolk Southern misses by $0.03, misses on revs (76.87 -0.51)
Reports Q2 (Jun) earnings of $1.46 per share, $0.03 worse than the Capital IQ Consensus Estimate of $1.49; revenues fell 2.5% year/year to $2.8 bln vs the $2.85 bln consensus. 

• Railway operating revenues were $2.8 bln, 3% lower compared with second-quarter 2012, with shipment volumes increasing 2%. 
• Second-quarter 2013 fuel surcharge revenues were $306 mln, or $59 mln less than the same period last year. 
• General merchandise revenues were $1.6 bln, 2% higher compared with the second quarter of 2012, driven by increased chemical and automotive shipments. 
• Coal revenues were $626 mln, 17% lower compared with the same quarter last year, due to lower average revenue per unit and a 4% decline in volumes, the result of a combination of reduced global demand for U.S. coal and competition from natural gas.
• Intermodal revenues increased 4% to $588 mln compared with the same period of 2012. Volumes increased 5% due to continued domestic and international growth. Railway operating expenses were $2.0 bln, 1% higher compared with second-quarter 2012.

RHI Robert Half beats by $0.03, beats on revs (35.84 -0.05)
Reports Q2 (Jun) earnings of $0.46 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.43; revenues rose 3.4% year/year to $1.06 bln vs the $1.05 bln consensus.

AT&T misses by $0.01, reports revs in-line (35.81 +0.23)
Reports Q2 (Jun) earnings of $0.67 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.68; revenues rose 1.6% year/year to $32.08 bln vs the $31.83 bln consensus.

Total wireless revenues, which include equipment sales, were up 5.7% year over year to $17.3 billion. Wireless service revenues increased 4.1% in the second quarter, to $15.4 billion. Wireless data revenues increased 19.8% from the year-earlier quarter to $5.4 billion. Second-quarter wireless operating expenses totaled $12.6 billion, up 11.8% versus the year-earlier quarter, and wireless operating income was $4.7 billion, down 7.7% year over year. 

AT&T posted a net increase in total wireless subscribers of 632,000 in the second quarter. Subscriber additions for the quarter included postpaid net adds of 551,000, the best second-quarter postpaid net adds in four years and a more than 70% increase from the year-ago quarter. Postpaid net adds include 398,000 postpaid tablets added in the quarter. Connected device net adds were 484,000. Prepaid gained 11,000 subscribers even with declines in session-based tablets. Reseller had a net loss of 414,000 primarily due to losses in low-revenue accounts, but revenues increased almost 30% year over year. 

Postpaid phone-only ARPU increased 3.0% versus the year-earlier quarter. Total postpaid subscriber ARPU, which includes high margin but lower-ARPU tablets, increased 1.8%versus the year-earlier quarter. This marked the 18th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. Postpaid data ARPU increased 17.6%versus the year-earlier quarter. 

Postpaid churn was 1.02%, up slightly from the year-ago quarter and down slightly from the first quarter of 2013. Total churn increased year over year, due mostly to increases in reseller churn, but was down slightly sequentially. 

AT&T's second-quarter wireless operating income margin was 27.1% versus 31.0% in the year-earlier quarter. AT&T's wireless EBITDA service margin was 42.4%, compared with 45.8% in the second quarter of 2012.

During Q2, the co completed its second 300 million share repurchase authorization and began buying back shares under its third 300 million share authorization.


AAPL Apple beats by $0.19, beats on revs; guides Q4 revs towards low end of expectations with in-line gross margin (418.99 -7.32)
Reports Q3 (Jun) earnings of $7.47 per share, $0.19 better than the Capital IQ Consensus Estimate of $7.28; revenues rose 0.9% year/year to $35.32 bln vs the $34.91 bln consensus; Q3 gross margin 36.9% vs Street est of 36.6% and 36-37% guidance.

• 31.2 mln iPhones sold in Q3 vs Street est of ~26 mln 
• 14.6 mln iPads sold in Q3 vs Street est of ~17 mln 
• 3.8 mln Macs sold in Q3 vs Street est of ~4 mln

Co issues guidance for Q4, sees Q4 revs of $34-37 bln vs. $37.07 bln Capital IQ Consensus; with gross margin 36-37% vs. 36.6% Street est.

17:53 ET VMW +11.0%, EA +7.0%, AAPL +3.2%, PNRA -6.3%, BRCM -5.8% following earnings/guidance :

The major averages ended in mixed fashion as the Dow Jones added 0.1% and the S&P 500 shed 0.2%.

Today after the close the following companies were scheduled to reported earnings: FULT, LLTC, ACE, ILMN, PEI, AAPL, ACC, AEC, AMSG, BCR, BRCM, DFS, EEFT, FBC, FNB, FTI, HA, HLIT, HTS, IRBT, JNPR, MANH, NBR, NSC, PLCM, PNRA, RE, RFMD, RHI, RKT, RUSHA, SFG, T, TRMK, TSS, UIS, UMBF, USNA, VASC, VMW, VOCS, ZIXI, EXAC, OKSB, WCN, ALTR, IBKC, IGT, KFN, EA, SUPX, CPWR

Other notable movers on earnings/guidance: VMW +11%, UIS +7.1%, EA +7%, ILMN +6.4%, CPWR +4.6%, AAPL +3.2%, HA +3.1%, AFOP +3.1%, KFN +1.8%, VASC +1.7%, ALTR +1.5%, HLIT +1.3%, LLTC +1.2%, IGT +1.1%, USNA +0.8%, FTI +0.5%, ZIXI +0.5%, RHI +0.5%, NBR +0.4%, AEC +0.2%, TSS +0.2%, RKT +0.2%, WCN +0.2%, ACE +0.1%, PNRA -6.3%, RUSHA -6.1%, PLCM -6.1%, BRCM -5.8%, HTS -3.6%, ACC -1.9%, FNB -1.7%, NSC -1.3%, JNPR -1%, RFMD -0.7%, T -0.5%, DFS -0.3%, IRBT -0.1%

Futures are higher after hours: S&P 500 futures are +1.87 from fair value of 1687.53 and Nasdaq100 futures are +15.87 from fair value of 3025.13.

Tomorrow morning before the open one economic report is scheduled to be released: 1) MBA Mortgage Index

Tomorrow before the open the following companies are scheduled to report earnings: PEP, ARMH, CAT, RCI, AOS, DAL, DHX, ECA, FCF, GNTX, LCC, PCH, RAI, SPNC, ATI, ATMI, BA, BKU, CFR, CKSW, CP, CVE, DPS, EMC, EVR, F, FMBI, GD, ICON, LAD, LL, LLY, MDCO, MKTX, MSA, MSI, MTH, NDAQ, NOC, NOR, NYCB, OC, OCR, PB, PLD, PX, RES, ROL, SLGN, TEL, TMO, TROW, TUP, WLP, WYN, ABC, PVR, ELN, EXAR, SAVE, ARW, RDN, RLGY, STX, MCO

Jason's Commentaries


Another flat day in the market. Dow was flat, Nasdaq was down, S&P500 was flat. Dow was being held up by names like UTX, IBM and HP which gained 2.55% 0.46% and 0.86%. Nasdaq was being dragged down by Apple which announced its earnings after market closed. Volumes as mentioned in yesterday's DMA, continued to be weak and the bulls barely outpaced the bears. VIX closed up higher as well.  The main laggard last night was Tech, Financials and Healthcare at -0.41%, -0.38% and -0.35% respectively. While Materials and Utilities are showing some moderate gains. On the technical side, S&P500 remained to be holding the highs and the Dow broke the all the time but unable to hold the high. It seems that Dow is going to break 15700 soon. 
On the commodities side, copper had some rough day last night as it dropped from $3.215 to $3.17. The other metals did not have much movement. Agriculture commodities did not have much movement as well except for soybean which had a massive drop during the trading hours last night. 
Tonight will be a big night for industrials as 3 of the major industrials, Boeing, Catepillar and General Dynamics are annoucing their earnings before market open. It's going to be a volatile ride tonight and it's gonna be a tough call and it's gonna depends on the earnings of these 3 big industrials.

Market Call: UP

Date: 24 Jul 2013