Today's slight uptick in the market has masked a busy 24 hours that has included the release of a highly-anticipated, but underwhelming, policy statement from the Bank of Japan, a raft of quarterly earnings, and a disappointing advance reading of second-quarter U.S. GDP (1.2%). To no one's shock, the disappointing GDP report has been viewed as an argument in favor of delaying the next rate hike, opening the door to an advance in equities. To be sure, investors received a few quarterly reports that have underpinned the move, which has been paced by the Nasdaq Composite.
Economic data today, aside from the GDP reading, included the Chicago Purchasing Managers Index (PMI) dipped to 55.8 in July from 56.8 in June. Also, the final reading of the University of Michigan Consumer Sentiment report for July checked in at 90.0, down from the final June reading of 93.5.
In the final trading session on July, the markets ended mixed (as has been the pattern of late). Action was led by the S&P 500 which added 3.54 points (+0.16%) to 2173.60. The Nasdaq Composite was up 7.15 points (+0.14%) to 5162.13, aided by the strong period from Alphabet (GOOG 768.79, +22.88 +3.07%). Rounding out the trio, modestly lower, the Dow Jones Industrial Average shed 24.11 points (-0.13%) to 18432.24. This month's movements leave the three major US indices +6.3%, +3.1% and +5.8% YTD, respectively.
For its part, the Technology (XLK 46.46, +0.18 +0.39%) held pace with the broader market advance, ending on a modest downtick, but still well off lows of the session. Component Xerox (XRX) outperformed despite a mixed earnings report. Other sectors as measured by the S&P ended Friday trading IYZ +1.17% XLE +1.02% XLU +0.60% XLP +0.50% XLV +0.20% XLY +0.11% XLF -0.17% XLI -0.29% XLB -0.51% as Telecoms pushed higher and Industrials were among the worst performers.
In the S&P 500 Information Technology (768.72, +1.00 +0.13%) sector, the session edged slightly lower as we limped into the weekend. A session of awe out of storage device name Western Digital (WDC 47.51, -6.19 -11.53%) had the stock down about -12.4% at lows following a better than expected quarterly report which was marred by SanDisk acquisition costs. Other names in the space which modestly outperformed today included NVDA +1.64%, RHT +1.16%, MSFT +0.84%, ACN +0.65%, APH +0.59%, CA +0.57%, HPQ +0.50%, JNPR +0.31%.
Other notable news items among sector components:
- Microsoft (MSFT 56.68, +0.47 +0.84%) disclosed in a 10-K that it will eliminate an additional 2,850 roles globally.
- Facebook (FB 123.94, -1.06 -0.85%) received a Statutory Notice of Deficiency from the IRS that could result in an additional federal tax liability of about $3-5.0 billion.
- According to Reuters, Hewlett Packard Enterprise (HPE 21.02, +0.71 +3.50%) has piqued the interest of several private equity firms that want to acquire certain HPE assets, which the company has weighed divesting for $6-8 billion.
Elsewhere in the tech space:
- In addition to reporting quarterly results, Expedia (EXPE 116.65, -2.62 -2.20%) said it may explore an IPO of trivago.
- Benefitfocus' (BNFT 43.00, -1.49 -3.35%) CFO Dennis Story resigned for personal reasons. The company also expects to exceed Q2 guidance.
- In addition to reporting quarterly results, FICO (FICO 126.64, +11.04 +9.55%) announced a new $250 million stock repurchase program.
- Vectrus (VEC 31.15, +0.32 +1.04%) was awarded a $47 million US Army contract modification.
- Wins Finance's (WINS 20.40, +0.05 +0.25%) President Richard Xu resigned.
- Shopify (SHOP 34.27, flat) filed for a $500 million mixed securities shelf offering.
In reaction to quarterly results:
- Amazon (AMZN 758.81, +6.20 +0.82%) reported better than expected Q2 EPS of $1.78 on better than expected reveneus which rose 31.1% versus last year to $30.4 billion. AMZN also guided Q3 revenues in-line with market expectations at $31.0-33.5 billion.
- Alphabet (GOOG) reported better than expected Q2 EPS of $8.42 on better than expected revenues which rose 21.3% versus last year to $21.5 billion.
- Baidu.com (BIDU 159.60, -6.03 -3.64%) reported in-line Q2 EPS and revenues of $1.22 and $2.75 billion, respectively (also in-line with previous guidance); the company also guided Q3 revenues worse than market expectations at $2.714-2.796 billion.
- Expedia (EXPE) reported better than expected Q2 EPS of $0.83 on worse than expected revenues of $2.2 billion.
- SBA Comm (SBAC 115.00, +2.52 +2.24%) reported better than expected Q2 funds from operations of $1.48 on revenues which fell 1.3% versus a year ago to $405.5 million. The company also gave Q3 revenue guidance of $406.5-416.5 million and adjusted EBITDA of $278-293 million. For FY16, the company now sees revenues of $1.63-1.65 billion, up from prior $1.61-1.64 billion. Also sees FY16 adjusted EBITDA of $1.12-1.13 billion, up from prior $1.11-1.12 billion.
- Western Digital (WDC) reported better than pre-announced Q4 EPS of $0.79 on revenues of $3.5 billion.
- Xerox (XRX 10.30, +0.40 +3.99%) reported worse than expected Q1 EPS of $0.22 on better than expected revenues of $4.28 billion. The company also guided Q2 EPS in-line at $0.24-0.26. Also reaffirmed FY16 EPS guidance of $1.10-1.20.
- Fortinet (FTNT 34.69, -2.48 -6.67%) reported in-line Q2 EPS of $0.14 on better than expected revenues of $311.4 million. Total billings rose 26% versus a year ago to $373.8 million. Also guided Q3 revenues in the range of $319-324 million on gross margins of 73-74%; also sees EPS of $0.17-0.18. For FY16, the company raised their revenue guidance to $1.274-1.284 billion from $1.260-1.270 billion.
- Companies scheduled to report quarterly results Monday morning: BSFT, CYOU, DSPG, FDC, MEET, SOHU
- N was upgraded to Hold at Societe Generale, to Mkt Perform at Raymond James, to Equal Weight at Morgan Stanley and to Neutral at Goldman, INVN was upgraded to Outperform from Market Perform at Northland Capital, WDC was upgraded to Outperform from Neutral at Robert W. Baird; N was downgraded to Hold at Deutsche Bank, to Sector Perform at RBC Capital Mkts and to Neutral at JP Morgan, GRUB was downgraded to Neutral at Monness Crespi & Hardt, to Neutral at BofA/Merrill and to Hold at Maxim Group, BIDU was downgraded to Hold at T.H. Capital, RTEC was downgraded to Neutral at Dougherty & Co, VNTV was downgraded to Equal Weight at Barclays and to Outperform at CLSA, CLS was downgraded to Neutral at Macquarie, FRP was downgraded to Hold at Drexel Hamilton, ADP was downgraded to Neutral at Robert W. Baird, PDFS and TER were downgraded to Hold at Craig Hallum, MSTR was downgraded to Mkt Perform at JMP Securities, EMC was downgraded to Mkt Perform at Bernstein
(Disclosure: Briefing.com has a business relationship with Microsoft)