Closing Recap 4:05PM EST

Friday, October 10, 14

Index Up/Down % Last
DJ Industrials -115.34 0.69% 16,543
S&P 500 -22.09 1.15% 1,906
Nasdaq -102.10 2.33% 4,276
Russell 2000 -14.57 1.36% 1,053


Equity Market Recap
The week ended like it started, in volatile fashion, with sharp selling early, paring losses midday,
but resumed its downward momentum into the bell to fresh lows (Nasdaq remained weak
throughout following MCHP/JNPR lower guidance crushing semis). The S&P 500 nearing its 200
day moving average to the downside (about 1904-05), which it has not breached since November
2012. Major averages posted their third straight weekly decline, led by a big drop in Materials,
Industrials and of course Energy (the laggard). Commodities bounced of multi-year lows early,
but still posted a dreadful week. Defensive sectors (safety or dividend plays) held up the best this
week, led by Staples, Utility and Healthcare. One notable, the VIX rose above 20 for first time
since February (big week of earnings coming up) also, Transports touched down another 2% at
one point (Columbus day Monday, bond markets closed equities open)
Overnight, The Nikkei Index dropped -178 points to 15,300, the Shanghai Index fell -14 points to
2,374, and the Hang Seng Index plunged -445 points to 23,088 (about a 2% drop). In Europe,
markets closed down for a 4
th
straight day, (worst week since May 2012), with the German Dax
falling over 200 points (below 9,000 level), or 2%, as overall Europe at almost 7-month lows (late
day, S&P cut the outlook for France to Negative from Stable)
Speculation rises to the whereabouts of North Korea Supreme Leader Kim Jong as it's now been
more than a month since the tyrant was seen in public. The latest public event missed was
today's visit to a family mausoleum, an annual event Kim has attended without fail since he took
power, said one report

Commodities
Gold prices ended lower by $3.60 to $1,221.70 an ounce on the day, trading in narrow range
after bouncing from earlier lows in week. Gold managed to post its first weekly gain in six weeks,
rising 2.4%, getting a lift Thursday as equities dropped on global growth concerns; silver ended
the day down 11c to $17.30 an ounce
Energy prices ended higher by a few pennies, but well off morning lows that saw WTI crude
touch a morning (and 2-year) low of $83.59 (closed up 5c at $85.82), while Brent bounced off 4-
year lows of $88.05, to end up 16c and settle back above $90 ($90.21). It was a week that wasnt
for energy prices, falling on supply concerns and weaker foreign data out of Europe and Asia
(slowing demand fears)

Currencies
The ICE dollar index (DXY) rose against other currencies, up a 2
nd
day after declining the prior
three days on profit taking; the yen has strengthened this week against the euro as ECB President
Mario Draghi said there were indications the regions economy is losing momentum, boosting
demand for haven assets; the dollar index was up about 0.4% to 85.85, but is down about 1%
over the week snapping its winning streak of gains; the euro declined today

Bond Market
Bond markets ended the day little changed, but it was a strong week overall, with yields
plummeting back to 1-year lows (traded as low as 2.28% this week on 10-yr benchmark).
Auctions this week were mixed, but flight to safety or quality trade in place this week given
the volatility in equities. Not to mention, German 10-yr yield touched record low of 0.86% earlier,
making bonds in U.S. look attractive

Macro Up/Down Last
WTI Crude 0.05 85.82
Brent 0.16 90.21
Gold -3.60 1,221.70
EUR/USD -0.0072 1.2618
JPY/USD -0.01 107.82
10-Year Note -0.027 2.30%


Sector News Breakdown
Consumer
Auto news; TSLA shares fell after its all-wheel drive Model S and driver assistance model failed to
impress; Ford (F) said its September passenger-car sales in China fell 4% compared with a year
ago to about 69,000 vehicles (follows rise of 13% in August); Nissan reported sales in China fell
20% Y/Y in September to 93.7K vehicles
Retail; HD repeated year EPS and sales growth view in slides; FDO reported quarterly results
overnight (but merger hopes with DG/DLTR keep stock active)
Homebuilders; FBN Securities upgraded names based on valuation, raising HOV and PHM to
Sector Perform and says favorite is KBH, which was upgraded to OP after a 20% YTD decline
Staples and Restaurants; DRI said that activist Starboard won all 12 seats on its board after proxy
fight; PLAY 5.882M share IPO opened at $17 after pricing at $16; Staples overall have
outperformed during this recent market pullback the last 3 weeks, led by tobacco, beverages,
and house products (no fear into earnings re potential impact of rising dollar) shares of KO,
PEP, MO, MNST have been leaders; AVP upgraded at UBS today

Energy
Energy shares fell early on Friday, extending their recent weakness as crude oil dropped to its
lowest level since 2010, but managed to get a bounce midday, as the group severely oversold of
late on plunging oil prices (WTI reversed losses of over 2% early to trade higher midday); saw a
bounce in beaten up names midday (DO)
In stock news, BAS raises Q3 rev view to up 9%-10% from prior 4%-6% view, CVEO rises as David
Einhorns Greenlight Capital Inc. disclosed larger stake of 9.99%; SM fell on lower production
view
Utility stocks better again today strong the last few days helped as rates remain low, and
investors flock to higher dividend/less volatile names with whippy markets; shares of DUK, EXC,
PEG, ED were higher early



Financials
Earnings is upon the sector, with reports from most of the large cap bank heavy-weights next
week (earnings Tuesday for the sector, with JPM, C, WFC reporting followed by SCHW, KEY, BLK,
BAC, AXP on Wednesday). In other news today, Private equity giant BX said to spin off its
financial advisory business http://goo.gl/f9Zn76

Healthcare
Ebola story remains hot topic; shares of LAKE and APT continue to benefit on Ebola fears as both
make/develop disposable protective apparel; privately held Mapp Biopharmaceutical Inc. is
taking new steps to expand production of ZMapp, the experimental Ebola treatment that was
provided to several infected patients before supplies ran out in August
EXAS soars as CMS issued a final National Coverage Decision for Cologuard, 1-month earlier than
expected (still awaits pricing); SYUT raises FY15 net forecast to $55M-$65M from $50M-$60M
view; JNJ upgraded to neutral at Credit Suisse; DPLO opened at $16.00 after 13.3M share IPO
priced at $13.00; GILD won approval for its Hep C combo pill midday

Industrials & Materials
Dow Jones Transport Index with an awful week (CNBC said worst in about 3-years), as global
growth slowdown concerns (all except the U.S.) weighing on airlines, rail, truckers, this despite oil
prices moving in its favor (lower) for weeks (down 20% from June highs for crude); earnings will
be next catalyst for sector
Industrials/crane movers; MTW lowered its year crane revenue forecast, now sees a decline by
mid-to-single digits (had seen flat to slightly down), while also guiding its Q3 and year outlook
below views; marks the 3
rd
crane co to warn (TEX and Australias Palfinger)
Ag space; Oct WASDE data came out at noon, Cotton futures extended earlier gains after the U.S.
government reduced its forecast for U.S. output in the 2014/15 crop year in its monthly world
supply and demand report. USDA raises U.S. corn production estimate to 14.475B, which kept
corn prices under wraps (beaten up names little lift DE, AGCO, POT)
LLL shares spiked midday after reporting $140M pre-tax income revisions from Aerospace review
(sales revision $73M) co had previously said internal review identified certain material
weakness in internal controls; CLF advanced as well on reports Glencore had talks that were
described as "very preliminary" with Cliffs Natural Resources about its Australian iron ore assets,
according to The Wall Street Journal http://goo.gl/q0LU10

Technology, Media & Telecom
Tech was down sharp on weaker guidance from JNPR/MCHP Nasdaq down as much as 2%;
Semis and networking stocks mostly under pressure after JNPR cut its Q3 eps and rev outlook
citing lower-than-anticipated demand from service providers, particularly in the U.S. (shares of
CSCO, CIEN, FFIV, weaker in sympathy) - JNPR suppliers include AVGO, IDTI, FNSR, ALTR, PSEM,
NPTN
Semiconductors among worst performers after MCHP lowered its Q2 revenue guidance (Credit
Suisse noted MCHP has historically been an industry barometer and guidance should not be
viewed as company-specific but a negative for the sector shares of ATML, POWI, ADI, ONNN,
INTC, SWKS, NXPI, TXN move on news); GTAT down as wants permission to wind down Sapphire
operations (lifted shares of RBCN); semi equipment also fell early KLAC, LRCX, TER, AMAT


Other movers; KN lowers Q3 revs to about $301M from prior view $310M-$330M and EPS citing
a temporary hold on shipments of a new MEMS microphone due to a low-level defect; Indian IT
firm INFY rises on earnings as Q2 net income rises 29%, topping estimates (CTSH up in sympathy)
Internet security movers; SYMC confirmed plan to split into 2 separate companies; CUDA Q2
eps/revs top views and said total active subscribers exceed 225k; rest of group been volatile
lately (PANW, FEYE, IMPV)
Internet; investors prepare for earnings next week; GRPN slides after Evercore downgraded to
Sell rating; high beta names were under pressure with overall Nasdaq decline, led by weakness in
FB, TWTR, BABA, LNKD, ZNGA, NFLX, EBAY early





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