Closing Recap

Friday, May 1, 15

Index

Up/Down

Last

DJ Industrials

183.54

1.03%

18,024

S&P 500

22.73

1.09%

2,108

Nasdaq

63.97

.129%

5,005

Russell 2000

7.68

0.65%

1,228

Equity Market Recap

U.S. equities recovered some of its prior day losses, as the Dow Industrials trade back above
18,000 level (touched low 17,774.89 yesterday), the S&P 500 back above 2,100 (2,077.59 low
yesterday), and Nasdaq back around 5,000 (4,921.55 low yesterday). The Nasdaq snapped its 4dau losing streak as well today, led by good gains in Semiconductors (+2.8%) and Biotech (+2.7%).
Stocks rallied Friday, but still ended the week lower, after a heavy dose of mostly weaker
economic data (GDP highlight disappointment), a Fed meeting (which kept door open that any
meeting going forward would be a live meeting for interest rate hike possibility, and a busy
week of corporate earnings (included more misses than makes in revs/guidance).
Biotech stocks bounced after a 9% drop over the last week on GILD results, while semiconductors
also lift the NASDAQ with SWKS results/ALTR move higher. Internet stocks have had a rough
week, capped with LNKD soft guidance last night sending shares down 20% (follows YELP/TWTR
missed results this week). Small Caps recover some of its more than -2% decline yesterday
Market laggards in April led today, with Transports bouncing (up more than 1.5% for DJ
Transports), as well as Healthcare/Biotech, while Energy stocks (which outperformed in April)
start off lower for month. Also leading today, Materials (mainly miners), Technology and
Discretionary while Telecom lagged

Economic Data
March Construction Spending fell (-0.6%) vs. est. rise of 0.5% (small revision to February); Private
construction fell (-0.3%), Private residential construction fell (-1.6%) in March
April Final Michigan Consumer Sentiment Rose to 95.9 (in-line with estimates and prelim
reading); the expectations index rose to 88.8 vs. 85.3 last month, while current economic
conditions index rose to 107.0 vs. 105.0 last month
April ISM Manufacturing was unchanged at 51.5 vs. est. 52.0 (and also-in-line with prior month
reading); segment breakdown: New orders rose to 53.5 from 51.8 MoM, employment fell to 48.3
from 50.0, Inventories fell to 49.5 from 51.5 and Prices paid rose to 40.5 vs 39.0

Commodities
Oil prices fall on day/up for the week; oil futures settled lower following reports of a monthly rise
in Iraqi oil exports, but prices still marked their seventh straight weekly gain on expectations that
U.S. supplies will soon see sizable declines. June crude settled at $59.15 a barrel, falling 48c or
0.8%. For the week however, prices gained 3.5%. It was also another week of rig taken off-line, as
the weekly Baker Hughes rig count fell another -27 to 905 (21st consecutive weekly decline),
while the oil rig count fell -24 to 769 (overall rig count down from their October peak of ~1,600).
Brent for June settlement fell 32c to $66.46 a barrel, rising 1.8% this week and trading at a
premium of $7.31 to WTI, compared with $8.13 on April 24.
Precious metal prices fall, as gold declines -$7.90 to $1,174.50 an ounce (down -0.7%); gold
ripped ahead of the FOMC to start the week...but plunged post meeting, ending the week
essentially where it began Actually lower for a 3rd week). Gold back down to 6-week lows on Fed,
mixed data, rising yields, falling the last 3 days

Currencies
The dollar index (DXY) nice little recovery today in what has been a week of selling pressure,
rising 0.7% today to 95.26 but fell from high of 97.281 on Monday (touched 8 week lows this
week); the euro dropped slightly against the greenback, trading back under the 1.12 level late
(trading at best levels since early March), as US data was weak/Euro data been improving.

Bond Market
Bonds finally showed some weakness, falling late in the week, as the tight range for the 10-yr
yield (had closed between 1.86%-1.99% for 30 straight days), finally broke out to the upside this
week, despite weaker GDP data as expectations we move closer to Fed hike nears. The yield on
the 10-yr moved up above 2.10%, rising 6 bps

Other Interesting tidbits

A very busy week for the sports fan: 1) Mayweather/Pacquiao fight Saturday night; 2) Kentucky
Derby Saturday afternoon; 3) NFL draft; 4) NBA playoffs; 5) NHL playoffs; 6) Baseball
(Yankees/Red Sox); enjoy the weekend!

Macro

Up/Down

Last

WTI Crude

-0.48

59.15

Brent

-0.32

66.46

Gold

-7.90

1,174.50

EUR/USD

-0.0026

1.1198

JPY/USD

0.78

120.15

10-Year Note

0.068

2.101%

Sector News Breakdown

Consumer
Auto news; busy day for the sector with April auto sales data out: 1) GM April US auto sales 5.9%
vs. est. 5.3%; 2) Ford (F) April US vehicle sales rose 5.4% vs. est. 6.1%; 3) FCAU said US April sales
rose 5.8% (189,027 vehicles) vs. est. 7.6% rise; 4) Hyundai unit sales +2.9% to 68,009 (said sales
record was set for the Elantra and Genesis models) 5) Nissan April auto sales rise 5.7% vs. est.
9%; 6) TM April US car sales up 1.8% vs. est. 5.8%; 7) HMC April sales (-1.8%) vs. est. 2.1%

 In other auto news; tire company CTB Q1 eps and revs both short of consensus though still sees
meeting or exceeding U.S. industry unit volume growth (follows strong GT results recently); auto
supplier AXL Q1 eps topped consensus (68c topped highest est. 61c), as revs beat; HTZ rising
ahead of Ira Sohn investment conference on Monday
Retailers; group lagged, as has been the case this week; couple earnings out as COLM & VFC
shares lag despite a beat and raise quarter (group mixed); teen apparel names up early led by
AEO, GPS, URBN, while ANF lagged
Consumer Staples; CLX Q3 results were mixed and lifted the low end of its year eps outlook (little
better than recent consumer product reports EL, CL); NTRI shares jumped after boosting its year
sales/Ebitda views; in beverages, SAM cut to Sell at Goldman Sachs after earnings yesterday
Restaurants bounce; YUM shares jumped as Dan Loebs Third Point takes significant stake (also
later reported Corvex took a big stake as well); CMG upgraded to Outperform at BMO Capital as
comps likely will inflect into 2016, lower commodities should contribute to EPS upside and
likelihood of returning cash to holders; HABT Q1 eps/sales top consensus; FRGI fell on earnings
Housing & Building Products; Housing stocks bounce back today, led by shares of LEN, TOL, KBH,
PHM (across the board gains); home furnishing stocks rise as LEG jumped on 5c EPS beat/raised
guidance and NWL mixed Q1 results (EPS beat/sales miss)
Energy
Energy movers; group outperformed yesterday, led by drillers (NE earnings/positive analyst
comments on group), and higher oil; today, CVX Q1 eps crushed the highest estimates (much like
XOM yesterday), at $1.37 vs. est. 79c (highest 99c), while 1Q production 2.68mmboe/d vs. est.
2.6mmboe/d; DVN named as new position for Dan Loebs Third Point
Regarding oil rigs/service; Baker Hughes (BHI) weekly rig count fell another -27 to 905 (21st
consecutive weekly decline), while the oil rig count fell -24 to 769 (overall rig count down from
their October peak of ~1,600)
Solar/Alternative energy; TSLA unveiled a suite of batteries to store electricity for homes,
businesses and utilities known as Powerwall (shares of SEDG advanced in sympathy which is
acting as Powerwalls inverter supplier); ENOC said it will collaborate with Tesla on the
deployment and management of energy storage systems in commercial and industrial buildings;
solar stocks weaker after FSLR and SPWR posted losses as they are planning to create a so-called
yieldco, a move that dragged down revenue in Q1
Utilities; busy day of earnings for the sector today, though rising bond rates have hindered move
higher in group this week; today, DUK Q1 EPS beat, FE was in-line and cutting jobs, PEG EPS beat
by 9c and reaffirmed year and PNM Q1 topped by 3c
Financials
Large Cap banks; group slightly higher as bond yields tick higher for a 3rd day; BAC announced a
$109.9B mixed securities shelf; Dow component V dips after revenue and EPS were above
expectations, but FX, gas prices and deal timing caused noise in FQ2/cut FY15 growth view; asset
managers rise on LM earnings results (JNS, BLK)
Money transfer; WU upgraded to Outperform at Wells Fargo (said possible WU positioned for
sustainable revenue/EPS growth) but reiterated Sell at Citi after Q1 results; MGI Q1 EPS and
revenues both short of consensus
Insurance; AIG Q1 eps beat by 3c and adds $3.5B to stocks buyback/profit jumped 53% in qtr.; big
week for life insurance earnings next week (MET/PRU)
Mortgage/finance; OCN upgraded to Buy at Sterne/CRT after Q1 eps/revs top views; ELLI also a
top performer today on earnings, as posts Q1 profit of $3.6M and
Brokers/Exchanges; CBOE follows better CME results yesterday as Q1 EPS/revs top highest
estimates (avg. daily trading vol. 4.77m contracts vs 5.64m QoQ); IBKR reported its reported
630,000 Daily Average Revenue Trades (DARTs), 9% higher YoY and 1% lower MoM; KCG Q1 eps
beat/said plans to star modified Dutch auction tender for up to $330m in stock

Healthcare
Large Cap Pharma; large cap pharma stocks doing well today - LLY outperforming - trading near
highs of day; CVS up slightly after earnings/guidance increased for year
Biotech; sector has been grabbing headlines this week, all for wrong reasons, as IBB (Bio ETF) has
fallen over 9% over the last 5-days after BIIB/CELG revenue disappointments; GILD however with
strong results overnight across the board helping lift sector/shares today (GILD Q1 eps
$2.94/$7.59b vs. est. $2.32/$6.89b and boosted year product sales); other movers on earnings in
biotech were BMRN (up), SGEN (falls)
Hospitals declined; LPNT reported quarterly results that appeared to have beaten, helped by
admissions, but shares fell, dragging down the sector (THC, UHS, CYH)
Medical equipment; shares of IART and PKI among names moving to upside on earnings, while
PODD fell as Q1 fell short of forecasts (downgraded by one analyst)
Industrials & Materials
AG & Machinery; MON said to explore buying SYT year after failed talks; has discussed interest
with Syngenta in recent weeks, people familiar with matter say http://goo.gl/NJRzDW ; POT,
MOS, AGU bouncing likely in sympathy (follows weakness Thursday on earnings in group)
Transports; the index trades to high, as airlines jumps as oil prices pulled in today (oil was up 25%
in April, which pared YTD gains in the sector); shares of AAL, UAL, DAL advanced
Rails/railcars; U.S. administration released final new regulations for crude-by-rail U.S. rule to
improve safety of trains carrying crude oil requires thicker walls on older tank cars, retrofit
schedule staggered from 2017 until 2025rule applies to trains with at least 20 continuous cars
loaded with flammable liquid, or trains with at least 35 such tank cars in total - rail cars active:
GBX, ARII, RAIL, TRN, WAB); GWR also reported quarterly results
Metals & Mining; copper climbed to 200 day ma since Sept (FCX best levels of 2015); gold miners
weak yesterday amid -2.4% plunge in gold prices and earnings for GG (which was cut by analyst
today); bounce in miners today helped after AEM beat; miners strong RIO, BHP, VALE big
moves to upside; in steel, ZEUS jumps on earnings beat; aluminum stocks rise handily, as CENX
earnings were good (helping lift AA which was also upgraded by an analyst); industrial metals
posting a good week of gains (copper strength as well)
Flow equipment; FLS Q1 eps/revs both came in below consensus as earnings plunge and cut its
FY15 outlook for revs to down (8%-12%) from down (1%)/up 3%; ITT Q1 profit rises as eps beats,
but lowers top/bottom eps by 5c
Technology, Media & Telecom
Internet; LNKD big loser in Internet as social stocks hurt badly this week on earnings (TWTR, YELP
as well) as co Q1 results in-line, but guided year outlook well below consensus views; online
travel a lift after EXPE bookings came in above projections led by domestic bookings growth of
20% YoY and international bookings growth of +32% YoY on better revs - stock all-time highs
(PCLN to report next week); BIDU weakness extended after analyst downgrade post earnings;
note FB down -$7 since earnings
Semiconductors; INTC signed a standstill agreement earlier this year with ALTR (recall ALTR
previously rejected a $54 per share bid), that expires on June 1, giving INTC option to launch a
hostile bid after that said Reuters (which also noted INTC discussed offering $58 per share for
Altera) http://goo.gl/bHJNxE ; SWKS (AAPL supplier) delivered a solid beat and raise, as continues
to benefit from a favorable RF market; TER rises on earnings/guidance; CY upgraded to Strong
Buy at Needham; overall the semi index (SOX) with a nice bounce today, up 2.8%, best one day
gain since 3/27 (2.83%)
Internet Security; sector rising on better numbers/guidance from FEYE which reported billings of
$152M (above est. $136M), while guiding revenues/billings above consensus; shares of Software
security stocks gain on report (CYBR, CUDA, PANW, PFPT)

 Software & Hardware; CTCT plunges as downgraded by several analysts after earnings/cutting
guidance; in addition to missing Q1 estimates, CTRL guided for 10%-15% 2015 revenue growth,
below a 16% consensus
Overall tech earnings: rising on earning beats: BCOR, BRKS, LLNW, MXL, SWKS, TER, and
WWWW, while stocks declining post earnings: CTRL, QLGC, RKUS, ROVI, TRMB

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