UPDATE: AA beats (headlines - at first glance) though Adjusted EBITDA is half Q2 2011's) and is holding modest gains after-hours - though well of initial knee-jerk reaction highs. And AMD (-7% after-hours) just pre-announced cutting revenue from sequentially +3% to -11%!!
Despite the ubiquitous late-day surge to day-session highs in S&P 500 e-mini futures (ES), equities ended the day marginally lower - rejecting the late-Friday surge unreality (as VIX also snapped back up and went sideways at pre-Friday-surge levels all day). The narrowest range in two months for the day-session in stocks (with major financials underperforming and only the Healthcare sector green on the day) was the antithesis of the strength in Treasuries with 5Y at record-low yields and 10Y testing back to 1.50%. Gold also led the day - notably outperforming both the USD-implied weakness and stocks - though the two now-QE-sensitive assets converged into the close - leaving Treasuries in the dust. ES drifted lower all night through the European session and converged with broad risk asset's far less sanguine levels from Friday into the US day-session. CONTEXT and ES tracked each other very well all day long until the last 30 minutes or so when stocks pushed 4-5pts rich. Credit modestly outperformed equities on the day but this was more catch-up from Friday than a new leg up as markets were dismally quiet in both stocks and bonds today - much quieter than Thursday and Friday of last week with ES (day) closing below its 50DMA (despite the late-day grind). EURUSD roundtripped from opening strength to weakness and back to modest strength leaving USD -0.2% (and only AUD weaker against the USD on the day).
Gold outperformed all day but note the convergence pull between gold and stock into the close today - even as Treasury yields just kept dropping to that 1.50 handle...
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Stocks recoupled with broad risk assets into the day-session close - shrugging off Friday';s late day exuberance - but the again into the close today they pushed to their own new reality...
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The USD roundtripped from its modestly weaker open after jumping into the European open last night and then leaking back all day - providing some momentum for both stocks and commodities. USD ended the day -0.2% from Friday's close (interestingly with only AUD weaker against the USD among the majors)...
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But stocks remain notably hopeful relative to Treasuries as they drift lower and lower in yield...
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Alcoa reported better than expected earnings and is +1.4% After-Hours (but the reality is not so pretty):
- Alcoa projects global aluminum supply deficit in 2012 and reaffirmed its forecast that global aluminum demand would grow 7 percent in 2012
- AA aluminum products Q2 shipments: 1,305,000 vs 1,295,000 in Q1, and 1,268,000 in Q2 2011
-
AA Adjusted EBITDA Q2 2012: $517, half of $1,039 in Q2
2011. -
AA Adjusted EBITDA margin plunges to 8.7%, from 10.4% in Q1, and
15.8% year ago -
Q2 Positive free cash flow of $246 million
- Cash from operations of $537 million
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and AMD dismal pre-announcement (and -6% after-hours):
- AMD, which is expected to announced earnings at 5pm on July 19, just dropped the preannouncement bomb, and cut revenues from +3% sequentially, to down 11%. It is still keeping gross profit margin in line with prior guidance.
- AMD is also lowering operating expenses guidance by 8% than prior guidance of $605MM.
- The lower preliminary revenue results are primarily due to business conditions that materialized late in the second quarter, specifically softer-than-expected channel sales in China and Europe as well as a weaker consumer buying environment impacting the company's Original Equipment Manufacturer (OEM) business.
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Charts: Bloomberg