TheChek News Flow

After Hours Summary: IRBT +23%, AMD +11%, X +9%, TXN / T +3% higher following earnings/guidance, steel names higher, TTPH +26% on Phase 3 trial update... AKAM -7%, CHGG -6.3%, SFLY / WYNN -4%, AMGN / JNPR -2% lower following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: IRBT +22.9% (to acquire privately-held Robopolis SAS for $141 mln), AMD +10.8%, X +8.7%, SFS +4.9%, EXAS +4.5%, RCKY +3.8% (light volume), ZION +3%, TXN +2.9%, T +2.6%, CMG +1.5%, TSS +1.4%

Companies trading higher in after hours in reaction to news: TTPH +26.1% (Tetraphase Pharmaceuticals announces top-line results from IGNITE4, the Company's phase 3 clinical trial evaluating the efficacy and safety of twice-daily intravenous (IV) eravacycline compared to meropenem for the treatment of patients with complicated intra-abdominal infections), ETRM +21.4% (enters into Collaboration Agreement with Galvani Bioelectronics), MOS +3.2% and POT +0.8% (still checking), WLL +2.9% (following API data and ahead of earnings), RETA +1.5% (commences 2.25 mln common stock offering; announced that as of June 30, 2017, the Company had ~$65.2 million in cash and cash equivalents), RIG +0.9% (provides quarterly fleet status report with contract backlog $10.2 bln)

US Steel (X) earnings and President Trump comments are lifting steel names in after hours: NUE +1.4%, MT +1.2%, WOR +0.8%, AKS +0.6%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: USNA -14.3%, OEC -7.6% (offers prelim Q2 results, reaffirms FY17 Adj-EBITDA guidance; announced that Kinove Luxembourg Holdings and other sellers are offering an aggregate of 10 mln common shares of the Company in an underwritten public offering), AKAM -7.1%, UHS -6.7%, CHGG -6.3%, SFLY -4.4%, WYNN -3.8%, HA -2.7%, AMGN -2.4%, TRN -2.3%, JNPR -2%, ESRX -1.9%

Companies trading lower in after hours in reaction to news: DRYS -5.7% (slightly lower after providing another Kalani Investments update), APRN -2.7% (details several changes to executive leadership team; Co-Founder and Chief Operating Officer Matthew Wadiak stepping down from role), PLX -2.6% (enters exchange agreement of $9 mln of its 4.50% Senior Convertible Notes due 2018 for $8.55 million aggregate principal amount of newly issued 4.50% Senior Convertible Notes due 2022), MC -2.5% (commences public offering of 6 mln shares of Class A common stock), LVS -0.8% / MLCO -0.6% (WYNN sympathy)

Advanced Micro on Conference Call (14.11   -0.05)

• Have seen elevated demand from crypto; Working to replenish GPUs depleted from this; Priority remains the gaming market. Did not have crypto in its forecast and are not counting on it to be a long term driver at the moment.
  • See strong demand in graphics for Q3. 
  • Helps that gaming will be seasonally stronger.
  • Crypto currency component for overall demand but strength remains in the gaming.
• Investing heavily in 7 NM
• Client computing revenue increased by strong double-digit percentage from year ago, driven by significant ramp and strong sell through of our Ryzen CPUs in the first fourth quarter of sales.
• In June, began the adoption of our GPU architecture with the launch of the Radeon Vega frontier.
• First full quarter of Ryzen in desktop channel. 
• Sequential revenue gains were primarily based on higher semi-custom product shipments due to seasonality. In addition, reached an important milestone in the quarter, delivering initial epic server revenue; expect an additional 20 epic's platforms to be available in the second half of 2017.
• Will talk more about margin progression in Q3 call; Progression is helping the Q3 guidance. 
• September guidance- Vega was included in the Q3 guidance.
• Free Cash Flow was lower due to wafer purchases for 2H17; Says FCF will be up in 2H and positive for the year.

Advanced Micro beats by $0.02, beats on revs; guides Q3 revs above consensus; raises FY17 sales growth (14.11   -0.05)

• Reports Q2 (Jun) earnings of $0.02 per share, $0.02 better than the Capital IQ Consensus of ($0.00); revenues rose 19.0% year/year to $1.22 bln vs the $1.16 bln Capital IQ Consensus, driven by higher revenue in the Computing and Graphics segment. Revenue was up 24 percent sequentially, driven by increased sales in both business segments. Gross margin was 33 %, up 2 percentage points year-over-year due to a richer product mix and a higher percentage of revenue from the Computing and Graphics segment, driven by the first full quarter of Ryzen processor sales.
  • Computing and Graphics segment revenue was $659 million, up 51 percent year-over-year, driven by demand for graphics and Ryzen desktop processors. Operating income was $7 million, compared to an operating loss of $81 million in Q2 2016. The year-over-year improvement was driven primarily by higher revenue and improved product mix. Client average selling price (ASP) increased significantly year-over-year, as desktop processor ASP increased due to the first full quarter of Ryzen processor shipments. GPU ASP increased year-over-year. Enterprise, Embedded and Semi-Custom segment revenue was $563 million, down 5 percent year-over-year primarily due to lower semi-custom SoC sales. In the quarter, AMD reached an important milestone by recognizing initial revenue from EPYC datacenter processor shipments.
• Co issues upside guidance for Q3, sees Q3 revs of +20-26% Q/Q to ~$1.47-1.54 bln vs. $1.39 bln Capital IQ Consensus Estimate; adj. gross margin ~34%.
• Raises FY17 rev growth to mid to high teens % from low double digits; semi-custom revenue to be down year-over-year based on the maturity of the current game console cycle, non-GAAP gross margin to be ~34%, achieve non-GAAP net income.

Closing Market Summary: Investors Take Earnings in Stride

The stock market cruised to a victory on Tuesday with the S&P 500 (+0.3%), the Nasdaq (unch), and the small-cap Russell 2000 (+0.9%) all settling at fresh record highs. The Dow (+0.5%) outperformed the benchmark index, but finished just 30 points shy of its record mark. The Nasdaq lagged as a handful of influential tech stocks underperformed.

Investors were drowning in earnings reports on Tuesday, but took the news in stride as the results largely came in better than expected. For instance, out of the five Dow components that reported their quarterly results on Tuesday morning, four of them--Caterpillar (CAT 114.54, +6.36, +5.9%), McDonald's (MCD 159.07, +7.22, +4.8%), DuPont (DD 85.49, +1.14, +1.4%), and United Technologies (UTX 120.42, -2.71, -2.2%)--beat earnings per share estimates. 3M (MMM 199.39, -10.61, -5.1%) was the only Dow component to miss bottom-line estimates.

However, stock movement didn't necessarily reflect earnings performance, at least on the surface, with Alphabet (GOOGL 969.03, -29.28) serving as a prime example. The tech giant reported better than expected earnings and revenues, but slipped 2.9% nonetheless. There were some concerns surrounding a 28.0% year-over-year increase in the company's traffic acquisition costs (TAC), but the sell off was more likely a signal that the good earnings news was priced in during a three-week rally leading up to the report; GOOGL shares jumped 8.6% from July 3 to July 24.

Alphabet weighed on the top-weighted technology sector, which finished with a loss of 0.2%. The industrial (-0.1%) sector also settled with a modest decline while the health care and utilities spaces suffered more substantial losses, losing 0.7% and 0.5%, respectively. Biotechnology names struggled, sending the iShares Nasdaq Biotechnology ETF (IBB 323.81, -3.53) lower by 1.1%. However, pharmaceutical giant Eli Lilly (LLY 82.19, -2.55) did even worse, dropping 3.0%, despite beating top and bottom line estimates.

On a related note, the Senate voted to move forward with a debate on health-care reform on Tuesday afternoon with Vice President Mike Pence breaking a 50-50 tie. 

Seven of eleven sectors advanced on Tuesday with the financials (+1.3%), energy (+1.3%), and materials (+1.2%) groups leading the charge. The financial space benefited from Citigroup's (C 68.03, +1.93) upbeat long-term profitability projections, which were provided at its first investor day since the Great Recession. In addition, a curve-steepening trade in the Treasury market also underpinned financials' positive performance. 

Treasuries settled lower across the curve with the heaviest selling taking place at the back end; the 10-yr yield climbed eight basis points to 2.33% while the 2-yr yield climbed three basis points to 1.39%.

Meanwhile, the energy space benefited from a rally in the crude oil market. The commodity advanced for the second day in a row, underpinned by yesterday's news that Saudi Arabia will curb its exports next month. Technical trading also played a factor as WTI crude managed to break above its 50-day simple moving average ($46.52/bbl), which acted as a level of resistance on Monday. WTI crude settled higher by 3.3% at a price of $47.89/bbl.

As for the materials sector, Freeport-McMoRan (FCX 14.87, +1.91) was the top performer, surging 14.7%, after saying on its post-earnings conference call that copper demand from China has been better than expected. FCX beat revenue estimates, but came up a little short on earnings. Meanwhile, copper jumped 3.9% to $2.84/lb.

Out of the remaining advancers--consumer discretionary (+0.7%), consumer staples (+0.7%), telecom services (+0.3%), and real estate (+0.1%)--the consumer discretionary and consumer staples groups were the top performers as retailers outperformed. The SPDR S&P Retail ETF (XRT 40.81, +1.05) climbed 2.6% amid broad strength.

Reviewing Tuesday's economic data, which included the Conference Board's Consumer Confidence Index for July, the May FHFA Housing Price Index, and the May S&P 500 Case-Shiller Home Price Index:

• The consumer confidence reading for July rose to 121.1 from the prior month's revised reading of 117.3 (from 118.9). The consensus expected the survey to hit 116.8.
  • The key takeaway from the report is that the uptick in July was forged by a pickup in sentiment for current conditions as well as the short-term outlook.
• The FHFA Housing Price Index for May rose 0.4%, while the consensus expected an increase of 0.7%. The prior month's reading was revised to 0.6% (from 0.7%).
• The May Case-Shiller 20-city Index hit 5.7%, which is in line with the consensus. The prior month's reading was left unrevised at 5.7%.

On Wednesday, investors will receive just two pieces of economic data--the weekly MBA Mortgage Applications Index and the June New Home Sales Report (consensus 610K). The two reports will cross the wires at 7:00 ET and 10:00 ET, respectively. 

Also of note, the Fed's latest policy directive will be released on Wednesday afternoon at 14:00 ET.

• Nasdaq Composite +19.1% YTD
• S&P 500 +10.6% YTD
• Dow Jones Industrial Average +9.4% YTD
• Russell 2000 +6.9% YTD