FT : Hexagon sounds out buyers as shares soar 12% (published 12mnts ago)

Hexagon sounds out buyers as shares soar 12%
Swedish industrial group has made 100 acquisitions since 2000

Hexagon, a Swedish industrial group that has tried to remake itself through a series of software acquisitions, is sounding out buyers about a potential sale as its market value shot up to $16.7bn on Wednesday.

The company has been working with advisers at Goldman Sachs and HSBC to gauge interest from larger industrial rivals such as ABB, Schneider Electric, Siemens and GE, according to two people close to the discussions.

Stockholm-based Hexagon is in the midst of a period of turmoil: its chief executive Ola Rollen has been charged in Norway with insider trading and its largest shareholder Melker Schorling was forced to step down as chairman for health reasons. Mr Rollen has denied wrongdoing.

Despite the trouble, the company’s share price has recovered steadily over the past several months from a steep drop in October when Mr Rollen was charged. Bankers have been working with the company for at least a few weeks to field interest. GS and HSBC declined to comment.

Shares in the company soared 12 per cent to a record-high of SKr423 in late morning Stockholm trading.

Hexagon said in a statement that it “evaluates various opportunities to optimise the company’s positioning and shareholder value. Should these evaluations lead to concrete results, the market will be immediately informed”. The statement followed a Wall Street Journal report about the sale efforts late on Tuesday.

The company, largely unknown outside Sweden, has been built up by Mr Rollen, still chief executive, and Mr Schorling, who owns 22.6 per cent of its shares.

Over the past 15 years, the duo used a poorly performing conglomerate that did everything from run day care centres to import fish to make more than 100 acquisitions and build one of the largest industrial technology groups in the Nordics.

Along the way Hexagon took control of Leica Geosystems and Brown & Sharpe, becoming a leader in technology used to design, measure and position objects.

Hexagon’s enterprise value to free cash flow ratio is 20 times — far ahead of what rival industrial groups are valued at, according to analysts. They said the company had convinced investors that it should be valued as an information technology business.

Some critics of the company have questioned the way the company calculates the gains from its dealmaking spree, although the company has defended its accounting. Nearly 4 per cent of Hexagon shares are held by investors who are betting that its price will fall.

“This has been a stock which has very much divided the market . . . The current valuation of Hexagon might prove challenging to any acquirer too,” analysts at Olivetree Financial wrote. They added: “It appears there is a changing of the guard, and it is very possible that Schorling’s children have seen this as an opportune time to exit at such a lofty valuation.”

When Mr Rollen was charged in October, his lawyer said in a statement that the allegations were connected to the purchase of shares in Next Biometrics by Greenbridge Partners, a private equity firm founded and managed by Mr Rollen. “Ola Rollen firmly denies the accusations. He does not admit to any guilt,” his lawyers said.

>>> Wall Street Wires Exclusive: Gemalto (AMS:GTO) receives takeover interest fr

Wall Street Wires Exclusive: Gemalto (AMS:GTO) receives takeover interest from various bidders

It is rumoured that Dutch headquartered digital security group Gemalto is working with an investment bank after receiving takeover interest from various bidders. The market cap of Gemalto is currently €4.7bn, with bids valuing the company at around €69 versus €52 now.

FT : Shares in Swedish group Hexagon jump 16% after reports of $20bn sale

Shares in Swedish group Hexagon jump 16% after reports of $20bn sale

Shares in Swedish industrial technology company Hexagon climbed 16 per cent on Wednesday morning after reports the group is considering putting itself up for sale.

The Wall Street Journal first reported after European markets closed on Tuesday that Hexagon, which specialises in precision measuring technologies, had held early-stage talks on a possible sale to a US or European rival, which could be worth around $20bn.

In an update for investors on Wednesday morning, Hexagon said it “regularly evaluates various opportunities to optimise the company’s positioning and shareholder value. Should these evaluations lead to concrete results, the market will be immediately informed”.

Hexagon has grown into one of Sweden’s largest companies – with a market capitalisation of over SKr150bn ($17bn) – under chief executive Ola Rollen, who has led the group since 2000. Mr Rollen was arrested and charged with insider trading in connection with an unrelated investment last October. At the time, his lawyers said he “firmly” denied the allegations.

Shares in the company were up 14 per cent at publication time, to SKr432.

>>> What to look at today - 14th of June 2017

Dow +0.44% S&P +0.45% Nasdaq +0.73% Russell +0.48%
US Market closed higher on record levels.  technology (+0.9%) and financials (+0.4%) sectors led the stock market into positive territory at Tuesday's opening bell, but the tech group soon faded as several of its most influential components retraced their opening gains. Luckily, the financial sector teamed up with the consumer discretionary (+0.6%) and materials (+1.3%) groups during this time to help mitigate technology's influence on the broader market. We saw weakness within the consumer discretionary sector, but Amazon's (AMZN 980.79, +15.88) big advance of 1.7% did more than enough to outweigh their bearish influence.McDonald's (MCD 149.82, +1.35) also put together a solid performance, adding 0.9%, after the company's target price was raised to $175 from $165 at Bank of America/Merrill Lynch.  energy sector (+0.7%) also finished ahead of the broader market, thanks in part to crude, WTI crude finished 0.7% higher at $46.43/bbl. VIX -10%. US after Hours HRB +10.3% following earnings/dividend increase, ALXN +3% after poaching BIIB -2% CFO. Asian equities were mixed, with solid gains in Australia and New Zealand offset by China, where markets weakened despite data showing resilience in retail sales and industrial output. The dollar held declines and Treasuries edged higher ahead of the Federal Reserve’s policy decision. China retail sales rose 10.7 percent year-on-year in May, in line with forecasts, while industrial production was up 6.5 percent versus an expected 6.4 percent. Japanese industrial production rose 5.7 percent in April from a year earlier and 4 percent month-on-month, matching estimates.

Nikkei +0.09% Hang Seng -0.19% CSI -1.19% Shanghai -0.67%

Eur$ 1.1217 CNH 6.7899 CNY 6.7964 JPY 110.05 GBP 1.2748 CHF 0.9685 RUB$ 56.9184 WTI$ 45.98 -1.03%

S&P -0.08% EuroStoxx +0.14% Dax+0.16% FTSE +0.05% SMI +0.07%

Macro :
- China May Industrial Output Rises 6.5%; Est. 6.4%
- EU Targets Derivative-Clearing Giants With Relocation Threat
- ECB Said Unlikely to Include Greece in QE in Coming Months
- Mnuchin Says He Wants to Unlock Burdensome Regs on Smaller Banks
- Australia to See More Elliott-BHP Style Activism: Credit Suisse

Keep an eye on :
- III LN : 3i Said to Consider Exiting its German Ferry Operator Scandlines
- AB1 GY : German Monopoly Commission Head Against Air Berlin Aid: Welt
- ADP FP : ADP Paris Airports May Passenger Traffic Climbs 2.8%
- ALBK ID : Ireland’s AIB Has Demand for All Shares on Offer in Stock Sale
- ALXN US : Alexion Names Biogen’s Paul Clancy CFO; Shares Rise (ALXN +3% BIIB-2% in after hours)
- BALTA BB : Balta Raises EU145m in IPO; Lone Star Sells EU58.6m of Stock
- BLT LN : BHP Billiton Needs Significant Upgrade in Directors: Elliott
- BMW GY : IBM Pairs With BMW to Market Connected Car Services: WSJ
- BP/ LN : BP Seeks to Expand Spanish Gas Station Network: Expansion
- BSLN SW : Basilea in Pact With Avir Pharma for Distribution in Canada
- BPM PL : Banco BPM Sells Bad Loans Valued at EU693m to Algebris
- BOSN SW : Bossard Sees 1H Net Income More Than 30% Above Year Earlier
- NXT FP : BNP Paribas, Societe Generale to Sell 4.4 Mln Euronext Shares
- FCA IM : Fiat Diesels Spew More Pollution Than Allowed, Researchers Say
- GEM LN : Gemfields in Talks With Fosun Gold Over Possible Competing Offer
- SHBA SS : Handelsbanken Raises Finnish 2017 GDP Forecast to 2.7% vs 1.8%
- ITX SM : Inditex 1Q Net Income Misses Est.
- ITM IM : Italmobiliare to Buy 40% of Tecnica Group for About EU60m
- EGL PL : Mota-Engil Wins $210m Contract in Guinea for Mining Services
- LSS FP : Lectra Chairman Andre Harari to Sell 16.6% Stake via Placing
- NVDA US : Nvidia EPS, Sales Ests. Raised on Higher Switch Units: Goldman
- POP SM : Banco Popular Report Criticized by Banking Inspectors: Expansion
- POP SM : U.S. Law Firms Prepare Claims Against Popular: Expansion
- RYA LN : Ryanair Said in Talks to Order Boeing 737 Max 10: Reuters
- STR AV : Kapsch, Strabag to Bid for German Road Toll Tender, Kurier Says
- STMN SW : Straumann Acquires 35% Non-Controlling Stake in Rapid Shape
- TELIA SS : Telia Said to Weigh Stake Sale in Russia’s MegaFon
- TSLA US : Tesla Can’t Escape Consumer Claims Over Sudden Acceleration
- VOW3 GY : VW Faces Combined U.K., Netherlands Diesel Claims: Telegraph

>>> Euronext reference shareholders renew agreement; sell 6.3% stake via acceler

Euronext reference shareholders renew agreement; sell 6.3% stake via accelerated bookbuilding
14 JUN 2017
Euronext (Paris:ENX) (Amsterdam:ENX) (Brussels:ENX) received the information that the group of Reference Shareholders (RSH), holding 33.36% of its share capital, has decided to extend an amended version of their RSH Agreement. This agreement dated 3 June 2014 was due to expire on 20 June 2017, and is now extended for a further period of two years commencing on 21 June 2017.
Eight RSH will adhere to such extension, now accounting for 23.86% of Euronext’s share capital. The new Reference Shareholders group has agreed to a new lock-up period of two years commencing on 21 June 2017 and expiring on 20 June 2019. The Supervisory Board representation of the Euronext RSH will be maintained, as the RSH, acting jointly, will retain their right to nominate one third of the Supervisory Board seats.
Euronext has also been informed that the lock-up of the current Reference Shareholders Agreement has been waived in favour of BNP Paribas and Société Générale in order to enable them to sell down in a coordinated manner their excess stakes in Euronext representing approximately 4.4 million Euronext shares, totalling to approximately 6.3% of Euronext’s share capital.
This development was also reported in daily Les Echos, which said that BNP Paribas and Société Générale sold the shares via an accelerated bookbuilding that took place yesterday Tuesday. The report noted that shares in Euronext have doubled in the last three years.

>>> Europe : Brokers Upgrades & Downgrades - 14th of June 2017

>>> Up
*ASML Raised to Buy at Citi
*Dialog Semi Raised to Outperform at MainFirst, PT EU50
*EasyJet Raised to Neutral at Davy
*Lagardere Raised to Add at AlphaValue, PT EU30.40
*Orange Belgium Raised to Buy at HSBC

>>> Down
*Anadarko Cut to Underweight at Barclays, PT $42
*Gerresheimer Cut to Hold at Bankhaus Lampe
*Halma Cut to Hold at HSBC
*LEG Immobilien Cut to Underweight at Morgan Stanley, PT EU84 (From Buy)
*Micro Focus Cut to Neutral at Citi
*NMC Health Cut to Hold at Jefferies, PT 2,450p
*Outokumpu Cut to Neutral at Credit Suisse
*Outokumpu Cut to Hold at Jefferies, PT EU7.50
*Proximus Cut to Hold at HSBC
*Raiffeisen Cut to Underweight at Barclays, PT EU22
*Telenet Cut to Hold at HSBC, PT EU59
*Tryg Cut to Neutral at MedioBanca, PT DKK154

>>> Initiation
*Hapag-Lloyd New Buy at Jefferies, PT EU35
*NN New Outperform at Credit Suisse
*SocGen New Buy at Spin-Off Research, PT EU54

>>> Call
>> Sector
*EUROPEAN PHARMACEUTICALS SECTOR CUT TO NEUTRAL AT LIBERUM

>>> Asian Update

Asia Mid-Session Market Update: China economic data steadies ahead of the Fed decision

***US Session Highlights***
- (US) Goldman Economist Chain Store Sales w/e Jun 10th w/w: +1.1%; Y/Y: +0.5%
- (US) MAY PPI FINAL DEMAND M/M: 0.0% V 0.0%E; Y/Y: 2.4% V 2.3%E; Ex Food and Energy M/M: 0.3% v 0.1%e; Y/Y: 2.1% v 1.9%e
- (CA) Bank of Canada (BoC) Gov Poloz: Reiterates low interest rates have been used to offset shocks
- With all eyes clearly on the outcome of the FOMC meeting tomorrow, equity markets gained strength again, as Techs recovered some lost ground from the past two days. Renewed interest in stocks took the S&P, the Dow, and the Russell 2000 to close at new all-time highs. A rate hike seems almost fully discounted; however, the market will be looking for signals from the meeting statement and Yellen's speech post interest rate announcement. All S&P sectors made positive gains for the day; Materials and Energy were the out-performers, gaining 1.2% and 0.7% respectively, Technology gained 0.6%

***US markets on close: Dow +0.4%, S&P500 +0.5%, Nasdaq +0.7%***
- Best Sector in S&P500: Materials
- Worst Sector in S&P500: Telecom
- Biggest gainers: FTR +8.5%; SWN +5.1%; CHK +.47%
- Biggest losers: MYL -2.9%; FOXA -2.4%; YHOO -2.1%
- At the close: VIX 10.4 (-1.0pts); Treasuries: 2-yr 1.36% (flat), 10-yr 2.21% (flat), 30-yr 2.86% (-1bps)

***US movers afterhours***
- HRB Reports Q4 $3.76 v $3.51e, Rev $2.33B v $2.32Be; adj EBITDA $904M v $812M y/y; +10.6% afterhours
- ALXN Names Paul J. Clancy CFO; effective July 10th (from BIIB); +3.7% afterhours
- SQNS File to sell ADS shares through Canaccord; -5.9% afterhours

***Politics***
- (US) White House spokesperson: Pres Trump has the right but no intention to fire Special Councel Mueller - press

***Key economic data***
- (CN) CHINA MAY FIXED ASSETS EX RURAL YTD Y/Y: 8.6% (4-month low) V 8.8%E
- (CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 6.5% V 6.4%E; YTD Y/Y: 6.7% V 6.6%E
- (CN) CHINA MAY RETAIL SALES Y/Y: 10.7% V 10.7%E; YTD Y/Y: 10.3% V 10.3%E
- (AU) AUSTRALIA JUNE WESTPAC CONSUMER CONFIDENCE INDEX: 96.2 V 98.0 PRIOR, M/M: -1.8% V -1.1% PRIOR (3rd straight decline)
- (NZ) NEW ZEALAND Q1 CURRENT ACCOUNT BALANCE (NZ$): 0.24B V +1.00BE

***Speakers and Press***
China
- (CN) China National Bureau of Stats (NBS): China economy remains stable in May with improvement
- (CN) China May Power Consumption +5.1% y/y – Chinese Press

Japan
- (JP) Japan reportedly seeking talks on North Korea with China and South Korea - Japan press

Australia
- (AU) JPMorgan expects RBA interest rates to bottom at 1.00%, down from 1.50% current - press

Korea
- (KR) South Korea foreign bond inflows rose by a net of KRW2.1T in May (5th straight rise) - FSS

***Asian Equity Indices/Futures (00:30ET)***
- Nikkei flat, Hang Seng -0.3%, Shanghai Composite -0.6%, ASX200 +0.9%, Kospi -0.3%
- Equity Futures: S&P500 -0.1%; Nasdaq -0.2%, Dax -0.1%, FTSE100 flat

***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1205-1.1220; JPY 109.95-110.15; AUD 0.7530-0.7545; NZD 0.7200-0.7225
- Aug Gold +0.2% at 1,272/oz; July Crude Oil -1.0% at $45.99/brl; July Copper flat at $2.60/lb
- (US) Weekly API Oil Inventories: Crude: +2.8M v -4.6M prior (first build in 4 weeks)
- (CN) PBOC SETS YUAN MID POINT AT 6.7939 V 6.7954 PRIOR
- (CN) PBOC to inject combined CNY90B v CNY50B prior in 7-day, 14-day and 28-day reverse repos
- (CN) China Finance Ministry sells 2-yr bonds at 3.620%; bid-to-cover 2.64x; Sells 5-yr bonds at 3.565%, bid-to-cover 3.76x

***Asia equities notable movers***
Australia
- Capitol Health (CAJ) +20%; Sells NSW assets to I-MED radiology network for A$81.5M cash; Guides FY17 Radiology EBITDA at top of guided range ~A$21.5M
- Melbourne IT (MLB) +2.2%; Affirms FY17 underlying EPS A$0.17-0.19; EBITDA A$37.5-41.5M - investor presentation
- Vocus (VOC) +0.8%; Affirms FY17 underlying net ~A$160-165M; EBITDA ~A$365-375M; Rev ~A$1.8B - investor slides
- Telstrea (TLS) flat; Confirms to cut 1,400 jobs as part of cost cutting efforts

Japan
- Yamato Holdings (9064) +1.8%; said to plan 15% raise on parcel delivery fees - Nikkei
- Honda (7267) +0.9%; Reportedly plans to add 2.2K jobs to speed Chinese SUV output - Nikkei
- Toshiba (6502) -3.3%; Said to delay the submission of FY16 annual securities report by at least 1-month - Japan press

Hong Kong
- NetDragon Websoft Holdings (777) +4.8%; Reports Q1 core segment profit CNY168.8M, +78.9% y/y
- Skyworth Digital (751) +0.7%; Reports FY16 net HKD$1.31B, -39.6% y/y
- China Sandi Holdings (910) -1.8%; Profit warning: Guides FY17 Net loss v profit HK$160

CNBC : Death of the human investor: Just 10% of trading is regular stock picking

Death of the human investor: Just 10% of trading is regular stock picking, JPMorgan estimates

"Fundamental discretionary traders" account for only about 10 percent of trading volume in stocks today, JPMorgan estimates.
"The majority of equity investors today don't buy or sell stocks based on stock specific fundamentals," said JPMorgan's Marko Kolanovic.
JPMorgan believes the recent sell-off in technology stocks may have been related to quantitative and computer trading and not traditional fundamental investors.
Quantitative investing based on computer formulas and trading by machines directly are leaving the traditional stock picker in the dust and now dominating the equity markets, according to a new report from JPMorgan.
"While fundamental narratives explaining the price action abound, the majority of equity investors today don't buy or sell stocks based on stock specific fundamentals," Marko Kolanovic, global head of quantitative and derivatives research at JPMorgan, said in a Tuesday note to clients.
Kolanovic estimates "fundamental discretionary traders" account for only about 10 percent of trading volume in stocks. Passive and quantitative investing accounts for about 60 percent, more than double the share a decade ago, he said.

In fact, Kolanovic's analysis attributes the sudden drop in big technology stocks between Friday and Monday to changing strategies by the quants, or the traders using computer algorithms.
In the weeks heading into May 17, Kolanovic said funds bought bonds and bond proxies, sending low volatility stocks and large growth stocks higher. Value, high beta and smaller stocks began falling in a rotation labeled "an unwind of the 'Trump reflation' trade," Kolanovic said.
"Upward pressure on Low Vol and Growth, and downward pressure on Value and High Vol peaked in the first days of June (monthly rebalances), and then quickly snapped back, pulling down FANG stocks" — Facebook, Amazon.com, Netflix and Google parent Alphabet, the report said.
Along with Apple, the big tech-related names fell more than 3 percent each last Friday and dropped again Monday, sending the Nasdaq composite lower in its worst two-day decline since December.
However, "the contribution coming from quant rebalances to this snapback is now likely over," Kolanovic said, noting that S&P derivatives have supported market gains at the beginning of this week.
"$1.3T of S&P 500 options expire on Friday, and this will change dealers' positioning," he said. "This can result in a modest increase of market volatility starting on Friday and into next week."
Tech recovered Tuesday, helping U.S. stocks close higher with the Dow Jones industrial average at a record.
Derivatives, quant fund flows, central bank policy and political developments have contributed to low market volatility, Kolanovic said. Moreover, he said, "big data strategies are increasingly challenging traditional fundamental investing and will be a catalyst for changes in the years to come."
Figures from market structure research firm Tabb Group point to similar gains in machine-driven trade volume, while the overall number of shares traded has declined.
A subset of quantitative trading known as high-frequency trading accounted for 52 percent of May's average daily trading volume of about 6.73 billion shares, Tabb said. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion average daily shares traded were executed by high-frequency traders.
To be sure, not everyone on Wall Street is giving ground to the machines so easily.
AllianceBernstein analysts made the case in an April 28 note that artificial intelligence is unable to generate significantly different results — by the mere fact that analyzing more and more data results in increasingly similar strategies.
Watch: BlackRock's new stock-picking strategy

>>> After Hours Summary: HRB +10.3% following earnings/dividend incr

After Hours Summary: HRB +10.3% following earnings/dividend increase, ALXN +3% after poaching BIIB -2% CFO

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: HRB +10.3% (also increases dividend), CPST +5.8% (light volume)

Companies trading higher in after hours in reaction to news: TAX +10% (light volume -- following HRB earnings and ahead of its own earnings release), MVIS +6.6% (terminates at-the-market facility with IFS Securities), ALDX +3.9% (light volume; to host a conference call and webcast on Wednesday, June 14, 2017 at 8:00 A.M. EDT to discuss results from its Phase 2b Allergic Conjunctivitis Trial), ALXN +3.1% (confirms it named BIIB's CFO Paul Clancy as its CFO effective July 31), EFX +1.9% (HRB sympathy), NSR +0.6% (Neustar receives written notification from the Committee on Foreign Investment in the United States that it will not take action to prevent the transactions contemplated by the Merger Agreement from being consummated)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: BPMX -7.7%

Companies trading lower in after hours in reaction to news: SQNS -5.9% (to offer newly issued American Depositary Shares, representing ordinary shares, in an underwritten public offering), WLL -3.3% (pulling back after closing near highs), MRO -2.2% (following API data), SNCR -1.9% (light volume; independent registered public accounting firm concluded that previously issued financial statements for 2015/2016 fiscal years and the respective quarterly periods should be restated and should no longer be relied upon), BIIB -1.7% (CFO Paul Clancy to depart), LOXO -1.4% (commences common stock offering and files mixed securities shelf offering)

>>> USClose Dow +0.44% S&P +0.45% Nasdaq +0.73% Russell +0.48%

Closing Market Summary: Tech Bounces Back on Tuesday

Investors pushed the S&P 500 (+0.5%) and the Dow (+0.4%) to new record highs on Tuesday, breaking the stock market's two-session losing streak. And while the Nasdaq didn't post a new record close, it did outperform its peers with a gain of 0.7%. 

The top-weighted technology (+0.9%) and financials (+0.4%) sectors led the stock market into positive territory at Tuesday's opening bell, but the tech group soon faded as several of its most influential components retraced their opening gains. Luckily, the financial sector teamed up with the consumer discretionary (+0.6%) and materials (+1.3%) groups during this time to help mitigate technology's influence on the broader market.

Eventually, the technology sector regained its footing to finish with the materials and consumer discretionary groups at the top of the day's leaderboard. However, the financial sector couldn't maintain its early strength, settling in line with the broader market. The major averages never touched negative territory, even during technology's period of weakness, and eventually closed near their best levels of the day.

Within the technology space, mega-cap tech names like Apple (AAPL 146.59, +1.17), Microsoft (MSFT 70.65, +0.87), Facebook (FB 150.68, +2.24), and Alphabet (GOOGL 970.50, +8.69) settled with gains between 0.8% and 1.5% while chipmakers pushed the PHLX Semiconductor Index higher by 0.6%. The technology sector's overall solid performance was an encouraging sign for the broader market, especially after the drubbing the sector took over the last two sessions.

There were pockets of weakness within the consumer discretionary sector, but Amazon's (AMZN 980.79, +15.88) big advance of 1.7% did more than enough to outweigh their bearish influence. McDonald's (MCD 149.82, +1.35) also put together a solid performance, adding 0.9%, after the company's target price was raised to $175 from $165 at Bank of America/Merrill Lynch.

Like many of its cyclical peers, the energy sector (+0.7%) also finished ahead of the broader market, thanks in part to crude oil's positive performance. The commodity held a loss of around 1.0% early in the morning session, but jumped into positive territory amid headlines that Kazakhstan's oil production is expected to decline this summer. WTI crude finished 0.7% higher at $46.43/bbl.

On the countercyclical side, the health care (+0.1%), consumer staples (unch), and utilities (+0.2%) groups finished just a tick above their flat lines while the telecom services sector (-1.0%) ended the day solidly lower as both Verizon (VZ 46.46, -0.73) and AT&T (T 38.68, -0.39) weighed. The wireless giants finished with losses of 1.6% and 1.0%, respectively.

Elsewhere, the CBOE Volatility Index (VIX 10.44, -1.02, -8.9%), sometimes referred to as the 'investor fear gauge', slipped nearly one point on Tuesday after jumping to a three-week high in Monday's session. However, despite the day's risk-on tone, the 10-yr Treasury note ticked up on Tuesday with its yield slipping one basis point to 2.21%.

On the data front, investors received only one economic report--May PPI--on Tuesday:

  • May producer prices came in at 0.0%, which is in line with the consensus. Core producer prices rose 0.3% while the consensus expected an increase of 0.2%.
    • The key takeaway from the report is that it supports the Fed's inclination to favor a policy tightening bias.

Tomorrow, investors will receive a slew of economic reports, including the weekly MBA Mortgage Applications Index at 7:00 ET, May Retail Sales (consensus 0.1%) and May CPI (consensus 0.0%) at 8:30 ET, April Business Inventories (consensus -0.1%) at 10:00 ET, and the FOMC Rate Decision at 14:00 ET.

  • Nasdaq Composite +15.6% YTD
  • S&P 500 +9.0% YTD
  • Dow Jones Industrial Average +7.9% YTD
  • Russell 2000 +5.1% YTD