ETF Preview: ETFs, Futures Higher Following Retail Sales, Import Prices and Empire State Manufacturing; Yellen Testimony Still Ahead

By Staff,

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Active broad-market exchange-traded funds at the close of Monday's regular session:

SPDR S&P 500 ( SPY ): +0.51%

iShares S&P 500 ( IVV ): +0.48%

PowerShares QQQ ( QQQ ): +0.60%

iShares Russell 2000 ( IWM ): +0.51%

iShares Russell 1000 Growth ( IWF ): +0.58%

iShares MSCI Emerging Markets Index (EEM): +0.77%

United States Oil Fund (USO): +0.43%

SPDR Gold Shares (GLD): -2.38%

Select Financial Sector SPDRS (XLF): +0.62%

Tuesday's Pre-Market Movers

SPY, +0.06%

GDX, +0.72%

IWM, -0.10%


XLF, +0.70%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV, were modestly higher in Tuesday's pre-market trading . Likewise, actively traded PowerShares QQQ ( QQQ ) was up 1%.

U.S. stock futures are edging higher ahead of the open, as investors digested several economic data releases. The U.S. import price index rose 0.1% in June due to higher fuel costs, but missed expectations for a 0.4% increase. Excluding fuel, import prices fell 0.1%. Meanwhile, retail sales climbed a seasonally adjusted 0.2% in June. Despite the increase, this still missed expectations for a rise of 0.6%. Excluding autos, retail sales rose 0.4%. Finally, the New York Fed reported that the Empire State manufacturing survey rose to 25.6 in July, up from 19.3 in June. This was the highest increase in four years.

Still ahead, Federal Reserve Chair Janet Yellen will be testifying before the Congress on the economy and monetary policy at 10 am ET.

Power Play: Financial

Select Financial Sector SPDRs (XLF) was up 0.70%. Direxion Daily Financial Bull 3X shares (FAS) was up 1.90% while its bearish counterpart, FAZ, was down 1.84%.

Goldman Sachs (GS) was up 1.89% after it reported Q2 EPS of $4.10 per share, well ahead of the analyst consensus of $3.06 per share, according to Capital IQ, and up from $3.70 per share in Q2 last year. Revenue was $9.13 billion, topping the Street view of $7.96 billion, and up from $7.78 billion in the year ago quarter.

Winners and Losers


Technology Select Sector SPDR ETF (XLK) was down 1.4% while other tech funds iShares Dow Jones US Technology ETF (IYW), iShares S&P North American Technology ETF (IGM) and iShares S&P North American Technology-Software Index (IGV) were inactive. SPDR S&P International Technology Sector ETF (IPK) was also flat.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) and Semiconductor Sector Index Fund (SOXX) were unchanged.

Microsoft (MSFT) was up 0.43% following a Bloomberg report that stated the company might announce its biggest job cuts in five years. The report cited unnamed people with knowledge of the plans. The cuts could be announced this week and would probably be in areas such as Nokia and divisions of Microsoft that overlap with that business as well as marketing and engineering, Bloomberg said. It could be the largest restructuring in Microsoft's history, exceeding the 5,800 job cuts in 2009, two people told Bloomberg.


Dow Jones U.S. Energy Fund (IYE) was flat while Energy Select Sector SPDR (XLE) was down 0.26%.

Anadarko Petroleum (APC) was up 1.49% after it said it has finalized and closed financial transactions, including a new unsecured five-year credit facility, the issuance of senior notes, and the sale of Western Gas Equity Partners (WGP) common units. Andarko has entered into a $3 billion five-year unsecured credit facility and a $2 billion 364-day facility, at lower pricing, to replace its $5.0 billion secured credit facility. The company also re-entered the bond market for the first time in four years, issuing $1.25 billion of 3.45-percent 10-year and 4.50-percent 30-year notes, and has completed the first WGP secondary offering, selling 5.75 million common units held by Anadarko. Anadarko received cash proceeds of more than $335 million from the WGP offering.

The company has also reported its minerals-interest ownership, which resulted in approximately $675 million of revenue in 2013, is trending higher in 2014 based on Q1 results which included $180 million in total royalties. The assets include its Land Grant fee acreage, representing approximately 8 million acres in the Rocky Mountain region, highlighted by positions in Colorado's Wattenberg field and Wyoming's Moxa, Wamsutter and Monell areas.


Crude was down 0.67%; United States Oil Fund (USO) was down 0.86%. Natural gas was down 0.05% and United States Natural Gas Fund (UNG) was down 0.22%.

Gold was up 0.26%, and silver was up 2.5%. Among rare metal funds, SPDR Gold Trust (GLD) was up 25% and iShares Silver Trust (SLV) was up 35%.

Health Care

Health Care SPDR (XLV) was up 0.49% while other health care funds iShares Dow Jones US Healthcare (IYH) and Vanguard Health Care ETF (VHT) were unchanged. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) was flat.

Johnson & Johnson (JNJ) was up 0.35% after the company said earnings excluding special items rose 12.2% to $1.66, exceeding the $1.55 average estimate from analysts polled by Capital IQ. Sales rose 9.1% to $19.5 billion, coming in well ahead of the $18.9 billion consensus estimate. GAAP earnings meanwhile rose to $4.33 billion or $1.51 per diluted share from $3.83 billion or $1.33 per share. For 2014, Johnson & Johnson now expects earnings between $5.85 and $5.92 per share, up from the previous guidance of $5.80 - $5.90 per share, and compared to the $5.89 average estimate.


Consumer Staples Select Sector SPDR (XLP), iShares Dow Jones US Consumer Goods (IYK), and Vanguard Consumer Staples ETF (VDC) were flat.

Reynolds American (RAI) the parent company of R.J. Reynolds Tobacco Company, has entered into a definitive agreement to acquire Lorillard (LO), the third largest tobacco company in the US and maker of Newport cigarettes. Reynolds will acquire Lorillard in a cash-and-stock transaction valued at $68.88 per Lorillard share, or a total of $27.4 billion, including the assumption of net debt. Under the terms of the transaction, Lorillard shareholders will receive, for each Lorillard share, $50.50 in cash and 0.2909 of a share in RAI stock at closing, representing $68.88 per share based on RAI's closing share price yesterday. Upon closing, Lorillard shareholders will own approximately 15% of RAI.

RAI has also reached an agreement with Imperial Tobacco Group, under which Imperial has agreed to purchase the KOOL, Salem, Winston, Maverick and blu eCigs brands and other assets and liabilities for $7.1 billion in cash. RAI expects to receive net cash proceeds of $4.4 billion after taxes. As part of the divestiture, Imperial will acquire certain assets owned by Lorillard including its manufacturing and R&D facilities in Greensboro, N.C., and 2,900 employees, including a national sales force. RAI expects the transaction to be accretive to earnings in the first full year, with strong double-digit accretion in the second year and beyond on a percentage basis. RAI shares were down 2.66% while LO shares were down 5%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing Commodities
Referenced Stocks: SPY , IVV , QQQ , IWM , IWF

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