Mid-Day ETF Update: ETFs Track Stocks Lower as Strong ISM Services, Factory Orders Data Trigger More Interest-Rate Hike Concerns


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Active broad-market exchange-traded funds in Tuesday's regular session:

SPDR S&P 500 ( SPY ): -0.54%

iShares MSCI Emerging Markets Index ( EEM ): -1.16%

iPath S&P 500 VIX ST Futures ETN ( VXX ): +2.81%

PowerShares QQQ Trust, Series 1 ( QQQ ): -0.58%

iShares Russell 2000 Index ( IWM ): -0.08%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV were weaker at the session's half. Actively traded PowerShares QQQ ( QQQ ) was down 0.58%.

U.S. stocks were also lower as upbeat economic data stoked more concerns that the Federal Reserve would increase interest rates sooner than expected. The Institute for Supply Management earlier reported that its nonmanufacturing index grew to 58.7% from 56.0% in June - the highest level since December 2005. Meanwhile, factory orders climbed a seasonally adjusted 1.1%in June, according to a report by the Commerce Department. At $503.2 billion, this gain was the highest level on record.

Looking ahead, Activision Blizzard (ATVI), Groupon (GRPN), and Walt Disney (DIS) are set to report their financial results in after hours trading later.

Power Play: Health Care

Health Care SPDR (XLV), iShares Dow Jones US Healthcare (IYH) and Vanguard Health Care ETF (VHT) were in the red. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) was up 0.10%.

Enzymotec (ENZY) tumbled some 38% to a record low after the maker of bio-active lipid ingredients reported missed Q3 earnings and revenue, and issued FY 2014 guidance below street estimates. The company reported net income of $400,000, or $0.02 per share, missing Capital IQ estimates of $0.09 per share. This is down from net income of $2.3 million, or $0.12 per share for the same quarter last year. Net revenue totaled $8.96 million, well below the consensus estimate of $14.25 million, and down nearly 40% from Q2 2013.

For FY 2014, the company is expecting net income of $8 million to $10 million, or EPS of $0.34 to $0.43, well below Cap IQ estimates of $0.81 per share. Net revenue, based on the equity method of accounting, is expected at $46 million to $52 million. On a proportionate consolidation method, net revenue should total $62 million to $70 million.

Winners and Losers


Select Financial Sector SPDRs (XLF) was up 0.27%. Direxion Daily Financial Bull 3X shares (FAS) was up 0.59% while its bearish counterpart, FAZ, was down 0.54%.

NorthStar Realty Finance (NRF) and Griffin-American Healthcare REIT II said their respective boards unanimously approved a definite merger agreement under which NRF will acquire Griffin-American in a stock and cash transaction valued at $4 billion, including about $600 million in debt. NRF is acquiring the portfolio of the real estate investment trust, which consists mostly of medical office buildings (43%) and senior housing facilities (30%) in the U.S. and the U.K., at an approximate 6.4% cap rate based on the company's estimate of 2015 NOI. The transaction is expected to be neutral to NRF's cash available for distribution and should close in Q4 2014. Griffin-American stockholders will receive $11.50 per Griffin-American share comprising: $7.75 per share in cash and $3.75 per share in NRF common stock. NRF shares were up 7%.


Technology Select Sector SPDR ETF (XLK), 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 weaker. SPDR S&P International Technology Sector ETF (IPK) was flat.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) was down 0.06% while Semiconductor Sector Index Fund (SOXX) was up 0.82%.

ChannelAdvisor Corp (ECOM) was down 27.36% and reached a 52-week low after reporting late Monday a Q2 non-GAAP net loss and revenue beating Wall Street expectations and forecast above-consensus FY14 revenue. The company said that, excluding stock-based compensation and other one-time items, its net loss narrowed to $7.5 million, or $0.30 per share, expanding on a $4.5 million adjusted net loss last year but still topping the Capital IQ consensus by $0.01 per share. Revenue rose 30% year over year to $20.8 million, trumping estimates by around $800,000.

For Q3, the company is expecting between $20.5 million to $20.9 million in revenue, in-line with the $20.86 million consensus. The company also is projecting FY14 revenue in a range of $86 million to $86.7 million, exceeding estimates by at least $240,000.


Dow Jones U.S. Energy Fund (IYE) was down 1.77%; Energy Select Sector SPDR (XLE) was down 1.70%.

Petroquest Energy (PQ) was down 9.58% after the independent oil and gas company reported Q2 earnings of $0.15 per share,compared with $0.06 per share in the same period last year. Total gas and oil sales were $60.58 million,up from $38.08 million in the prior-year quarter. Analysts polled by Capital IQ were expecting EPS of $0.14 and revenue of $64.2 million. PQ also reported that its production for the quarter was 10.7 Bcfe, compared to 8.7 Bcfe for the comparable period of 2013. Oil and NGL volumes made up approximately 28% of second quarter 2014 production as compared to 22% in the second quarter of 2013.


Crude was up 0.10%; United States Oil Fund (USO) was up 0.39%. Natural gas was up 0.84% and United States Natural Gas Fund (UNG) was up 0.72%.

Gold was down 0.47%, and silver was down 0.67%. Among rare metal funds, SPDR Gold Trust (GLD) was down 0.42% and iShares Silver Trust (SLV) was down 0.59%.


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

Leapfrog Enterprises (LF) was down 16.10% after the company reported late Monday a disappointing Q1 performance, compounded by weak Q2 fiscal 2014 and full-year fiscal 2015 guidance. LF posted a Q1 fiscal 2015 loss of $0.23 per share, one penny deeper than the consensus of analysts polled by Capital IQ, and wider than a prior-year Q1 loss of $0.05 per share. Revenues decreased 43% to $47.0 million, missing revenues $50.8 million. For Q2 fiscal 2014, LF offered guidance for a loss per share of $0.03 to a gain of $0.01 and revenues in the range of $125 million to $130 million. Analysts expect to see EPS of $0.39 on revenues of $219.4 million. For full-year fiscal 2015, LF expects a loss per share of $0.04 to a gain of $0.10 and revenues in the range of $480 million to $505 million. Analysts expect to see EPS of $0.22 on $572.7 million.

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

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