Mid-Day ETF Update: ETFs Join Broader Market Rally as Investors Hope Housing Data Prompts Additional Stimulus from Fed

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Active broad-market exchange-traded funds at mid-day:

SPDR S&P 500 ( SPY ): +1%

iShares Russell 2000 Index ( IWM ): +1.7%

iPath S&P 500 VIX Short Term Futures ( VXX ): -1.7%

iShares MSCI Emerging Markets Index ( EEM ): +1.77%

Financial Select Sector SPDR ( XLF ): +1.8%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM, IVV and others, are firmer. Actively traded PowerShares QQQ (QQQ) is up 1.13%.

U.S. stocks are trading firmly in the green as new housing data for May - showing a 7.9% rise in housing permits despite a 4.8% decline in new homes starts - may just be the catalyst for the Federal Reserve to initiate additional moves to stimulate the economy, as many investors are hoping. A two-day Federal Reserve meeting begins today, with much of Wall Street expecting that the Fed will announce an extension to the $400 billion Operation Twist program.

Winners and Losers

Technology -

Among tech actives: Apple (AAPL) is up 0.4%; Microsoft (MSFT) is up 3.7%; Intel (INTC) is up 0.5%; Google (GOOG) is up 1.8%; Cisco (CSCO) is up 0.4%; Yahoo (YHOO) is up 0.98%.

Network Engines (NEI) has surged 80% to near year highs after the company announced that it agreed to be acquired by UNICOM Systems, a global information technology company and part of the UNICOM group of companies, for $1.45 per common share in cash or a total of $63.2 million. The price represents a premium of 85.5% to NEI's closing price of $0.78 on June 18. Upon the consummation of the merger, NEI will become a private company, wholly owned by UNICOM.

Network Equipment Technologies (NWK) is up 12% after Sonus Networks (SONS) agreed to acquire it for $1.35 per share in a cash merger, valued at a total of $42 million, excluding acquisition-related costs. SONS shares are down 3.85%.

Oracle (ORCL) is up 2.8%, pulling back from its earlier gains of about 5%, after the company reported Q4 earnings of $0.82 per share, ex one-time items, versus the analyst consensus of $0.78. Revenues were $10.92 bln, versus the analyst estimate of $10.89 bln. ORCL's report was an unexpected release, as the company was scheduled to report on Thursday this week.

Microsoft (MSFT) is still firmer following yesterday's launch of the company's latest product, Surface: a new Windows-based tablet computer to compete against Apple's (AAPL) iPad.

In the ETF space, iShares Dow Jones US Technology ETF (IYW) is up 1%; Technology Select Sector SPDR ETF (XLK) is up 0.9%; and iShares S&P North American Technology ETF (IGM) is up 1.1%. iShares S&P North American Technology-Software Index (IGV) is up 1.4%.

SPDR S&P Semiconductor (XSD) is up 1.3% and Semiconductor Sector Index Fund (SOXX) is up 1.5%.

SPDR S&P International Technology Sector ETF (IPK) is flat.

Energy -

Dow Jones U.S. Energy Fund (IYE) up 1%. Energy Select Sector SPDR (XLE) is up 1.1%.

CenterPoint Energy (CNP) has turned positive after the company signed an agreement with Martin Midstream Partners (MMLP), under which MMLP's subsidiary, Prism Gas Systems, will sell its East Texas and Northwest Louisiana natural gas gathering and processing assets, and certain other natural gas gathering and processing assets also owned by the MMLP, to CNP's indirect subsidiary, CenterPoint Energy Field Services for $275 million. The assets to be sold include the MMLP's 50% operating interest in the Waskom Gas Processing Company. A subsidiary of CenterPoint Energy Field Services owns the remaining 50% interest in Waskom. MMLP is up 1.4%.

Valero Energy (VLO) is up 3% after shares were upgraded to Buy from Neutral at UBS, maintaining a price target of $26.

Commodities -

Crude is up 0.88% at $84.00 a barrel. United States Oil Fund (USO) is up 0.96% at 31.62.

Gold is down $3.90 at $1,623.10 an ounce. SPDR Gold Trust (GLD) is down 0.5% at around 157.10. Silver is down 0.98% at $28.39 a pound. iShares Silver Trust (SLV) is down 1% at around 27.60.

Healthcare -

Health Care SPDR (XLV) is up 0.9% near year highs; iShares NASDAQ Biotechnology Index (IBB) is up 1.4% and has hit year highs; Vanguard Health Care ETF (VHT) is up 1% and has hit new year highs; and iShares Dow Jones US Healthcare (IYH) are up 1% near year highs.

AstraZeneca (AZN) is up 2.8% while Palatin Technologies (PTN) is down 15% near year lows after the two companies halted their Phase I clinical trial of AZD2820, an obesity compound that both parties are developing under a research collaboration, after a subject in the trial suffered what the companies suspect was an allergic reaction following his first dose.

Consumer -

Consumer Staples Select Sector SPDR (XLP) is flat but still near year highs; iShares Dow Jones US Consumer Goods (IYK) is slightly lower; and Vanguard Consumer Staples ETF (VDC) is up 0.08% and has hit new year highs.

SPDR S&P Retail (XRT) is up 1.4%; PowerShares Dynamic Retail (PMR) is up 0.9%; and Market Vectors Retail ETF (RTH) is up 0.4% and has hit new year highs.

Barnes & Noble (BKS) is down 6% after the company posted Q4 revenue of $1.38 bln and net loss of $1.08 per share. The analyst consensus on Capital IQ called for revenue of $1.47 billion and a loss of $0.95 per share.

Walgreens (WAG) is down 6% near year lows after the company earlier reported Q3 earnings of $0.62 per share, on revenues of $17.75 bln. Results include $0.01 per diluted share due to costs related to a strategic transaction with Alliance Boots, in which WAG will invest $6.7 billion in cash and stock (comprised of $4 billion in cash and 83.4 million shares) in exchange for a 45% equity ownership stake in Alliance Boots. The Q3 results may not be comparable to the Capital IQ consensus of $0.63 EPS on revenues of $17.95 bln. Analyst estimates typically exclude one-time items. The company also announced that it has increased its quarterly dividend 22.2% to $0.275 cents per share, payable Sept. 12, to shareholders of record Aug. 17. The increase raises the annual dividend rate from $0.90 per share to $1.10 per share.

Power Play -

Financial -

ETFs and stocks in the financial sector are trading higher and leading the broader market rally in mid-day trading.

Select Financial Sector SPDRs ( XLF ) is up 1.9%. Direxion Daily Financial Bull 3X shares (FAS) is up 5%. Its bearish counterpart, FAZ, is down 5%.

Among actives: Bank of America (BAC) is up 5%, Goldman Sachs (GS) is up 3.6%, Morgan Stanley (MS) is up 4.2%; Citigroup (C) is up 3.7%.

Discover Financial Services (DFS) is up 2.4% and nearer to year highs. The company earlier reported Q2 EPS of $1.00, topping estimates for $0.97. Revenue for the quarter came in at $1.8 billion, in-line with expectations.

Jefferies Group (JEF) is up 2% after it posted Q2 EPS of $0.31, topping estimates for $0.28. Revenue for the quarter came in at $706.5 million, ahead of the $681.33 million consensus.

Citigroup (C) continues to trade higher after it announced that its Citi Transaction Services business was appointed by Balfour Beatty, an international infrastructure group, as depositary bank for its sponsored Level 1 American Depositary Receipt (ADR) program. Balfour Beatty's ADR programme trades in the OTCQX platform in the US over-the-counter (OTC) market under the symbol BAFYY, with each ordinary share comprised of 4 ADRs. Balfour Beatty's ordinary shares are also listed on the London Stock Exchange.

Bank of America (BAC) is also firmer following a StreetInsider report that stated the bank is in discussions with Julius Baer Group Ltd., a Swiss private banking group, about Merrill Lynch's international wealth management business (outside the United States).



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

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


This article appears in: Investing , Commodities

Referenced Stocks: EEM , IWM , SPY , VXX , XLF

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