ETF Preview: ETFs Weaker, Futures Slip Into the Red as Sequester Takes Effect; Stricter Property Regulation in China Sours Market
Active broad market exchange-traded funds in Friday's regular session:
SPDR S&P 500 ( SPY ): +0.38%
iShares S&P 500 ( IVV ): +0.28%
PowerShares QQQ ( QQQ ): +0.42%
iShares Russell 2000 ( IWM ): +0.48%
iShares Russell 1000 Growth ( IWF ): +0.26%
iShares MSCI Emerging Markets Index (EEM): +0.23%
United States Oil Fund (USO): -0.97%
SPDR Gold Shares (GLD): -0.34%
Select Financial Sector SPDRS (XLF): +0.28%
Pre-Market Most Active:
Broad Market Indicators
Broad-market exchange-traded funds, including SPY, IWM, IVV and others, were weaker. Actively traded PowerShares QQQ ( QQQ ) was down 0.13%.
U.S. stock futures slipped into the negative territory ahead of Monday's open, erasing Friday's gains, with U.S. federal spending cuts taking effect after a deadlock in Washington failed to avert them.
Analysts now say the sequester cuts have shaved off GDP forecasts and have further sparked the risk aversion in the markets, according to a report on MarketWatch. With no significant economic data to be released today, investors have turned their attention to news overseas, particularly from Beijing, as mainland Chinese stocks plunged after the government said it will tighten regulatory measures to control the sharp rise in real estate prices.
Winners and Losers
Select Financial Sector SPDRs (XLF) was down 0.23%. Direxion Daily Financial Bull 3X shares (FAS) was down 0.40%. Its bearish counterpart, FAZ, was up 0.59%.
Among financial stocks, KKR (KKR) could see some upside movement this morning, after the WSJ reported KT&G Corp. is considering a bid that could be worth up to $3 billion for the company's Oriental Brewery Co.
Tech ETFs 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 leaning higher.
Semiconductor ETFs, SPDR S&P Semiconductor (XSD) and Semiconductor Sector Index Fund (SOXX) looks to open in the green.
SPDR S&P International Technology Sector ETF (IPK) was headed for a flat to higher open.
In sector news, Cellcom Israel (CEL) was up 1.25% after the company reported Q4 earnings of ILS 1.14 or $0.31 per share, ex one-time items, versus the single analyst estimate on Capital IQ of ILS 0.84 or $0.22. Revenues were ILS 1.41 or $377 mln, versus the single analyst estimate of ILS 1.39 bln or $372.25 mln. The company said that for Q1, it continues to expect "further erosion in revenues ... which will lead to further erosion of profitability."
The company also stated that its board of directors has opted not to distribute a dividend for Q4, saying it needs to further strengthen the company's balance sheet due to market uncertainty. The board will reevaluate this decision in the coming quarters as market conditions develop.
Dow Jones U.S. Energy Fund (IYE) and Energy Select Sector SPDR (XLE) look to open lower.
In sector news, Patterson-UTI Energy, Inc. (PTEN) reported that for the month of February 2013, it had an average of 201 drilling rigs operating, including 189 rigs in the United States and 12 rigs in Canada. For the two months ended February 28, 2013, it had an average of 199 drilling rigs operating, including 188 rigs in the United States and 11 rigs in Canada. Average drilling rigs operating reported in the company's monthly announcements represent the average number of its drilling rigs that were operating under a drilling contract.
April crude is up 0.10%; May natural gas was down 0.37%. United States Oil Fund (USO) was down 0.18%. United States Natural Gas Fund (UNG) was down 0.58%.
April gold was up 0.38% and silver for May delivery was up 0.74%. Among rare metal funds, SPDR Gold Trust (GLD) was up 0.27%; iShares Silver Trust (SLV) was up 0.36%.
Among stocks, Hecla Mining Company (HL) was down 8.62% after announcing that it has entered into a definitive arrangement agreement with Aurizon Mines Ltd. (AZK) pursuant to which Hecla will acquire all of the issued and outstanding common shares of Aurizon in a transaction with a total value of approximately C$796 million.
Hecla will acquire all of the outstanding common shares of Aurizon for C$4.75 per share. Each holder of Aurizon common shares may elect to receive either C$4.75 in cash or 0.9953 of a Hecla share. AZK shares are up 7.82%.
Healthcare ETFs Health Care SPDR (XLV), Vanguard Health Care ETF (VHT), and iShares Dow Jones US Healthcare (IYH) are pointing to a negative start. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) is also pointing lower.
In corporate news, Arena Pharmaceuticals (ARNA) was down 2.40% after it reported a Q4 loss of $0.10 per share, ex one-time items, versus the Capital IQ consensus of $0.05 loss per share. Revenues were $1.9 mln, down 9.5% year-over-year, versus the analyst estimate of $49.72 mln.
Consumer ETFs Consumer Staples Select Sector SPDR (XLP), iShares Dow Jones US Consumer Goods (IYK), and Vanguard Consumer Staples ETF (VDC) are pointing to a higher start.
In sector news, Tesla Motors (TSLA) was down 1.18% after it today said it was unable to timely file its Annual Report on Form 10-K for the year ended December 31, 2012 because a probable error in the presentation of certain non-cash items relating to capital expenditures on its consolidated statements of cash flows was identified during the final review of the Form 10-K.
The company said it believes that some unpaid capital expenditures in 2011 and 2012 would be more accurately classified as operating activities, rather than investing activities.
Power Play -
Industrial ETFs were lower: Vanguard Industrials (VIS), down 0.16%; iShares Trust Dow Jones U.S. Industrial Sector Index Fund (IYJ), and Select Sector SPDR-Industrial (XLI) are expected to open lower.
Among stocks, Ferro Corporation (FOE) was up 27.88% after Schulman (SHLM) proposed to acquire all of the outstanding shares of FOE's common stock for $6.50 per share, representing an estimated total enterprise value of about $855 million including total indebtedness. The offer represents a 25% premium over the closing price of FOE common stock on March 1, 2013, and a 32% premium over the volume-weighted average trading price over the preceding 60-day period. SHLM shares are currently flat.