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ETF Preview: ETFs, Futures Point Higher on As-Expected Midterm Election Results


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Active broad-market exchange-traded funds ahead of Wednesday's regular session:

SPDR Select Sector Fund - Financial ( XLF ): +0.5%

SPDR S&P 500 ( SPY ): +0.8%

iShares MSCI Emerging Index Fund ( EEM ): +1.2%

Invesco QQQ Trust, Series 1 ( QQQ ):+1.0%

United States Oil Fund ( USO ): +0.9%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were higher. Actively traded PowerShares QQQ ( QQQ ) was up 1.0%.

US stock futures were pointing to a positive open as investors seek clarity on the new political agenda after the US mid-term elections. Democrats seized the House majority while Republicans retained control of the Senate. Results of the elections were largely in line with expectations, but Wall Street will be waiting to see how they will affect President Donald Trump's legislative agenda moving forward.

The start of the policy setting Federal Open Market Committee meeting is another focus for investors on Wednesday.

Federal Reserve's Consumer Credit for September will be issued at 3:00 pm ET. The consensus is for $16.5 billion, down from $20.1 billion in the prior month.

Power Play: Consumer

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

Consumer Discretionary Select Sector SPDR (XLY) and retail funds SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR) and Market Vectors Retail ETF (RTH) were inactive in pre-market trade.

Michael Kors Holdings (KORS) fell over 11% after the company reported mixed fiscal Q2 results and raised its full-year adjusted EPS outlook. For the quarter ended Sept. 29, adjusted EPS was $1.27 per share, down from $1.33 a year ago but still above the $1.10 average estimate of analysts polled by Capital IQ. Revenues, meanwhile, increased to $1.25 billion from $1.15 billion in the same period of the preceding fiscal year, almost hitting the $1.26 billion consensus. For the full fiscal year, Michael Kors raised its adjusted EPS guidance to $4.95 to $5.05 from $4.90 to $5.00, driven by better-than-expected performance of both the Michael Kors and Jimmy Choo brands. Revenues outlook was maintained at about $5.13 billion. Analysts are expecting FY adjusted EPS of $5.02 and revenues of $5.14 billion.

Winners and Losers

Financial

The Select Financial Sector SPDRs ( XLF ) was inactive. Direxion Daily Financial Bull 3X shares (FAS) was up 0.3% while its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was also quiet.

Zillow Group (Z, ZG) plunged some 20% after the company said Q3 sales rose 22% to $343.09 million from the year-ago period but missed the CapIQ mean for $344.17 million. Net loss was $492 million, down from a profit of $9.21 billion last year. Q4 sales are seen between $340 million and $357 million, below forecasts for $367.77 million. FY sales are seen between $1.31 billion and $1.32 billion, below expectations for $1.34 billion. Separately, it said Allen Parker will join the company as Chief Financial Officer. Parker spent the last 13 years in finance roles at Amazon (AMZN).

Technology

Technology Select Sector SPDR ETF (XLK) was up 1.1% and 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.

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

Twilio (TWLO) jumped as much as 17% after the cloud communications platform said late Tuesday that for Q4 ending in December, the company said it anticipates non-GAAP EPS to be in the range of $0.03 to $0.04 and revenue to be in the range of $183 to $185 million. Analysts had projected EPS of $0.02 and revenue of $161 million, according to Capital IQ estimates. Twilio reported non-GAAP EPS was $0.07 in the September quarter, compared to non-GAAP net loss of $0.08 per share, in the year-ago period. That exceeded the $0.02 average estimate of analysts surveyed by Capital IQ. Q3 revenue rose 68% to $168.9 million, from $100.5 million, also surpassing the analyst consensus of $151.6 million. For FY18, the company anticipates non-GAAP EPS of $0.10 to $0.11, and revenue in the range of $629 million to $631 million. Analysts had projected EPS of $0.03 on revenue of $589.5 million.

Industrial

Select Sector SPDR-Industrial (XLI) was up 1.2% and other funds iShares Trust Dow Jones U.S. Industrial Sector Index Fund (IYJ), and Vanguard Industrials (VIS) were quiet.

Kratos Defense & Security Solutions' (KTOS) fell more than 1% after it reported adjusted EPS rose to $0.08 in Q3 from break-even, exceeding analysts' estimates of $0.03 in a Capital IQ poll. Revenue rose to $159.4 million from $157.1 million a year ago, ahead of the $157.65 million estimate. For full-year 2018, Kratos said it is increasing its guidance for adjusted EBITDA, up to $56 to $60 million, and adjusted EPS up to $0.18 to $0.21, from $0.15 to $0.19 previously, and expects revenue of $635 to $645 million, from prior forecast of $640 to $650 million. Market consensus was $0.19 for EPS on revenue of $643 million. For Q4, it expects revenue of $182 million to $192 million, adjusted EBITDA of $13 to $17 million, and adjusted EPS of $0.03 to $0.06. The Street view is for EPS of $0.08 on revenue of $191 million.

Energy

Dow Jones US Energy Fund (IYE) was flat and Energy Select Sector SPDR (XLE) was up 1.2% in the pre-market session.

Vantage Energy Acquisition (VEAC, VEACU, VEACW), an acquisition entity led by Roger Biemans, former CEO of Vantage Energy, said it agreed to buy entirety of QEP Resources' (QEP) Williston Basin oil-and-gas assets in North Dakota and Montana for $1.65 billion cash and up to 5.8 million shares of Vantage common stock, if certain stock-price targets are met. Upon closing the transaction, Vantage Energy Acquisition will change its name to Vantage Energy, with Biemans as full-time chairman and CEO. The new company will trade on the Nasdaq under the ticker "VEI" upon closing, which is expected in Q1 or early Q2. Vantage said the transaction creates a pure-play Williston Basin operator with strong free-cash flow and low-risk growth opportunities. The acquired assets consist of more than 100,000 net acres and are currently producing at the rate of 46,000 barrels of oil equivalent per day. QEP shares rose more than 6%.

Commodities

Crude was up 1%. United States Oil Fund ( USO ) was up 1%. Natural gas was down 0.9% while United States Natural Gas Fund (UNG) was down 0.6%.

Gold was up 0.5%. SPDR Gold Trust (GLD) was up 0.3%. Silver was up 1.2%, while iShares Silver Trust (SLV) was up 1.1%.

Health Care

Health Care SPDR (XLV) was up 0.9% and other health care funds Vanguard Health Care ETF (VHT) and iShares Dow Jones US Healthcare (IYH) were quiet. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was up 0.8%.

Jazz Pharmaceuticals (JAZZ) fell nearly 9% after it said adjusted EPS rose to $3.58 in Q3 from $3.22 a year earlier, easily beating analysts' estimates of $3.32 in a Capital IQ poll. Revenue rose to $469.37 million from $411.86 million a year ago, but still lagging the $482.64 million estimate. For full-year 2018, it now expects revenue of $1.86 billion to $1.9 billion, from $1.88 to $1.93 billion previously, while keeping its adjusted EPS at $12.75 to $13.25. The Street view is for EPS of $13.11 on revenue of $1.92 billion.

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) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.



This article appears in: Investing , ETFs
Referenced Symbols: XLF , SPY , EEM , QQQ , USO



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