Active broad-market exchange-traded funds ahead of Wednesday's regular session:
SPDR S&P 500 ( SPY ): +0.1%
iShares MSCI Emerging Index Fund ( EEM ): -0.1%
SPDR Select Sector Fund - Financial ( XLF ): 0.2%
Invesco QQQ Trust, Series 1 ( QQQ ): +0.1%
Barclays Bank PLC iPath S&P 500 VIX Short-Term Futures ETN ( VXX ): -0.9%
Broad Market Indicators
Broad-market exchange-traded funds, including SPY, IWM and IVV were higher. Actively traded PowerShares QQQ ( QQQ ) was up 0.1%.
US stock futures are looking to open in positive territory, ahead of the close of the Federal Reserve's two-day policy meeting. The Fed is expected to announce a 0.25% rate-hike at the press conference scheduled at 2 pm ET.
In economic data news, the MBA mortgage applications index fell 1.5%, from the prior reading of an increase of 4.1%.
Producer prices rose 0.5% in May, versus the consensus for an increase of 0.3%. Core producer prices increased 0.3%, better than the expected 0.2% increase.
Looking ahead, the Atlanta Fed business inflation expectations report will be released at 10 am ET. The much-watched EIA domestic oil inventories release is at 10:30 am ET.
Power Play: Health Care
Health Care SPDR (XLV) and other health care funds Vanguard Health Care ETF (VHT) and iShares Dow Jones US Healthcare (IYH) were flat. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was down 0.3%.
Flex Pharma (FLKS) plunged more than 68% after coming off a trading halt, as the company said it's ending the ongoing phase 2 clinical trial investigations of FLX-787 in amyotrophic lateral sclerosis (ALS) and Charcot-Marie-Tooth (CMT) due to oral tolerability concerns observed in both studies in a subset of patients being treated with the oral disintegrating tablet formulation at 30 mg taken three times a day. It has decided to review its strategic alternatives, including the potential sale or merger of the company. It also will restructure its organization to reduce costs, including reducing its workforce by approximately 60%. Most of these changes are anticipated to be completed by June 30. As a result, it expects to realize annualized cost savings beginning in Q3. The company estimates it will incur one-time costs of approximately $0.8 million to $1.1 million related to the restructuring plan.
Winners and Losers
The Select Financial Sector SPDRs ( XLF ) was flat. Direxion Daily Financial Bull 3X shares (FAS) was up 0.6% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was down 0.9%.
Southern Missouri Bancorp (SMBC) said it is acquiring Gideon Bancshares, the 92% owner of First Commercial Bank, in a deal worth around $22.7 million, with each Gideon stock receiving 2.0486 Southern Missouri shares and $72.79 in cash. The deal, backed by Gideon board, would bring total assets to about $2.1 billion and total deposits of $1.8 billion. Gideon operates ten locations in southeast Missouri with consolidated assets of $223 million.
Technology Select Sector SPDR ETF (XLK) was up 0.3% 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 both flat.
Qualcomm (QCOM) will not exit its server chip business as widely speculated but the unit will be subjected to resizing, the company's president told Reuters. Qualcomm President Cristiano Amon said that the chipmaker will implement staff reductions in the unit but intends to keep operating it, albeit with a narrower focus on large computing players in China such as Alibaba (BABA), Tencent Holdings, and Baidu (BIDU) through a joint venture. "We are not looking at strategic options. We are not selling. We are still focused on it," Amon said. The restructured chip unit will be integrated into the Qualcomm CDMA Technologies unit, which designs and sells mobile phone chips, to gain cost efficiencies. The company introduced chips that utilize technology from Softbank Group Corp.'s ARM Holdings to power the computer servers behind cloud-based services, putting it in direct competition with Intel (INTC). But in May, Bloomberg News reported that Qualcomm was exploring whether to sell or close the business unit. QCOM shares fell marginally.
Dow Jones US Energy Fund (IYE) was flat and Energy Select Sector SPDR (XLE) was down 0.01%.
Enphase Energy (ENPH) was up 35% after disclosing late Tuesday it agreed to acquire SunPower's (SPWR) microinverter business for $25 million in cash, and 7.5 million shares of Enphase common stock. Enphase said it expects to add $60 million to $70 million annualized revenue in H2 of FY19 at 33% to 35% gross margin. Enphase said it will add over 140 patents to its IP portfolio. The deal is expected to close in Q3, and initial shipments are set for Q4. Enphase said the $25 million cash will be funded from the company's balance sheet in two installments.
Crude was down 0.6%. United States Oil Fund (USO) was down 0.4%. Natural gas was up 0.1% while United States Natural Gas Fund (UNG) was up 0.5%.
Gold was down 0.2%. SPDR Gold Trust (GLD) was down 0.1%. Silver was up 0.3%, while iShares Silver Trust (SLV) was up 0.3%.
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) was up 0.1% and retail funds SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR) and Market Vectors Retail ETF (RTH) were inactive in pre-market territory.
H&R Block (HRB) fell nearly 19% a day after the company beat Street projections on fiscal Q4 earnings while saying on its earnings conference call it will close 400 offices and issuing downside revenue guidance for FY19. CFO Tony Bowen said most of the office closures are expected in Q2 and the company will take a charge on the buyout of the remaining lease liability. The company estimates the charge will fall in the range of $15 million to $20 million for fiscal 2019. The company added in the conference call that it expects FY19 revenues of $3.05 billion to $3.1 billion, below the $3.14 billion mean estimate of analysts polled by Capital IQ, which has been updated to $3.08 billion on Wednesday.
Late Tuesday fiscal Q4 earnings from continuing operations of $5.43 per share, compared with the prior-year period's $3.76 per share. Analysts polled by Capital IQ were expecting EPS of $5.27. Revenue was $2.39 billion, up from $2.33 billion in the same quarter last year. The Street view was for revenue of $2.34 billion. The company also said that its board of directors has approved an increase in its quarterly dividend of 4%, to $0.25 per share, and declared a quarterly cash dividend of $0.25 per share payable on July 2, to shareholders of record as of June 22.