ETF Preview: Broad Market ETFs Gain as Oil Rises: Consumer in Focus Amid Bids and Earnings

Pre-Market Movers Wednesday:

NUGT +11.1%

UCO +9.8%

XOP +5%

VHT -2.6%

ZSL -2.5%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV were modestly higher pre-market. Actively-traded PowerShares QQQ ( QQQ ) was up 0.6%.

U.S. stock futures were pointing to a higher open, helped by a rally in oil prices . Consumer stocks were in focus Wednesday, with several household names reporting results and a two of the world's beer giants going head-to-head in a takeover battle. Anheuser-Busch ( BUD ) made a revised $99.7 billion-bid for London-rival SABMiller, which was promptly rejected. Meanwhile, Constellation Brands ( STZ ) topped the Street view with Q2 earnings, while Monsanto ( MON ) stock was hammered after reporting a major Q4 miss.

Power Play: Consumer

Funds in the consumer sector were were mixed and underperforming the broader market. Consumer Staples Select Sector SPDR ( XLP ) was edging higher, iShares Dow Jones US Consumer Goods (IYK), and Vanguard Consumer Staples ETF (VDC) were flat after closing lower.

Consumer Discretionary Select Sector SPDR (XLY) slipped 0.3%, SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR) and Market Vectors Retail ETF (RTH) were also flat.

Anheuser-Busch InBev's ( BUD ) revised proposal to the board of SABMiller plc to combine the two beer enterprises into a global beer concern was rejected by its London-based rival.

Anheuser-Busch said the revised proposal is to acquire SABMiller for GBP 42.15 per share in cash, with a partial share alternative available for 41% of SABMiller shares.

Anheuser has made two prior written proposals in private to SABMiller, the first at GBP 38.00 per share in cash and the second at GBP 40.00 per share in cash. The beer-brewer said said it is "disappointed" that SABMiller has rejected both approaches "without any meaningful engagement."

Winners and Losers


Tech funds were mixed ahead of the bell. Technology Select Sector SPDR ETF (XLK) was up 0.5%, iShares Dow Jones US Technology ETF (IYW) and iShares S&P North American Technology ETF (IGM) were inactive and iShares S&P North American Technology-Software Index (IGV) was edging down. SPDR S&P International Technology Sector ETF (IPK) was unchanged.

Semiconductor ETFs, SPDR S&P Semiconductor (XSD) and Semiconductor Sector Index Fund (SOXX) were unchanged after closing higher.

AU Optronics (AUO) disclosed a series of management changes Wednesday morning, with chairman and president Paul Peng resigning from his position as president to assume the role of CEO.

The Taiwan-based producer of LCDs and other flat panel displays also said current CFO Andy Yang will serve as Chief Strategy Officer, and Benjamin Tseng, associate vice president of finance, will be appointed as AUO's new CFO. Michael Tsai, who currently serves as senior vice president and general manager of AUO's Video Solutions Business Group, will serve as President and Chief Operation Officer.


Funds in the financial sector were higher and outperforming the broader market. Select Financial Sector SPDRs (XLF) rose 0.6%. Direxion Daily Financial Bull 3X shares (FAS) increased 1.1%; Direxion Daily Financial Bear 3X Shares (FAZ) was up 1.4%.

AXIS Capital Holdings (AXS), a hybrid specialty insurer, said it is winding down its retail insurance operations in Australia and implementing other operational changes to improve efficiency, with the loss of 100 jobs.

The actions will result in a pre-tax reorganization charge of approximately $51 million, or $0.51 per share during the third quarter of 2015, with anticipated annual run-rate pre-tax cost savings of approximately $30 million to be substantially realized in 2016.


Energy funds were flat to higher. Dow Jones U.S. Energy Fund (IYE) was unchanged and Energy Select Sector SPDR (XLE) was 1.3%.

SunEdison (SUNE) was higher pre-bell Wednesday even after reports Latin American Power walked away from a $700 million buyout deal after SunEdison failed to make a $400 million upfront payment.

According to the Wall Street Journal, the deal, which was supposed to close on September 30, would have seen private-equity-owned Latin American Power, which is owned by BTG Pactual SA, the Brazilian investment bank, and Patria Investimentos, add to the list of SunEdison's recent acquisitions in the region, which total around $6 billion.


Crude was up 1.8%; United States Oil Fund (USO) was up 1.2%. Natural gas was up 0.9% and United States Natural Gas Fund (UNG) was flat. Gold was up 0.8%, and SPDR Gold Trust (GLD) was up 0.3%.

Health Care

Health care funds were lower, just behind the broader market. Health Care SPDR (XLV), iShares Dow Jones US Healthcare (IYH) and Vanguard Health Care ETF (VHT) were unchanged after a weaker close Tuesday. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) was leaning higher.

Dermira (DERM) rose in Wednesday's pre-market session after the specialty biopharmaceutical company reported that topline data from the company's Phase 2a study showed that DRM01, a a novel, topical sebum inhibitor in development for the treatment of acne, met all of the primary efficacy endpoints.

Shares are up 5% at $25.98, with a 52-week range of $12.68 - $32.13.

The data demonstrated statistically significant improvements relative to vehicle in the reduction of lesion counts and the proportion of patients who achieved a successful improvement in Investigator's Global Assessment (IGA) score at week 12. The newly presented data also suggest that a treatment difference in these endpoints was observed as early as the first efficacy assessment, which was conducted after four weeks of the 12-week treatment period.

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

SPDR S&P 500 (SPY): -0.5%

Market Vectors Gold Miners ETF (GDX): +3.4%

VIX Short-Term Futures ETN Ipath (VXX): +1.4%

iShares MSCI Emerging Index Fund (EEM): -0.2%

United States Oil Fund (USO): +3.9%

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 All rights reserved. Unauthorized reproduction is strictly prohibited.

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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