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ETF Preview: ETFs, Futures Higher on M&A Deals; Street Digests Inflation, and Personal Income, Spending Data

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

SPDR S&P 500 ( SPY ): +0.4%

PowerShares QQQ Trust, Series 1 ( QQQ ):+0.5%

SPDR Select Sector Fund - Financial ( XLF ): +0.6%

VelocityShares Daily 2x VIX Short Term ETN ( TVIX ): -3.6%

iShares MSCI Emerging Index Fund ( EEM ): +0.6%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV were higher. Actively traded PowerShares QQQ ( QQQ ) was up 0.5%.

US futures were pointing to a higher open as Wall Street focuses on a several M&A deals, economic data releases and earnings reports.

Sprint (S) and T-Mobile (TMUS) said they have signed definitive deal to merge in an all-stock transaction that is equal to a total implied enterprise value of $146 billion for the combined company. Oil production companies Marathon Petroleum (MPC) and Andeavor (ANDV) have agreed to merge in a deal which will see Marathon acquire Andeavor's shares for a total equity value of $23.3 billion or a total enterprise value of $35.6 billion. ILG, Inc (ILG) agreed to be acquired by Marriott Vacations Worldwide Corporation (VAC) in a transaction valued at $4.7 billion. Walmart (WMT) agreed to merge its UK unit, Asda, the third largest grocer in the UK, with J Sainsbury (SBRY.L), the second largest, in a cash and share transaction. And, Prologis (PLD) will acquire DCT Industrial Trust (DCT) in an all-stock transaction valued at $8.4 billion..

In economic data news, the PCE index, the Federal Reserve's preferred inflation gauge, rose to 2% year over year from a 1.7% pace in February. The index hit the Fed's target for the first time in a year. The core rate of inflation rose to 1.9% in March from 1.6% in the prior month.

The March reading of personal income showed an increase of 0.3% versus expectations for a 0.4% rise, while for spending, rose 0.4%, matching forecasts.

Looking ahead, the April reading of Chicago PMI will be released at 9:45 am ET and a March report on pending home sales will be reported at 10 am ET.

In earnings news, McDonald's (MCD) led gainers after reporting better-than-expected Q1 results, while Cooper Tire & Rubber Company (CTB) and ON Semiconductor (ON) were among losers.

Power Play: Technology

Technology Select Sector SPDR ETF (XLK) 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 flat.

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

ON Semiconductor (ON) fell more than 3% after it posted Q1 adjusted EPS of $0.40 compared with $0.27 a year earlier, topping the $0.39 adjusted EPS estimate in a Capital IQ survey. Revenue fell 4% to $1.38 billion from $1.44 billion a year earlier but was higher than the $1.37 billion analyst consensus. ON sees Q2 revenue at between $1.41 billion and $1.46 billion, straddling the $1.42 billion average estimate. It expects 37.0% to 39.0% of gross margin.

Winners and Losers

Financial

The Select Financial Sector SPDRs ( XLF ) was down 0.6%%. Direxion Daily Financial Bull 3X shares (FAS) was up 0.7% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was down 0.5%.

Loews (L) rose 0.8% after it reported Q1 earnings of $0.89 per share, compared with the prior-year period's $0.87 per share. Analysts polled by Capital IQ were expecting EPS of $0.78. Revenue was $3.58 billion, up from $3.3 billion in the same quarter last year.

Industrial

Select Sector SPDR-Industrial (XLI) and other industrial funds Vanguard Industrials (VIS) and iShares Trust Dow Jones U.S. Industrial Sector Index Fund (IYJ), were flat.

Cooper Tire & Rubber Company (CTB) fell more than 14% after the company reported Q1 earnings of $0.16 per share, down from the prior-year period's $0.57 per share. This may not be comparable to the Capital IQ consensus estimate of $0.53 EPS. Revenue was $601 million, down 6.5% from $643 million in the same quarter last year. The Street view is for revenue of $641.2 million. The company said it expects operating profit margin performance in Q2 to be similar in Q1. With industry demand expected to improve in the back half of the year, it projects operating profit margin to its 9% to 11% guidance range for the second half of 2018.

Energy

Dow Jones US Energy Fund (IYE) was flat and Energy Select Sector SPDR (XLE) was down 0.03%.

Marathon Petroleum (MPC) fell more than 8% after it reported early diluted EPS of $0.08 for Q1, up from last year's $0.06, but missing the Street view of $0.14. Revenues totaled $18.98 billion, up from last year's $16.39 billion but also missed Street view of $21.78 billion. For the company's outlook, CEO Gary Heminger said: "Looking forward, we are very optimistic about the opportunities for our business. The solid demand backdrop, favorable crude differentials, and changing dynamics of the low-sulfur-fuel market all set the stage to create meaningful benefits across MPC's integrated and diversified business model."

Commodities

Crude was down 1.1%. United States Oil Fund (USO) was down 0.8%. Natural gas was down 0.1% while United States Natural Gas Fund (UNG) was down 0.1%.

Gold was down 0.7%. SPDR Gold Trust (GLD) was down 0.8%. Silver was down 0.8%, while iShares Silver Trust (SLV) was down 1.1%.

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 also inactive.

Molina Healthcare (MOH) rose 3.1% after reporting Q1 adjusted net income of $1.71 per share, up from $1.47 per share in the prior year period. Excluding certain special items, net income for the quarter would have been $0.80 per share, higher than the $0.78 per share Street estimate provided by Capital IQ. Revenue was $4.65 billion, down from $4.90 billion reported for the same period last year and lower than the $4.74 billion Street estimate. For 2018, the company now expects adjusted net income of $4.24 to $4.74 per share on revenue of $18.7 billion vs previously issued outlook of $3.23 to $3.73 adjusted EPS on revenue of $18.8 billion.

Consumer

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

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 quiet in the pre-market session.

McDonald's (MCD) rose some 4% after posting Q1 EPS of $1.72, up from $1.47 year over year and above the Street view of $1.67. McDonald's said Q1 included $0.07 of charges connected to the Tax Cuts and Jobs Act of 2017, resulting in an adjusted EPS of $1.79. McDonald's posted Q1 revenue of $5.14 billion, down from $5.68 billion a year ago, but above the Street view of $4.97 billion, The company said, "Due to the impact of the company's strategic refranchising initiative, consolidated revenues decreased 9% (15% in constant currencies)."

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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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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