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ETF Preview: ETFs, Futures Higher on Strong Earnings, Upbeat China GDP

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

SPDR Select Sector Fund - Financial (XLF): +0.4%

SPDR S&P 500 (SPY): +0.3%

VanEck Vectors Gold Miners ETF (GDX): -0.2%

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

iShares China Large-Cap ETF (FXI): +0.6%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV, were inching higher. Actively traded PowerShares QQQ (QQQ) were up 0.4%.

US stock futures edged up ahead of the opening bell, as mostly upbeat earnings continued to help sentiment; positive economic data from China has also eased lingering concerns over a slowdown in global growth.

US Bancorp (USB) and Morgan Stanley (MS) were among early gainers following strong Q1 results, while Netflix (NFLX), IBM (IBM) and Bank of Mellon (BK) were among losers after reporting mixed or lower-than-expected earnings.

China's first-quarter GDP expanded at a faster pace than economists had expected, according to data released Wednesday by the country's National Bureau of Statistics. Q1 GDP rose 6.4%, higher than the 6.3% Econoday forecasts, but steady from growth recorded in the previous quarter. Agriculture output rose 4.4%, while primary and secondary industry grew 2.7% and 6.1%, respectively, the data showed.

In US economic data news, mortgage applications declined 3.5% week-to-week, though volume was still up 14% from the same time last year, the Mortgage Bankers Association said in a report. Refinance applications brought down the total as they fell 8% for the week. Still, they were up 26% year-over-year, the MBA said. Purchase applications, however, rose 1% week-to-week to the highest in nine years and were up 7% from last year, the association said.

Looking ahead, the Trade Balance Report for February will be out at 8:30 am ET, with Econoday seeing a contraction of $53.6 billion, from $51.1 billion in the prior month.

Data on wholesale Inventories for February are due at 10 am ET, with estimates for an increase of 0.3% versus the previous month's 1.2%.

Power Play: Financial

The Select Financial Sector SPDRs (XLF) was up 0.4%. Direxion Daily Financial Bull 3X shares (FAS) was up 0.4% while its bearish counterpart Direxion Daily Financial Bear 3X Shares (FAZ) was down 0.2%.

Bank of New York Mellon Corp. (BK) fell more than 3% after it reported Q1 EPS of $0.94, down from $1.10 in the year-earlier period and below the Street estimate of $0.96 compiled by Capital IQ. Total revenue declined to $3.9 billion from $4.18 billion a year earlier, missing forecasts for $4 billion.

Winners and Losers

Technology

Technology Select Sector SPDR ETF (XLK) was up 0.1% and iShares Dow Jones US Technology ETF (IYW) and iShares S&P North American Technology ETF (IGM) were inactive.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) and Semiconductor Sector Index Fund (SOXX) were both quiet in pre-market trade.

IBM's (IBM) non-GAAP operating EPS fell to $2.25 in Q1 from $2.45 a year earlier but was still ahead of analysts' estimates of $2.24 in a Capital IQ poll. Revenue slipped to $18.18 billion from $19.07 billion a year ago, lagging the $18.58 billion estimate. For full-year 2019, the company continues to expect GAAP EPS of at least $12.45, and operating non-GAAP EPS of at least $13.90. CIQ estimate expected GAAP EPS of $12.28 and non-GAAP EPS of $13.92 for the year. Shares fell more than 3%.

Energy

Dow Jones US Energy Fund (IYE) was flat and Energy Select Sector SPDR (XLE) was up 0.6% in pre-market trade.

Sonatrach, Algeria's state energy producer, and Chevron (CVX) will hold talks next week to explore a strategic partnership in shale gas and oil production, Reuters reported. Executives at the Texas-based energy giant paid a visit to Sonatrach's offices in Algiers amid political turmoil resulting from the resignation of President Abdelaziz Bouteflika last week. The visit also came on the heels of Exxon's planned $33 billion acquisition of Anadarko Petroleum (APC). CVX shares rose marginally while APC shares edged lower.

Commodities

Crude was up 0.6%. United States Oil Fund (USO) was up 0.4%. Natural gas was up 0.2%, while the United States Natural Gas Fund (UNG) was down 0.1%.

Gold was up 0.1%. SPDR Gold Trust (GLD) was down 0.03%. Silver was up 0.3%, while iShares Silver Trust (SLV) was down 0.1%.

Health Care

Health Care SPDR (XLV) and other health care funds including Vanguard Health Care ETF (VHT) and iShares Dow Jones US Healthcare (IYH) were flat in pre-market trade. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was also inactive.

Precision BioSciences (DTIL), a genome editing company, said it has dosed the first patient in its phase 1/2a clinical trial of PBCAR0191 for the treatment of relapsed or refractory (R/R) non-Hodgkin lymphoma (NHL) or R/R B-cell precursor acute lymphoblastic leukemia. The trial is expected to enroll up to 80 patients.

Consumer

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

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

Pepsico (PEP) rose more than 2% after it reported fiscal Q1 core earnings of $0.97 per share, up slightly from $0.96 per share in the prior-year period and higher than the $0.93 per share Street estimate provided by Capital IQ. Revenue for the quarter ended March 23 was $12.88 billion, up from $12.56 billion reported for the same period last year and higher than the $12.68 billion Street estimate. For 2019, the company expects a core constant currency EPS decline of 1%, and full-year organic revenue growth of 4%.

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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