ETF Preview: ETFs, Futures Modestly Higher on Regulatory Moves from China, Upbeat Earnings

Active broad-market exchange-traded funds in Monday's pre-market session:

SPDR S&P 500 ETF Trust ( SPY ): +0.5%

VelocityShares 3X Long Crude ETN ( UWTI ): -4.3%

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

Market Vectors TR Russia ETF ( RSX ): -0.2%

iPath S&P 500 VIX Short Term Futures ETN ( VXX ): -1.8%

Broad-Market Indicators

Most broad-market exchange-traded funds, including SPY, IWM, IVV and others, were modestly higher ahead of Monday's open. Actively traded PowerShares QQQ (QQQ) was up 0.4%.

U.S. stock futures were in positive territory, following several regulatory moves from China. The country's Securities Regulatory Commission has implemented new rules, including tighter rules on margin lending and encouraging the use of short selling, which are aimed at maintaining the healthy development of the market. People's Bank of China also reduced the amount of reserves commercial banks are required to hold by one percentage point. The move is expected to free up $200 billion for lending.

Back home, economic data is light. The Chicago Fed National Activity Index for March showed a decline to 0.42 from February's downward revised reading of 0.18. This missed expectation for an increase to 0.15.

Investors will be focused on earnings news, with Morgan Stanley (MS) and Hasbro (HAS) as early gainers following better-than-expected Q1 results.

Power Play: Consumer

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

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

Hasbro, Inc. (HAS) was up 8.9% in Monday's pre-market trading after it reported financial results for the first quarter 2015 that beat analysts' expectations. The multinational toy and board game company posted Q1 net income of $26.7 million, or $0.21 per diluted share, compared with the prior-year period's $32.1 million, or $0.24 per diluted share. Revenue was $713.5 million, up from $679.5 million in the same quarter last year. Analysts polled by Capital IQ were expecting EPS of $0.08 on revenues of $660.3 million.

Winners and Losers


Select Financial Sector SPDRs (XLF) was up 0.7%. Daily Financial Bull 3X shares (FAS) was up 1.4% and its bearish counterpart, FAZ, was down 1.5%.

Morgan Stanley (MS) was up 1.7% on Monday after it reported that its earnings applicable to common shareholders for Q1 increased to $2.31 billion from $1.45 billion in the prior year quarter. Income from continuing operations applicable to Morgan Stanley was $2.4 billion, or $1.18 per share, compared with income of $1.5 billion, or $0.74 per share, for the same period a year ago. Results for the latest-quarter included a net discrete tax benefit of $564 million or $0.29 per diluted share primarily associated with the repatriation of non-US earnings at a lower cost than originally estimated. Net revenues were $9.9 billion compared with $9.0 billion a year ago. Analysts polled by Thomson Reuters expected the company to report earnings of $0.78 per share and revenues of $9.17 billion for the quarter. Analysts' estimates typically exclude special items.

The firm increased its quarterly dividend to $0.15 per share from $0.10 per share, payable on May 15, 2015 to common shareholders of record on April 30, 2015.


Technology Select Sector SPDR ETF (XLK), 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. SPDR S&P International Technology Sector ETF (IPK) was also unchanged.

Semiconductor ETFs SPDR S&P Semiconductor (XSD) and Semiconductor Sector Index Fund (SOXX) were flat in pre-market trading.

Check Point Software Technologies (CHKP) reported financial results for Q1 that topped analysts' expectations, with Q1 non-GAAP net income was $179 million or $0.95 per share versus $164 million or $0.84 per share in the same quarter the previous year. Revenue was $373 million, up 9% from $342 million in the same quarter last year. Analysts polled by Capital IQ were expecting EPS of $0.91 on revenues of $369.99 million.


Select Sector SPDR-Industrial (XLI) was up 0.4% while other industrial ETFs iShares Trust Dow Jones U.S. Industrial Sector Index Fund (IYJ) and Vanguard Industrials (VIS) were inactive.

Lennox International (LII) reiterated its guidance for 2015 earnings, even as Q1 results fell short of expectations. The climate control solutions provider said adjusted earnings from continuing operations fell to $0.37 per diluted share from $0.42 the year earlier, missing the $0.46 average estimate from analysts polled by Capital IQ. Revenue fell 1% to $685.8 million, falling short of the $714.8 million consensus estimate. On a reported basis, net income fell to $13.9 million or $0.31 per diluted share from $19.9 million or $0.40 a year ago. Looking ahead, Lennox said it still expects revenue growth between 4% and 8% at constant currency as well as a negative 3 point impact from foreign exchange for a growth range between 1% and 5% at actual currencies. The company still expects to report adjusted EPS between $5.20 and $5.60 compared to the $5.39 average estimate from analysts polled by Capital IQ. But, It lowered it expectations for GAAP EPS from continuing operations to between $5.14 and $5.54, down from $5.20 to $5.60.


Dow Jones U.S. Energy Fund (IYE) was flat and Energy Select Sector SPDR (XLE) was down 0.1%.

Halliburton Company (HAL) reported that both earnings and revenue fell in Q1 but exceeded analysts' estimates. Income excluding special items fell to $0.49 per diluted share from $0.73 the year earlier, exceeding the $0.38 average estimate from analysts polled by Capital IQ. Revenue fell to $7.05 billion from $7.35 billion but topped the $7.00 billion consensus estimate. On a reported basis, Halliburton had a loss of $643 million or $0.76 per diluted share compared to a profit of $622 million or $0.73 a year ago. The company reported $1.21 billion in charges related to write-offs, inventory write-downs, impairments on intangible assets, severance costs and other charges. It also recorded a Venezuela currency devaluation of $0.23 per diluted share and Baker Hughes (BHI) acquisition-related costs of $0.04 per diluted share.


Crude was down 1.2%. United States Oil Fund (USO) was down 1.7%. Natural gas futures were down 2.5%. United States Natural Gas Fund (UNG) was down 2.8%.

Gold was up 0.4% while silver was down 1.2%. Among rare metal funds, SPDR Gold Trust (GLD) was down 0.4% while iShares Silver Trust (SLV) was down 1.1%.

Health Care

Health Care SPDR (XLV), Vanguard Health Care ETF (VHT) and iShares Dow Jones US Healthcare (IYH) were flat. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was also inactive.

Genetic Technologies (GENE) was up 24.8% after it said two additional breast health centers will begin to offer the company's BREVAGenplus to at-risk patients. The company previously disclosed that six breast health centers were set to adopt BREVAGenplus, of which all six provided samples during March 2015, the company said. GENE said additional centers are likely to adopt the test later in 2015, and therefore has reiterated its expectation of sales growth acceleration in the second half of 2015 and beyond.

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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