ETF Preview: ETFs, Futures Point Lower Amid Economic Data, Corporate Earnings

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

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

VelocityShares 3X Inverse Natural Gas ETN ( DGAZ ): +1.3%

SPDR Select Sector Fund - Financial ( XLF ): -0.8%

Direxion Daily Junior Gold Miners Index Bull 3X Shares ( JNUG ): +2.6%

Direxion Daily Gold Miners Index Bull 3X Shares ( NUGT ): +2%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV edged lower. Actively traded PowerShares QQQ (QQQ) was down 0.3%.

U.S. stock futures were mostly lower as investors brace for a flurry of economic data releases, company earnings, a Federal Reserve meeting, as well as news on the latest policy decisions of President Donald Trump.

Wall Street is waiting to see what the impact of Trump's executive order to ban immigrants from several Muslim countries will be on businesses in and outside the U.S. The move has been met with protests at several airports around the country.

The Federal Open Market Committee will kick off its two-day policy meeting on Tuesday, will expectations that the central bank will leave interest rates unchanged.

In economic data news, personal income rose 0.3% in December, missing expectations for an 0.4% increase. Consumer spending, meanwhile, was up 0.5%, in line with forecasts.

The personal consumption expenditures (PCE) index - the preferred inflation gauge of the Federal Reserve - rose 0.2% in December. The core rate, which excludes food and energy, edged 0.1%.

Looking ahead, pending home sales for December will be released at 10 am ET.

Power Play: Health Care

Health care funds 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 flat.

Ocera Therapeutics (OCRX) was down 56.1%, on track to fall below its 52-week low, after the company said a phase 2b study of intravenously-administered ornithine phenylacetate (OCR-002) did not show statistically significant results in the primary and secondary endpoints. While not statistically significant, the company said OCR-002 demonstrated a 17-hour reduction over placebo for the primary endpoint, which was time to improvement in HE symptoms and a 15-hour reduction over placebo for the secondary endpoint, which was median time to complete response in HE symptoms. The company OCR-002 exhibited a statistically significant reduction over placebo for the study's pre-specified exploratory endpoint, which was time to achieve normal plasma ammonia levels.

Winners and Losers


Select Financial Sector SPDRs ( XLF ) was down 0.8%. Direxion Daily Financial Bull 3X shares (FAS) was down 1.8% and its bearish counterpart, FAZ was up 1.9%.

New Residential Investment (NRZ) was down 1.2% after it said it will pay $982 million for servicing rights on $97 billion of Citigroup (C) CitiMortgage home loans, and issue up to 56.5 million shares of common stock, or about $906.4 million worth at market price. The company is paying $950 million for approximately $97 billion UPB of seasoned Agency MSRs from CitiMortgage as well as related services advances for approximately $32 million. Citigroup said it will effectively exit mortgage servicing operations by the end of 2018 to focus on originations. The action is intended to simplify CitiMortgage's operations, reduce expenses, and improve returns on capital. In addition, Citigroup entered into a subservicing agreement with privately held Cenlar FSB for the remaining Citi-owned loans and certain other mortgage servicing rights not sold to New Residential. C shares were down 1%.


Tech funds 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 quiet in pre-market trading . SPDR S&P International Technology Sector ETF (IPK) was flat.

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

Nokia (NOK) was down 1.5% while the company announced that it would work with Orange (ORAN) to collaborate on the development of 5G services. The companies will also build on existing joint innovation programs, as well as work with other partners, to develop, trial and introduce solutions that will make 5G a commercial reality and drive the digital transformation of vertical industries. Nokia and Orange will leverage the Nokia Flexi Base Station and 5G-ready AirScale radio access portfolio, the AirFrame data center platform, telco cloud and cybersecurity technologies to create applications making use of 5G's ultra-low latency and ultra-high reliability. ORAN ADRs were down 1.2%.


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

Ixia (XXIA) was up 6.3% after agreeing to be acquired by Keysight Technologies (KEYS) for approximately $1.6 billion. Under the terms of the deal, each Ixia share will be exchanged for $19.65 per share in cash, which represents an 8% premium to the stock's previous close. The transaction is expected to close no later than the end of October, subject to customary closing conditions. Keysight said it expects the transaction to be immediately accretive to its adjusted earnings with annual cost synergies of $60 million. Revenue synergies are expected to be in excess of $50 million by year three and $100 million by year five of integration. KEYS shares were up 0.9%.


Dow Jones U.S. Energy Fund (IYE) was flat while Energy Select Sector SPDR (XLE) was down 0.4% in pre-market trade.

Dorian LPG (LPG) reported fiscal Q3 adjusted net loss was $0.36, down from the $0.84 profit a year ago and wider than the Capital IQ consensus of a net loss of $0.23. However, while revenues of $35.7 million dropped from $93.3 million a year ago, they came in higher than the mean estimate of $33.7 million provided by Capital IQ. Looking ahead, the company expects strong demand for its vessels in the quarters ending June 30 and Sept. 30 and weak demand for quarters ending Dec. 31 and Mar. 31. Also, expected lower rates or off-hire time for its vessels may adversely impact its business, financial condition and operating results.


Crude was down 0.6%. United States Oil Fund (USO) was down 0.7%. Natural gas was down 3.4% while United States Natural Gas Fund (UNG) was down 3.4%.

Gold was down 0.4%. SPDR Gold Trust (GLD) was up 0.2%. Silver was up 0.6% while iShares Silver Trust SLV) was up 0.7%.


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

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 also flat.

Tempur Sealy International (TPX) was down 24.3% after the maker and distributor of bedding products said Monday that it has received a formal notification from Mattress Firm Holdings terminating all of its supply contracts with company. For full year 2016, the company's net sales to Mattress Firm represents approximately 21% of total worldwide sales. The company also said that it expects to report Q4 GAAP net profit of $61 million to $63 million, ahead of the $60 million consensus estimate from analysts polled by Capital IQ, and revenues of approximately $770 million, above the $741 million consensus. Full 2016 net profit is expected to range from $200 million to $202 million on revenues of $3.13 billion.

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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