Credit: Shutterstock photoActive broad-market exchange-traded funds ahead of Thursday's regular session:
SPDR S&P 500 ( SPY ): -1.3%
SPDR Select Sector Fund - Financial ( XLF ): -1.2%
iShares MSCI Emerging Index Fund ( EEM ): -1.3%
Invesco QQQ Trust, Series 1 ( QQQ ): -2%
ProShares UltraPro Short QQQ ( SQQQ ): +6.1%
Broad Market Indicators
Broad-market exchange-traded funds, including IWM and IVV were lower. Actively traded PowerShares QQQ ( QQQ ) was down 2%.
US stock futures were lower ahead of the opening bell as Apple (AAPL) slashed its fiscal Q1 revenue outlook, blaming a slowing Chinese economy.
In economic data news, Automated Data Processing said private-sector employment December generated 271,000 jobs. Forecasts from Econoday were for 175,000 for and were up from November's 179,000.
Meanwhile, initial claims for the Dec. 29 week came in at 231,000 -- the highest level since Thanksgiving and versus forecasts for 217,000.
Looking ahead, December Institute for Supply Management Manufacturing index, which will be released at 10 am ET, is expected to come in at 57.9, according to Econoday, versus November's 59.3. Construction spending is expected to bounce a modest 0.2% for November following a 0.1% decline in the previous report.
Forecasters see total unit vehicle sales for December at 17.3 million annualized rate vs November's 17.4 million.
Power Play: Technology
Technology Select Sector SPDR ETF (XLK) was down 1.2% and other tech funds 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) was flat and Semiconductor Sector Index Fund (SOXX) was down 2.5%.
Apple (AAPL) fell nearly 8% after the tech giant said late Wednesday it expects Q1 revenue of about $84 billion, well below the analyst consensus of $91.4 billion on Capital IQ. Gross margin is seen at about 38%, with operating expense is seen at about $8.7 billion. The company noted in its statement that it did not "foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad." Detailing iPhone sales, Cook said, "Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year."
Winners and Losers
Financial
The Select Financial Sector SPDRs ( XLF ) was down 1.5%. Direxion Daily Financial Bull 3X shares (FAS) was down 3.6% and its bearish counterpart Direxion Daily Financial Bear 3X Shares (FAZ) was up 3.9% in pre-market trade.
UBS (UBS) Chairman Axel Weber said the Swiss bank has no plans to merge with struggling German lender Deutsche Bank (DB), media reported. In an interview with Tages-Anzeiger newspaper, Weber quelled speculation that UBS is amenable to a combination with its German peer. "Every company has to think things over, but it makes little sense to consider mergers at group level now. These paralyse companies for years," he said. "UBS is much stronger today than before the financial crisis, but combining with another bank - no matter which - would be premature at this moment. We want to grow primarily organically and we surely have to be able to walk before we want to run."
Energy
Dow Jones US Energy Fund (IYE) was inactive and Energy Select Sector SPDR (XLE) was down 0.5% in pre-market trade.
Canadian Solar (CSIQ) said it is partnering with Signal Energy to provide engineering, procurement and construction services and supply solar modules for ESCO Pacific's Finley solar farm in New South Wales, Australia. The company said it will install over 490,000 of its 1500V KuMax modules on single-axis solar tracking systems. Construction of the project began in December and is expected to complete in October. Shares also were upgraded at Goldman Sachs.
Commodities
Crude was up 0.4%. United States Oil Fund (USO) was up 0.4%. Natural gas was down 0.3% while the United States Natural Gas Fund (UNG) was down 1.2%.
Gold was up 1.5%. SPDR Gold Trust (GLD) was up 0.4%. Silver was down 0.03%, while iShares Silver Trust (SLV) was up 0.6%.
Health Care
Health Care SPDR (XLV) was down 0.8% and other health care funds including Vanguard Health Care ETF (VHT) and iShares Dow Jones U.S. Healthcare (IYH) were flat in pre-market trade. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was up 1.4%.
Kitov Pharmaceuticals Holdings (KTOV) rose more than 37% after the company said it signed an exclusive 15-year marketing and distribution agreement with Coeptis Pharmaceuticals for the US market. Under the terms of the deal, Coeptis will commercialize Kitov's combination drug, Consensi, intended to simultaneously treat osteoarthritis pain and hypertension. The agreement provides for total milestone payments from Coeptis to Kitov of $3.5 million, of which Kitov has already received the initial milestone upon execution of the agreement. Additional milestone payments are due upon completion of an agreed chemistry, manufacturing, control (CMC) plan, and upon first commercial sales in the US. Kitov will be paid 40%-60% of Coeptis' net profit on Consensi sales. The agreement is for a term of fifteen years and may be extended for additional two-year terms, and includes customary provisions, as well as certain residual rights and obligations of the parties following termination. Consensi, under patent protection in the US until 2030, is expected to be launched during 2019.
Consumer
Consumer Staples Select Sector SPDR (XLP) was down 0.1% and Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones U.S. Consumer Goods (IYK) were inactive.
Consumer Discretionary Select Sector SPDR (XLY) was down 1.3% and retail funds SPDR S&P Retail (XRT) and Market Vectors Retail ETF (RTH) were quiet in pre-market trade.
The Simply Good Foods Company (SMPL) posted fiscal Q1 net earnings of $0.18 per diluted share, up from $0.14 per share a year ago but below the $0.19 average estimate from analysts polled by Capital IQ. Net revenue jumped 13.5% year-on-year to $120.9 million but still lagged the consensus estimate of $122.4 million. Given the "solid start to the year," the company updated its outlook for fiscal 2019. It expects full-year net sales growth to exceed its long-term target of an annual increase of 4% to 6%, compared with a previous outlook for net sales growth to "slightly exceed our long-term target." The company anticipates adjusted EBITDA will grow at a higher rate than net sales.
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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.
