ETF Preview: ETFs, Futures Point Lower as Government Shutdown, Fed's Tighter Monetary Policy Weigh

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

SPDR S&P 500 ( SPY ): -0.5%

iShares MSCI Emerging Index Fund ( EEM ): -0.4%

Invesco QQQ Trust, Series 1 ( QQQ ): -0.6%

SPDR Select Sector Fund - Financial ( XLF ): -0.2%

iShares MSCI EAFE ETF ( EFA ): -0.1%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were lower. Actively traded PowerShares QQQ ( QQQ ) was down 0.6%.

US stock futures were pointing lower ahead of the open, as Wall Street mulled the implications of the government shutdown, which may extend into the new year, according to media reports.

Trading volume is expected to be light during today's shortened session.

Progress in US-China trade negotiations could spark some gains later on, following a South China Morning Post report that said trade discussions on the "vice-ministerial level" have been held via teleconference between China's Ministry of Commerce and representatives from the US.

Meanwhile, there has been market chatter that President Donald Trump could fire Federal Reserve Chairman Jerome Powell after last week's interest rate hike, but Treasury Secretary Steven Mnuchin denied this, saying the president did not suggest dismissing Powell.

Mnuchin also said that he held individual calls with the CEOs of the nation's six largest banks in which the heads confirmed they have "ample" liquidity available for lending to consumers, business markets, and all other market operations. The move comes after the decline in US stocks last week set them up for the biggest slump in December since the 1930s.

In economic data news, the November reading of the Chicago Fed National Activity index came in at 0.22, versus the previous reading of 0.24.

Power Play: Health Care

Health Care SPDR (XLV) was down 1.1% 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 down 0.5%.

Acorda Therapeutics (ACOR) rose more than 1% after it said late Friday that the US Food and Drug Administration has approved Inbrija for the intermittent treatment of OFF episodes in people with Parkinson's disease treated with carbidopa/levodopa. The drug is expected to be available for prescription in Q1 2019.

Winners and Losers


The Select Financial Sector SPDRs ( XLF ) were down 0.2%. Direxion Daily Financial Bull 3X shares (FAS) were down 1.1% and its bearish counterpart Direxion Daily Financial Bear 3X Shares (FAZ) were up 1.4% in pre-market trade.

Cadence Bancorporation (CADE) and State Bank Financial (STBZ) jointly said that Cadence exercised its right to increase the exchange ratio in relation to the terms of the definitive merger agreement signed by the two companies. State Bank shareholders will now get 1.271 shares of Cadence's class A common stock for every share of State Bank Financial's common stock. After the deal's completion, legacy Cadence and State Bank Financial shareholders will collectively own about 63% and 37% of the combined entity, respectively. The adjusted exchange ratio adds about 4.3 million Cadence shares issued to State Bank Financial. Cadence plans to repurchase these additional shares in the market. Its board of directors has amended the share repurchase authorization to include about 4.3 million of total shares. The merger, expected to complete on Jan. 1, is subject to the satisfaction of customary closing conditions.


Technology Select Sector SPDR ETF (XLK) was down 0.5% 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) and Semiconductor Sector Index Fund (SOXX) were both flat.

Seagate Technology (STX), a provider of storage solutions, said after markets closed on Friday that it has appointed Gianluca Romano as chief financial officer. Romano will join Seagate on Jan. 7. Gianluca most recently served as corporate vice president, business finance & accounting at Micron Technology.


Dow Jones US Energy Fund (IYE) and Energy Select Sector SPDR (XLE) were both quiet in pre-market trade.

An Exxon Mobil (XOM) ship conducting seismic work in deep-water off the coast of Guyana was "intercepted" by a Venezuelan naval vessel. The Guyana Foreign Ministry condemned the "dangerous incursion" by the Venezuelans, reported the Associated Press. The Norwegian ship, Ramform Tethys, was contracted to perform seismic work in a block off Guyana's coast by Exxon Mobil, and was approached Saturday by the Venezuelan ship. The Guyana government described the event as an "illegal, aggressive and hostile act" by Venezuela. Guyana said that it would be bring the episode to the attention of the United Nations and would send formal communication to Venezuela. A US State Department spokesman said officials were monitoring reports that the Venezuelan navy may have interfered with the Norwegian ship. Exxon has reported that up to 5 billion oil-equivalent barrels of reserves reside in the deep-water area off Guyana, enough the make the nation the second-largest in Latin America. XOM shares fell nearly 1% in pre-market trade.


Crude was down 1.7%. United States Oil Fund (USO) was down 0.9%. Natural gas was down 1.6% while the United States Natural Gas Fund (UNG) was up 0.5%.

Gold was up 0.6%. SPDR Gold Trust (GLD) was up 0.5%. Silver was up 0.4%, while iShares Silver Trust (SLV) was up 0.4%


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.

Tesla (TSLA) fell nearly 3% after the car maker said it reduced prices for certain of its Model 3 cars in China by up to 7.6%. According to Reuters, the company has already cut prices in November for its Model X and Model S cars by 12% - 26%.

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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