ETF Preview: ETFs, Futures Slip Lower Ahead of the Open After Fed Decision

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

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

iShares MSCI Emerging Index Fund ( EEM ): +1.2%

SPDR Select Sector Fund - Financial ( XLF ): -0.7%

Invesco QQQ Trust, Series 1 ( QQQ ): -0.1%

iPath S&P 500 VIX Short-Term Futures ETN ( VXX ): +2.3%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were higher. Actively traded PowerShares QQQ ( QQQ ) was down 0.1%.

US stock futures were edging lower tracking European and Asian bourses, which were weighed down by rate-hike announcements from the US Federal Reserve as well as from the central banks of several other countries.

Fed Chairman Jerome Powell said Wednesday the Federal Reserve will be raising its benchmark rate a quarter-point but reassured markets that the interest rate hikes for the coming year will be gradual and based on economic conditions. However, financial markets' concerns were not assuaged, as this was the fourth US rate hike of 2018.

In news abroad, the Hong Kong Monetary Authority raised its base rate by 25 basis points to 2.75%, in line with expectations. Meanwhile, the Bank of England voted to keep the key rate at 0.75% and the purchase program at GBP435 billion.

In economic data news, weekly jobless claims totaled 214,000, versus forecasts for 220,000 and compared with the unrevised prior week count of 206,000. Continuing claims increased to 1.688 million from an unrevised count of 1.661 million.

The Philadelphia Fed Business Outlook Survey declined to 9.4 in December from an unrevised 12.9 in November. Forecasts were for a reading of 16.5.

Looking ahead, data for leading indicators will be released at 10 am ET, with expectations for a reading to show a flat 0.0%.

Power Play: Health Care

Health Care SPDR (XLV) was down 0.1% 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 0.2%.

DBV Technologies S.A (DBVT) shares fell nearly 60% and were on track to trade below its regular session 52-week low. The company said after meetings with the FDA that it has decided to voluntarily withdraw its Biologics License Application (BLA) for Viaskin Peanut in children four to 11 years of age because it believed the application lacked sufficient detail regarding data on manufacturing procedures and quality controls. It is currently working closely with the agency to resubmit the application for Viaskin Peanut as quickly as possible.

Winners and Losers


The Select Financial Sector SPDRs ( XLF ) was down 0.4% in pre-market trade. Direxion Daily Financial Bull 3X shares (FAS) was down 0.5% and its bearish counterpart Direxion Daily Financial Bear 3X Shares (FAZ) was flat.

Yintech Investment Holdings (YIN) said that its Forthright Financial Holdings unit has acquired Hong Kong-based OTS Capital Management for an undisclosed sum. Further details of the transaction were not disclosed, but Yintech noted that the acquisition serves as the next step in its strategy to diversify its securities products and services offerings.


Technology Select Sector SPDR ETF (XLK) was down 0.4% 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.

BlackBerry (BB) rose nearly 6% after BMO Capital Markets said the company could report declines in revenue when it releases its fiscal third-quarter results early Thursday, but the growing software and services segment may see revenue increase 4% as the former smart-phone leader continues to shift its focus. Revenue could fall almost 7% year-on-year to $219 million, BMO analyst Tim Long said in a note on Wednesday. His view is better than the consensus for a decrease to $213 million. Long sees non-GAAP EPS of just a penny, while the Street's view is for $0.02. A year ago, BlackBerry reported non-GAAP revenue of $235 million and EPS of $0.03. BMO is projecting a fiscal third quarter gross margin of 75.1%, higher than the consensus view for 74.3% and the year ago 74.3%.


Dow Jones US Energy Fund (IYE) was inactive and Energy Select Sector SPDR (XLE) was down 1.4% in pre-market trade.

NGL Energy Partners (NGL) said it has signed a definitive deal to sell its South Pecos water disposal assets in Texas to a unit of WaterBridge Resources for $238.8 million in cash, plus additional consideration subject to meeting certain criteria. The assets include nine saltwater disposal facilities and additional disposal permits in southern Reeves and Ward counties, along with disposal agreements and other contracts related to the facilities. NGL said the sale will allow the company to focus more on its core area of growth and reduce overall leverage. Sale proceeds will be used to reduce debt, enhance liquidity and improve compliance leverage to under 3.0x by fiscal year-end.


Crude was down 3%. United States Oil Fund (USO) was down 1.9%. Natural gas was up 2.8% while the United States Natural Gas Fund (UNG) was up 4.7%.

Gold was up 0.1%. SPDR Gold Trust (GLD) was up 1%. Silver was down 0.1%, while iShares Silver Trust (SLV) was up 1.2%


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) was down 0.2% and retail funds SPDR S&P Retail (XRT) and Market Vectors Retail ETF (RTH) were quiet in pre-market trade.

Rite Aid (RAD) rose nearly 10% after it reported adjusted EPS was flat at $0.01 in Q3 from a year earlier, but was better than analysts' estimates of an adjusted loss of $0.01 per share in a Capital IQ poll. Revenue rose to $5.45 billion from $5.35 billion a year ago, in line with consensus. The company said it has narrowed its fiscal 2019 guidance, expecting revenue of $21.8 billion to $21.95 billion with same store sales growth of 0.5% to 1.0%, and adjusted net loss of $0.03 to $0.01 per share. The Street view is for net loss of $0.00 per share on revenue of $21.79 billion. Its previous 2019 guidance was for revenue of $21.7 billion to $22.1 billion, with same-store sales growth of flat to 1.0%, and adjusted net loss of $0.03 to earnings of $0.01.

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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