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EEM

Mid-Day ETF Update: ETFs Mixed, Stocks Go Positive As Bernanke Allays Fears of Another Recession, Raises Prospect of QE3

Active broad-market exchange-traded funds at mid-day:

SPDR S&P 500 ( SPY ): +0.9%

Financial Select Sector SPDR ( XLF ): -0.1%

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

iShares Russell 2000 Index ( IWM ): +1.1%

PowerShares QQQ Trust, Series 1 ( QQQ ): +1.5%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM, IVV and others, are mixed. Actively traded PowerShares QQQ ( QQQ ) is up 1.5%.

U.S. stocks have recouped earlier losses and are now trading higher following comments from Fed chairman Ben Bernanke in his second day testifying before the Senate Banking Committee. Bernanke allayed fears of a double-dip, saying that the central bank was ready to inject more stimulus into the economy, but was in no rush to do so, as he does not expect the economy to slip back into a recession.

Winners and Losers

Financial -

Select Financial Sector SPDRs ( XLF ) is down 0.1%. Direxion Daily Financial Bull 3X shares (FAS) is down 0.4%. Its bearish counterpart, FAZ, is up 0.5%.

Actives in the sector are mostly lower: Bank of America (BAC), down 2.2%; Goldman Sachs (GS), down 0.86%; Morgan Stanley (MS), down 1.5%; and Citigroup (C), down 0.1%.

Flagstar Bancorp (FBC) has turned negative after earlier hitting a day high $1.09. The company reported that it has returned to profitability in Q2, with earnings of $0.15 per share, above the single analyst estimate of $0.02, according to Capital IQ. In the prior quarter, the bank posted a loss of $0.02 per share while in the same quarter last year, it posted $0.14 loss per share.

U.S. Bancorp (USB) is up near year highs after it reported Q2 earnings of $0.71 per share, versus the Capital IQ consensus of $0.70. Total net revenue on a taxable-equivalent basis was $5.07 bln, versus the analyst estimate of $4.98 bln. In the same period last year, the bank reported EPS of $0.60 on $4.69 bln.

Bank of America (BAC) posted FQ1 EPS of $0.19, topping estimates for $0.14. Revenue for the quarter came in at $22.2 billion, just short of the $22.87 billion consensus.

Technology -

Tech actives: Apple (AAPL), turns negative; Microsoft (MSFT), up 2.2%; Intel (INTC), up 3.9%; Google (GOOG), up 1%; Cisco (CSCO), up 2.8%; and Yahoo (YHOO), up 0.32%.

A.O. Smith (AOS) hit year highs after it posted Q2 EPS of $0.75, comfortably beating estimates for $0.67. Revenue for the quarter came in at $484.2 million, ahead of the $475.25 million consensus. The company says it now sees FY2012 EPS of $2.80-$2.90, versus prior guidance of $2.75-$2.90 and the consensus of $2.88.

VMware (VMW) continues to trade higher, now up near 12% after it reported in yesterday's after hours session preliminary Q2 revenue of about $1.123 bln, ahead of the analyst consensus of $1.113 bln on Capital IQ. For the full year, the company expects revenue to be between $4.54 bln and $4.635 bln, vs. expectations of $4.58 bln. VMware also announced that Paul Maritz will be succeeded in the post as Chief Executive Officer of VMware, effective September 1, 2012, by Pat Gelsinger, currently president and chief operating officer, EMC Information Infrastructure Products.

ETFs in the space are gapping higher: iShares Dow Jones US Technology ETF (IYW), up 2.1%; iShares S&P North American Technology ETF (IGM), up 2.4%; iShares S&P North American Technology-Software Index (IGV), up 2.8%; and Technology Select Sector SPDR ETF (XLK) is up 1.8%.

SPDR S&P Semiconductor (XSD) is up 4.1%; Semiconductor Sector Index Fund (SOXX), up 3.6%.

SPDR S&P International Technology Sector ETF (IPK) is down near 1%.

Energy -

Dow Jones U.S. Energy Fund (IYE) is up 0.7%; Energy Select Sector SPDR (XLE) is up 0.7%.

Kosmos Energy's (KOS) Wawa-1 exploration well, drilled in the Deepwater Tano Block offshore Ghana, has intersected oil and gas-condensate in a Turonian-aged turbidite channel system. The Wawa-1 well encountered 20 meters (65 feet) of gas-condensate pay and 13 meters (42 feet) of oil pay in turbidite sands. Fluid samples indicate the oil to be good quality, between 38 and 44 degrees API. Shares are up 3.2%.

Commodities -

Crude was up around 0.4% while natural gas was up 4%. United States Oil Fund (USO) is up 0.8% while United States Natural Gas Fund (UNG) is up more than 5%.

Gold was down around 0.82%; likewise, silver was down near 0.75%. Among rare metal funds, SPDR Gold Trust (GLD) is down 0.6% while iShares Silver Trust (SLV) is around the same level.

Consumer -

ETFs in the space are mostly higher: Consumer Staples Select Sector SPDR (XLP), up 0.03% near year highs; iShares Dow Jones US Consumer Goods (IYK), up 0.4%; and Vanguard Consumer Staples ETF (VDC), up 0.04% near year highs.

SPDR S&P Retail (XRT) was up around 1.5%; PowerShares Dynamic Retail (PMR), was slightly lower; and Market Vectors Retail ETF (RTH) has hit year highs.

Stanley Black & Decker (SWK) is up 5.5%, reversing earlier losses of some 3%, after it reported Q2 earnings of $1.32 per share, ex one-time items, compared with the prior-year period's $1.46 per share. Revenues were $2.81 bln, up 8.1% from $2.6 bln in the same quarter last year. Analysts polled by Capital IQ were expecting EPS of $1.53 on revenues of $2.91 bln. The company expects FY12 EPS of $5.40 - $5.65, down from the previous outlook of $5.75 - $6.00. Analysts are looking for $5.78 in EPS. It reaffirms its guidance that organic net sales should increase 1% - 2% from a 2011 pro forma revenue base of $11 bln.

Sally Beauty Holdings, Inc. (SBH) is down 6.8% after announcing the underwritten public offering of 23,111,527 shares of its common stock held by investment funds associated with Clayton, Dubilier & Rice, LLC (the CDR Investors) pursuant to the company's shelf registration statement filed with the Securities and Exchange Commission. It is expected that the CDR Investors will no longer hold any shares of common stock of the company after giving effect to the offering.

Separately, Sally Beauty issued preliminary Q3 sales of about $887 mln and adjusted EPS of $0.38 per share. The analyst consensus is $900 mln in sales and earnings of $0.37, according to Capital IQ.

Power Play -

Healthcare -

ETFs have traded higher throughout the session and most have hit new year highs:

VIVUS (VVUS) is up 11% at $29.35, but well off a new year high $31.21 hit earlier following its pre-market halt. Earlier, the company announced that the U.S. Food and Drug (FDA) has approved Qsymia as an adjunct to a reduced-calorie diet and increased physical activity for chronic weight management in overweight adult patients, or patients with an initial body mass index of 30 or greater, or 27 or greater with at least one weight-related comorbidity, such as hypertension, type 2 diabetes mellitus or high cholesterol.

Abbott Laboratories (ABT) is down 0.6% after earlier hitting year highs. It reported Q2 earnings of $1.23 per share, ex one-time items, versus the Capital IQ consensus of $1.22. Revenues were $9.81 bln, versus the analyst estimate of $9.84 bln. The company reaffirms its guidance for FY12, and continues to see EPS of $5.00 - $5.10, excluding non-recurring items, in line with the analyst estimate of $5.04.

St. Jude Medical (STJ) is down more than 4% after it reported Q2 EPS of $0.88, beating estimates by a penny. Revenue for the quarter came in at $1.4 billion, in-line with expectations.

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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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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