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Mid-Day ETF Update: ETFs, Stocks Continue Rally as Dow Clears 26,000

Active broad-market exchange-traded funds in Tuesday's regular session:

iShares MSCI Emerging Index Fund ( EEM ): +0.3%

SPDR S&P 500 ( SPY ): +0.2%

SPDR Select Sector Fund - Financial ( XLF ): +0.3%

iPath S&P 500 VIX Short Term Futures ETN ( VXX ): +2.8%

ProShares Trust Ultra VIX Short Term Futures ETF ( UVXY ): +5.9%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were higher. Actively traded PowerShares QQQ (QQQ) was up 0.4%.

U.S. stocks extended their rally into the session's half, as the Dow Industrials hit the 26,000 milestone, but has retreated to just below that level. Gains were sparked by upbeat quarterly results from Citigroup (C) and UnitedHealthcare (UNH).

Meanwhile, the Empire State manufacturing survey fell to 17.7 in January, versus expectations for the survey to rise to 18.6. The December reading was revised to 19.6 from the initially reported level of 18.0.

Power Play: Financial

Select Financial Sector SPDRs ( XLF ) was up 0.3%, Direxion Daily Financial Bull 3X shares (FAS) was up 1.4% and its bearish counterpart FAZ was down 1.5%.

Citigroup (C ) shares were up 0.6% after the company reported Q4 adjusted earnings of $1.28 per share, up from $1.14 a year ago. The company said its results include a combined net benefit of roughly $0.08 per share related to discrete items that resulted in a lower-than-expected tax rate, as well as a one-time loss in discontinued operations. Analysts had expected adjusted earnings of $1.19 per share. On a reported basis, the company had a loss of $18.3 billion or $7.15 per share compared to a $3.57 billion or $1.14 profit a year ago. A charge of $22 billion related to tax reform weighed on the reported results. This charge is comprised of $19 billion related to the re-measurement of Citi's deferred tax assets arising from a lower US corporate tax rate and shift to a territorial tax regime, and $3 billion related to the deemed repatriation of unremitted earnings of foreign subsidiaries. Total revenue was $17.26 billion, up 1% from a year ago, and beat the analyst consensus of $17.23 billion.

Winners and Losers

Technology

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 firmer.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) was down 0.04%, while Semiconductor Sector Index Fund (SOXX) was up 0.5%.

Qualcomm (QCOM) shares rose 4% after the chip maker offered investors a projection for earnings in fiscal 2019 that's well above Wall Street's expectations as it pledged to create stockholder value and urged the rejection of nominees for its board by Broadcom (AVGO). The chipmaker, which was the target of a takeover attempt by Broadcom last year, is "firmly committed to delivering" fiscal 2019 non-GAAP earnings per share of $6.75 to $7.50, well ahead of the $4.02 average estimate from analysts polled by Capital IQ. Qualcomm sees revenue for the next fiscal year of $35 billion to $37 billion, according to an investor presentation also released Tuesday.

Energy

Dow Jones US Energy Fund (IYE) was up 0.7% and Energy Select Sector SPDR (XLE) was up 0.8%.

BP (BP) ADRs fell some 3% after the company said it expects to take a post-tax non-operating charge of around $1.7 billion in its fourth quarter 2017 results as a result of the closing of its claims facility related to the Deepwater Horizon oil spill disaster in 2010. The company said that a Court Supervised Settlement Program (CSSP) established as part of the Deepwater Horizon class action settlement is winding down and that the charge results for the remaining Business Economic Loss (BEL) and other claims associated with the CSSP. It said that the cash impact is expected to be spread over a multi-year period. The charge results primarily from "significantly higher claims determinations issued by the CSSP in the fourth quarter", the company said in a statement provided to MT Newswires. It added that the charge was also from the "continuing effect of the Fifth Circuit's adverse May 2017 ruling on the matching of revenues with expenses when evaluating BEL claims". BP also revised the expected level of cash payments related to the Deepwater Horizon incident in 2018 to be around $3 billion compared to the company's third quarter estimate of just over $2 billion.

Commodities

Crude was up 0.6%. United States Oil Fund (USO) was up 0.9%. Natural gas was up 1.5% while United States Natural Gas Fund (UNG) was up 3.3%.

Gold was up 0.7%. SPDR Gold Trust (GLD) was up 0.7%. Silver was up 0.8%, while iShares Silver Trust (SLV) was up 0.7%.

Consumer

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

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 in the green.

bebe stores (BEBE) jumped more than 45% after B. Riley Financial (RILY) a diversified financial services company, made an equity investment in bebe stores to create a tax efficient platform that's intended to be leveraged for investments in profitable businesses. B. Riley said it has converted its existing loan to bebe into shares of bebe common stock and has acquired additional shares, resulting in B. Riley's ownership of 29% of bebe's shares outstanding. The company said it expects bebe to generate dividends through the acquisition of cash-generating companies and the utilization of its net operating losses.

Health Care

Health care funds Health Care SPDR (XLV), Vanguard Health Care ETF (VHT) and iShares Dow Jones U.S. Healthcare (IYH), were higher. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was down 3%.

Eiger BioPharmaceuticals (EIGR) shares fell 48% after the company said a phase 2 study of ubenimex in pulmonary arterial hypertension missed the endpoints. The company said the study demonstrated no improvement overall or in key subgroups for both the primary efficacy endpoint of pulmonary vascular resistance and the secondary endpoint of 6-minute walk distance. Eiger said it will continue to develop ubenimex for lymphedema based on its distinct mechanism of action impacting lymphangiogenesis. The company is developing ubenimex for lymphedema in the Ultra study, a multi-center, international, phase 2 study in patients with primary and secondary lymphedema that is fully enrolled with data expected in the second half of 2018.

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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