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Mid-Day ETF Update: ETFs, Stocks Continue to Trade Higher as 10-Yr Yield Backs Off 3.0%

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

iShares MSCI Emerging Index Fund ( EEM ): +1.5%

SPDR S&P 500 ( SPY ): +0.6%

SPDR Select Sector Fund - Financial ( XLF ): +0.03%

PowerShares QQQ Trust, Series 1 ( QQQ ): +1.2%

VanEck Vectors Gold Miners ETF ( GDX ): -0.7%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were firmer. Actively traded PowerShares QQQ ( QQQ ) was up 1.2%.

U.S. stocks extended gains into the session's half as investors dismissed signs of inflationary pressures and soft factory output data, instead, focusing on the 10-year Treasury note yield, which backed away from the 3.0% trigger.

In economic data news, the January producer price index rose 0.4%, exceeding expectations, and initial jobless increased 7,000 to 230,000 versus forecasts for 229,000.

Industrial production was down 0.1% in January, below expectations for an increase of 0.3%. Additionally, December's healthy 0.9% gain was more than cut in half, and capacity utilization slowed for the first time in five months. reappeared at the lows.

Power Play: 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 up 0.6% and Semiconductor Sector Index Fund (SOXX) was up 1.2%.

Syntel (SYNT) rose 15.7% after the company reported Q4 net income of $0.62 per share increased from $0.57 a year ago and was affected by $0.11 due to one-time tax provisions. On an adjusted basis, the company earned $0.51 per diluted share. This compares to the Capital IQ estimate of $0.39 per share. Total revenue of $239.8 million increased from $237.9 million the same quarter last year. That beat the estimated $213.7 million. For FY18, Syntel expects earnings to be between $1.72 to $1.92 per share on revenue of $905 million to $950 million. This compares to Wall Street estimates of $1.81 in earnings on $892.1 million in revenue.

Winners and Losers

Financial

The Select Financial Sector SPDRs ( XLF ) was up 1.2%. Direxion Daily Financial Bull 3X shares (FAS) was up 2.2% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was down 2.3%.

U.S. Bancorp (USB), the parent company of the fifth-largest bank in the US, said it will pay $613 million for failing to have adequate anti-money laundering programs in place and for not filing a report on suspicious activity. The company will pay penalties assessed by the US Attorney's Office for the Southern District of New York, the Office of the Comptroller of the Currency, the Federal Reserve Board and the Financial Crimes Enforcement Network or FinCEN, it said in a statement Thursday. U.S. Bank operated an anti-money laundering, or AML, program "'on the cheap' by restricting headcount and other compliance resources and then imposed hard caps on the number of transactions subject to AML review in order to create the appearance that the program was operating properly," said Manhattan US Attorney Geoffrey Berman in a separate statement. USB shares slipped 0.2%.

Energy

Dow Jones US Energy Fund (IYE) was up 0.2% and Energy Select Sector SPDR (XLE) was up 0.1%.

SunPower (SPWR) shares fell 9% after the company reported below consensus GAAP EPS and disappointing guidance for Q1 and FY18. After the close on Wednesday, the company said Q4 sales were $658.1 million and n0n-GAAP sales were $824 million. The CapIQ mean was for $796.6 million. Non-GAAP EPS were $0.25, above forecasts for $0.09. GAAP net loss per share was $4.07, worse than expectations for a $0.40 loss. Q1 GAAP sales are seen between $280 million to $330 million and non-GAAP sales between $300 million to $350 million, below estimates for $427.6 million. FY18 sales are seen between $1.6 billion to $2.0 billion on a GAAP basis and $1.8 billion to $2.2 billion on a non-GAAP basis, below the Street's $2.41 billion. Additionally, as a result of the negative near-term impact from the solar tariff, the increased costs due to tariff imports have caused a delay in 2018 projects and made other projects uneconomical. Accordingly, the company's planned $20 million employment expansion is on hold.

Commodities

Crude was up 0.5%. United States Oil Fund (USO) was up 0.8%. Natural gas was up 0.2% while United States Natural Gas Fund (UNG) was down 0.3%.

Gold was up 1.6%. SPDR Gold Trust (GLD) was up 1.5%. Silver was up 1.4%, while iShares Silver Trust (SLV) was up 1.5%.

Health Care

Health care funds Health Care SPDR (XLV), Vanguard Health Care ETF (VHT) and iShares Dow Jones U.S. Healthcare (IYH), were firmer. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was up 0.5%

Zoetis (ZTS) rose more than 3% after the company reported Q4 adjusted diluted earnings per share of $0.69, up from $0.47 for the same period last year, and ahead of the Capital IQ consensus forecast of $0.66. Revenue for the quarter was $1.46 billion, up from $1.28 billion in the year-ago quarter, and beating the analyst forecast of $1.40 billion. For its 2018 guidance, the company said it expects full-year adjusted EPS of $2.96 to $3.10 on revenue of between $5.68 billion to $5.8 billion. The Street view is for EPS of $2.98 on revenue of $5.6 billion.

Consumer

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

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 red.

Avon Products (AVP) rose more than 8% after the cosmetics maker reported Q4 adjusted earnings of $0.12 per diluted share, compared with the prior-year period's $0.01 per diluted share. Analysts polled by Capital IQ were expecting EPS of $0.07. Revenue was $1.57 billion, practically unchanged from the same quarter last year. The Street view was for revenue of $1.6 billion.

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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