Mid-Day ETF Update: ETFs, Stocks Continue to Weaken; Market Sentiment Weighed by World Bank's Cut on Global Growth Outlook

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

SPDR S&P 500 ( SPY ): -0.31%

iShares MSCI Emerging Markets Index ( EEM ): -0.36%

iShares Russell 2000 Index ( IWM ): -0.50%

iPath S&P 500 VIX ST Futures ETN ( VXX ): +1.65%

Select Sector SPDR Fund - Financial ( XLF ): -0.72%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV continued to trade in the negative territory. Likewise, actively traded PowerShares QQQ (QQQ) was down 0.01%, but hit a new 13-year high.

U.S. stocks were weaker at session's half as market sentiment remained gloomy following the World Bank's move to cut its forecast for global growth. The World Bank projected that global economic growth will be 2.8%, from a 3.2% increase forecasted in January. It also said growth in emerging markets will likely face headwinds due to military conflicts, possible interest rate hikes and a reluctance to make policy changes in many countries.

Power Play: Health Care

Health care funds were slightly lower but were still outpacing the broader market. Health Care SPDR (XLV), iShares Dow Jones US Healthcare (IYH) and Vanguard Health Care ETF (VHT) were higher. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) was up 0.24%.

In corporate news, Northwest Biotherapeutics (NWBO) climbed 15% after the biotechnology company said in its ongoing Phase I/II clinical trial of DCVax-Direct for all types of inoperable solid tumors, all nine patients who have received four of the six planned injections are showing tumor-cell death, tumor shrinkage, substantial immune cell accumulation in their tumors and/or stabilization of their advanced cancer. In addition, biopsies in three of the nine patients show no live tumor cells in the injected tumor.

Winners and Losers


Select Financial Sector SPDRs ( XLF ) was down 0.72%, near multi-year highs. Direxion Daily Financial Bull 3X shares (FAS) was down 2.13%. Its bearish counterpart, FAZ, was up 2.15%, near record lows.

Among sector news, Credit Suisse Group (CS) was down nearly 1% after a Wall Street Journal report said the firm could become much less popular among Swiss taxpayers because it apparently intends to take a tax write off on a large portion of its $2.8 billion settlement for helping Americans evade taxes. The Journal said the bank has indicated that about $800 million of the settlement could be written off in Swiss taxes, leaving a shortfall in Switzerland's public accounts. The matter is expected to be taken up by the Swiss parliament. Stefan Hostettler, head of policy for the Social Democratic Party in Switzerland, said Swiss taxpayers had trouble understanding how a bank could be fined and then pass at least part of that cost on to taxpayers. The Journal reported that Bank of America's (BAC) proposed $12 billion mortgage settlement with the Department of Justice could similarly be reduced by the bank taking billions in tax write offs on the settlement, and that J.P Morgan (JPM) might be eligible to cut the cost of its own mortgage settlement with the DOJ by $7 billion in tax write offs, also underwritten by the U.S. taxpayer. BAC shares are down 1.7%.


Technology Select Sector SPDR ETF (XLK), iShares Dow Jones US Technology ETF (IYW) and iShares S&P North American Technology-Software Index (IGV) was weaker. iShares S&P North American Technology ETF (IGM) slipped lower but earlier hit multi-year highs. SPDR S&P International Technology Sector ETF (IPK) was flat.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) and Semiconductor Sector Index Fund (SOXX) were higher and hit new record highs.

In corporate news, Montage Technology Group Ltd. (MONT) was up 9% after agreeing to be bought by a Chinese state-owned company. The Shanghai-based fabless chipmaker will be acquired for $22.60 a share by Shanghai Pudong Science and Technology Investment Co., according to a statement from the companies.

The offer price has a premium of 14% to Montage's closing price of $19.78 on Tuesday. The merger values Montage's equity at about $693 million on a fully diluted basis, the statement said. The deal needs to be approved by Montage shareholders and government authorities. Shanghai Pudong is wholly owned by the Pudong New Area government of Shanghai.


Dow Jones U.S. Energy Fund (IYE) was up 0.31% and Energy Select Sector SPDR (XLE) was up 0.28% - near record highs.

Among stocks, Baytex Energy (BTE, BTE.TO) shares hit a fresh 1.5-year high Wednesday after the petroleum and natural-gas explorer said it completed its acquisition of Aurora Oil & Gas (AEF.TO) for 4.20 Australian dollars per share and confirmed a 9% boost to its dividend concurrent with the closing. The consideration of A$4.20 for each Aurora share held as at June 3, 2014 will be paid within the next five business days, the company said. The monthly dividend, meanwhile, will increase to $0.24 from $0.22 per share, payable July 15 to shareholders of record on June 30.


Crude was down 0.02%; United States Oil Fund (USO) was down 0.16%. Natural gas was up 0.29% and United States Natural Gas Fund (UNG) was up 0.10%.

Gold was down 0.10% and silver was up 0.01%. Among rare metal funds, SPDR Gold Trust (GLD) was down 0.07% and iShares Silver Trust (SLV) was down 0.14%.


Consumer Staples Select Sector SPDR (XLP), iShares Dow Jones US Consumer Goods (IYK), and Vanguard Consumer Staples ETF (VDC) slipped lower but were still near their record highs.

Retail ETFs SPDR S&P Retail (XRT), Market Vectors Retail ETF (RTH), and PowerShares Dynamic Retail (PMR) were also weaker.

Among stocks, Ulta Beauty (ULTA) rose 14% after reporting Q1 sales of $713.8 million, up 22.5% from $582.7 million recorded in Q1 last year and ahead of the analyst consensus of $699.7 million on Capital IQ. Comp store sales increased 8.7% for the quarter. EPS was up 18.5% to $0.77, three cents ahead of expectations. For Q2, the company expects sales of $706 to $717 million, vs. Street estimates of $703 million. EPS is seen at $0.78 to $0.83, vs. expectations of $0.82 per share. The company reiterated its prior FY 2014 guidance.

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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