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Mid-Day ETF Update: ETFs, Stocks Extend Gains on Tentative Budget Deal, Optimism for US-China Trade Talks

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

SPDR S&P 500 ( SPY ): +1.2%

iShares MSCI Emerging Index Fund ( EEM ): +0.9%

SPDR Select Sector Fund - Financial ( XLF ): +1.6%

ProShares UltraPro Short QQQ ( SQQQ ): -3.9%

Invesco QQQ Trust, Series 1 ( QQQ ): +1.3%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were higher. Actively traded PowerShares QQQ ( QQQ ) was up 1.3%.

US stocks continued to trade in positive territory at the session's half, as investors lauded lawmakers' tentative deal to avert another government shutdown as well as positive signals from ongoing trade discussions between the US and China.

In economic news, the January National Federation of Independent Business optimism index fell 3.1% to 101.2 after sliding 0.4% to 104.4 in December.

The December Job Openings and Labor Turnover Survey showed openings rose 169,000 to 7.335 million against forecast for 6.900 million.

Optimism surrounding a potential US-China trade deal also crossed the Atlantic with most European sectors in positive territory and the automotive sector leading gains. In the UK, British Prime Minister Theresa May updated lawmakers on the latest Brexit developments saying she needed some time to complete the process with the European Union.

Power Play: Health Care

Health Care SPDR (XLV) was up 1% and other health care funds including Vanguard Health Care ETF (VHT) and iShares Dow Jones U.S. Healthcare (IYH) were higher. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was up 0.7%

ADMA Biologics Inc. (ADMA) rose nearly 17% after it said it has entered into a three-year senior secured term loan facility with Perceptive Advisors for up to $72.5 million under two funding tranches, with the first $45 million already disbursed and earmarked for reimbursing a senior secured credit facility of $30 million in full plus associated costs and fees. In a statement released Tuesday, the pharmaceutical company focused on plasma-derived biologics said the second tranche of $27.5 million is predicated on the US Food and Drug Administration's approval of either the BIVIGAM Prior Approval Supplement or the RI-002 Biologics License Application, and is available through June 30, 2020, with a minimum draw down of $10 million. Under the terms of the agreement, interest was set at 7.5% plus the greater of one-month London interbank offered rate, and 3.5%, with ADMA issuing a warrant to Perceptive priced at a 115% premium to purchase 1.36 million shares.

Winners and Losers

Financial

The Select Financial Sector SPDRs ( XLF ) was up 1.6%. Direxion Daily Financial Bull 3X shares (FAS) was up 3.1% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was down 3.0%.

Ellie Mae (ELLI) rose almost 21% after it said that it will be acquired by private equity firm Thoma Bravo in an all-cash transaction valued at $3.7 billion. Under the terms of the agreement, Ellie Mae shareholders will receive $99 in cash for each share they own. The price is a 47% premium to the 30-day average closing price and a 49% premium to the 60-day average price on Feb. 1. Chief Executive Jonathan Corr said in a statement that Ellie Mae's goal since its founding more than 20 years ago has been to "automate everything automatable" for the industry.

Technology

Technology Select Sector SPDR ETF (XLK) was up 1.2%, while tech funds iShares Dow Jones US Technology ETF (IYW) and iShares S&P North American Technology ETF (IGM) were in the green.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) was up 1.6% and Semiconductor Sector Index Fund (SOXX) was up 2%.

RADCOM Ltd. (RDCM) fell some 7% after i t report ed a Q4 adjusted loss per share of $0.27 after a profit of $0.21 in the year-earlier period, missing the two-analyst estimate of a loss of $0.26, according to Capital IQ. Revenue tumbled 62% to $3.99 million from $10.63 million, slightly ahead of the $3.77 million mean estimate compiled by CapIQ.

Energy

Dow Jones US Energy Fund (IYE) was up 1.5% and Energy Select Sector SPDR (XLE) was up 1.4%.

Royal Dutch Shell (RDS.A), Eni (E), BP (BP) and Exxon Mobil (XOM) secured concessions in Egypt's lucrative energy exploration tender, Reuters reported. The tender, which was issued by Egyptian Natural Gas Holding Corp., was the largest in its history and marked the first time Exxon participated in an exploration project in Egypt, according to the report. Shell won the most number of concessions, three for oil and two for gas. Seven oil exploration concessions in which 39 wells will be drilled were awarded to Neptune Energy, Merlon, Shell, Eni and state-controlled Egyptian General Petroleum Corp. Five gas exploration concessions, in which 20 wells will be drilled, were awarded to Shell, Exxon, Petronas, BP, DEA and Eni, Reuters said. RDS.A ADRs rose more than 1%, E shares rose 1%, BP ADRs rose 0.8% and XOM shares rose more than 1%.

Commodities

Crude was up 2%. United States Oil Fund (USO) was up 2.2%. Natural gas up 1.7% while United States Natural Gas Fund (UNG) was up 1.1%.

Gold was up 0.1%. SPDR Gold Trust (GLD) was up 0.2%. Silver was down 0.1%, while iShares Silver Trust (SLV) was up 0.1%.

Consumer

Consumer Staples Select Sector SPDR (XLP) was up 0.8% and Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones U.S. Consumer Goods (IYK) were higher.

Consumer Discretionary Select Sector SPDR (XLY) was up 1.5% and retail funds SPDR S&P Retail (XRT) and Market Vectors Retail ETF (RTH) were firmer.

JAB Holding Co. is bidding to boost its stake in luxury goods company Coty (COTY) to as much as 60%, offering a premium to investors in an offer that needs to be approved by the board's independent directors. The investment firm, through JAB Cosmetics, is seeking to acquire up to 150 million additional shares of Coty Class A stock at $11.65 per share, in cash. The offer is a 21% premium to Monday's closing price, 38% over the 90-day volume weighted average price and 51% above the 30-day average, according to a statement from JAB. "We at JAB have been investors in the company for almost three decades and expect to remain so," Chairman Peter Harf said in a letter to Coty's board Tuesday. "We believe that the company has the potential to address its challenges and prosper over the long-term." Conditions on the offer include that at least 50 million shares are tendered. That would give JAB almost 351 million shares, or 47% of the issued and outstanding stock. If all 150 million shares are purchased in the offer, JAB would own 451 million shares, or about 60% of the outstanding stock. Other conditions include approval from the independent board directors and their recommendation to shareholders, JAB said. COTY shares rose more than 14%.

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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