Mid-Day ETF Update: ETFs, Stocks in Negative Territory on Decline in Pending Home Sales; Weakness in Crude Weighs

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

SPDR S&P 500 ( SPY ): -0.3%

iShares MSCI Emerging Index Fund ( EEM ): -1.2%

3X Long Natural Gas ETN Velocityshares ( UGAZ ): -16.6%

3X Long Crude ETN Velocityshares ( UWTI ): --8.2%

United States Oil Fund ( USO ): -2.9%

Broad Market Indicators

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

U.S. stocks were weaker at the session's half, following the National Association of Realtors' report that November pending home sales declined 0.9%, missing forecasts for an increase of 0.5%. Analysts had expected the indicator, which measures signed contracts and not closings, to improve due to warmer-than-normal weather in the U.S.

Declining oil prices were also weighing on stock indexes, as U.S. crude supplies rose last week, according to estimates from American Petroleum Institute.

Power Play: Energy

Energy funds were lower, leading the other sectors into the negative territory. Dow Jones U.S. Energy Fund (IYE) was down 1% and Energy Select Sector SPDR (XLE) was down 0.9%.

Lilis Energy (LLEX) was up 77.7% after the oil and gas exploration and production company said it agreed to merge with Brushy Resources, a San Antonio-based oil and gas company with primary operations in the Permian Basin in West Texas. Lillis said it will issue shares representing approximately 50% of the post-closing, common stock outstanding, and assuming and refinancing $13.6 million in debt. In addition, at the closing, Brushy will divest certain of its assets in South Texas to its subordinated lender in exchange for the extinguishment of $20.5 million in subordinated debt, payment of $500,000 in cash, and the issuance of a $1 million subordinated note. The company said that as a result of the deal, Lilis is acquiring approximately 3,500 core net acres in the prolific Permian Southern Delaware Basin in the Crittendon Field of Winkler County, Texas, with over 500 potential drilling locations. Total net daily production on the assets being acquired is approximately 460 barrels of oil equivalent, with approximately 47% oil. Lilis expects the merger to close early in the second quarter of 2016.

Winners and Losers


Funds in the financial sector were were lower, in line with the broader market. Select Financial Sector SPDRs (XLF) was down 0.3%. Direxion Daily Financial Bull 3X shares (FAS) was down 1%; Direxion Daily Financial Bear 3X Shares (FAZ) was up 0.8%.

Bank of America (BAC) was down 1% after the bank said it will record an approximate $600 million write-down to net interest income and to pretax income in Q4 amid the redemption of $2 billion of trust preferred securities related to the merger with Merrill Lynch in 2009. The company said that starting in January, these securities, unlike other outstanding series of trust preferred securities, will completely phase out from regulatory capital. It said it expects to realize cash savings from lower funding costs as a result of the redemption.


Tech funds were lower, below the broader market. 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 weaker. Meanwhile, SPDR S&P International Technology Sector ETF (IPK) was flat.

Semiconductor ETFs, SPDR S&P Semiconductor (XSD) was down 0.5%, while Semiconductor Sector Index Fund (SOXX) was down 1%.

Wi-Lan (WILN) was up 3.9% after the patent licensing company said that its Collabo Innovations subsidiary entered into a license and settlement agreement with Toshiba Corporation for patents relating to image sensing technology resolving an existing litigation pending in the District of Delaware. Terms of the settlement were not disclosed. The company acquired the patent portfolio from Panasonic in 2013 and used it in electronic devices such as smartphones, tablets and cameras.


Crude was down 3.1%. United States Oil Fund ( USO ) was down 2.9%. Natural gas was down 7.3%. United States Natural Gas Fund (UNG) was down 5.6%. Gold was down 0.6% and SPDR Gold Trust (GLD) was down 0.8%. Silver was down 0.6% and iShares Silver Trust (SLV) was down 0.5%.


Consumer staples funds were in negative territory, in line with the broader market. Consumer Staples Select Sector SPDR (XLP), iShares Dow Jones US Consumer Goods (IYK), and Vanguard Consumer Staples ETF (VDC) were in the red.

Consumer discretionary and retail funds were also weaker, matching the broader market. Consumer Discretionary Select Sector SPDR (XLY), SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR) and Market Vectors Retail ETF (RTH) were lower.

Pep Boys-Manny, Moe & Jack (PBY) was down 2.9% after it said it has terminated its previously announced merger agreement with Bridgestone Retail Operations and has accepted a superior acquisition offer of $18.50 per share from Icahn Enterprises (IEP). Simultaneous with the termination of the Bridgestone agreement, Icahn Enterprises, on behalf of Pep Boys, paid Bridgestone a $39.5 million termination fee. The deal is expected to close in the first quarter of 2016.

Health Care

Health care funds were in the red, in line with the broader market. Health Care SPDR (XLV), iShares Dow Jones US Healthcare (IYH) and Vanguard Health Care ETF (VHT) were weaker. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) was down 0.3%.

NeuroMetrix, Inc. (NURO) was down 15.2% after it said it entered into a definitive agreement to sell shares of its series C convertible preferred stock and two series of warrants to a healthcare dedicated institutional investor for an aggregate gross proceeds of $13.8 million. The private offering consists of 13,800 shares of its series C convertible preferred stock at a price of $1,000 per share, and two series of warrants to purchase an aggregate of approximately 10.8 million shares of common stock at an exercise price of $2.30 per share. The company expects to use the net proceeds to redeem shares of its series B convertible preferred stock and for general corporate purposes. The offering is expected to close on or about Dec. 31, subject to customary closing conditions.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 All rights reserved. Unauthorized reproduction is strictly prohibited.

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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