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Mid-Day ETF Update: ETFs, Stocks Remain in Positive Territory as Street Shrugs Off Lower-than-Expected Q4 GDP

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

iShares MSCI Emerging Index Fund ( EEM ): +1%

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

iShares Inc iShares MSCI Brazil ETF ( EWZ ): +0.6%

iPath S&P 500 VIX Short Term Futures ETN ( VXX ): -0.1%

ProShares Trust Ultra VIX Short Term Futures ETF ( UVXY ): -1.2%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were higher. Actively traded PowerShares QQQ (QQQ) was up 0.8%.

U.S. stocks were extending gains at session's half despite a lower-than-expected estimate of Q4 economic growth. Gains in the health care, technology and energy sectors helped offset declines among utilities and real estate stocks.

The economy grew by an estimated 2.6% on an annualized basis in the final quarter of 2017, down from a 3.2% annualized growth rate in Q3, according to data published by the Commerce Department. This was below analysts' expectations for 3.0% growth.

The result comes the same day President Donald Trump delivered an address at the World Economic Forum in Davos, Switzerland in which he urged businesses to invest in the U.S., saying his America first policy "does not mean America alone".

In other economic data news, durable goods orders for December accelerated by 2.9%, versus the consensus for 0.6%, compared to 1.3% in the prior month. Excluding contracts for transportation equipment, orders rose a smaller 0.6%. Meanwhile, the U.S. International trade in goods showed a deficit of $71.6 billion. The consensus was for a deficit of $69.0 billion, narrower than $69.7 billion in November. Finally, the advance report for wholesale inventories for December showed an increase of 0.2%. Analysts were looking for advance wholesale inventories of 0.3%, down from 0.7% in the prior month.

Power Play: 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 green.

Colgate-Palmolive (CL) shares fell nearly 6% after the consumer goods manufacturer reported Q4 adjusted earnings of $0.75, unchanged a year ago. Analysts polled by CapIQ expected adjusted earnings of $0.75 per share. On a GAAP basis the company reported EPS of $0.37, down from $0.68 in the same period a year ago. The company said it took a Q4 provisional charge of $275 million, or $0.31 per share, related to tax reform. It also had a $0.07 per share charge related to its global growth and efficiency program. Total revenue of $3.89 billion was up from $3.72 billion in the same period a year ago, missing the $3.92 billion consensus estimate.

Winners and Losers

Financial

Select Financial Sector SPDRs (XLF) was up 0.4%, Direxion Daily Financial Bull 3X shares (FAS) was up 0.7% and its bearish counterpart FAZ was down 0.5%.

Arthur J. Gallagher & Co (AJG) rose 6.4% after the company said it has acquired Market Financial Group Ltd. and its affiliate Austin Consulting Group Inc. Terms of the deal weren't disclosed. Late Thursday, the provider of insurance brokerage and consulting services reported Q4 total revenue of $1.60 billion compared with $1.39 billion in the year-ago period. Analysts polled by Capital IQ were expecting revenue of $1.48 billion. Net income for the quarter was $0.82 per share, compared with $0.66 per share in the year-ago period. Analysts were expecting EPS of $0.74.

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 1.5%, while Semiconductor Sector Index Fund (SOXX) was up 2%.

Maxim Integrated Products (MXIM) rose 5.5% after the company reported late Thursday Q2 EPS, excluding special items, of $0.65, as expected in a Capital IQ poll, up from $0.46 a year earlier. Revenue rose to $622.6 million from $551.0 million a year ago, and coming in ahead of the $620.5 million estimate. For Q3, the firm expects revenue of $620 million to $660 million and EPS excluding special items of $0.66 to $0.72. That compared with market expectations of $0.63 for EPS on revenue of $602.3 million for the quarter. The company also said it has raised its quarterly dividend 17% to $0.42 per share, payable on March 15, 2018, to stockholders of record on March 1, 2018.

Energy

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

Holly Energy Partners (HEP) rose 2% after the firm said it has increased its Q4 dividend to $0.65 per unit from $0.6075 a year ago. The dividend will be paid Feb. 14 to shareholders of record as of Feb. 5. In 2018 the company said it expects to increase the quarterly distribution by $0.005 per unit, resulting in an annual distribution growth rate of 4%. Holly Energy meanwhile said it has agreed to a private placement with funds managed by Tortoise Capital Advisors for approximately $110 million of common equity. Proceeds will be used to repay debt associated with its acquisition of the Frontier and SLC pipelines, which closed in October.

Commodities

Crude was up 0.9%. United States Oil Fund (USO) was up 1.4%. Natural gas was up 2.7% while United States Natural Gas Fund (UNG) was up 2.8%.

Gold was down 0.9%. SPDR Gold Trust (GLD) was up 0.3%. Silver was down 1.3%, while iShares Silver Trust (SLV) was up 0.8%.

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 0.8%.

AbbVie (ABBV) gained 11% after the company reported Q4 adjusted net profit rose to $1.48 per share, from $1.20 per share in the prior year period and came in higher than the $1.43 per share Street estimate provided by Capital IQ. Net revenue was $7.74 billion, up from $6.80 billion reported for the same period last year and higher than the $7.53 billion Street estimate. For 2018, the company now expects adjusted earnings to range from $7.33 to $7.43 per share, up from previously $6.37 to $6.57 per share. The Street consensus calls for adjusted EPS of $6.77.

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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