Mid-Day ETF Update: ETFs, Stocks Trims Gains as Geopolitical Tensions Erode Optimism for US-China Trade Talks

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

SPDR S&P 500 ( SPY ): +0.1%

iShares MSCI Emerging Index Fund ( EEM ): -0.1%

SPDR Select Sector Fund - Financial ( XLF ): -0.04%

iShares China Large-Cap ETF ( FXI ): +0.5%

Invesco QQQ Trust, Series 1 ( QQQ ): +0.04%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were higher. Actively traded PowerShares QQQ ( QQQ ) was up 0.04%.

US stocks trimmed earlier gains but were still in positive territory at session's half, as the resumption in US/China trade talks were beginning to dissolve and heightened geopolitical tensions between Washington and Beijing coupled with another possible government shutdown weighed on investor confidence.

The uptrade slowed as naval maneuvers in the South China Sea rekindled geopolitical tensions and raised concerns the US and China won't be able to hammer out a deal before another tranche of tariffs against Chinese exports take effect March 1. With the looming threat of another shutdown, the major averages trimmed early gains.

There are no economic data due for release.

Power Play: Health Care

Health Care SPDR (XLV) was down 0.2% and other health care funds including Vanguard Health Care ETF (VHT) and iShares Dow Jones U.S. Healthcare (IYH) were lower. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was up 0.3%

Alphatec (ATEC) said on Feb. 6 the US District Court for the Southern District of California granted a stay in the patent litigation proceedings between the company and NuVasive (NUVA), and also vacated the Dec. 9 trial date. The stay, which both ATEC and NuVasive have agreed to, suspends active litigation in the patent suit while the US Patent and Trademark Office considers challenges recently filed by ATEC to invalidate certain NuVasive patents covering its CoRoent lateral implants. ATEC said it anticipates that the stay of proceedings to remain in effect until at least July 2019, the expected date that the Patent Office will decide whether it will institute a full review of the challenged NuVasive implant patents. NuVasive initially filed a lawsuit against ATEC in February 2018 alleging various infringement claims against ATEC's lateral surgery procedure. ATEC shares rose 7.5% while NUVA shares rose more than 15%. NUVA also benefited from reports Smith & Nephew (SNN) was eying the company.

Winners and Losers


The Select Financial Sector SPDRs ( XLF ) was down 0.02%. Direxion Daily Financial Bull 3X shares (FAS) was up 0.4% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was down 0.4%.

County Bancorp (ICBK) rose nearly 3% after the firm said it earned a profit of $0.40 per share in Q4, up from $0.30 per share in the same quarter last year, but below the Capital IQ consensus estimate of $0.52. The Manitowoc, Wisconsin-based bank said net interest income plus total non-interest income increased to $13 million from $12.2 million and beat the estimated $12.7 million. With challenges in the dairy industry and a flattening yield curve, the company is anticipating "another challenging year on the credit side with our classified assets continuing to increase," CEO Tim Schneider said in a statement. "We still believe that our classified asset levels are protected overall by the use of Farm Service Agency guarantees on many of our agricultural credits."


Technology Select Sector SPDR ETF (XLK) was up 0.2%, 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 0.8% and Semiconductor Sector Index Fund (SOXX) was up 0.7%.

Comtech Telecommunications (CMTL) fell marginally after the company reported its Command & Control Technologies group received $11.9 million in orders during Q2 of fiscal 2019 from a federal government customer for its cyber security training services. "This recent award speaks to the government's continued confidence in the value of our products and services as part of their cyber portfolio in preparing DoD personnel for cyber challenges faced today and well into the future," said CEO Fred Kornberg.


Dow Jones US Energy Fund (IYE) was up 0.5% and Energy Select Sector SPDR (XLE) was up 0.5%.

Vaalco Energy Inc. (EGY) rose nearly 6% after the company said year-end proved reserves increased to 5.4 million barrels of oil, up 76% from a year ago. Proved and probable reserves jumped to 9.7 million barrels of oil, up 144%, according to a statement. The company noted it produced an average of 3,750 barrels of oil per day net in 2018 and sold 1.44 million barrels of oil in 2018. Vaalco is finalizing plans to drill up to three development wells in 2019 at a net cost to the company of $25 million to $30 million, all of which will be funded from cash on hand and cash generated from operations.


Crude was down 1.6%. United States Oil Fund (USO) was down 1.4%. Natural gas up 3.6% while United States Natural Gas Fund (UNG) was up 2.4%.

Gold was down 0.4%. SPDR Gold Trust (GLD) was down 0.5%. Silver was down 0.7%, while iShares Silver Trust (SLV) was down 0.7%.


Consumer Staples Select Sector SPDR (XLP) was down 0.1% and Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones U.S. Consumer Goods (IYK) were lower.

Consumer Discretionary Select Sector SPDR (XLY) was up 0.3% and retail funds SPDR S&P Retail (XRT) and Market Vectors Retail ETF (RTH) were firmer.

Motorcar Parts of America (MPAA) fell more than 2% after the company reported adjusted earnings were $0.35 per diluted share for the three months ended Dec. 31, from $0.41 a year earlier. Analysts surveyed by Capital IQ expected $0.38. Fiscal Q3 sales increased 20.6% to $124 million, from $102.9 million, surpassing the analyst consensus of $116 million.

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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