Mid-Day ETF Update: ETFs, Stocks Turn Lower Ahead of House Vote on Tax Reform Bill

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

iShares MSCI Emerging Index Fund ( EEM ): -0.6%

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

SPDR Select Sector Fund - Financial ( XLF ): -0.1%

VelocityShares 3x Long Natural Gas ETN ( UGAZ ): -2.6%

iPath S&P 500 VIX Short Term Futures ETN ( VXX ): +1%

Broad Market Indicators

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

U.S. stocks turned negative at session's half, as profit taking materialized preemptively before the House of Representatives votes on the latest legislation. Market participants are not only bracing for the possibility the bill may fail in the House, but year-end window dressing that could be exacerbated by elevated levels in equities.

On the economic front, housing market data indicated the feverish pace of new construction is beginning to cool as November housing starts were up 3.3%, but significantly lower than October's 8.4% pace (revised down from +13.7%). Additionally, permits were down 1.4% to a seasonally-adjusted annual rate of 1.298 million though still better than 1.270 million estimates.

Power Play: Health Care

Health care funds Health Care SPDR (XLV), Vanguard Health Care ETF (VHT) and iShares Dow Jones U.S. Healthcare (IYH), were weaker. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was up 0.4%.

Portola Pharmaceuticals (PTLA) shares rose more than 5% after the company said the U.S. Food and Drug Administration has approved its prior approval supplement for the anticoagulant Bevyxxa ahead of its scheduled Jan. 30 action date. Portola said it plans to start commercial launch in early January.

Winners and Losers


Select Financial Sector SPDRs ( XLF ) was down 0.1%, Direxion Daily Financial Bull 3X shares (FAS) was down 1.5% and its bearish counterpart, FAZ, was up 1.5%.

Aspen Insurance Holdings (AHL) was down 0.7% after the company said it has struck a partnership with CGB Diversified Services, a provider of crop insurance, risk management, and grain marketing expertise. Under the agreement, Aspen said it has acquired a 23.2% stake in a newly formed company, Crop Re Services LLC, which is responsible for directing the placement of reinsurance on behalf of CGB Diversified Services. The remaining 76.8% stake is owned by CGB. In exchange for the Crop Re stake, Aspen has sold AG Logic Holdings, its US crop insurance business, to CGB for $68.4 million.


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 lower.

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

Alphabet's (GOOG) YouTube signed a new long-term agreement with the top two music labels, promising stronger policing of user uploads of copyrighted songs and paving the way for a new paid service after two years of tumultuous negotiations, according to a report from Reuters. Universal Music Group said its deal with YouTube will give artists more flexibility and better pay, the news report said. Sony Music Entertainment also signed a new agreement, people familiar with the matter were cited as saying. GOOG shares were down 0.9%.


Dow Jones US Energy Fund (IYE) was up 0.4% and Energy Select Sector SPDR (XLE) was up 0.5%.

TransCanada's (TRP) request to amend the route application for the proposed Keystone XL pipeline project has been denied by the Nebraska Public Service Commission, media including ABC Nebraska TV and Reuters reported. In November, the regulator approved a route for the pipeline but it was not the preferred route for the company. TRP shares fell marginally.


Crude was up 0.5%. United States Oil Fund (USO) was up 0.6%. Natural gas was down 1.2% while United States Natural Gas Fund (UNG) was down 1% .

Gold was down 0.2%. SPDR Gold Trust (GLD) was down 0.1%. Silver was down 0.4%, while iShares Silver Trust (SLV) was down 0.2%.


Consumer Staples Select Sector SPDR (XLP), Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones US Consumer Goods (IYK) were firmer.

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 also in the green.

Darden Restaurants (DRI) raised its guidance for the full year on Tuesday as it unveiled better-than-expected second quarter results for both its top and bottom lines which was helped by the addition of new restaurants during the period. The company, whose brands include Olive Garden and Longhorn Steakhouse among others, generated $1.88 billion in sales in the quarter ended November 26, up 14.6% from the prior-year period, according to a statement published in the morning. This surpassed the consensus estimate of analysts polled by Capital IQ for sales of $1.86 billion. Adjusted earnings per share rose by 14.1% to $0.73, beating the Street's forecast for $0.70. DRI shares rose 5.5% in recent trading.

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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