Mid-Day ETF Update: ETFs, Stocks Turn Lower as Trade Deal Optimism Fades

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

iShares MSCI Emerging Index Fund ( EEM ): -0.4%

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

Select Financial Sector SPDRs ( XLF ): -1.3%

ProShares UltraPro Short QQQ ( SQQQ ): +2.3%

iPath Series B S&P 500 VIX Short-Term Futures ETN ( VXXB ): +6.7%

Broad Market Indicators

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

US stocks reversed into the negative territory at session's half, with the Dow Jones Industrial Average losing nearly 400 points as optimism for a final trade deal between the US and China fizzled out.

Investors are also digesting the latest construction spending data, which showed a surprise decline in December as slower paces of growth for residential and highway building curbed the result in both the private and public sectors.

Spending was down by 0.6% month-on-month to a seasonally adjusted annual rate of $1.29 billion, while the consensus on Capital IQ was for a 0.3% increase in the final month of 2018. Annually, the December rate is 1.6% higher than the same period of 2017. For the full year 2018, the value of construction spending rose by 4.1% to almost $1.3 billion, the US Census Bureau said on Monday.

Power Play: Health Care

Health Care SPDR (XLV) was down 1.7% and other funds iShares Dow Jones US Healthcare (IYH) and Vanguard Health Care ETF (VHT) were weaker. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) was down 1.7%.

Shares of Intrexon (XON) were down more than 15% after the biotechnology company said it signed a strategic licensing agreement with Surterra Wellness, allowing the latter to use its Botticelli plant propagation platform for the production of specific cannabis cultivars for the Florida market. The deal covers two stages, the first being an optimization phase in which Intrexon will calibrate its Botticelli technology to suit Surterra's cannabis cultivars and then a production phase where Surterra will use the technology to generate cannabis plantlets for its products. Surterra will deploy the Botticell platform within its Florida cultivation facility and Intrexon will be entitled to royalties on Surterra's Botticelli-derived plantlet usage.

Winners and Losers


Select Financial Sector SPDRs ( XLF ) was down 1.1%. Direxion Daily Financial Bull 3X shares (FAS) was down 3.3%; Direxion Daily Financial Bear 3X Shares (FAZ) was up 3%.

The First Bancshares (FBMS) was down 1.8% said it has closed the acquisition of FPB Financial Corp., the parent holding company for Florida Parishes Bank. According to the terms, each FPB shareholder will receive 0.8792 of a share of First Bancshares' common stock in exchange for each share of FPB stock held prior to the merger. As a result of the merger, the combined company now has approximately $3.5 billion in assets, $2.8 million in deposits and $2.3 billion in loans and operates across 71 banking locations across Mississippi, Louisiana, Alabama, Florida and Georgia.


Technology Select Sector SPDR ETF (XLK) was down 1%; 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) slipped lower.

Semiconductor ETFs, SPDR S&P Semiconductor (XSD) was down 0.8%, while Semiconductor Sector Index Fund (SOXX) was down 0.6%.

Juniper Networks (JNPR) was down 6% after it said it will acquire Mist Systems in a $405 million deal that will see it take over the creator of the cloud-managed wireless networks that are powered by artificial intelligence. In a statement, Juniper said the deal for Mist Systems is expected to close in its fiscal second quarter, subject to approvals and closing conditions. Mist is projected to be slightly dilutive to fiscal 2019 non-GAAP earnings per share and then slightly accretive in 2020.


Dow Jones U.S. Energy Fund (IYE) was down 1% and Energy Select Sector SPDR (XLE) was down 1%.

Enbridge Inc (ENB) was down 6.1% after it said the State of Minnesota has provided the company with a permitting timeline for its agencies' remaining environmental permits for the Line 3 Replacement project. The timeline indicates the certifications on all remaining State permits required for the construction of Line 3 will be provided by this November, according to a statement. Enbridge anticipates the remaining Federal permits will be finalized about 30 days to 60 days thereafter. This new permitting schedule updates the company's prior expectation for the receipt of final State permits in Q2 2019, which underpinned an expected in-service date before the end of this year. In light of this permitting timeline, the firm is developing a revised construction schedule for the replacement project but now expects an in-service date during H2 2020.


Crude was up 0.5%; United States Oil Fund (USO) was up 0.6%. Natural gas was down 0.6% and United States Natural Gas Fund (UNG) was down 0.1%.

Gold was down 0.7%, and SPDR Gold Trust (GLD) was down 0.2%. Silver was down 0.8% and iShares Silver Trust (SLV) was down 0.3%.


Consumer Staples Select Sector SPDR (XLP) was down 0.6% and iShares Dow Jones US Consumer Goods (IYK), and Vanguard Consumer Staples ETF (VDC) were in the red.

Consumer Discretionary Select Sector SPDR (XLY) was down 0.5% and SPDR S&P Retail (XRT) , PowerShares Dynamic Retail (PMR) and Market Vectors Retail ETF (RTH) were weaker.

February light-vehicle sales last month dropped to the slowest pace since August 2017 as Ford (F) and General Motors (GM) sales both declined. Sales were reported at a seasonally adjusted annual rate of 16.6 million in February, down from 17 million a year earlier, according to RBC analysts. The bank had projected a rate of 16.7 million units. Actual sales last month totaled 1.265 million units, down 2.8% year-over-year. RBC said in a report that it estimates retail sales were down 4% on an annual basis. Ford sales dropped 4.4%, excluding heavy trucks, while GM sales plunged 5.3% from February 2018. F shares were up 0.2% and GM shares were down 0.8%.

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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