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Mid-Day ETF Update: ETFs, Stocks Turn Negative as Partial Government Shutdown Looms

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

SPDR S&P 500 ( SPY ): -0.7%

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

Invesco QQQ Trust, Series 1 ( QQQ ): -1.9%%

SPDR Select Sector Fund - Financial ( XLF ): -1%

ProShares UltraPro Short QQQ ( SQQQ ): +5.0%

Broad Market Indicators

Broad-market exchange-traded funds, including IWM and IVV were lower. Actively traded PowerShares QQQ ( QQQ ) was down 1.5%.

US stocks retreated back to negative territory at session's half, reversing from earlier gains on the back of comments from New York Fed President John Williams, who said the FDA may reassess rate hikes in 2019 after this week's increase.

Williams said on CNBC that the Fed is re-evaluating its views on the economy. The Federal Open Market Committee earlier this week raised rates by 25 basis points for a fourth time this year, as expected, despite some indications of cracks in the US economy. Still, job gains and wage growth have been robust, the Fed said in its report. The agency indicated it will increase rates twice next year, down from prior forecasts for three rate bumps.

Economic data showed durable goods orders increased 0.8% in November, and while that was below expectations, it reversed a 4.3% slide in October. Excluding the transportation sector, however, orders declined 0.3%. The US economy grew 3.4% in the third quarter, down slightly from the prior rate of 3.5%.

Personal income was up 0.2% last month, missing an estimate for growth of 0.3% and behind the previous month's gain of 0.5%. Consumer spending was up 0.4% month-to-month, beating forecasts for 0.3% but also behind the previous month, which was revised higher to a gain of 0.8%, the Bureau of Economic Analysis said in a report.

A potential partial government shutdown kept a lid on gains as President Donald Trump refused to sign a spending bill that would keep offices open unless it contained money for a border wall. The US House passed a bill with the wall money but the Senate is expected to deny Trump the funds.

Power Play: Technology

Technology Select Sector SPDR ETF (XLK) was down 1.3%, while tech funds iShares Dow Jones US Technology ETF (IYW) and iShares S&P North American Technology ETF (IGM) were in the red.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) was down 1% and Semiconductor Sector Index Fund (SOXX) was up 0.1%.

Amazon (AMZN) was down nearly 4% even as it unveiled plans for its first Mississippi fulfillment center, which will be situated in Marshall County. According to a statement, establishing the 554,000-square-foot facility will create 850 full-time jobs with a $15 minimum hourly wage.

Winners and Losers

Financial

The Select Financial Sector SPDRs ( XLF ) was down 0.2%. Direxion Daily Financial Bull 3X shares (FAS) was down 1% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was up 1.1%.

LendingTree (TREE) fell nearly 6% after it said it has agreed to acquire Value Holding, the parent company of ValuePenguin.com, a personal finance website, for $105 million in cash. The acquisition is expected to close in Q1 2019 subject to customary closing conditions, LendingTree said in a statement Friday. LendingTree said it will fund the acquisition through cash on hand and by drawing on a credit agreement. LendingTree said it expects the acquisition to be immediately accretive to 2019 adjusted earnings per share.

Energy

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

Petroleo Brasileiro SA (PBR), the government-controlled oil and gas company in Brazil known as Petrobras, was requested by the Supreme Court to suspend all new divestments in exploration as well as production, Reuters reported on Friday. Following the court injunction, an agreement between the oil and gas company and the government on the sales of some $27 billion of assets to slash debt is now on hold, the newswire reported, citing a statement from the company. Divestments committed to by management before May will still go ahead. PBR ADRs fell 0.2%.

Commodities

Crude was up 0.4%. United States Oil Fund (USO) was down 0.4%. Natural gas up 3.9% while United States Natural Gas Fund (UNG) was up 1.8%.

Gold was down 0.6%. SPDR Gold Trust (GLD) was down 0.6%. Silver was down 1%, while iShares Silver Trust (SLV) was down 0.8%.

Consumer

Consumer Staples Select Sector SPDR (XLP) was up 0.5% and Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones U.S. Consumer Goods (IYK) were higher.

Consumer Discretionary Select Sector SPDR (XLY) was up 048% while retail funds SPDR S&P Retail (XRT) and Market Vectors Retail ETF (RTH) were weaker.

CarMax (KMX) rose more than 4% after it reported Q3 earnings rose to $1.09 a share from $0.81 a year earlier, beating the consensus on Capital IQ for $1. Net sales and operating revenue for the Richmond, Va.-based company rose 4.6% to $4.3 billion, while the Street was projecting $4.33 billion. CarMax said net earnings benefited from a lower effective tax rate, which fell to 23.2% from 33.9% in the prior year's third quarter after the Tax Cuts and Jobs Act of 2017 lowered corporate tax rates. But comparable-store used unit sales declined 1.2% year-on-year due to lower store traffic that was partially offset by improved conversion, CarMax said.

Health Care

Health Care SPDR (XLV) was up 0.1% while 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 down 2.2%.

Obalon Therapeutics (OBLN) shares surged more than 36% after the medical technology company said it received approval from the US Food and Drug Administration of its "Obalon Navigation System," which eliminates the need to use x-ray when placing its balloon system in patients for weight loss. The company's system puts balloons in the stomach so people eat less, according to the company's website. The company said it expects to make the navigation system commercially available in Q1 in the US.

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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