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Mid-Day ETF Update: ETFs, Stocks Weaker as Consumer Sector Weighs on Broader Market

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

SPDR S&P 500 ( SPY ): +0.4%

Market Vectors Gold Miners ETF ( GDX ): +0.3%

iShares MSCI Emerging Index Fund ( EEM ): +0.3%

iPath S&P 500 VIX ST Futures ETN ( VXX ): +0.2%

VelocityShares Daily 2x VIX ST ETN ( TVIX ): -0.2%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV were higher. Actively traded PowerShares QQQ (QQQ) was up 0.3%.

U.S. stocks were mostly lower, as pressure from the consumer sector soured market sentiment at session's half. Disappointing earnings from Macy's (M) and Dow component stock Disney (DIS) dragged consumer stocks sharply lower.

M&A news also weighed on stocks, following news that a federal judge issued a temporary injunction blocking the $6.3 billion merger between Staples (SPLS) and Office Depot (ODP) on objections raised by the Federal Trade Commission that the union of the two would create a monopoly in the office supply space. Investors poured out of both stocks.

Meanwhile, crude oil prices rose above $45 a barrel after the U.S. Energy Information Administration reported a 3.4 million-barrel drop in crude-oil supplies last week.

Power Play: Consumer

Consumer staples funds were weaker, in line with the broader market. Consumer Staples Select Sector SPDR (XLP), iShares Dow Jones US Consumer Goods (IYK) and Vanguard Consumer Staples ETF (VDC) were in negative territory.

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 lower.

Macy's (M) was down 13.9% after it posted Q1 earnings of $0.37 per diluted share, in line with analysts' estimates but down from the $0.56 per diluted share recorded in the prior year period and below the company's own original outlook. Revenue contracted to $5.77 billion, below analysts' expectations for $5.96 billion and down from the prior year period's $6.23 billion. The company said that the sales decline reflected, in part, the closure of 41 stores in 2015. The company now expects its full year 2016 comparable sales on an owned plus licensed basis to decrease in the range of 3%-to-4%, with comparable sales on an owned basis to be approximately 50 basis points lower. This compares to the company's previous guidance for comparable sales on an owned plus licensed basis to decline by approximately 1% in fiscal 2016. The company also revised its guidance for earnings per diluted share excluding settlement charges in fiscal 2016 to a range of $3.15-to-$3.40, lower than the previous guidance for $3.80-to-$3.90 per diluted share in 2016.

Winners and Losers

Financial

Select Financial Sector SPDRs (XLF) was down 0.4%. Direxion Daily Financial Bull 3X shares (FAS) was down 1.1% while its bearish counterpart, FAZ, was up 1.2%.

Encore Capital Group Inc (ECPG) surged 11% after the company reported a Q1 adjusted earnings per share of $1.31 compared with $1.12 a year ago, beating the $1.26 average estimate from analysts polled by Capital IQ. Sales rose to $289 million from $277.8 million but missing the $303.8-million consensus. Adjusted net profit in the three months to March 31 climbed to $33.9 million from $30.6 million a year ago, according to a company statement late Tuesday.

Technology

Tech funds were lower, but ahead of the broader market. 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 weaker. SPDR S&P International Technology Sector ETF (IPK) was down 2.2%.

Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) was up 0.5% and Semiconductor Sector Index Fund (SOXX) was up 0.3%.

Electronic Arts (EA) was up 12.2% after reporting late Tuesday Q4 non-GAAP net income of $161 million, or $0.50 per share, topping the average of estimates on Capital IQ for $0.42 and last year's $125 million, or $0.39 a share. Non-GAAP net revenue was $924 million, compared with $896 million in the year ago period. On a GAAP basis revenue rose to $1.31 billion from $1.18 billion. The Street's view was for revenue of $888.9 million. For fiscal 2017, Electronic Arts sees non-GAAP net revenue of about $4.9 billion on EPS of $3.50. The average of 22 analysts is for revenue of $4.86 on EPS of $3.46. For fiscal Q1 2017, the company projects revenue of about $640 million and loss per share of $0.05. The Street's view is for $743 million in revenue and earnings of $0.18 per share.

Industrial

Industrial funds were lower, but still better than the broader market. Select Sector SPDR-Industrial (XLI), Vanguard Industrials (VIS) and iShares Trust Dow Jones U.S. Industrial Sector Index Fund (IYJ) were in negative territory.

TopBuild (BLD) was up 1.7% after it reported Q1 adjusted EPS of $0.31, well above the street view of $0.15 as compiled by Capital IQ, and also above the $0.06 reported a year earlier. The company reported Q1 adjusted net income of $11.9 million on revenues of $414.0 million, the latter figure above the street view of $387.9 million. A year earlier, the company reported like figures of $2.2 million on $358.5 million.

Energy

Dow Jones U.S. Energy Fund (IYE) was up 0.7%; Energy Select Sector SPDR (XLE) was up 0.8%.

Whiting Petroleum (WLL) was down 4% after the company said it gave notice to mandatorily convert $476.3 million of outstanding convertible notes into shares of Whiting common stock on May 18. As a result, Whiting will have issued approximately 41.8 million shares of its common stock to retire all of the $476.7 million of convertible senior notes and convertible senior subordinated notes the company issued in March in exchange for the same amount of senior notes and senior subordinated notes.

Commodities

Crude was up 3.4%; United States Oil Fund (USO) was up 3%. Natural gas was down 0.2% and United States Natural Gas Fund (UNG) was down 0.4%.

Gold was up 0.8%, while silver was up 1.5%. Among rare metal funds, SPDR Gold Trust (GLD) was up 0.5% and iShares Silver Trust (SLV) was up 1.2%.

Health Care

Health care funds were in the red, in line with the broader market. Health Care SPDR (XLV), iShares Dow Jones US Healthcare (IYH) and Vanguard Health Care ETF (VHT) were in the red. Biotech ETF iShares NASDAQ Biotechnology Index (IBB) was down 1%.

Puma Biotechnology Inc (PBYI) was up 8% after it said late Tuesday that for Q1, non-GAAP adjusted net loss was $41.5 million, or $1.28 loss per share , ex one-time items, versus $32.4 million, or $1.02 loss per share in the same quarter the previous year. The Capital IQ analyst estimate is for $1.99 loss per share. The company did not record any revenue, as expected.

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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