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Mid-Day ETF Update: ETFs, U.S. Stocks Reverse Course into Negative Territory, Weighed by Rising Treasury Yields

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

SPDR Select Sector Fund - Financial ( XLF ): +1.4%

iShares MSCI Emerging Index Fund ( EEM ): -0.7%

VelocityShares Daily 2x VIX Short Term ETN ( TVIX ): +6.6%

SPDR S&P 500 ( SPY ): -0.8%

iShares China Large-Cap ETF ( FXI ): +0.3%

Broad Market Indicators

Broad-market exchange-traded funds, including SPY, IWM and IVV were lower. Actively traded PowerShares QQQ (QQQ) was down 1.1%.

U.S. stocks turned negative at session's half, as higher Treasury yields and the rising cost of commodities overshadowed upbeat earnings and economic data releases, which had fueled earlier gains.

The 10-year Treasury note leaped past the 2.90% milestone, a threshold traders view as expensive to corporate borrowing needs.

In economic data news, jobless claims fell by just 1,000 to 232,000, compared to expectations for a drop of 3,000. And although the Philadelphia Fed business outlook index was better-than-expected, some of its components pointed to brewing stagflation. Prices paid rose to a seven-year high while new orders fell.

Lackluster earnings results from Proctor & Gamble and Philip Morris (PM) had sent the consumer staple sector sharply lower while Apple and semiconductors were losing ground following a warning from Taiwan Semiconductor (TSM) regarding slower smartphone sales. Losses were mitigated, however, by positive results from Dow component American Express (AXP), which beat profit and sales expectations. Alcoa (AA) topped EPS estimates on below-consensus revenue, and Novartis (NVS) reported better-than-expected results and reaffirmed its FY18 outlook.

Power Play: Consumer

Consumer Staples Select Sector SPDR (XLP) was down 3.2% and other funds Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones US Consumer Goods (IYK) were weaker.

Consumer Discretionary Select Sector SPDR (XLY) was down 0.6% and retail funds SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR) and Market Vectors Retail ETF (RTH) were in negative territory.

Pier 1 Imports' (PIR) sank 20% after the retailer reported late Wednesday adjusted EPS fell to $0.21 in Q4 from $0.34 a year earlier, but it was still higher than analysts' estimates of $0.20 in a Capital IQ poll. Revenue fell 3.1% to $512.2 million from a year ago, lagging the $537.52 million estimate. The retailer said the company needs to change and warned of losses for fiscal 2019 as it makes new investments to drive earnings growth.

Winners and Losers

Financial

The Select Financial Sector SPDRs ( XLF ) was up 1.4%. Direxion Daily Financial Bull 3X shares (FAS) was up 1.6% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was up 0.4%.

The Bank Of New York Mellon (BK) rose nearly 5% after the bank reported Q1 earnings of $1.10 per diluted share, versus $0.83 last year. That beat the $0.94 estimate of analysts polled by Capital IQ. Revenue for the quarter came in at $4.18 billion, versus $3.84 billion last year. That was ahead of the $4.04 billion Capital IQ estimate.

Energy

Dow Jones US Energy Fund (IYE) was down 0.1% and Energy Select Sector SPDR (XLE) was down 0.1%.

Torchlight Energy Resources (TRCH) fell some 15% after the company said it priced an underwritten public offering of 5 million shares at $1.15 per share, or 13.5% lower than the share closing price on Wednesday. Torchlight has also granted to the underwriter a 30-day option to acquire an additional 750,000 shares to cover over-allotments in connection with the offering. After the underwriting discount and estimated offering expenses payable by Torchlight Energy Resources, it expects to receive net proceeds of $5.37 million, assuming no exercise of the over-allotment option. The offering is expected to close on or about April 23.

Technology

Technology Select Sector SPDR ETF (XLK) was down 1.3% and other tech funds 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 3.1% and Semiconductor Sector Index Fund (SOXX) was down 4%.

Computer Task (CTG) rose nearly 3% after the firm posted Q1 adjusted earnings per share of $0.06. In the year-earlier quarter EPS was $0.05 and there was no non-GAAP adjustment. The adjusted EPS was in line with the estimate of two analysts polled by Capital IQ. Revenue totaled $82.8 milllion compared with $77.0 million a year earlier. That result was above the $79.5 million estimate of two analysts at Capital IQ.

The company predicts Q2 revenue of between $87 million and $91 million, straddling the projection of two analysts at Capital IQ of $88.6 million.The company predicts full year revenue of $343 million to $357 million, which it narrowed from a previous forecast range of $340 million to $360 million, and which is above two analysts' estimate of $344.8 million. It sees Q2 adjusted diluted EPS of $0.06 to $0.10, compared with analysts' expectation of $0.10, and between $0.30 and $0.42 for the full year, unchanged from a previously given forecast, compared with analysts' estimate of $0.36.

Commodities

Crude was up 0.5%. United States Oil Fund (USO) was up 0.1%. Natural gas was down 2.2% while United States Natural Gas Fund (UNG) was down 2.4%.

Gold was down 0.5%. SPDR Gold Trust (GLD) was down 0.3%. Silver was down 0.1%, while iShares Silver Trust (SLV) was up 0.4%.

Health Care

Health Care SPDR (XLV) was down 1% and other health care funds Vanguard Health Care ETF (VHT) and iShares Dow Jones US Healthcare (IYH) were lower. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was down 1.2%.

Sientra Inc. (SIEN) rose 6.7% after the company said late Wednesday the U.S. Food and Drug Administration (FDA) has approved commercial sales of its OPUS-branded breast implant products, triggering an additional $10.0 million tranche of term loan borrowing capacity under its credit facility with MidCap Financial Services and Silicon Valley Bank. The implants are being manufactured for Sientra by Lubrizol's Vesta life-sciences subsidiary at Vesta's production facility in Wisconsin.

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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