Active broad-market exchange-traded funds in Tuesday’s regular session:
SPDR S&P 500 ( SPY ): -1.3%
Invesco QQQ Trust, Series 1 ( QQQ ): -0.8%
iShares MSCI Emerging Index Fund ( EEM ): -1.3%
SPDR Select Sector Fund – Financial ( XLF ): -1.7%
United States Oil Fund ( USO ): -5.4%
Broad Market Indicators
Broad-market exchange-traded funds, including IWM and IVV were lower. Actively traded PowerShares QQQ ( QQQ ) was down 2.6%.
US stocks were off session lows but still in negative territory at session’s half, with a major sell-off, led by the technology and energy sectors.
While there has been healthy bargain-hunting in the semiconductor sector, the Nasdaq opened at its lowest level since April, wiping out all its gains from 2018. The Dow Jones Industrial Average and S&P 500 were also beaten down as concerns over global economic growth, the pace of US rate hikes and uncertainty surrounding the trade war between the US and China continue to weigh.
This morning’s economic data failed to breathe life into equities as the housing market continues to slow in tandem with higher interest rates. Housing starts were up a less-than-expected 1.5% to a seasonally-adjusted annual rate of 1.228 million while new building permits were down 0.6% to a SAAR of 1.263 million.
Power Play: Technology
Technology Select Sector SPDR ETF (XLK) was down 1.1% and other 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 up 0.1% and Semiconductor Sector Index Fund (SOXX) was up 0.6%.
Agilent Technologies (A) rose 8% after the company said its fiscal Q4 non-GAAP net income was $262 million, or $0.81 per share up 21% from $218 million, or $0.67 per share, in the same period last year, and exceeding estimates of $0.74 per share. The company also improved its fiscal Q4 revenue by 9%, coming in at $1.29 billion from $1.19 billion in the year-ago period, and also beating estimates of $1.26 billion. For Q1 of fiscal year 2019, the company expects revenue between $1.265 billion and $1.28 billion, and non-GAAP earnings per share between $0.71 and $0.73, in line with consensus estimates of $1.28 billion and $0.73. For the full fiscal year 2019, Agilent expects between $5.13 billion and $5.17 billion, and non-GAAP earnings per share between $3.00 and $3.05, compared to consensus estimates of $5.19 billion and $2.97.
Winners and Losers
The Select Financial Sector SPDRs ( XLF ) was down 1.9%. Direxion Daily Financial Bull 3X shares (FAS) was down 4.7% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was up 4.5%.
Deutsche Bank AG (DB) fell 5% to record lows after the German lender admitted to Reuters it acted as payment processor for the Estonian operations of scandal-ridden Danske Bank, media reported. On Monday, Reuters reported that Howard Wilkinson, the former head of Danske Bank’s trading unit for the Baltics who exposed its involvement in alleged money laundering, said that a major European bank helped process up to $150 billion in suspicious payments. A representative for the German financial giant told the news agency that it acted as a correspondent bank for Danske but it “terminated the relationship in 2015 after identifying suspicious activity.” Bloomberg News said that Germany’s Federal Financial Supervisory Authority is also seeking additional information on Deutsche’s transactions with Danske.
Dow Jones US Energy Fund (IYE) was down 2.7% and Energy Select Sector SPDR (XLE) was down 2.6%.
Pacific Gas & Electric Co (PCG) rose nearly 3% after Bloomberg said California assemblyman Chris Holden requested a bill that will help the company absorb liabilities from this year’s wildfires. Kellie Smith, an adviser to Holden, told Bloomberg that she is drafting the legislation, which may be introduced as soon as Dec. 3. It may serve as the framework for lawmakers to consider relief for PG&E, as the state’s largest utility is facing billions of dollars in liability for death and property damage in the Camp Fire of Northern California, Bloomberg reported. “He is concerned about the instability of the utility and the adverse effect it could have on ratepayers, and the ability to deliver services at a reasonable cost,” Smith said via telephone. Other proposals may emerge, with Michael Picker, the president of the agency that regulates PG&E, publicly proclaiming the possibility that the company will be broken up.
Crude was down 5.6%. United States Oil Fund ( USO ) was down 5.6%. Natural gas was fell nearly 7% while United States Natural Gas Fund (UNG) was down some 4%.
Gold was down 0.2%. SPDR Gold Trust (GLD) was down 0.2%. Silver was down 0.7%, while iShares Silver Trust (SLV) was down 0.9%.
Consumer Staples Select Sector SPDR (XLP) was down 1.1% and Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones U.S. Consumer Goods (IYK) were lower.
Meanwhile, Consumer Discretionary Select Sector SPDR (XLY) was down 1.4% and retail funds SPDR S&P Retail (XRT) and Market Vectors Retail ETF (RTH) were lower.
L Brands (LB) fell some 14% after the company reported Q3 adjusted earnings of $0.16 per share, compared with the prior-year period’s $0.30 per share. Analysts polled by Capital IQ were expecting EPS of $0.15. Revenue was $2.77 billion, up from $2.62 billion in the same quarter last year. The Street view is for revenue of $2.7 billion. Same store sales for the quarter rose 4%. The company expects Q4 EPS of $1.90 – $2.10. The Street view is for EPS of $2. It also raised its FY18 adjusted EPS guidance to $2.60 – $2.80 from $2.45 – $2.70 previously. Analysts were looking for $PS of $2.63.
L Brands said it plans to reduce its annual dividend to $1.20 from $2.40 currently, beginning with the quarterly dividend to be paid in March 2019. The planned reduction will result in a dividend payout ratio that is more consistent with the company’s past practice, and a dividend yield in line with relevant comparisons. The $325 mln in cash made available from the dividend reduction will be used primarily to contribute to the deleveraging of the company’s balance sheet over time. The company also said John Mehas has been named CEO of Victoria’s Secret Lingerie, effective early 2019, replacing Jan Singer, who has resigned.
Health Care SPDR (XLV) was down 0.1% and 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 up 0.2%.
LivaNova (LIVN) fell nearly 15% after the firm said it plans to start a clinical study to meet the proposed changes by the US Centers for Medicare & Medicaid Services on the national coverage determination for the company’s Vagus Nerve Stimulation Therapy for treatment-resistant depression. The company expects the regulator to render final decision on the proposals on or before Feb. 17.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.