Active broad-market exchange-traded funds in Friday’s regular session:
- iShares MSCI Emerging Index Fund ( EEM ): +1.3%
- SPDR Select Sector Fund – Financial ( XLF ): +1.3%
- iShares Inc iShares MSCI Brazil ETF ( EWZ ): -0.5%
- SPDR S&P 500 ( SPY ): +1%
- iShares MSCI EAFE ETF ( EFA ): +0.8%
- Broad Market Indicators
Broad-market exchange-traded funds, including SPY, IWM and IVV were firmer. Actively traded PowerShares QQQ (QQQ) was up 1.5%.
U.S. stocks extended their gains into the session’s half as the latest U.S. jobs report buoyed market sentiment and overshadowed lingering concerns of possible trade war as well as geopolitical issues in Italy.
The Labor Department reported that nonfarm payrolls rose ahead of expectations with a gain of 223,000 in May versus estimates for a 190,000 rise. The unemployment rate firmed at 3.8% versus estimates for 3.9% and also 3.9% for the previous month. Average hourly earnings rose 0.3% versus the 0.2% gain seen by forecasters. Private payrolls rose 218,000 ahead of the 184,000 estimate, while manufacturing payrolls increased 18,000 in-line with expectations.
The PMI manufacturing index came in just slightly below expectations at 56.4 in May versus estimates for 56.6. The ISM manufacturing index accelerated to 58.7 in May versus April’s 57.3 and estimates for 58.5. Construction spending swung back higher in April at a 1.8% gain from from March’s 1.7% decline.
Meanwhile, geopolitical concerns in Europe dissipated after Italian politicians agreed on a coalition government, averting the prospect of a snap election and ending the uncertainty in the eurozone’s third-largest economy.
And, the European Union said it will open a case with the World Trade Organization over tariffs placed on steel and aluminum imports by the U.S. On Thursday, U.S. President Donald Trump said he would end the suspension of tariffs on steel or aluminum imports from Canada, Mexico and the European Union. Canadian Prime Minister Justin Trudeau said Canada will also file a challenge to the levies with the WTO, calling the tariffs “illegal and counterproductive.”
Power Play: Consumer
Consumer Staples Select Sector SPDR (XLP) was up 0.1% and other funds Vanguard Consumer Staples ETF (VDC) and iShares Dow Jones US Consumer Goods (IYK) were firmer.
Consumer Discretionary Select Sector SPDR (XLY) was up 0.7% and retail funds SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR) and Market Vectors Retail ETF (RTH) were in positive territory.
lululemon athletica (LULU) jumped nearly 7% after the company reported Q1 revenue of $649.7 million, up from $520.3 million in the year ago quarter and ahead of the analyst consensus of $617 million on Capital IQ. Earnings were $0.55 per share, rising over last year’s result of $0.23 per share and better than expectations of $0.46 per share. For Q2, the company expects revenue in the range of $660 to $665 million, vs. the Street view of $645 milion. EPS is seen at $0.46 to $0.48, vs. the consensus of $0.44 per share. For the full year, lululemon is forecasting revenue in the range of $3.04 to $3.075 billion and earnings of $3.10 to $3.18 per share. The Street stands at $3.02 billion in revenue and earnings of $3.09 per share.
Winners and Losers
The Select Financial Sector SPDRs ( XLF ) was up 1.4%. Direxion Daily Financial Bull 3X shares (FAS) was up 3.2% and its bearish counterpart Direxion Daily Financial Bear 3X shares (FAZ) was down 3.1%.
Deutsche Bank’s (DB) had its credit rating lowered by Standard & Poor’s, which cited “significant execution risk” to CEO Christian Sewing’s plan to overhaul Germany’s biggest lender. S&P reduced the long-term issuer rating for the lender and its subsidiaries by one notch to ‘BBB+’, the third-lowest investment grade, from ‘A-‘, the credit rating company said in a statement on Friday. S&P maintained the stable outlook on the rating, reflecting its view that ” will execute its strategy in earnest and, over time, will show progress against its 2019 financial objectives.” DB shares were down 0.2%.
Technology Select Sector SPDR ETF (XLK) was up 1.6% while other tech funds iShares Dow Jones U.S. Technology ETF (IYW), iShares S&P North American Technology ETF (IGM) and iShares S&P North American Technology-Software Index (IGV) were firmer.
Among semiconductor ETFs, SPDR S&P Semiconductor (XSD) was up 1.5% and Semiconductor Sector Index Fund (SOXX) was up 1.9%.
Qualcomm (QCOM), Ford Motor (F) and Panasonic Corporation of North America formed an alliance to launch Cellular Vehicle-to-Everything (C-V2X) technologies in Colorado. The use of the technology is an extension of a previously announced partnership between the Colorado Department of Transportation and Panasonic to integrate connected vehicle technology in the state of Colorado, Qualcomm said.. Panasonic, Qualcomm Technologies and Ford have joined the advanced development efforts to help launch the technology, and to assess C-V2X capabilities this summer on select roadways throughout Panasonic’s CityNOW headquarters in Denver, which will be followed by deployment in select areas along the I-70 Mountain Corridor later in the year, the company said.
Dow Jones US Energy Fund (IYE) was up 0.5% and Energy Select Sector SPDR (XLE) was up 0.6%.
Range Resources Corp. (RRC) rose more than 3% after the firm declared a quarterly cash dividend of $0.02 per common share payable on June 29 to stockholders of record at the close of business on June 15.
Crude was down 0.8%. United States Oil Fund (USO) was down 0.9%. Natural gas was up 0.2% while United States Natural Gas Fund (UNG) was up 0.2%.
Gold was down 0.3%. SPDR Gold Trust (GLD) was down 0.2%. Silver was up 0.1%, while iShares Silver Trust (SLV) was up 0.2%.
Health Care SPDR (XLV) was up 1% and other health care funds Vanguard Health Care ETF (VHT) and iShares Dow Jones US Healthcare (IYH) were firmer. Biotechnology fund iShares NASDAQ Biotechnology Index (IBB) was up 1.3%.
Oncolytics (ONCY) rose more than 7% after the company said it has priced an underwritten public offering of 1.4 million shares of common stock at $5.83 per share for total expected gross proceeds of $8 million. The company intends to use the net proceeds for research and development activities and for working capital purposes. The offering is expected to close on or about June 5, subject to customary closing conditions.