Stock exchange traded funds were slightly higher Wednesday as Dell (NasdaqGS: DELL) lifted tech ETFs but weak results from Staples (NasdaqGS: SPLS) sparked concerns over the consumer sector. Investors remain cautious prior to the Federal Reserve’s assessment of the economy.
Dell shares rallied about 5% Wednesday following strong quarterly results. Wall Street analysts cheered the company’s gross margin but expressed concern over weak revenue. Brean Murray analysts boosted their target price on Dell shares to $19 “on the back of much stronger than anticipated gross margin,” according to a note. The stock “will likely trade up today but could soften through the day as revenue was softer in most areas … Looking forward, we expect the stock to remain somewhat volatile and could likely again be prone to bouts of trading a bit disconnected from ultimate results.”[Dell Revenue, Gross Margin Put Tech ETFs in Focus]
A 15% sell-off in Staples rained on the parade in retail ETFs, which have rallied this year. The office-supplies company reported lower-than-expected quarterly profit and cut its full-year view. “Our first-quarter results show that we’re making good progress on our key growth initiatives and we’re gaining share in North America, but at a cost to our bottom line,” said Ron Sargent, Staples’ chief executive. [Staples Pullback to Ring Up Retail ETFs]
Quarterly earnings Wednesday from Deere (NYSE: DE) were set to drive ETFs that invest in agribusiness and industrial stocks. ETFs such as the $4 billion Market Vectors Agribusiness (NYSEArca: MOO), which holds 8% in Deere, could see weakness after the quarterly report. Deere shares slipped about 1% before the bell Wednesday. Likewise, the $4 billion SPDR Industrial Select Sector Fund (NYSEArca: XLI) holds 2.9% in Deere. [Deere Earnings Drive Agribusiness and Industrial ETFs]
Metals ETFs for silver and gold were set to rise Wednesday, but investors have been yanking money from these ETFs amid their recent decline. The iShares Silver Trust (NYSEArca: SLV) was up nearly 2% before the bell. “With the volatility in commodities, it should be no surprise that [ETF] flows there are strongly negative for the quarter,” said Nicholas Colas, ConvergEx Group chief market strategist, in a note Wednesday. [Investors Pull Money From Silver, Gold ETFs]
ETFs that invest in silver rallied nearly 4% on Wednesday, raising questions over whether the metal can recover after its recent drubbing on higher margin requirements for futures contracts. [Silver ETFs Find Footing]
Investors have put almost as much money into ETFs in the first half of the second quarter as they did through all of the first quarter, according to a report Wednesday. ETFs have attracted $20.4 billion of new assets quarter-to-date as compared to $27.2 billion for the first quarter, according to Nicholas Colas, ConvergEx Group chief market strategist. He said investors are gravitating toward “old-school” ETFs such as those that invest in stocks and bonds with inflows of $14.2 billion and $5.5 billion, respectively, quarter-to-date. [Investors Plowing Cash Into ETFs in Second Quarter]
Gregory A. Clay contributed to this article.