Equity exchange traded funds (ETFs) are starting out flat this week following an earnings miss by home improvement company Lowe’s (NYSE: LOW) and new concerns about Europe’s debt crisis.
Options traders have been positioning for a rebound in financial-sector ETFs that have large stakes in Citigroup (NYSE: C), Bank of America (NYSE: BAC) and other big banks, according to a report Monday. A trend has emerged in recent weeks in options based on SPDR KBW Bank ETF (NYSEArca: KBE), the largest bank ETF by assets, Street One Financial said in a note to clients. [ETF Option Traders Look for Rebound in Citigroup, Big Banks]
Retail ETFs got a boost Monday from JC Penney (NYSE: JCP), which saw its shares rise 5% after the company reported upbeat quarterly results. Sector bellwether Wal-Mart (NYSE: WMT) will report first-quarter earnings on Tuesday. Analysts are calling for a 1% drop in revenue, compared to last year, as higher gas prices may be causing Wal-Mart shoppers to close their wallets. The company is up against strong competition from online retailers such as Amazon. [Retail ETFs Eye JC Penny, Wal-Mart]
Specialized financial ETFs tracking capital-markets stocks were set to take a hit Monday from NYSE Euronext (NYSE: NYX) shares, which fell 10% after Nasdaq (NasdaqGS: NDAQ) and IntercontinentalExchange (NYSE: ICE) pulled their $11 billion bid for the exchange operator. NYSE Euronext accounts for at least 5% of SPDR KBW Capital Markets ETF (NYSEArca: KCE) and iShares Dow Jones US Broker-Dealers (NYSEArca: IAI). It is also a roughly 5% holding in IQ Merger Arbitrage ETF (NYSEArca: MNA). [NYSE Euronext to Weigh on Capital Markets ETF]
ETFs tracking silver were down more than 2% in premarket action Monday as the dollar continued to strengthen against the euro. The $12.3 billion iShares Silver Trust (NYSEArca: SLV) slipped 2.6% before the bell. The ETF has dropped 13% over the past month amid the correction in metals markets. Gold prices were flat Monday morning, hovering below $1,500 an ounce. [Silver ETFs Fall as Dollar Strengthens]
Housing ETFs were set for a red open Monday after Lowe’s (NYSE: LOW) reported first-quarter net income that fell from the year-ago period and the major indexes were down in premarket trading. Lowe’s and Home Depot (NYSE: HD) are reporting quarterly results this week, so ETFs tracking homebuilders and related housing sectors could see moves. Home-improvement chains Lowe’s and Home Depot are held in the sector ETFs along with builders such as Toll Brothers (NYSE: TOL). [Can Lowe’s, Home Depot Improve Housing ETFs]
Gregory A. Clay contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.