Stock exchange traded funds rose Tuesday on a $8.5 billion cash deal for Internet telephone service Skype, although suitor Microsoft (NasdaqGS: MSFT) closed the session in negative territory.
Molycorp (NYSE: MCP) shares fell 5% in after-hours trading Tuesday following the company’s quarterly earnings as profit and revenue both came in well short of expectations. The stock dropped about 7% in Tuesday’s regular trading. The bearish action in Molycorp hit the $500 million Market Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX). The ETF counts Molycorp as its third-largest holding at about 7% of the fund. [Molycorp to Weigh on Rare Earths ETF After Earning Miss]
ETFs that follow consumer discretionary stocks will see the action piloted by bellwether Disney (NYSE: DIS) on Wednesday following quarterly results. The company’s earnings came in lower than expected after Tuesday’s closing bell. Evercore Partners confidently boosted its profit estimates for Disney ahead of the results. [Disney Earnings to Drive Consumer Discretionary ETFs]
Internet sector ETFs enjoyed a nearly 3% rally in eBay (NasdaqGS: EBAY) on Tuesday after an $8.5 billion deal for Skype, in which it has an ownership stake. Skype’s acquisition by Microsoft (NasdaqGS: MSFT) is “a positive for eBay in our view as it will help unlock about $2 a share in value by monetizing eBay’s 30% equity ownership in Skype, boosting the company’s financial flexibility to pursue strategic acquisitions and/or share buyback,” said Jefferies analysts in a note Tuesday. [eBay Hoist Internet ETFs on Skype Deal]
The manager of a nearly $700 million ETF that holds silver says it is bullish on the metal despite last week’s sell-off, although there is a catch. William Rhind, manager director at ETF Securities U.S., says silver prices should mend “barring further Comex margin increases.” Last week’s 30% plunge in silver has been blamed on profit taking and signs of life in the U.S. dollar. Margin hikes in silver contracts have also reportedly shaken out speculators who flocked to the rally. [ETF Manager Likes Silver, Barring Further Margin Increases]
Citigroup’s (NYSE: C) 10-for-1 reverse share split has dramatically reduced overall trading volume in the U.S. stock market, but it turned out to be a nonevent for exchange traded funds tracking the financial sector and banks. Citi’s reverse split and plans to pay a dividend are partly designed to attract more institutional investors to the shares. Yet financial-sector ETFs with large stakes in Citi are still left with the same allocation to the stock after the move. [Financial ETFs Take Citigroup Reverse Split in Stride]
ETFs that invest in Treasury bonds have been moving higher despite fears over the U.S. budget deficit and high-profile investors betting against government debt. Bond ETF investors are at a fork in the road, as uncertainty has plagued the fixed-income market. The Federal Reserve ends its bond-buying program less than two months from now, and investors are analyzing the slow-growth climate in markets and how bonds may fit into their portfolios. PIMCO’s Bill Gross has also stepped up his bet against U.S. debt, Reuters reported this week. [Treasury ETFs Rise Despite Investor Doubts]
Telecom ETFs were among Tuesday’s best-performing sectors as a 5% rally in Level 3 Communications (NasdaqGS: LVLT) carried the group higher. Level 3 shares were close to setting a new 52-week high as investors continued to bid the stock higher in the wake of the company’s recent quarterly results. In April, the company said it would acquire Global Crossing in a $3 billion deal (NasdaqGS: GLBC). Level 3 reported a smaller loss in its latest quarter. [Level 3 Rally Powers Telecom ETFs]
Stocks were higher Tuesday but healthcare exchange traded funds (ETFs) trailed the market as Boston Scientific (NYSE: BSX) slipped 9% after the maker of medical devices announced its chief executive will step down at the end of the year. Boston Scientific said Ray Elliot will retire in December and that it is looking for a replacement. [Healthcare ETFs Lag Market as Boston Scientific Weighs]
Gregory A. Clay contributed to this article.