PowerShares QQQ (NasdaqGM: QQQ) jumped almost 2% on Tuesday as investors awaited quarterly earnings from Wall Street darling Apple (NasdaqGS: AAPL) after the closing bell.
The tech sector was leading the market following Monday’s pullback in U.S. stocks.
Some options traders have tapped tech ETFs to profit from strength in the sector as many bellwethers announce quarterly results this week, including Apple, IBM (NYSE: IBM), Intel (NasdaqGS: INTC) and Microsoft (NasdaqGS: MSFT). Options have been active in Technology Select Sector SPDR Fund (NYSEArca: XLK) the past couple sessions, involving mainly bullish call buying in August, Street One Financial said in a note Tuesday.
The Nasdaq-100 ETF, PowerShares QQQ, was up 6% year to date as of July 18, compared with a 4.9% gain for the S&P 500, according to investment researcher Morningstar. Apple is the largest stock holding at over 10% of assets.
Wall Street is looking quarterly earnings of $5.80 a share from Apple on revenue of about $25 billion. The company’s iPhone and iPad businesses are a profit machine.
Bullish analysts have been boosting their estimates ahead of Apple’s results but Sterne Agee in an earnings outlook said it is “confident in Apple’s ability to exceed heightened expectations.”
They added the company may surprise to the upside on its guidance. “For its outlook, Apple usually offers vintage conservative guidance, however, based on our supply chain checks indicating better availability of components and increased production capacity, we believe it could be less conservative than usual,” Sterne Agee said.
Jefferies analysts in their preview said they expect Apple to report results above consensus for both revenue and earnings per share. “We believe sales for MacBook Air, iPad and iPhone were better than expected despite fears of production constraints and slowing demand,” they wrote. “We also believe Apple will provide strong guidance [for the third quarter]due to new products and back-to-school demand.”
PowerShares QQQ
