Oil services sector-related exchange traded funds led the charge Friday as a strong jobs report strengthened the broader economic outlook and traders shrugged off an earnings miss from Weatherford International (NYSE: WFT).
The SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) was among the best performing non-leveraged ETFs on Friday, increasing 4.2%.
Supporting the gains in the oil services segment, Weatherford International shares surged 21.6% despite an earnings miss as Wall Street looked to the company’s free cash flow generation and improving earnings. The company has not reported a quarterly profit in four years and continued to struggle under massive debt since oil prices crashed in 2014, according to Reuters.
Nevertheless, traders grew more optimistic after Weatherford revealed adjusted loss narrowed to $140 million or 14 cents per share from $329 million or 33 cents per share a year ago. Analysts also pointed to EBITDA beat and free cash flow of $65 million.
“Weatherford was able to continue to execute its transformation initiatives despite a volatile commodity price environment in the fourth quarter and post positive free cash flow,” analysts for Evercore ISI wrote in a note.
WFT shares make up 4.1% of XES’s underlying portfolio.
Energy Space Support
Further bolstering broader gains in the energy space, the U.S. economy continued to add jobs after a 35-day government shutdown, market volatility and uncertainty over global growth tested the markets over January. The Labor Department calculated nonfarm payrolls increased a seasonally adjusted 304,000 in January, the Wall Street Journal reports.
“Payrolls crushed expectations,” Omair Sharif, economist at Société Générale, wrote in a note to clients. “Not bad for an economy that is supposedly softening.”
The ongoing strength in the U.S. economy could suggest continued growth ahead, which would continue to support demand for raw materials like crude oil and related industries.
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