Monday, July 25, 2016

Earnings Beat Goes On

After a slow start for the week, the S&P 500 gained 0.6% while the Nasdaq Composite gained 1.4% and the Dow Jones increased by .3%.  As you would expect, quarterly earnings were a big factor in driving the markets this week - more results will be released in coming weeks with 75% of S&P 500 members still due to report their earnings. Thus far, this earnings season has delivered some good surprises.

One company with a great earnings report was Johnson & Johnson (JNJ).  The company beat both revenue and earnings estimates for the quarter, helping the momentum in U.S. stocks and the healthcare industry. For the quarter, their revenue was $18.48 billion, beating analysts average estimate by $500 million. Earnings for the second quarter were $1.74, 6 cents more than the analysts predicted.

With their great earnings report, ETFs that have a exposure to Johnson and Johnson also lead the way this week. The 2 ETFs that have the biggest exposure to Johnson & Johnson, XLV, Health Care Select Sector SPDR Fund, and CURE, Direxion Daily HealthCare, gained 2% and 4% respectively this week.

Global equities seemed to also do surprisingly well this week despite so many international issues and turbulence including the attempted coup in Turkey, the potential for change in monetary policy from the Bank of Japan next week and the European Central Bank keeping all of its interest rates unchanged on Thursday, adding that it expects rates to remain at present or lower levels for an extended period.

In ETF news, SEC moved to expedite the approval of exchange-traded funds run by human stock and bond pickers. This could lead to even larger and faster growth of the already growing ETF industry. The SEC on Friday approved guidelines for actively managed ETFs, which aim to cut months off the process of bringing these funds to market.

This week BWV, HOMX, PGX, and DIVC were are top 4 of biggest gains in our Quant movers section.  Each fund’s quant score increased by 16%, 12%, 12%, and 10% respectively. Our biggest losers this week were IEV, BDCS, MLPG, MLPI. Each fund lost 12%, 10%, 10%, and 9% respectively.

This week was another steady week for our select list. However, there was 1 unranked funds from last week that made it to the top spot in their category, and a number 5 ranked fund that made it to number 1. They were EWU in the European region, and XES, in the energy sector.

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