Market Update: ETFs Rise, Equity Futures Mixed as Large Cap Earnings Continue

As earnings season rolls on, major exchange-traded funds (ETFs) showed gains in pre-market trading on Thursday, January 16, 2025. The SPDR S&P 500 ETF Trust (SPY) climbed 0.2%, while the tech-heavy Invesco QQQ Trust (QQQ) advanced 0.4% ahead of key economic data releases.

Futures Snapshot

• S&P 500 Futures: +0.1%

• Dow Jones Industrial Average Futures: -0.2%

• Nasdaq Futures: +0.3%

Traders are keeping an eye on upcoming economic reports, including December's retail sales bulletin and the weekly jobless claims report due at 8:30 AM ET. The Philadelphia Fed Manufacturing Index and import/export prices data for December will also be released simultaneously. Later in the morning, November’s business inventories report and the National Association of Home Builders' Housing Market Index for January will be posted at 10 AM ET. Energy traders will be watching the weekly EIA natural gas report at 10:30 AM ET.

Bitcoin & Cryptocurrency Watch

• Bitcoin: -0.2%

• ProShares Bitcoin Strategy ETF (BITO): -0.04%

Sector Performance: Winners & Losers

Industrial Sector

• Industrial Select Sector SPDR Fund (XLI): +0.04%

• Vanguard Industrials Index Fund (VIS): +0.1%

• iShares US Industrials ETF (IYJ): Inactive

Cadre Holdings (CDRE) saw a 4.3% pre-market gain after announcing the acquisition of two Carr’s Group engineering units for £75 million ($91.5 million) in cash.

Technology Sector

• Technology Select Sector SPDR Fund (XLK): +0.8%

• iShares US Technology ETF (IYW): +0.1%

• iShares Expanded Tech Sector ETF (IGM): Inactive

• SPDR S&P Semiconductor ETF (XSD): Inactive

• iShares Semiconductor ETF (SOXX): +1.4%

Taiwan Semiconductor Manufacturing (2330) surged 4% pre-market after posting strong Q4 earnings and revenue, with an optimistic Q1 outlook.

Health Care Sector

• Health Care Select Sector SPDR Fund (XLV): -0.2%

• Vanguard Health Care Index Fund (VHT): Flat

• iShares US Healthcare ETF (IYH): +0.4%

• iShares Biotechnology ETF (IBB): -0.3%

UnitedHealth Group (UNH) dropped 3.2% in pre-market trading following a lower-than-expected Q4 revenue report.

Financial Sector

• Financial Select Sector SPDR Fund (XLF): +0.2%

• Direxion Daily Financial Bull 3X Shares (FAS): +0.6%

• Direxion Daily Financial Bear 3X Shares (FAZ): -0.3%

Morgan Stanley (MS) gained 2.5% pre-market after delivering strong Q4 earnings and net revenue.

Energy Sector

• iShares US Energy ETF (IYE): -0.2%

• Energy Select Sector SPDR Fund (XLE): -0.4%

Genesis Energy (GEL) increased 1.6% after maintaining its quarterly distribution for common unitholders.

Consumer Sector

• Consumer Staples Select Sector SPDR Fund (XLP): +0.3%

• Vanguard Consumer Staples Fund (VDC): +0.3%

• iShares US Consumer Staples ETF (IYK): Inactive

• Consumer Discretionary Select Sector SPDR Fund (XLY): +0.1%

• VanEck Retail ETF (RTH): Inactive

• SPDR S&P Retail ETF (XRT): Flat

Toyota Motor (7203) declined 1.6% after its Hino Motors unit agreed to a $1.6 billion settlement with US regulators over carbon dioxide emissions falsification and engine smuggling.

ETFs in Focus: Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE)

The Direxion NASDAQ-100 Equal Weighted Index Shares (QQQE) is gaining attention as a passively managed ETF designed to provide broad exposure to Large Cap Growth stocks. Launched in 2012, it has amassed over $1.28 billion in assets.

Why Large Cap Growth?

Large cap companies, those with a market capitalization above $10 billion, are generally more stable, offering predictable cash flows and lower volatility compared to smaller firms. Growth stocks, while offering higher-than-average sales and earnings growth rates, tend to have higher valuations and higher volatility.

ETF Insights

• Expense Ratio: 0.35%

• Dividend Yield: 0.84%

• Top Sectors: Information Technology (40.7%), Industrials, Consumer Discretionary

• Top Holdings: Diamondback Energy (FANG), Constellation Energy (CEG), Broadcom (AVGO)

Performance & Risk

• YTD Performance: +1.87%

• 1-Year Gain: +9.75%

• 52-Week Range: $82.41 - $96.24

• Beta: 1.03 (Moderate Risk)

Comparison with Other ETFs

• Vanguard Growth ETF (VUG): Expense Ratio: 0.04%, Assets: $157.29B

• Invesco QQQ (QQQ): Expense Ratio: 0.20%, Assets: $321.60B

Final Thoughts

With its equal-weighted approach, QQQE provides diversified exposure to the NASDAQ-100. While it’s a solid option for large-cap growth exposure, investors may also consider VUG and QQQ for alternative approaches. Passive ETFs remain a cost-effective, transparent, and tax-efficient choice for long-term investors.

Stay tuned for more updates and insights into the market!