Short interest for iShares U.S. Telecommunications ETF gives investors a sense of the degree to which investors are betting on the decline of iShares U.S. Telecommunications ETF's stock. Short interest data is updated every two weeks.

iShares U.S. Telecommunications ETF (BATS:IYZ), Short Interest Report

iShares U.S. Telecommunications ETF

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Comcast introduces NOW, offering prepaid and month-to-month options for affordable internet, mobile, and streaming services, catering to Americans seeking cost-effective connectivity.

Looking For Affordable Connectivity And Streaming? Comcast Unveils NOW - Eyes Prepaid And Month-to-month Internet

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Ligado Networks filed a lawsuit against the U.S. government, alleging that the Defense Department and Commerce Department obstructed its business plans with a calculated disinformation campaign. 

The long-struggling satellite company seeks compensation of up to $39 billion for the spectrum rights it claims were unjustly denied. 

Beleaguered Satellite Firm Ligado Networks Sues US for $39B in Spectrum Rights Dispute

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Telecom Stocks Under Pressure As Toxic Lead Cable Concerns Discourage Buyers: 5 ETFs To Watch

Comcast Corporation&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CMCSA#NASDAQ">CMCSA</a>) launched a new brand of quality, low-cost internet, mobile, and streaming TV products that consumers&nbsp;<a target="_blank" href="https://www.benzinga.com/pressreleases/24/04/b38296504/comcast-launches-now-a-new-brand-and-product-portfolio-that-redefines-low-cost-internet-mobile-and" rel="noreferrer noopener">can purchase month-to-month</a>.
The brand &#8211; known as NOW &#8211; provides NOW Internet prepaid service and NOW Mobile, among others.
The NOW portfolio is poised to be particularly impactful for Americans looking for cost-effective connectivity.&nbsp;
The federal government recently announced that April is the last full month of the Affordable Connectivity Program (ACP) if it does not receive additional funding.&nbsp;
Also Read:&nbsp;<a target="_blank" href="https://www.benzinga.com/news/24/04/38189737/comcasts-market-valuation-does-not-reflect-fair-value-for-its-significant-growth-portfolio-analyst" rel="noreferrer noopener">Comcast&#8217;s Market Valuation Does Not Reflect Fair Value For It&#8217;s Significant Growth Portfolio: Analyst</a>
NOW Internet and Mobile will provide customers enrolled in ACP with another option for affordable, reliable connectivity.
According to&nbsp;<a target="_blank" href="https://pro.benzinga.com/?gspk=YWRhbWVja2VydDUzMzY&amp;gsxid=zBMR4PKmcgBw" rel="noreferrer noopener">Benzinga Pro</a>, CMCSA stock has gained over 1% in the past year. Investors can gain exposure to the stock via&nbsp;IShares U.S. Telecommunications ETF&nbsp;(BATS:<a class="ticker" href="https://www.benzinga.com/stock/IYZ#BATS">IYZ</a>) and&nbsp;Northern Lights Fund Trust III FPA Global Equity ETF&nbsp;&nbsp;(BATS:<a class="ticker" href="https://www.benzinga.com/stock/FPAG#BATS">FPAG</a>).
NOW Internet subscribers have the option to select from two prepaid plans: one offering 100 Mbps for $30 per month and another providing 200 Mbps for $45 monthly.
NOW Mobile will provide unlimited 5G data, talk and text for $25/line.
Comcast added that NOW Mobile is a new prepaid service that includes 5G data and access to more than 23 million WiFi hotspots, unlike any other provider in the prepaid category, it said in a press release.
NOW TV, available to Xfinity Internet subscribers, presents a streaming service comprising live and on-demand content from over 40 networks, over two dozen integrated FAST channels, and Peacock Premium, all for $20 per month.
NOW WiFi Pass gives customers unlimited access to more than 23 million Xfinity WiFi hotspots for $20 for 30 days.
The company said that the brand has all-in pricing and no contracts or credit checks.
Read Next:&nbsp;<a target="_blank" href="https://www.benzinga.com/markets/equities/24/04/38296131/ford-recalls-456-565-suvs-and-trucks-over-low-battery-issue-nhtsa-warns-of-safety-risks-report" rel="noreferrer noopener">Ford Recalls 456,565 SUVs And Trucks Over Low Battery Issue, NHTSA Warns Of Safety Risks: Report</a>
Price Action: CMCSA shares are trading higher by 0.64% to $39.24 premarket on the last check Thursday.
Photo via Shutterstock

Ligado Networks&nbsp;filed a lawsuit against the U.S. government, alleging that the Defense Department and Commerce Department obstructed its business plans with a calculated disinformation campaign.&nbsp;
The long-struggling satellite company seeks compensation of up to $39 billion for the spectrum rights it claims were unjustly denied.&nbsp;
This legal action comes amid the looming threat of $4 billion in November bond payments, as Ligado has been navigating financial instability while striving to secure its spectrum rights.
The heart of the matter revolves&nbsp;<a class="editor-rtfLink" href="https://www.wsj.com/articles/ligado-sues-u-s-seeking-39-billion-in-spectrum-fight-888ad542?mod=latest_headlines" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">around</a>&nbsp;Ligado&#39;s contention that the Pentagon and Commerce Department used a false pretext to deny the company the wireless spectrum licenses that should have been commercially available, the Wall Street Journal noted.&nbsp;
Federal officials at both departments have consistently argued that Ligado&#39;s planned fifth-generation wireless signals could disrupt the Global Positioning System (GPS) functionality.
Ligado&#39;s lawsuit further alleges that the Pentagon took control of Ligado&#39;s spectrum in the L-band without disclosing alternative purposes to other regulators or Congress.&nbsp;
The Pentagon frequently uses this frequency range for classified weapons and communication programs, rendering it unavailable for civilian use.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

The U.S. telecommunications industry is experiencing a volatile period following a detailed investigation conducted by the Wall Street Journal revealing that telecom companies, such as AT&amp;T Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/T#NYSE">T</a>), Verizon Communications Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VZ#NYSE">VZ</a>), Telephone and Data Systems Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TDS#NYSE">TDS</a>), Frontier Communications Parent Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FYBR#NASDAQ">FYBR</a>) and others neglected more than 2,000 lead-containing cables across the country that were installed under the old Bell System <a href="https://www.benzinga.com/government/23/07/33158334/toxic-lead-covered-cables-from-at-t-verizon-and-other-telecoms-are-hazardous-wsj">and are now decaying.</a>
Environmental researchers, collaborating with Journal reporters, conducted tests on water and sediment samples from various locations. Shockingly, eight out of 12 tests showed elevated levels of lead contamination.
<h2 class="wp-block-heading">Lead-Cabling Controversy Hits Telecoms Stocks: Analysts React</h2>
The market impact was swift and severe. Analysts, including <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/07/33256330/at-t-verizon-plummet-to-multidecade-lows-toxic-lead-investigation-sparks-telco-sell">Citigroup&#8217;s Michael Rollins</a>, wasted no time downgrading the affected stocks due to the environmental threat. 
On Monday, shares of AT&amp;T plummeted to their lowest value since 1993, dropping 7%. Although there was a slight recovery attempt on Tuesday&#8217;s opening, AT&amp;T ultimately closed flat. 
Verizon shares also experienced a significant decline, hitting their lowest point in over a decade on Monday with a 7.5% drop, followed by a marginal 2.4% rebound on Tuesday. TDS saw the most notable recovery on Tuesday, surging 9% after an 8.4% decline on Monday.
<h2 class="wp-block-heading">Telecom Companies Respond to Lead Cable Concerns:</h2>
In response to the Wall Street Journal&#8217;s investigation, the telecom companies and USTelecom, a group representing the broader industry, defended their practices. 
They emphasized that they provide safety training and protective gear to workers to handle lead properly. 
AT&amp;T said in a press release that it does not consider lead-sheathed cables to be a public health concern, citing scientific literature. The company also criticized the testing methodologies used by the newspaper and questioned the credibility of one of the testing companies due to a conflict of interest.
TDS acknowledged the presence of a limited amount of lead cabling in its network and said it is identifying the next steps to address the issue while complying with applicable laws. Verizon did not issue a PR on the matter.
<h2 class="wp-block-heading">5 ETFs With The Highest Exposure To Telecom Stocks</h2>
Among the exchange-traded funds that show a concentration of holdings in telecommunication stocks affected by the lead-cabling crisis, Benzinga found:
<figure class="wp-block-table"> 
<table>
<thead>
<tr>
<th>ETF Name</th>
<th>T (weight %)</th>
<th>VZ (%)</th>
<th>TDS (%)</th>
<th>FYBR (%)</th>
</tr>
</thead>
<tbody>
<tr>
<td>iShares U.S. Telecommunications ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IYZ#NYSE">IYZ</a>)</td>
<td>4</td>
<td>11.8</td>
<td>0</td>
<td>2.5</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Global Comm Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IXP#NYSE">IXP</a>)</td>
<td>2.59</td>
<td>3.55</td>
<td>0</td>
<td>2.3</td>
</tr>
<tr>
<td>SPDR S&amp;P Telecom ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XTL#NYSE">XTL</a>)</td>
<td>3</td>
<td>3.1</td>
<td>3.5</td>
<td>3</td>
</tr>
<tr>
<td>Vanguard Communication Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOX#NYSE">VOX</a>)</td>
<td>3.8</td>
<td>4.4</td>
<td>0.1</td>
<td>0</td>
</tr>
<tr>
<td>Invesco S&amp;P 500 Equal Weight Communication Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSPC#NYSE">RSPC</a>)</td>
<td>4</td>
<td>4.1</td>
<td>0</td>
<td>0</td>
</tr>
</tbody>
</table>
</figure>
Also Read: <a href="https://www.benzinga.com/news/23/07/33253034/whats-going-on-with-verizon-shares">What&#8217;s Going On With Verizon Shares</a>
Photo: Shutterstock

Shares in telecom giants AT&amp;T Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/T#NYSE">T</a>), Verizon Communication Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VZ#NYSE">VZ</a>), Telephone and Data Systems, Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TDS#NYSE">TDS</a>), and Frontier Communication Parent, Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FYBR#NASDAQ">FYBR</a>) dropped dramatically Monday, shedding 7% to 15%. The Wall Street Journal&#8217;s investigation revealing the neglect of a network of harmful lead-coated cables <a href="http://benzinga.com/government/23/07/33158334/toxic-lead-covered-cables-from-at-t-verizon-and-other-telecoms-are-hazardous-wsj">prompted the market backlash.</a>
In a note released Monday, Citigroup analyst Michael Rollins examined the situation regarding the cable network deployed by these telecom companies nationwide. 
According to Rollins, a considerable percentage of these cables may have lead sheathing, with varied amounts of exposure for each company. As a result, the analyst believes that this issue will continue to have an impact on stocks and their valuation for a few months, if not longer, until the market has a better understanding of the financial risk involved.
Rollins stated that gathering more information regarding the matter could take several months, and that a final resolution could take years. According to Citigroup&#8217;s current scenario estimate, most wireline telecommunications companies will experience a firm valuation discount ranging from 0.2x to 1.0x of EBITDA.
Also Read: <a href="https://www.benzinga.com/markets/eurozone/23/07/33255186/tesla-prepares-to-double-berlin-factory-size-aiming-for-1-million-evs-annually">Tesla Prepares To Double Berlin Factory Size, Aiming For 1 Million EVs Annually</a>
Chart: AT&amp;T Tumbles to February 1993 Levels, Verizon to November 2010
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="702" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/17152456/T_2023-07-17_21-22-59_aba83-1024x702.png" alt="" class="wp-image-69555" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/17152456/T_2023-07-17_21-22-59_aba83-1024x702.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/17152456/T_2023-07-17_21-22-59_aba83-300x206.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/17152456/T_2023-07-17_21-22-59_aba83-768x526.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/17152456/T_2023-07-17_21-22-59_aba83-1536x1052.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/17152456/T_2023-07-17_21-22-59_aba83.png 1804w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h2 class="wp-block-heading">Citigroup Actions</h2>
In response to recent developments, Citigroup has downgraded its ratings on AT&amp;T, Telephone and Data Systems, and Frontier Communication to Neutral/High Risk. While the price targets for these stocks have been reduced to $16, $8, and $17, respectively.
<h2 class="wp-block-heading">ETF That Holds Telcos</h2>
The U.S.-listed exchange-traded funds with the highest exposure to AT&amp;T are the iShares MSCI USA Value Factor ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VLUE#NYSE">VLUE</a>) with a 5.1% weight and the iShares U.S. Telecommunications ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IYZ#NYSE">IYZ</a>) with a 4.2% weight.
The iShares Trust &#8211; iShares U.S. Telecommunications ETF also has a large stake in Verizon (12.4%), which is also represented by an 8.3% weight in the First Trust Morningstar Dividend Leaders Index Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FDL#NYSE">FDL</a>). 
Frontier Communication is a 3% holding in the SPDR S&amp;P Telecom ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XTL#NYSE">XTL</a>).
<h2 class="wp-block-heading">Telcos&#8217; Response</h2>
In response to the investigation, AT&amp;T and USTelecom, an industry group, developed websites debunking concerns about the environmental and public health implications of lead cables. 
A spokesperson for USTelecom emphasized that&nbsp;there is no evidence that legacy lead-sheathed telecom cables are a significant source of lead exposure or a public health concern. The representative additionally stressed the importance of safe work procedures in the telecommunications industry in avoiding worker exposure to lead.
Read now: <a href="https://www.benzinga.com/news/23/07/33249131/at-t-stock-is-trading-lower-whats-going-on">AT&amp;T Stock Is Trading Lower: What&#8217;s Going On?</a>
Photo: Shutterstock

Downgrades

Price Target

AT&T, Verizon Plummet To Multidecade Lows: Toxic Lead Investigation Sparks Telco Sell-Off, Analysts Head For The Exits

The iShares U.S. Telecommunications ETF (BATS: <a class="ticker" href="https://www.benzinga.com/stock/iyz#BATS">IYZ</a>) is down roughly 35% year-to-date, while the S&amp;P 500 is down approximately 22.6% year-to-date.
As the communications services sector has been dragged down far worse than other sectors in the S&amp;P 500, now may be an opportune time to bargain hunt for stocks that have been artificially dragged <a href="https://www.benzinga.com/markets/options/22/10/29241831/verizon-communications-whale-trades-spotted">down with the market</a>.
For instance, Verizon Communications Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vz#NYSE">VZ</a>) and AT&amp;T (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/t#NYSE">T</a>) have seen their yields soar, as the <a href="https://www.benzinga.com/money/best-sectors-to-invest-in-right-now/">sector</a> plummets. A key factor to consider is that during times of recession, consumers still need to pay phone and internet bills, which could lead to an eventual rebound.
The SPDR S&amp;P 500 ETF Trust&nbsp;(ARCA: SPY) has an average dividend yield of 1.64%, while the communications services <a href="https://www.benzinga.com/money/best-sectors-to-invest-in-right-now/">sector</a> has the highest average dividend yield in the S&amp;P 500 of 6.89%
Go To:&nbsp;<a href="https://www.benzinga.com/analyst-ratings/analyst-color/22/10/29290832/netflix-q3-earnings-preview-analysts-pinpoint-key-metrics-for-investors-to-watch">Netflix Q3 Earnings Preview &mdash; Analysts Pinpoint Key Metrics For Investors To Watch</a>
Spok Holdings Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/spok#NASDAQ">SPOK</a>) is offering a dividend yield of 16.23% or $1.25 per share annually, utilizing quarterly payments, with a track record of increasing its dividends once in the past year.
Spok Holdings is a global leader in critical communication solutions and continues to innovate to set the standard for the future of healthcare communication. Spok solutions are in more than 2,200 hospitals, including all of the adult and children&rsquo;s hospitals named to U.S. News &amp; World Report&rsquo;s Best Hospitals Honor Roll, as its customers make more than&nbsp;100 million messages each month.
In the second quarter, Spok saw its software bookings increase by 23% year-to-date, touting 32 deals worth over six figures each.
&ldquo;We are very encouraged about our prospects for the second half of 2022 and beyond, and our focus remains on creating value for our stockholders by maximizing revenue and cash flow generation,&rdquo; said Vincent D. Kelly, president and CEO of Spok Holdings.
Lumen Technologies Inc&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lumn#NYSE">LUMN</a>) is offering a dividend yield of 14.47% or $1&nbsp;per share annually, making quarterly payments, with an inconsistent track record of increasing its dividends.
Lumen Technologies is one of the U.S&#39;s largest telecommunications carriers serving global enterprises, with 450,000 route miles of fiber. This includes over 35,000 route miles of subsea fiber connecting Europe, Asia&nbsp;and Latin America.
&quot;We improved our revenue trajectory and accelerated the number of Quantum Fiber locations enabled in the second quarter,&rdquo; said&nbsp;Lumen&nbsp;President and CEO Jeff Storey.
Lumen completed the $2.7 billion divestiture of its Latin American business to Stonepeak on Aug. 1, and saw its net income decline in the second quarter of 2022 of $344 million, from the previous <a href="https://www.benzinga.com/markets/penny-stocks/22/10/29203538/short-interest-sector-focus-communication-services-sector">period&#39;s year of $506 million</a>.
Photo:&nbsp;<a href="https://www.shutterstock.com/g/chombosan">metamorworks</a>&nbsp;via Shutterstock

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Do Tech Stocks Pay High Dividends? These 2 Yielders Surpass Their Peers

On CNBC&rsquo;s &ldquo;<a href="https://www.cnbc.com/video/2022/08/08/final-trades-uber-nvidia-telecom-more.html">Halftime Report Final Trades</a>,&rdquo; Liz Young of BNY Mellon Investment Management said that iShares US Telecommunications ETF (BATS: <a class="ticker" href="https://www.benzinga.com/stock/iyz#BATS">IYZ</a>) &quot;hasn&rsquo;t come back as much in this rally as some of the other stocks,&quot; meaning there wasn&rsquo;t as much &ldquo;multiple expansion.&rdquo;
&ldquo;I think that there could be a nice rally if we see bullish sentiment by the end of the year,&rdquo; Young added.
Stephen Weiss of Short Hills Capital Partners chose Ford Motor Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/f#NYSE">F</a>). &ldquo;The Inflation Reduction Bill is not allowing credits for cars over 55,000 or trucks over 80,000,&rdquo; Weiss stated. Most cars don&rsquo;t apply for the credit, but Ford does, he added. &ldquo;I think Ford is gonna be one of the primary beneficiaries of this,&rdquo; Weiss mentioned.
Check out other stocks making moves in the <a href="https://www.benzinga.com/premarket/">premarket</a>.
&nbsp;&quot;Shark Tank&quot; investor&nbsp;Kevin O&#39;Leary, known as &quot;Mr. Wonderful,&quot; said that when Nvidia Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>) was on sale, &ldquo;they missed on gaming, but what they make is going to be in demand in all 11 sectors of the economy.&rdquo; &ldquo;Either data center or semis, that&rsquo;s a trend that is gonna stick for years to come,&rdquo; he added.
Also Read:&nbsp;<a href="https://www.benzinga.com/news/22/08/28411403/indian-billionaire-outperforming-elon-musk-jeff-bezos-this-year-takes-zero-salary-home">Indian Billionaire Outperforming Elon Musk, Jeff Bezos This Year Takes Zero Salary Home</a>
Joseph Terranova of Virtus Investment Partners named Uber Technologies Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uber#NYSE">UBER</a>) as his final trade.

Media

NVDA

UBER

CNBC's Final Trades: iShares Telecom, Nvidia, Uber, And This Big Three Automaker

CNBC&rsquo;s &quot;Fast Money: Halftime Report&quot; delivers market-moving news to investors.
The commentary delivered by hosts of the show often moves the stocks mentioned. The information is collected and refined using <a href="https://benzinga.grsm.io/register174">Benzinga Pro&rsquo;s</a> News Tool. Benzinga Pro users can access this information by using the News tool on any workstation.
Traders on the show bought the following stocks:
Nvidia Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>) Kevin O&rsquo;Leary purchased shares of Nvidia, calling it a &ldquo;discount.&rdquo;
Call of the day:
Apple Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>)
Final trades:
Ford Motor Company (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/f#NYSE">F</a>)
NVIDIA Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>)
Uber Technologies Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/uber#NYSE">UBER</a>)
iShares US Telecommunications ETF (BATS: <a class="ticker" href="https://www.benzinga.com/stock/iyz#BATS">IYZ</a>)

AAPL

Kevin O'Leary Says This Chipmaker's Stock Is A 'Discount'

<ul>
<li>Congress&rsquo;s temporary $3.2 billion broadband subsidy program has seen over 2.3 million U.S. households subscribed,&nbsp;<a class="editor-rtfLink" href="https://www.reuters.com/world/us/more-than-23-million-us-households-sign-up-broadband-subsidy-fcc-2021-06-07/" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">Reuters reported</a>&nbsp;based on the Federal Communications Commission (FCC) data.</li>
<li>Over 1,000 broadband providers have agreed to support the program aimed towards the lower-income and pandemic afflicted Americans to provide internet access to the underserved communities.</li>
<li>Some providers expect the program initiated on May 12 to run out of funds in four to six months.</li>
<li>Verizon Communications Inc&nbsp;(NYSE:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/vz#NYSE" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">VZ</a>),&nbsp;T-Mobile US Inc&nbsp;(NASDAQ:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/tmus#NASDAQ" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">TMUS</a>),&nbsp;AT&amp;T Inc&nbsp;(NYSE:&nbsp;<a class="editor-rtfLink" href="https://www.benzinga.com/stock/t#NYSE" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">T</a>) are some of the U.S.&rsquo;s major broadband providers.</li>
<li>Reuters notes there are 33.2 million households eligible for the subsidy.</li>
</ul>

CHTR

LBRDA

LBRDK

Over 2.3M US Households Signed for Broadband Subsidy: Reuters

Ten-year <a href="https://www.benzinga.com/topic/u-s-treasury">U.S. Treasury</a> yields hit 3 percent on Tuesday for the first time since 2014, but the stock market hasn&rsquo;t initially reacted the way investors might expect.
<h3>
	What Happened</h3>
The 10-year Treasury yield reached the 3-percent psychological level Tuesday morning, triggering fears that inflation could be ramping up too quickly. Rapidly rising interest rates and inflation can eat into corporate profits. In addition, higher yields on fixed-income investments tend to sap money out of the stock market, particularly from dividend stocks.
To make matters worse, the yield curve &mdash; the difference between short-term rates and long-term rates &mdash; has been flattening. In the past, the yield curve has often inverted prior to U.S. recessions.
<h3>
	Why It Matters</h3>
As would be expected, the stock market tanked Tuesday, with the Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>) down 2.2 percent and the SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) down 1.7 percent in mid-day trading. The market leaders and laggards have been<a href="https://www.bloomberg.com/news/articles/2018-04-23/yen-drop-to-buoy-japan-stocks-as-dollar-rallies-markets-wrap"> somewhat unexpected</a>.
The iShares Dow Jones US Telecom (ETF) (NYSE: <a class="ticker" href="/stock/iyz#NYSE">IYZ</a>), which contains high-yielding telecom stocks that would typically be hit hard by rising rates, was mostly flat on the day. At the same time, the Utilities SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) was up 0.6 percent and the iShares US Real Estate ETF (NYSE: <a class="ticker" href="/stock/iyr#NYSE">IYR</a>) was up 0.1 percent. Both sectors are filled with high-yielding stocks.&nbsp;
<h3>
	What&rsquo;s Next</h3>
Investors will be keeping a close eye on where Treasury yields progress in the coming weeks, particularly when it comes to the yield curve. In addition, investors will be watching the <a href="https://www.benzinga.com/federal-reserve">Federal Reserve</a> closely for commentary related to interest rates and inflation following its next meeting May 1-2.
Related Links:
<a href="https://www.benzinga.com/markets/bonds/18/02/11200307/why-increases-in-us-bond-yields-hurt-your-stocks">Why Increases In US Bond Yields Hurt Your Stocks</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/02/11120075/analyst-reits-falling-on-rising-treasury-bond-rates">Analyst: REITs Falling On Rising Treasury Bond Rates</a>

Bonds

Federal Reserve

SPDR Dow Jones Industrial Average ETF Trust

iShares Trust Dow Jones US Real Estate Fund Index

3% Treasury Yield Triggers Puzzling Market Reaction

The S&amp;P 500 index continues to trade near historical all-time highs but that doesn't mean every sector within the index is trading in the green for 2017. Quite the contrary, three sectors within the index are lagging the index by the widest margin seen in decades, according to Fundstrat Global Advisers.
As a whole, the S&amp;P 500 index and the SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) is up around 9 percent this year, but energy (Energy Select Sector SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xle#NYSE">XLE</a>)), telecommunications services (iShares Dow Jones US Telecom (ETF) (NYSE: <a class="ticker" href="/stock/iyz#NYSE">IYZ</a>) and financial sectors (Financial Select Sector SPDR Fund (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>))are all down by an average of 7.7 percent. In fact, this under-performance represents the largest gap dating back all the way to 1990, and over the past three decades, the bottom three performing sector have never been energy, telecommunications services, and financials.
<h3>The Other Side Of The Story</h3>
While the three sectors are underperforming the broader index, this is occurring after a major runup, especially in the first quarter of last year, S&amp;P Global's Erin Gibbs said during a recent <A href="http://www.cnbc.com/2017/06/03/three-sectors-are-lagging-the-sp-500-by-a-historic-degree-this-year.html">CNBC "Trading Nation"</a> segment.
Of particular note, the <A href="https://www.benzinga.com/media/cnbc/17/06/9550416/financial-stocks-are-now-red-for-2017-but-some-analysts-see-more-pain-ahead">financial sector</a> is "coming off froth valuations" after a notable 20 percent rally in the fourth quarter last year. Energy stocks can't be faulted as it is merely following the decline in <A href="http://www.benzinga.com/topic/oil">oil prices</a> while telecoms and other high dividend yielding sectors are seeing investors exiting their positions.
Given the underperformance so far in 2017, the three sectors are now approaching "reasonable valuations and reasonable pricing," Gibbs added.
Related Links:
<a href="https://www.benzinga.com/media/cnbc/17/06/9563088/pro-itd-be-a-mistake-for-investors-to-hit-the-exits-now">Pro: It'd Be A Mistake For Investors To 'Hit The Exits' Now</a>
<A href="https://www.benzinga.com/fintech/17/06/9562810/the-factors-that-could-be-moving-short-and-long-term-buyers">The Factors That Could Be Moving Short- And Long-Term Buyers</a>

CNBC

3 Sectors Lagging The S&P 500 By A Huge Amount

The first quarter of 2017 hasn&#39;t been kind to the telecom sector and the related exchange traded funds. Between investors favoring higher beta, cyclical sectors and the bond-like traits of telecom stocks, a disadvantage against the backdrop of rising U.S. interest rates, the sector is scuffling.
The iShares U.S. Telecommunications ETF (NYSE: <a class="ticker" href="/stock/iyz#NYSE">IYZ</a>) is lower by 3.6 percent year-to-date, while the Fidelity MSCI Telecommunications Services ETF (NYSE: <a class="ticker" href="/stock/fcom#NYSE">FCOM</a>) is off 2.3 percent. If there&#39;s good news looming for these ETFs and the broader telecom space, it&#39;s the possibility of a more favorable regulatory environment.
&ldquo;The regulatory environment for US telecommunications and cable companies under the new administration is likely to lead to less regulation and lower taxes, which would be positive for operators&#39; growth profiles,&quot; <a href="https://www.fitchratings.com/site/pr/1020864">Fitch Ratings</a> said in a note Tuesday. &ldquo;These moves would likely stimulate investment and greater innovation for both operators and business customers given increased clarity and predictability of the regulatory environment.&rdquo;
How a more sanguine regulatory setting affects big-name telecom companies is particularly important to the aforementioned ETFs and that statement certainly applies to FCOM. The Fidelity ETF, which is the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/03/9172263/making-a-call-with-telecom-etfs">least expensive telecom ETF</a> on the market, allocates 46 percent of its weight to AT&amp;T Inc. (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) and Dow component Verizon Communications Inc. (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>).
Those stocks combine for 20 percent of the lineup in IYZ. Down 5 percent, Verizon is one of the worst-performing members of the Dow year-to-date.
&ldquo;The rating outlook for the telecom and cable sector could remain negative if it appears management is weakening its commitment to maintaining appropriate credit profiles in the face of more transformational transactions by failing to address rising leverage from acquisitions in a timely and effective manner,&rdquo; said Fitch. &ldquo;The rating outlook could also remain negative if product pricing becomes irrational and detrimental to the health of the sector. Unlimited mobile data plans are a case in point where companies are facing competitive pricing pressures.&rdquo;
Although telecom is often thought of as a high-yielding sector, the trailing 12-month dividend yields on FCOM and IYZ are each just over 2.3 percent, which is below the 2.44 percent yield on 10-year U.S. Treasuries. However, the two telecom ETFs sport price-to-earnings ratios that are slightly ahead of the multiple on the S&amp;P 500.

Politics

A More Favorable Regulatory Environment For Telecom ETFs

Perhaps due to the sector&#39;s bond-like qualities, a disadvantage at a time when investors widely expect te Federal Reserve to boost interest rates, the telecom sector is lagging this year. For example, Dow component Verizon Communications Inc. (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>) is lower by more than 6 percent year-to-date.
Investors typically embrace telecom stocks and the related exchange traded funds as defensive dividend ideas. Despite the sector&#39;s recent struggles, some analysts view telecom slightly more favorably than other low beta,<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/03/9166690/how-the-fed-can-affect-these-dividend-etfs"> high yield groups</a>.
&ldquo;CFRA&rsquo;s investment policy committee recommends a marketweight exposure to the telecom services sector, in contrast to underweighting views on other high-yielding equity sectors such as consumer staples, real estate or utilities,&rdquo; <a href="https://www.cfraresearch.com/">CFRA Research</a> said in a note out Tuesday.
<h3>
	A Look At The ETFs</h3>
Year-to-date, the iShares U.S. Telecommunications ETF (NYSE: <a class="ticker" href="/stock/iyz#NYSE">IYZ</a>) and the Vanguard Telecommunication Services ETF (NYSE: <a class="ticker" href="/stock/vox#NYSE">VOX</a>) are lower by 5.4 percent and 4.1 percent, respectively. Verizon&#39;s slack performance is hindering both ETFs. VOX allocates 20.7 percent of its weight to Verizon, while IYZ has a 9.7 percent weight to the stock.
CFRA has buy ratings on five telecom stocks, including Verizon rival AT&amp;T Inc. (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>). Last week, the firm upped its ratings on Sprint Corp. (NYSE: <a class="ticker" href="/stock/s#NYSE">S</a>) and T-Mobile US Inc. (NASDAQ: <a class="ticker" href="/stock/tmus#NASDAQ">TMUS</a>) to Buy from Hold.
&ldquo;Last week, CFRA equity analyst Angelo Zino upgraded to buy, from hold, his recommendation on Sprint Corp and T-Mobile US,&rdquo; said CFRA. &ldquo;According to Zino, the S upgrade primarily reflects a view that the company will see healthy subscriber growth despite recent unlimited plan offerings from larger carriers. For TMUS, Zino expects the carrier to be very aggressive with promotions/marketing efforts for the next generation iPhone launch in September and sees additional share gain ahead. In both cases, Zino sees the stocks undervalued on an enterprise value/EBITDA basis.&rdquo;
T-Mobile and Sprint combine for over 11 percent of IYZ&#39;s lineup. VOX&#39;s combined weight to those stocks was 8 percent at the end of January. 
The Fidelity MSCI Telecommunications Services ETF (NYSE: <a class="ticker" href="/stock/fcom#NYSE">FCOM</a>) has a comparable lineup to VOX and is lower by 4.7 percent this year. FCOM is the least expensive telecom ETF with an annual fee of just 0.084 percent.
CFRA has Market Weight ratings on FCOM and VOX and an Underweight rating on IYZ.

Making A Call With Telecom ETFs

President Donald Trump has named <a href="https://www.fcc.gov/about/leadership/ajit-pai">Ajit Pai</a> as the chairman of the Federal Communications Commission. Pai, a FCC commissioner, has been elevated to the top position at the commission following the resignation of Tom Wheeler last month.
In a <a href=https://twitter.com/AjitPaiFCC/status/823646831196389376> statement </a> acknowledging the offer, Pai said he looks forward to working with the new administration, his colleagues at the commission, members of Congress and the American public to bring the benefits of the digital age to all Americans.
<h3> Tamer FCC Regulations On The Chopping Block? </h3>
Pai's elevation means the commission could be leaning toward a more restrained and permissive stance, in line with Trump's call for looser regulations. In the past, Pai had always been at loggerheads with his predecessor on a range of issues, including net neutrality, accusing the commission of overstepping its authority. 
The <a href=http://www.connectwithglobal.com/leadership.html> FCC </a> is likely to become Republican-dominated, as it is believed that the two vacant slots will be filled by candidates from either of the parties. The five-member commission can only hold three members from a single party. Currently, the commission has one Democrat and two Republicans, and it is likely the additional two members to fill out the board will be one Democrat and one Republican. Incidentally, Pai may not have to go through the grind of a Senate hearing, unless and otherwise he is appointed on a long-term basis. 
<h3> Pai's Credentials And Stance </h3>
A Kansas-based lawyer, Pai worked for Verizon Communications Inc. (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>) in early 2000s and was nominated to the FCC in 2012. During his tenure at the FCC, he has opposed several rules aimed at lowering the cost of cable boxes, advancing municipal broadband, lowering rates for prison phone calls and restricting data collection by ISPs, etc. Pai has also been known for writing letters, op-eds and written dissenting opinions that are apparently inflammatory.
<h3> Not Neutral On Net Neutrality </h3>
Pai has taken a dissenting stance against net neutrality since February last year and has voiced his opinion against it in a 67-page dissent statement. His argument has been the market will regulate itself fine and an unfettered internet has evolved into an amazing success story, changing lives and the world. 
<h3> What Is Net Neutrality? </h3>
Net neutrality, aka open internet, is a principle that ISPs should give consumers access to all legal content and applications on an equal basis, without favoring some sources or blocking others. Therefore, ISPs cannot charge content providers for speedier delivery of their content on fast lanes or slowing content of content providers they compete with. This assumes significance in an era when telecom companies are engaged in vertical integration and getting into content. 
A case in point is Comcast Corporation (NASDAQ: <a class="ticker" href="/stock/cmcsa#NASDAQ">CMCSA</a>), which owns NBCUniversal. The company delivers content, namely TV shows and movies through its Xfinity Internet Service. AT&amp;T Inc. (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) has <a href=http://www.benzinga.com/analyst-ratings/analyst-color/16/10/8590819/the-strategic-rationale-for-at-ts-bid-to-buy-time-warner> negotiated a deal </a> to buy Time Warner Inc (NYSE: <a class="ticker" href="/stock/twx#NYSE">TWX</a>), although the deal is yet to be consummated.
<a href=http://www.phonearena.com/news/Verizon-to-buy-giant-cable-operator-Comcast_id90145> Recent reports </a> suggest that Verizon, which already has an agreement to buy Yahoo for $4.8 billion, may be eyeing to buy Comcast.
With Pai, and his overt opposition to net neutrality, at the helm, net neutrality is expected to be dismantled. He had recently expressed his resolve to reverse or overturn net neutrality in one way or another.
<h3> Beneficiaries If Net Neutrality Is Dismantled </h3>
<ul>
<li>ISPs such as AT&amp;T, Verizon and Comcast stand to gain on the potential rollback of the open internet, as they can operate with less regulation and reduced transparency.</li>
<li>Wireless providers such as Sprint Corp (NYSE: <a class="ticker" href="/stock/s#NYSE">S</a>), T-Mobile US Inc (NASDAQ: <a class="ticker" href="/stock/tmus#NASDAQ">TMUS</a>) etc., which were also included in the ambit of net neutrality, could now heave a sigh of relief. Some of the existing deals of these companies such as allowing users to stream music without it counting against the data caps, may now be allowed.</li>
</ul>
<h3> Losers On Reversal Of Net Neutrality </h3>
<ul>
<li>Search engines, aggregators and social networking sites such as Alphabet Inc (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>) (NASDAQ: <a class="ticker" href="/stock/googl#NASDAQ">GOOGL</a>) Google, Facebook Inc (NASDAQ: <a class="ticker" href="/stock/fb#NASDAQ">FB</a>), Microsoft Corporation (NASDAQ: <a class="ticker" href="/stock/msft#NASDAQ">MSFT</a>), etc. could lose, as ISPs now assume the role of the traffic regulator on the Internet, taking the power away from traditional regulators of web traffic such as search engines.</li>
<li>Mobile App developers also stand to lose as the standards for mobile internet access will not be the same as regular home and business internet connections.</li>
<li>Content providers such as Netflix, Inc. (NASDAQ: <a class="ticker" href="/stock/nflx#NASDAQ">NFLX</a>), Amazon.com, Inc. (NASDAQ: <a class="ticker" href="/stock/amzn#NASDAQ">AMZN</a>), Hulu, Pandora Media Inc (NYSE: <a class="ticker" href="/stock/p#NYSE">P</a>), Microsoft's Skype and Google's YouTube are also among the affected parties, as most of the evening hour traffic is taken by these streaming services, adding costs to the ISPs without generating proportionately higher revenues. With ISPs now regaining the power to levy higher charges, these content companies can see their profitability suffer. </li>
</ul>
At the time of writing, iShares Dow Jones US Telecom (ETF) (NYSE: <a class="ticker" href="/stock/iyz#NYSE">IYZ</a>) was down 0.68 percent at $35.06. 
Image Credit: By Federal Communications Commission [Public domain], via <a href="https://commons.wikimedia.org/wiki/File:Commissioner_Ajit_Pai_Being_Sworn_In_by_FCC_Chairman_Genachowski_(7196602012).jpg">Wikimedia Commons</a>

Management

Movers

AMZN

GOOG

GOOGL

MSFT

NFLX

Net Neutrality Opponent To Head The FCC; Who Benefits?

<a href="http://www.theverge.com/2017/1/20/14338158/fcc-chairman-ajit-pai-trump-net-neutrality" title="http://www.theverge.com/2017/1/20/14338158/fcc-chairman-ajit-pai-trump-net-neutrality">http://www.theverge.com/2017/1/20/14338158/fcc-chairman-ajit-pai-trump-net-neutrality</a>

The Verge Reports Donald Trump To Name Net Neutrality Opponent Ajit Pai To Head FCC

A Citi survey shows that owning telecom stocks as a growth-recovery play is gaining popularity.

	&quot;Based on our recent buy-side survey, 56% of investors identified a single leading investment story in telecoms, 16% do not see telecoms as appealing under their current structure and 27% see company-specific stories only,&quot; analyst Dalibor Vavruska wrote in a note.

	The analyst noted that considering only the top four stories (utility/dividend, growth recovery, efficiency &amp; consolidation and regulatory improvements), 36 percent of investors saw growth recovery as the leading story, up from 8 percent in autumn 2014.
 
	Meanwhile, the utility/dividend and efficiency gains and consolidation stories remain popular, but less so than in 2014 amid &quot;already ultra-low interest rates, often unstable free cash flows, new pure infrastructure investment options and regulatory constraints.&quot;

	In addition, only 4 percent of respondents see regulatory improvement as the main story.

	Vavruska noted that the survey implies that telecoms need to better monetize bandwidth demand growth to meet investor expectations and avoid future vulnerability. However, current structural/regulatory framework may not guarantee such a move.

	&quot;The question therefore remains: will growth recovery help to sustain the industry in its current form or will growth disappointment possibly invoke more volatility, disruption and ultimately make structural change a global phenomenon?&quot; Vavruska added.

Telecom Stocks As A Growth-Recovery Play Is Gaining Popularity

Tim Seymour said on <a href="http://video.cnbc.com/gallery/?video=3000483718">CNBC&#39;s Fast Money</a> that the small-caps remain a problem and he is using iShares Russell 2000 Index (ETF) (NYSE: <a class="ticker" href="/stock/iwm#NYSE">IWM</a>) as a way to hedge his portfolio. He added that iShares Dow Jones US Telecom (ETF) (NYSE: <a class="ticker" href="/stock/iyz#NYSE">IYZ</a>) and Utilities SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) are going to continue to outperform.

	Brian Kelly thinks that iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE: <a class="ticker" href="/stock/tlt#NYSE">TLT</a>) should trade higher.

	Pete Najarian believes that Freeport-McMoRan Inc (NYSE: <a class="ticker" href="/stock/fcx#NYSE">FCX</a>) and Marathon Oil Corporation (NYSE: <a class="ticker" href="/stock/mro#NYSE">MRO</a>) are going to continue to trade lower and he owns put options in both of them.

iShares Trust Barclays 20+ Year Treasury Bond Fund

Fast Money Traders Share Their Trading Ideas For A Declining Market

For the third quarter of 2015, the S&amp;P 500 just barely made it out of negative territory with EPS growth of 0.6%. Revenues weren&#39;t as lucky, posting a decline of 2.9% for the quarter. While the final earnings number was better than the -2.2% figure expected at the beginning of the season in October, revenues actually worsened as the season went on, from an initial prediction of -1.7%. A look into the beat rates gives some clues, with only 32% of companies beating on revenues during the quarter vs. 57% on earnings.

	<figure class="tmblr-full" data-orig-height="436" data-orig-width="718"></figure>

		<img data-orig-height="436" data-orig-width="718" src="https://36.media.tumblr.com/023d804ca205a550b682aa4b9c4cdbe9/tumblr_inline_o052qhXkZ21r7gn29_540.png" />
	

	The sector story during the third quarter didn&#39;t differ much from the first half of the year. Commodities continued to struggle, dragging down the energy and materials sectors, while health care and consumer discretionary remained winners.

	Energy ended the season with profits falling 55% and revenues down 29%, a slight improvement from expectations at the beginning of the season, but still not painting a very pretty picture. Both industries within the sector, oil, gas &amp; consumable fuels and energy equipment, saw massive losses on the back of oil prices that continued to tank throughout the quarter. Brent crude fell an additional 24% in Q3, and WTI was down 19%. Expect more of the same in the final quarter of the year.

	<figure class="tmblr-full" data-orig-height="371" data-orig-width="600"></figure>

		<img data-orig-height="371" data-orig-width="600" src="https://40.media.tumblr.com/b73a576b3bbf78e4bdfc39d497e08862/tumblr_inline_o052r8gFkW1r7gn29_540.png" />
	

	Materials followed energy, with profits down nearly 4% and revenues falling an even deeper 15.7%. It probably comes as no surprise that the weakest link within the sector is metals &amp; mining, with EPS plummeting 71% in Q3 and revenues declining 20%. Base metals and precious metals alike saw declines throughout the quarter, mostly due to a weakening Chinese economy, the largest importer of commodities in the world. Even gold, typically seen as a safe haven, has been suffering due China&#39;s spot as the number one importer of the precious metal, behind India. China alone accounts for nearly half of total global zinc and copper consumption. With no signs that the Chinese economy is on track to recover anytime soon, a continued slump in commodities will surely persist into the new year.

	<figure class="tmblr-full" data-orig-height="439" data-orig-width="714"></figure>

		<img data-orig-height="439" data-orig-width="714" src="https://41.media.tumblr.com/eed525d928672f57cf3aaaa51179fabc/tumblr_inline_o052rq4VOj1r7gn29_540.png" />
	

	Sectors such as health care and consumer discretionary continued their reign in the third quarter. Health care put up impressive growth on the top-line (9.0%) and bottom-line (13.7%), lead higher by the biotechnology names. Biotech alone saw profit growth of 29.8% and sales growth of 22.7%, higher than expectations of 18.9% and 21.4% in October. Heavy hitter, Gilead Sciences, was once again a top performer in the space, posting EPS growth of 75% and revenue growth of 37%, after Q2 growth rates came in at their lowest level in 6 quarters.

	<figure class="tmblr-full" data-orig-height="491" data-orig-width="774"></figure>

		<img data-orig-height="491" data-orig-width="774" src="https://40.media.tumblr.com/172aa9741c4fa0357e944c0565bdbab8/tumblr_inline_o052siHU1A1r7gn29_540.png" />
	

	Despite mixed signals from the retail space during the season, consumer discretionary still remains a leader in the index. Lower oil prices and an improving jobs market, which didn&#39;t have as much of an impact as initially expected a year ago, began to translate into increased purchases of large ticket items in 2015. Automobiles in particular ended the third quarter as the biggest winner, with profits increasing 41.2%. Following autos was a returning favorite, internet retail, increasing EPS by 18.6% YoY as e-commerce continues its ascent. As a result of the strengthening housing market, household durables also had a robust season with profits growing 13% and revenues up 10% thanks to the homebuilders and appliance-makers. This also resulted in upbeat reports from home improvement retailers such as Home Depot and Lowe&#39;s, lifting specialty retailers to 10.5% profit growth. All other traditional retailers from the multi-line retailers and textiles, apparel &amp; luxury goods segments had considerably more muted results.

	<figure class="tmblr-full" data-orig-height="477" data-orig-width="740"></figure>

		<img data-orig-height="477" data-orig-width="740" src="https://41.media.tumblr.com/13c34a8b6a06ce91a131f951d95e8388/tumblr_inline_o052svzGDf1r7gn29_540.png" />
	

	A Look Ahead to Q4 2015

	The S&amp;P 500 is heading into the final reporting season of the year expecting negative earnings and revenue growth once again. Currently, EPS growth stands at -1% and revs at -2.0%. Losses for energy and materials are only expected to steepen. At present, estimates for energy call for a -71.6% decline on earnings and -30.4% on revenues. Meanwhile, materials are expected to worsen to -10% and -13.7%, respectively.

	<figure class="tmblr-full" data-orig-height="436" data-orig-width="718"></figure>

		<img data-orig-height="436" data-orig-width="718" src="https://40.media.tumblr.com/f66cbf9f437ab326bca4371d6f0c5e2f/tumblr_inline_o052tkFF4d1r7gn29_540.png" />
	

	Even the leading sectors have more muted expectations. Two defensive sectors, telecom and utilities, are anticipated to lead with earnings growth around the 17% mark, but because of their small size they are not heavily weighted and therefore don&#39;t have a huge impact on the overall index. Health care follows, with analysts calling for EPS growth of 6.1% and higher revenues of 8.4%. This would mark the first quarter that health care puts up single-digit profit growth, after six consecutive quarters of posting double-digits. Despite the inclusion of the holiday shopping season in the fourth quarter report, consumer discretionary is only predicted to increase earnings by 5.5% with revenues at 3.7%.

	Only 17 companies have reported thus far for Q4, including Carnival, Nike, FedEx, Lennar, Micron, among others. Of those 17 names, 53% have managed to beat the Estimize EPS consensus, with 35% missing and 12% matching. While it&#39;s still early on in the season, revenues are already off to a bad start. A meager 18% of companies that have reported for the quarter have beaten the Estimize revenue consensus, continuing a downward trend of weak sales figures.

	Stay tuned for the fourth quarter season which unofficially kicks off on January 11 when Alcoa reports. That week the Estimize blog will post a more detailed preview with additional insights for Q4. &nbsp;

Short Ideas

Previews

ASHR

GILD

Looking To Q4 Earnings Season In 6 Charts

The telecommunications sector is the smallest sector weight in the S&amp;P 500, accounting for less than 2.4 percent of the benchmark U.S. index. It&#39;s understandable, to a certain extent, that outside of the largest telecom names, the sector is sometimes glossed over by investors.

	With that treatment comes a relatively small number of exchange traded funds compared to more widely followed sectors, such as technology, financial services and healthcare. That also means the competition for the honor of 2015&#39;s top telecom ETF was confined to a small amount of competitors. Though the field is small, the Fidelity MSCI Telecommunication Services Index ETF (NYSE: <a class="ticker" href="/stock/fcom#NYSE">FCOM</a>) is this year&#39;s best-performing telecom ETF.

	Up barely more than 1 percent this year, the Fidelity MSCI Telecommunication Services Index ETF clearly is not displaying a jaw-dropping performance. However, FCOM&#39;s two main competitors, the Vanguard Telecommunication Services ETF (NYSE: <a class="ticker" href="/stock/vox#NYSE">VOX</a>) and the iShares U.S. Telecommunications ETF (NYSE: IZY), have each traded lower this year.

	At issue is the telecom sector&#39;s reputation as being negatively correlated to higher interest rates, a scenario that came to pass earlier this month.

	Earlier this year, Bank of America Merrill Lynch examined the sectors that perform well after Fed liftoff, those that disappointed and those that were somewhere in the middle. Bank of America used the prior six tightening cycles beginning March 1983, January 1987, March 1988, February 1994, June 1999 and June 2004. The research, not surprisingly, showed that telecom and utilities stocks are&nbsp;<a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/09/5834437/dont-mess-with-these-etfs-if-interest-rates-rise">usually laggards following Fed liftoff</a>.

	&quot;Telecom was the worst or second worst performing sector in terms of average cumulative returns in 6 out of the 12 months following Fed liftoff,&quot; said BofA in a note out last week. The bank added &quot;utilities were lackluster throughout the 12 months after Fed liftoff.&quot;

	FCOM charges just 0.12 percent per year, or $12 for every $10,000 invested. Until recently, that made the Fidelity offering the least expensive telecom ETF, but VOX wrested that crown earlier this month when Vanguard said it <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/12/6068969/vanguard-is-at-it-again-lowers-fees-on-21-etfs">pared fees on its sector ETFs to just 0.1 percent per year</a>.

	Dow component Verizon Communications Inc. (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>) and former Dow stock AT&amp;T Inc. (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>) combine for over 46 percent of FCOM&#39;s weight. No other stock garners a weight of more than 4.75 percent in the ETF.

Meet This Year's Best Telecom ETF

It is not a stretch to say nearly all market participants know the Federal Reserve meets this week, nor is it a stretch to say those market participants are divided over whether or not the central bank will proceed with raising interest rates.

	Fed funds futures indicate traders are not betting the Fed boosts borrowing costs and there is no shortage of commentary and punditry opining that the Fed has missed its window of opportunity to raise rates.

	Bottom line: The Fed will or will not raise interest rates this week. Bottom line, part two: Some sectors outperform others immediately following and for months after a Fed rate hike. As <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5832788/these-sector-etfs-could-shine-after-a-rate-hike">Benzinga reported last week</a>, Bank of America Merrill Lynch examined the sectors that perform well after Fed liftoff, those that disappointed and those that were somewhere in the middle. Bank of America used the prior six tightening cycles beginning March 1983, January 1987, March 1988, February 1994, June 1999 and June 2004.
<h3>
	Deeper Dive</h3>

	BofA&#39;s research suggests that Energy Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xle#NYSE">XLE</a>) and the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) perform well after Fed raises rates. But wait, there&#39;s more. The bank also looked into the sectors that lag following the unveiling of higher interest rates.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5834046/nibbling-at-risk-with-etfs-in-the-week-ahead">Nibbling At Risk With ETFs In The Week Ahead</a>

	It is not surprising that the telecom and utilities sectors were among the laggards on BofA&#39;s post-rate hike list.

	&quot;Telecom was the worst or second worst performing sector in terms of average cumulative returns in 6 out of the 12 months following Fed liftoff,&rdquo; said BofA in a note out last week. The bank added &ldquo;utilities were lackluster throughout the 12 months after Fed liftoff.&rdquo;

	In terms of ETFs, it is worth remembering that the Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) is the most negatively correlated to interest rates among the nine sector SPDRs. If the Fed does raise rates, this week or any other time, it might be wise to avoid the Vanguard Telecommunication Services ETF (NYSE: <a class="ticker" href="/stock/vox#NYSE">VOX</a>) and the iShares U.S. Telecommunications ETF (NYSE: <a class="ticker" href="/stock/iyz#NYSE">IYZ</a>).
<h3>
	Surprise</h3>

	The surprise for investors when it comes to sector ETFs to buy in the wake of a Fed rate hike comes in the form of the ETFs not to buy, those being financial services funds. For the all talk of ETFs such as the Financial Services Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>) needing higher interest rates as&nbsp;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5730304/forget-deductibles-and-premiums-look-at-insurance-etfs">an upside catalyst</a>, the historical data cited by BofA does not support that case.

	In nine of the 12 months following Fed liftoff, financials were the worst or second-worst performing sector, according to BofA.

	&ldquo;Banks, Financials, and Telecom had negative average absolute returns 12-months after an initial Fed rate hike,&rdquo; said the bank.

	In the third quarter, it appears that investors are not buying into the notion that financial services ETFs could be disappointments if the Fed hikes rates. XLF, the largest financial services ETF, and the Vanguard Financial Services (NYSE: <a class="ticker" href="/stock/vfh#NYSE">VFH</a>) have lost just $110 million combined in the current quarter.