Market Overview

ETFs For Q1 Earnings Reports (OIH, IAI, SOIL)


Some S&P 500 members have already delivered earnings reports, but we're just a few days away from first-quarter earnings season kicking into high gear as Dow component Alcoa (NYSE: AA) is scheduled to deliver its first-quarter results a week from today. Alcoa's report usually isn't a big deal on its own, but it does market the start of a deluge of earnings data from marquee companies across all industries.

Excluding technology titan Apple (Nasdaq: AAPL) expectations for Q1 earnings from S&P 500 constituents are far from impressive. Barclays recently noted that, excluding Apple, EPS growth for the S&P 500 in Q1 will be practically zilch.

In late March, Dan Sanborn of Ned Davis Research said the S&P 500's total earnings growth drops from 7.8% with Apple, year over year, to just 2.7% without Apple, according to Barron's.

All of that sounds ominous, so let's have a look at a few ETFs that will definitely be in play this earnings season.

Market Vectors Oil Services ETF (NYSE: OIH) OIH constituent Baker Hughes (NYSE: BHI) recently sent a chill down the back of oil services investors by warning its Q1 earnings would be glum because more of its clients are moving away from natural gas production to oil. The savage repudiation of Baker Hughes shares weighed on rivals such as Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL) as well as ETFs such as OIH.

Oil services earnings don't kick off in earnest for another two weeks when Halliburton reports on April 18 followed by Schlumberger on April 20. Those are the world's two largest providers of oilfield services and if their sentiments are comparable to those of Baker Hughes, OIH will likely see intense selling pressure.

PowerShares KBW Bank ETF (NYSE: KBWB) The PowerShares KBW Bank ETF is one of many that have been boosted by positive results from the Fed's stress tests on banks. KBWB has also been boosted by Bank of America (NYSE: BAC) being the Dow's best performer in Q1 as that stock is the ETF's largest holding.

At this juncture, it can be argued that a lot, if not all, of the good news is priced into large-cap bank stocks. However, that doesn't eliminate the chances for positive or negative surprises. Looking at KBWB's chart, the ETF is particularly vulnerable, but it does need another spark to rally some more.

iShares Dow Jones US Broker-Dealers ETF (NYES: IAI) Jefferies (NYSE: JEF) recently surprised the Street with a solid earnings report and that could be a tell that IAI's more noteworthy constituents are poised to do the same. By "more noteworthy," we mean Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS).

Earnings season should unveil a bit more about the fundamental outlooks for investment banks and that will impact IAI's technicals, which are at a critical stage right now. The ETF is up more than 22% year-to-date and is seen consolidating in a higher range, so the importance of looming Q1 profit updates should not be underestimated regarding this ETF.

Global X Fertilizers/Potash ETF (NYSE: SOIL) SOIL should not be ignored in the world of agribusiness ETFs. The fund has been a solid performer this year and what we're looking for here as fertilizer producers deliver their profit updates is comments and outlook regarding potash demand and pricing along with any clues that current market dynamics are still favoring companies with more nitrogen than potash exposure.

Posted-In: Earnings Long Ideas News Sector ETFs Guidance Short Ideas Futures Technicals Best of Benzinga


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