The homebuilding industry announced disappointing first-quarter earnings, dragging down related exchange traded funds (ETFs).

The markets were feeling optimistic in the last few weeks because of positive earnings numbers from industries that don’t count themselves as part of the financial or homebuilding sectors, reports Madlen Read for the Associated Press. But in the last two sessions, the confidence seems be slowly chipping away.

Homebuilder D.R. Horton reported a quarterly loss of $1.3 billion and cut its dividend in half, to 7.5 cents a share. The company is 4.4% of the SPDR S&P Homebuilders (XHB) and 5.7% of the iShares Dow Jones US Home Construction (ITB). Both are down midday, but so far have enjoyed a strong year: they’re both up 17.6% year-to-date.

In the financial sector, it was disappointing earnings all around: Fannie Mae posted a quarterly loss of $2.2 billion; UBS reported a loss of almost $11 billion; and Wachovia said it’s almost doubling its previously reported loss to $708 million.

Financial ETFs such as the iShares Dow Jones US Financial Services (IYG) and Regional Bank HOLDRs (RKH) were mostly flat on the news, however. IYG is down 5.5% year-to-date, while RKH is down 3.4% year-to-date.

Tags | Financial, Homebuilders, Real Estate