October 02, 2008 at 11:00 am by Tom Lydon
Exchange traded funds (ETFs) and stocks are down sharply this morning as more downbeat economic news trickled in on two fronts: factory orders and unemployment.
Factory orders are down more than what had been forecast, by 4%. It was the biggest drop in two years, says Timothy R. Homan for Bloomberg. The decline is partially a result of the credit crisis, since as banks have become more reluctant to lend, it’s more difficult for companies to borrow what they need to get new equipment.
Economists had forecast a 3% drop.
Jobless claims are at their highest level since 2001, rising in the wake of a weakening economy and hurricanes. Claims for benefits are the highest they’ve been since the Sept. 11 attacks, reports Christopher S. Rugaber for the Associated Press.
A number of ETFs are trading lower this morning, including industrials, which stand to be particularly hit by the slowdown in factory orders:
- Rydex S&P Equal Weight Industrials (RGI), down 21.3% year-to-date
- PowerShares FTSE RAFI Industrials (PRFN), down 21.5% year-to-date
- iShares Dow Jones U.S. Industrials (IYJ), down 22% year-to-date
Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.
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