U.S. stocks and exchange traded funds (ETFs) have mixed reactions on less than thrilling economic news and an announcement from the Treasury Department.

After much anticipation, the Treasury Department nodded its head and announced that it will allow 10 big banks, which received TARP funds, to repay close to $68 billion worth of borrowed funds.  Among the banks allowed to repay at JP Morgan Chase (JPM), Goldman Sachs (GS) and Bank of New York Mellon (BK). This is a good indicator that some stability has returned to a much battered sector, but it doesn’t mean that the financial crisis is completely over.  The news sent reactions throughout the sector and the Financial Select SPDR (XLF) was down nearly 0.3% in morning trading.

On a negative note, April wholesale inventory numbers fell for the eighth consecutive month.  The Commerce Department reported that the wholesale inventories dropped 1.4% in April, more than the 1.1% forecast by economists.  This reduction of stockpiles on shelves has contributed significantly to the contraction of the U.S. economy.  Although consumer confidence seems to be regaining, this shift still hasn’t shown up on the consumer spending forefront.

As we have seen some indicators of an economic recovery, rising gas prices may hinder these attempts.  Gas prices have increased for41 days in a row driving the price of a gallon of fuel up to a national average of $2.62/gallon.  The hike in prices is being caused by refinery problems in the Midwest and the fact that rising crude prices are finally hitting the gas stations, states Clifford Kraus for The New York Times.

The Dow Jones Industrial Average was down 0.4%, the S&P 500 dropped 0.2% and the Nasdaq added 0.4% in morning trading.

Tags: Dow Jones Industrial Average, Energy, Financial, Gas, NASDAQ, Oil, S&P 500, Sector ETFs, XLF