Midday Market Update: ETFs Edge Higher Despite Jobless Claims

August 20th at 10:00am by Tom Lydon

U.S. stocks and exchange traded funds (ETFs) edged higher in morning trading and got a boost from overseas markets despite a discouraging job report that showed an unexpected rise in claims.

The Labor Department reported that new claims for unemployment benefits jumped unexpectedly to 576,000 last week, a jump from the 561,000 witnessed last week and much higher than the 550,000 anticipated by economists.  Although the pace of layoffs has slowed, unemployment remains high and continues to hinder the economic recovery.

Transportation officials are getting ready to wind down the “Cash for Clunkers” program as the program is on pace to exhaust its $3 billion in funds by early September.  The announcement of when the program will end may be made as early as tomorrow as officials discuss how the program should end and how to deal with a backlog of rebate payments to dealers.

But to replace “Cash for Clunkers” could be another government program that would offer rebates to consumers who purchase new energy-efficient appliances. The program would give as much as $200 back to consumers, Marketplace reports.

On the earnings front:

  • Sears Holding Corp. (SHLD), missed expectations and reported a loss of $0.17/share, excluding one-time costs, analysts expected a profit of $0.32/share.  Revenues at the company declined 10% on a stronger dollar and same-store declines.
  • H J Heinz Co., the maker of ketchup and Ore-Ida French fries, reported earnings of $0.67/share topping Wall Street’s expectations of $0.62/share, despite witnessing a decline in revenues of 4% and a strong dollar.
  • In metals and mining, Rio Tinto Group (RTP) announced a decline in profits of 65% as the prices of copper, iron ore and aluminum declined.  The world’s third-largest mining company is faced with mounting debt and is at a standstill in contract negotiations with some Chinese steelmakers.  SPDR S&P Metals & Mining (XME) is up 1.6% in intraday trading.

In the real estate world, mortgage delinquencies rose to a record seasonally adjusted 9.2% of all mortgages. Additionally, the inventory of homes in foreclosure increased to 4.3% and loans overdue by at least 90 days rose to 8%, the highest on record.  This worrisome data didn’t have much effect on iShares Dow Jones U.S. Real Estate Index (IYR), which is up 2.4% in intraday trading.

Overall all three U.S. indexes are moderately higher with the Dow Jones Industrial Average up 0.4% and the S&P 500 and Nasdaq each gaining 0.75%.

For more stories on metals and mining, visit our metals and mining category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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