Stocks, ETFs Move Higher as Trade Gap Narrows

December 10th at 10:00am by Tom Lydon

ETF UpdateBoth stocks and exchange traded funds (ETFs) are nicely higher this morning as news that the nation’s trade gap narrowed in October offset slightly higher-than-expected weekly jobless claims. 

The Commerce Department reported this morning that the trade deficit for the United States unexpectedly narrowed by 7.6% in October to $32.9 billion. The weak U.S. dollar helped boost exports by 2.6% to $136.8 billion. In a sign that world trade may be slowly shaking off the effects of the global financial crisis, Doug Palmer of Reuters reports that U.S. exports were at their highest level since November 2008 and imports were at their highest level since December 2008.

The smaller-than-expected trade gap is likely to prompt analysts to raise estimates of fourth-quarter economic growth. This will be good news for the Obama administration, which sees export growth as one avenue for creating jobs in the country. (For more stories concerning the Obama administration, please see our President Obama category).

Citibank (NYSE: C) is up this morning on reports that it is looking to repay the remaining $20 billion in TARP funds as soon as possible. Citibank is the only remaining major bank left with “exceptional” federal aid, report Bradley Keoun and David Mildenberg for BusinessWeek. This is after Bank of America (NYSE: BAC) recently announced an agreement with the government to repay TARP funds. (For more stories on the financial sector, please see our financial category).

Despite the news for Citibank, the SPDR KBW Bank ETF (NYSE: KBE) is down slightly this morning. (For more stories on other sector ETFs, please see our sector ETFs category).

Eli Lilly (NYSE: LLY) this morning forecast that 2010 earnings would come in line with Wall Street expectations. However, the company suggested earnings could fall after its biggest drugs lose patent protection between 2011 and 2014, reported Ransdell Pierson and Lewis Krauskopf for Reuters. Wall Street is intently focused on the “patent cliff” when Lilly faces generic competition for their drugs – Zyprexa, Gemzar, Evista and Cymbalta. These worries have pushed the stock down by more than 3.5% this morning. (For more stories on the pharmaceutical sector, please see our pharmaceuticals category).

However despite the Lilly news, the SPDR S&P Pharmaceuticals ETF (NYSE: XPH) and the PowerShares Dynamic Pharmaceuticals ETF (NYSE: PJP) are both up approximately 1% this morning. (For other stories on sector ETFs, please see our sector ETFs category).

Tony D’Altorio contributed to this article.

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.