Consumers Upbeat (ETFs) Amid Mixed Economic News

December 23rd at 8:30am by Tom Lydon

ETFs are somewhat restrained Thursday after a batch of mixed economic reports led to a flat opening for Wall Street Thursday.

  • Confidence among consumers rose in December to its highest level since June, on improved job prospects and larger discounts from retailers, a survey released on Thursday showed. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment came in at 74.5, up from 71.6 in November. It was slightly below the median forecast of 74.7 among economists polled by Reuters. “The overall tenor of news about recent economic developments was on balance more favorable than at any time during the past six years,” wrote Richard Curtin, the survey’s director. The ProShares Russell Ultra3000 ETF (NYSEArca: UWC) is up almost 2% on the upbeat consumer sentiment news.
  • The Commerce Department said that Americans spent 0.4 % more in November. Analysts forecasted a bump of 0.5 %, following an increase of 0.7% in October. Consumer spending, which accounts for approximately 70% of economic activity in the U.S., is seen as a bellwether of where the economy is headed. The PowerShares Dynamic Retail ETF (NYSEArca: PMR) is a good play on increased consumer spending.
  • Orders for U.S.-made durable goods declined 1.3% in November, led down by transportation-equipment orders, the Commerce Department reported Thursday. Economists polled by MarketWatch had expected a decline of 0.5%. Durable-goods orders in October were revised to a decline of 3.1% from a prior estimate of a 3.4% drop. Durable goods are expensive items designed to last three years or longer, and while the data is volatile from month to month, analysts see a trend in orders as a valuable leading economic indicator. Investors can play the Industrial Select Sector SPDR (NYSEArca: XLI)
  • The number of U.S. workers filing new applications for jobless benefits fell slightly last week to 420,000, the Labor Department reported Thursday. The prior week’s number was revised up by 2,000 to 423,000. The four-week average of new claims rose 2,500 to 426,000. The moving average is considered a more accurate barometer of employment trends because it smooths out quirks in the weekly data. In the week of Dec. 11, meanwhile, the number of people who continued to receive benefits under state unemployment programs dropped 103,000 to a seasonally adjusted 4.06 million.
  • European stock markets fell amid thin volumes Thursday, the last full trading session before the Christmas holiday, while shares of Allied Irish Banks PLC plunged as the government effectively took control of the ailing financial group. Shares of AIB (NYSE: AIB) are down 20% after the government won a request by the Irish High Court to approve a 3.7 billion Euro ($5 billion) cash injection. The government, which already has a 19% stake in AIB, will now hold more than 92% of the bank. AIB shares will be delisted from the main Irish exchange and will now list on the Enterprise Securities Market, which will allow shareholders to maintain access to a public facility for those shares. Investors can profit from a bearish Euro trend with the ProShares Ultra Short Euro ETF (NYSEArca: EUO).

Gregory A. Clay 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.