ETFs Remain Flat on Economic Uncertainty

December 16th at 8:30am by Tom Lydon

ETFs are flat on Thursday after a round of economic data illustrated an unexpected drop in weekly jobless claims and the first rise in housing starts in three months.

  • The number of people filing for state unemployment benefits for the first time fell to its second lowest level this year, the Labor Department said Thursday. Against a backdrop of what’s been stubbornly high joblessness, initial claims dropped 3,000 to a seasonally adjusted 420,000 last week, marking the third decline in the past four weeks. First-time claims have been on a clear improving trend over the past two months, raising hope that companies will soon hire more workers. 
  • Construction of new U.S. homes remained at a low level in November, while permits for new construction fell. Housing starts rose 3.9% to a seasonally adjusted, annualized rate of 555,000 last month, the Commerce Department reported, however, that’s 5.8% below the year-earlier period. On Wednesday, the National Association of Home Builders reported that builder confidence on new, single-family homes remained at low levels in December. Meanwhile, permits for new construction fell 4% to the lowest level since April 2009.  SPDR S&P Home Builders ETF (NYSEArca: XHB) is up 0.5% in early trading.
  • European markets held in a tight range Thursday as political leaders headed to Brussels for a summit on the region’s sovereign-debt crisis. EU leaders will meet over the next two days to discuss their response to the sovereign-debt crisis, including creating a permanent crisis-resolution mechanism and potentially increasing the current bailout fund. If you’re feeling bullish about what this meeting will produce, check out ProShares Ultra MSCI Europe ETF (NYSEArca: UPV).
  • Asian markets struggled for direction Thursday, as investors worried about eurozone sovereign-debt problems, while Chinese stocks slipped on lingering worries about monetary-policy tightening by Beijing. Standard & Poor’s lifted China’s long-term credit rating to AA-minus from A-plus, saying the government had deftly handled the financial crisis and that a higher rating reflected the nation’s improved fiscal position and growth prospects. The Direxion Daily China Bear 3x Shares ETF (NYSEArca: CZI ) is pointing up this morning.

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.

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