ETFs React To Mixed Economic Data

January 14th at 8:30am by Tom Lydon

Mixed economic reports begat mixed exchange traded funds (ETFs) in early trading. The markets digested reports that retail spending rose while inflation increased modest, but calm.

  • Consumer prices rose last month as the cost of gas increased by the largest amount since June 2009. Outside of energy costs, there was little sign of widespread inflation. The Labor Department said Friday the Consumer Price Index rose 0.5% in December, the largest increase in 18 months. United States Gasoline (NYSEArca: UGA) is up 1.1% so far today; it’s up 23.8% in the last six months.
  • Retail sales rose for a sixth consecutive month in December, by 0.6%, with big gains in sales of autos and furniture. The increases lifted sales for the year by the largest amount in more than a decade, the Commerce Department said Friday. The gain boosted retail sales 13.5% above the recession low hit in December 2008. The string of increases pushed sales for all of 2010 up 6.7%, the largest annual increase since 1999. The SPDR S&P Retail ETF (NYSEArca: XRT ) is at break-even today but a has a 33.23% year-to-date return.
  • The People’s Bank of China on Friday boosted its reserve-requirement ratio for banks by half a percentage point. The ratio, which determines the amount of money that lenders must keep on reserve, has been lifted numerous times over the past year. PBOC adviser Xia Bin said the central bank is struggling to sterilize foreign-fund inflows and believes negative real interest rates are unfair to the nation’s savers, according to a report by Dow Jones Newswires. The Direxion Daily China Bear 3X Shares ETF (NYSEArca: CZI) is up more than 1.5% today.
  • On the corporate front, J.P. Morgan Chase & Co. reported quarterly results Friday that were buoyed by a recovery in mergers and acquisitions and other investment-banking businesses like underwriting equity and debt offerings. However, the financial-services giant reported lackluster results from its key trading businesses. Shares of J.P. Morgan (NYSE: JPM) are up more than 1.5% today. iShares Dow Jones U.S. Financial Services (NYSEArca: IYG) is up more than 1%; JP Morgan is nearly 12% of the fund.
  • Intel Corp. on Thursday reported a 48% jump in fourth-quarter profit, as the chip giant saw strong demand for server processors, but flat growth in the personal-computer market. Shares of Intel (NASDAQ: INTC) are down 1% in early trading, as some analysts also cited the company’s strong outlook and a big jump in projected capital expenses for 2011 — a sign, they say, of confidence in future demand. ProShares Ultra Semiconductors (NYSEArca: USD) is up 2% so far today.

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.