ETFs Respond to Durable Goods, Jobless Claims

January 27th at 8:30am by Tom Lydon

Exchange traded funds (ETFs) got off on a sideways note on Thursday, as a combination of problematic U.S. data on durable goods and jobless claims and Japan’s sovereign-debt downgrade created headwinds.

  • New U.S. claims for unemployment benefits surged last week, reflecting seasonal factors and severe weather conditions, the government reported Thursday. Initial jobless claims rose to a seasonally adjusted 454,000 in the week ending Jan. 22, up 51,000 from the prior week’s revised 403,000, the Labor Department said. That was the highest level of claims since late October, and the increase was sharper than analysts’ consensus forecast for a rise to 410,000.
  • Orders for U.S.-made durable goods stumbled for the second straight month in December, the Commerce Department reported. Orders fell 2.5% in December follows a revised 0.1% decline in November; this is the fourth decline in the past five months. The report on durable orders and shipments was much weaker than expected. Economists surveyed by MarketWatch were anticipating a 1% rise. Rydex S&P Equal Weight Industrials (NYSEArca: RGI) is up nearly 1.5% in early trading.
  • Pending home sales rose 2% in December for the fifth increase in the past six months, according to an index released Thursday. The National Association of Realtors said its pending home sales index rose to 93.7 from a downwardly revised 91.9 in November. The index is still 4.2% below the level in December 2009, however. The Direxion Daily Real Estate Bull 3X ETF (NYSEArca: DRN) is up about 4.5% today on the news.
  • The dollar spiked higher against the yen on Thursday after a leading credit ratings agency downgraded its view on Japan’s debt amid concerns over its elevated borrowings. Standard & Poor’s cut its rating on Japan’s debt by one notch to AA- from AA. Though the agency had Japan on notice for a downgrade, the scale of its criticism of Japan’s efforts to get a grip on its debts was surprising. The ProShares UltraShort Yen ETF (NYSEArca: YCS) is up 1.5% in early trading.
  • Caterpillar Inc.’s (NYSE: CAT) fourth-quarter earnings soared as demand at the heavy-machinery maker recovered from slumping levels a year earlier. Caterpillar results smashed analysts’ earnings estimates as sales skyrocketed by 62%. “As the global economy continued to improve, the demand for Caterpillar products increased substantially,” said Caterpillar Chairman and CEO Doug Oberhelman in a statement. SPDR Dow Jones Industrial Average (NYSEArca: DIA) counts Caterpillar as a top holding, with 6% of the fund. DIA is up a slight 0.2% in early trading.

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

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. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.