Strong Earnings Support ETFs

April 29th at 8:06am by Tom Lydon

Exchange traded funds (ETFs) were rising slightly in early trading Friday after another round of positive earnings from major U.S. companies.

  • U.S. consumer spending rose as households stretched to cover the higher cost for food and gasoline as inflation posted its biggest year-on-year rise in 10 months. The Commerce Department said on Friday consumer spending, adjusted for inflation, edged up 0.2 percent last month after rising 0.5 percent in February. Nominal spending increased 0.6 percent for a ninth straight month of gains, after advancing 0.9 percent in February. Economists had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent. “The story in the first quarter was higher gas prices are forcing people to spend more at the expense of other items,” said Christopher Low, chief economist at FTN Financial in New York. “The inflation burden increased in the quarter, things were progressively worse as you moved from January to March.” The Consumer Staples Select Sector ETF (NYSEArca: XLP) is slightly higher early Friday.
  • Nasdaq OMX and IntercontinentalExchange are poised to go hostile in their bid for NYSE Euronext after shareholders ratcheted up pressure on the Big Board parent to get a better deal. Nasdaq OMX Group Inc and IntercontinentalExchange Inc are expected to soon take their $11.1 billion bid directly to NYSE’s shareholders through a tender offer, two sources familiar with the situation said. The move is seen as the next logical step for Nasdaq and ICE after being rebuffed twice by NYSE, which has refused to open talks on their offer. NYSE favors its existing $10.1 billion deal with Germany’s Deutsche Boerse AG. The Direxion Daily Financial Bear 3x Share ETF (NYSEArca: FAZ) rose almost 1% so far today.
  • The Chicago purchasing managers index, a barometer of business trends, fell to 67.6% in April from 70.6% in March. Economists polled by MarketWatch had forecast a reading of 68.0%. Two months ago the index reached a 22-year high. The prices paid component slipped to 81.8% from 83.4%, while new orders dropped to 66.3% from 74.5%. Any reading above 50% means that more companies are expanding than contracting. The Chicago PMI is the last major regional index released before the national Institute for Supply Management’s manufacturing index. The Industrial Select Sector SPDR (NYSEArca: XLI) is moderately higher early Friday.

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.

Tickers