Durable Goods, Industrial ETFs in Focus

May 25th at 7:44am by Tom Lydon

The April report on durable goods orders will be in the spotlight Wednesday as the release is a measure for the health of overall economic activity. Industrial sector exchange traded funds could move on the news, as this report is also a measure of business investment.

April durable goods orders are anticipated to be down by 2.6%, due to weak aircraft orders. Joshua Newell for iMarketNews reports that durables had grown for the past three months, driven by better-than-expected retail sales.

The decline in private sector consumption is driving the downtrend, as the outlook for growth in the near future is uncertain at best.

According to David Resler, chief economist with Nomura Securities, this weak expectation is not due to the rise of commodity prices. Rather, “We expect softness in the number resulting from supply disruptions in the auto industry affecting other industries. These broken supply chains should have only transitory effects, and that this decline is not part of a larger trend.”

SPDR Industrial Select Sector Fund (NYSEArca: XLI) is up 26.5% year to date. Top holdings include General Electric, United Technologies and United Parcel Service. [Traders See Downside in Industrial Sector ETFs.]

Another industrial ETF is iShares Dow Jones US Industrial (NYSEARca: IYJ).

However, the  industrial sector has outperformed the broad market so far this yaer, up 7.9%, while the S&P 500 has gained 6.4%. [Deere Earnings Drive Agribusiness and Industrial ETFs.]

Tisha Guerrero 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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