Midday Market Update: Safety Surges as Housing Remains Mixed | ETF Trends

Just as they have all week, U.S. stocks and exchange traded funds (ETFs) are fluctuating between positive and negative territory on optimistic news from the housing sector and a push from commodities.

A positive announcement from the nation’s largest home improvement retailer, Home Depot (HD) gave investors something to cheer about.  The Atlanta based company expects full-year earnings from continuing operations to be in a range of remaining flat to declining by 7%, higher than the previously forecast decline of 7%, reports the Associated Press.  This is yet another indicator that the housing market may have bottomed out and is starting to rebound.  Despite this promising news, the SPDR S&P Homebuilders (XHB) dropped nearly 1.5% in morning trading. It’s up 5.7% year-to-date; HD is 3.9%.

One of the most valuable commodities of all, black gold, surged above $71/barrel in electronic trading on the New York Mercantile Exchange, marking a high for 2009.  The threats of weak demand and excess supply have been overshadowed by fears of a weak U.S. dollar, the threat of inflation and the fact that the Commerce Department expects oil consumption to rebound by 2010, making crude extremely attractive.  The news sent the United States Oil Fund (USO) up nearly 2% in morning trading.

In the auto industry, the takeover of Chrysler LLC by Fiat SpA has formed the world’s sixth largest automaker.  The Italian car maker will own 20% of the newly formed Chrysler company, and aid Fiat in having a global presence.  The combined company is estimated to have sales of nearly 4.5 million vehicles globally, ranking it right behind Ford (F).

As the U.S. dollar continues to weaken, the nation’s trade deficit isn’t getting any better.  In April, the deficit rose 2.2% to a whopping $29.2 billion and is on pace to hit approximately $361.1 billion for the year. The good thing is that the deficit appears like it will be much lower than that of 2008.

Overall, all the major indexes are down for the morning.  The Dow Jones Industrial Average declined 0.3%, the S&P 500 dropped 0.4% and the Nasdaq gave back nearly 1.2%.

Kevin Grewal 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.