An increase in home construction in April, tame inflation, upbeat earnings reports, and a recovering euro are providing a boost to stocks and exchange traded funds (ETFs) in early trading Tuesday.
An April increase in home sales boosted new-home construction, as well. However, since special tax credits expired in April, homebuilders remain cautious in the face of a likely dip in sales. Housing starts gained 5.8% in April, following a 5% gain in March. Overall, the housing starts report shows homebuilders are encouraged by solid growth in home sales, but remain cautious about future growth, as the number of permits for future groundbreakings fell sharply. [Homebuilder ETFs: Why the Sector Still Has Appeal.]
- SPDR S&P Homebuilders (NYSEArca: XHB)
A day after falling to a four-year low, the euro rose to $1.2427, a modest but important rebound nonetheless, as the European currency has been the driving force behind trading recently. The slight increase in the euro follows a meeting of European Finance ministers and European leaders expecting to hammer out further details in the $1 trillion bailout package. [Euro ETFs: Out of the Woods?]
- Currency Shares Euro Trust (NYSEArca: FXE)
Benefits from cost-cutting measures and strong growth overseas turned into better than expected gains for Wal-Mart (NYSE: WMT). First-quarter net income rose 10% to settle at $3.32 billion for the world’s largest retailer. Wal-Mart, which generates $400 billion in sales annually, is considered a key factor in determining consumer spending, so economists closely monitor sales trends at the retailer when determining the health of the U. S. economy. [Retail ETFs: Improving Sales Numbers And Optimistic Consumers.]
- SPDR S&P Retail (NYSEArca: XRT)
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Aaron Hurst contributed to this article.
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