Finally, a big batch of good news to kick off the new month:

• The Institute for Supply Management (ISM) reported that manufacturing activity grew for the sixth consecutive month in January to its best reading in nearly six years, report Tali Arbel and Christopher S. Rugaber for the Associated Press.
• Personal incomes rose in December by more than expected. The increase was a modest one, going up 0.4%. But it was the sixth gain in a row, and it outpaced analysts’ expectations of 0.3% growth.
• Consumers are spending a little more, as well, but this growth was tempered, too. American shoppers are still reluctant to spend too much money as credit remains tight and unemployment is still sky-high. The 0.2% increase fell short of the expected 0.3% increase. SPDR S&P Retail (NYSEArca: XRT) is up nearly 1% this morning.

Exxon Mobil’s (NYSE: XOM) profit fell 23% in the fourth quarter, but revenues increased, reports Jad Mouawad for The New York Times. The losses reflected lower oil prices and depressed oil demand as the economy remains weak. iShares Dow Jones U.S. Energy (NYSEArca: IYE) is up 2.4% this morning; Exxon is 25.3%. [For more stories about oil, go here.]

Gold prices are recovering some of their losses of late by gaining 1% in trading this morning. One analyst suggests that it may be the work of bargain hunters, reports Matt Whittaker for The Wall Street Journal. A weaker U.S. dollar is also lending a little strength to the precious metal. SPDR Gold Shares (NYSEArca: GLD) is up 1.5% this morning. [For more stories on gold, go here.]

Exxon Mobil Corp. (NYSE: XOM) is planning on acquiring natural gas explorer and producer XTO Energy Inc. (NYSE: XTO), which is valued at $41 billion, reports Jason Womack for The Wall Street Journal. The renewed interest in natural gas may provide the necessary stimulus for more mergers and acquisitions to come.

The news provided a boost to natural gas prices and some analysts think natural gas prices may rise $1 above their current levels in 2010 on the increase in M&A activity. Natural gas prices for January delivery still hover around $5.25 per million British thermal units. (Will cold snap heat up natural gas ETFs?)

Exxon’s planned purchase of XTO Energy has observers wondering if the natural gas prices are set to break the $6 barrier, remarks Matt Phillips for The Wall Street Journal. Exxon Chief Executive Rex Tillerson tried to dispel the notion that the company is betting on natural gas prices, stating that the buyout is not a price play but more of an efficiency play.

XTO’s specialty is extracting gas from sources like shales, coal-bed methane and “tight” formations. Exxon has already expressed an interest in these gas sources and the acquisition would help Exxon to develop those interests. Shale fields boast large quantities of hydrocarbons, long lifespans and repeatable results, which help lower company costs in the long run.

For more information natural gas, visit our natural gas category.

• iShares Dow Jones U.S. Energy (NYSEArca: IYE): up 17.4% year-to-date; XOM is 25.3%

• United States Natural Gas (NYSEArca: UNG): down 57.6% year-to-date

• First Trust ISE-Revere Natural Gas (NYSEArca: FCG): up 44.9% year-to-date

• United States 12-Month Natural Gas (NYSEArca: UNL): up 6.0% in the last week (Recently launched ETF)

Max Chen contributed to this article.

Exxon Mobil (NYSE: XOM) will by XTO Energy for $31 billion in an all-stock deal. Exxon has been moving to capitalize on the fast-growing supply of natural gas in the United States. The move has analysts thinking that more acquisitions could be coming, and potential targets include companies involved in natural gas, reports Mark Williams for the Associated Press. iShares Dow Jones U.S. Energy (NYSEArca: IYE) is up more than 1% on the news; Exxon is 25% of the fund.

Citigroup (NYSE: C) has made itself the last of the big banks to exit the TARP program after striking a deal to pay back $20 billion to taxpayers. The bank’s CEO wanted to exit the program because pay constraints were making the company subject to the poaching of its employees by rival banks on Wall Street, reports Bradley Keoun for Bloomberg. Financial Select Sector SPDR (NYSEArca: XLF) is trading flat so far this morning; Citigroup is 4%. (Read more about the financial sector here).

Industrial output in the eurozone declined in October after five straight months of growth, reports Pan Pylas for the Associated Press. The 0.6% decline was expected by analysts after reports showed that German industrial output fell 1.8% that same month. iShares MSCI EMU (NYSEArca: EZU) is trading up about 1% this morning. (More stories about Europe are here).

The Commerce Department reported that U.S. GDP contracted at a pace of 1% from April to June, signaling that the recession is easing up. This barometer of the nation’s health has now contracted four straight quarters for the first time on record, dating to 1947, The reading was better than the 1.5% annualized contraction expected.

The fate of the government’s “cash for clunkers” program appears to be up in the air.  Many are glad to receive a little extra cash for their clunkers, but it is unclear just how much longer the program will be in existence.  It appears that just after one week of being implemented, the program has exhausted its $1 billion allocation.  This morning, official CARS.gov Web Site indicated that $780 million remained in the coffers, states Jennifer Liberto and Peter Valdes-Dapena of CNN Money.

In the earnings world, Chevron (CVX) reported a decline in second-quarter earnings of 71%.  This was well below Wall Street’s expectations of $0.97/share and was driven by many forces, including a decline of 79% from its oil and gas production arm.  The news sent the iShares Dow Jones U.S. Energy  (IYE) down nearly 0.3% in morning trading.

In the media arena, the Washington Post (WPO) reported a second-quarter profit and, unlike most other companies, didn’t come from cost-cutting measures. It relied on its other business to get it through the media slump.  The news sent the PowerShares Dynamic Media (PBS) up nearly 1% in morning trading.

Things are not looking much sunnier across the pond. Eurostat, the European Union’s statistic division, revealed that consumer prices have fallen for the second straight month.  Prices declined by 0.6% and was much higher than expected.  The drop in prices has been driven by the surge in unemployment that the EU nations have witnessed.

All three major U.S. indexes were up this morning, with the Dow Jones Industrial Average adding 0.3%, the S&P 500 0.2% and the Nasdaq 0.4%.

For more stories on energy, visit our energy category.

Kevin Grewal contributed to this article.

Investors have been finding the balance between stocks, bonds and cash for many years, but switching around assets in these three areas did not prove as helpful as it used to, remarks Kirk Shinkle for US News & World Report.

Advisors, educators, and analysts are all starting to recommend that Mr. and Mrs. Investor to include a hodgepodge of investments to mitigate risk in his or her portfolios. Such recommendations include:

Gold. In anticipation of inflation and a weaker dollar, traders should consider some allocations to the precious metal. Current growing prices during this economic downturn shows that investing in gold could prove to be a prudent defensive trade.

• iShares COMEX Gold Trust (IAU): down 1.9% year-to-date
• SPDR Gold Shares (GLD): down 2.0% year-to-date

Energy. There is a low correlation between energy and many asset classes that make it an essential component for a diversified portfolio. Besides, we are still very much dependent on oil and that probably won’t change any time soon.

• iShares Dow Jones US Energy (IYE): down 3.5% year-to-date

Agriculture. People still eat and agricultural commodities are the most basic components of what we eat. Population growth and changing diets around the world only help add to the benefits of this sector for the long haul. Renowned investor Jim Rogers has also been fervently advocating the potential for this sector.

• PowerShares DB Agriculture (DBA): down 7.6% year-to-date
• Market Vectors Agribusiness ETF (MOO): up 9.2% year-to-date

Real Estate. REITs are still the best way for potential investors to tap into an asset class that could cut overall volatility. Real estate related investments usually don’t move with stocks and has low correlations with short-term bonds.

• Vanguard REIT Index ETF (VNQ): down 31.1% year-to-date

Emerging Markets. Many emerging markets saw plummeting prices but the returns can be quite lucrative. Though it should be noted that specific countries or regions can be volatile at times, One can invest in country or region related ETFs.

• iShares MSCI Emerging Markets Index (EEM): up 5.7% year-to-date

Wherever you choose to invest, always make sure the trend is up instead of relying on fundamentals.

Disclosure: Tom Lydon has clients that hold shares in EEM.

Max Chen contributed to this article.

Crude oil fell to $108.77 a barrel in mid-day trading today, reports Tim Pardis of the Associated Press.  ETFs leveraging oil have been top performers in trading today.  Transportation has been reacting positively to the falling price as well.  Energy-related ETFs have dropped along with the price of oil. 

Worries in the financial sector were also eased as news that Korea Development Bank is in talks about acquiring Lehman Brothers (LEH).

A report on supply management showed manufacturing activity was down slightly in August, but this was expected, and that inflation slowed.

ETFs reacting to the news today, and their mid-day performance:

• PowerShares DB Crude Oil Double Short ETN (DTO), up 11.6%
• iShares Dow Jones Transportation (IYT), up 1.0%
• iShares Dow Jones U.S. Energy (IYE), down 4.7%
• Financial Select Sector SPDR (XLF), up 1.2%

For full disclosure, some of Tom Lydon’s clients own IYT.

There are more than 160 U.S.-based products within this fund family, and they represent $327 billion in assets as of early May, reports Hannah Glover for Ignites.

As of late Friday, all but two of the ETFs were trading at $100 per share or higher. July 24th is the magic date when shares for 16 ETFs will start trading at a split-adjusted rate. Shareholders on record as of July 21 will see the adjusted number of shares in their brokerage account change as of July 28. these spits range form a 2-for-1 to a 10-for-1 according to the product.

Share splits will lower the price of shares to make them more accessible for individual investors and offer more liquidity to investors. It’s mostly a psychological move that’s merely a sign of success for an ETF or stock. Most stocks and ETFs prefer to trade under $100 to help them retain their attractiveness.

The shares splitting are: