Evidence of a distressed economy lingers, underscored by a weak jobs report. The Labor Department said weekly jobless claims fell by less than expected last week. The Commerce Department reported durable goods orders didn’t rise as fast as anticipated last month, as orders for big-ticket manufactured goods are low, reports Stephen Bernard for Associated Press.

The Dow Jones industrial average fell more than 150 points following disappointing reports.

During his State of the Union address Wednesday night, President Barack Obama avoided talking about the banking overhaul plan. Last night’s speech was described as an effort to “reset” or “restart” the agenda after a year the President admitted hasn’t always gone smoothly.

The biggest shift Obama made last night, policy wise, was his declaration “that jobs must be our number one focus in 2010,” and plans for a “new jobs bill” would go into production, reports Aaron Task for Tech Ticker. Obama also urged Congress not to give up on health care reform.

Earnings reports were mixed:

• Proctor & Gamble (NYSE: PG) saw broad sales growth in their most recent quarters, signaling at least some pickup in consumer spending. For P&G, in particular, the improved sales were seen as increased evidence of a turnaround in its business since sales of its higher priced goods tumbled, reports CNN Money. Vanguard Health Care (NYSEArca: VHT) is down nearly 1% this morning; JNJ is 11.3%.

  

• Ford Motor Corp. (NYSE: F) posted a profit of $2.7 billion for the year, a dramatic turnaround for the company. They sustained and weathered one of the most dire years for the auto industry and remain in strong health. The company grabbed 15.3% of the U.S. auto market as sales of Ford brands in the fourth quarter rose 13% from the same period a year earlier, reports Jerry Hirsche for The Los Angeles Times.
• AT&T (NYSE: T) earnings were also largely aided by sharp cost-cutting. The company posted a 25.6 % increase in fourth-quarter earnings as its wireless and new T.V. businesses continue to grow. In the quarter that ended December 31, AT&T said Thursday, it earned $3.09 billion, or 51 cents a share, reports Marguerite Reardon for CNET News. All eyes will be on the wireless company to watch how it handles the latest iPad Tablet launch this week. iShares Dow Jones U.S. Telecom (NYSEArca: IYZ): AT&T is 17.3%

Defensive sectors have led the market over the last few weeks, remarks Gary Gordon for TheStreet, although, it might be because of year-end yield harvesting or efforts to combine cash-flow ETFs with growth ETFs. Among some of the top ETFs leading us out of 2009 include:

• Utilities Select Sector SPDR (NYSEArca: XLU)

• iShares Dow Jones U.S. Telecom (NYSEArca: IYZ)

Additionally, semiconductors and agribusiness are still performing remarkably well.

• SPDR S&P Semiconductor (NYSEArca: XSD)

• Market Vectors Agribusiness ETF (NYSEArca: MOO)

According to Gordon, the U.S. dollar carry trade, or “risk trade,” has a little more juice left to be squeezed out of it for these reasons:

• Government policy. “Risk trade” is the world’s belief that the U.S. interest rates will remain at practically nothing while the dollar remains weak. The U.S. government currently hasn’t shown any initiative in strengthening the dollar, and policies like health care reform, fiscal stimulus and the Fed’s reluctance to change rates have all kept the dollar from appreciating.
• Advisor strategy. Gordon has increased his exposure to utilities and others are doing the same. One ETF-only advisor specifically noted positions in technology, telecoms and utilities because of the prospect of growth with stable cash flows. [An ETF to invest in the "smart-grid" plan.]
• The U.S. dollar. The PowerShares DB U.S. Dollar Index Bullish (NYSEArca: UUP) may have gained recently; however, investors should know that since March, UUP mostly finished every month lower than the month before it. A true trend reversal may need something more substantial. [Gains in the dollar.]

These are some ETFs that help an investor interested in capitalizing on the carry-trade. [Playing the carry-trade with ETFs.]

• PowerShares DB G 10 Currency Harvest (NYSEArca: DBV)

• iPath Optimized Currency Carry ETN (NYSEArca: ICI)

Max Chen contributed to this article.

Assets: $508million

Holdings: Some of the best-known names in the telecommunications sector can be found in this fund, including AT&T (NYSE: T), Qwest (NYSE: Q), Sprint (NYSE: S) and Verizon (NYSE: VZ).

Objective: IYZ tracks the Dow Jones U.S. Select Telecommunications Index, which is a subset of the Dow Jones Wilshire 2500 Index.

What You Should Know

• IYZ is up 22.7% year-to-date, and up 11% in the last month
• The fund has an expense ratio of 0.48% and 33 holdings
• Yields 4.3%
• The fund is primarily broken down into fixed line telecommunications, 76.6% mobile telecommunications, 23%

The Latest News

• Competition in the sector is tight – the major providers are always scrambling to offer new services at better and better prices
• More consumers are snapping up new smartphones tied to the 3G network, and using data providers held in telecom ETFs (Four ways to play the smartphone battle)
• While consumers are shutting down their land lines, other areas of telecom continue to grow, according to BusinessWeek: wireless, data and video are all hot
• Revenue in the sector is growing faster than the costs are (Reasons to watch global telecom)
• Telecom has a reputation for dividends, and some of them have the highest yields available in the S&P 500 (The next big telecom growth spot)

For past ETF Spotlights, visit our ETF Spotlight page.

Phone companies and network suppliers are finally feeling optimistic after second-quarter profits and earnings were shown to have improved over the first quarter. On the downside, Jeffry Bartash for The Wall Street Journal reports that the decline in business and unemployment has kept overall demand for telecom services low.

While telecom executives have yet to see an end to the recession, the industry believes that demand will resume by the end of this year, and should last into 2010. That’s because the industry has had to cut costs and become increasingly efficient, which means that as sales increase, margins may also rise.

Stable profits and avoidance of sharp sales declines have helped AT&T (T) and Verizon  Communications (VZ). Internet and phone service are considered “must haves” for most  people.

• iShares Dow Jones U.S. Telecommunications Sector (IYZ): up 13% year-to-date; AT&T 23.2%; Qwest 4.2%

• Merrill Lynch Telecom HOLDRs (TTH): down 4.7% year-to-date; AT&T 54.8%; Qwest 2.3%; Verizon 29.5%

For more stories about telecom, visit our telecom category.

The government will award $4 billion in loans and grants to various telecommunications firms in an attempt to expand broadband access to underserved areas across the United States, reports John Poirier of Reuters.  This is just one part of the massive $787 fiscal stimulus passed earlier this year.

President Barack Obama and the Federal Communications Commission (FCC) have made broadband access a top priority, stating that it’s vital to be on top of the technology revolution in order for the nation to remain competitive in an increasingly global marketplace.The funding will be made available to both the public and private sectors.

Many suggest that the FCC should place net-neutrality rules within the total broadband plan. Such rules would prevent broadband providers from blocking or slowing consumers’ access to legal Web content, states Grant Gross of Computer World. Net neutrality refers to a network that has no restrictions on content, sites, equipment and types of communication.

Some ETFs that could be affected as more Americans go online include:

• iShares Dow Jones U.S. Telecom (IYZ): up 9.9% year-to-date

• Broadband HOLDRs (BDH): up 43.3% year-to-date

For more stories on telecommunications, visit our telecommunication category.

Kevin Grewal contributed to this article.

Verizon Communications (VZ) has announced it will merge with Frontier Communications for $5.3 billion in stock, according to The New York Times. The deal will include 4.8 million access lines covering 14 states. It is the beginning of Verizon’s plan to tap into the wireless, FiOS fiber-optic services and other broadband development.

Cisco Systems Inc (CSCO) has won the contract to expand the high-speed wireless networks of Clearwire Corp. (CLWR) and it will create new devices for the carrier, report Kelly Riddell and Ville Heiskanen for Bloomberg. The devices will be for consumers and small/medium-sized companies, and future technologies will be implemented to boost internet traffic.

The second largest phone company in Europe Telefonica SA (TEF) reported a 9.8% increase in first quarter profits after adding emerging market customers, writes Paul Tobin for Bloomberg. Customers in Latin America are expected to generate growth for the company as operations in Europe are on the decline.

• WisdomTree International Communications (DGG): down 13.4% year-to-date; TEF is 5.9%

• iShares Dow Jones U.S. Telecom (IYZ): up 7% year-to-date; VZ is 14.8%

Max Chen contributed to this article.

Aryeh Katz for Investopedia says that there are several large-cap stocks that are yielding reasonable to very good dividends, small P/E’s with strong price momentum. But instead of picking individual stocks, why not try to capture the sector that these big companies represent to spread the risk around?

• Altria (MO): With a market cap of $35 billion and a way to operate on non-cyclical business such as tobacco and beer, the dividend yield is 7.75%. P/E multiple is at 11.45 and 66% of the company is owned by institutional investors.
• McDonald’s (MCD): A household staple that is priced to withstand the economic downfall, as well as profit in it. They currently offer investors a solid 3.68% dividend yield.  It trades with a P/E multiple of only 14.20, and 75% of this stock is owned by institutions. Usually during a down economic time, diners who would go to an upscale eatery will often choose McDonald’s (or other fast food) instead.
• Verizon (VZ): One of the nation’s largest telecommunications companies, has a market cap of $88 billion and a payout annually of 5.94%. 60% of the company is institutionally held and the P/E is very reasonable at 13.77. Shares have appreciated 30% since the market bottomed in October 2008.
  

If institutions are loading up on big names right now, isn’t that telling you something? Strong fundamentals mixed with decent pricing is presenting opportunity now. Here are some ETF that hold these stocks; note that none of them are above their long-term trend lines yet, but watch them to see what they do:

• iShares Dow Jones U.S. Telecom (IYZ): up 4.6% year-to-date; Verizon 15.85% of assets

• PowerShares Dynamic Food And Beverage (PBJ): down 2.1% year-to-date; McDonald’s 5.1%

• PowerShares Dynamic Consumer Staples (PSL): down 1.5% year-to-date; Altria 2.5% of assets

The recent market rally, which sparked the interest of many an investor, took iShares Dow Jones U.S. Telecom (IYZ) up more than 6% and has renewed interest in this sector. Telecommunication firms such as AT&T (T) and Verizon (VZ) are up for around $4.7 billion in Federal funding and are part of the larger picture when Washington is speaking of broadband efforts, says Don Dion for Seeking Alpha.

Telecom companies argue that the restrictions placed on their services through network neutrality stifle development and draw the focus away from the original purpose of the stimulus. Together, AT&T and Verizon make up 21% of the ETF IYZ, making the company news important to investors of this fund.

Both AT&T and Verizon have been exploring “smart metering” to help customers increase energy efficiency. While the new energy meters are still in the early phases, “green” initiatives from both companies could draw interested buyers as pressure builds for the development of energy-efficient technology. $565 million was proposed to be spent by AT&T in the company’s green efforts.

• iShares Dow Jones U.S. Telecom (IYZ): down 5.2% year-to-date

Kate Gibson for Yahoo Finance explains that the companies that make up the S&P 500 tallied a collective $114 billion in losses in the still-being-reported fourth quarter. The scenario would be remarkably different, and profitable, however, if just 10 companies behind $131 billion in losses were removed from the picture.

• SPDR S&P 500 (SPY) is down 22.4% year-to-date

The 10 worst losses accounted for $131 billion in losses, leaving the remaining 490 issues with positive earnings, however, how many investors actually only purchased stocks from those six issues then? While all 10 sectors of the S&P fell during the first two months of 2009, telecommunications fared the least poorly, shedding just 2.8%.

Fronting the declines in particular were energy, materials and industrials.

Some of the companies that brought the S&P 500 down include: ConocoPhillips (COP), Time Warner (TM), Merril Lynch/ Bank of America (BAC), General Motors (GM), Symantec Corp. (SYMC), among others.

• Industrial Select Sector SPDR (XLI): down 31.8% year-to-date

• iShares Dow Jones U.S. Telecom (IYZ): down 12.7% year-to-date

Despite a global recession, AT&T (T) has opted to spend $1 billion in expanding its global network, which would add greater capacity for businesses in the U.S. and overseas, reports Jeff Meisner for E-Commerce Times. It has put more than $3 billion into its network since 2006.

The network expansion will focus on Asian markets like China, India, the Philippines, Thailand and Malaysia. North American networks will also be boosted in Mexico and Puerto Rico.

While AT&T is looking optimistic, Sprint Nextel Corp. (S) reported a $1.6 billion fourth-quarter loss. Losing 1.3 million customers probably didn’t help much, and it laid off 8,000 workers, writes Antonio Perez for The Epoch Times. In the past year, Sprint lost 4.5 million subscribers; whereas, AT&T gained 2.1 million customers.

Sprint’s losses are said to be the effect of business downsizing where the number of active contracts will likely decline. Layoffs have also harmed its wireless mobile broadband market. The cause for hope is their new line of mobile phones that are set to come out later this year.

• HOLDRS Merrill Lynch Telecom (TTH): down 8.0% in the last month; 9.3% in the last three months; holdings in AT&T, 57.8%; Sprint is 1.2%

• iShares Dow Jones U.S. Telecommunications Index (IYZ): down 4.4% in the last month; up 4.8% in the last three months; AT&T is 23.1%; Sprint is 4.8%

• Vanguard Telecom (VOX): down 4.5% in the last month; up 4.7% in the last three months AT&T is 20.0%; Sprint is 4.0%