September pending home sales jumped 6.1% as homebuyers rushed to take advantage of a government tax credit. The $8,000 credit for first-time homebuyers ends at the end of this month. The number of sales of previously owned homes are now at their highest level in more than two years, reports Alan Zibel for the Associated Press. (More stories on the real estate sector).

• iShares Dow Jones U.S. Home Construction (NYSEArca: ITB)

U.S. manufacturing activity grew at its fastest rate in more than three years in October. The surge was unexpected, although some noted that it’s still improving at a modest pace, reports The Wall Street Journal. Construction spending also rose by 0.8%, although Wall Street expected a decline.

• Industrial Select Sector SPDR (NYSEArca: XLI)

CIT filed for bankruptcy this weekend in a last-ditch effort to keep operating. CIT is a lender to nearly a million small- and mid-size businesses. The lender was also a recipient of $2.3 billion in taxpayer bailout money, which will be wiped out in the bankruptcy, The Wall Street Journal notes. (How to harness the financial sector’s recovery).

Ford surprised Wall Street by announcing $1 billion in net income in the third quarter. The automaker has also forecast a “solidly profitable” 2011. Ford hasn’t posted a full-year profit since 2005, report Tom Krisher and Dee-Ann Durbin for the Associated Press.

Investors this week will be looking at various economic indicators for clues to the strength of the U.S. economy. One of the most anticipated reports is the Labor Department’s October employment report, which is due on Friday. The Federal Reserve is also going to comment on Wednesday after a two-day meeting.

Bank of America (BAC) and Citigroup (C) are the latest financial giants to report earnings and beat Wall Street’s expectations.  Bank of America reported earnings of $0.33/share, much higher that the $0.28/share forecast by analysts, driven primarily from its profits from its trading operations.  The nation’s largest consumer bank said that it is still concerned about the weakness in the economy, rising unemployment and deteriorating credit quality which will effect the company’s performance for the rest of the year.

Citigroup reported earnings of a $0.49/share and surprised Wall Street who expected the company to post a loss of $0.37/share. The outperformance was driven by a gain in the sale of its Smith Barney unit and not from improved trading operations like the other major banks.  The Financial Select Sector SPDR (XLF) was down nearly 1% in morning trading.

Conglomerate General Electric (GE) proved that the recession has taken a toll.  The Dow component reported a decline in second-quarter profits by 49%, but still beat Wall Street’s expectations.  GE reported income of $0.24/share as compared to the $0.23/share forecast by analysts. Out of all of GE’s units, the only one to post an increase in second-quarter profits was its infrastructure segment, driven by large stimulus packages.  Despite the outperformance, the news sent the Industrial Select Sector SPDR (XLI) down nearly 1.2% in morning trading.

In the technology sector, search engine giant Google (GOOG) reported profits that topped forecasts.  Google reported earnings of $5.36/share, higher than the $5.08/share that analysts expected. The news didn’t impact the industry as the Technology Select Sector SPDR (XLK) down 0.3% in intraday trading.

June housing construction rose to its highest level in seven months as builders rushed to pour foundations to enable first-time home-buyers to take advantage of tax credits.  Additionally, the Commerce Department reported that construction of new homes and apartments jumped 3.6% last month.  These numbers are all better than expected and are a sign that the economy may be in recovery mode.  The news sent the SPDR S&P Homebuilders (XHB) up about 2% in intraday trading.

Overall, all three major U.S. indexes are down this morning.  The Dow Jones Industrial Average declined nearly 0.1%, the S&P 500 dropped 0.4% and the Nasdaq fell 0.4%.

For more stories on financials, visit our financial category.

Kevin Grewal contributed to this article.

The Labor Department reported that employers cut a 467,000 jobs in June, a larger-than expected number, sending the unemployment rate up to a 26-year high of 9.5%.  This further supports the fact that economic relief isn’t in sight for the near future.  Some experts believe that the unemployment rate will climb as high as 11% by year-end.

The situation in Europe is just as bleak, as the unemployment rate in the Eurozone hit a seasonally adjusted 9.5% as well.  Unemployment in the 16 countries that use the Euro surpassed the 15 million mark.

In the automotive world, car sales by U.S. carmakers hit the brakes in the month of June.  Overall annualized unit sales fell short of Wall Street’s 10 million forecast, coming in at 9.69 million.  Of the large automakers, Ford (F) posted better results than all others.  Automotive analysts hope that the federal government’s planned voucher program will ignite a spark in a much-battered industry.

On a positive note, U.S. factory orders rose more than expected in May, posting the largest number in nearly a year.  The Commerce Department reported that total orders rose by 1.2% in May, beating the 0.8% forecast by economists.  This increase reflected a 1.8% jump in demand for durable goods and a 0.7% increase in non-durable goods.  Despite the encouraging news, the Industrial Select Sector SPDR (XLI) was down 2.6% in intraday trading.

Overall the markets are fairly quiet this morning, perhaps traders and investors are gearing up for 4th of July – the markets are closed tomorrow.  The Dow Jones Industrial Average is down about 2%, the S&P 500 dropped nearly 2.2% and the Nasdaq declined by about 2.4%.

For more stories on industrials, visit our industrial category.

Kevin Grewal contributed to this article.

More positive news came from the Labor Department, which released a report indicating that wholesale prices rose less than expected in May as a large jump in the price in gasoline offset a drop in food prices. The Producer Price Index, or PPI, rose by a seasonally adjusted rate of 0.2% from April, much lower than the 0.6% anticipated by analysts. This news put a little ease on inflation worries.

On the negative side, the Federal Reserve released a report indicating that industrial production, which includes production at the nation’s factories, mines and utilities, has tumbled by a larger than expected 1.1%, marking a seventh straight month of declines. Additionally, industrial companies idled more of their plants and equipment, resulting in an overall operating rate of 68.3%, a record low since 1967, reports Jeannine Aversa of the Associated Press. Despite the discouraging news, the Industrials Select SPDR (XLI) gained nearly 0.4% in morning trading. It’s down 1.5% year-to-date.

Consumer electronics giant Best Buy (BBY) released its first-quarter earnings and beat Wall Street’s expectations.  The company reported earnings of $0.42/share, much higher than the $0.34/share forecast by analysts.  Additionally, the company remains optimistic about the future and maintained its yearly earnings forecast.  Despite the outperformance, shares of Best Buy traded down in morning trading and the Retail HOLDRs (RTH) dropped 0.8% in morning trading; BBT is 4.2%. It’s up 4.2% year-to-date.

The Dow Jones Industrial Average jumped 0.2%, the S&P 500 added 0.4% and the Nasdsaq gained 0.7% in morning trading.

For more mews on the retail and consumer sector, visit our related category.

Kevin Grewal contributed to this article.

Some of the dividend-focused ETFs are so diversified that they could stand in as core holdings for a portfolio, remarks Paul Justice for Morningstar. When considering a dividend paying stock or ETF, the objective is to think growth over the long-term. Dividend investing is all about finding solid dividend stocks that are reasonably priced and are expected to continue raising their dividends in the future, explains Dividends4Life on iStock Analyst.

Do not confuse dividend investing with searching for high-yielding stocks to generate a high income. A majority of the time, the quality ones will not have outrageous yields, however the growing dividends over time could compensate.

Here is a small sample of dividend-paying ETFs. Note that this is not all-inclusive, and there are may other worthy ETFs delivering dividends to choose from:

• Vanguard Financials (VFH): yields 5.9%; down 5.2% year-to-date
• PowerShares International Dividend Achievers (PID): yields 6.2%; up 3.4% year-to-date
• SPDR S&P Dividend ETF (SDY): yields 6.4%; down 1.1% year-to-date
• SPDRS (SPY): yields 3.3%; up 1.4% year-to-date
• WisdomTree LargeCap Dividend (DLN): yields 4.8%; down 4.5% year-to-date
• Industrial Select Sector SPDR (XLI): yields 4%; down 2.3% year-to-date
• Diamonds Trust, Series 1 (DIA): yields 3.9%; up 2.8% year-to-date
• iShares S&P 100 (OEF): yields 3.7%; down 0.9% year-to-date
• iShares NYSE 100 (NY): yields 3.8%; down 2.9% year-to-date
• Rydex Russell Top 50 (XLG): yields 3.6%; down 1.6% 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

Around $300 billion in tax cuts to workers and businesses in the economic recovery program would come from government spending, accounting for around 40% of the cost related to tax cuts, reports Pater Baker and Carl Hulse for The New York Times. The package will also include more than $100 billion in tax incentives for businesses to create jobs and invest in equipment or factories. There is also a credit of $500 for workers, totaling $150 billion. Along with the infrastructure spending and money used for basic materials, this rounds off the package total of $675-$775 billion for the economic stimulus.

In response to this news the dollar rallied against the euro to three week highs, and also gained against the Swiss franc and Danish krone, reports Ye Xie and Anchalee Worrachate for Bloomberg. The dollars’ gains have been seen as superficial and the U.S. currency is expected to fall again, according to analysts.

• Industrials Select Sector SPDR (XLI): down 38.7% in 2008

• iShares Dow Jones U.S. Industrial (IYJ): up 3.6% year-to-date

Investor optimism about the plan seems evident. Currency traders are sending the dollar up sharply today on the belief the Obama’s plan will help the U.S. economy rise out of the recession, says Joseph Lazzaro for Blogging Stocks. One currency trader says the trading desks are sending signals that they expect the worst of the recession to be over by mid-year.

Everywhere, from Australia and Asia to Europe and the United States, the drop in manufacturing activity has led to a slump within the worst slowdown since the Great Depression.

In the United States, the Institute of Supply Management said its index fell to the lowest point in 28 years, to 32.4 in December from 36.2 in November, reports Bettina Wassener for The New York Times. One economist says the report means that the United States was in even worse shape than anyone thought at the end of 2008.

New orders have been shrinking for 13 straight months, and are now at the lowest level since January 1948. Elsewhere:

• In Europe, an index of purchasing managers fell to a new low in December.
• In China, the purchasing managers’ index showed a slowdown for the fifth straight month, and suffered the steepest decline in its history.
• Australia’s manufacturing slowing for the seventh consecutive month.
• In South Korea, exports dropped 17.4% from one year ago.

• Industrial Select Sector SPDR (XLI): down 40.1% for 2008

Maybe with a new year comes a new attitude. Around the world, stock markets opened up to positive numbers despite the negative reports, reports Pan Pylas for the Associated Press. Britain’s FTSE 100, Germany’s DAX and France’s CAC-40 all closed higher.

GMAC, the financing arm of General Motors (GM) won’t have the sole rights to provide loans to people who buy GM cars, and it will stop financing leases as well, reports Tom Krisher for the Associated Press. In the deal, the government will get 5 million preferred shares in exchange for a $5 billion capital injection.

Caterpillar Inc. (CAT) reported they are cutting executive compensation by 50% next year because of anemic demand, not just domestically, but overseas as well. The top pay for senior managers will be cut by 5-35% while other management and support staff are to be cut up to 15%, reports Associated Press on The New York Times.

Along with this comes a hiring freeze, reductions within incentive programs and equity-based compensation. Layoffs, factory shutdowns and incentives for voluntary leave are also on the agenda. These are all symptoms of the overall weak demand.

Just a few months ago, global economic demand was making up for U.S. weakness, as record-breaking demand is now a figment of the past. China’s sales were expected to top $2 billion, and global sales were projected to be at least $50 billion.  Countries such as China, India, Southeast Asia and the Middle East are no longer booming in their building cycle.

• DIAMONDS Trust, Series 1 (DIA): down 34.3% year-to-date; Caterpillar is 4.6%

• Industrial Select Sector SPDR (XLI): down 42.4% year-to-date; Caterpillar is 3.5%

• iShares Dow Jones U.S. Industrial (IYJ): down 42.2% year-to-date; Caterpillar is 2.5%

Most Americans have already believed this about the economy, but it’s still unwelcome news. Declaring a recession can take awhile because the final readings on a variety of economic measures need to be taken, reports Chris Isidore for CNN Money.

What should investors do now? It’s never too late to implement an exit strategy, if you’re among those who have stayed in and are tired of seeing portfolio declines.

Here’s a suggested simple plan for coping that’s easy to follow, will help stop the bleeding and helps to remove emotions from the process. If you follow this, you’re not bailing entirely on your portfolio, you’re just taking steps to protect yourself in case the market continues south:

• Sell one-third of your invested equity positions now.
• If the remaining two-thirds decline 5%, sell another third.

The Dow Jones Industrial Average sank at times more than 500 points, as investors are simply not sold on solid holiday retail spending this year, reports Sara Lepro for Associated Press. Although retail sales came out better than expected by analysts’ measures, this isn’t enough to send any shot of confidence through the markets. Black Friday sales are not enough to make up for the entire month.

Christopher S. Rugaber for Associated Press reports that the manufacturing barometer shows activity fell to a 26-year low in November, a consecutive drop for 12 months. Analysts were calling for a reading of 38.4, but instead got a reading of 36.2 for November. This is the lowest since November 1982, the time of a dark recession for the economy in the United States.

Another indication of a deep recession for the economy lies in the construction spending that fell in October. A major loss in homebuilding is another result of the economic slowdown, and has fallen at a steady beat for the past two and a half years, reports Martin Crutsinger for Associated Press.

The Institute for Supply Management said its gauge of manufacturing activity fell to a reading of 36.2 in November, a 26-year low.

• Industrials Select Sector SPDR (XLI), down 40.1% year-to-date

The continued downward momentum of oil is validated by the 26-year low in manufacturing activity in the U.S. The numbers are worse than expected and OPEC has not announced a production cut of crude earlier than the next meeting, three weeks away, reports Mark Williams for Associated Press.

Light, sweet crude for January delivery fell nearly 7%, or $3.67 to $50.76 a barrel and set at $54.43 as of Friday.

• PowerShares DB Oil ETF (DBO), down 35.5% year-to-date