Homebuilder exchange traded funds (ETFs) could be getting a little lift from Fed Chairman Ben Bernanke’s hints that another rate cut could be nigh. Trang Ho of Investor’s Business Daily reports that since the housing slump and high energy prices will continue to vex consumers for the time being, the central bank will have to be flexible.
On Friday, there were some hints that the Treasury Department and several major mortgage firms were working on a plan to freeze interest rates on adjustable-rate mortgages, which could help control foreclosures.
Homebuilder ETFs sure liked what they heard. The SPDR S&P Homebuilders (XHB) and the iShares Dow Jones U.S. Home Construction Index (ITB) both jumped more than 6%. While it’s a start, they’ve still got a long way to go: XHB has dropped 49% year-to-date while ITB plummeted 59% year-to-date.
Are we finally seeing the light at the end of the tunnel — even if it’s just a tiny speck?
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.