ETF Trends
ETF Trends

2008 takes the cake for the worst year for the U.S. real estate market since 1997, and related stocks and exchange traded funds (ETFs) mirror this. This rings true despite a random spike in sales for December.

The National Association of Realtors said Monday that sales of existing homes rose 6.5% to an annual rate of 4.74 million in December, which were actually better-than-expected results, reports Alan Zibel for Associated Press. The bump in sales were due to the foreclosure markets in California, Nevada and Florida.

As the real estate market wanes, the retail and sales reports for many companies are reflecting the recession and the inability for a turnaround is apparent. Companies undergoing turmoil include:

  • Reuters reports that Caterpillar (CAT) announced layoffs and foretold the year ahead would be a tough one for the heavy machinery company. The makers of construction and mining machines said that 20,000 jobs are at stake, and this could be their worst year since post-WWII.
  • Sprint Nextel Corp. (S) plans on cutting 8,000 jobs, or 14% of their staff, taking $1.2 billion in costs off the table. The Associated Press reports that the wireless provider is freezing the 401(k) match, holding off on salary increases and freezing the tuition reimbursement program.
  • Heavyweight McDonalds Corp. (MCD) reported a fourth quarter net profit loss of 23%, due in large part to the stronger U.S. dollar. This is actually a reflection of international sales growth and sales in U.S. stores actually increased 5%, reports Courtney Dentch for Bloomberg. Excluding foreign-exchange fluctuation, revenue grew 5%.
  • Home Depot (HD) is closing their Expo chain and cutting 7,000 jobs taking their shares 5% higher in trading on this news. The injured housing market is a direct reason that the home improvement company can not stay afloat. Of their 300,000 workers, 2% will be affected, and most of the cuts impact workers at Home Depot’s 34 Expo Design Centers, five YardBIRDS, two Design Centers and HD Bath, a bath remodeling business with seven sites, reports Ashley M. Hehner for the Associated Press.

Meanwhile, Pfizer has agreed to buy Wyeth for $68 billion in cash and stock, reports Aaron Task for the Tech Ticker. And in what could be a positive sign is that the deal is going through with the held of bailed-out banks, says Scott Jagow for Marketplace.

Oil has experienced a small rally as the price climbed to $48 per barrel, based upon the equity markets surge on the Dow Jones Industrial Average, reports Dirk Lammers for the Associated Press.

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.