Midday Market Update: Wall Street Ignites On Economic Data | ETF Trends

U.S. stocks and exchange traded funds (ETFs) opened the third quarter in positive territory on encouraging economic news regarding manufacturing, pending home sales and construction spending. 

A report on U.S. manufacturing activity indicated that the sector has contracted less than expected in June and at the slowest pace since last August.  The Institute for Supply Management’s index read a 44.8 in June, which is still indicative of a contraction, but higher than the 42.8 it logged in May and higher than the 44.5 expected by analysts.

On another positive note, the National Association of Realtors reported that pending home sales rose for the fourth straight month.  Its seasonally adjusted index rose by 0.1% to 90.7; the rise has been much fueled by lower home prices and the $8,000 tax credit offered first-time homebuyers.  The news sent the iShares Dow Jones U.S. Real Estate (IYR) up nearly 1.5% in morning trading.

On a negative note, the Commerce Department reported that total construction spending declined by 0.9% in May, almost double the 0.5% decline economists anticipated.  The changes left total construction spending at a seasonally adjusted annual rate of $964 billion, down a whopping 116% from a year ago.  Despite this news, the PowerShares Dynamic Building & Construction (PKB) added 2.1% in morning trading.

To further support the belief that the U.S. job market is still hurting, but slightly less so: private companies shed the fewest jobs in the last eight months.  ADP Employer Services reported that the private sector handed out 473,000 pink slips in June, down from the 485,000 handed out last month, but a far cry from the 393,000 anticipated by analysts.   Granted, fewer jobs are being cut, but the numbers are still higher than forecast, indicating that relief is not in sight.