Stocks and exchange traded funds (ETFs) turned sour despite a report showing consumer-led GDP growth in the first quarter, the third consecutive quarterly gain and yet another sign that the economy’s free-fall is becoming a memory.
The economy’s 3.2% growth rate in the first quarter is attributed to a solid rebound in consumer activity. American shoppers increased their spending by 3.6%, the strongest rate of growth in more than three years. Consumer spending grew 1.6% in the fourth quarter. Better still is that consumers appear to be moving on from purchasing just staple items to buy appliances, recreational goods, clothing and dinners out. Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is trading down this morning, despite the report. [Retail ETFs Near 3-Year Highs.]
Goldman Sachs (NYSE: GS) is in for another round of trouble as the Justice Department opens a criminal investigation of the Wall Street giant. The Securities and Exchange Commission (SEC) has already charged Goldman with civil fraud. Goldman, of course, denies any wrongdoing and will fight any and all allegations. iShares Dow Jones U.S. Broker-Dealers (NYSEArca: IAI) is down about 0.7% this morning; Goldman is 10.4%. [Financial ETFs: Look Under the Hood.]
Homebuilder D.R. Horton (NYSE: DHI) posted a profit in its fiscal second quarter on a 19% increase in finished sales. A 55% spike in new orders was also reported. Of course, today is the last day for the government’s tax credit, so we’ll soon find out how much of the real estate market’s strides are the result of incentives. SPDR S&P Homebuilders (NYSEArca: XHB) is up 0.6% so far today; DHI is 4.4%. [Moment of Truth for Homebuilder ETFs.]
The massive oil spill spreading through the Gulf has been sending the leading oil ETF, United States Oil (NYSEArca: USO), higher this week. Yesterday, it gained 2.7% as the spill intensified and today it’s up another 0.8%. The spill has already spread to the Louisiana coast and is estimated to be spilling 5,000 barrels a day. Crude oil prices have been rising and may post a monthly gain. [Using ETFs to Hedge Inflation.]
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.