ETF Trends
ETF Trends

Worries about the domestic and global economy didn’t wind down along with the second quarter. They’re hanging around, dogging the markets and exchange traded funds (ETFs) right into the third quarter.

Financial overhaul made another step closer to becoming a reality late yesterday after the House approved it. It’s now marching over to the Senate, where it may encounter some resistance.

If the bill does wind up becoming a law, the impact on financial ETFs may be mixed. The larger banks will see their activities and investments sharply curtailed, and growth may be constrained. This could be to the benefit of smaller regional and community banks, which tend not to invest in risky instruments and they’re not so large that they’re at the risk of being broken apart. [What Financial Reform Means for ETFs.]

  • SPDR KBW Bank (NYSEArca: KBE)
  • iShares Dow Jones U.S. Regional Banks (NYSEArca: IAT)
  • First Trust NASDAQ ABA Community Bank (NYSEArca: QABA)

Mortgage rates have plunged to the lowest level in more than 50 years, to 4.58% this week. Unfortunately, it’s not bringing buyers out of the woodwork; pending home sales and construction spending both declined in May. Pending home sales are now at the lowest level on record, plunging 30% from April. [Homebuilder ETFs Get Cheap.]

  • SPDR S&P Homebuilders (NYSEArca: XHB)

There’s good news/bad news in the manufacturing sector: while the index slipped last month, it’s still at a level pointing to growth. It’s one of the few areas in the U.S. economy that has generally remained positive for the last year, although analysts caution that if consumer spending stays weak, manufacturing growth could step back. If consumer spending does continue to generally be weak, consumer discretionary ETFs may feel it more than most. [Craving Fast Food? Here Are 4 ETFs.]

  • First Trust Consumer Discretionary AlphaDEX (NYSEArca: FXD)

Consumer Discretionary, FXD, Retail

  • Vanguard Consumer Discretionary (NYSEArca: VCR)

Consumer Discretionary, VCR, Retail

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.