Exchange traded funds (ETFs) are on a high this morning, thanks to the Federal Reserve’s announcement of a plan to increase the purchase of Treasury bonds, as well as positive reports on October retail sales.
The Fed on Wednesday said it would purchase an additional $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion a month. The central bank will also keep reinvesting principal payments from its securities holdings. The Fed has sent a clear signal that it will use every weapon in its arsenal to keep the economy afloat. The top-moving ETF, according to the ETF Dashboard, is the Claymore U.S. Capital Markets Bond (NYSEArca: UBD), which is up 6%. [6 ETFs for a Financial Sector Recovery.]
Among the retailers reporting good numbers is discount retailer Target Corp. (NYSE: TGT), which reported a 1.7% gain in same-store sales in October. The results exceeded Wall Street’s expectations of a 1.5% rise. Target’s stock price is up more than 2.5% so far this morning. Another retailer up big in early trading (almost 7%) are the shares of Gap, Inc. (NYSE: GPS), which announced that same-store sales for October climbed 2%, exceeding the expectations of analysts, who expected the clothing retailer to report a drop. Macy’s Inc. (NYSE: M) is riding the retail wave up more than 4% in early trading. SPDR S&P Retail (NYSEArca: XRT) is up 2.2% so far today; Macy’s is 1.6%; Gap is 1.5%; and TGT is 1.4%. [‘Tis the Season: Retail ETFs Start Their Engines.]
The Bank of England announced that it would keep its official bank rate at 0.5%, as many analysts expected. After the news, the British pound extended gains against the dollar, rising 0.8%. The European Central Bank also kept rates on hold. In Europe, stock markets rallied to multi-month highs on the Fed news. CurrencyShares British Pound Sterling (NYSEArca: FXB) is up 1.1% so far today. [Two ETFs to Play the Dollar’s Decline.]
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Gregory A. Clay contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.