ETFs React to Blow-Out Employment Report | ETF Trends

Exchange traded funds (ETFs) are largely flat in early trading, although a private-sector employment report proved far better than anticipated, offering an upbeat spin on the labor front before Friday’s all-important nonfarm-payrolls figures.

  • The December ISM Services Index was released this morning, but no real reaction has been made to the data. The Index improved to 57.1 from 55.0. It had been expected, on average, among economists polled by Briefing.com to come in at 55.7. Market participants are unenthusiastic by the stronger-than-expected ISM reading.
  • Private-sector employment jumped a record 297,000 in December, according to Automatic Data Processing Inc.’s employment report released Wednesday, in what could be a signal that the recovery is finally adding jobs at a meaningful clip. Employment in the service-producing sector rose 270,000, the largest monthly increase in the series that dates back to 2000. PowerShares Dynamic Building & Construction ETF (NYSEArca: PKB) is up slightly in response to the blockbuster jobs data.
  • The dollar gained ground in early trading, extending its advance on major rivals after data showed a strong jump in private hiring last month, fueling optimism over the U.S. economic outlook. Currency strategists warned that the dollar’s recent gains could prove fragile, with investors showing little conviction before Friday’s release of U.S. nonfarm-payrolls figures and other labor-market data for December. The PowerShares DB U.S. Dollar Index Bullish ETF (NYSEArca: UUP) is up more than 1% in early trading.
  • Crude-oil continued to pared larger losses today after an upbeat private-sector jobs report, but continued to trade under $89 a barrel, extending the previous session’s sell off. Oil prices are suffering from “pure exhaustion,” analysts at JPMorgan wrote in a note to clients Wednesday. The ProShares UltraShort DJ-UBS Crude Oil ETF (NYSEArca: SCO) is responding to the crude-oil pullback and is up more than 2% so far today.
  • Telecommunication shares are up today after Qualcomm Inc. (NASDAQ: QCOM) on Wednesday said it would buy Atheros Communications Inc. (NASDAQ: ATHR) for $45 a share, in a deal valued at $3.1 billion. The acquisition is intended to help accelerate the expansion of Qualcomm’s technologies and platforms to new businesses beyond cellular and provide access to significant new growth opportunities,” Qualcomm said. Atheros shares jumped 19% to $44 a share on Tuesday as reports of the deal surfaced. The iShares S&P North America Technology-Multimedia (NYSEArca: IGN) is up nearly 1% today; QCOM is 8.4% of the fund.

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. 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.