Exchange traded funds (ETFs) kicked off the new year by moving higher, helped by investor enthusiasm for equities and optimism about the outlook for U.S. growth. ETFs are buoyed by stock-market gains in Asia and Europe, with some relief about slowing growth in China’s manufacturing sector, according to data released during the weekend.
- The ISM Manufacturing Index for December came in at 57.0, which is slightly below the reading of 57.3 that had been expected. The December reading is up from the 56.6 that had been posted for the prior month. Construction spending for November increased 0.4%, but that is actually stronger than the consensus call for a 0.2% increase. Spending for the prior month had increased 0.7%. The ProShares Ultra Industrials ETF (NYSEArca: UXI) is responding positively to the news, up about 2.5%.
- European stocks markets kicked off the first trading day of 2011 on a stronger footing, as optimism over global growth lifted auto stocks such as Volkswagen and Peugeot. In Italy, Fiat began trading as two separate companies Monday. iShares MSCI Italy (NYSEArca: EWI) is up 0.5% so far today; Fiat is 4.9% of the fund.
- Asian stock indexes kicked off the New Year with a solid start, with gains seen across all active markets as South Korea’s main index surged to an all-time high. Technology and automotive shares led the gains in Seoul amid optimism on the global demand outlook. Though the mood was positive, one analyst cautioned that it was too early to read much into the market’s action owing to several regional stock markets remaining closed and a large number of investors still away on holiday. IQ South Korea Small Cap (NYSEArca: SKOR) is up 1.4% so far this morning.
- Shares of Bank of America (NYSE: BAC) rallied after reporting on Monday it’s reached a settlement with Fannie Mae and Freddie Mac of outstanding repurchase claims arising from certain home loans sold to them by Countrywide Financial Corp. As a result of the settlement, Bank of America said its home loans and insurance business is expected to record a $2 billion, non-cash goodwill impairment that the company can’t deduct for tax purposes. iShares Dow Jones U.S. Financial Services (NYSEArca: IYG) is up 2% so far today; BAC is 9.3% of the ETF.
Gregory A. Clay contributed to this article.
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