GDP Data Comes In Strong, But ETFs Left Wanting | ETF Trends

Exchange traded funds (ETFs) turned south this morning, despite the government reporting a jump in consumer spending and exports that had the economy growing 3.2% in the final quarter of 2010.

  • The U.S. economy gathered speed in the fourth quarter with a big gain in consumer spending and strong exports pushing demand ahead at the fastest clip in more than 26 years. The economy grew at a solid 3.2 percent annual rate in the final three months of 2010, but it would have risen at a 7.1 percent rate if businesses had not put the brakes on rising inventories, the Commerce Department said on Friday. The SPDR S&P 500 ETF (NYSEArca: SPY) is flat so far today.
  • (NASDAQ: AMZN) stock dropped about 8% after the online bookseller’s operating margins fell short of market expectations. Inc. said Thursday that its fourth-quarter earnings rose by 8%, thanks to strong holiday sales, though the company’s operating margins for the period came in below Wall Street’s projections. Amazon’s results are delivering a big hit to Internet HOLDRs (AMEX: HHH), which is down nearly 4% today. Amazon is 44.2% of the fund.
  • Microsoft Corp. (NASDAQ: MSFT)  shares are down about 2% after the software giant posted a slight drop in quarterly profit, but said revenue rose 5% thanks to strong demand for its Kinetic video game device and Office software. iShares S&P North America Technology (NYSEArca: IGV) is down nearly 1% this morning; Microsoft is 6.9% of the ETF.
  • Asian markets ended mostly lower Friday, with stocks in Japan sliding a day after Standard & Poor’s cut the country’s sovereign-debt rating, while Indian shares stumbled as automobile and real-estate firms declined over interest-rate concerns. “The S&P downgrade could likely push the government to quicken the tax-system reforms and fiscal reconstruction” said RuiXue Xu, rates strategist at RBS Securities. iShares MSCI Japan (NYSEArca: EWJ) is down 1% today.

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.