Reversing a few days of weak starts, exchange traded funds (ETFs) opened higher as investors respond to another round of earnings, corporate deal making and economic reports.
- U.S. core producer prices in January rose to their highest rate in more than two years, hinting at a build-up in inflation pressures as the recovery gathers pace, a potentially troubling development for the Federal Reserve. A separate report from the Fed showed industrial production fell unexpectedly in January, largely because of a drop in utilities output as temperatures returned to normal following an unusually cold December. Vanguard Utilities (NYSEArca: VPU) is flat early trading.
- Home construction rose at the fastest rate in 20 months, pushed up by a spike in apartment building. But construction of single-family homes declined a sign that demand for housing remains weak. Single-family homes, which make up nearly 70% of new construction, fell 1% to an annual rate of 417,000 units. Apartment construction skyrocketed 80 percent to an annual rate of 171,000 units. The Direxion Daily Real Estate Bull 3x Shares ETF (NYSEArca: DRN) jumped 2.5% early today.
- French pharmaceutical major Sanofi-Aventis SA confirmed Wednesday it has struck a deal to buy Genzyme Corp. (NASDAQ: GENZ) for $20.1 billion in cash plus a contingent value right, bringing to a successful end its months-long pursuit of the U.S. biotech firm. “This transaction will create a meaningful new growth platform for Sanofi-Aventis while expanding our footprint in biotechnology,” said Sanofi Chief Executive Christopher Viehbacher in the statement.” SPDR S&P Biotech (NYSEArca: XBI) is up only slightly this morning; Genzyme accounts for 3.4% of the fund.
- Round Rock, Texas-based company Dell Inc. (NASDAQ: DELL) shares soared about 9% on Tuesday after posting results showing its net income nearly tripled, driven by strong corporate sales. The company got a big boost from its servers and networking business, which posted sales of $2.1 billion, up 16% from the year-earlier period. However, storage sales slipped 4% to $574 million, while business-services revenue edged up 1% to $1.9 billion. First Trust NASDAQ-100 Technology (NASDAQ: QTEC) is up 1% this morning; Dell stock is 2.4%.
- Also, shares of discount retailer Family Dollar Stores Inc. (NYSE: FDO) surged approx. 25% to after the company said it’s received an unsolicited takeover bid from Trian Group worth between $55 and $60 a share in cash. PowerShares Dynamic Retail (NYSEArca: PMR) is up 2% this morning; Family Dollar is 2.3% of the ETF.
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.