Exchange traded funds (ETFs) start off strong on Thursday after economic data had new claims for unemployment benefits dropping last week and the Labor Department reported a rise in consumer prices.
- Fewer people applied for unemployment benefits last week, providing support for the view that there will be stronger job growth this year. Applications fell to a seasonally adjusted 385,000 last week, marking the third decline in the past four weeks, the Labor Department reported Thursday. The four-week average for claims dropped to 386,250. That was the lowest level since July 2008, providing evidence that the job market is on a more solid footing. “The downward trend in initial jobless claims is undeniable,” said Joshua Shapiro, chief U.S. economist at MFR Inc. Shapiro said it provided “strong evidence that the labor market recovery is for real” and he predicted it would continue in coming months.
- Americans paid more for food and gas in February, as consumer prices rose at the fastest pace in nearly two years. The Consumer Price Index rose 0.5% in February, the largest increase since June 2009, the Labor Department. Core prices, which exclude food and energy, rose only 0.2% , matching January’s gain. More food and gas price increases are in the pipeline. The Labor Department said Wednesday that wholesale prices jumped 1.6% in February, the largest increase since June 2009. Wholesale food prices rose 3.9%, the biggest increase since November 1974. The Federal Reserve said this week that more expensive food and energy is “currently putting upward pressure on inflation.” But the central bank said the pressures are likely to be temporary. It also said that measures of underlying inflation have been subdued, a reference to core prices. Market Vectors Agribusiness ETF (NYSEArca: MOO) is up 2.5% in early trading.
- Factories produced more cars, appliances, computers and furniture in February, lifting manufacturing output for the sixth straight month. The Federal Reserve says overall output at the nation’s factories, mines and utilities dipped 0.1% last month, the first decline since October. But that reflected a sharp drop in production at gas and electric utilities because of unseasonably warm weather. Factory production, the biggest slice of industrial activity, rose 0.4%. Manufacturing is expected to keep boosting economic growth — despite the nuclear crisis in Japan. Overall industrial production has risen by nearly 12% since hitting its recession low in June 2009. But it remains about 6% below its pre-recession peak in September 2007. The SPDR S&P International Industrial Sector ETF (NYSEArca: IPN) is up approximately 2.5% today.
- Oil prices are climbing back around $100 per barrel after a crackdown on protesters in Bahrain increased tensions in a conflict that threatens to pull in OPEC heavyweights Saudi Arabia and Iran. Meanwhile, Japan is expected to boost imports of fossil fuels as the third-largest economy recovers from the Sendai disaster. Benchmark crude added $1.91 to $99.89 per barrel on the New York Mercantile Exchange. It rose as high as $100.67 per barrel earlier in the day. The Direxion Daily Energy Bull 3x Shares (NYSEArca: ERX) surged over 5% so far today.
Gregory A. Clay contributed to this article
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