Exchange traded funds (ETFs) closed broadly higher Tuesday after consumer confidence fell less than some analysts had feared, shaking off concerns about stagnant home prices.
- Shoppers’ worries about juggling rising gas and food prices and other household costs flared up in March, pushing a closely watched barometer of sentiment sharply down. The sharp decline, which followed a three-year high in February and reversed five straight months of improvement, raises questions about shoppers’ ability and willingness to spend in coming months. The Consumer Confidence index measures how Americans feel about business conditions, the job market and the next six months. Economists monitor confidence because consumer spending, including big-ticket items such as housing and health care, accounts for about 70% of U.S. economic activity and is critical for a strong rebound. “Consumers’ inflation expectations rose significantly in March and their income expectations soured, combination’s that will likely impact spending decisions,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. SPDR Consumer Staples Select Sector (NYSEArca: XLP) rose 0.5% today.
- Home prices in 20 major U.S. cities fell 1% in January, the sixth straight monthly decline, according to the Case-Shiller home-price index released Tuesday by Standard & Poor’s. “The housing-market recession is not yet over, and none of the statistics are indicating any form of sustained recovery,” said David Blitzer, chairman of the S&P index committee. Prices fell 3.1% year over year in January, down from a 2.4% year-over-year drop in December. Housing-market data continued to be terrible in February, as both existing- and new-home sales plunged. Economists said an enormous oversupply of distressed properties is pushing prices down. There are also worries of a so-called “shadow inventory” of homes that sellers and banks want to list, but are waiting for the right moment. Despite the news, the Direxion Daily Real Estate Bull 3x Shares ETF (NYSEArca: DRN) rose 1.44% today.
- Shares of oil-service firms broke though to their loftiest levels since 2008 on Tuesday after Halliburton Co. (NSYSE: HAL) signaled increased business in oil-rich Saudi Arabia, while the broad equities market and oil prices advanced. In the spotlight, Halliburton foresees more business in Saudi Arabia, amid speculation on Wall Street that increased drilling could actually indicate limits in the country’s vast reserves. Shares of Halliburton rose 2.3%. Collectively, the energy components of the S&P 500 index rose 1.4%, leading 10 sub sectors tracked by FactSet Research. Energy stocks took their cue from the broad equities market, as well as the commodity markets. The iShares Dow Jones U.S. Oil Equipment & Services Index Fund (NYSEArca: IEZ) rose 2.2% on Tuesday.
- Treasury prices declined Tuesday, pushing 10-year notes to their longest losing streak since 1999, after the government had to pay more than expected to complete a sale of 5-year notes. Traders balanced the auction with U.S. economic data, Japan’s struggle to contain radiation from an earthquake-damaged nuclear plant and comments from Federal Reserve officials focusing on normalizing their ultra-easy monetary policy. Bonds briefly erased their decline after Standard & Poor’s downgraded Portugal and Greece and a report showed U.S. consumer confidence tumbled this month. Yields on the benchmark securities have risen for nine days, the longest string since December 1999. The Direxion Daily 20+ Year Treasury Bear ETF (NYSEArca: TMV) ended the day 2.28% higher.
Gregory A. Clay contributed to this article
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