Exchange traded funds (ETFs) are pointing to a slightly higher start for Wall Street Monday, as investors turned their attention to a heavy week of economic data and to crude prices after Libyan rebels took control of key oil towns over the weekend.
- Consumer spending rose in February at the fastest pace in four months, but a big part of the increase went to cover higher gas prices. The Commerce Department said Monday that consumer spending jumped 0.7% in February. Personal incomes rose 0.3%. That was after a 1.2% January income increase — the biggest in nearly two years. Both gains reflected a Social Security tax cut, which boosted take-home pay. Still, high gas prices were a big reason for the spending gains. Economists are concerned that if energy costs keep going up, it will cut into household budgets and leave consumers with less money to spend on other items. Paul Dales, senior U.S. economist at Capital Economics, said the February figures on incomes and spending provided “yet more evidence that higher prices are denting economic growth.” The ProShares Ultra Consumer Goods ETF (NYSEArca: UGE) rose almost 1% in early trading.
- Pending home sales rose in February in all parts of the U.S. except for the Northeast, a real estate trade group reported Monday. The National Association of Realtors said its index of pending home sales rose 2.1% to 90.8 in February, the first increase in three months. Yet the index still stands 8.2% below the year-ago level of 98.9, when a now-expired federal tax credit boosted sales. Pending sales fell 10.9% in the Northeast, which NAR said might be attributable to poor weather. Pending sales rose 2.7% in the South, 4.0% in the Midwest and 7.0% in the West. The index is based on sales contracts on existing homes. The NAR also reports on sales of existing homes once the sales close, usually six to eight weeks later. The Direxion Daily Real Estate Bull 3x Shares ETF (NYSEArca: DRN) rose slightly in early trading.
- Crude-oil futures fell below $104 a barrel on Monday, as rebel forces in Libya captured key oil towns over the weekend. Funds flowed into U.S. equities and out of some commodities, including oil, as stock futures advanced. Crude oil for May delivery slipped $1.57 to $103.83 a barrel on the New York Mercantile Exchange. “The rebels in Libya have regained the major oil ports of Brega and Ras Lanuf thanks to western support,” Commerzbank analysts said in a note. “This is clearly stirring hopes that oil shipments in Libya could normalize soon.” The ProShares UltraShort DJ-UBS Crude Oil ETF (NYSEArca: SCO) is up over 2.5% so far today.
- Japanese shares fell Monday as high levels of radioactivity hindered work to control the nuclear fallout from the damaged Fukushima Daiichi power facility, while Hong Kong and Taiwanese stocks lost ground after some earnings reports fell short of estimates. “Developments in Japan remain challenging … In recent days, radiation levels at the facility have risen again, suggesting that hope for a relatively quick resolution that emerged early last week might have been premature,” Frederic Neumann, HSBC’s co-head of Asian economics research, wrote in a note to clients. The ProShares Ultra MSCI Japan ETF (NYSEArca: EZJ) gained over 1% early Monday.
Gregory A. Clay contributed to this article
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