ETF Trends
ETF Trends

The major equity index exchange traded funds (ETFs) finished April with significant monthly gains as they all closed near multiyear highs.

  • U.S. stocks got a lift on Friday from Caterpillar and other U.S. industrials shares, putting the Dow in line for its best monthly performance since December. “This whole rally we’ve seen has been earnings driven,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York. “The corporate earnings and corporate revenues are much stronger than the economic data would indicate and that is why we keep marching higher here.” Of the blue-chip index’s 30 components, 18 traded higher. The blue-chip Dow average was up 4.1 percent for the month while the S&P 500 has risen 2.8 percent and the Nasdaq has gained 3.3 percent. The Nasdaq was also heading for its best month of the year, while the S&P 500 was aiming for its best month since February. The SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) ended moderately higher on Friday.
  • Airline investors had the wind at their back Friday after J.P. Morgan raised its full-year profit outlook for three major carriers, saying planned capacity cuts and revenue growth have exceeded its earlier views. Also giving a boost to shares in the sector were reports that United Continental had raised domestic fares, a move that could be matched by other carriers as they race to cover the rising price for jet fuel. Wall Street had been lowering its industry forecast as fuel costs surged ahead of attempts to raise ticket prices. However, “2011 and 2012 expectations now appear mostly too low for the first time in several months,” said J.P. Morgan analyst Jamie Baker. “Fundamentals tell a strong story,” Baker said in a note to clients, pointing to planned seat capacity reductions and climbing revenues. Investors can play this trend with the iShares Dow Jones Transportation Average ETF (NYSEArca: IYT) which closed moderately higher today.
  • Treasury prices rose on Friday for a third straight week of gains, pushing 10-year yields to the lowest level in more than a month, as investors felt more comfortable with the outlook for the Federal Reserve’s monetary policy. On Friday, bonds came under pressure from data showing consumer spending and sentiment improved. Notably, there was extremely little trading volume “given the rare confluence of holidays in both the Tokyo and London money centers,” said strategists at RBS Securities — the former for Golden Week and the latter for the royal wedding. Yields on 10-year notes which move inversely to prices, fell as low at 3.29%, the lowest since late. Yields on 2-year notes declined 2 basis points to 0.61% and 30-year bond yields slipped 1 basis point to 4.41%. A basis point is 1/100th of a percent. The iShares Barclays 20+ Year Treasury Bond ETF (NYSEArca: TLT) ended slightly higher on Friday.

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.