Stock exchange traded funds (ETFs) were higher Friday as increased factory production and rising consumer sentiment was offset by rising inflation around the world.
- Rising food and gasoline prices lifted U.S. consumer inflation as expected in March, but underlying inflation pressures remained contained, a government report showed on Friday. The mild rise in core CPI — which excludes food and energy and is watched by the Federal Reserve for monetary policy — may be seen as vindication for officials at the U.S. central bank who have viewed the recent energy price spike as having a temporary effect on inflation. “The Fed is not going to see inflation as a threat so they have the freedom to keep interest rates low longer,” said David Wyss, chief economist at Standard & Poor’s Ratings Services in New York. “But core inflation is creeping up from its lows six months ago, so the Fed is going to end its extraordinary measures,” he added. The Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (NYSEArca: TMF) surged over 2.5% on Friday.
- U.S. factories produced more consumer goods, business equipment and raw materials in March, boosting manufacturing activity for the ninth straight month. The Federal Reserve says output at the nation’s factories, mines and utilities increased 0.8 percent last month after edging up 0.1 percent in February. The previous month’s results were dragged down by a weather-related drop in utility production. Factory production, the largest single segment of industrial production, increased 0.7 percent last month. Manufacturing has been a key driver of economic growth since the recession ended. Overall industrial production has risen about 11 percent since its recession-low in June 2009. It is still 8 percent below its pre-recession peak, reached in September 2007. The Industrial Select Sector SPDR (NYSEArca: XLI) is trading slightly higher.
- Business conditions for New York state-based manufacturers in April were the best in a year as new orders surged, according to a survey of executives released Friday. The Empire State manufacturing survey rose for a fifth consecutive month in April, with general business conditions increasing over four points to a reading of 21.7, the Federal Reserve Bank of New York said. The new orders index for April jumped 17 points, to 22.3, and the shipments index shot up 27 points to 28.3, the New York Fed said. The indexes for both prices paid and prices received rose to their highest levels in more than a year, indicating that price increases continued to accelerate. The ProShares Ultra Basic Materials ETF (NYSEArca: UYM) is up over 1% so far on Friday.
- U.S. consumer sentiment rose more than expected in April as worries about the impact of higher oil prices on economic growth eased slightly, a survey released on Friday showed. The Thomson Reuters/University of Michigan’s preliminary April reading on the overall index on consumer sentiment came in at 69.6, up from 67.5 in March. It was also above the median forecast of 68.5 among economists polled by Reuters. The sentiment reading is still below February’s level, with March sentiment the lowest in more than a year. The Consumer Staples Select Sector SPDR (NYSEArca: XLP) is up slightly today.
Gregory A. Clay contributed to this article.
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