Greece Bailout Catapults Stock ETFs Higher | ETF Trends

Stock exchange traded funds (ETFs) jumped at the opening of trading on the prospect of Greece getting help resolving its debt crisis as investors overlooked the negative S&P/Case Shiller home price index.

European stocks rose Tuesday on hopes that a new aid deal for Greece would keep the country from defaulting on its debts, and as falling unemployment in Germany underlined the strength of the eurozone’s largest economy. A deal would not solve Greece’s deeper economic problems but would remove the fears of an imminent default stoked last week by news the IMF would withhold further loans. “A solution to Greece’s medium-term problem isn’t immediate but renewed EU efforts should reduce tensions, near term,” said analysts at Credit-Agricole. The SPDR Stoxx Europe 50 ETF (NYSEArca: FEU) jumped over 3% so far on Tuesday.

U.S. single-family home prices dropped in March, dipping below their 2009 low, as the housing market remained bogged down by inventory and weak demand, a closely watched survey said on Tuesday. The price index was below the low seen in April 2009 during the financial crisis. The glut of houses for sale, foreclosures, tight credit and weak demand has kept the housing market on the ropes even as other areas of the economy start to recover. “This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” David Blitzer, chairman of the index committee at S&P Indices, said in a statement. “Home prices continue on their downward spiral with no relief in sight.” Despite the report, the iShares Dow Jones U.S. Real Estate ETF (NYSEArca: IYR) is up almost 1% on Tuesday.

Japan’s industrial production bounced back modestly in April after suffering a record-breaking tumble in March, while the unemployment rate rose modestly, and household spending slowed its fall, government data released Tuesday showed. More promising, projections for industrial output in the coming months improved, with respondents to the ministry‘s survey now expecting production to rise 8.0% in May, compared to a previous forecast of 2.7%. For June, the survey yielded a forecast 7.7% rise. The Ministry said improved outlooks for transport equipment, electronics parts and devices, and information and communications electronics — in that order — led the increase in the forecast. The ProShares Ultra MSCI Japan ETF (NYSEArca: EZJ) is up over 3% in early trading.

The Chicago PMI dropped sharply to a reading of 56.6% in May from April’s 67.6%, a sign of a weakening recovery, according to data released Tuesday. Production, new orders and order backlogs all dropped sharply. “Whether by plan or by misfortune, the proportion of firms reporting buildup in inventories increased in May, showing the broadest increase seen since September 2006,” the survey said. The national Institute for Supply Management’s manufacturing gauge is due Wednesday. The Materials Select Sector SPDR ETF (NYSEArca: XLB) is trading higher today.

The Conference Board’s consumer-confidence index fell in May as Americans grew slightly more pessimistic about future job prospects and business conditions. The nonprofit organization said its consumer confidence index fell to 60.8 in May from a revised 66.0 in April – the lowest reading in six months. The future-expectations index dropped to 75.2 from 83.2 last month, the lowest level since last October. The “present situation” index, however, barely edged down, to 39.3 in May from 40.2 in April. The Conference Board’s index conflicts with another consumer survey by Reuters and the University of Michigan that showed an increase in May owing to a drop in gas prices. The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is up on Tuesday.

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.