ETF Trends
ETF Trends

The major index exchange traded funds (ETFs) lost some of their early gains and ended slightly lower on Monday despite the death of Osama bin Laden, the news only resulted in brief gains for the market, as traders shifted their focus back to earnings results and economic news.

  • The Nasdaq and IntercontinentalExchange have intensified their fight for the top U.S. stock market. On Monday, Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. said they are taking their unsolicited bid for the New York Stock Exchange directly to shareholders. They are starting an exchange offer to jointly acquire all of the outstanding shares of NYSE Euronext for $11 billion. The parent company of NYSE has twice rejected the joint bid from Nasdaq and ICE saying it is committed to its previously agreed-to $10 billion merger with German exchange operator Deutsche Boerse, despite the lower price. The fight for shareholder votes was largely expected. Nasdaq CEO Robert Greifeld told analysts recently that the company planned to appeal to shareholders directly if NYSE again rebuffed the company’s advances. The iShares Dow Jones U.S. Financial Sector ETF (NYSEArca: IYF) ended slightly lower on Monday.
  • U.S. manufacturing activity slowed in April for a second straight month but input prices reached their highest level in nearly three years, according to an industry report released on Monday. The Institute for Supply Management said its index of national factory activity eased to 60.4 in April from 61.2 the month before. The figure topped economists’ forecasts for a reading of 60. The index for prices paid rose to 85.5 from 85, the highest since July 2008. New orders, output and hiring all eased in comparison with March but showed enough vigor to offer reassurance the economy had enough resilience to withstand costlier energy. A sharp decline in the value of the U.S. dollar was helping the export-heavy sector. “The economy is not falling apart despite the spike in oil prices,” said Joel Naroff of Naroff Economic Advisors in Holland, Pa. “Firms are hiring, adding to inventories, seeing demand rise and exporting. Those are not signs of malaise.” The Industrial Select Sector SPDR (NYSEArca: XLI) basically closed flat today.
  • Crude-oil futures settled modestly lower in volatile trading Monday, as prices gained some support from a weaker dollar but traders were concerned that the U.S. manufacturing sector expanded at a slower pace. Investors also appeared divided in evaluating the impact of the death of Osama bin Laden after a U.S. raid in Pakistan Sunday. Some analyst judged that his killing would skim off some of the risk premium attached oil prices, others cited prospects for turbulence in the Arab world and, more crucially, in bin Laden’s native Saudi Arabia, the world’s top oil exporter. A sell-off didn’t occur, however, because few investors wanted to be caught short in a market that could turn without much notice, said Kyle Cooper, managing director of IAF Advisors in Houston. The death of bin Laden was tricky for oil markets because the connection to Saudi Arabia and potential for unrest in the oil-rich country. “If anything happens in Saudi Arabia, oil at $120 will look cheap,” Cooper said. “That’s why we had a reluctance to sell off today.” The ProShares UltraShort Oil & Gas ETF (NYSEArca: DUG) closed almost 4% higher on Monday.

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.