Stock ETFs Balance Earnings, European Debt Worries | ETF Trends

The S&P 500 and equity ETFs have been stuck in a range since the end of February as investors weigh improving earnings against fresh fears over the Eurozone debt crisis.

The International Monetary Fund issued an optimistic outlook on the overall global economy, but global markets and exchange traded funds may have a hard time fulfilling the projections, considering the new developments in the Eurozone.

In mid-April, the IMF raised its global growth forecast for the first time in over a year, estimating that the world economy will expand 3.5% in 2012, compared to the January calculations of 3.3%, reported Ian Katz for Bloomberg. Additionally, the world will grow 4.1% in 2013, up from 4.0%.

  • iShares MSCI ACWI Index Fund ETF (NYSEArca: ACWI)
  • Vanguard Total World Stock ETF (NYSEArca: VT)

The forecasts were largely dependent on the premise that the euro area has stabilized since the default fears of last year, with the Eurozone contracting by 0.3% in 2012, instead of the previously estimated 0.5%.

  • iShares S&P Europe 350 Index Fund ETF (NYSEArca: IEV)

Additionally, China is expected to expand 8.2% and Japan to grow 2% this year.

  • iShares FTSE/Xinhua China 25 Index Fund ETF (NYSEArca: FXI)
  • iShares MSCI Japan Index Fund ETF (NYSEArca: EWJ)

The U.S. is expected to gain 2.1% in 2012 and 2.4% in 2013.

  • SPDR S&P 500 ETF (NYSEArca: SPY)

“Improved activity in the United States during the second half of 2011 and better policies in the euro area in response to its deepening economic crisis have reduced the threat of a sharp global slowdown,” the IMF has said. “Weak recovery will likely resume in the major advanced economies, and activity is expected to remain relatively solid in most emerging and developing economies.”

“The most immediate concern is still that further escalation of the euro-area crisis will trigger a much more generalized flight from risk,” the IMF added.