Equity exchange traded funds (ETFs) ended solidly higher Thursday, as enough positive sentiment about earnings offset concerns about GDP growth and disappointing employment data.
- Treasury prices rose on Thursday pushing yields down to five-week lows, after a pair of U.S. reports showed that weekly jobless claims jumped and that the economy grew at a slower pace in the first quarter. “I’m not seeing the U.S. economy really growing very well,” said Jason Brady, who helps oversee about $4 billion in fixed-income assets at Thornburg Investment Management. Bonds pared gains slightly following an auction in 7-year notes where dealers accounted for more than half the purchases, signaling weaker investor demand. An anticipated plan by the federal government to cut deficits is also likely to include reduced spending measures that could further slow the economic recovery and keep up investors’ interest in fixed income investments. The Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (NYSEArca: TMF) gained over 2% on Thursday.
- Crude-oil futures on Thursday edged to their highest settlement since September 2008 as investors weighed the U.S. Federal Reserve’s decision to keep interest rates low and news the U.S. economy grew at a slower pace against a weaker dollar. Light, sweet crude for June delivery gained 10 cents, or 0.1%, to $112.86 a barrel on the New York Mercantile Exchange. It had earlier traded as high as $113.97 a barrel, according to the exchange’s owner CME Group. A weaker dollar supported prices against the day’s not-so-positive macro-economic news. First-quarter gross domestic product numbers were “poor” and figures on jobless claims “lackluster,” said Matt Smith, an oil analyst with Summit Energy in Kentucky. “Then there’s a bit of a hangover from yesterday. The markets were really expecting more than [Fed Chairman Ben Bernanke] gave.” The ProShares Ultra Oil & Gas ETF (NYSEArca: DIG) closed flat today.
- The National Association of Realtors’ index of pending home sales rose 5.1% to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4% below March 2010 levels but 24% above June’s reading. The February index initially was reported at 90.8. The data reflects contracts but not closings on existing homes, which normally occur with a lag time of one or two months. “Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5% to 10% this year with sales growth of lower priced homes likely to outperform high-end homes,” said Lawrence Yun, NAR’s chief economist. An index of 100 is equal to the average level of contract activity during 2001 and coincides with a level that is historically healthy. The Direxion Daily Real Estate Bull 3x Shares ETF (NYSEArca: DRN) surged over 4% on Thursday.
Gregory A. Clay contributed to this article.
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