Equity markets are suddenly enduring a rocky April. Stocks were off to a good start last week following strong earnings reports from Intel and JP Morgan, but poor numbers out of Bank of America and fraud allegation at Goldman Sachs sent major indexes sharply lower (see ETFs With Exposure To Goldman). With another week of earnings reports ahead and more details on the Goldman fraud leaking out, U.S. markets figure to be active again in coming days. Overseas, a cloud of volcanic ash continues to wreak havoc on European airlines and threatens to hamper the region’s economic recovery. Below, we profile three ETFs in particular that could see an active week:
Financials Select Sector SPDR (XLF)
Why XLF Could Be On The Move: Once again, turmoil in the financial sector sparked a broad sell off last week. As more details regarding the alleged fraud at Goldman Sachs are released, XLF could see volatile times ahead. In addition to that wild card, Citigroup will report earnings before the bell on Monday morning, which could help to set the tone for banks all week. The struggling bank is expected to break-even, so any profit or loss could have a huge impact on the firm and the sector as a whole (for more financial ETFs that could be in focus, see Financial ETFs: Seven Ways To Play).
SPDR Homebuilder ETF (XHB)
Why XHB Could Be On The Move: Existing home sales figures will be reported on Thursday morning and new home sales figures come out on Friday. Both numbers are expected to show an increase over previous readings, with existing home sales coming in at 5.3 million compared to 5.02 million in the prior period. Meanwhile, new home sales are expected to surge to roughly 340,000 up from 308,000 in the previous period. Should the numbers stay above the estimates, it could be a bullish sign for struggling homebuilders and suggest that the housing market may finally be back on track. However, if the numbers slip back down it could sink funds like XHB (for more information on the homebuilder ETFs, see XHB vs. ITB Head-To-Head).
Rydex CurrencyShares Canadian Dollar Trust (FXC)
Why FXC Could Be On The Move: The Bank of Canada is scheduled to meet on Tuesday in order to give its decision on interest rates. Although few believe a rate hike will occur, many believe that the Bank will give guidance on how much and how quickly it will raise rates later this year. According to BusinessWeek, some of the nation’s largest lenders believe that the Bank will raise rates by 1-1.25% by the end of the year. Look for any comments out of central bank Governor Carney to sway the currency markets and have an impact on FXC (for more ETFs that may be in focus see our Guide To Canadian ETFs).
FXM: The Central Bank of Mexico kept rates steady, which helped to keep the peso flat early in the week. However, as the Goldman Sachs news broke, demand for riskier currencies sunk, sending the peso plunging against the dollar and pushing FXM down close to 70 basis points in Friday trading.
SMH: Semiconductor stocks soared higher after Intel reported a solid first quarter that saw profits and revenues rise. SMH was up close to 5.2% for the week on the news and only slid 1.1% in Friday trading despite a broad sell-off in most equity markets.
TIP: Demand for inflation protected securities did not sharply increase after the government reported tame core CPI numbers.
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Disclosure: no positions at time of writing.