Markets trended upwards last week as investors were encouraged by lower than expected CPI numbers, which led some to believe that the Fed will hold off on raising rates for the time being. Although earnings season is winding down, there are several key companies that will be reporting this week including Target, FirstSolar, and Home Depot. Below is a look at three ETFs that could be on the move this week amidst earnings reports, data releases, and continued analysis of the euro zone:
1. Industrials Select Sector SPDR (XLI)
Why XLI Could Be On the Move: Chicago PMI figures are released at 9:45 am (EST) on Friday.
What To Watch For: The Chicago PMI is a survey of manufacturing firms in the Midwest region. It consists of five components: new orders, production, supplier deliveries, inventories, and employment. An index reading above 50 suggests an expansion in manufacturing while a reading below 50 suggests a contraction. The most recent Chicago PMI level was 61.5, but the market is anticipating a drop to into the high 50s. Should the Chicago PMI fall below expectations or rise above its original level, it could be a powerful signal for the state of American manufacturing and give direction to many components of XLI.
2. Oil Service HOLDR (OIH)
Why OIH Could Be On the Move: TransOcean (RIG) reports earnings on Wednesday,;RIG makes up 15.1% of OIH holdings.
What To Watch For: With the price of crude oil surging more than $5 in last week’s trading, many traders will look to TransOcean, one of the largest firms in the oil services space, for their take on the state of the oil markets and expectations or guidance for the rest of 2010. RIG is approaching its 52-week high and the mean analyst expectation for the quarter’s earnings is $2.56 with a range from $2.44 to $2.81.
3. iShares MSCI Brazil Index Fund (EWZ)
Why EWZ Could Be On the Move: Petrobras, which is the largest component of the Brazilian ETF, reports earnings on Friday after the bell. However, due to the timing of the event, the news could end up having a bigger impact for the following week.
What To Watch For: Since Brazilian exchanges were closed for much of the week due to Carnival and Ash Wednesday, expect a more volatile Brazilian market as traders return to the largest market in South America. Petrobras, the partially state-owned oil company of Brazil, will likely set the tone for not only the Brazilian market but for all of South America, since the firm is the largest by market capitalization on the continent. Analysts are forecasting earnings of $0.86 for the oil giant, with estimates ranging from $0.68 to $0.92.
- EIS finished the week up slightly over, 2% despite lukewarm reaction to earnings from TEVA pharmaceuticals, the largest component of EIS.
- TIP rose to start the week, but finished down after lower than expected CPI numbers cooled worries over inflation.
- GDX soared to start the week but then pulled back slightly, finishing up nearly 2%.
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Disclosure: Eric is long EWZ.