The past few weeks have seen a nice rally to start off the new year. With a number of encouraging earnings and data reports, stocks have been on a tear, with the S&P hitting 1,300 for the first time in several months. But last Friday’s GDP report, though representing strong growth, may have adverse effects on the recent rally. ”[GDP] was still a nice number, but short of expectations, and I think that that’s contributing to some of the market’s weakness,” said Thomas Wilson, senior investment manager at Brinker Capital. The coming week will try and shake off the lower than expected GDP with earnings from more bellwether U.S. firms. Below, we outline three ETFs to keep a close eye on as the week unfolds [see also The Ten Commandments of Commodity Investing].
Market Vectors Pharmaceutical ETF (PPH)
Why PPH Will Be In Focus: This ETF was recently converted from its HOLDR status to a normal ETF ran by Van Eck, but the fund still maintains its original investment discipline; pharmaceuticals. Top holdings include names like Johnson & Johnson, Pfizer, Merck, Eli Lilly, among other big players int he health care industry. This week will be huge for PPH, as the latter three aforementioned holdings will be reporting earnings. Both Pfizer’s and Eli Lilly’s announcements come on Tuesday while Merk will wait until Thursday to release its results. With the three companies accounting for more than 16% of the fund, PPH should see relatively higher volumes this week [see also 10 Equity ETFs That Surged In 2011 (And Might Do The Same In 2012)].
FTSE NAREIT Mortgage REITs Index Fund (REM)
Why REM Will Be In Focus: This ETF focuses on REITs from U.S. markets and is home to nearly $300 million in total assets. Perhaps the biggest draw for this ETF comes from its 30 Day SEC yield of 11.6%, offering a massive income stream to any portfolio. REM will be in focus this week as its top holding, Annaly Capital Management, reports earnings on Monday. Annaly, which accounts for over 22% of REM’s assets, is one of the most popular REITs in the US. The firm has assets of over $16 billion and features an average daily volume of over 12 million. Analysts are calling for EPS of $0.56 with revenues of $624 million. Look for this report to have a significant impact on REM’s upcoming week.
United States Natural Gas Fund LP (UNG)
Why UNG Will Be In Focus: UNG has been one of the most talked about ETFs this year as its price has been plummeting for several months. Natural gas has been, without question, the worst performing commodity in 2012, but last week saw the asset make something of a quiet rally, as futures jumped more than 10%. With only two days left in the month, if UNG can continue this trend, it may actually turn a terrible month into a positive gain. But be warned, natural gas is incredibly volatile, and the fund could just as easily give up all of last week’s progress with the first sign of bad news for the natural gas sector [see also 25 Ways To Invest In Natural Gas].
Disclosure: Photo courtesy of David Richfield. Jared is long PFE.