Daily ETF Roundup: Housing Soars, Earnings Miss

by on October 17, 2012 | ETFs Mentioned:

Markets rallied today, as strong readings on the U.S. housing sector boosted stocks. According to the Commerce Department, housing starts increased 15% from August, while the number of building permits ticked 11.6% higher. And after the unforgettable bottoming out of this frustrating segment of the market, the recent positive reports point to the housing sector finally regaining some footing and beginning to show long-term strength. Bogging down the rally, however, were disappointing earnings reports from blue chip International Business Machines (IBM) and tech giant Intel (INTC) [see also How To Pick The Right ETF Every Time]. 

Global Market Overview: Housing Soars, Earnings Miss  

All three major major U.S. equity indexes managed to eke out modest gains on the day, bolstered by strong domestic housing data. The Dow Jones Industrial Average (DIA) closed only 0.04% higher, as poor earnings reports from Intel and IBM weighed heavily on blue-chips. Tech-heavy Nasdaq (QQQ) and the S&P 500 (SPY) also inched their way into positive territory, gaining 0.1% and 0.41%, respectively. In Europe, markets were higher; Spain’s IBEX 35 Index surged 2.4% after Moody’s Investors Service affirmed Spain’s government bond rating at Baa3. Asian equities were also broadly higher after Japan’s Prime Minister told his cabinet to draft an economic stimulus package, leading the Nikkei Stock Average to jump 1.2%. China’s Shanghai Composite inched 0.3% higher.

Bond ETF Roundup 

After moody’s left Spain’s credit rating in investment-grade territory, investors moved to dump their Treasury holdings, pushing yields up by the most in a month. With presidential elections less than three weeks away however, many will likely remain weary of taking concrete bets on this safe haven.

Commodity ETF Roundup

With the exception of energy, commodities were higher across the board today. Cotton prices jumped 4% after rumors indicated that supplies may be tight. Precious metals, copper, and grains were also among today’s top performers.

ETF Chart Of The Day #1: XHB

The State Street SPDR Homebuilders ETF (XHB) was one of the best performers, gaining 1.93% on the day. This ETF was bolstered by much better-than-expected housing data; September housing starts came in at 872,000, blowing past estimates of 770,00. Despite finishing in positive territory, this ETF gave up a big chunk of its gains in afternoon trading, settling just shy of the $26 mark [see also Timber Set To Soar Says Jeremy Grantham].

ETF Chart Of The Day #2: XLK

The State Street Technology Select Sector SPDR (XLK) was one of the worst performers, shedding 0.52% on the day. Profit taking pressures hit this ETF right from the opening bell after industry giants IBM and Intel both missed earnings estimates. The negative performance of these two giants weighted heavily on the tech-sector as a whole seeing as how they both hold a spot in XLK’s top-ten holdings. Despite today’s lackluster performance, this ETF is still up 19% year-to-date [see our High Tech ETFdb Portfolio].

ETF Fun Fact Of The Day

There are 25 ETFs that currently offer exposure to Intel Corp (INTC) stock. It receives the highest weightings in the Market Vectors Semiconductor ETF (SMH) and the PHLX SOX Semiconductor Sector Index Fund (SOXX) at 18.26% and 7.55%, respectively.

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Disclosure: No positions at time of writing.