ETFs Flat Wednesday on Flurry of Economic Data

August 18, 2012 /

Major ETFs scored modest gains Wednesday as the market digested a handful of economic data that show the U.S. economy is growing slowly with tamed inflation.

In afternoon trade, the SPDR S&P 500 ( SPY ) was up a mere 0.04%.
SPDR Dow Jones Industrial Average ( DIA ) let up 0.02%.

PowerShares QQQ ( QQQ ), a basket of the 100 largest nonfinancial stocks on the Nasdaq, was up 0.04%.

“It is the middle of August and we do not expect volatility in equities, but we do note that the current environment could lead to a strong directional move in the event of a breakout in either direction,” wrote Waverly Advisors in its daily client note.

Industrial production, which includes output from factories, mines and utilities, rose 0.6% in July after gaining 0.1% in June, the Federal Reserve reported.

“One can make the argument that manufacturing is moving in the right direction; however, it is just a matter of time before the effects of the European debt crisis and slowing demand in Asia will bring an end to the U.S. recovery that began in June 2009,” Carlos Guillen, an analyst at Wall Street Strategies, wrote in a commentary.

Consumer prices were flat in July on a seasonally adjusted basis. Economists expected a 0.2% rise. They increased 1.4% over the past 12 months, making the smallest 12-month change since November 2010, the U.S. Bureau of Labor Statistics reported. The core consumer price index, which excludes volatile food and energy prices, rose 0.1%, below expectations of a 0.2% gain.

“With core CPI increases fairly neutral, the case for more (quantitative) easing depends primarily on the growth and employment numbers,” wrote Carl Weinberg, chief economist at High Frequency Economics.

A reading of National Association of Home Builders/Wells Fargo confidence index showed homebuilder sentiment climbed to a five-year high, although most respondents in the survey said conditions remain poor.

U.S. gross domestic product was flat in June after expanding 0.3% in May and 0.5% in April, according to Macroeconomic Advisers. The June growth rate was 0.5% above the annual rate seen in the second-quarter on average.

IShares MSCI EAFE Index ( EFA ), tracking developed foreign markets, lost 0.29%, led by a slowdown in the European mining sector. Greece is reportedly trying to get a two-year extension of its austerity program, which would spread its budget cuts over four years instead of two. That would call for a 20 billion euro loan from the International Monetary Fund.

IShares MSCI Emerging Markets Index ( EEM ) fell 0.16% on fears that China’s central bank will refrain from undertaking new stimulus efforts.


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