Index ETFs advanced Tuesday, with the S&P 500 Index rebounding to within two points of its record and the Dow Industrials hitting a new high, after US durable goods orders rose more than estimated in February and home prices jumped the most since June 2006.
The Commerce Department reported orders for durable goods rose 5.7 percent in February, mainly due to a surge in automobile and aircraft orders. The number exceeds expectations of a growth rate of about 5 percent and suggests the economy is expanding at a 2.5-3 percent annual rate.
Equities got a boost today as residential real estate prices rose by 8.1 percent in January from a year ago, marking the biggest year-over-year growth since June 2008, according to the S&P Case-Shiller index released today.
On a downbeat note, consumer confidence slumped to 59.7 in March from a revised three-month high of 68 in the prior month as Washington’s budget battle soured Americans’ outlook of the economy.
New home sales slipped 4.6 percent to an annual rate of 411,000 in February, a separate report from the Commerce Department showed, though weather likely responsible for the biggest drop in two years.
The Dow Jones Industrial Average (DJIA) climbed 112 points as markets shrugged off worries over Cyprus. Banks in the island nation will stay closed until Thursday and are likely to be subjected to capital controls to check a potential run on deposits.
The S&P 500 Index (SPX) rose 12 points with healthcare, energy and utilities advancing the most within its 10 business groups.
Treasuries advanced, with the benchmark 10-year note yields trading in the narrowest range in two week, as investors remained worried about Europe and US consumer confidence tumbled more than forecast while home sales declined.
Meanwhile the euro changed little today, swinging between modest gains and losses throughout Tuesday’s session and struggling to bounce back from Monday’s steep fall after an eurozone official suggested bank customers in crisis-hit peripheral countries could face losses similar to those imposed on Cyprus.
European stocks advanced Tuesday, snapping a three-day losing streak, after stronger-than-expected US housing data and durable goods orders eased concerns European officials will impose haircuts on bank-deposits in the region.
The developments in Cyprus have brought the focus back on troubled European economies. Greece and Spain could witness significant capital flight if new negotiations are necessary for future bailout deals.
Trading at the Cyprus stock exchange has been suspended till Thursday while the reopening of Cypriot banks has also been delayed until the same day. In an interview with the BBC, Cypriot Finance Minister Michalis Sarris said depositors with more than EUR 100,000 in banks could see around 40 percent of uninsured deposits converted into worthless bank shares. Ouch.
Our Trend Tracking Indexes (TTIs) headed north as well with the Domestic TTI reaching +3.74% while the International TTI ended up at +7.98%.
The updated ETF Model portfolio report will be posted tomorrow morning.
Contact Ulli