Courtesy of John Nyaradi.
Industrials Select Sector SPDR (AMEX:XLI) and Industrials iShares (AMEX:IYJ) rose in spite of the negative “Durable Goods Orders” Report released earlier today by The US Department of Commerce.
Durable goods orders indicate demand for goods such as cars, airplanes and appliances; The US Department of Commerce said that overall demand for durable goods fell by .8% from September. Decreased orders for durable goods would indicate less demand and thus a slowing economy.
Industrial ETFs did not respond to the negative durable goods report however, as (AMEX:XLI) increased .71% while Industrials iShares (AMEX:IYJ) followed with an over 1% increase by the end of the trading day.
The surge in (AMEX:XLI) and (AMEX: IYJ) is likely due to large quarterly profit increases for large industrial goods provided by companies such as Caterpillar (NYSE:CAT) and Detroit auto makers last month.
Although (AMEX:XLI) and (AMEX:IYJ) surged today, they could give up ground as the US Economy still teeters on the brink of recession and the surge in car sales and machinery orders last month evens out. Also, the situation in Europe still remains tenuous and any hick-up in a bail-out plan across the Atlantic will have a direct effect on demand in the industrials marketplace, as a Euro hick-up would likely derail any signs of a US economic recovery.
All in all, one can expect industrial ETFs such as (AMEX:XLI) and (AMEX:IYJ) to likely fall in coming days due to the painstakingly slow US economic recovery and any negative developments that come out of Europe.
ETF Summary:
(AMEX:XLI) +0.23, +0.71%
(AMEX:IYJ) +0.63, +1.03%
Disclaimer: Wall Street Sector Selector trades a wide variety of ETFs and positions can change at anytime.
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