4 ETFs Moving Higher On Jobs Number
The nonfarm payroll number this morning was as ugly as they come with the headline number of 143,000 job gains coming in well below expectations.
The reaction from the market was surprising to many. The initial move in stocks was higher, but after the opening bell rang, the major U.S. equity indices floundered in the red.
Not all sectors were down on the news, including bond ETFs that were moving higher on a big drop in the U.S. Treasury yields. Other interest rate sensitive sectors moving higher included utilities, REITs and housing.
SPDR Utilities ETF
The SPDR Utilities ETF (NYSE: XLU) is the best performing sector on Friday with a gain more 0.6 percent, as the ETF hits the best level in more than two months. With a large portion of investors buying the ETF for its dividend yield of 3.4 percent, a drop in interest rates makes the sector more attractive. Over the last year, the ETF is up 22 percent with dividends included. The expense ratio is a low 0.16 percent.
iShares U.S. Home Construction ETF
The iShares U.S. Home Construction ETF (NYSE: ITB) is also moving higher today largely in part due to lower interest rates keeping mortgage rates down and homes more affordable. The ETF has had a rough week after a big drop on Wednesday, but the last two days it has rebounded nicely. Over the last year, the ETF is up 16 percent. However, the chart is trendless and a breakout above $24.50 in the short-term is needed to confirm a new uptrend.
iShares Cohen & Steers REIT ETF
IQ US Real Estate Small Cap ETF
The IQ US Real Estate Small Cap ETF (NYSE: ROOF) is similar to ICF, except it concentrates solely on small cap REITs versus the large cap names its peer invests in. The current dividend yield of 6.9 percent makes the ETF even more interest rate sensitive. With dividends included, the ETF is up about 22 percent in the last 12 months.
All four ETFs mentioned are moving on the fact interest rates are falling. With that being said the consensus on the street is that bonds will begin to fall sooner rather than later and that will push interest rates higher. If that is the case investors need to keep an eye on high yielding ETFs as they move in the opposite direction of interest rates.
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