U.S. Dollar, Dow Jones and Utility ETFs To Watch This Week
Friday’s better than expected jobs number sent the stock market into a tailspin and the week ahead will be a closely watched indicator of investor commitment.
The positive economic data and recent selling may indicate investors are anticipating a 2015 rate hike, which will be a significant departure from half a decade of Federal Reserve zero interest rate policy.
The week ahead features several important economic releases including February retail sales, consumer sentiment index, and the Federal budget.
Here are the key ETFs to watch for the week starting Monday, March 9:
PowerShares U.S. Dollar Index Bullish Fund (NYSE: UUP)
The U.S. dollar index broke out to a new 52-week high on Friday amid global equity weakness and continued depreciation in the euro. UUP is the largest currency-focused exchange-traded fund with over $1.2 billion in total assets.
This ETF tracks the daily price movement of the U.S. dollar versus a basket of six major world currencies. UUP has gained 7.63 percent in 2015 and is now more than 20 percent higher over the last year.
With the United States now anticipating a monetary tightening cycle and Europe entering a quantitative easing phase, the U.S. dollar continues to be a hot trend to watch in 2015.
Dow Jones Industrial Average ETF (NYSE: DIA)
It was announced last week that Apple Inc (NASDAQ: AAPL) will join the Dow Jones Industrial Average in March, marking a significant milestone in the 119-year old index. AAPL will replace AT&T Inc (NYSE: T), along with a planned stock split of Visa Inc (NYSE: V), to usher in more balanced technology sector exposure.
DIA tracks the daily price movement of this historic 30 stock index and will be an interesting area of the market to watch over the coming weeks as this transition takes effect.
Utilities Select Sector SPDR (NYSE: XLU)
The broad-based basket of utilities stocks fell through its 200-day moving average for the first time in well over a year on Friday. This technical breakdown in XLU represents a significant deviation from the strength that these defensive stocks exhibited last year.
XLU tracks 32 large-cap companies engaged in electric, gas, or water services and is now down more than 8 percent in 2015. The combination of rising interest rates and equity market volatility have been a headwind for XLU this year.
If bond yields are indeed headed higher, XLU may continue to feel the effects of heightened volatility in the coming weeks.
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