Wall Street managed to march higher early last week, however, domestic equities settled into range-bound trading for the remainder of the period given a lack of upbeat economic news and overall pessimism stemming from the situation in Egypt. Political instability and civil unrest in the region continue to put pressure on financial markets around the globe, especially as fears grow over the riots spreading to other countries in the area. Commodities have been quite volatile, with oil managing to slip just below $90 a barrel on Friday, while gold managed to hold support and inch higher. On Friday, the markets wobbled between positive and negative territory as investors digested a mixed jobs report, with data showing that job creation is still stagnant, despite a reduction in the overall joblessness rate to 9.0%.
This week has a round of earnings from major industry leaders, especially from the consumer goods sector, and investors are expected to remain on the edge of their seat as the Egyptian drama unfolds. Below, we profile three ETFs that will come into focus during the week.
iShares Dow Jones U.S. Consumer Goods Index Fund
Why IYK Will Be in Focus: This fund, which tracks the Dow Jones U.S. Consumer Goods Index, has four of its top ten holdings all reporting earnings this week, including: Coca-Cola Company
iShares Dow Jones U.S. Insurance Index Fund (IAK)
Why IAK Will Be in Focus: This fund tracks the Dow Jones U.S. Select Insurance Index, which measures the performance of the insurance sector of the U.S. equity market. Its top two holdings, Metlife
CurrencyShares British Pound Sterling Trust
Why FXB Will Be in Focus: This fund tracks the British Pound, and it will come into focus as the Bank of England makes it decision regarding interest rates on Thursday morning, February 10th [see FXB Fact Sheet]. The current rate is 0.5%, and it was left unchanged following January's meeting since the British economy remains extremely weak. Analyst consensus is for the bank to hold rates steady, since, with a gloomy outlook for much of Europe, especially Portugal, Spain, and Ireland, it would be a real surprise to see the Bank of England raise rates and risk crippling the already stagnant economic recovery. Hints of a possible rate hike have been circulating as Bank of England deputy governor Charlie Bean, has noted that if commodity prices continue to rise, interest rates will likely need to be adjusted as well. Given the volatility of currency markets, traders are advised to monitor the rate decision and the press conference following it, before establishing either long or short positions in FXB or other currency funds [also see Forget About Euro ETFs, British Pound ETFs Are the Real Danger].
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Disclosure: No positions at time of writing.
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