U.S. stocks are coming off their sixth consecutive week of
higher finishes as earnings news has been supportive of continued
upside. About 75 percent of the 341 S&P 500 companies which
reported fourth-quarter results have beaten estimates, according
to Bloomberg data.
Earnings ebullience has been enough to send the S&P 500 to
a new five-year high and with a week short on economic catalysts,
it will be up to some of the more noteworthy remaining earnings
reports to drive further price appreciation in stocks. That said,
Tuesday's State of the Union address cannot be overlooked as a
Market participants will be eagerly awaiting comments from
President Obama regarding possible budget cuts, also known as
sequestration, that could result in $85 billion in pared spending
to defense and domestic programs. With those factors in mind, the
will be worth keeping an eye on this week.
iShares Dow Jones US Aerospace & Defense Index Fund (NYSE:
) A four percent year-to-date gain for the iShares Dow Jones US
Aerospace & Defense Index Fund may not sound like much to
marvel at, but this is one ETF that deserves some credit for
crawling higher. The fund was one of the ETFs that was squarely
in the cross-hairs of the fiscal cliff debate and then it had to
contend with the Boeing (NYSE:
) Dreamliner fiasco, a factor that cannot be overlooked because
the Dow component is ITA's second-largest holding at a weight of
Once again, ITA and other aerospace ETFs find themselves at
the center of political hand-wringing. Negative headlines
pertaining to the sequestration issue will undoubtedly hit some
ITA holdings, putting the ETF's recent bullishness in danger.
One anecdote to consider: The F-22 Raptor fighter plane, which
cost over $400 million a piece, is believed to be a prime
candidate to be scuttled under a sequestration scenario. Boeing
and Lockheed Martin (NYSE:
) partner on the Raptor and those stocks combine for over 13
percent of ITA's weight.
SPDR S&P Retail ETF (NYSE:
) Consumer discretionary and select retail names have impressed
this earnings season and that has drive an impressive run for the
SPDR S&P Retail ETF. XRT has jumped over nine percent
year-to-date and is now found bumping against some stiff
resistance at $68.
XRT's ability to break that resistance and start a new leg
higher will be tested this week with the release of retail sales
for January and consumer sentiment for early February. Lower pay
checks and higher gas prices, among other factors, have some
analysts expecting essentially no growth in retail sales.
It is already known that the National Retail Federation sees
sales growth below the 10-year average this year, but how much of
that and the possibly slack January data are baked into XRT
remains to be seen. Above $68, XRT becomes a tricky short, that
much is clear.
Consumer Staples Select Sector SPDR (NYSE:
) Another ETF that has been on a seemingly unstoppable run, the
Consumer Staples Select Sector SPDR is up 7.4 percent
year-to-date as investors continue to put cash to work with
stodgy staples names. For the week ending February 8,
XLP hauled in almost $92 million in fresh
Catalysts are in place to move the ETF this week as Coca-Cola
), PepsiCo (NYSE:
), Kraft (NASDAQ: KRF), Lorillard (NYSE:
) and Reynolds American (NYSE:
) all deliver earnings reports. All five are XLP constituents.
Alone, Coke and Pepsi combine for nearly 15 percent of XLP's
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.