US Equity ETFs Stage A Comeback And Rally The Most In Nearly Two Months On Data; Europe Follows Suit

[Chart courtesy of MarketWatch.com]

US stock ETFs started November on a strong note with the major benchmark indexes rallying more than one percent, the most in seven weeks, after employment and manufacturing topped estimates and consumer confidence surged to more than four-year high in October.

Economic data were mostly positive on Thursday.

Payroll processing firm ADP said 158,000 private-sector jobs were created in October, the most in eight months, the Institute for Supply Management’s US factory index rose to 51.7 in October from 51.5 a month earlier and the Conference Board’s consumer-confidence index increased to 72.2 in October – the highest since February 2008, from a downwardly revised 68.4 in September.

Separately, a Labor Department report showed weekly initial jobless claims fell by 9,000 to a seasonally adjusted 363,000 pace last week. How this all stacks up to the real unemployment data, we will find out on Friday morning.

In Asia, two Chinese manufacturing surveys showed signs of economic recovery. The government’s official Purchasing Manager’s Index jumped to 50.2 in October from 49.8 the previous month. Any reading above 50 indicates expansion. The private sector PMI by HSBC showed firming up of activity to an eight month high of 49.5 from 47.9 in the prior month.

Posting its biggest single-day gain since September 13, the Dow Jones Industrial Average (DJIA) jumped 136 points.  Breadth within the 30-stock blue-chip index turned positive with winners outpacing decliners 27 to 3.

The S&P 500 Index (SPX) added 15 points with information technology and industrials advancing the most among its 10 business sectors.

Snapping a three-day winning streak, Treasuries fell as reports on US employment and manufacturing indicated economic expansion may gain momentum, tempering demand for safe-haven assets. Yield on the benchmark 10-year Treasury notes climbed three basis points to 1.72 percent while 30-year Treasury bond yields jumped five basis points to 2.90 percent.

Meanwhile, led by risk sensitive sectors such as resources and banks, European stocks rallied on upbeat Chinese manufacturing data and solid US employment and consumer confidence reports. The Stoxx Europe 600 index jumped 1.3 percent, wiping out yesterday’s 0.5 percent loss.

In Greece, the Athens General Index plunged five percent after lawmaker Michalis Kassis left the socialist Pasok Party over EUR 13.5 billion in spending cuts and tax increases. The National Bank of Greece sank 12 percent.

The German DAX 30 index surged one percent as positive Chinese manufacturing data lifted car makers  BMW AG jumped 2.93 percent while Volkswagen AG and Daimler AG added 2.8 percent and 1.3 percent, respectively.

The CAC 40 index rose 1.4 percent, lifted by a 1.2 percent jump in car maker Renault SA. Banking major Credit Agricole surged three percent.

The FTSE 100 index finished 1.4 percent higher in London.

Our Trend Tracking Indexes (TTIs) recovered with the market surge and have reached the following positions above their respective long term trend lines:

Domestic TTI: +1.97%

International TTI: +3.78%

For more details, charts and all the latest momentum numbers please refer to the current StatSheet, which I will post shortly.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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