Overseas Demand For Cars, Planes Bumps Up Durable Goods Orders And ETFs

In a late-summer surprise, durable goods orders for July rose, which could benefit a number of exchange traded funds (ETFs).

The 1.3% gain in orders for goods meant to last at least three years ties last month’s increase, reports Timothy R. Homan for Bloomberg. The jump may have been helped along by foreign demand for autos, aircraft and telecommunications gear, since exports hit a record.

But the jump in exports could be short-lived, because both the European and Japanese economies are entering a period of contraction at the same time our dollar is strengthening. Economists had projected an increase of 0.8%. Excluding transportation, orders rose 0.7% instead of a projected fall of 0.7%.

Among the ETFs that could reap the rewards of an uptick in orders are:

• iShares Dow Jones U.S. Telecom (IYZ): down 23.8% year-to-date; top holdings include AT&T (T), 21.4%; Sprint (S), 7.8%; and Verizon (VZ), 15.5%
• PowerShares Aerospace & Defense (PPA): down 15.4% year-to-date; top holdings include Boeing (BA), 7.2% and Lockheed Martin (LMT), 7.2%
• Technology Select Sector SPDR (XLK): down 13.9% year-to-date; top holdings include Apple (AAPL), 6.7%; Hewlett Packard (HPQ); 4.5% and Microsoft (MSFT), 10%.

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