ETFs and Stocks Waffle on Economic Reports

Stocks stayed flat Wednesday after the Commerce Department reported unexpected drops in home construction and building permits in October. A few real estate-focused exchange-traded funds showed mild gains.

The Dow Jones Industrial Average closed down 11 points at 10,426. The Nasdaq dropped 11 to 2193, and the S&P 500 slipped a point to 1110.

In economic news, the Labor Department reported U.S. consumer prices continued to rise at a moderate pace in October. The consumer price index came in close to expectations and indicated a slow economic recovery is keeping inflation contained.

Prior to the economic and housing reports, traders had welcomed a rise in commodities prices; crude-oil and metals futures climbed, while the dollar fell against the euro and the yen. Small gains in commodities had helped the Dow finish at a fresh 13-month high Tuesday.

Wednesday's data showed housing starts decreased 10.6% to a seasonally adjusted 529,000 annual rate compared to the prior month. Economists surveyed by Dow Jones Newswires had forecast a 1.7% increase. The 10.6% fall left residential construction at its lowest point in six months.

Building permits in October fell 4.0% to a 552,000 annual rate. Economists had expected permits to rise by 0.9% to a rate of 580,000. Building permits are a sign of future construction.

The seasonally-adjusted CPI rose 0.3% in October, compared with a monthly 0.2% increase in September. The core CPI, which strips out volatile food and energy prices, advanced by 0.2% in October, the same increase seen the previous month. The figures were a tad higher than forecast by Wall Street economists, which had projected a 0.2% rise in the headline CPI and a 0.1% increase in core inflation.

The inflation data should give the U.S. Federal Reserve continued ammunition in trying to support the economic recovery by keeping interest rates at a record low close to zero.

As of 4:10 p.m., crude oil futures traded on the Nymex were up 52 cents to $79.66 a barrel. For a detailed rundown on Wednesday’s trading session see our market story. 

The SPDR Dow Jones REIT fund (RWR) rose 2.0%, on the anticipation that the renewal of the home-buying assistance tax credit will improve the sector. The iShares Cohen & Steers Realty Majors Index fund (ICF) climbed 1.9%.

The United States Natural Gas fund (UNG) dipped 3.4%. The iShares MSCI Brazil Index (EWZ) fund shed 1.6% on regional stock weakness.

Data Point
World Gold Trust Services, a joint venture between the World Gold Council and State Street Global Advisors, the investment management arm of State Street Corporation (STT), on Wednesday announced the fifth anniversary of SPDR Gold Shares (GLD). The fund now has assets under management in the trust with more than $40 billion as of Nov. 16, 2009 and is thought to be the second-largest largest ETF in existence. It is the fastest growing ETF, by assets, in the world. It was the first ETF to be backed by a physical asset, said James Ross, senior managing director at State Street Global Advisors.

Launching Pad
Exchange-traded fund providers First Trust Advisors, together with the NASDAQ OMX Group and Clean Edge, have launched the first ETF to invest in the electric infrastructure sector. The First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index Fund which will trade as GRID on the Nasdaq and will track the Nasdaq OMX Clean Edge Smart Grid Infrastructure Index, a modified market capitalization index comprised of companies involved in electric grid, meters, devices and network, energy storage and management, and sector-related software.

Earnings and Conference Calls
ActivIdentity, ADC, Aruba Networks, Bon-Ton Stores, Brady, Casual Male Retail Group, China Medical Technologies, Chordiant Software, Datawatch, Dick's Sporting Goods, Ditech Networks, Dress Barn, Foot Locker, Gamestop, Gap, Griffon, Helmerich & Payne, Hibbett Sports,Intuit, Kulicke & Soffa, MTS Systems, National Grid, New York & Company, Patterson Dental, Raven Industries, Ross Stores, Sally Beauty, School Specialty, Sears Holdings, Shoe Carnival, Stage Stores, Stein Mart, Suntech Power Holdings, Sycamore Networks, The Buckle, The Cato Corporation, The Children's Place Retail Stores, The Wet Seal, Trans World Entertainment, TransDigm Group, Trina Solar, TTI Telecom, Verigy, Williams-Sonoma, Zumiez

Economic Data
8:30 a.m. Initial Jobless Claims
10:00 a.m. Leading Indicators
10:00 a.m. Philadelphia Fed Survey
10:30 a.m. EIA Natural Gas Report
4:30 p.m. Fed Balance Sheet
4:30 p.m. Money Supply