ETFs we’re watching for Wednesday, April 11, 2012

The stock market returned to positive territory as the earnings report from Alcoa (AA) and successful European bond auctions helped re-ignite confidence.  Alcoa reported a record revenue total of $6.0 billion (which exceeded analyst estimates of $5.77 billion).  Alcoa’s earnings were 10 cents per share, compared with expectations for a 4-cent loss per share.  Nevertheless, a Bloomberg survey of analysts suggested that six of the largest lenders – including JP Morgan Chase – could post an 11% drop in first-quarter profit, posing a threat to this incipient rally.

In Europe, the Italian stock market rallied after a successful auction of €11 billion in one-year debt, causing the yield on Italy’s ten year bonds to fall 0.15% to 5.54% (NYSEARCA:EWI).  German carmakers Volkswagen, BMW and Daimler AG each made significant gains exceeding 2% in Wednesday’s trading (NYSEARCA:EWG).  As of 9:34 EDT, the Euro STOXX 50 Index jumped by 1.42% to 2,354 (NYSEARCA:VGK).  The FTSE 100 advanced by 0.74% to 5,636 (NYSEARCA:EWU).  The German DAX Index gained 1.44% to 6,701.

In Asia, Japan’s machinery orders climbed 4.8 percent, despite expectations for a decline of 0.8 percent.  Nevertheless, Japan’s Nikkei 225 Stock Average declined by 0.83% to 9,458 despite weakening of the yen in anticipation of monetary stimulus efforts by the Bank of Japan.  (NYSEARCA:EWJ).

China’s Shanghai Composite Index advanced by 0.13% to 2,308 (NYSEARCA:FXI).    The Hong Kong Hang Seng Index declined by 1.06% to 20,140.

May futures for Brent Crude Oil increased by 4 cents to $119.92/bbl.

June gold futures declined by 60 cents to $1,660.

The euro is up against the dollar by 0.44% trading at $1.3139.

In the United States, stocks got off to a decent start, with the S&P 500 up 0.05% to 1,365 at the opening bell.  At 10:20 EDT, the Dow Jones Industrial Average was up 108 points (0.85%) to 12,824.  The S&P 500 advanced by 1.05% to 1,372.  The Nasdaq Composite rose by 1.11% to 3,024.

ETF Summary:

iShares Dow Jones US Industrial Sector Index Fund (NYSEARCA:IYJ) +1.12% following Alcoa’s upbeat earnings report.

iShares MSCI Italy Index Fund (NYSEARCA:EWI) +4.00% as a result of Italy’s successful bond auction.

iShares MSCI Germany Index Fund (NYSEARCA:EWG) +2.92% following impressive gains made by German automakers in Wednesday’s trading session.

Vanguard MSCI Europe ETF (NYSEARCA:VGK) +2.54% as a result of advances in European stock markets following successful bond auctions.

iShares MSCI Japan Index Fund (NYSEARCA:EWJ) +1.09% as a result of surprising increase in machinery orders.

SPDR S&P 500 INDEX ETF (NYSEARCA:SPY) +1.14% as investors regain confidence in market following European rebound.

Bottom line:  American stock indices make significant advances as concerns about European sovereign debt crisis subside following successful bond auctions and rumors that European Central Bank may restart Spanish bond purchases.

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Disclaimer: Wall Street Sector Selector trades a wide variety of ETFs and positions can change at any time.

About John Nyaradi (http://www.wallstreetsectorselector.com) John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.