ETFs for a Recovering Economy

NEW YORK (TheStreet) -- Today we'll look at four exchange-traded funds (ETFs) that track stock market sectors that should benefit from the economic recovery.

The U.S. stock markets have witnessed their biggest rally since the Great Depression and remain relatively cheap. Meanwhile, data show the economy is on the mend. This should spell more gains for the ETFs that track the following stock markets sectors: transportation, manufacturing, construction and consumer discretionary.

In terms of an overall U.S. economic recovery, statistics have been favorable. According to the Department of Labor, initial jobless claims are dropping, and the total number of people collecting some form of unemployment benefits, whether from the federal government or from states, is dropping as well. In fact, initial jobless claims are down nearly 27% from a year ago, and the total number of individuals receiving unemployment benefits has declined to 10.54 million. In the month of March, nonfarm payrolls rose by 162,000 and private-sector payrolls jumped 123,000, indicating that companies are starting to hire.

A second favorable statistic comes from the real estate markets. In March, sales of new homes jumped 27%, the largest increase in 47 years. In February, the S&P/Case-Shiller home price index witnessed its first increase since December of 2006, climbing 1.3%.

Other positive statistics include a 2.8% increase in orders for nontransportation durable goods and stellar first-quarter corporate earnings. Income for companies in the S&P 500 has been beating Wall Street's expectations by 22% in the first quarter.

On Monday, the world's largest construction equipment maker, Caterpillar(CAT) beat analyst expectations and reported increases in profits. This outperformance was driven primarily by rebounding construction and mining activities in developing nations and is indicative of improving global economic conditions.

Another company that shattered Wall Street's expectations was the world's largest appliance maker, Whirlpool(WHR). The Benton Harbor, Mich.-based company reported first-quarter profits of $2.13 per share, easily surpassing analyst expectations of $1.33 per share. This is indicative of an uptick in consumer spending.

Another notable mention on the earnings front is transportation provider Union Pacific(UPN), which witnessed a 43% increase in profits as it hauled more goods.