Stock Rally Fades, Financial ETFs Swing Negative

August 22nd at 9:17am by John Spence

A nearly 200-point Dow rally faded Monday as exchange traded funds indexed to the U.S. bank sector fell to new 52-week lows.

The Dow saw nearly all its morning gains evaporate while SPDR KBW Bank ETF (NYSEArca: KBE) shed 0.5%. Key holding Bank of America (NYSE: BAC) lost over 6%.

U.S. stocks were volatile Monday following a four-week losing streak.

After a steep pullback, stocks are “bouncing along the bottom” and set to rally, Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, told Bloomberg.

The iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) reversed early losses and gained over 3% at last check. The exchange traded note tracks futures based on the CBOE Volatility Index, Wall Street’s so-called fear gauge. [Sector ETF Correlations at Two-Year High: Strategist]

In precious metals, SPDR Gold Shares (NYSEArca: GLD) added 2% as gold prices nearly touched $1,900 an ounce.

In commodities, crude futures backed off an earlier climb above $84 a barrel. U.S. Oil Fund (NYSEArca: USO) was fractionally negative.

SPDR S&P 500 ETF


Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.