The S&P 500 was on track for a 3% weekly pullback in afternoon trading Friday as Europe’s debt crisis boils over again. A dismal May employment report knocked equity ETFs hard Friday on worries the job market is heading south again.
The Dow and Nasdaq Composite joined the S&P 500 in falling below their 200-day exponential moving averages on Friday. The Dow was poised for a 2.5% weekly decline while the Nasdaq lost 3%.
Gold ETFs rallied Friday along with bullion prices, which rose back above $1,600 an ounce on talk the Federal Reserve may step in with more stimulus to support the economy.
Gold miner ETFs have been outperforming gold prices since mid-May, fueling speculation the beaten-down sector is finally on the mend. Earlier this week, Tom Lydon told Chuck Jaffe on his MoneyLife show that valuations and profit margins in gold miners are very compelling after the protracted sell-off.
Gold miner ETFs were the best-performing sector ETFs for the week as well.
Treasury ETFs also led the top gainers this week on the safety trade. Yields on the 10-year note dropped as far as 1.44% on Friday to record lows.
Conversely, the worst performers this week included ETFs tracking natural gas, oil, homebuilders and energy stocks.
Plunging oil prices will certainly provide relief at the pump for consumers as the summer driving season gets into full swing. However, crude dropping under $83 a barrel from $100 earlier this year signals investor concern over the global economy and deflation.
The top unleveraged ETFs this week were PIMCO 25+ Year Zero Coupon U.S. Treasury (ZROZ), Vanguard Extended Duration Treasury (EDV) and Market Vectors Junior Gold Miners (GDXJ) with rallies of more than 6%.
The bottom three unleveraged ETFs this week were U.S. Natural Gas Fund (UNG), which lost about 14%, followed by iPath S&P GSCI Crude Oil (OIL) and PowerShares DB Oil (OIL) with declines of 9%.
In next week’s economic data, look for updates on factory orders, ISM nonmanufacturing, international trade, productivity and labor costs, the trade deficit and the Federal Reserve’s beige book.
iShares S&P 500 (IVV)