ETFs are a good way for investors to capitalize on policy initiatives of the Obama administration while reducing the day-to-day volatility compared to other investment options, such as stocks, remarks Daniel Harrison for IndexUniverse. (Play Obama’s new energy plan).

Health Care opportunities. Jim Oberweis, chief executive of Oberweis Asset Management, believes that “there is a possible positive [outcome] for pharmaceutical companies” since sales of prescription drugs will increase as health care coverage widens. Furthermore, Oberweis argues that health care providers may benefit from more patient visits and biotechs are in a more positive position than previously thought. (More on the health care sector).

Broad-based and niche market ETFs that could benefit from the growth in the number of patients receiving coverage include:

• Health Care Select Sector SPDR (NYSEArca: XLV): up 14.3% year-to-date
• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 15.1% year-to-date
• iShares Dow Jones U.S. Medical Devices (NYSEArca: IHI): up 32.4% year-to-date; IHI is well-diversified, with 58% of assets under management in its top 10 holdings, and a maximum single-stock weighting of 10%. Companies included should benefit from the increase in the number of hospital patient visits.
• PowerShares Dynamic Pharmaceuticals (NYSEArca: PJP): up 10.3% year-to-date; PJP is a well-diversified ETF on large, mostly dividend-paying pharmaceutical companies that have lots of cash on hand and may see an increase in sales of core prescription drugs.
• SPDR S&P Pharmaceuticals (NYSEArca: XPH): up 19.2% year-to-date; XPH is more broadly diversified.
• iShares Dow Jones US Pharmaceuticals (NYSEArca: IHE): up 22.2% year-to-date; IHE focuses more on the oversold traditional pharma brands like PJP.
• SPDR S&P Biotech (NYSEArca: XBI): down 4.3% year-to-date; XBI is well-diversified, with 45% of its funds invested in its top 10 holdings. The fund is also mostly invested in nontraditional pharma companies.
• iShares Nasdaq Biotechnology (NasdaqGM: IBB): up 11.2% year-to-date; IBB has a higher weighting in its top holdings and it focuses exclusively on Nasdaq-listed securities; some large biotech companies may be excluded.

Clean energy. It is no big secret that clean energy is a big policy initiative of the Obama administration. The more notable technologies being pushed into the forefront of the sector are nuclear and solar energy. Solar tech investing is still considered risky because of the industry’s mini boom/bust cycles, but ETFs help minimize volatility. (More on alternative energy).

• Market Vectors Solar Energy ETF (NYSEArca: KWT): down 6.5% year-to-date
• Claymore/MAC Global Solar Energy (NYSEArca: TAN): up 0.3% year-to-date
• Market Vectors Nuclear Energy ETF (NYSEArca: NLR): up 19.7% year-to-date

Max Chen contributed to this article.

Warren Buffett’s company Berkshire Hathaway (NYSE: BRK-A) announced this week that it plans to buy Burlington Northern Santa Fe (NYSE: BNI) for $100 a share, writes Jack Hough for SmartMoney. Buffett named rail car loadings as his favorite economic indicator.

• iShares Dow Jones Transportation Average (NYSEArca: IYT): up 7.2% year-to-date ; BNI is 11.4%

According to records, Berkshire Hathaway sold shares of Moody’s (NYSE: MCO) after the ratings firm signed off on mortgage securities that turned toxic. During the second quarter, Berkshire dumped Constellation Energy (NYSE: CEG) and reduced holdings in ConocoPhillips (NYSE: COP), Home Depot (NYSE: HD) and United Health Group (NYSE: UNH). The money was used to purchase preferred shares of General Electric (NYSE: GE) and Harley Davidson (NYSE: HOG).

• Vanguard Industrials ETF (NYSEArca: VIS): up 12.5% year-to-date; GE is 12.5%

• First Trust Large Cap Value Opp AlphaDEX (NYSEArca: FTA): up 28.5% year-to-date; HOG is 1%

Berkshire also bought two common stocks that are more widely available: Becton Dickinson (NYSE: BDX), distributor of medical supplies,  and Johnson & Johnson (NYSE: JNJ), maker of drugs, consumer products and medical supplies. Value investors should noted that both BDX and JNJ have increased dividends each year for more than three decades. (How healthcare overhaul affects ETFs)

• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 10.3% year-to-date; BDX is 1.2%

• Pharmaceutical HOLDRs (AMEX: PPH): up 3.5% year-to-date; JNJ is 25.2%

Max Chen contributed to this article.

Although several sectors have notched strong third-quarter performance, the ones listed below are among the standouts. For more stories on sector ETFs, visit our sector ETF category.:

1. Technology. Apple (Nasdaq: AAPL) is the latest big tech name to post strong earnings. The maker of the popular iPhone posted a 47% gain in profit, taking investors and analysts by surprise. Shares were up 5.4% as of Tuesday, reports Jessica Mintz for the Associated Press.

Other technology companies posted strong earnings, as well. (Read about them here).

• Technology Select Sector SPDR (NYSEArca: XLK): up 40.3% year-to-date; Apple 8.1%

• FirstTrust NASDAQ -100 Tech Index (NYSEArca: QTEC): up 67.6% year-to-date; Apple 2.7%

2. Pharmaceuticals. The sector came out a winner in the health care bill that went through the finance committee last week. Pfizer (NYSE: PFE) reported a 26% higher profit, but lower sales. The world’s largest drug maker posted net income of $2.88 billion, or 43 cents a share, even as many patents have been expiring, reports Val Kennedy for MarketWatch.

• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 14.2% year-to-date; Pfizer is 10.6%

• Vanguard Health Care (NYSEArca: VHT): up 15.3% year-to-date; Pfizer is  7.5%

3. Fast Food. McDonald’s (NYSE: MCD) and Yum Brands (NYSE: YUM) have weathered the recession nicely, as price-aware consumers stop going out to sit-down restaurants. Yum Brands has continues to thrive; its third-quarter earnings rose 18% thanks to lower costs that helped the company earn a profit in both the United States and China. McDonald’s announces earnings on Thursday.

• PowerShares Dynamic Food And Beverage (NYSEArca: PBJ): up 10.8% year-to-date; Yum 4.7%; McDonald’s 4.5%

Among the economic reports that left Wall Street with mixed feelings include

• In September, wholesale prices made a surprise drop thanks to lower energy costs. The Producer Price Index declined 0.6%, but economists were expecting a flat reading. In the year ending September, the index fell 4.8%, reports the Associated Press.
• Applications for hosing permits fell by the largest amount in five months in September. The applications help gauge future housing activity. Some suspect that the drop came amid concerns that Congress wouldn’t continue its tax credit for first-time homebuyers, reports Martin Crutsinger for the Associated Press. SPDR S&P Homebuilders (NYSEArca: XHB) is down about 1.2% this morning.

Earnings reports this morning were mostly better than expectations despite some losses:

• Caterpillar (NYSE: CAT) announced that its profit declined 53% in the third quarter. But the equipment maker is already looking ahead, saying that it expects its prospects to improve next year as the economy strengthens, reports the Associated Press. There are already signs of growing demand in Asia, and Caterpillar generates 70% of its sales overseas. PowerShares Global Emerging Markets Infrastructure (NYSEArca: PXR) is down about 1.5% this morning.

• Coca-Cola (NYSE: KO) saw its third-quarter profits move high, but sales took a hit from falling consumer purchases of carbonated beverages. The amount of soda shipped grew 2%, but fell 4% in North America.
• Drugmaker Pfizer (NYSE: PFE) reported a profit, thanks to cost-cutting that made up for declining sales. The company intends to keep cutting costs because it has the biggest drug industry deal of the year: a $68 billion acquisition of Wyeth. iShares Dow Jones U.S. Pharmaceuticals (NYSEArca: IHE) is down about 1% this morning.

Oil prices briefly topped $80 a barrel this morning, but retreated as soon as the dollar began to strengthen against the euro. It was the first time in a year that oil topped $80, reports the Associated Press.

The U.S. Senate Finance Committee approved its version of legislation to overhaul the nation’s $2.5 trillion health care system.

Matt Phillips for The Wall Street Journal reports that following the official vote moving the bill out of the committee, health shares moved even lower. Unfortunately, the S&P Health Care Sector index is the worst-performing segment of the S&P 500, knocking the financial sector off from the top position. (Read why health care ETFs still have appeal).

Health insurers took the biggest decline after the vote, which pharmaceuticals close behind. The Standard & Poor’s pharmaceutical index is down 1.5%, outpacing the declines in the health care index and the S&P 500.

Leslie Gevirtz for Reuters says there are both winners and losers in the current bill.

Winners:

• Drugmakers/Pharmaceuticals. The pharmaceutical sector managed to keep an $80 billion rebate agreement while also successfully heading off a fight that would have required some of its largest players to give back another $106 billion in additional rebates over 10 years. Pharmaceuticals can be played with the PowerShares Dynamic Pharmaceuticals (NYSEArca: PJP), which is up 9.7% year-to-date.

• Hospitals. Hospitals kept intact a $155 billion, 10-year deal to accept lower payments from Medicare and Medicaid. Some hospitals can be found in the iShares Dow Jones U.S. Healthcare Providers (NYSEArca: IHF), which is up 18.9% year-to-date.

Losers:

• Health Insurers: While the industry successfully fought amendments for a government-run program, it still faces more than $6 billion in yearly fees. Vanguard Health Care (NYSEArca: VHT) is up 12.3% year-t0-date.

• Device makers: Device makers are facing a $4 billion yearly fee, although analysts feel that this feel could be reduced. iShares Dow Jones Medical Devices (NYSEArca: IHI) is up 29.9% year-to-date.

For more stories about health care, visit our health care category.

Johnson & Johnson (NYSE: JNJ), which makes Band-Aids and the Acuvue brand of contact lenses, reported better-than-expected earnings but just missed the revenue forecast, reports Linda A. Johnson for the Associated Press. Pharmaceutical sales dropped 14.1% because of increased generic competition. iShares Dow Jones U.S. Pharmaceuticals (NYSEArca: IHE) is down about 0.6% this morning. JNJ is 8%.

Gold hit an intraday price record, surging as high as $1,069.70 an ounce. Many analysts expect the price of gold to continue to rise into next year, reports Ben Rooney for CNNMoney. The weakening U.S. dollar has lent support to gold’s run-up. Have a strategy when investing in gold, and be sure to set a stop loss that you can execute when the time comes. Read how here. SPDR Gold Shares (NYSEArca: GLD) is up nearly 0.5% this morning.

The euro has jumped to its highest level against the U.S. dollar since September 2008 as investors seek out higher yields, reports Nicholas Hastings for The Wall Street Journal. The eurozone’s currency is on its way toward $1.50. CurrencyShares Euro Trust (NYSEArca: FXE) is up about 0.25% in morning trading. Read about how to incorporate currencies into your portfolio here.

Cisco (Nasdaq: CSCO), the world’s largest manufacturer of networking equipment, is buying Starent Networks Corp. for $2.9 billion. This is Cisco’s second multibillion-dollar buy in less than two weeks, reports Rochelle Garner for Bloomberg. iShares S&P North America Tech-Multimedia Networking (NYSEArca: IGN) is up about 0.2% this morning.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

For full disclosure, Tom Lydon’s clients own shares of GLD.

A busy week of economic data is expected on Wall Street this morning, and it could soon sharpen the picture for investors. One of the major reports expected is the monthly reading on the job market, which will be out on Friday. Unemployment is considered one of the biggest hurdles the economy has yet to overcome, reports Sara Lepro for the Associated Press.

Also upcoming this week include home prices, manufacturing, consumer confidence, construction spending and factory orders. There are also going to be some updated outlooks from companies before the third-quarter earnings season kicks off.

Xerox (NYSE: XRX) recently announced that it will purchase Affiliated Computer Services (NYSE: ACS) in a $6.4 billion cash and stock deal, which will enable Xerox to expand into technology and data management. Additionally, pharmaceutical company Abbot Laboratories (NYSE: ABT) announced that it will purchase Brussels drug company Solvay, giving Abbot full control of its Belgium development partner’s cholesterol departments and exposure to emerging markets. The news sent the SPDR S&P Pharmaceuticals (NYSEArca: XPH) up 2% in morning trading.

In other news, crude oil edged above $66/barrel on the New York Mercantile Exchange as the dollar gave up most of its earlier gain against a basket of currencies, boosting the appeal of oil and commodities to investors. The news sent the United States Oil Fund (NYSEArca: USO) up 1.3% in morning trading.

Overall, all three major U.S. indexes were in positive territory this morning, with the Dow Jones Industrial Average up 1.3%, the S&P 500 adding 1.5% and the Nasdaq jumping 1.9%.

For more news on crude oil, visit our oil category.

After largely ignoring the disease, virtually every large pharmaceutical company seems to have discovered cancer now that more about the disease is known. A substantial portion of the smaller biotechnology companies are focused on it, as well. Combined, the two industries are pumping billions of dollars into the development of drugs to fight off the disease, reports Andrew Pollack for The New York Times.

Two industry trends are pushing the move:

• Recent scientific discoveries have suggested new targets for cancer drug researchers to attack
• Drug companies are experiencing declining profits from staple drugs such as Lipitor; high prices that cancer drugs can command are proving to be alluring
• Cancer patients are often desperate for drugs while insurers could face outrage if they denied payments, so drug makers can charge hefty sums for medicines – even those that don’t work very well

Gardener Harris for The New York Times reports that a settlement has been reached regarding the pharmaceutical giant Pfizer (PFE) over the company’s illegal promotion of its now-withdrawn painkiller, Bextra. The $2.3 billion fine is the largest-ever levied for Medicare and Medicaid fraud, and the agreement also includes some promotional practices involving other Pfizer drugs — Zyvox, Geodon and Lyrica.

• PowerShares Dynamic Pharmaceuticals (PJP): up 3.9% year-to-date



• iShares Dow Jones U.S. Pharmaceuticals (IHE): up 10.2% year-to-date



• SPDR S&P Pharmaceuticals (XPH): up 8.7% year-to-date

For more stories about pharmaceuticals, visit our pharmaceutical category.

The ADP Employer Services Report indicated that the private sector shed 298,000 jobs in August, beating the 370,000 lost in July, but higher than the 250,000 anticipated by analysts.  Although it appears the numbers are trending in the right direction, the report also suggests that employment is likely to continue to decline for several months to come.

On the positive side, the Labor Department stated that productivity rose at an annual rate of 6.6% in the second quarter, marking the largest advance in six years.  This is of importance because worker productivity is the single biggest factor in determining living standards.  Higher productivity means that workers can increase or sustain their living standards, and it also illustrates that companies are able to boost wages financed by rising output, states Martin Crutsinger of the Associated Press.

Factory orders rose in July as companies tried to prevent stockpiles from declining further.  Bookings rose by 2.2%, the most since July 2007, fueled by stabilizing global markets and a rebound in the auto industry caused by the government’s “cash-for-clunkers” program.  In fact, automakers showed sales of cars and light cars at a rate of 14.1 million, the highest number since May 2008, states Courtney Schlisserman of Bloomberg.

In the pharmaceutical world, the world’s largest drug maker, Pfizer (PFE), indicated that it would pay a record $2.3 billion penalty over allegations that it had marketed the pain reliever Bextra and possibly other products for medical conditions different from their approved use.  This settlement is the largest ever paid by a drug company for alleged violations of federal drug rules.  The news sent the Pharmaceutical HOLDRs (PPH) down nearly 0.3% in morning trading. Pfizer is 14.3%.

BP PLC (BP), the biggest oil producer in the United States and biggest leaseholder in the Gulf of Mexico, found black gold.  BP said that it hit crude in its Tiber Prospect in the deepwater Gulf of Mexico and believes that it could be bigger than its Kaskida discovery, which has more than 3 billion barrels of oil in place.  The news sent the iShares S&P Global Energy (IXC) up nearly 1% in morning trading. BP PLC is 7.4%.

Crude oil has slipped for the third straight day to under $68/barrel. The decline in crude has been driven by cost-cutting measures by both corporations and individuals, as well as the greater than usual amount of oil in storage.  Despite the drop in oil, the United States Oil Fund (USO) is up 0.1% in morning trading.

Overall all three major U.S. indexes edged upward, with the Dow Jones Industrial Average adding 0.1%, the S&P 500 jumping 0.1% and the Nasdaq gaining 0.3%.

For more stories on energy, visit our energy category.

Kevin Grewal contributed to this article.

Chipmaker Advanced Micro Dynamics (AMD) reported a second-quarter loss of $0.62/share a far cry from the $0.47/share loss expected by Wall Street.  On the positive side, Wells Fargo (WFC) reported a jump in earnings of 47% which resulted in profits of $0.57/share.  These results smashed analysts’ expectations of $0.34/share.  The financial sector remained busy, with disappointing earnings from Morgan Stanley (MS).  The financial giant reported a loss of $1.10/share as compared to an expected loss of $0.49/share. The news sent the Financials Select Sector SPDR (XLF) down nearly 1% in morning trading.

In the aerospace world, plane maker Boeing (BA) announced a 17% increase in second-quarter profits, earning $1.41/share and beat Wall Street’s expectations of $1.21/share.  Revenues of the commercial airplane maker increased and announced that it will release a revised schedule for the long-delayed 787 jetliner.

Drug giant Pfizer (PFE) topped analysts’ expectations by a penny, reporting earnings of $0.48/share.  Sales were down in all five of Pfizer’s units, but the final ink is getting ready to dry on its billion-dollar purchase of Wyeth (WYE).  The news sent the SPDR S&P Pharmaceuticals (XPH) up about 0.3% in morning trading.

In other news, GE Capital, the financing arm of conglomerate General Electric (GE) stated that it plans to exit the government’s Temporary Liquidity Guarantee Program and will no longer issue government-guaranteed short-term debt and will be able to issue non-guaranteed long-term debt with maturities of up to three years.

There is more positive news that the recession may be coming to an end.  The Federal Housing Finance Agency reported that housing prices posted the smallest decline in 10 months in May. Prices fell 5.6% year over year in May and five U.S. regions witnessed price increases .

Overall, all three major U.S. indexes are down in morning trading.  The Dow Jones Industrial Average dropped 0.2%, the S&P 500 is down 0.3% and the Nasdaq declined 0.1%.

For more stories on the financial sector, visit our financial category.

Kevin Grewal contributed to this article.