Leveraged and inverse ETFs aim to have the funds’ movements correspond to the inverse of the relevant market indicator on a daily basis.  One must keep in mind that these ETFs come with risks, as well. The biggest issue to understand is the meaning of the word “daily” when it comes to these ETFs: daily, they will track their benchmarks. The further out an investor gets, the greater the risk that the fund won’t track its benchmark perfectly. This effect is heightened in volatile markets. (Check out our special report on these investment tools).

There are a growing number of providers of such ETFs today, including Direxion, ProShares and Rydex.

These funds can be appealing to investors with the risk appetite for several reasons:

• They can be used as a hedge if an investor believes the market is due for a short-term correction. If an investor is holding a position, but doesn’t necessarily want to sell it, then a leveraged or inverse ETF can be used to hedge against any potential loss.
• They can be used to capitalize on market movements. If an investor believes that the S&P 500 is due for a nice run, a leveraged ETF to maximize this movement might be just what the investor wants. (How leveraged ETFs are misunderstood).

These funds aren’t for everyone – always be fully aware of the risks and know how they work before you invest.

For more on leveraged and inverse ETFs, visit our leveraged ETFs category.

Some examples of common inverse and leveraged ETFs are:

• ProShares Short S&P 500 (SH), which seeks to give 100% of the inverse daily performance of the S&P 500.

• ProShares Ultra S&P 500 (SSO), which seeks to give 200% of the daily performance of the S&P 500.

• Emerging Markets Bear 3x Shares (EDZ), seeks to give 300% of the inverse daily performance of the MSCI Emerging Markets Index
  

• Technology Bull 3x Shares (TYH), seeks to give 300% of the daily performance of the Russell 1000 Technology Index

• Rydex 2x Russell 2000 (NYSEArca: RRY), seeks to give 200% of the daily performance of the Russell 2000 Index

• Rydex Inverse 2x S&P MidCap 400 (NYSEArca: RMS), seeks to give 200% of the inverse daily performance of the Mid Cap 400 Index

Kevin Grewal contributed to this article.

Many electronic makers have come to the market with aggressive cost-cutting plans and incentive to gain back consumer dollars, as the global outlook for the market shows signs of improvement.

• Although Playstation maker Sony posted fourth-quarter losses, the company’s latest results beat analysts’ forecasts by a wide margin, reports Hiroko Tabuchi for The New York Times.

• Samsung Electronic is still the ruler; the performance of other companies couldn’t match the world’s largest maker of televisions. Samsung said profits in the most recent quarter had tripled to a record $3.14 billion as it capitalized on investment in new panel technologies and marketing. It also got a boost from a weak won, which gave it the ability to undercut Sony’s prices.

• Panasonic notched its first profit in a year as sales of DVD recorders and household appliances showed some recovery. It’s now betting on batteries for hybrid and electric cars by merging with Sanyo.

Who can grab the most market share by cost cutting and appealing to consumers?

For more stories about consumer discretionary, visit our consumer discretionary category.

• PowerShares FTSE RAFI Japan (NYSEArca: PJO): down 1.1%; holds 2.8% of Sony

• SPDR S&P International Cons Disc Sector (NYSEArca:IPD): up 55% year-to-date; holds 2.2% Sony

• iShares S&P Global Technology (NYSEArca: IXN): up 38.2% year-to-date; holds 4.2% Samsung

• iShares MSCI Emerging Markets Index (NYSEArca: EEM): up 64.5% year-to-date; holds4.3% Samsung

• iShares MSCI South Korea (NYSEArca: EWY): up 63.4% year-to-date; Samsung, 19.1%

• WisdomTree International Technology Sector Fund (NYSEArca: DBT): up 18.9% year-to-date; Panasonic is 6.2%

Apple’s (NasdaqGS: AAPL) iPhone may be threatened by Motorola’s (NYSE: MOT) Droid, a smartphone serviced on Verizon’s (NYSE: VZ) network and powered by Google’s (NasdaqGS: GOOG) Android 2.0 operating system, according to The Week. (The smartphone push in China).

John Herman of Gizmodo believes that the iPhone is already so entrenched in the consumer world that it will still have a dominating presence. David Coursey of PC World argues that the Droid’s practical features are a good lure for consumers looking for something not already on the market.

MG Seigler at TechCrunch sees that Google isn’t trying to undermine iPhones, but rather sell its operating system, which works on a range of different devices. (Four reasons to watch global telecom).

Many are arguing that the Droid is the most sophisticated mobile device from a hardware standpoint to hit the market, reports Michael Arrington for The Washington Post. The Droid smartphone may be as thin or thinner than the iPhone 3GS, with a slide out physical keyboard and removable battery.

For more information on the technology sector, visit our technology category.

• Vanguard Telecom Services (NYSEArca: VOX): up 13.2% year-to-date; Verizon is 20.3%

• iShares Dow Jones U.S. Technology (NYSEArca: IYW): up 46.4% year-to-date; Apple is 9%, Google is 6.5%

• iShares S&P Global Telecommunications (NYSEArca: IXP): up 5.7% year-to-date; AT&T is 15.3%; Verizon is 8.2%

• Technology Select Sector SPDR (NYSEArca: XLK): up 35.5% year-to-date; Apple is 7.7%; AT&T is 8.9%; Google is 4.8%; Verizon is 4.5%

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

Max Chen contributed to this article.

Sites such as Amazon.com Inc. (NasdaqGS: AMZN)  and eBay Inc. (NasdaqGS: EBAY) are providing cost-conscious shoppers with the means to sniff out popular items at low costs, writes Don Dion for TheStreet. On Thursday, Amazon stated that third-quarter earnings jumped 69% on improved sales across all its product lines, reports Dan Gallagher for MarketWatch. (Can you find bargains with a luxury ETF?)

One way to gain investment exposure on the internet holiday shopping bonanza is through  First Trust Dow Jones Internet Index (NYSEArca: FDN), currently up 69.2% year-to-date.

FDN includes 41 companies that generate a minimum of 50% of their annual sales from the internet. Companies included have a stock price of greater than $10 and market cap of at least $100 million. The fund has a net expense ratio of 0.6%. (Is a fresh approach all it takes with retail ETFs?)

The top 10 holdings make up 51% of the total assets. Some major holdings include: AMZN at 5.6% , EBAY at 6.5%, Google Inc. (NasdaqGS: GOOG) at 9.8%, Yahoo! Inc. (NasdaqGS: YHOO) at 4.9%, Priceline.com Inc. (NasdaqGS: PCLN) at 4.2% and Expedia Inc. (NasdaqGS: EXPE) at 3.7%.

Sector allocations include: software, 24.8%; hardware, 4.2%; media, 1.4%; telecommunications, 38.4%; consumer services, 22.6%; business services, 2.5%; and financial services, 6.1%.

For more information on technology, visit our technology category.

Max Chen contributed to this article.

Positive earnings from the tech sector lifted some spirits:

• Amazon (Nasdaq: AMZN) reported a 69% increase in its third-quarter profit, fueling hopes that the holiday season could be a good one for online retailers, reports Geoffrey A. Fowler for The Wall Street Journal.
• Microsoft (Nasdaq: MSFT) reported that cost-cutting helped deliver forecast-beating profits. The software giant also stated that consumer demand was strengthening.

Technology Select Sector SPDR (NYSEArca: XLK) is up 38.6% year-to-date; Microsoft is 9.9%

Existing home sales shot up 9.4% in September, handily beating estimates. It was also the largest monthly gain in 26 years, reports Alan Zibel for the Associated Press. Much of the increase is being attributed to homebuyers scrambling to purchase a home before the government’s tax credit for first-time homebuyers ends. SPDR Dow Jones REIT (NYSEArca: RWR) is up 17.7% year-to-date. (Visit our real estate category for more stories on the housing market.)

Federal Reserve Chairman Ben Bernanke urgedCongress this morning to push through financial reform. The central bank is also taking its own steps  to fix the wounded system, reports Michael S. Derby for The Wall Street Journal.

Meanwhile, the U.S. Treasury and Federal Reserve have unveiled new rules aimed at capping executive pay. While it doesn’t cap pay levels at any specific institution, it still has broad reach, reports Steven Sloan at Insurance Networking. The Fed that 28 large financial institutions to a review of their policies. (For more on the financial sector, visit our financial category).

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 key earnings news today:

• Gannett (NYSE: GCI), the publisher of USA Today, managed to post a profit even as revenue fell
• Toy-maker Hasbro’s (HAS) income also rose amid cost-cutting by the company
• After the market closes today, tech giants Apple (Nasdaq: AAPL) and Texas Instruments (NYSE: TXN) will report earnings
• Caterpillar (NYSE: CAT) will report earnings on Tuesday

Oil’s price continued to rise, inching above $79 a barrel before stepping back. Investors are watching earnings reports for any signs that consumers are feeling confident again, reports Pablo Gorondi for the Associated Press. United States Oil Fund (NYSEArca: USO) is trading flat this morning. (Where is gas going next?)

Demand for Treasuries has stayed strong, even though the budget deficit now well past the $1 trillion mark, the government has sold a record amount of debt and the dollar hasn’t been this weak since August 2008. (Why you should watch Treasury ETFs).

Foreign buyers have stepped up their holdings to a record $3.5 trillion. Demand in the United States has been kept afloat by a rising savings rate and lingering worries that the market’s rally is overdone, report Liz Capo McCormick and Daniel Kruger for Bloomberg. iShares Barclays 7-10 Year Treasury (NYSEArca: IEF) is trading flat so far today.

Recent gains in the technology sector are attributed to improved results and upgrades in Google Inc. (NasdaqGS: GOOG), Advanced Micro Devices (NYSE: AMD) and Intel Corp. (NasdaqGS: INTC), reports Benjamin Pimentel for The Wall Street Journal.

Additionally, some solid earnings have emerged from the sector in recent days:

• Intel reported better-than-expected quarterly profits, along with revenue ahead of previous projects. Intel is considered by many as a bellwether for the technology sector and economy as a whole. (Read more about semiconductors).
• Google announced a 27% increase in third-quarter profits, beating analysts’ expectations. A recovering economy upped demand for online ads and e-commerce, the search engine giant said.
• IBM (NYSE: IBM) reported that its earnings rose 14% from the same period last year, surpassing expectations.

A rash of mergers and acquisitions have been seen in the technology sector, and an industry group is forecasting more. As the economy recovers, the firm says, technology companies will no longer hesitate to acquire other companies. Year-to-date, 48 companies have been acquired. In all of 2008, 45 acquisitions took place, Reuters reports.

For more information on the technology sector, visit our technology category.

• Technology Select SPDR (NYSEArca: XLK): up 40.4% year-to-date; INTC is 4.8%, GOOG is 4.8%

• iShares Dow Jones U.S. Technology Sector Index Fund (NYSEArca: IYW): up 52.8% year-to-date; INTC is 6.0%, GOOG is 6.5%

Max Chen contributed to this article.

JPMorgan Chase & Co. (NYSE: JPM) is one of the first banks up to report third-quarter earnings, and the results are cheering Wall Street. The bank reported a $3.59 billion profit, but also stated that it had about doubled the money set aside for home and credit loan defaults in the quarter, reports Stephen Bernard for the Associated Press. Financial Select Sector SPDR (NYSEArca: XLF) is up more than 2% this morning; JPM is 12.3%.

Tech bellwether Intel (Nasdaq: INTC) also made good on its assurances that the PC market is slowly beginning to reboudn by reporting results that, while glum, surpassed expectations. The chip-maker reported that profits and sales dipped 8% in the third quarter. iShares Dow Jones U.S. Technology (NYSEArca: IYW) is up about 1.25% this morning; Intel is 6%. More on why semiconductors are doing well.

Oil prices have hit a one-year high above $75 a barrel thanks to new lows for the U.S. dollar, reports Claire Rangel for The Wall Street Journal. The dollar hit a 14-month low against a basket of currencies. Oil is priced in U.S. dollars, so as the dollar weakens the commodity becomes cheaper for those overseas.

Business inventories in August were cut for the 13th straight month, dropping 1.5%. It was more than what analysts had expected. On the flip side, sales by manufacturers, wholesalers and retailers rose 1%. Much of the boost came from the “cash for clunkers” program, reports Martin Crutsinger for the Associated Press. Read about the holiday sales outlook here.

For more stories on oil, visit our oil 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.