Stocks and many exchange-traded funds (ETFs) lost ground for a third straight day as investors grew increasingly uneasy about a recent move away from riskier assets and into U.S. Treasuries.

As investors moved money out of stocks, they moved money into safer investments like Treasury bills, report Stephen Bernard and Tim Paradis for the Associated Press. The yield on the three-month T-bill today was 0.02%, after falling to a yield of 0.005% late Thursday. In fact, yields briefly turned negative Thursday as demand jumped for this safest of short-term investments. The SPDR Barclays Capital 1-3 Month T-Bill ETF (NYSE: BIL) has a year-to-date return of 0.22%, with a yield of 0.28%. (For more stories on Treasuries, see our treasury bonds category).

Disappointing results from Dell (NASDAQ: DELL), the world’s number-three PC brand, weighed on investor sentiment. Dell is recovering from the global slowdown a bit slower than its competitors because of its reliance on commercial versus consumer business, writes Kelvin Soh for Reuters. Dell did say, however, that PC demand has picked up following the launch of Windows 7 from Microsoft (NASDAQ: MSFT). The Technology Select SPDR ETF (NYSE: XLK) and the iShares Dow Jones U.S. Technology Index Fund (NYSE: IYW) are both just down fractionally for the day. However, Dell’s stock is currently down more than 8%. (For more stories on the technology sector, see our technology category).

Home-building giant DR Horton (NYSE: DHI) said today that orders surged 26% on a unit basis and that it narrowed its fiscal fourth-quarter loss. However, the company did miss analyst estimates and took hefty land-related charges, reports Dawn Wotapka for the Dow Jones Newswires. The company went on say that conditions are still challenging in the industry because of rising unemployment, weak consumer confidence and high inventory levels. The stock is currently down more than 9%, while the SPDR S&P Homebuilders ETF (NYSE: XHB) is down 2% today. (For more stories on the homebuilding industry, see our homebuilders category).

Tony D’Altorio contributed to this article.

The U.S. dollar has hit a 15-month low against a basket of major currencies today on positive economic news from Asia. The feeling that the Fed won’t raise rates anytime soon and the fact that central banks will continue to provide liquidity could continue to pressure the dollar, reports Bradley Davis for The Wall Street Journal. PowerShares DB U.S. Dollar Index Bearish (NYSEArca: UDN) is down slightly this morning.

Treasury Secretary Timothy Geithner said today that he’s encouraged by the efforts Japan and China have made to increase internal demand instead of relying on Americans. It’s a shift, he said, that could contribute to more stable growth. iShares FTSE/Xinhua China (NYSEArca: FXI) is up about 0.25% this morning.

Homebuilder exchange traded funds (ETFs) are trading as high as 4.5% this morning on news that Toll Brothers (NYSE: TOL) new contracts are up 42%. The luxury homebuilder also expects fourth-quarter revenue to top expectations. SPDR S&P Homebuilders (NYSEArca: XHB) is up 3.2% this morning. For more stories about real estate, click here.

UPS (NYSE: UPS), the world’s largest package delivery service, said this morning that it expects volume to grow next year amid economic recovery. The company also said it may raise shipping rates next year, and the size will be announced in December, reports Harry Suhartono for Reuters. iShares Dow Jones Transportation Average (NYSEArca: IYT) is up about 1.5% today; UPS is 8.2%. For more stories on the transportation sector, click here.

Congress voted to extend the tax credit and President Barack Obama signed it into law this morning, according to The Wall Street Journal. (ETFs get a lift from economic report).

An $8,000 line of credit will apply to contracts entered before April 30, 2010, and closed by June 30 for homes up to $800,000. The law will also create a new $6,500 credit for homebuyers who lived in their previous home for at least five consecutive years.

Income limits for eligible buyers are increased to $125,000 for single buyers and $225,000 for couples.

Economists for the National Association of Realtors calculated that the tax credit has contributed $22 billion to the economy and an estimated 2 million people will use the tax credit this year. NAR president Charles McMillan says the government incentive has helped stabilize the housing market, stimulate the economy and create jobs.

Naysayers think prolonging the tax credit will artificially keep home prices high.

The expansion and extension of the tax credit may also be advantageous for homebuilder ETFs as more house hunters jump into the market. (Positive signals for real estate ETFs)

For more information on homebuilders, visit our homebuilders category.

• iShares Dow Jones U.S. Home Construction (NYSEArca: ITB): up 18.5% year-to-date

• SPDR S&P Homebuilders (NYSEArca: XHB): up 21.7% year-to-date

• MACROSHS HOUSING UP (NYSEArca: UMM): up 16% since inception

Max Chen contributed to this article.

New home sales had an unexpected 3.6% drop in September. Waning effects from the government’s tax credit for first-time homebuyers are being blamed for the decline, reports Alan Zibel for the Associated Press. September’s decline was the first since March. SDPR S&P Homebuilders (NYSEArca: XHB) is down more than 3% this morning. For more stories on real estate, visit our real estate category.

The Treasury Department and the GMAC, the former lending arm of General Motors, are in talks for a third round of taxpayer-funded aid. The Treasury mandated that GMAC raise another $11.5 billion after stress tests, but the lender has had to go back to the government for more cash, Reuters reports.

ConocoPhillip’s (NYSE: COP) announced its third-quarter earnings fell 71% from a year ago. The company blames lower gas and oil prices along with poor refining margins, reports Isabel Ordonez for Dow Jones Newswires. Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) are expected to report lower earnings tomorrow and Friday, respectively. Vanguard Energy (NYSEArca: VDE) is down more than 2% this morning; ConocoPhillips is 6.6%; Chevron is 13.1%; and Exxon is 19.5%.

Durable goods orders in September climbed, which is being hailed as a favorable sign for U.S. manufacturing. The 1% jump is the fourth increase in six months, reports Greg Robb for MarketWatch.

For more stories on oil, visit our oil category.

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.

While investors aren’t heading for the exits, talk of a potential correction persists. But if you’re in the markets now, you have participated in the rally. (And if you’re not in, read about rebuilding your portfolio here). And like most investors, you probably want to protect those gains, not lose them.

Jeff Cox for CNBC has seven ideas on how to keep your gains safe, and we’ve thrown in some of our own, as well:

1. Emerging/Overseas Markets: Investors are moving away from a solely domestic portfolio, and moving assets overseas to cultivate diversity and keep exposure to foreign markets. By remaining quick and conservative, the markets such as China or Russia can help spread out the risk. Read about their economies here).

• iShares MSCI Emerging Markets (NYSEArca: EEM)

2. Energy: This sector remains to be a mainstay within a portfolio, as crude prices will stay low in the near term but could go significantly higher when supply becomes an issue again. Find out what may happen with oil prices here).

• United States Oil (NYSEArca: USO)

3. Choose ETFs: While some market pros now are cautioning against playing the entire market and suggest choosing single stocks instead, consider ETFs. Choosing a winning stock in a sector can be a daunting challenge, while an ETF can give you instant exposure while spreading out the risk.

4. Play Defense: Security can be found in names that traditionally provide security while the market looks for further direction. Consider what’s happening in consumer staples: consumers are staying at home, cooking more meals in and buying those old familiar name brands.

5. Gold: Gold prices have risen along with the stock market and economic indicators, indicating that investors want some downside protection should the rally fade. This has pushed the price of gold to new records. Can the rally go on? Read about it here.

• SPDR Gold Shares (NYSEArca: GLD)

6. Homebuilders: This beaten-down sector is poised to go higher, however, supply has a lot to do with it. While there have been a slew of factors cited—leveling in prices, low mortgage rates, government intervention—supply and demand will be the key in a true recovery for this sector.

• SPDR Homebuilders (NYSEArca: XHB)

7. Technology: Consumer electronics was the 11th strongest sector in the third quarter, up 44%. Some believe that this sector will continue to move higher.

• Vanguard Information Technology (NYSEArca:VGT)

8. Have an exit strategy. We use the 200-day moving average as a guide for when to get in and when to be out of the markets. For more ideas about trend following and creating a defensive strategy, check out the The ETF Trend Following Playbook, on shelves now.

For more stories about portfolio protection, visit our trend following category.

For a majority of companies, third-quarter results could be below those of 2008, with per-share profits for the S&P 500 at a projected drop of 15.4%. More than 340 businesses could see a year-over-year drop in profits, according to Zacks. Projected revenues show median company sales may drop 7.2%, with more than 360 companies expected to experience a year-over-year drop in earnings.

There are a lucky few that are forecasting actual earnings growth compared to last year:

Homebuilders. First off, conditions were already deteriorating and mortgages were hard to come by last year. Secondly, more new and existing home sales translates to a more stable housing market.

• SPDR S&P Homebuilders (NYSEArca: XHB): up 35.4% year-to-date

Insurance. Insurance companies can potentially pull off double-digit growth. Some firms can bounce back higher from prior-year losses while others may see true growth. Property and causality insurers have been sparred by a calm hurricane season so far, and most insurers benefited from a recovering financial market.

• KBW Insurance (NYSEArca: KIE): up 33.2% year-to-date

Health Care. The medical sector is still raking in the profits. The sector is not correlated to commodity prices and is less economically sensitive. The result is that medical companies are showing both revenues and earnings growth this quarter.

• Vanguard Health Care (NYSEArca: VHT): up 12.7% year-to-date

On the flip side, here are a few sectors that could report contractions:

Commodity. Commodity-related companies reported strong profits last year and as a result, energy and metals companies may show drops in third-quarter profits this year.

• iShares Dow Jones U.S. Oil & Gas Ex Index (NYSEArca: IEO): up 33.8% year-to-date

• PowerShares DB Base Metals (NYSEArca: DBB): up 53.7% year-to-date

Banks. Many banks still remain unprofitable. High joblessness, high level of foreclosures and poor real estate market all affect banks. The result is a projected report of losses for the sector.

• iShares Dow Jones U.S. Financial Sector Index Fund (NYSEArca: IYF): up 20.1% year-to-date

Max Chen contributed to this article.

What are the arguments in favor of recovery?

• Homebuilder confidence is up. The National Association of Home Builders/Wells Fargo confidence index climbed to 18, the highest since June 18, reports Bob Willis for Bloomberg. A reading below 50 means most respondents view conditions as poor. Builders will eventually begin to start construction back up from record lows.

• Government credits and lower prices may have helped those first-time homebuyers to heal the broken housing market.

• Home prices notched their first quarterly increase in three years today, reports J.W. Elphinstone for the Associated Press. The reading is, however, still down nearly 15% from last year.

• Things have stopped getting worse, and this is the first step to getting better. The marketplace is glutted with inventory, he says, which puts further pressure on prices and total sales — not to mention the need for new houses. This will create more buying opportunities, writes Dan Burrows for SmartMoney.

• Burrows also notes that the bottom or low point in valuations and sales is past, however, there is still a ways for falling prices in areas such as California and Florida. When prices truly stabilize, home builders’ gross and operating margins will improve – and so too will their bottom lines.

• Same-store sales growth in the key markets of Florida, California, Nevada and Arizona where housing has been hit hardest, in such stores that are based on home improvement.

• SPDR S&P Homebuilders (XHB): up 28.6% year-to-date



• iShares Dow Jones U.S. Home Construction (ITB): up 33.2% year-to-date

For more stories about homebuilders and real estate, visit our real estate and homebuilder category.

Assets: $562 million

Holdings: XHB’s components are a mix of retailers, such as Bed Bath & Beyond (BBBY) and Williams Sonoma (WSM), homebuilders such as KB Home (KBH) and materials suppliers such as Leggett Platt (LEG).

Objective

XHB tracks the S&P Homebuilders Select Industry Index.

What’s Good

This fund is a good cross-section of industries that are directly affected by activity in the real estate market. Other similar funds have weightings mostly in homebuilding companies and real estate investment trusts (REITs), but investors who want to spread the risk out a little more and get exposure to several areas of the real estate market might be interested in XHB.

The Latest News

• Last month, new home sales rose 11%, the largest amount in eight years
• On the downside, while that number rose, the median sales price of those homes declined 12% to $206,200
• The Case-Shiller Index, on the other hand, rose for the first time in 2006; the index tracks the home prices in the 20 largest U.S. cities
• Consumer confidence sank last month as more Americans became concerned about unemployment
• This fund is both a play on real estate as well as retail, so it’s subject to the activity in both sectors, good or bad
• XHB is up 24.2% year-to-date

The most recent good news first: New housing starts and permits have risen for the second straight month in June. Starts climbed 3.6%, reports Reuters.

And now the bad news.

According to new research from the University of Chicago’s Booth School of Business and Northwestern University’s Kellogg School of Management, a study found that 26% of foreclosures are actually calculated and strategic, thanks to “negative equity.”

The decision to bail out of loans by owners who actually have the money to make the payments but can’t handle the negative equity they’re carrying caused by local property value declines are causing people to simply mail their house keys back tot he lender, reports Kenneth Harney for The Los Angeles Times. In certain parts of California and Nevada, more than half of all households have negative equity right now.

Real estate investment trusts (REITS) also face potholes ahead.

• SPDR S&P Homebuilders (XHB): up 3.5% year-to-date

• iShares Dow Jones US Home Construction (ITB): up 4.6% year-to-date

For more stories about real estate, visit our real estate category.