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.

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.

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.

This weekend, Obama closed the “doughnut hole” in Medicare Part D coverage, which will cut the costs of drugs for seniors. The Pharmaceutical Research and Manufacturers of America agreed to reduce its draw of revenues by $80 billion over 10 years and cut the cost of medicine in the program by up to 50%, reports Stephanie Condon for CBS News. Perhaps it could spur more drug spending if many people were holding off on buying certain prescription drugs because of cost issues.

Meanwhile, the industry is changing its approach to drug development, which could lead to more profitability if it proves successful. The Food and Drug Administration is pushing to take a new angle and focus on genetic triggers that cause disease. A decade ago, the aim was for drug companies to develop pills that could be marketed to millions of patients, explains Jeanne Whalen for The Wall Street Journal.

But if drug companies can find and fix the genetic switches that make people sick, companies such as Novartis believes it will find truly effective drugs that patients need — and that insurers are willing to pay for. This will act as a segue, identifying rare diseases and using them as an entrance to identify and treat more common ones.

The major advances in genetics and biology research have made this approach to pharma care possible, thanks to technology that gives scientists the ability to pick apart the causes of many illnesses.

• PowerShares Dynamic Pharmaceuticals (PJP): down 5.9% year-to-date

• iShares Dow Jones US Pharmaceuticals (IHE): down 0.8% year-to-date

• SPDR S&P Pharmaceuticals (XPH): down 3.5% year-to-date

For more stories on health care, visit our pharmaceutical category.

The power of this recession has made much of the market incomprehensible and the market has long since stopped making sense. The fear levels are at code red for investors. Is there a way to gauge what you might want to get back into once the market looks slightly tempting again?

Gary Gordon for ETF Expert ponders where an investor is to go when all the traditional market readings and signals are all topsy-turvy.

• Gordon feels that a small rally of any kind would bolster S&P Pharmaceuticals (XPH) which could be what is a paradox of “smart risk.”
• Other areas that are pretty beaten-down could be identified by looking at the performance of UltraShort funds. Among the ones that made a killing in February are ProShares Ultra Short Consumer Goods (SZK), ProShares UltraShort Materials (SMN) and ProShares UltraShort Financials (SKF).
• There could be some value in the technology sector, too. Other areas of this type of smart risk could be found in the short and ultrashort sector funds. Semiconductors are collectively trading at a price-to-book of just 1.3.

The market is in serious need of fixing, and chances are, we’ve still got some surprises remaining. Whatever pops up down the line, if it’s these types of funds or something else, mind those trend lines and just stick to the strategy.

Both of the presidential nominees’ plans were proposed before the current conditions we face now, and compromises will likely be made at the expense of health care’s well-being, reports James Ritchie for Business Courier.

While we’re all thinking about the $700 billion bailout, though, it also happens to be how much Americans waste each year on unnecessary healthcare expenses, says Arthur Garson Jr. for the Christian Science Monitor. If we took steps to save that money, just $100 billion would cover the uninsured and $600 billion would be left to help Wall Street.

Current healthcare spending in the United States totals $2.1 trillion, up from $1.3 trillion in 2000 (not adjusted for inflation). An estimated third of that is just waste: needless doctor visits, pricey drugs and inefficient paper billing systems.

The size and scale of the crisis taking place within our economy takes the place of any other reform at the moment. But, does this matter when you are not healthy? When the health care problem is once again a priority, these ETFs could benefit:

• SPDR Pharmaceuticals (XPH), down 17.3% year-to-date (black line)
• PowerShares HealthCare Services (PTJ), down 35.7% year-to-date (green line)

With the coming election in November, everyone’s wondering what will become of healthcare when either John McCain or Barack Obama takes office.

Conventional wisdom tells us that if Obama takes office, Big Pharma will take a hit in profit margins. But overall, the healthcare sector can be risky to dabble in during these uncertain political times, ponders Gary Gordon for ETF Expert. He rightly points out that investing is never one-dimensional, and you can’t solely blame politics for what happens in pharmaceuticals.

As of now, pharmaceuticals have been coming out ahead, and meds are on an upward trend. Investors may have renewed faith in Democratic leadership, as Obama has been pushing for more affordable health care, rather than universal health coverage. Are investors convinced that Obama and McCain are unlikely to interfere with bottom line drug makers and distributors?

While we don’t know where the markets are going or who’s going to win the election in a few months, what we do know is that the trend in healthcare is up right now, and these three funds are above their trend lines.

• SPDR Pharmaceuticals (XPH), up 0.9% year-to-date; up 6.6% in the last three months
• iShares Dow Jones Pharma Fund (IHE), down 2% year-to-date; up 5.3% in the last three months
• iShares Dow Jones U.S. Medical Devices (IHI), up 3.1% year-to-date; up 7.9% in the last three months

In a New York Times article, Elisabeth Rosenthal examines how over the past two years, cervical cancer has gone from an obscure disease mostly in poor nations to a great concern in many western countries.

Two vaccines have been approved and released over the past two years. Over this period, tens of millions of girls throughout the United States and Europe have been vaccinated against cervical cancer. In many countries, the vaccines were recommended for universal use among females between the ages of 11 and 26. The vaccines include Gardasil, from Merck, and Cervarix, a GlaxoSmithKline product.

As this market grows at an alarming rate, the vaccines have appealed to not only potential recipients and humanitarians, but politicians as well. The remarkably quick transition of the vaccines in the United States and Europe shows the success of what manufacturers call education and critics call marketing.

As investment in these vaccines increases, award-winning advertising has been utilized to promote these innovations. The impact has been so large, 41 states have passed or have begun considering legislation on cervical cancer. Virginia has made the shots mandatory for girls before entering school, which takes effect in 2009.

As even the critics of the marketing admit to the benefits of the vaccines, many questions remain unanswered about both treatments. Questions pertaining to the length of immunity and potential side effects have nagged the vaccines.

However, 16 million doses have already been distributed domestically by Merck. This left both the FDA and CDC saying that “by chance alone some serious adverse effects and deaths” will occur because of the large population these 16 million doses were administered to.

Even though some questions remain pertaining to the long-term effects and immunity of the vaccines, the market for these treatments is vast and potentially very lucrative. Some ETFs that could weigh in on this action include:

• HealthShares Cancer (HHK), is up 1.5% year-to-date with top holdings in Vertex Pharmaceuticals, APP Pharmaceuticals, Fresenius, and Onyx Pharmaceuticals.
• Pharmaceutical HOLDRs (PPH), is down 10.6% year-to-date with top holdings in Abbot Laboratories, Johnson & Johnson, Merck, and Pfizer.
• PowerShares Dynamic Pharmaceuticals (PJP), is down .8% year-to-date with top holdings in Genetech, Wyeth, Merck, and Johnson & Johnson.
• SPDR S&P Pharmaceuticals (XPH), is down .5% year-to-date with top holdings in Barr Pharmaceuticals, Forest Laboratories, King Pharmaceuticals, and Merck.
• iShares Dow Jones US Pharmaceuticals (IHE), is down 3.4% year-to-date with top holdings in Pfizer, Merck, Johnson & Johnson, and Abbot Laboratories.

Both Elan Corp. (ELN) and Wyeth (WYE) said complete data from the midstage trial of their experimental drug for Alzheimer’s disease supports their decision to move the drug into more advanced studies before a definite conclusion can be made, reports Shirley S. Wang for The Wall Street Journal.

The drug, bapineuzumab, had inconclusive test results that may not move expert scientists and investors. While it did show effectiveness in cleansing the brain of a substance many believe plays a role in the disease, patients on the whole showed no improvement in their symptoms.

Both companies decided to go on to Phase III, which can cost at least $100 million.

According to the Alzheimer’s Association, the disease is the sixth-leading cause of death in the United States, surpassing diabetes. At least 5.2 million people live with the disease, and 10 million baby boomers will develop it. The cost of treating Alzheimer’s and other forms of dementia exceeds $148 billion per year.

ETFs that could benefit if this drug ultimately proves to be effective in the treatment of this disease include:

• SPDR S&P Pharmceutical (XPH): down 3% year-to-date; Wyeth 4.8%
• Pharmceutical HOLDRs (PPH): down 13.3% year-to-date; Wyeth 7.5%
• HealthShares Neuroscience (HHN): up 9.2% year-to-date; Elan 6.3%