ETF Trends
ETF Trends

A flurry of activity and reports on Wall Street today sent exchange traded funds (ETFs) moving in every direction.

Financials took a hit on the news that Merrill Lynch & Co. Inc. (MER) had its earnings forecasts cut by JPMorgan Chase (JPM) and UBS AG, reports Kevin Plumberg for Reuters. Then Merrill turned around and downgraded Bank of America (BAC), PNC Financial (PNC) and SunTrust Banks (STI), saying that the collapse of the housing market will continue to hurt lending and home equity.

Financial ETFs are down slightly intraday:

  • Regional Bank HOLDRs (RKH): JPMorgan Chase, 14.7%; Bank of America, 9.1%; PNC, 4.5%; SunTrust, 4.3%
  • Financial Select Sector SPDR (XLF): Bank of America, 8.8%; JPMorgan Chase, 6.8%; Merrill Lynch, 2.1%; PNC, 1.1%; SunTrust, 1%
  • iShares Dow Jones US Financial Services (IYG): Bank of America, 11.9%; JPMorgan Chase, 9.1%; Merrill Lynch, 2.7%; PNC, 1.4%; SunTrust, 1.4%.

The Conference Board reported this morning that its Consumer Confidence Index fell to 64.5 this month, from a revised 76.4 in February. The reading is a five-year low, and a far cry from the 73 that had been expected by analysts, reports Joe Bel Bruno for the Associated Press.

It’s a strong sign that people are increasingly restricting their spending to the necessities amid fears that we’re in a recession – but the decreased spending will only further weaken the economy.

Retail ETFs that could feel the effects of the news:

  • SPDR S&P Retail (XRT)
  • Retail HOLDRs (RTH)
  • Consumer Discretionary SPDR (XLY)

Home prices also fell by record levels in January, by 10.7%, says Vinnee Tong for the Associated Press. It was the biggest decline in the Case-Shiller home price index’s two-decade history. Spring is typically a strong sales time, though, and any notable improvements in the market might not be noticed until summer.

The worst-hit cities were Miami and Las Vegas, which were both hit by 19.3% drops. One economist says a pattern of improvement probably won’t be seen until April, at the earliest.

This downbeat news comes on the heels of yesterday’s positive news that existing home sales in the United States posted a surprise jump of 2%.

All these numbers have sent the price of oil gyrating as investors have begun selling on worries about the economy, while others are buying on news of the dollar’s continued decline. Mercifully, the price of gas and diesel have pulled back some from their recent records, reports John Wilen for the Associated Press.

But analysts are saying that investors should continue to see choppy waters for oil as disagreement about the direction of the commodity persists. As the price see-saws, look for changes in these ETFs:

  • United States Oil (USO)
  • United States Natural Gas (UNG)
  • iShares Dow Jones US Oil & Gas Exploration (IEO)

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

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.