Euro Concerns Continue to Fuel Market, ETF Volatility | ETF Trends

The widespread euphoria over Europe’s massive $1 trillion bailout package appears to be wearing off. Stocks and exchange traded funds (ETFs) went south at the market open before climbing back to par a little while later.

One day after the biggest gains in more than a year, volatility is still the name of the game as markets fell sharply early Tuesday with excitement waning over the European Union bailout. Even as Germany approved its share of the bailout, investors are still concerned that European debt woes could destroy the euro, a currency used by 16 European countries. [ETFs to Watch in the Wake of European Deal.]

  • CurrencyShares Euro Trust (NYSEArca: FXE)

While the $1 trillion rescue plan provides assurances that the euro would remain intact, significant reductions in spending are still required in heavily indebted nations such as Greece. Another challenge also plagues European policy makers: how to contain free-spending governments to avoid another crisis of this magnitude.

Wholesale inventories rose for the third consecutive month in March while sales rose even more. It’s a strong sign that companies are going to have to step it up if they want to meet improving demand. Wholesale inventories increased 0.4%. The number of goods currently on hand fell to the lowest point since record-keeping began. [5 Ways to Play the Recovery.]

  • Vanguard Consumer Discretionary (NYSEArca: VCR)

Toyota (NYSE: TM) posted an annual profit of $2.2 billion early Tuesday. Despite the effects of the recession and a crippling safety scandal that threatened the automaker’s reputation, Toyota also predicted a further increase in earnings for the coming year, behind reduced costs and aggressive sales incentives. [As Auto Sales Improve, Play It With This ETF]

  • iShares MSCI Japan Index (NYSEArca: EWJ): Toyota is 4.9%

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

Aaron Hurst contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.