Financial sector exchange traded funds (ETFs) are being dragged down by issues with foreclosure problems at U.S. banks, which is continuing to cast a pall over the financial stocks.

Adding to the downdraft are dismal earning results from the investment-banking division of Swiss banking conglomerate USB AG (NYSE: UBS) who is down more than 5% in early trading. Though UBS profits exceeded forecasts, traders were not pleased with the results. This news is having a big negative impact on European markets. iShares MSCI Switzerland (NYSEArca: EWL) is down 1.6% so far today; UBS is 4.6%. [Mortgage Scandal Weighs Financial ETFs.]

Ford Motor Company (NYSE: F) reported a nice jump in third-quarter net income compared to a year earlier – though actual revenue was basically unchanged.  SPDR S&P International Consumer Discretionary Sector (NYSEArca: IPD) is down 1.3% so far this morning. [Play Improving Auto Sales With This ETF.]

Consumer Discretionary ETF, Retail ETF

On the housing front, it has been reported that home prices all the around the country weakened, even areas that were beginning to show strength earlier in the year. The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday fell 0.2% in August from July. Fifteen of the cities showed monthly price declines. Prices are expected to drop further in the coming months, though housing prices went up in many places from April to July. But the increase was largely fueled by government tax credits which have since expired. Now the peak home buying season is behind us. Plus record foreclosure rates, high unemployment and tepid buyer demand is contributing to drive down prices. Don’t forget some buyers might be hesitant to bid on properties because of allegations of flawed foreclosure paperwork. Direxion Real Estate Bear 3X ETF (NYSEArca: DRV) up more than 3% so far today. [Homebuilder ETFs Wait on Recovery.]

Homebuilder ETFs, Real Estate ETFs

Gregory A. Clay contributed to this article.

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.

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