Exchange Traded Funds (ETFs) dropped Thursday, with the bears in control after data showed rising jobless claims and growing U.S. and Chinese trade deficits.

  • The number of people seeking unemployment benefits rose last week. But the rise comes after applications hit their lowest level in nearly three years and economists expect further declines as the economy improves. Applications increased by 26,000 to a seasonally adjusted 397,000 during the week ended March 5, the Labor Department said Thursday. The four-week average, a less volatile measure, rose to 392,250. The average fell to its lowest level since July 2008 two weeks ago. The latest report covers the week after the Presidents’ Day holiday, when many government offices were closed. Applications usually rise in weeks following holiday-shortened weeks. The SPDR Dow Jones Industrial Average (NYSEArca: DIA) is down 1.5% in morning trading.
  • A surge in oil prices helped push imports up at the fastest pace in 18 years in January, giving the country the largest trade deficit in six months. The Commerce Department said Thursday the January deficit increased 15.1 percent to $46.3 billion. Exports rose 2.7 percent to an all-time high of $167.7 billion. But imports rose a faster 5.2 percent to $214.1 billion. That reflected a big jump in America’s foreign oil bill, underscoring concerns that surging oil prices could slow the economic recovery. A widening trade deficit hurts the U.S. economy. When imports outpace exports, more jobs go to foreign workers than to U.S. workers. The Direxion Daily Energy Bear 3x Shares ETF (NYSEArca: ERY) rose over 9% in early trading.
  • Europe’s leading stock markets retreated Thursday as euro zone debt fears sparked by a credit downgrade to Spain overshadowed news of positive company earnings, traders said. “Markets are taking another pasting … mainly on the back of Spain getting downgraded by Moody’s,” said Spreadex trader Chris Purdy. The markets are looking at higher oil prices and the continued concern over European debt. The iShares S&P Europe 350 Index ETF (NYSEArca: IEV) is down approximately 2% today.
  • Asian shares declined Thursday as escalating fighting in Libya and China’s unexpected trade deficit for February sparked a sell-off in the region. The fall in Shanghai came after the country posted a $7.3 billion trade deficit in February, compared with expectations of a surplus, as exports and imports growth slowed sharply, bearing the impact from the Chinese New Year holidays during the month. “One thing we are more certain about is that China’s trade surplus is most likely to decline at a faster rate than anyone expected this year… A much smaller trade surplus means that the external pressure on yuan appreciation would be less,” said Wei Yao, China economist at Societe Generale in Hong Kong iShares FTSE/Xinhua China 25 Index (NYSEArca: FXI) is down this morning about 1.3%.

Gregory A. Clay contributed to this article.

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