Stock exchange traded funds pulled back Wednesday while commodities dropped sharply and Cisco (NasdaqGS: CSCO) slipped after-hours as it predicted more weakness in its current quarter and announced job cuts.
PowerShares QQQ (NasdaqGM: QQQ), a large ETF tracking Nasdaq tech stocks, was down fractionally in after-hours trade Wednesday following Cisco’s quarterly earnings. Chief Executive John Chambers on the conference call said the company expects the fourth quarter “will continue to show weakness.” [Nasdaq ETF Slips on Cisco]
ETFs tracking the U.S. banking sector were down about 1% on Wednesday on reports Bank of America (NYSE: BAC), J.P. Morgan (NYSE: JPM) and other mortgage services have proposed paying $5 billion to settle an investigation related to foreclosures. Some analysts predict Bank of America may pay as much as $3.7 billion to settle a probe of its mortgage practices, Bloomberg reported. [Bank ETFs Lower on Reports of Mortgage Settlement Offer]
Basic materials ETFs were crushed Wednesday along with energy-sector ETFs as commodities sold off and key component Freeport-McMoRan (NSYE: FCX) dropped more than 5%. The iShares Dow Jones US Basic Materials (NYSEArca: IYM) was down 3% while silver and oil led the decliners in the commodities complex. The $1.2 billion ETF has about 9% in Freeport-McMoRan. [Freeport-McMoRan Leads Materials ETFs Deep Into Red]
The commodities sell-off Wednesday was the latest sign that investors are growing more sensitive to risk with the Federal Reserve’s stimulus program set to expire at the end of June. The latest plunge in silver and oil prices had investors dumping stocks Wednesday as the Dow suffered a triple-digit loss. Investors are all too familiar with risk and volatility within markets these days, but there are ways to protect against these factors. [Risk and Your ETF Portfolio: How to Protect It]
Financial ETFs tracked the market lower Wednesday as investors worried about the impact of a guilty verdict for Raj Rajaratnam on insider trading charges, and banks’ exposure to mortgage losses. Financial Select Sector SPDR Fund (NYSEArca: XLF) was down 1% while top holding Citigroup (NYSE: C) shed over 3%. [Citigroup, Mortgage Woes Drag Down Financial ETF]
U.S. Gasoline Fund (NYSEArca: UGA) was down 7% Wednesday as oil and gasoline prices fell sharply after the Energy Department said inventories rose in the latest week while demand weakened. There were also reports that CME Group and Nymex halted trading in some energy futures markets. [Gasoline ETF Tumbles 7%]
Internet-sector ETFs fell Wednesday along with top holding Yahoo (NasdaqGS: YHOO) after the company in a filing said the ownership of Alibaba Group’s online payment business, Alipay, was restructured. Yahoo has an ownership stake in Alibaba. The stock was down nearly 6%. [Internet ETFs Follow Yahoo Lower After Restructuring]
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.