ETF Trends
ETF Trends

Stock exchange traded funds were set for a big decline Monday after Standard & Poor’s downgraded its triple-A credit rating on U.S. debt.  Dow futures slipped over 200 points before the bell while gold soared to $1,710 an ounce.

SPDR S&P 500 ETF (NYSEArca: SPY) fell more than 2% in Nasdaq premarket trading. SPDR Gold Shares (NYSEArca: GLD) vaulted about 3% as gold prices topped $1,700 for the first time. [Small-Cap ETFs May Signal More Pain]

The iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) traded higher by about 8% in preopen dealings. The exchange traded note rallied last week along with the CBOE Volatility Index, Wall Street’s fear gauge. [Debt Fears Stalk Equity ETFs After Jobs Report]

U.S. Treasury ETFs, meanwhile, were set to rally Monday in the wake of the S&P downgrade. Yields on 10-year notes tumbled below 2.5% in morning trading. Bond yields and prices move in opposite directions.

“S&P’s downgrade to AA+ of U.S sovereign credit had the immediate effect of penalizing risk assets, with 10-year U.S. Treasury futures rallying amid heavy losses for Asian equities and Nymex oil futures,” said strategists at Lloyds Bank, in a MarketWatch report.

U.S. Oil Fund (NYSEArca: USO) was off nearly 4%. [Summer Crash of 2011?]


Full disclosure: Tom Lydon’s clients own GLD and SPY.

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.