U.S. equities staggered into Tuesday’s closing bell as exchange traded funds indexed to the S&P 500 lost 2.6% and fell below a key technical level.
Broad-based stock ETFs such as SPDR S&P 500 ETF (NYSEArca: SPY) and iShares S&P 500 (NYSEArca: IVV) sliced through their 200-day moving average in Tuesday’s sell-off. Many investment advisors use the technical indicator determine how much should be invested in stocks. [S&P 500 ETFs Face Another Test at 200-Day Average]
The Dow shed 266 points with the Eurozone debt crisis and a potential U.S. credit ratings downgrade weighing on sentiment.
The S&P 500’s price level is now in negative territory for the year. The “risk-off” trade was in full force Tuesday.
In ETFs, investors sought the safety of funds tracking gold, the Swiss franc and U.S. Treasury bonds, for example. Exchange traded products tracking CBOE Volatility Index futures also rose Tuesday on the fear trade.
SPDR Gold Shares (NYSEArca: GLD) rallied more than 2%. [Spread ETF Rallies on Stock Downdraft, Record Gold]
CurrencyShares Swiss Franc Trust (NYSEArca: FXF) also added over 2%. [Investors Seek Safety in Swiss Franc ETF]
In bonds, iShares U.S. Barclays 20+ Year Treasury (NYSEArca: TLT) soared 3%.
SPDR S&P 500 ETF
iShares U.S. Barclays 20+ Year Treasury (NYSEArca: TLT)
Full disclosure: Tom Lydon’s clients own GLD.