Stock exchange traded funds have suffered four straight losing weeks in the current tailspin. Markets are shaky again this year as Federal Reserve Chairman Ben Bernanke prepares to deliver his speech at the Kansas City Fed Symposium at Jackson Hole.
Last year, stocks embarked on a multi-month rally after the Fed chief in late August hinted at the second round of quantitative easing, or “QE2,” at Jackson Hole. The Fed’s stimulus program expired at the end of the second quarter, and markets have been rocky ever since. [Third Quarter Outlook: Life After QE]
Bernanke’s speech is on Friday “and everybody’s hoping that, just like last year, Ben Bernanke will respond to market turmoil by unwrapping a big, shiny present for the market in the form of some kind of stimulus,” reports WSJ.com’s MarketBeat. “The market might get its heart broken.”
All Star Charts notes that QE2 was good for stocks and gold, but bad for ETFs that invest in U.S. Treasury bonds. However, since the end of June, stock ETFs have tanked while gold and Treasury funds have soared.
Over the past year, SPDR S&P 500 (NYSEArca: SPY) has risen 6.3%, iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) has gained 10.1%, and SPDR Gold Shares (NYSEArca: GLD) has jumped 47.8%, according to Morningstar data. [Treasury ETFs Volatile on ‘QE3’ Talk]