ETF Trends
ETF Trends

Friday’s nonfarm payrolls report capped a five-day rally as the unemployment rate fell below 8% to the lowest level since President Obama took office.

The S&P 500 was on track for a weekly gain of 1.8% in afternoon trading Friday as the blue-chip benchmark climbed above the highest closing level since 2007. Meanwhile, the Dow added 1.5% and the Nasdaq Composite rose 1.2%.

“The September number was pretty close to being spot on consensus and it came with an upwards revision to the August number. The market reaction is positive on a report that’s solid even if it’s unspectacular,” Janney Montgomery Scott strategist Mark Luschini told Bloomberg News.

The U.S. economy added 114,000 jobs in September while the unemployment rate fell to 7.8%.

European stock ETFs were the big winners this week with Greece, Italy and Spain pacing the advancers.

“Spain will continue to be at the forefront of investors’ minds as it still hasn’t officially requested a bailout. Markets have expected Spain to ask for financial aid from its European partners, which would then trigger the start of the European Central Bank’s outright money transactions program, but Spanish lawmakers so far have dug in their heels and resisted making the move,” Dow Jones Newswires reports. “ECB President Mario Draghi reiterated Thursday that the bank stood ready to buy bonds through its new OMT program, as soon as conditions are met by governments.”

Conversely, volatility-linked ETFs absorbed the steepest losses this week as U.S. stocks continue to grind higher. Treasury ETFs also fell with investors moving away from safe havens.

The top three unleveraged ETFs this week were Global X FTSE Greece 20 (NYSEArca: GREK), iShares MSCI Italy (NYSEArca: EWI) and iShares Dow Jones US Home Construction (NYSEArca: ITB) with gains of 6% or more.

The bottom three unleveraged ETFs this week were ProShares VIX Short-Term Futures (NYSEArca: VIXY), iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) and VelocityShares Long VIX Short Term ETN (NYSEArca: VIIX). They lost more than 7%.

In next week’s economic data, be prepared for reports on the federal budget, trade deficit, import and export prices, producer prices and consumer sentiment. On Monday, the U.S. bond market will be closed for Columbus Day but the stock market will be open.

The opinions and forecasts expressed herein are solely those of John Spence, 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.