Investors hoped that Friday’s momentum would carry over to the new week, but a late day dip erased all of the gains from the previous session. Worries over the fiscal situation in Europe continued to dominate trading, as investors digested the credit markets’ report that the chances of a Greek default stand around 75%. A jump in home sales, usually a welcome development, was written off as a byproduct of a tax credit set to expire this month. Elsewhere, Chinese leaders pledged to reform the yuan ahead of a highly-anticipated meeting with Treasury Secretary Geithner in Beijing this week.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through exchange-traded products, dropped 5.87 points, or 0.6%, to close at 998.84. Trading was once again heavy to start the week, although aggregate volume failed to top the 1 billion mark regularly shattered last week.
The biggest loser on the day was the Financials Select Sector SPDR (XLF), which sunk as investors continued to consider the impact that regulatory reform will have on Wall Street profits (see Why Reform Bill Boosted XLF). Although the latest version of the bill is expected to significantly reduce profits at big banks, investors rejoiced late last week that the reform didn’t include certain provisions that had been discussed in recent months. But those gains disappeared on Monday, as anxiety over the financial sector sparked a sell-off.
Among the day’s few winners was the SPDR Gold Trust (GLD), which climbed 1.4% on a fresh wave of risk aversion (see Two Very Different Predictions For The Gold ETF). After a rush to safe havens sent bullion prices soaring over the last months, prices pulled back somewhat late last week on concerns that the elevated price levels were unjustified (see Five Safe Haven ETFs For Riding Out The Storm).
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Disclosure: No positions at time of writing.