Stocks took a dive lower today as investors finally took profits following three consecutive days in bright green territory. The S&P 500 was off by 2%, while the NASDAQ fared a bit worse, down 2.26% on the day. This decline was a bit overdue considering the stellar equity market performance over the past few days coupled with the fact that Euro zone debt-woes remain largely unanswered as investors await for more guidance. “There’s always a concern about what is going to happen with Europe and how they are going to put together a deal that satisfies everyone,” said Robert Pavlik, chief market strategist at Banyan Partners. “The bottom line is, investors in Greek paper shouldn’t be thinking about a haircut; they should be worried about getting scalped.”
Worse-than-expected corporate earnings results at home put additional downward pressure on equity indexes. Industry bellwether 3M Co. tanked over 6% on the day after the company missed earnings estimates and lowered its 2011 profit forecast. The real story of the day was Netflix, which plunged a whopping 35% lower for the day after the video-rental firm missed analyst earnings estimates and reported loosing close to 800,000 subscribers. The S&P Case-Shiller report showed a 0.2% increase in housing prices, making for the fifth straight monthly gain and giving investors a reason to believe that the housing market is in fact bottoming out [see Talking Real Estate ETFs With IndexIQ's Adam Patti]
One of the biggest ETF winners on the day was the State Street SPDR Gold Trust (GLD), which managed to close 2.8% higher [see Futures Free Commodity Portfolio Now Available]. Overseas, German Chancellor Merkel voiced her opposition to buying up bonds in the secondary market, which inevitably spooked investors seeing as how debt negotiations will now likely take longer than previously expected. Gold prices surged just a few short minutes after the opening bell on Wall Street as investors sought refuge amidst the selling frenzy. Futures prices for the precious yellow metal soared to $1,700 an ounce by the end of the day, with GLD settling at $165.62 a share.
One of the biggest ETF losers on the day was the PowerShares WilderHill Clean Energy Portfolio (PBW), which was off by 4.1%. Heightened concerns over Europe coupled with a sluggish economic recovery at home continue to weigh down on the clean energy sector as capital restrictions pose a serious threat to the industry [see Bright Spots In The ETF Landscape: Five Funds Holding Their Value In a Wild 2011]. PBW has faced serious headwinds these past few months amidst the equity market turmoil, and from a year-to-date perspective this ETF is down 45%.
Disclosure: No positions at time of writing.