After ending the week on a high note following the announcement of QE3 on the home front, investors came back in a profit taking mood Monday morning as major benchmarks stumbled lower out of the gates. Selling pressures from Europe spilled over after finance ministers overseas failed to agree on a timetable for moving forward with the proposed unified banking sector. Randy Frederick, managing director of active trading at Charles Schwab, commented, “There’s the potential for a small pull-back, but I think we will move back into the bull territory later in the week unless there’s an unexpected negative news event” [see also How To Pick The Right ETF Every Time].
Shares of Apple traded in green territory throughout the day which kept the Nasdaq afloat, although the benchmark still shed 0.16% on the day. By comparison, the S&P 500 Index and Dow Jones Industrial Average fared worse, losing 0.33% and 0.30% respectively as the closing bell rang.
Bond ETF Roundup
Treasuries took the lead in the fixed income market; this asset class inched higher on the day as investors sought refuge following the resurfacing gridlock overseas, which has undoubtedly brought Euro zone debt drama back into the spotlight. TIPS and junk bonds fell lower alongside stocks as profit taking pressures hit this corner of the bond market as well.
Commodity ETF Roundup
Commodity prices fell lower across the board as investors digested a worse-than-expected Empire state index report; the figure came in at -10.4 versus the previous reading of -5.9, which intensified worries over a domestic slowdown in manufacturing activity. The U.S. dollar also crept higher on the day, which only added to the headwinds for commodity prices.
ETF Chart Of The Day #1: TLT
The iShares Barclays 20 Year Treasury Bond Fund (TLT) was one of the best performers during an otherwise lackluster session for equities, gaining 1.20% on the day. Investors jumped back to the safe havens following last week’s massive rally as resurfacing worries over debt drama in Europe made headlines over the weekend. Despite today’s rally, TLT has endured a tough September as shares have shed upwards of 6% since the beginning of the month [see our Better-Than-AGG Total Bond Market ETFdb Portfolio].
ETF Chart Of The Day #2: USO
The United States Oil Fund (USO) was one of the worst performers, shedding a dismal 2.96% on the day. High-volume profit taking pressures swept over the crude oil market in the afternoon; the sudden drop triggered a number of stop-losses at key technical support levels along the way which only added to the severity of the downside move. Following today sell-off, USO is down 6% from a year-to-date performance perspective [see also 25 Ways To Invest In Crude Oil].
ETF Fun Fact Of The Day
The iShares Frontier Markets Index Fund (FM) has about 31% of its portfolio dedicated to Kuwait and 0% to Chile. The Guggenheim Frontier Markets ETF (FRN) has about 38% of its assets dedicated to Chile and 0% to Kuwait.
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Disclosure: No positions at time of writing.