Bearish sentiment took over Wall Street today, as escalating fears about the Euro Zone and anticipation ahead of Bernanke’s speech spurred a global market sell off. Sour economic reports weighed heavily on investors with the Euro Zone’s measure of economic sentiment reported to be at its lowest level in over two years. The U.S. Labor Department stated that more Americans filed for initial jobless benefits last week than had been expected, a sign that job creation remains mild. Markets slipped even lower after a report indicated that Spain may delay its decision to seek a sovereign bailout until aid conditions are clear.
This yo-yo-like mentality from the Euro Zone has understandably left investors with mounting doubts, as the region seems to be taking one step forward and two steps back in its seemingly lacking attempts to keep the currency bloc together. And in regards to Jackson Hole, investors shouldn’t hold their breath for any concrete plans from the Fed either as many speculate that tomorrow’s symposium will be a chance for Bernanke to effectively “talk” about the options instead of taking immediate action [see also Seven Simple & Cheap ETF Model Portfolio].
All three major indexes landed in red territory today, bogged down by rising Euro Zone fears and caution ahead of tomorrow’s speech from Bernanke. The Dow Jones Industrial Average (DIA) and Nasdaq (QQQ) fell the most today, losing 0.81% and 1.05% respectively. The S&P 500 (SPY) dropped 0.78%, closing below the psychologically-important 1,400 level. European markets fell amid poor sentiment data and reports of Spain possibly delaying its decision to seek a bailout. In Asia, equities lost ground with Japan’s Nikkei Stock Average dropping 1% after poor retail sales data and China’s Shanghai Composite slipping less than 0.1%.
Bond ETF Roundup
U.S. Treasuries rallied ahead of Bernanke’s Jackson Hole speech as investors finalized bets on their stimulus expectations. Depending on the outcome tomorrow, investors will likely see high levels of activity in the Treasury bond market. If the Fed makes the bold move to deliver yet another bond-buying program (which many believe they will not), long-term bonds will likely rally, but inflation expectations will eventually weigh on the market.
Commodity ETF Roundup
Crude oil logged its second day of losses as the highly anticipated meeting of central bankers put downward pressure on the commodity. Lack of damage to the Gulf Coast’s oil-refining hubs from Hurricane Isaac also weighed on oil prices. Gold futures also slipped as hope among investors that Bernanke will take immediate action to boost economic growth dwindled.
ETF Chart Of The Day #1: EWA
The iShares MSCI Australia Index Fund (EWA) was one of the worst performers of the day, shedding 1.86% during the session. A decrease in demand for industrial metals has sent iron ore – Australia’s key export – tumbling, forcing several of Australia’s biggest mining companies to cut back amid the slowdown in the country’s resources boom. And as concerns of Australia’s mining sector heightened, this ETF, which holds several mining companies, gapped significantly lower at the open. EWA inched lower throughout the day, eventually settling just above its low of $23.13 a share [see also Australia ETFs: 9 Ways To Play].
ETF Chart Of The Day #2: EWP
The iShares MSCI Spain Index Fund (EWP) tumbled 2.14% during today’s sessions, as reports indicated that Spain may delay its decision to seek bailout funding. In response, this ETF gapped slightly lower at the open, only to decline even further during afternoon trading hours. EWP eventually settled just above its low of $25.14 a share [see also Euro Free Europe ETFdb Portfolio].
ETF Fun Fact Of The Day
Two ETFs track the Russell 3000 Index and Vanguard’s VTHR charges the cheapest expense ratio at just 0.16%.
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Disclosure: No positions at time of writing.