Daily ETF Roundup: Fears Over Euro Zone Recession Intensify

by on August 23, 2012 | ETFs Mentioned:

Apparently Bernanke & Company were not too convincing yesterday since investors seemingly shrugged off the Fed’s “hints” of future stimulus and proceeded to drive the market straight into red territory today. The issue many have with yesterday’s Fed minutes is that the central bank seems reluctant in taking off the “training wheels” so to speak. By placing conditions on whether or not the Fed will jump in to boost the economy, investors will, understandably, continue to have mounting doubts about the prospect of more stimulus. The economic landscape thus far has been by no means cheery, but certain facets of the economy have proven  to be brights spots, well on their way to recovery. Despite this, growing concerns surrounding the health of Europe’s and China’s economies as well as several weak domestic reports have painted a rather grim picture for the future [see also Seven Simple & Cheap ETF Model Portfolio].

Global Market Overview: Fears Over Euro Zone Recession Intensify 

As investors doubted the latest signal from the Fed that it is preparing to take action to boost the nation’s lackluster recovery, all three major indexes landed in negative territory.  The Dow Jones Industrial Average (DIA) was on pace for its biggest decline of the month, sliding 0.90% during the session. The S&P 500 (SPY) and Nasdaq (QQQ) also posted losses on the day. In Europe, equities were mixed after several weak euro-zone reports pointed towards the region falling into its second recession in three years. News that Spain is negotiation conditions for a possible aid package also weighed on Euro equities. Asian markets ended higher despite the release of a survey suggesting that China’s manufacturing sector is contracting.

Bond ETF Roundup 

U.S. Treasuries posted their fifth day of gains today, as investors continued to shift assets to the safe haven after yesterday’s release of the Fed minutes. In other bond news, the Federal Reserve announced today that it profitably closed the book on its 2008 acquisition of AIG’s most toxic assets.

Commodity ETF Roundup

Precious metals were the only commodities that managed to post decent gains on the day. Gold hit its four-month high following China’s weak manufacturing report, while platinum and palladium continued its rise on worries that labor disputes will disrupt supplies from South America.

ETF Chart Of The Day #1: SLV

The iShares’ Silver Trust (SLV) was one of the best performers today, gaining 2.35% on the session. Bolstered by hopes of a new round of Fed stimulus and continuing Euro Zone drama, this ETF gapped significantly higher at the open. After the initial pop, SLV slid sideways for the rest of the day, eventually settling below its high of $29.88 a share [see also Jim Rogers: Silver Is a Better Investment Than Gold].

ETF Chart Of The Day #2: XLB

The State Street Materials Select Sector SPRD ETF (XLB) was one of the worst performers, shedding 1.67% on the day. Material stocks in the S&P 500 fell the most today, forcing this ETF to gap slightly lower at the open. XLB continued to decline throughout the day, eventually settling just above its low of $35.89 a share  [see also Commodity Guru ETFdb Portfolio].

ETF Fun Fact Of The Day

EWZ tracks the MSCI Brazil Index which is only down 2.19% YTD, while its currency-hedged counterpart, DBBR, tracking the same basket of holdings is down 10.89% in the same time period.

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Disclosure: No positions at time of writing.