Major ETFs rebounded from morning weakness to post gains by
midday Friday on news that the European Central Bank is
considering setting interest-rate limits on a new-bond buying
program in hopes of controlling borrowing rates for Greece, Spain
and other indebted eurozone countries.
In addition, a letter from U.S. Federal Reserve Chairman Ben
Bernanke to a congressional oversight panel surfaced saying that
the Fed has room to enact more stimulus to help boost the
In afternoon trade, SPDR S&P 500 (
) rose 0.53%. So far it's lost 0.51% for the week, breaking a
six-week winning run.
SPDR Dow Jones Industrial Average (
) snapped a five-day losing streak, gaining 0.54%
PowerShares QQQ (
), a basket of the 100 largest nonfinancial stocks on the Nasdaq,
climbed 0.75%. After recovering most of its losses from earlier
this week, it's on track to end the week ahead a mere 0.09% and
up six weeks in a row.
ETF investors can expect more volatility from the Fed's annual
meeting in Jackson Hole, Wyo., at months' end.
"Further downside action is expected as traders flee The
Street for the last week of summer," the Stock Trader's Almanac
wrote in its latest client note. "After Labor Day, we then have
to contend with the volatile months of September and October.
"Election years do little to improve the ugly market
performance records of these infamously bad market months."
IShares Dow Jones U.S.Home Construction (
) rose the most among nonleveraged, domestic equity ETFs, adding
1.63% to a 52-week high of 18.08. July building-permits data was
revised lower to a seasonally adjusted rate of 811,000, by the
Commerce Department. Permits rose 6.7% from June vs. 6.8%
reported earlier. Permits indicate future construction activity.
ITB sports the highest IBD Relative Strength Rating among
nonleveraged ETFs, 95, which means its price performance is
outpacing 95% of the market's issues. Its robust B+
Accumulation/Distribution Rating means institutional investors
are buying more shares than selling.
IShares Nasdaq Biotechnology (
) lifted 1.24% as it found support at its 50-day moving average.
It owns a healthy 86 RS and B Acc/Dis Ratings combination.
Weekly Money Flows
Retail investors have been weary of the rally that started in
June. They've pulled money out of U.S. equity funds for the sixth
week in a row with actively managed funds seeing the most
outflows, according to EPFR Global.
They've opted instead for gold, high-yield bonds and municipal
bonds. Investors pulled $847 million out of stock funds during
the week ended Aug. 22, while pouring $4.9 billion into bond
funds. About 60% of that went into U.S. bond funds. Flows into
gold and precious metals funds climbed to a 29-week high.
U.S. durable goods orders for July expanded 4.2%
month-over-month vs. a consensus forecast of 3.0%. They rose 1.6%
the prior month. But if transportation is excluded, mainly
aircraft production, orders shrank 0.4% for the month. Nondefense
capital goods orders -- excluding aircraft -- fell by 3.4%.
The U.S. dollar trading against a basket of foreign currencies
found support at its 200-day moving average after a four-day
losing streak this week on a Federal Reserve minutes release that
hinted it would consider more quantitative easing to support
economic growth. The euro lost ground against the dollar as the
European Central Bank's bond purchasing plan was postponed until
Germany's ruling on the eurozone bailout fund. PowerShares DB
U.S.Dollar Index Bullish (UUP) picked up 0.18%.
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