SPY, QQQ, DIA Fall On Profit Taking, Weak Data


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Stock ETFs sold off across the board Thursday on disappointing U.S. employment and housing reports, along with weak Chinese manufacturing and signs of economic stagnations in the euro zone.

Market Overview

In afternoon trade, theSPDR S&P 500 ( SPY ) fell 0.75% but in low volume, which makes for a healthy pullback.

SPDR Dow Jones Industrial Average ( DIA ) plunged 0.84%.

PowerShares QQQ ( QQQ ), a basket of the 100 largest nonfinancial stocks on the Nasdaq, declined 0.66%.

SPY is on track to post its first weekly decline after a six-week winning run.

"This is due, in part, to global concerns that European leaders are simply not making progress towards solving their region's debt crisis," said Elle Kaplan, CEO and co-founder of Lexion Capital Management in New York.

Other market strategists believe investors are taking profits after a run-up, which is normal.

"That being said, there are still plenty of good buying opportunities, especially in individual equities," said Cort Meinelschmidt, CEO and chief investment officer at Sentinel Capital Solutions in Hagerstown, Md.

The loss on the Dow "ain't nothing but a shrimp fin caught in the throat... (you) just gotta cough it up," said John Graves, a registered investment adviser and managing partner at The Renaissance Group with $480 million in assets in Ventura, Calif. He's also author of "The 7% Solution," a book about retirement planning. He advises that investors should buy when everyone is selling.

"The most despised rally since 2007 is just taking a breather," said Keith Newcomb, portfolio manager at Full Life Financial in Nashville, Tenn. "Rallies are hated, and tops are eagerly called when too many investors are on the sidelines."

IShares MSCI EAFE Index ( EFA ), tracking developed foreign markets, dropped 0.59%.

IShares MSCI Emerging Markets Index ( EEM ) skidded 0.92%.

"The market has taken a brief respite from the troubles in Europe over the past several weeks," said David Houle, a chartered financial analysts at Season Investments in Colorado Springs, Colo. "September and October will bring Europe back into the limelight, and headlines over the past day or two have reminded investors what is at stake and how difficult the situation will be to resolve."

Economic Reports

• Jobless claims rose by 4,000 for a second week to reach 372,000 in the period ended Aug. 18, Labor Department figures showed today in Washington. The number of Americans filing applications for unemployment benefits climbed last week to a one-month high, showing little progress in the labor market.

• New-home sales rose 3.6% in July to a seasonally adjusted annual rate of 372,000, the Commerce Department said Thursday. That's the same as in May, which was the highest since April 2010. But the number of sales remain sharply below the annual pace of 700,000 that economists consider healthy. In the past 12 months, sales have jumped 25% from a historically low level.

• Chinese manufacturing fell in August for the 10th month in a row, owing to a slowdown in exports and real estate investments.

• Eurozone economic data showed the region is sliding further into recession. The eurozone Purchasing Managers' Index shows the economy there shrinking about 0.5% in the July-September quarter, according to Markit.

Follow Trang Ho on Twitter @TrangHoETFs .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , ETFs
Referenced Symbols: DIA , EEM , EFA , QQQ , SPY

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