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Equity ETFs Poised for Second Straight Down Week


U.S. stock ETFs rallied Friday after Fed chairman Ben Bernanke’s highly anticipated Jackson Hole speech but the major indices were on track to lose ground for a second week.

In afternoon trading Friday, the S&P 500 was down 0.4% for the week, the Dow shed 0.6% and the Nasdaq Composite was off 0.2%.

Bernanke said the economy and jobs market continue to face challenges, and left the door open for further quantitative easing from the Fed. The attention now turns to the Fed policy meeting in September.

“Bernanke fell short of providing any explicit green light to further asset purchases at the September meeting, but his remarks reinforce the dovish bias arising from the minutes of the July meeting,” said Millan Mulraine, an economist at TD Securities, in a Reuters report. “The burden of proof remains squarely on the data … to dissuade the Fed from taking further action.”

ETF Overview

There weren’t many big movers in ETFs this week amid subdued trading volume before the Labor Day holiday weekend.

Volatility-linked ETFs moved higher during most of the week as stock traders were hedging before Bernanke’s Friday speech. However, volatility products moved lower Friday along with the VIX as stocks rallied. [Volatility, Short ETFs Lower After Jackson Hole Speech]

The top three unleveraged ETFs this week were iPath Cocoa (NIB), ProShares VIX Short-Term Futures (VIXY) and iPath S&P 500 VIX Short-Term Futures (VXX) . They were on track for gains of more than 2% for the week, in afternoon dealings Friday.

The bottom three unleveraged ETFs were iPath US Treasury 10-Year Bear (DTYS), Market Vectors Coal (KOL) and ETFS Physical Palladium (PALL) with losses of more than 4%. [ETF Chart of the Day: Coal] [Platinum ETFs Gather Inflows on Mine Shutdown]

In next week’s economic data, look for reports on ISM manufacturing, construction spending, motor vehicle sales, productivity and labor costs. However, the main event will be the August nonfarm payrolls report, which crosses on Friday.

Markets will be closed on Monday for Labor Day.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.