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ETF Weekly Review: Stocks Tread Water as Fiscal Cliff Threatens


ETFs pegged to the major U.S. equity benchmarks were on track for slight weekly gains in Friday afternoon trading with a month left until the deadline on a budget deal in Washington.

The S&P 500 was up 0.3%, the Dow was flat for the week and the Nasdaq Composite added 1.3%.

“If you look at the net-net of all the noise surrounding the fiscal cliff, there’s very little impact in terms of meaningful actions,” said Douglas Cote at ING U.S. Investment Management in a Bloomberg News report. “For the market, it’s creating intraday volatility.”

On Wall Street, the conventional wisdom is that Congress and the Obama administration will take the negotiations down to the wire before reaching a compromise.

“There is no sign of it from the rhetoric but there are expectations it will happen,” said Steve Goldman, principal at Goldman Management, in a Reuters article. “The rhetoric will get worse before it gets better.”

ETF Overview

This week’s ETF standouts included funds tracking India, base metals, copper, Asian stocks and utilities.

Conversely, the steepest decliners included Egypt, Greece, natural gas, miners, gold and silver.

The top three unleveraged ETFs this week were Market Vectors India Small-Cap (SCIF), iPath MSCI India (INP) and iShares S&P India Nifty 50 (INDY) with gains of 5% or more.

The bottom three unleveraged ETFs this week were Market Vectors Egypt (EGPT), U.S. Natural Gas (UNG) and Global X FTSE Greece (GREK). They lost over 8%.

In next week’s economic data, look out for reports on ISM manufacturing, construction spending, motor vehicle sales, factory orders and consumer credit. The main event is on Friday with the nonfarm payrolls report for November.

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.