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Investors Chase Rally with S&P 500, Nasdaq-100 ETFs


Investors are using some of the largest and most highly traded ETFs to buy U.S. stocks, which were set for their fourth straight week of gains in afternoon trading Friday.

For example, over the first four days of the week, the top-selling ETFs were SPDR S&P 500 (SPY) and the Nasdaq-100 PowerShares QQQ (QQQ) with inflows of $3.7 billion and $1.4 billion, respectively, according to IndexUniverse data.

Meanwhile, the small-cap iShares Russell 2000 (IWM) raked in nearly $500 million between Monday and Thursday. [Investors Pumping $2 Billion a Day Into U.S. Stock ETFs]

The S&P 500 was on track of a weekly advance of 0.4% in afternoon dealings Friday while the Dow rose 0.3%. Both U.S. blue-chip stock indices hit new record highs this week amid second-quarter earnings season. However, the Nasdaq-100 QQQ ETF was set for a decline of 1.2%.

“As with every earnings season, you have some high profile misses, but still the market is obviously taking it in stride. We think it’s encouraging we’re shaking off the tech disappointments,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, in a Reuters report.

“As long as companies can beat the lowered estimates – and the bar is definitely set low – they should be rewarded. On the flip side, if they miss, they will be just as much punished,” Detrick added.

The top three unleveraged ETFs this week were Guggenheim Global Solar Energy (TAN), Global X FTSE Colombia 20 ETF (GXG) and PowerShares Golden Dragon China Portfolio (PGJ) with gains of 5% or more.

The bottom three unleveraged ETFs this week were iPath US Treasury 10-year Bear ETN (DTYS), iShares MSCI Taiwan Index Fund (EWT) and UBS E-TRACS CMCI Silver ETN (USV) with declines of over 3%.

In next week’s economic data, look for reports on new and existing home sales, durable goods orders and consumer sentiment.

Full disclosure: Tom Lydon’s clients own QQQ, SPY and IWM.

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.