Citi’s Woes, Poor Earnings Weigh on ETFs (Daily ETF Wrap-Up)
January 13th, 2009
Market Wrap-Up
Monday marked the beginning of the fourth quarter and year-end earnings season. Alcoa (AA), traditionally the first bellwether to announce its tallies, will do so after the market closes. Even before hearing the numbers, though, investors were betting the news wouldn’t be good, setting the tone for what is expected to be a dismal round of results. Alcoa’s shares fell 8.7%, due to production concerns and an analyst downgrade. The Dow Jones Industrial Average followed a similar trajectory. That benchmark dropped 125 points to 8,474.
Financials also weighed heavily on trading. There seems to be a brewing boardroom drama playing out at Citigroup (C). While a front-page story in The Wall Street Journal signals Chief Executive Officer Vikram Pandit’s job is safe, other reports mentioned that federal regulators are pushing for the company to remove its chairman, Winfried Bischoff. A possible replacement is Time Warner‘s (TWX) Richard Parsons. Meanwhile, the company appears to be in talks to spin off its brokerage unit into a joint venture with Morgan Stanley (MS). All that didn’t sit well with traders. Citi’s shares were hammered 16.4% lower.
Oil continued to slide lower. Last week crude dropped on a larger-than-expected increase in weekly inventories. That has prompted a new round of concerns that the economic down turn is leading to a dramatic curtailment in demand, both here in the U.S. and overseas. The price of a barrel of oil dropped over $3 to under $38.
As President-elect Obama’s inauguration nears, his influence is already being felt on Capitol Hill. With his urging, the Bush administration asked Congress to release the second half of a $700 billion bailout plan, the so-called TARP money.
Finally, the scandal surrounding failed money manager Bernard Madoff took another twist. A New York judge ruled he could remain free on bail as his case unwinds.
Losers
The downturn in the price of oil continued to plague natural resources ETFs. The SPDRs S&P Metals & Mining fund (XME) dropped 9.6%. The Market Vectors Coal ETF (KOL) slipped 9.5%.
Winners
The fallout in Citi shares caused a domino effect in the financial-services sector. Both Wall Street firms and small regional banks lost ground. That was fine for investors who were taking a bearish stance on this sector. The ProShares Ultrashort ETF (SKF) gained 11.2%.
Tuesday’s Notebook
Earnings & Conference Calls
Infosys, Linear Technology
Economic Data
7:45 a.m. ICSC Chain Store Sales
8:30 a.m. Nov. Budget Balance
8:55 a.m. Redbook Retail Sales
Quick Take
A look at how the industry’s most popular ETFs did on Monday:
| Symbol | Net Assets | Price | 52 Week High | 52 Week Low | Volume |
|---|---|---|---|---|---|
| SPY | 77,352 | 86.95 | 142.85 | 75.59 | 264,625,318 |
| EFA | 27,687 | 42.46 | 78.53 | 37.1 | 27,915,981 |
| EEM | 15,215 | 23.83 | 51.72 | 19.12 | 65,120,420 |
| GLD | NA | 80.76 | 99.81 | 70.14 | 14,740,119 |
| IVV | 14,675 | 87.21 | 143.08 | 75.71 | 3,319,486 |
| QQQQ | 12,179 | 29.52 | 50.58 | 25.51 | 102,008,993 |
| IWF | 9,691 | 36.33 | 60.06 | 31.16 | 8,923,105 |
| SHY | 7,806 | 84.46 | 85 | 82.11 | 1,227,947 |
| VTI | 8,264 | 43.22 | 71.09 | 36.98 | 5,920,741 |
| IWD | 7,878 | 47.02 | 78.53 | 40.3 | 7,367,323 |
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