5 ETFs Hit Hardest by Economic Data

by: Gary Gordon

Permabears will probably point to Thursday’s volatile stock sell-off as proof of a double-dip recession. They’ll also suggest that the market’s action is indicative of a major decline ahead.

The problem that I have with ”get-me-noticed” predictions of devastation is the permanency of the position. For instance, when stocks move higher, permabears explain that it is either a “short seller squeeze” or a meaningless, low volume event. (Should this imply that a 2% drubbing in mid-August is a ”long call buyer’s squeeze” or a “limited-shares-traded” event?)

In truth, we aren’t seeing any new info on the state of the U.S. economy. Retail sales are weak. The trade deficit is sucking the life out of GDP. And the extension of unemployment benefits has… surprise, surprise… led to a near-term trend of increasing jobless claims.

The economy will find a way to push through at an anemic rate of growth. After all, the Fed and the U.S. government have been determined to keep the country from falling off the proverbial cliff with un-targeted stimulus packages, unemployment extensions, handouts to the states and treasury repurchases.

The activity may be saving public sector jobs and public pensions; yet, it’s also saving “Class Warfare Street” at the expense of both “Main Street” and “Wall Street.”

Indeed, a lack of clarity in energy policy, health care legislation and financial regulation have led corporations to sit on their wallets. There is a pervasive feeling of uncertainty in the business world that keeps decision-makers from hiring. For the optimists, profits will continue to surprise on the upside, while the pessimists can contniue harping on economic weakness. (Note: Economic weakness may actually HELP stocks come Q4… find out why right here! )

Nevertheless, when it comes to terrible econ data, you can count on these ETFs to get whacked. Here are some of the hardest hit sector ETFs in Thursday’s beat-down:

5 of the Hardest Hit Exchange-Traded Products (8/19/10 Sell-Off)
Approx %
iShares DJ Home Construction (BATS:ITB) -3.2%
PowerShares WilderHill Progressive Energy (NYSEARCA:PUW) -2.8%
iShares DJ Transportation (BATS:IYT) -2.6%
Regional Bank HOLDRs (NYSEARCA:RKH) -2.6%
Rydex Equal Weight Consumer Discretionary (NYSEARCA:RCD) -2.5%
5 of the Least Affected Exchange-Traded Products (8/19/10 Sell-Off)
Internet Infrastructure HOLDRs (NYSE:IIH) 1.5%
JP Morgan Alerian MLP (NYSEARCA:AMJ) -0.3%
Market Vectors Gold Miners (NYSEARCA:GDX) -0.6%
iPath DJ Total Commodity Index (NYSEARCA:DJP-OLD) -0.8%
First Trust Internet (NYSEARCA:FDN) -0.9%

Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.