US Stocks Claw Back But Close Lower On Economy, Earnings Worries And Lack Of QE; ITB Rises, EWY Tanks

[Chart courtesy of MarketWatch.com]

US stocks ended lower Thursday, extending their losing streak for the sixth consecutive day as investors grew worried over warnings from the technology sector on profits and remained wary of the lack of pace of global economic recovery.

Treasuries rallied as the allure for safe-haven assets seemed more attractive after the bank of Japan refused to announce further stimulus measures Thursday, and investors wondered if global central banks are incapable or unwilling to take coordinated action even as the world economy continues to bleed.

The QE addicted crowd maybe feeling fear now as the much counted on actions are not forthcoming. As I mentioned before, economic news will have to get a lot worse and/or markets will have to slip to much lower levels to induce the central banks to try to pull another rabbit out their collective hats.

Trading on the Dow Jones Industrial Average (DJIA) remained choppy with the Dow ultimately closing 0.3 percent lower, despite foraying into the green territory occasionally as well as dropping 112 points.

The S&P 500 Index (SPX) lost 0.5 percent, its sixth down day in a row. Technology and financials fared the worst while utilities and healthcare performed the best among its 10 business groups.

The benchmark 10-year yield approached the June 4 record low level, losing four basis points to finish at 1.47 percent. The yield on 30-year bonds traded five basis points lower to end at 2.56 percent in late afternoon business, despite a US Labor Department report showing first-time unemployment benefit claims dropping to four-year lows.

ETFs in the news:

On a very choppy trading day, the iShares Dow Jones US Home Construction Index Fund (ITB) emerged among the top gainers, rising 2.06 percent on the day. The chatter of “housing recovery” has grown stronger in recent days as recent data seems compelling: construction job growth has increased over the past ten months while building permits in May were 7.9 percent higher over April. Other homebuilder related funds such as the SPDR S&P Homebuilders ETF (XHB) rose, adding 1.43 percent on the day.

Asian markets remained weaker, especially after the South Korean central bank cut key interest rates unexpectedly. The iShares MSCI South Korea Index Fund (EWY) was among the biggest decliners, losing 2.32 percent for the day. Emerging market funds also retreated ahead of China’s quarterly GDP data tomorrow with the iShares MSCI Emerging Markets Index Fund (EEM) shedding 1.67 percent for the day.

Please see the latest momentum numbers and Trend Tracking Index positions in the StatSheet, which I will post within the hour.

Disclosure: No holdings

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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