Energy ETFs Drop as Gulf Storm Passes

Market Wrap-Up

It was Mother Nature that dictated much of the trading in stocks Tuesday. A tropical storm that had been brewing in the Gulf of Mexico the last few days appeared to be heading south toward Mexico, averting a direct collision with oil and gas fields off the coast of Texas. The per-barrel price of crude had been rising on concerns the storm would knock out some energy infrastructure assets. But as the storm passed investors sold off oil. It dropped almost $4 to the $128 level.

A series of corporate announcements also weighed heavily on the performance of the stock market. Techs dipped when Apple (AAPL) announced it earned $1.1 billion on $7.5 billion revenue in its fiscal third quarter, but expected earnings going forward would possibly be weaker than analysts expect. Apple shares dropped 3.6%. Other tech names like SanDisk (SNDK) and Texas Instruments (TXN) also disappointed.

Wachovia (WB) posted a staggering $8.9 billion loss during its second quarter. But a company plan to cut costs and exit the wholesale mortgage business gave traders confidence the worst was over. The stock jumped 24.8% on the news. Other financial stocks like Citigroup (C), Wells Fargo (WFC) and J.P. Morgan (JPM) gained ground. American Express (AXP), though, didn't go along for the ride. The company announced earnings well below analyst estimates. Its shares dropped almost 10%.

The Dow Jones Industrial Average had been flat most of the day before a late-session rally put that benchmark index up 135 points to close at 11,603.

Winners

Bloomberg reported that Indian Prime Minister Manmohan Singh's coalition government won a crucial vote in that country's parliament, signaling he may be able to pass some regulations that would attract foreign investors to the developing region. The PowerShares India ETF (PIN) gained 5.9% on the news.

Traders continued to warm up to ailing financials. Even on a day when American Express and Wachovia announced disappointing earnings, some financial ETFs managed to post gains. The SPDR KBW Bank ETF (KBE) increased 9.3%.

Home builders also moved up Tuesday. The iShares Dow Jones U.S. Home Construction fund (ITB) jumped 7.9%.

Losers

At midday meteorologists predicted Tropical Storm Dolly would turn south and make landfall in Mexico instead of heading toward the Texas coast and valuable gas and oil platforms. That caused oil to sink below $126 per barrel before recovering to $128. That $3.50-a-barrel drop caused several energy ETFs to post losses for the day. The SPDR S&P Oil & Gas Exploration & Production fund (XOP) lost 5.8%. The United States Natural Gas ETF (UNG) pulled back 5.1%.

Tuesday's Industry Headlines

Launching Pad
State Street expanded its popular SPDR family of ETFs Tuesday by adding 10 international sector funds to its lineup. The new ETFs focus on international consumer discretionary, consumer staples, financials, health care, industrial, materials, technology, telecommunications, utilities and energy companies outside the U.S. The SPDR ETF line now stands at 80 offerings.

Wednesday's Notebook

Earnings
Affiliated Managers Group, Aflac, Airgas, AllianceBernstein, Allstate, Amazon.com, Ameriprise, Anheuser-Busch, Ariba, AT&T, Boeing, Carter's, Chipotle Mexican Grill, Coachmen, Cohen & Steers, ConocoPhillips, Deltic Timber, EMC, Ethan Allen, Fair Isaac, General Dynamics, GlaxoSmithKline, Hershey, Judson City Bancorp, Jakks Pacific, McDonald's, McKesson, New York Times, Noble Corp., NutriSystem, Pepsico, Praxair, Pulte Homes, Travelers, Tractor Supply, WellPoint, Whirlpool, Wyeth

Quick Take

A look at how the industry's most popular ETFs did on Tuesday.

10 Largest ETFs
Symbol	Net Assets	Price	52 Week High	52 Week Low	Volume
SPY	71,655	127.42	156.39	121.48	290,961,684
EFA	43,645	67.75	85.64	64.79	10,335,827
EEM	20,935	131.58	165.39	117.49	15,990,531
GLD	NA	93.06	99.81	65.04	17,541,073
IVV	16,690	127.93	156.65	121.69	4,141,535
QQQQ	16,302	44.78	55.03	41.17	150,736,346
IWF	13,253	54.33	63.64	52.79	4,117,655
SHY	9,070	82.63	84.49	80.11	1,046,202
VTI	10,116	64.15	77.66	60.89	2,732,145
IWD	8,091	69.11	88.24	64.01	2,540,030