Greece Weighs on U.S. Stock Markets and ETFs
Major markets and index ETFs fell today after Greece and Europe continued their drama and the tech sector bubble started to hiss. The S&P 500 declined .33%, the Dow Jones Industrial Average dropped .16%, the NASDAQ Composite lost .46%, and the Russell 2000 declined .82%. Index ETFs followed suit as the SPDR S&P 500 ETF (NYSEARCA:SPY) dropped .32%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) lost .16%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) declined .46%, and the iShares Russell 2000 Index ETF (NYSEARCA:IWM) lost .79%.
Markets and ETFs likely reacted negatively to Greece, as Fitch downgraded Greek bonds to just one level off of “default” status, despite the Eurozone’s approval of the 130 billion Euro bailout for Greece yesterday. Negative European economic data did not help matters for Europe today either, as many fear that the Eurozone is on the brink of another recession that could be sparked by a Greek default.
The Tech Sector did not fair well today either, as HP (NYSE:HPQ) reported a 44% fall in net earnings for fiscal Q1 2012 compared to Q1 2011; Dell (NASDAQ:DELL) did not do have a good day as well as the company struggled to earn $764 million in Q4 2011 compared to $927 million in Q4 2010. Perhaps the tech sector bubble is beginning to hiss; the decline in tech giants’ stock like Dell and HP also likely suggests the continued onslaught of the tablet revolution, as people just don’t seem as interested in laptops anymore.
Today’s previous home sales report indicated a 4.3% increase today, however the figure was not welcomed as the 4.3% increase missed expectations. The financial sector also took a dive today on likely concerns over Europe, same old story here.
Iran is also starting to heat up again, as the country rejected further investigations of its nuclear programs. Israel meanwhile mentioned that Iran could have a nuclear missile capable of reaching the United States in 2-3 years. If Israel and the US do not tolerate Iran’s volatility, any action involving Iran will likely send oil prices even higher than what oil prices are now.
Tomorrow is a big day as we will receive jobless claims, FHFA home prices, and the Kansas City Fed index reports. Greece and Iran are still pressure cooking too, as the Greek debt deal goes back to the Greek parliament for a vote and Iran tensions will likely help in continuing the rise in oil prices.
Bottom Line: Markets reacted negatively today to Greece and Fitch’s downgrading of Greek debt, alongside horrible HP and Dell earnings reports. It appears that the Tech Sector and Financial sector bubbles are hissing slowly, and previous home sales were nothing to write home about. Be aware of continued Greece drama and Iran tensions, as both are still major market movers.
John Nyaradi is the author of The ETF Investing Premium Newsletter.
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