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Equities ETFs Nosedive on Potential US Debt Fight

By  +Follow October 3, 2013 6:11AM
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Equities ETFs plunged alongside the markets on Thursday morning as dire predictions about the consequences of another fight over the debt ceiling, paired with the continued government shutdown, led to a major sell-off. This took major ETFs that track equities with them, with the SPDR S&P 500 ($SPY) falling as much as 1.3 percent by noon. However, news that John Boehner has reportedly told Republican members of congress that he’ll be willing to forego the “Hastert Rule” (the informal agreement that no bill will be brought to the floor of the house without a majority of Republican votes) to avoid a default sparked an early afternoon rally that took losses back down to just over 0.75 percent.

Treasury: Default on National Debt Could Cause Stock Market Crash, Recession

The Treasury Department has been making a string of warnings to congress in hopes of preventing another difficult battle over the debt ceiling. The last extended fight ultimately resulted in a downgrade of American debt and a major decline in the equities market. Today, the department released a report highlighting what it viewed as a potential “catastrophe.”

“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation,” the report said.

“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth -- with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression.”

Treasury Secretary Jack Lew joined the chorus, urging congress not to delay action.

‘‘As we saw two years ago, prolonged uncertainty over whether our nation will pay its bills in full and on time hurts our economy,’’ Lew said in a statement. ‘‘Postponing a debt ceiling increase to the very last minute is exactly what our economy does not need — a self-inflicted wound harming families and businesses.’’

Equities ETFs, Return on US Debt Fall

In a classic example of skewed market logic, the concern over the potential for the United States defaulting on government debt had investors scrambling to buy more government debt. While stocks slid, investors looking to reduce risk have been buying bonds, with the yield on 10-year T-notes falling 3 basis points to 2.6 percent yesterday.

Other ETFs tracking the equities market were on the move with a high trading volume. The iShares Russell 2000 Index ($IWM) was off almost 1.25 percent, the Select Sector Financial Slct Str SPDR ($XLF) lost about 0.75 percent, and the Direxion Daily Small Cap Bear 3X Shares ($TZA) was up over 3 percent. Also making big moves were ETFs tracking volatility in the stock market, with the iPath S&P 500 VIX Short Term Futures (VXX) gaining almost 2.5 percent and the VelocityShares Daily Inverse VIX Short Term ETN (XIV) shedding just over 2.5 percent.

Results for SPY
Scott Redler
21 Apr 14 02:22:05
$spy range has support at $185.56 then $184.60ish resistance at $186.91 then $187.20 - bigger one $188
Karel Ondriash
21 Apr 14 02:14:54
The #ETF trading system connues "Hold long ETFs" status as of April 21 $SPY $SH
Karel Ondriash
21 Apr 14 02:13:49
RT @SJosephBurns: 10 Fast Facts About the $SPY Chart http://t.co/qocQmw8cYf My #trading #BLOG Guest links to @MichaelGLamothe & @OptionScie…
Financial Alerts
21 Apr 14 02:12:02
Bearish or Bullish on these #stocks $NTAP $MHK $FLIR $SPY #overvalued http://t.co/HckmDg5o7K
Brecken Khamba
21 Apr 14 02:06:57
Get research on $SIX $VZ $VLO $SPY View now http://t.co/jUKfZ4uEWA
ug_lee
21 Apr 14 01:53:42
Ferry disaster: more bodies found http://t.co/VS962OGfag #video $SPY
Read_this_n0w
21 Apr 14 01:31:18
-BIG NEWS- $NUS resume business meetings and will begin accepting applications for new sales people on May 1 $DJIA $SPY $SPX $GOOG
'ga re Tshwane'
21 Apr 14 01:25:21
RT @EvanMedeiros: NEW POST: why i gave up predictions and bowed to the markets http://t.co/q6RXAxRJvT $SPY $AAPL $STUDY #trading
'ga re Tshwane'
21 Apr 14 01:22:05
RT @andrewnyquist: RT @seeitmarket How To Use The COT Report For Trading http://t.co/1QlW5YvigC by @InterestRateArb $SPY $GLD $SLV $NG_F $C…
Gary Hudson
21 Apr 14 01:05:34
Markets Go Up And Down. What To Buy Now... And Later! $VQT $PHDG $SPY $DIA $QQQ #investing http://t.co/kbr6n7w0Oq
ok_trader
21 Apr 14 00:57:23
RT @RedDogT3Live $spy reclaimed all its moving averages last week. Now it needs to show commitment a few sessions above them.
John Randel
21 Apr 14 00:56:13
Tech fall reduces participation in IPOs but many investors remain optimistic about the overall stock market $SPY http://t.co/jC2b1F693T
iHugo Albert
21 Apr 14 00:55:04
$SPY Markets Go Up And Down. What To Buy Now... And Later! http://t.co/YfXLXbHcjM
Algo
21 Apr 14 00:45:31
Ferry disaster: more bodies found http://t.co/VBDYNVRfqn #video $SPY
CodyHindSTA
21 Apr 14 00:37:28
4 Keys to Breaking Your Trading Plateau http://t.co/gQzLeZRR2O $ES_F $SPY $SPX
Read_this_n0w
21 Apr 14 00:16:22
RT @ACInvestorBlog: $FB Facebook reportedly tinkering with its own mobile ad network http://t.co/5j9WIIPYBD $DJIA $SPy $SPX $GOOG
Dow Alerts
21 Apr 14 00:12:31
New $SPY alerts have recently been posted. Check them out now. http://t.co/eYHAvTygw1
Seeking Alpha
21 Apr 14 00:09:34
Markets Go Up And Down. What To Buy Now... And Later! http://t.co/RjDuir3s3x $VQT $PHDG $SPY $DIA $QQQ
Ansel Gonzalez
20 Apr 14 23:46:17
Are you hanging on to $JWN $OFC $KMI $SPY Click http://t.co/2xrKgqVbQB
OceanView
20 Apr 14 23:44:56
RT @SJosephBurns: 10 Fast Facts About the $SPY Chart http://t.co/qocQmw8cYf My #trading #BLOG Guest links to @MichaelGLamothe & @OptionScie…
$SPY trader
20 Apr 14 23:35:16
$spy bloody red asap mark my words
RichJr
20 Apr 14 23:28:44
RT @SeekingAlpha: Market Outlook - Busiest U.S. Factories Since Early 2008 http://t.co/FYPFVkWRIJ $DIA $IWM $QQQ $VXX $SPY
PriceTrader
20 Apr 14 23:27:09
$spy formed possible new higher low around 181 area, now watching how far can it go
0x4F6B6B6172
20 Apr 14 23:22:42
RT @StockTwits: Chart Of The Day: Here's how the current bull market compares to the monster 1982 bull market http://t.co/v537uj0Qbv $SPY $…
Volatility Indexes
20 Apr 14 22:52:05
RT @etfguide: AUDIO: "Each stock rally is being led by fewer & fewer companies..." via @indexshow http://t.co/H6W7YgtiwF $QQQ $IBB $FB $NFL…
Volatility Indexes
20 Apr 14 22:51:59
RT @carsondahlberg: $VXST testing projected support after testing projected resistance last week $SPX $SPY $ES_F $VIX http://t.co/4k8s3oKX32
JORDAN DEAN BURT
20 Apr 14 22:48:58
RT @ichimokucharts: Market Review Ichimoku vid 15thApr http://t.co/psZXUjuFuy $SPY $SPX $SP_F $ES_F $NDX $QQQ $GLD $GC_F $CL_F $OIL $ZW_F $…
JORDAN DEAN BURT
20 Apr 14 22:48:53
RT @ichimokucharts: US Stock Market Review Ichimoku, Candlestick and Fibonacci video Apr16 http://t.co/8PR0wpPvNX $NDX $QQQ $SPX $SPY $ES_F…
iHugo Albert
20 Apr 14 22:48:04
$SPY Market Outlook - Busiest U.S. Factories Since Early 2008 http://t.co/9ucKc9irwB
Rob Hager
20 Apr 14 22:25:20
Sluggish Economic Recovery Proves Resilient http://t.co/03oJBsIoM8 $SPY
Ryan
20 Apr 14 22:02:27
$SPY moment of truth. Figured we would see that bounce last week, but now it's make or break IMO. Watchin 188 test for option day trades
iHugo Albert
20 Apr 14 21:59:33
$SPY 11:21 am S&P +1 pushes to new session/weekly high and pauses http://t.co/TwpWKUxMur
Alex Lee
20 Apr 14 21:59:09
stock market watchlist $SPY $CPST $BIOF $PLUG http://t.co/l4p6WMsGBj #daytrading
Ani Anirudhan
20 Apr 14 21:52:28
RT @TraderHMS: The dangers of a winning streak: Trading Card 131 by Mark Douglas $STUDY $SPY $QQQ http://t.co/EGedOkiYwm
GC Fractalerts
20 Apr 14 21:49:35
New $SPY alerts have recently been posted. Check them out now. http://t.co/kafO4AgWmn
T Hot
20 Apr 14 21:46:16
$SPY Claims good last week. Earnings choppy. Short term uptrend breaks on earnings misses or Ukraine stuff. Watching housing on Tue/Wed.
followback
20 Apr 14 21:39:23
Ukraine gunfight shakes truce http://t.co/LaQUOGlGKE #video $SPY
Navin Jay
20 Apr 14 21:34:35
RT @SeekingAlpha: Market Outlook - Busiest U.S. Factories Since Early 2008 http://t.co/FYPFVkWRIJ $DIA $IWM $QQQ $VXX $SPY
Mayor of Smiley Town
20 Apr 14 21:34:28
RT @SeekingAlpha: Market Outlook - Busiest U.S. Factories Since Early 2008 http://t.co/FYPFVkWRIJ $DIA $IWM $QQQ $VXX $SPY
Joshua Schroeder
20 Apr 14 21:31:38
RT @seeitmarket: New Post: "2013 Cash Reserves Ranking: Apple, U.S. Corporates Lead Way" http://t.co/JQyrITN44l by @JoshuaSchroede2 $AAPL $…
Chess
20 Apr 14 21:15:06
NEW POST: Late Night Strategy for Monday http://t.co/d0YZnopMsN $AXP $IWM $K $QQQ $SPY
Juan Andres Morales
20 Apr 14 21:14:15
U.S. Stock-Market Valuations Are At Dangerous Bull-Slaying Levels $SPY http://t.co/K6HRjVk73n
MeetMyStockBroker
20 Apr 14 21:05:33
RT @PairsGuy: People always ask: Why is #Pair #Trading better than #DayTrading? Answer: You don't get smoked when u pick the wrong #stock d…
Scott Martindale
20 Apr 14 20:59:52
Sector Detector: Rejuvenated market seeks follow-through, but earnings loom large | Sabrient Systems http://t.co/3ui8oFTj9y #ETF $SPY $IYW
LHommeAncien
20 Apr 14 20:59:05
$spy #Obama with all the Russians living in Brooklyn’s Brighton Beach/”Little Odessa” , what happens if Putin claims that neighborhood??
Tressie Fortenberry
20 Apr 14 20:58:40
Insider Trading updates on $MKC $EA $MTD $SPY #economy http://t.co/fxfTynwTqx
ug_lee
20 Apr 14 20:58:19
Volkswagen: Pushing for electrification in China http://t.co/OJpiY0GFtb #video $SPY
HedgeSauce
20 Apr 14 20:56:59
#hedgesauce: HedgeSauce invests in its community generated research and pays the author 15% of alpha it generates #socialtrading $QQQ $SPY
Gary Hudson
20 Apr 14 20:49:18
Market Outlook - Busiest U.S. Factories Since Early 2008 $DIA $IWM $QQQ $VXX $SPY http://t.co/AqrPxMFoQw
Raskol
20 Apr 14 20:48:24
RT @TraderHMS: Trading Card 250 by Warren Buffett $SPY $STUDY $QQQ http://t.co/QmuhG01CwG
				
				
By  +Follow October 3, 2013 6:11AM
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