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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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for SPY
Elly
29 Jul 15 10:16:35
$AAPL $AMZN Too many confident the FED will be Dovish-Ignoring GDP data tomorrow with a high 2.5% forecast……. $SPY #Yellen #FOMC
Gofio de Trigo
29 Jul 15 10:16:35
wld b fun mrkts 2day if #MCYellen rised half a point uh xD #aintgonnahappenanyways @pdacosta $SPY #USD #DX $INDX #DXY #EURUSD #EC #6E
binaryoptionsocial
29 Jul 15 10:14:41
$MRK active, relative volume: 4.13, 1H, 1:00 PM, #nyse $DJI $SPY http://t.co/RBfA8LuuAy
LHommeAncien
29 Jul 15 10:14:25
@canuck2usa this onlly "big$" game i know of where biggest player telegraphs to all the small fry exactly what he's going to do sure.. $spy
Alpha Maven Alerts
29 Jul 15 10:14:14
$V active, relative volume: 3.73, 1H, 1:00 PM, #nyse $DJI $SPY
erik paul
29 Jul 15 10:13:49
Energy $XLE & Industrials $XLI the $SPX $SPY sector leaders here @ midday with #FOMC $FED on tap @ 2:00 pm ET: $ES_F +9 $YM_F +99
Alpha Maven Alerts
29 Jul 15 10:13:11
$RIG active, relative volume: 4.73, 1H, 1:00 PM, #nyse $SPY
MaryEllen
29 Jul 15 10:12:13
$AAPL $AMZN Five hawkish signals the #Fed might send today http://t.co/Bqqv72x3UR #FOMC $SPY
Alpha Maven Alerts
29 Jul 15 10:11:47
$MSFT active, relative volume: 2.62, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY
Alpha Maven Alerts
29 Jul 15 10:11:26
$MRK active, relative volume: 4.13, 1H, 1:00 PM, #nyse $DJI $SPY
Alpha Maven Alerts
29 Jul 15 10:11:05
$MO active, relative volume: 10.4, 1H, 1:00 PM, #nyse $SPY
WinzAlways
29 Jul 15 10:10:28
$COST $AMBA $SPY be on the other side of my trade, be a loser
Alpha Maven Alerts
29 Jul 15 10:10:23
$MA active, relative volume: 5.82, 1H, 1:00 PM, #nyse $SPY
Alpha Maven Alerts
29 Jul 15 10:10:02
$KR active, relative volume: 11.89, 1H, 1:00 PM, #nyse $SPY
Alpha Maven Alerts
29 Jul 15 10:09:41
$KMI active, relative volume: 13.72, 1H, 1:00 PM, #nyse $SPY
binaryoptionsocial
29 Jul 15 10:09:07
If $TWTR hits 29.99 How fast will we see 20.00.???? $SPY $SPX $QQQ $FB $YELP $YHOO $IWM $ES_F … … … … http://t.co/Csk7miZSkI
binaryoptionsocial
29 Jul 15 10:09:03
If $TWTR hits 29.99 How fast will we see 20.00.???? $SPY $SPX $QQQ $FB $YELP $YHOO $IWM $ES_F … … http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:09:00
Be on the right side of the trade $SPY $QQQ $DIA $IWM $GLD $GDX $USO $AAPL $FB $NFLX $BBRY $TSLA $NFLX $FXI $SHAK … http://t.co/XG5hVFJGig
binaryoptionsocial
29 Jul 15 10:08:59
$GILD active, relative volume: 3.55, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/RBfA8LcTJ0
Alpha Maven Alerts
29 Jul 15 10:08:59
$HPQ sentiment rise to: 0.71, change: +0.69, sdr: 1.01, 1H, 1:00 PM, #nyse $SPY
binaryoptionsocial
29 Jul 15 10:08:58
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/RBfA8LcTJ0 … … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:58
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/Csk7miIhta … … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:58
$COST active, relative volume: 6.27, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/RBfA8LcTJ0 … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:57
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/RBfA8LcTJ0 … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:57
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta … … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:56
$COST active, relative volume: 6.27, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:56
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/RBfA8LcTJ0 … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:55
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/Csk7miIhta … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:55
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/RBfA8LcTJ0 http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:55
$COST active, relative volume: 6.27, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/RBfA8LcTJ0 http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:54
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/Csk7miIhta http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:54
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/RBfA8LcTJ0 http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:54
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta … http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:54
$COST active, relative volume: 6.27, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta http://t.co/RBfA8LcTJ0
binaryoptionsocial
29 Jul 15 10:08:53
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta http://t.co/RBfA8LcTJ0
Alpha Maven Alerts
29 Jul 15 10:08:17
$GILD active, relative volume: 3.55, 1H, 1:00 PM, #nasdaq $NDX $SPY
moonshine
29 Jul 15 10:07:41
@lrzhou @canuck2usa in here @ $5.67 -- $SPY nearing possible relative highs as well, trade should be aligned.
binaryoptionsocial
29 Jul 15 10:07:35
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/RBfA8LcTJ0 … http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:35
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/Csk7miIhta … http://t.co/Csk7miIhta
Alpha Maven Alerts
29 Jul 15 10:07:35
$EXPE active, relative volume: 14.57, 1H, 1:00 PM, #nasdaq $SPY
binaryoptionsocial
29 Jul 15 10:07:35
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/RBfA8LcTJ0 http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:34
$COST active, relative volume: 6.27, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/RBfA8LcTJ0 http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:34
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/Csk7miIhta http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:34
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/RBfA8LcTJ0 http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:33
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta … http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:32
$COST active, relative volume: 6.27, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:31
$CSCO active, relative volume: 4.09, 1H, 1:00 PM, #nasdaq $DJI $NDX $SPY http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:30
$BIIB active, relative volume: 6.09, 1H, 1:00 PM, #nasdaq $NDX $SPY http://t.co/Csk7miIhta http://t.co/Csk7miIhta
binaryoptionsocial
29 Jul 15 10:07:17
If $TWTR hits 29.99 How fast will we see 20.00.???? $SPY $SPX $QQQ $FB $YELP $YHOO $IWM $ES_F … … … http://t.co/XG5hVFJGig
binaryoptionsocial
29 Jul 15 10:07:16
guess it'd be like this until roller coaster show. will have to go out for 2 hours. $SPY $SPX $ES_F … … http://t.co/XG5hVFJGig
				
				
By  +Follow October 3, 2013 6:11AM
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