What Santa Claus Rally? ETF Investors’ Mood Sours

Perhaps everyone’s favorite guy decided to stay home. ETF investors discerned few signs Wednesday of the fabled “Santa Claus rally,” which typically happens in the final trading week of the year. What they saw instead was yet another fall in oil prices that cast a pall of gloom on Wall Street.

Both WTI and Brent crude were reported to trade below $ 37 a barrel in early trade, dropping more than 3% each. Just-released official data show U.S. crude inventories unexpectedly grew by 2.6 million barrels in the last week, according to CNBC.

Even safe-haven assets such as major gold and bond ETFs posted losses as investors sour on the outlook for global economic growth.

SPDR S&P 500 (ARCA:SPY), a proxy for the broad U.S. market, dropped 0.4% on the stock market today. Top holding Apple (NASDAQ:AAPL) gave up roughly 1%. So did Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX).

The ETF is up 3% year to date as of Dec. 29.

IShares MSCI EAFE (ARCA:EFA), tracking an index of developed-market stocks outside North America, slipped 0.5%.

The ETF is up nearly 1% so far this year. Its largest regional weightings are the U.K. and Japan, at 20% and 23% of portfolio assets respectively.

Vanguard FTSE Emerging Markets (ARCA:VWO) stumbled 0.9%.

The ETF has shed nearly 15% year to date. Its largest country stake is China, at a 27% portfolio weighting.

Oil’s slide also pressured gold.

SPDR Gold Shares (ARCA:GLD) melted 0.7% in low volume, putting it on course for a third loss in as many days.

The ETF has taken a 10% hit year to date.

ETFs backed by physical gold are trading near multiyear lows.

Higher expectations of an interest rate hike, which the Fed delivered in December, have weighed heavily this year on the precious metal. Gold bears no yield and struggles to compete with yield-bearing rival assets when rates are rising.

All 11 Select SPDR ETFs tracking S&P 500 sectors posted losses or traded flat in late morning trade.

PowerShares WilderHill Clean EnergyPortfolio (ARCA:PBW) rose 0.5%, with solar stocks showing strength despite the oil rout.

10 Bellwether ETFs:

Here’s a look at how the major exchange traded funds tracking various asset classes are performing today.

Following daily ETF market action can be key to successful investing:

• SPDR S&P 500 (ARCA:SPY), -0.3%, RS 71

• PowerShares QQQ (NASDAQ:QQQ), -0.4%, RS 83

• SPDR Dow Jones Industrial Average (ARCA:DIA), -0.2%, RS 71

• IShares Core S&P Mid-Cap (ARCA:IJH), -0.1%, RS 56

• IShares Russell 2000 (ARCA:IWM), -0.3%, RS 56

• IShares MSCI EAFE (ARCA:EFA), -0.4%, RS 59

• Vanguard FTSE Emerging Markets (ARCA:VWO), -0.9%, RS 32

• SPDR Gold Shares (ARCA:GLD), -0.7%, RS 36

• IShares Core U.S. Aggregate Bond (ARCA:AGG), -0.1%, RS 52

• PowerShares DB U.S.$ Bullish (ARCA:UUP), +0.1%, RS 66

Follow Aparna Narayanan on Twitter @IBD_ANarayanan.

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