Despite Mortgage Program, Housing ETFs Drop

Market Wrap-Up

The federal government announced a sweeping mortgage modification program Tuesday designed to speed up renegotiation of the terms of potentially hundreds of thousands of mortgages at risk of defaulting. While details of the program were vague, it appears it could help Americans struggling with their monthly payments -- those behind at least three months -- stay in their homes. Traders seemed to welcome the news. After being down 200-plus points for most of the session, the Dow Jones Industrial Average rallied 100 points shortly after the press conference announcing the plan concluded.

At the time the market was trading down for good reason. Toll Brothers (TOL) announced its fourth-quarter revenues had fallen 41% from the same time period last year, signaling the housing crisis is still impacting the home builder. American Express (AXP) became the latest financial-services company to convert to a bank holding structure, qualifying it for government aid. Goldman Sachs (GS) announced a round of layoffs at its Japanese entity. TJX Companies (TJX), parent of retail chains TJ Maxx and Marshalls, announced its third-quarter sales were relatively flat, evidence consumers are cutting back on all kinds of household expenses. Starbucks (SBUX) announced its quarterly profit shriveled to $5.4 million, a 97% drop from the same time period last year. Evidently, lattes aren't high on consumers' lists of necessities. Meanwhile, the bad news out of Detroit continued. General Motors (GM) saw its shares dip under $3 a piece.

On Tuesday the price of crude fell almost $4 a barrel to below the $59 level for the first time in more than a year. Oil sold off over slumping global demand estimates. Gasoline prices also traded lower.

The Dow Jones Industrial Average jumped around the entire session, losing as much as 300 points, before closing down 179 points to 8,692.

Winners

A deal between Exelon (EXC) and NRG Energy (NRG) collapsed. And traders seem to be happy with that news. The stocks of both companies increased Tuesday, sending the Market Vectors Nuclear Energy ETF (NLR) up 1%.

Losers

The dollar gained ground on the Russian ruble Tuesday, causing ETFs focused on that part of the world to decrease. The Market Vectors Russia (RSX) fund lost 13.3%.

The news of a potential mortgage bailout plan didn't help the prospects of the housing industry. The SPDR S&P Homebuilders ETF (XHB) dropped 2.1%.

Wednesday's Notebook

Earnings & Conference Calls
Applied Materials, Crocs, JA Solar, Macy's, the Progressive Group, Thomson Reuters

Economic Data
10:35a.m. U.S. Energy Dept. Oil Inventories
10:35a.m. API Oil Industry Report

Quick Take

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