New Bailout Plan Can't Lift ETFs

Market Wrap-Up

The federal government announced a sweeping $800 billion bailout plan Tuesday designed to stabilize not just a jittery financial system but to kickstart the market for consumer, auto and educational loans and housing. This plan is separate from the $700 billion Troubled Assets Relief Program (TARP) that is already underway.

While that was initially seen as a positive by traders, the momentum that boosted stocks during early trading didn't last. Salle Mae (SLM), a student-loan lender, jumped 25.8% on the bailout news. But keeping broader gains in check was data showing a decrease in GDP growth and a 17.4% drop in November to the Case/Shiller housing index from the same time period last year. That was a record decrease.

Tech stocks were particularly hard hit during Tuesday's session. Analyst downgrades and weak guidance painted a cloudy picture for the immediate future for this industry. Hewlett-Packard (HPQ) sank 4.4% over concerns its sales would slow, dinging its bottom line.

Oil came close to crossing below the $50 level once again as investors worried about slacking demand and increases in weekly inventories. The price for a barrel of crude fell almost $4 to the $51 level.

The Dow Jones Industrial Average started the session rallying as much as 160 points on the Federal Reserve news, extending a two-day rally. But a bleak economic outlook dampened that enthusiasm by lunchtime and the benchmark stayed lower until the last hour of trading. A mini-rally after 3 p.m. lifted the index 36 points to 8,480.

Winners

The government's new bailout plan, which has a component geared toward the housing industry, helped home builder ETFs post a decent session. IShares Dow Jones U.S. Home Construction (ITB) and the SPDR S&P Homebuilders (XHB) ETFs gained 11% and 8.2%, respectively.

Losers

Oil's almost $4 drop weighed heavily on natural-resources funds. The United States Oil ETF (USO) pulled back 6.3%. The iPath S&P GSCI Crude Oil Total Return fund (OIL) also lost 6.3%.

Tuesday's Industry Headlines

Launching Pad
ProShares, a pioneer of leveraged and short ETFs, announced it launched a dozen new funds Tuesday. Eight of the funds will focus on commodities, including oil, gold and silver. The other four will focus on currencies like the euro and the Yen.

Wednesday's Notebook

Earnings & Conference Calls
Deere & Co., Fred's, Tiffany

Economic Data
8:30a.m. Initial Jobless Claims
8:30a.m. Oct. Personal Income
8:30a.m. Oct. Personal Spending
8:30a.m. Oct. Durable Goods Orders
9:45a.m. Nov. Chicago PMI: Previous
10:00a.m. End-Nov. Reuters/Univ. of Michigan Sentiment Index
10:00a.m. Sept. New Home Sales
10:00a.m. DJ-BTMU Business Barometer

Quick Take

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