SPY, QQQ and DIA Quiet Before ECB Confab Thursday

Sarah Woodman, Global events journalist
September 06, 2012 /

The major ETFs treaded water in quiet trade Wednesday as investors sat on their hands ahead of the European Central Bank’s meeting Thursday that could reveal a new game plan to solve the eurozone’s debt crisis.

Here’s an overview of the major ETF changes Wednesday.

SPDR S&P 500 ( SPY ): -0.09%.

PowerShares QQQ ( QQQ ), tracking the 100 largest nonfinancial stocks on the Nasdaq: -0.10%.

SPDR Dow Jones Industrial Average ( DIA ): +0.11%.

IShares MSCI EAFE Index ( EFA ): -0.27%.

IShares MSCI Emerging Markets Index ( EEM ): -0.50%.

SPY closed at 140.92 a share. If it can’t rally further and breaks below 139.50 to 138.50 a share, Simon Maierhofer, founder of iSpyETF.com, recommends selling.

Major Upcoming Events

Aside from the major ECB meeting, the market faces a busy political schedule over the next week that could bring about market-moving events.

Sept. 6: ECB President Mario Draghi’s press conference. He is rumored to be announcing a plan to buy unlimited amounts of short-term government bonds to ease the debt crisis.

Sept. 7: U.S. August payrolls report. A weak report may bolster the case for the Federal Reserve to engage in more quantitative easing.

Sept. 12: German constitutional court ruling. It has to determine whether the country’s involvement in the European bailout fund is legal.

“If the German Constitutional Court rules against German rescue plans for other nations, the Bundesbank and all believers in sound money can breathe again,” John Browne, a senior economic consultant to Euro Pacific Capital, wrote in a client note. “However, it could imply an urgent and possibly terminal threat to the euro. Likely that would imply considerable short-term monetary volatility involving a short-term price spike in the U.S. dollar and a longer-term increase in precious metals prices.”

Sept. 12: Election in the Netherlands. It could set the country on a course to leave the euro.

Sept. 12: European bank regulations proposal. The European Commission will propose bank regulatory reform in which it is expected to push for sweeping oversight of eurozone banks by the ECB, MarketWatch reported.

Sept. 13: FOMC two-day meeting concludes. It could announce another round of quantitative easing.

“It is also possible that the Fed could extend its zero-interest-rate forecast beyond 2014,” Bob Doll, senior adviser to BlackRock, wrote in a client note. “Should the Fed follow through with possible new easing measures, we believe they would provide a boost to the economy but would not materially alter our 2% growth forecast.”

“Given better relative economic and earnings growth levels as well as highly accommodative monetary policies, we continue to favor U.S. stocks vs. global benchmarks,” Doll added.


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