ETFs Drop as Congress Debates Auto Industry

The heads of the Big Three auto makers continued to answer questions on Capitol Hill as they lobbied for a $25 billion bailout plan that would help prevent them from slipping into possible bankruptcy. While the chief executives argued their demise would cause a cascading effect on the economy, they seemed to have a hard time finding any sympathetic ears. The politicians continuously grilled them on their predicaments and innovative ways to get out of it. And, judging from some wire stories, it appears they are less than willing to open up their purse strings for another ailing industry without caveats attached.

The idea of the automobile industry spiraling downward has weighed heavily on trading the last few days. Wednesday was no different. But there were other events impacting the stock market, too.

The Federal Reserve's Federal Open Market Committee released the minutes of its last meeting, revealing the body think the economy will continue to contract well into 2009 and normal growth will probably not return until 2011. It also pushed up its estimate on unemployment. Housing starts and building permits continued to decline. The Consumer Price Index did slip slightly during October, but the decrease wasn't enough to get traders excited enough to jump into the market.

The Dow Jones Industrial Average dropped 427 points to 7,997.

The price of a barrel of oil dropped just over $1 after the Department of Energy said weekly inventories rose. The per-barrel price now stands at the $53 level.

While oil prices were dropping, natural gas was moving higher. Traders were betting a wave of cold weather in the northeast part of the country would increase demand as consumers used the commodity for heating purposes. The United States Natural Gas ETF (UNG) increased 3%.

The happenings in Washington led to a broad sell off of financials and real estate. Indeed, CNBC reported financials have lost $125 billion in market capitalization during the last two weeks.

One of the biggest losers Wednesday, though, was solar ETFs. These ETFs usually rise and fall with the price of oil. That phenomenon was certainly at play today, too. But there has also been speculation that the subsidies this industry gets from governments, especially in Europe, will be scaled back. There have also been some concerns over some quarterly earnings announcements that weren't so rosy.

The Claymore/MAC Global Solar Energy (TAN) and the Market Vectors Solar Energy (KWT) ETFs lost 12.8% and 11%, respectively.

Industry Speak
Index Universe is running an interesting Q&A with Lee Kranefuss, chief executive officer of the iShares ETF franchise. Follow the link to read what he thinks about funds in registration, fees and the future of the industry.

Thursday's Notebook

Earnings & Conference Calls
Autodesk, Barnes & Noble, Bon-Ton Stores, Casual Male, Cost Plus, Dell, Dick's Sporting Goods, Foot Locker, Gamestop, Gap, Patterson Dental, Suntech Power

Economic Data
8:30a.m. Initial Jobless Claims
10:00a.m. Oct. Conference Board Leading Indicators
10:00a.m. Nov. Philadelphia Fed Business Index
10:00a.m. DJ-BTMU Business Barometer

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