ETFs Rally on Talk of RTC-Type Bailout

After playing a waiting game for news on separate deals involving Washington Mutual (WM) and Morgan Stanley (MS), Wall Street finally heard what it wanted to hear. Reports that hit the wires and air waves after 3 p.m. speculated the Treasury Department was contemplating creating a Resolution Trust Corporation-type entity that would take control of some of the toxic assets plaguing financial services firms a la the set-up put in place after the 1980s Savings & Loan crisis. Those reports helped stocks surge in late trading. The Dow Jones Industrial Average jumped 409 points to close at 11,019.

Overnight a series of central banks injected almost $250 billion into ailing markets across the globe. Here in the States, regulators put in place new short-selling rules in an effort to head off any bear raids on ailing financial services firms. As traders unwound those positions they probably played a part in helping the market post a gain.

Wall Street's woes helped initial jobless claims increase 10,000 claims from the previous week to the 445,000 level. The unemployment rate has been gradually creeping higher the last three months.

Meanwhile, crude briefly traded over $100 a barrel this morning before the release of a government report showing weekly natural gas inventories increased. Natural gas futures sold off and crude followed along with it. The price for a barrel of oil finished up $1.50 per barrel to $98.68. Gold seemed to be the only safe haven for most of the session. But the RTC news led to a selloff. Gold had been trading around $898 per ounce before settling at $854.

Despite the turmoil surrounding the financial services sector, traders once again placed bets on the banking institutions far removed from Wall Street. The SPDR KBW Regional Banking ETF (KRE) jumped 15.3%. The iShares Dow Jones U.S. Regional Banking fund (IAT) surged 13%.

Recording a big loss was the SPDR S&P International Technology Sector ETF (IPK). The fundamentals for this industry have been deteriorating since a big part of its business depends on finance firms buying new equipment. The fund dropped 4.9% Thursday.

Launching Pad
Invesco PowerShares announced the trading of six new ETFs that focus on commodities and certain sectors. Four of the funds will track indexes based on agriculture, coal, steel and precious metals, respectively. The remaining two offerings are based on the transportation and biotech industries.

There are no significant earnings calls or economic data releases scheduled.

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