ETFs Slide on Concern Over Global Economy

Stocks dropped sharply Thursday and never came back up, as pessimism surrounding the world economy weighed on markets. Almost no unleveraged or long-biased exchange-traded funds finished in the black, though major indexes moved off their lows at the end of the day.

The Dow Jones Industrial Average closed down 94 points at 10332. The Nasdaq ended down 36 at 2157, and the S&P 500 slipped 15 to 1095.

Overseas equities were mostly lower, which had a positive impact on the dollar and the opposite effect on gold and oil prices.

As investors questioned whether a recent rally has run out of steam and economic recovery hopes have been overblown, the Organization for Economic Cooperation and Development raised its forecast for economic growth in 2010 for its 30 member countries, but cautioned any recovery will be slow and bumpy because of high unemployment. The Paris-based group said unemployment is not expected to peak until the end of 2010 or the beginning of 2011.

Data Thursday showed initial jobless claims were unchanged last week at 505,000.

Technology shares led a decline in markets on Wednesday, as the tech-heavy Nasdaq Composite fell 11 points, the Dow Jones Industrial Average also lost 11, and the S&P 500 slipped a fraction of a point.

Tech stocks came under pressure after Bank of America Merrill Lynch (BAC) downgraded eight microchip companies, notably Intel (INTC) and Texas Instruments (TXN), on worries that inventories are too high.

The dollar rose against most currencies, with the euro trading at a day's low of $1.4842. Gold futures fell $4.70 an ounce and oil futures also lost ground.

A weaker sales forecast from Danone and losses by miners sent the pan-European Dow Jones Stoxx 600 down 0.4% in mid-morning trade. Declines also were seen in many Asian markets.

For a detailed rundown on Thursday’s trading session see our market story.

The Short S&P 500 ProShares (SH) was a sure bet against the slide, rising 1.3%. The PowerShares DB US Dollar Index Bullish fund eked out a gain of 0.3%.

The Semiconductor HOLDRS fund (SMH) dropped 3.2% on the sector downgrade. The WisdomTree India Earnings fund (EPI) dropped 2.9%.

Launching Pad
Exchange-traded funds provider iShares has the first set of sector-focused China A-Shares exchange-traded funds, a quintet of offerings listed on the Stock Exchange of Hong Kong. They track a host of indexes linked to the CSI 300 Index, including energy, financials, infrastructure and materials and a feeder fund. The funds are: iShares CSI A-Share Energy Index ETF, iShares CSI A-Share Financials Index ETF, iShares CSI A-Share Infrastructure Index ETF, iShares CSI A-Share Materials Index ETF, iShares CSI 300 A-Share Index ETF. The funds provide investors with specific sector exposure in China by investing in China A-Share Access Products (CAAPs), derivative instruments linked to an A-Share or the index issued by a third party, known as the CAAP issuer. They will join the iShares FTSE/Xinhua A50 China Index fund (FXI), which tracks the 50 largest publicly traded Chinese companies, all of which are listed on the Shanghai and Shenzhen stock exchanges.

Earnings and Conference Calls
America's Car-Mart, AnnTaylor Stores, D.R. Horton, J. M. Smucker, Kirkland's, Met-Pro

Economic Data
There are no major economic indicators scheduled to be released Friday.