ETFs Stay the Course Ahead of Fed Meeting

Major indexes closed slightly lower Monday as investors took a breather ahead of this week's Federal Reserve meeting on interest rates. The Dow Jones Industrial Average moderated its intraday decline, shedding 32 to finish at 9338. The Nasdaq dipped 8 to 1992 and the S&P 500 was down 3 to 1007.

Most ETFs stayed in the middle of the trade Monday, with few big gains or losses from most sectors in a light trading session.

The Federal Open Market Committee, the arm of the Fed that rules on monetary policy, is scheduled to meet Tuesday and Wednesday to hand down its statement on the federal funds rate. Most analysts and economists expect the Fed to stand pat this week, but some say the better-than-expected employment data that led to Friday's rally may provide support for an increase soon.

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

Investors looked to government debt as a safe, if unexciting haven, pushing the iShares Barclays 20+ Year Treasury Bond fund (TLT) up 1.3%. The SPDR S&P Oil & Gas Exploration & Production fund (XOP) rose 0.9%.

The SPDR S&P Homebuilders fund (XHB) dipped 2.8% Monday as investors took profits after the sector’s surge last week. The SPDR S&P Retail (XRT) fund lost 2% as investors digested a week of declining sales reports and looked toward earnings from Macy's (M) and other store chains.

Data Point
Barclays Global Investors said global exchange-traded-fund assets rose 11% in the first six months of the year, topping $789 billion. However, trading volume dropped 17% from the year-ago period, according to the firm's July 2009 ETF Landscape report. Inflows to ETFs outpaced the MSCI World index, bolstering support for exchange-traded funds' growing popularity with investors. The report said European ETFs now outnumber U.S. funds, with 713 products sold in Europe and 693 in the US. However, the U.S. ETF market remains substantially larger, totaling $538 billion as opposed to Europe’s $166 billion at the end of the first half.

Earnings and Conference Calls
Advanced Life Sciences, Altek, Applied Materials, Aramark, Avon Products, Bob Evans Farms, Celadon Group, Clearwire, Del Monte Pacific, Federal Agricultural Mortgage Corp., Fossil, InterContinental Hotels Group, Learning Tree International, Realogy, Solo Cup, Systemax, Trend Micro, Warnaco Group

Economic Data
7:45 a.m. ICSC-Goldman Store Sales
8:30 a.m. Productivity and Costs
8:55 a.m. Redbook
10:00 a.m. Wholesale Trade