Big Drop in Market Hits Commodity ETFs

Market Wrap-Up

A record $18 billion initial public offering by Visa (V) couldn't help sustain the rally started yesterday by the Federal Reserve's three quarter point interest rate cut. Commodities were hit hard in heavy trading. Gold, oil and grains have hit all time highs in 2008. But, it appeared Wednesday that many investors were content to finally take some profits off the table. Gold dropped to $945 an ounce. Oil fell to $102 per barrel on reports of weak demand. Even stocks heavily dependent on commodity prices were dinged: Exxon (XOM), Chevron (CVX), DuPont (DD) and Alcoa (AA) decreased an average 4% each. The Dow Jones Industrial Average swung to a 294 point loss to 12098, giving back more than half the gains it recorded Tuesday.

Winners

China has been one of the hottest investments of the last few years. Indeed, according to Lipper funds that tracked that country averaged an annual gain of 58% the last two years. However, in 2008 inflation fears have investors cooling on it. Year-to-date the iShares FTSE/Xinhua China 25 (FXI) has lost 22%. That downturn, though, has benefited the ProShares UltraShort FTSE/Xinhua China 25 (FXP), a fund that tries to post double the inverse returns of its index. This fund was up 13.4% Wednesday.

Losers

A series of commodity funds — the year's high flyers — succumbed to some profit taking. Gold was especially hard hit. Market Vectors Gold Miners (GDX) was down 6.6%. Other commodities also lost ground. Market Vectors Coal (KOL) dropped 7.6%, iPath Dow Jones-AIG Grains Total Return (JJG) decreased 6.3% and SPDR S&P Metals and Mining (XME) lost 7%.

Wednesday's Major Headlines

Launch Pad
State Street Global Advisors announced the SPDR DB International Government Inflation-Protection Bond ETF (WIP) began trading Wednesday. This fund tracks an index of 120 inflation-indexed bonds from 18 developed and emerging countries outside the U.S. The fund charges an annual expense ratio of .50%.

Thursday's Notebook

Earnings
Thursday: Barnes & Noble, Bear Stearns, FedEx, Luby's, Palm, Children's Place, Winnebago

Quick Take

A look at how some of the industry's most-popular ETF did Wednesday.

10 Largest ETFs
Symbol	Net Assets	Price	52 Week High	52 Week Low	Volume
SPY	66,487	130.21	156.39	127.71	332,659,624
EFA	46,850	68.43	85.64	67.18	13,714,005
EEM	26,031	126.46	165.39	113.2	31,275,340
GLD	19,967	93.04	99.81	63.55	37,237,417
IVV	17,539	130.51	156.65	127.94	3,705,085
QQQQ	16,422	42.25	55.03	41.17	213,230,983
IWF	13,211	53.5	63.64	52.79	3,443,879
SHY	9,893	84.38	84.49	79.64	204,377
VTI	9,732	128.86	155.31	126.28	432,871
IWD	8,633	72.16	89.77	70.41	2,569,613

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