Demand Worries Ding Energy-Related ETFs

Crude was center stage Wednesday. The Department of Energy announced weekly inventories have risen once again -- the 11th time in 12 weeks, according to Bloomberg -- because of a lack of demand from cash-strapped consumers. To counter falling prices and demand OPEC announced a production cut of 4.2 million barrels a day from its September levels. But that curtailment didn't persuade traders to jump into black gold. The price of a barrel of oil fell over $3 to the $40 level.

Macy's (M) spurred a small rally in retail stocks as it agreed with its lenders, including Bank of America (BAC) and JP Morgan (JPM), to new terms on a $2 billion credit facility. The retailer's shares rose 18% on the news. However, that wasn't enough to keep stocks in the black a day after the Federal Reserve announced a historic drop in key interest rates to between 0% and 0.25%. A falling dollar and another round of write-downs in the financial services sector -- Morgan Stanley (MS) announced a $2.4 billion quarterly loss -- weighed heavily on trading. Bloomberg now estimates the credit crisis has led to $1 trillion in losses.

The Dow Jones Industrial Average swung from positive to negative territory throughout the session. It closed down 99 points to 8,824.

Solar ETFs had been sinking because of lower product prices and a dip in oil. On Wednesday, though, investors decided the shares looked cheap and jumped back in. The Market Vectors Solar Energy ETF (KWT) gained 9.9%; Claymore/MAC Global Solar Energy (TAN) climbed 9.6%.

Despite the announcement that OPEC would cut production, traders still felt that won't be enough to counter falling demand. The United States Oil fund (USO) dropped 4.4%.

Launching Pad
Direxion announced another round of its highly leveraged/short ETFs. The six new funds will join eight that were launched last month. They will cover developed markets, emerging markets and technology. The Bull and Bear versions of these funds will try to gain 300% of the returns or 300% of the inverse returns of the underlying indexes.

Earnings & Conference Calls
3Com, Accenture, Carnival Corp., Discover Financial, Fedex, Lennar, Oracle, Pier 1, Quicksilver

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

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