Employment Letdown Leaves ETFs Flat

Stocks wavered, went flat and closed with little movement Friday, despite new data showing the unemployment rate has hit a 26-year high. The lack of traction left most exchange-traded funds flat, as well.

The Dow Jones industrial Average picked up 17 points to close at 10023. The Nasdaq was up 7 at 2112 and the S&P 500 picked up 3 to close at 1069.

Setting off the early decline, the Labor Department said U.S. unemployment rose to 10.2% in October and employers cut more jobs than forecast, a sign the labor market continues to struggle as the economy emerges from its deep recession.

The bump in the unemployment rate caught many off-guard. The rate, which is calculated using a survey of households as opposed to companies, climbed 0.4 percentage points last month, but economists surveyed by Dow Jones Newswires had forecast an increase of just 0.1 points (to 9.9%).

Nonfarm payrolls fell by 190,000 last month, with the largest job losses in construction, manufacturing, and retail trade. Economists had expected a 175,000 decrease.

Gold topped $1,100 an ounce early, then ebbed to 1095 at the close.

Crude traded on the Nymex dropped early. As of 4:10 p.m., front-month futures contracts were down $1.93 at $77.69. For a detailed rundown on Friday’s trading session see our market story.

Gold prices climbed through the week, briefly topping $1,100 an ounce, pushing up the Market Vectors Gold Miners fund (GDX) 10.4%. The recently launched Market Vectors Brazil Small-Cap fund (BRF) rose 8.6% for the week.

Volatility was tough on investors in the iPath Exchange Traded Notes S&P 500 VIX Short-Term Futures Index fund (VXX), which shed 6.2% in a turbulent week. Declining natural gas prices pushed back shares of the United States Natural Gas fund (UNG) by 6.1%.

Data Point
Global indexer FTSE Group licensed three international equity indexes to Charles Schwab Investment Management (SCHW) to allow the discount brokerage to create three new exchange-traded funds. These are among Schwab’s first ETF offerings, and will track the FTSE All Emerging Index, the FTSE Developed ex-U.S. Index and the FTSE Developed Small Cap ex-U.S. Liquid Index. The FTSE All Emerging Index tracks the performance of large- and mid- cap stocks from 22 emerging markets including Brazil, China, Taiwan and India. The FTSE Developed ex-U.S. Index is comprised of large- and mid-cap stocks from 24 developed markets, excluding the United States. The FTSE Developed Small Cap ex-U.S. Liquid Index is made up of small-cap stocks from 24 developed markets, excluding the United States.

Exchange-traded fund blogger Ron Rowland of InvestWithAnEdge.com tallied up the product launches and found that 11 new ETFs and one new exchange-traded note were launched in October, and no products were delisted. According to his count, there were 880 active listings of ETF products at the end of October: 796 ETFs and 84 ETNs. They traded a total value of shares of $1.567 trillion for the month, a surge of 19% from the $1.312 trillion of September. ETF volume averaged 1.59 billion shares daily. Trading in the SPDR S&P 500 (SPY) averaged $21.7 billion daily, accounting for more than 30% of all ETF value traded.

Launching Pad
OOK Advisors, which last week launched the Oklahoma ETF (OOK), will began trading its TXF Large Companies ETF on Thursday. The fund will be made up exclusively of stocks issued by Texas’s publicly traded companies. Based on the SPADE Texas Index, this will be the second state-based ETF introduced by OOK Advisors. The Oklahoma ETF has been relatively flat since inception and had low trading volume.

Exchange-traded fund provider iShares Trust has registered two ETFs focused on the financial sector and materials sector. The iShares MSCI Emerging Markets Financial Sector Index Fund will track the MSCI Emerging Markets Financial Sector Index, based on emerging economies. The iShares MSCI Emerging Markets Materials Sector Index Fund will track the MSCI Emerging Markets Materials Sector Index, which comprises stocks in chemical companies, construction materials companies, containers and packaging, metals and mining, and paper and forest products companies.

The company also plans to launch the iShares MSCI Europe Financial Sector Index Fund, which will track equities in financial institutions similar to those in its underlying index. The iShares MSCI Far East Financial Sector Index Fund will use a representative sampling strategy to replicate the performance of its underlying index, which comprised 93 securities of banks, financial companies, insurance and real estate companies in Hong Kong, Japan and Singapore.

Bond fund manager PIMCO, launched a pair of exchange-traded funds focused on medium and long-term Treasury bonds. The PIMCO 3-7 Year U.S. Treasury Index Fund (FIVZ) and PIMCO 25+ Year Zero Coupon U.S. Treasury Index Fund (ZROZ) began trading today, the firm reported. PIMCO already has ETFs for the 1-3 year and 7-15 year ranges, which charge annual fees of 0.2%.