Index ETFs Hold Off For Earnings Season

Index ETFs declined slightly today, likely in correction after last week’s gains and in anticipation for the new earnings season tomorrow. The SPDR S&P 500 ETF (SPY) lost .27%, the SPDR Dow Jones Industrial Average ETF (DIA) lost .41%, the PowerShares QQQ Trust Series 1 ETF (QQQ) gained .03%, and the iShares Russell 2000 Index ETF (IWM) lost 0.38%.

Today was a relatively quiet day on Wall Street, however tomorrow will likely be different, as Alcoa (AA) will kick off the Q4 2012 earnings season after market close, and Wells Fargo (WFC) will follow up with its earnings report this Friday. Tomorrow also brings us consumer credit reports as well as the NFIB Small Business Survey.

In other news, multiple big banks in the United States including Bank of America (BAC), JP Morgan Chase (JPM), and Citigroup (C) agreed to pay $8.5 billion to settle bad mortgage claims. Additionally, the VIX Index, or the master of “fear” in the marketplace, had its largest weekly dump ever last week, losing 39% after politicians came to a fiscal cliff resolution. In a sense, big banks and the VIX Index had a bit of their own fiscal cliff.

And of course, all eyes are set on the looming debt ceiling debate and sequestration debate set to start in the next few weeks. The GOP has already stated that it needs a $1/$1 ratio of cuts versus dollars added to the debt ceiling, while the White House has said it will not negotiate the debt ceiling at all. Investors are already starting rumors regarding a possible minting of a $1 trillion platinum coin by the Secretary of the Treasury (say Timothy Geithner) to circumvent Congress; the President also has the power of the 14th Amendment to make sure that the nation’s public debt “shall not be questioned.” I have said this before and I will likely say this again before the end of the first quarter, but you could not have made up this situation five years ago.

Bottom Line: Markets and investors waited in idle today for a bigger day tomorrow filled with important economic indicators. And, don’t forget the upcoming Congressional battles.

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