Markets and ETFs Correct On China, Home Construction Report

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Major markets and their respective index ETFs corrected yesterday after yesterday’s and last week’s gains.  The Dow Jones Industrial Average declined .52% to close at 13170.19 points, while the S&P 500 declined .3% to close at 1405.52 points.  The NASDAQ composite dropped .14% while the Russell 2000 Index dropped 1.02%. 

Index ETFs followed along as the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) dropped .52%, the SPDR S&P 500 ETF (NYSEARCA:SPY) declined .29%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) gained .18% while the iShares Russell 2000 Index ETF (NYSEARCA:IWM) lost .89%.

The decline in yesterday’s markets was likely a correction sparked by reports of cooling Chinese economic growth and lackluster Home Construction reports here at home. Chinese steel production, car sales, and exports have all declined, however a 7% economic growth percentage is still a very positive figure, albeit less powerful than China’s traditional 10% growth per year rate. Home construction rates also slipped 1.1%, which is just another sign that the housing market will likely be the heavyweight anchor on our fragile economic recovery.

Looking ahead to today, the tech sector could pop as Oracle (ORCL) reported higher profits after hours yesterday, while the Apple (AAPL) dividend euphoria will likely continue.Today also brings existing home sales reports; like I said above, the real estate and housing market will not likely impress any of us for quite some time to come.

Bottom Line: Although news of a slowing China and a slump in a Home Construction report likely did not help markets yesterday, the decline was likely a correction from Monday’s and last week's highs.  As we all know, what comes up must eventually come down, especially when the S&P 500 is within 10% of reaching its per-recession highs.  After nearly four years of volatility and economic “recovery,” the S&P 500 potentially reaching its old highs is certainly a time for celebration albeit with extreme caution  regarding overbought technical indicators and a potential possible correction.