ETF Trading Report: Large Cap Blend, Oil ETFs In Focus

U.S stocks plunged across the board in Thursday trading as weak data from around the world led to a major sell-off. Investors focused in on the report from Spain which revealed that about $70 billion would be needed for the country’s financial institutions while American jobless claims, the Philly Fed survey, and previously owned home sales all disappointed on the domestic front.

Thanks to these data points, as well as the hangover from yesterday’s Fed meeting, the Dow finished the day lower by about 2% or 251 points, while the broader indexes fell by even more, with the S&P 500 sinking by 2.2% and the Nasdaq tumbling by 2.4% in the session.

It was hard to figure out the biggest losing sectors on the day as selling was pretty much across the board. Although, basic materials, tech, and financials did stand out on the downside while consumer goods and health care did manage to lose less than most on the session (read Medical Device ETFs: A Better Way To Play Health Care?).

Given the risk off environment, the dollar and bonds were the place to be for much of the session as the dollar index rose above the $82.25 mark while the greenback added more than 1.6 cents against the euro and 1.3 cents against the pound. Meanwhile, rates fell across the board for T-bills, as the 10 year fell to 1.62% while the 30 year breached the 2.7% mark to close out Thursday trading.

Commodity trading was unsurprisingly the polar opposite of the bond/dollar market as natural resources sank pretty much across the board. Cotton led the softs lower with a 6.9% slump while crude oil sank 3.9% while precious metals fell by similar levels as well.

For ETF trading, most products saw slightly more active days across the board although Asia-Pacific ETFs and mid cap products were trading far less on the day. On the other hand, commodities were in focus while U.S. sector products continued to trade at elevated amounts heading into the final day of trading this week.

In particular, investors saw a great deal of interest in the oil ETF market, led by the United States Oil Fund ( USO - ETF report ) . This product usually trades about 7.7 million shares a day but spiked to just over 18.3 million shares during Thursday’s session (read Two Energy ETFs Holding Their Ground).

This bump in activity was also seen in a number of other oil ETFs during the session, including the leveraged version of the product as well. Clearly, investors were seeking to tap into these types of funds on the steep slide in crude oil prices during the session as USO fell by about 3.4% on the day.

In fact, USO is now within striking distance of its 52 week low of $29.10/share and is now down 23% so far in 2012 suggesting a bear market is well under way for the oil market.

Another segment which saw an outsized level of interest when compared to normal conditions was in the large cap blend space, especially in the case of the iShares S&P 100 Index Fund ( OEF - ETF report ) . This product usually does about 870,000 shares in volume but surged to just over 3.7 million shares during today’s session (read Try Value Investing With These Large Cap ETFs).

Other large cap blend products also saw a big day in volume while funds similar to OEF—and this iShares fund as well—saw large block trades dominate their activity on the session. In fact, close to two million shares in OEF’s volume was the result of two trades while similar figures were present in other products in the space.

Apparently, some big traders were making large moves in the space but felt more comfortable using the comparatively small OEF rather than SPY and some of the other more famous products in the segment.

(see more on ETFs in the Zacks ETF Center)