What ‘Bankruptcy Watch’ Means For Financial ETFs

In these tight times, companies are continuing to struggle to stay above water, causing investors and analysts to be on a so-called “bankruptcy watch” over the next few weeks; markets and exchange traded funds (ETFs) may reflect the news.

With all eyes on the situations with GM (GM), Citigroup (C) and the other banking stocks, market watchers notes that traders and investors could well be on “bankruptcy alert” as more and more companies struggle mightily to stay afloat.

And Main Street could be getting sick of watching Washington bail out troubled companies.

If you look at some of the stock prices for these ailing corporations, we’re not that far away from zero. We know that the cash burn rate is pretty quick and they could ask for more cash. Will the government continue to step up and offer the hatful of money?

Robert Holmes for TheStreet reports that among the companies on the hot list include:

• Wells Fargo (WFC)
• Bank of America (BAC)
• US Bancorp (USB)
• General Motors (GM)
• Citigroup (C)

Some of these big-name financial companies have heavy weightings in financial ETFs. Bankruptcy could change the appearance of these funds.

Financial Select Sector SPDR (XLF): down 50% year-to-date; Wells Fargo is 10.3%; Bank of America is 5.5%; US Bancorp is 3.4%; Citigroup is 2.5%

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