After the release of disappointing economic data, the S&P 500 in June has given back almost all the gains it had accumulated in 2011. Employment data released on Friday showed that only 54,000 jobs were created in May. The news rattled markets, which had forecast the addition of at least 150,000 jobs. The latest housing statistics showed that real estate prices continue to fall in many parts of the US; the Case-Shiller Price Index plunged below levels last seen during the 1920s.

On top of that, most economists expect gasoline prices to top $5 this summer, hurting seasonal travel and cutting into household budgets. That’s also bad news for retailers eager to attract shoppers.

The result has been growing pessimism regarding US economic growth. Economists at Barclays Capital recently cut their forecast for second-quarter economic growth to 2 percent from their previous estimate of 3.5 percent.

Weakness in the labor and housing markets has renewed fears of another recession. But the odds of another significant downturn in the economy are long.

Although May’s employment numbers were weak, they followed three consecutive months of respectable job growth. Furthermore, the May report showed the greatest weakness in the automotive and retail sectors. The auto industry has been hit by supply disruptions resulting from the March 11 earthquake in Japan. The weakness in the retail sector is the result of seasonal factors. Neither of these short-term challenges mean the US economy is headed for another recession.

On the real estate front, there were some glimmers of hope embedded within the disappointing data. The Case-Shiller Price Index is a composite reading of 20 urban markets in the US. Although the headline number plunged, prices stabilized in half of the localities comprising the index. It’s an encouraging sign, although we’re still far away from a true recovery in the real estate market.

Finally, prices for food and energy are beginning to stabilize. The price of crude oil has dipped below $100 per barrel, albeit by just a few pennies. Although one can never rule out the possibility of another spike in crude oil prices in the coming months, I doubt that gasoline prices will rise above $5 per gallon.

Nevertheless, I anticipate a textbook market correction this summer. Trading volumes are always lighter during the season and it doesn’t take much bad news to result in a downturn in the market. Expect the S&P 500 to decline by 10 percent in coming months. However, investors should view any correction as a buying opportunity.

What’s New

The summer doldrums are upon us; only two new exchange-traded funds (ETF) launched last week.

Global X Management added to its lineup of food-related ETFs with the launch of Global X Farming ETF (NYSE: BARN). Tracking the Solactive Global Farming Index, the fund invests in a mix of agribusiness names, livestock operations and producers of farming products and equipment.

The fund is well diversified across geographical regions; the US accounts for about 32 percent of investable assets and the remainder of the fund’s holdings are spread across developed and emerging markets. Global X Farming ETF employs a modified weighting strategy that assigns a greater weighting to companies with larger market capitalizations. However, no single holding will account for more than 4.75 percent of assets. The fund will charge an annual expense ratio of 0.68 percent.

I have a straightforward logic for investing in food-related ETFs. A growing global population combined with a rising standard of living in emerging markets will increase demand for food. This secular trend will stretch capacity and drive up prices, leading to opportunities for investors with a long time horizon. Global X Farming ETF is a promising fund for investors who see the same trends at work.  

IQ Japan Mid Cap Index (NYSE: RSUN) replicates an index of 100 Japanese mid-cap stocks with market capitalizations of less than $3 billion.

The fund has allocated 23 percent of investable assets to industrials, 18 percent to financials and 16 percent to consumer discretionary names. Because the fund invests in mid-cap companies, few of the portfolio holdings derive significant business from exports. This makes IQ Japan Mid Cap Index a more direct way to invest in Japan’s domestic economy than a Japan-focused large-cap fund.

The fund’s 0.69 percent annual expense ratio is reasonable, making this fund an interesting offering for investors seeking to play Japan’s post-quake recovery.