Markets continued to tread water Tuesday, with most major benchmarks nearly unchanged as a critical earnings season kicks off. Intel and Johnson & Johnson started the action, setting the stage for several more high profile earnings reports later this week. But the real story on Tuesday was commodities, as agriculture ETFs continued to rise and natural gas funds saw a big dip.
The PowerShares DB Agriculture Fund (DBA) jumped 1.4% on Tuesday after gaining 4% on Monday. The UN Food and Agriculture Organization said on Monday that food commodities prices are likely to remain high and volatile in the medium term, with a repeat of price spikes seen in 2007 and 2008 a very real possibility. DBA invests corn, soybeans, sugar, and wheat.
The United States Natural Gas Fund (UNG) was one of Tuesday’s biggest decliners, losing more than 4% for the session. UNG’s decline was driven by both fundamentals and its own actions. The fund said in an SEC filing that it could put “potentially all of its investments” in gas-related investments other than futures in anticipation of regulatory changes. Since UNG holds a huge portion of the natural gas futures market, the news frightened some investors who see an erosion of a large portion of futures demand.
Disclosure: No positions at time of writing.