The wild week on Wall Street continued Thursday, with most major U.S. and international benchmarks clawing back the prior session’s losses. Better-than-expected GDP data in the U.S. marked the end of the recession in the minds of many investors, sending the Dow to its best day in more than two months. Separately, investors continued to exhibit strong appetite for Treasuries, snapping up $123 billion in notes in four separate auctions, three of which broke size records. The ETFdb 60 Index, a broad-based measure of the performance of asset classes available through exchange-traded funds, rose 15.59 (1.6%) to 996.18.
Winners outnumbered losers by better than three-to-one, led by the resurgent iShares MSCI Brazil Index Fund (EWZ). The Brazilian ETF finished up more than 7.5% a day after sliding by nearly the same amount. Brazilian equities were boosted by a stronger outlook from the U.S., as well as hopes that the government won’t step in to cool the rally that has taken off in recent months. Brazil announced plans to extend tax cuts implemented on consumer durable goods through at least the end of January, although the breaks are conditioned upon maintenance of environmental efficiency standards by manufacturers. The reduction in the industrial product tax was implemented earlier this year as a stimulus for consumption.
Volatility ETNs continued to prove their strong inverse relationship with equities, as the iPath S&P 500 VIX Short-Term Futures ETN (VXX) dropped nearly 5%. Volatility had surged in recent periods as doubt over the staying power of the recovery began to creep in to the minds of investors. But Thursday’s GDP report apparently calmed a lot of nerves, and reduced expectations for big market fluctuations in the short term.
Disclosure: No positions at time of writing.