Equity and oil prices fell on Monday as the dollar strengthened, suggesting that the greenback remains a safe haven investment in times of economic uncertainty. Investors continued to dance around two psychologically and technically important levels: the 10,000 mark for the Dow Jones Industrial Average and the $1.50 mark for the dollar against the euro.
The ETFdb 60 Index, a broad-based barometer of the universe of investable assets available through ETFs, dropped 9.77, or 1.0%, to close at 1,004.43. Only four components of the index finished the day in positive territory on heavy trading volumes.
Monday’s decliners were led by the United States Natural Gas Fund (UNG), a commodity fund that invests in near month natural gas futures. Natural gas prices have been extremely volatile in recent weeks as uncertainties abound over two key drivers of demand: a potential recovery in the manufacturing sector and the severity of upcoming winter weather. Monday’s losses were driven by profit taking as investors who have recorded big gains since early September cashed out on news of warm November weather in the Northeast. UNG slipped about 4.8%.
The Market Vectors Gold Miners ETF (GDX) was another big mover, dropping 4.3% for the day as gold prices slipped. GDX has been one of the best-performing equity ETFs over the last year, gaining more than 150% even after Monday’s loss. Increases in gold prices to record levels have raised earnings expectations for companies engaged in mining and exploration activities.
The only ETFdb 60 component to add more than 0.1% on Monday was the iPath S&P 500 VIX Short-Term Futures ETN (VXX), which jumped 3.3% on expectations for an increasingly rocky road in equity markets over the coming months. VXZ, which invests in longer term futures on the VIX Index, was up 1.4%. Monday’s performance further establishes these volatility ETNs as an effective form of portfolio insurance for investors worried about a double dip.
Disclosure: No positions at time of writing.
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