A very good year for most asset classes ended on a sour note Thursday, as fears about an unwinding of the stimulus plan hung over the market on the final day of 2009. Like the rest of the week, however, trading was very light throughout the day. A decline in jobless claims surprised investors, but also stoked fears the the Fed will begin raising interest rates in 2010 to combat inflation. “That catch-22 is likely to remain a key consideration for traders well into 2010,” wrote Peter McKay.
The ETFdb 60, a benchmark measuring the performance of asset classes available through exchange-traded products, lost 4.66 points to close at 1,033.99. For the final quarter of the year, the ETFdb 60 was up 3.4%.
It was perhaps fitting that one of the day’s biggest losers was the United States Natural Gas Fund (UNG), which lost2.6% after government data showed that U.S. gas inventories fell less than expected last week. Inventories fell by 124 billion cubic feet for the week ended December 25, compared to expectations for a drop of 147 billion cubic feet. Natural gas closed the year at about $5.60 per million British thermal units, and UNG lost 56% on the year.
Total stocks of natural gas stood at 3.276 trillion cubic feet, 13.1% higher than the same week a year ago and 13.6% above the five-year average. Following the initial drop in the wake of the data release, UNG traded within a relatively tight range the rest of the day. For analysis on UNG’s major movements, sign up for our free ETF newsletter.
Reflecting an increase of fear in the market, the iPath S&P 500 VIX Short-Term Futures ETN (VXX) jumped 2.5% on Thursday. VXX, which tracks a futures-based strategy of investing in futures on the CBOE Volatility Index, had slumped throughout December as hopes for a smooth path for markets in 2010 had been boosted.
Disclosure: No positions at time of writing.