Equity markets rose modestly in mid-week trading, with the Nasdaq leading the major indexes on the upside by posting a gain of 0.9%. The S&P 500 and the Dow managed to post gains of 0.6% and 0.4%, respectively, despite an extremely rocky start that saw the markets rise almost half a percent in the opening minutes only to fall back before the first hour was over. Commodity markets stayed flat while investors sold off T-Bills to send the 10-year yield up to 2.95% on the day. Today’s gains were largely due to a better-than-expected report from ADP regarding private employers’ hiring; the data showed that 42,000 jobs were added in July, well ahead of the 23,000 increase that analysts had expected. But some analysts were not as bullish on the number, suggesting that the economy still has a rough patch it has to get through before solid growth levels return. “I wouldn’t get too enthused; it’s one data point that’s positive,” said Christian Hviid, chief market strategist at Genworth Financial Asset Management. “At the end of the day, the head winds are still out there. It’s a pretty weak employment landscape, and there’s this concept of austerity out there, and potentially slower growth going forward.”
One of the biggest winners on the day was the Market Vectors Gold Miners ETF (GDX), which rose by 2.6% in today’s trading. This boost came as gold briefly broke through the $1,200 mark on bullish news from China. The country reported that banks would be permitted to import and export more gold, thus granting greater access for trading among foreign companies. This news could spur greater demand for the yellow metal, and helped to boost many of the large cap mining firms that dominate the holdings of GDX [see holdings of GDX here].
One of the biggest losers in the ETFdb 60 was the Vanguard Long-Term Bond ETF (BLV), which fell by 0.4% on the day. This came after broad weakness in the Treasury markets, which saw yields rise by close to six basis points on the ten-year note as investors shrugged off their concerns about the economy and sold bonds on the bullish jobs report. Despite this drop some remain optimistic on the long-term slice of the market, believing that short-term debt is overvalued due to temporarily high demand. “The long bond is definitely the least under pressure,” said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut. “The last several trading sessions have seen the long end of the curve kind of out there doing its own thing, responding to different flows and stimuli.” [see holdings of BLV here]
Disclosure: No positions at time of writing.