Although U.S. equity markets spent much of the day in the red, a late surge in the final hour and a half of trading helped to propel the Dow and the Nasdaq to gains on the day. While the Dow finished ahead by 0.2% and the Nasdaq squeaked by with a 0.1% gain, the S&P 500 stayed in the red, falling by .4 points. Meanwhile, Treasury markets resumed their slide in longer-term issues as the 10 year note spiked to 2.76% while the 2 year stayed flat yielding 0.48%. The big news was again in commodity markets which saw gold continue its record run with the precious metal now trading above $1,275/oz. Other metals also continued their surge as silver hit $20.75/oz. and copper reached $3.5/lb thanks to renewed investor demand in commodity markets.
Today saw weakness in the services and financial sectors with gains in the tech and and some of the metal names as the September rally appeared to fizzle out in Thursday trading. A couple of big earnings reports highlighted trading today with a special focus on Federal Express and their announcement. The company increased its fiscal-year outlook on solid first-quarter profit levels but planned to cut 1,700 jobs and gave a lukewarm second quarter forecast along with weak profit margins in its ground and express segments. “The overall skepticism about economic growth is still there,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management. “Shipping companies are a barometer of economic activity. So when we get a negative surprise from the industry, it makes people question the sustainability of the recovery.” This news helped to pull down a variety of equities and sent shares of FedEx down by close to 3% on the day.
One of the big winners in the ETFdb 60 was the Market Vectors Gold Miners ETF (GDX) which soared higher by 1.4% on the day. This surge came as gold prices continued their trend higher thanks to weakness in the dollar and continued concern over a global recovery. Gold miners were also boosted by a report from AngloGold, the world’s third biggest gold miner, which said that it will wind down its hedge book by early next year, suggesting that they see gold prices jumping higher in the near future. Currently, AngloGold makes up the fourth biggest allocation in GDX, comprising 5.7% of the fund’s total assets [see more of GDX's holdings here].
One of the biggest losers on the day was the iShares MSCI Japan Index Fund (EWJ) which sank by 1.3%. Today’s losses were largely a result of continued uncertainty over the Japanese yen situation and the resulting backlash from Western countries, many of which were not thrilled with the ‘unilateral decision’ by the country to attempt to weaken its currency. Luxembourg Prime Minister and chairman of euro-region finance ministers, Jean- Claude Juncker, said that euro nations are not happy with the decision and that they were insisting that they step back from unilateral interventions. “Nevertheless they did it and that we didn’t like the idea and the fact that they did it,” he said in an article for Bloomberg. Despite this unhappiness, EWJ managed to make back some of its early losses on reports that the country was ready to intervene again to push down exchange rates, further helping the struggling Japanese exporters [see holdings of EWJ here].
Disclosure: No positions at time of writing.