Equity markets stayed flat in much of Tuesday’s trading session with the Dow sneaking by with a gain and the S&P 500 and the Nasdaq both posting modest losses. However, despite the neutral nature of today’s equity markets, the 10 Year T-Bill finally broke back through the 3% barrier to finish the day at 3.05%. Commodity markets also struggled with oil and gold both falling close to 2% as the precious metal dropped close to $25/oz. in today’s trading. Today’s flat results came after consumer confidence fell in July to its lowest level since February due to consumers growing increasingly concerned about the weak job market and tepid economic growth levels. This bearish news was canceled out by several earnings reports which helped to boost the markets and keep most indexes even on the day. One of the day’s key reports came from DuPont which reported strong sales and boosted its guidance for the rest of the year, news which sent the stock up 4% on the day and helped to buoy the DJIA. For companies, “it seems growth hasn’t ground to a halt, and that is very important for the stock market,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co, in San Francisco. However, Marc went on to say that “the balance of the market is in a bit of a pullback phase, and consumer confidence is weighing today.”
One of the biggest gainers on the day was the United States Natural Gas Fund (UNG) which jumped higher by 1.3%. This jump came after a bullish earnings report from Occidental Petroleum (OXY) which is the fourth largest U.S. oil and gas firm and the largest natural gas producer in California. OXY reported a profit of $1.06 billion, or $1.31 a share, up from $682 million, or 84 cents a share, a year earlier on revenues of $4.76 billion which represents a 29% increase from the prior year. However, the company missed its earnings estimate by 2 cents which sent shares down close to 3.6% in Tuesday trading but it appears as if the company has made up most of the losses in the after-hours session. Traders also bought the commodity due to hot weather which is expected to continue for the near future in much of the Eastern and Midwestern portions of the U.S. Many will now focus in on the weekly Energy Department report tomorrow in order to give UNG guidance for the rest of the week. “It’s pretty hot and the AC is running,” said Kyle Cooper, managing director at energy consultant IAF Advisors in Houston. “The next injection number is going to be pretty bullish.” [see UNG's fact sheet here]
One of the biggest losers in the ETFdb 60 was the Market Vectors Gold Miners ETF (GDX) which fell by 3.7% on the day. This came after the price of gold tumbled by nearly 2% as investors’ risk appetite increased on the back of solid earnings reports from a variety of companies. The caused many gold miners to fall sharply in today’s trading including the fund’s top holding, Barrick Gold Corp (ABX) which fell by close to 4.1% on the day. Additionally, the dollar continued to strengthen as traders grow increasingly wary of Europe and their ability to handle the ongoing debt crisis. As more investors flee the euro they have piled into U.S. dollars which has helped to keep a lid on most commodity prices including gold. The safe-haven is now down more than 8% from its record high earlier this summer [see more charts of GDX here].
Disclosure: No positions at time of writing.