All eyes were on Ben Bernanke Thursday, as the Federal Reserve announced an increase in the federal funds rate from 0.50% to 0.75%. The widely-expected move comes as Washington looks to unwind the unprecedented stimulus programs enacted to prop up an ailing financial sector in recent years. “Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the Fed said in a statement. Elsewhere, Wal-Mart announced an increase in profit but warned on 2010 earnings outlook, while Dell reported a decline in profit attributable to thinning margins.
The ETFdb 60 Index added 3.62 points, or 0.4%, to notch its third consecutive winning session. The index has now climbed nearly 2% on the week.
Leading the way higher was the iPath Dow-Jones UBS Copper ETN (JJC) which surged 2.5% on signs of strength in the global economy. Separate reports released Thursday showed strong gains in factory activity in the U.S. and a tenth straight rise in a gauge of overall economic prospects. Although Chinese markets are closed this week for the New Year, demand is expected to accelerate when investors return next week.
The increase came despite an uptick in LME copper stocks to more than 555,000 tonnes, the highest level since October 2003.
The United States Natural Gas Fund (UNG) slid by 3% on Thursday, as the EIA gave its weekly report on inventory levels. Supplies fell by approximately 190 billion cubic feet for the week ended February 12, roughly in line with analyst estimates. But unseasonably warm temperatures across much of the mid-west put a damper on expectations for gas demand. UNG is now down about 7% on the year and 45% over the last 12 months.
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Disclosure: No positions at time of writing.