American equity markets wobbled in the final day of October trading, as investors digested earnings reports and modest GDP growth for the U.S. economy. The Nasdaq and S&P 500 both finished the day at their starting points while the Dow managed to squeak by with a gain of 0.1%. In commodity markets, gold managed to storm back higher, gaining $15/oz. to finish October at just under $1,360/oz. Meanwhile, Treasury markets continued to soar as the 10 year note’s yield fell by six basis points and the 2 year note saw its yield decline to 0.34%.
Today’s choppy session came at the hands of the government’s GDP report which showed that the U.S. economy grew at a 2% annual pace in the third quarter. While meager, this growth rate is higher than the 1.7% that economists were predicting. Furthermore, investors felt that this low growth rate confirmed the need for additional Fed stimulus when the Reserve Bank meets next week. “Because GDP was so lackluster, we don’t see the Fed pumping the brakes” on its plan, said Tony Zabiegala, a partner at Strategic Wealth Partners.
The ETFdb 60 Index inched higher, adding 2.54 points, or 0.2%. Winners outnumbered winners by three-to-one in relatively light trading.
One of the biggest gainers on the day was the United States Natural Gas Fund (UNG), which jumped higher by 3.4% to close out October. This move helped to propel futures of the popular heating fuel up a six-week high as investors contemplated increased demand for natural gas gas ahead of expectations of a cold November. “The six-to-10-day forecast is a little colder, so you’ll start to see more heating demand,” said Phil Flynn, an analyst with PFGBest in Chicago. “The seasonality of the market is starting to kick in a little bit.” Today’s gains pushed UNG up by 7.4% over the past week, which helped to turn around the fund’s recent weakness; UNG has dropped by close to 28% over the past quarter [see fundamentals of UNG here].
One of the biggest losers in the ETFdb 60 was the iPath DJ-UBS Copper ETN (JJC), which sank by 1.2% on the day. Prices of copper fell as traders reevaluated the wisdom of holding onto base metals ahead of the Fed’s policy meeting as a hedge against inflationary tactics by the Central Bank. This helped to push the metal to its lowest level since October 8th and prices for the red metal below the $3.75/lb. mark. “They (base metals) are under pressure — it’s the usual suspects, a slightly firmer U.S. dollar, weaker equity markets in Asia, and some profit-taking ahead of the Fed meeting next week,” said Commerzbank analyst Daniel Briesemann [see technical analysis of JJC here].
Disclosure: No positions at time of writing.