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Daily ETF Roundup: JJC Sinks, XLF Rises

by Michael Johnston on January 27, 2010 | ETFs Mentioned: JJC • XLF

Wall Street posted modest gains on Wednesday after the Federal Reserve decided to keep interest rates steady ahead of Obama’s State of the Union Address. Traders pointed to the lack of bad news in the Fed statement as a reason for optimism going forward. “There was some relief that there wasn’t anything overtly negative that could be construed from the Fed statement” said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles. ETFdb 60 Index

Technology shares rallied as well as Apple introduced its much anticipated iPad tablet computer and Gilead Science surged more than 7% after beating earnings estimates for the fourth quarter. Industrials also rose as aerospace giant Boeing forecasted a return to profitability in 2010, sending shares higher by over 7% as well. The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, dropped 1.84 points to close at 1,014.97. The index has posted losses in five of the last six trading sessions (see Five Ways To Use The ETFdb 60 Index).

Among the biggest gainers was SPDR Select Sector Financials ETF (XLF) which rose almost 2.5% in Wednesday trading. The gain was largely attributed to the Fed’s stance on keeping interest rates low for an extended period of time and the relatively upbeat outlook for the economy. This reverses an earlier trend in which financial ETFs saw their shares plummet as Washington introduced a new $100 billion tax proposal on the largest financial institutions.

XLF

The biggest loser on Wednesday was iPath DJ-AIG Copper Total Return Sub-Index ETN (JJC), after copper prices fell more than 11 cents a pound. This pullback, which was the most in more than four months, pushed JJC down roughly 4.5%. The reason for the steep decline was due to poor news out of the two largest copper consumers: China and the United States. The U.S. reported an unexpected drop in home sales, which gave the copper markets fresh concerns about a downturn in housing which would heavily reduce the demand for the industrial metal. In China, copper traders worried that Chinese steps to slow down the economy and tighten lending would decrease the demand for construction projects and copper products. This news combined to leave copper finishing at around $3.22, down from a high of over $3.50 just a few weeks ago.

JJC