After plunging to start the day, equity markets recouped losses in afternoon trading to finish the third-to-last session of September in positive territory. All of the major indexes finished ahead by roughly 0.45% while gold fought off an early slide to finish the day above the psychologically important $1,300/oz. mark, posting another new record for the yellow metal. Meanwhile, the dollar continued its slide against the major currencies of the world, losing more than one cent against the euro while depreciating against the yen as well.
Investors initially sold off equities after a sharp decline in consumer confidence was reported; the figure sank to 48.5, well below expectations of a modest rise to 53.2. “Much like the unemployment rate, consumer confidence has been stuck in a sub-par range even as the economic recovery unfolded,” said Jim Baird, partner and chief investment strategist for Plante Moran. However, investors shrugged off this weak data and bought up equities on a solid earnings report from Walgreen’s and firm commodity prices, which helped to boost a variety of names in the basic materials sector. Services and healthcare also stayed in the green and helped to balance out continued weakness in the technology and financial sectors.
The ETFdb 60 Index jumped by 4.72 points, or 0.4%, on relatively high volume. The day’s gains were broad based, as winners outnumbered losers by an impressive five-to-one ratio.
One of the biggest winners on the day was the Market Vectors Gold Miners ETF (GDX) which jumped higher by 2.4%. This gain was largely due to the robust gain in gold prices, which bounced off of early session lows to soar to new record highs later in the day. Today’s spike in prices came as investors gambled that the Federal Reserve would be forced to pump more money into the economy in an attempt to boost the current economic environment. Thanks to this speculation, investors sold off the dollar and bought gold as a way to hedge against further greenback debasement in the near future. “People are buying every dip in gold,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “The trend isn’t going to change until interest rates rise.” [see holdings of GDX here]
One of the biggest losers in the ETFdb 60 was the Market Vectors Agribusiness ETF (MOO), which sank by 0.7% on the day. Today’s losses were largely a result of extreme weakness in Monsanto (MON) which makes up 7.5% of the fund’s total assets. Shares of MON slid by more than 8% on the day as the company reported disappointing results on its newest modified corn seed “SmartStax.” The new seed generated an average yield which lagged behind other comparable products by close to 4% and it may force the company to give farmers credits for their 2011 planting season purchases. “Though less than 10% of planted SmartStax acres this year have been harvested to date, we believe the company is prepared to start acting on its satisfaction promise,” said Jefferies analyst Lawrence Alexander who also suggested that this event could help to impact 2011 earnings as well [see more holdings of MOO here].
Disclosure: No positions at time of writing.