Although equity markets fell sharply to start the day after weak jobs numbers were released, most indexes made up the majority of their early losses to finish the day within striking distance of opening prices. At one point the S&P 500 was down almost 1.5% before surging back in late day trading to finish down just 0.4% to close out the week; other major indexes followed similar paths. In commodity markets, oil sold off as traders feared that the weak job numbers would signal a slowdown in demand for crude. Gold gained modestly on rising fears over a double dip recession, while wheat prices plummeted neatly 7% after touching two year highs in the previous session [see Wheat ETFs In Focus]. This helped to boost demand for Treasury bonds once again; the 10 year note fell down to 2.82% and the 2 year finished just north of the psychologically important 0.5% mark. This flight to quality came after the government reported weaker-than-expected job growth; just 71,000 new jobs were added and when census losses were factored in payrolls dropped 131,000 on the month.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, slipped lower by 1.3 points to finish the week in moderate trading.
One of the biggest gainers on the ETFdb 60 was the Market Vectors Gold Miners ETF (GDX), which surged by 1% in today’s trading. This came after continued fears over the U.S. economic outlook which helped push gold above $1,200/oz. That boosted the demand for gold miners, which stand to benefit from an increase in gold prices as investors grow increasingly concerned that the Fed may take further measures to stimulate the economy. “The report isn’t bad; the problem is, it isn’t good,” said Ira Epstein, director at the Linn Group in Chicago, said of the jobs data. “The reason gold is up is they wonder if this is going to cause the (Federal Reserve) to do another stimulus.” [see GDX's holdings here].
One of the biggest losers on the day was the United States Natural Gas Fund (UNG), which continued its slide by dropping 2.5% in Friday’s trading. This came after growing fears over a slowdown in the economy which would lead to a decrease in demand for electricity. Moreover, a report from Baker Hughes showed that natural gas drilling rigs were at a 17-month high. The report indicated that 983 rigs are now drilling for gas and horizontal rigs, which are used to extract natural gas from shale, rose to a record high of 878 in operation. This report led traders to believe that there would be ample supply of natural gas in the near-term, especially given the weak economy [see more charts of UNG here].
Disclosure: No positions at time of writing.