Equity markets rose modestly to start the week, with the Nasdaq leading the way on the upside by posting gains of nearly 0.8% on the day. Commodities were mixed, with gold maintaining its $1,200/oz. price level and oil surging higher to $81.50/bbl. as investors remained cautious ahead of the Federal Reserve policy meeting tomorrow afternoon. Volume on the NYSE was extremely light; only 380.1 million shares changed hands, one of the lowest levels of the year. Many will be looking for the Bank to inject more money into the economy in order to attempt to stop a slide into a double dip recession, which appears more likely than ever. This will put all eyes on Fed Chair Ben Bernanke, he could signal more intervention into the economy. It remains to be seen if such an initiative would take the form of buying Treasury bonds, mortgage-backed securities, or some other unconventional program altogether. “It’s all about tomorrow,” said Joe Saluzzi, co-head of equity trading at Themis Trading LLC in Chatham, N.J. “The market loves stimulus. The market wants stimulus.”
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, closed higher by 3.15 points, or 0.3%. Trading volume was once again on the light side as the summer slowdown continued.
One of the biggest gainers on the ETFdb 60 was the iShares Dow Jones Transportation Fund (IYT), which soared by 1.4% in today’s trading. This jump came after solid days out of the fund’s main components, including a 2.3% gain for top component Federal Express and a 1.1% gain for UPS (which also makes up a large percentage of IYT’s holdings). This iShares fund has been on somewhat of a winning streak as of late despite overall choppiness in the markets. IYT has surged higher by almost 9% over the past month and has posted a gain of 22% over the past 52 weeks [see more fundamentals of IYT here].
One of the biggest losers on the day was the United States Natural Gas Fund (UNG), which fell by 3.6%. This steep drop came as the National Weather Service forecast below-normal temperatures across much of the Midwest, Northeast and Mid-Atlantic regions of the country, likely tempering air conditioning demand and thereby power usage next week. This forecast of lower demand has combined with ample supplies to send prices sharply lower over the past week; current inventories are now at just under 3 trillion cubic feet, or 8.1% above the five-year average. UNG is now down 27.6% so far in 2010 and has fallen 11.6% over the past week [see more charts of UNG here].
Disclosure: No positions at time of writing.