U.S. equity markets had another rocky day of trading as an early slide gave way to a late session rally in financials, which boosted many stocks back into positive territory. The Dow finished the day down just three points while the Nasdaq and the S&P 500 gained by 0.3% and 0.4%, respectively. Commodities also bounced back for the most part in Thursday trading as gold gained $3/oz and oil finished the day barely in the black, gaining 0.2% on Thursday.
Today’s market moving events came out of Washington D.C., as investors focused in on a Treasury bond auction and continued uncertainty over tax legislation heading into the new year. Despite weakness earlier in the week as yields soared for T-Bills, investors scooped up long-term U.S. Treasury debt with a bid-to-cover ratio of 2.74, slightly higher than the previous ten auctions which had a ratio of 2.66. This suggested to many that demand was still strong for government debt and that any fears about the ability of the Treasury to repay its debts are minimal at this time. Meanwhile, Congressional Democrats expressed their opposition to the current tax cut plan which was announced earlier in the week, vowing to reject the proposal unless changes were made. “We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote,” said House Speaker Nancy Pelosi. This opposition could stall the program and helped to sink markets which had hoped that the package would stimulate the still struggling economy.
One of the biggest gainers in the ETFdb 60 was the Financial Select Sector SPDR (XLF), which gained 1.2% in Thursday trading. This big gain came thanks to a solid day from Bank of America which gained more than 5.4% on the day. The bank–which makes up just under 7% of the fund–surged as it settled a bid-rigging lawsuit while smaller asset management firms saw their shares soar thanks to an analyst upgrade from Barclays Capital. The popular fund from State Street has jumped higher in recent days, having surged by close to 6% in the last week alone [see more holdings of XLF here].
One of the biggest losers in the ETF world was the United States Natural Gas Fund (UNG), which tumbled by 3.2% on the day. Despite the recent run-up in prices and cold weather across much of the country, users of the gas failed to sufficiently eat into the massive supplies that have been built up in the natural gas market. While stockpiles dropped by 89bcf, this was well within the wide range set by analysts who predicted a drawdown of anywhere between 71bcf and 108bcf. Furthermore, the EIA report disappointed by stating that gas stockpiles at the end of March will be about 171bcf higher than the previous level they held at the end of the heating season in 2010. “The storage number is pretty much in line with the expectation,” said Phil Flynn, an analyst with PFGBest in Chicago. “At the end of the day, gas supplies are still very ample.” [see technicals of UNG here].
Disclosure: No positions at time of writing.