U.S. markets experienced a flat trading session on Thursday after a few key central bank meetings in Europe failed to give equities direction. The Dow and S&P 500 both finished down modestly by 0.2% while the Nasdaq managed to reverse its Wednesday losses and squeak by with a three point gain. The real action was in commodity markets, which saw gold surge up to $1,366/oz. only to trend lower throughout the day and end up at the $1,334 mark. Oil also had a rough day, with the crude finishing down by close to $2/bbl. or roughly 2.3%. Meanwhile, a variety of other commodities also had wild sessions; natural gas fell by over 6% and sugar jumped higher by close to 6.9% in today’s session.
Although equities briefly broke through the important 11,000 mark for the DJIA, investors sold off shares ahead of tomorrow’s crucial jobs report, which comes after conflicting data points on the employment front. On Wednesday, ADP reported a net loss in jobs for the month of September to the surprise of analysts. However today’s initial jobless claims came in far less than expected, leaving many to wonder where Friday’s numbers would end up. Additionally, the U.S. dollar gained in Thursday trading which helped to weaken commodities and send the dollar index up marginally. This helped to draw investors out of the frothy precious metals market and back into T-bills which saw the 2-year note yield sink to just 36 basis points. However, all eyes will now focus in on tomorrow’s job report, which will likely signal to the Fed how bad the economy is and if the market needs additional quantitative easing measures in order to boost sagging growth prospects heading into 2011.
The ETFdb 60 Index slipped 3.20 points, or 0.3%, on the day. Volume was relatively heavy, particularly in commodity products that continued recent trends of volatility on Thursday.
One of the biggest gainers on the day was the PowerShares DB Agriculture ETF (DBA), which rose by 0.9% in Thursday trading. These gains were fueled by rising corn prices, which jumped by 2%, and surging sugar, which rose by nearly 7% during Thursday’s trading session. These large gains in sugar, which makes up about 11% of DBA, came thanks to supply disruptions in India, the world’s second biggest producer of the crop. Sugar-cane growers in the state of Uttar Pradesh, India’s largest grower, will withhold supplies should mills fail to meet a minimum price requirement, a farm group said according to Bloomberg [see more holdings of DBA here].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG), which tumbled by 6.5% on the day. These sharp losses came after supplies of natural gas grew more than expected in the past week, up to just under 3.5 trillion cubic feet. This 85 bcf gain was much higher than the 76 bcf that analysts had expected and extended the gap between the current inventory level and the five year average–now at 6.7%. “We’re going to be in a very robust inventory environment heading into the winter,” said Chris Kostas, a senior analyst with Energy Security Analysis Inc. “Between the high heating demand over the past winter and strong cooling demand over the summer, it’s amazing that we’re only 4% below last year’s (inventory) record.” [for more on this Thursday trading phenomenon, make sure to read Thursdays With UNG]
Disclosure: No positions at time of writing.