Equity markets finished the day flat after a disappointing report from the Labor Department sent equities lower at the start. Commodities finished the day flat while traders fled to the relative security of the Treasury market and drove yields down to the 2.9% mark on the 10 year bond and below 0.55% for the two year note. This weakness came as the Labor Department reported that initial claims for unemployment benefits jumped to 479,000 last week from 460,000 a week earlier. Economists polled by Thomson Reuters had forecast new claims would fall modestly. Although some cited the ending of the census as a reason for the possible jump and the relatively good reaction to the news by the stock markets, others remain cautious about the economic outlook and the prospects for a jobless recovery. “Without job creation, you can’t get consumer confidence up and spending up,” said Joe Gordon, founder and managing partner of Gordon Asset Management. “People are very cautious.”
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, slid 1.61 points, or 0.2%. Volume was once again light at less than 500 million shares.
One of the biggest winners on the day was the Market Vectors Agribusiness ETF (MOO) which soared higher by 1.6%. This came after wheat exports were banned from Russia, sending wheat prices soaring higher around the world. This trend led many traders to expect a robust increase in demand for fertilizers as farmers attempt to boost crop yields before the harvest later this year. MOO holds several of the world’s largest fertilizer companies including Potash Corp of Saskatchewan (8%), and the Mosaic Company (7.2%), which look to be the main beneficiaries of a rush for fertilizer in the near future [see more on MOO's holdings here].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG), which fell by 2.4% in Thursday trading. This steep drop came after the government reported a decline in electricity use despite the hot weather across much of the country and a weaker hurricane forecast from NOAA. The weather organization is now predicting just 12 hurricanes and six major storms compared to its earlier forecast of 8-14 named hurricanes and seven major storms. This news was seen as a negative for UNG prices since it limits the chances that a storm could disrupt the important Gulf region, which is among the biggest producers of natural gas in the country [see more on UNG's fact sheet].
Disclosure: No positions at time of writing.