After initially sinking by more than 200 points by noon, the Dow finished the day off by just 66 points to post a loss of 0.6%. Meanwhile the tech heavy Nasdaq fell by 0.8% and the S&P 500 sank by half a percent. In commodity markets, oil finally reversed its 16 day slide to finish higher by 2.6% as gold sold off to finish the day below $1,200/oz. A large reason for this midday turnaround was a report out of the Federal Reserve that predicted a slightly better economy in the rest of 2010. Officials bumped up their growth forecast from 2.8%-3.5% to 3.2%-3.7% and now forecasts that the unemployment rate may dip below 9.5% by the end of this year.
The ETFdb 60 Index continued its slide on Wednesday, dropping 6.03 points, or 0.6%. The index is now down about 1.6% on the year after another day of heavy trading during which losers outnumbered winners by nearly three-to-one.
One of the advancing ETFs was iPath S&P 500 VIX Short-Term Futures ETN (VXX), which rose by 2.4%. The increase came after another rocky day on Wall Street which saw the S&P 500 trade in a 24 point range. Markets sank initially after Germany banned some specific trades on some stocks and bonds. Markets were rescued partially by the Federal Reserve report midday, but still finished sharply lower on the day. Despite being down close to 12.4% for the year, VXX has been on an impressive run as of late, posting a 30.2% gain over the past two weeks and a 63.3% gain over the past month (see more fundamentals of VXX).
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG), which sank by 4.1% in Wednesday trading. The fund sold off as traders fled natural gas on general concerns about the economy. In particular, weak figures on American home foreclosures (more than 14% of mortgages are in foreclosure) drained confidence further. Additionally, robust supplies and moderate temperatures across much of the country helped to decrease demand for the popular heating fuel. “Industrial demand has been the biggest Achilles heel for natural gas for the last couple of years,” said Chris Jarvis, the president of Caprock Risk Management, an energy investment and analysis firm (see UNG vs. USO: Decoupling Or Correction?).
Disclosure: No positions at time of writing.