U.S. equities rose modestly in Wednesday trading as all the major indexes finished the day in positive territory. The tech heavy Nasdaq led the way on the upside with gains approaching 0.9% while the broad S&P 500 lagged behind, gaining just 0.6%. Oil managed to finish the day up by close to 50 cents a barrel while precious metals retreated off of their fresh highs; silver finished the day just under the $20/oz. mark. Meanwhile, the U.S. dollar showed broad strength in today’s trading session despite continued weakness in Treasury prices; the greenback was up more than 0.5% against the pound and the Australian dollar but fell by close to 1% against the Canadian dollar, which saw its central bank raise rates by 25 basis points earlier today.
Today’s modest gains came despite weakness in the Fed’s Beige Book report, which showed that the U.S. economy was slowing down over the summer. The weakest areas were in the real estate and construction sectors of the economy, with regional weakness in much of the Eastern United States. The lone exception to this trend was the Boston area which managed to post solid numbers thanks to its heavy dependence on high tech companies and biotechnology firms. Arguably the brightest outlook came from the Dallas Fed due to high demand for energy and strong commodity prices in the region. “The economy might have been going 55 miles an hour. Now we are going 45 miles an hour,” said economist John Canally of LPL Financial. “The economy is muddling along.”
The ETFdb 60 Index added 3.22 points, or 0.3%. Winners outnumbered losers by more than two-to-once in another day of light trading.
One of the biggest winners on the day was the iShares Dow Jones Transportation Average Index Fund (IYT), which jumped higher by 1.3%. This boost could be attributed to further details over President Obama’s new $50 billion infrastructure proposal which will be used to repair and rebuild 15,000 miles of roads, 4,000 miles of railroads and 150 miles of airport runways. This news sent the transportation sector surging since any investment in the country’s crumbling infrastructure is likely to make their job of transporting goods that much easier and thus more profitable in the long run [see holdings of IYT here].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which fell by 1.2% in Wednesday’s trading session. This came after continued predictions of mild weather going forward and ample supplies thanks to near record levels of natural gas drilling activity. The number of rigs is now approaching 1,000, close to a 39% increase from just one year ago. All of this extra supply has helped to keep a lid on prices and keep investors bearish on the prospects of UNG going forward; the fund is now down roughly 22% over the summer quarter [see more on UNG's fact sheet page].
Disclosure: No positions at time of writing.