Daily ETF Roundup: UNG Slides, XLE Rises

by on November 10, 2010 | ETFs Mentioned:

Although equity markets started the day sharply lower, stocks managed to rally in midday trading to post solid gains by the end of Wednesday’s  session. The Dow finished up by 0.1% while the S&P 500 and the Nasdaq posted more robust gains of 0.4% and 0.7%, respectively. Currency markets stayed relatively flat as the U.S. dollar index gained 0.3% on the day thanks to greenback gains against the yen, which helped to balance out the losses the currency experienced against the British pound. Oil continued its surge, finishing the day up 1.6%, just above the $88/bbl. level. While this wasn’t a huge gain by any means, it bucks the trend that investors saw over in the metals markets, as copper and gold both declined modestly while silver fell by over $1.6/oz. on the day, a 5.5% decline.

The big news today came from Boeing, which reported that its flagship product, the oft-delayed 787 Dreamliner, had to make an emergency landing in Texas after a smoky cabin caught the attention of the pilots in a test flight. Shares of Boeing were down more than 3% on the day, helping to drag down the DJIA and further extend the delays for a plane that is now three years behind schedule. However, this was more than balanced out by oil majors and drilling firms, which surged as crude futures hit their highest levels in more than two years on the back of QE fears and a continued reduction in inventory supplies for the important commodity.

The ETFdb 60 Index surged nearly 2% on the day, adding 20.42 points. Winners outnumbered losers by more than two-to-one, as most commodity and equity components climbed higher in relatively heavy trading.

One of the biggest losers on the day was the United States Natural Gas Fund (UNG), which tumbled by 3.2%. Today’s losses in UNG come after the volatile ETF reversed much of its gains from earlier in the week as an early EIA report sunk markets for the popular heating and cooling fuel. This week’s report on natural gas storage came out a day early in observance of Veteran’s Day, and delivered a new storage record for natural gas. Supply level increases were about 6bcf less than analysts predicted but were still enough to push storage levels over the 3.837 bcf record set last November. “It was a little bit of a surprise how much we sold off but it just goes to show the underlying fundamentals are just not strong enough to push off at this point,” said Matt Smith, a commodities analyst with Summit Energy on the subject of natural gas prices. “We’ve had a decent rally to get up to $4.20; to push it on further from there is really a step too far.” [see more on UNG's fact sheet]

One of the biggest winners in the ETFdb 60 was the Energy Select Sector SPDR (XLE), which gained 1.3% on the day. Today’s gains were all about the continued surge in oil prices as the commodity continues to close in on $90/bbl. after the DOE reported that commercial crude stocks fell by 3.3 million barrels last week. This increase in both demand and prices helped to send the oil majors soaring higher, as ExxonMobil gained 0.7% and both Chevron and ConocoPhillips climbed about 1.5%. These three oil giants combine to make up close to 40% of XLE so a strong showing from them clinched a solid day for the popular energy ETF [see more on XLE's holdings page].

Disclosure: No positions at time of writing.