Equity markets experienced a roller coaster ride on Tuesday, as the S&P 500 alternated between dips and peaks before surging to end the day up 1.1%. It was a more dismal day for the Nasdaq; the tech heavy benchmark slumped and finished the day down marginally, heavily under-performing its counterparts. This choppy trading session came after gold hit a record $1,254.5/oz on continued fears over European debt issues; new austerity measures have been announced in recent days in Germany, Britain, and Hungary. However, markets got a boost after Fed Chairman Ben Bernanke assured investors that the U.S. economy would continue to recover but would post sluggish job growth for the foreseeable future.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, climbed 5.46 points, or 0.6%.
One of the biggest losers on the ETFdb 60 was the United States Natural Gas Fund (UNG), which fell by 2.6% in Tuesday trading. This decline came on a report that the EIA expects total marketed natural gas production to increase by 1.2 billion cubic feet/day (2.1 %) to 61.2 billion cubic feet/day in 2010, an upward revision of 0.5 Bcf/d from last month. This news, along with the prospect of a cooler summer, sent natural gas plunging today and reversed recent upward trend (see Can UNG Continue Its Rally?). “Some of the hotter forecasts may not come to fruition and the intensity of cooling demand has come off a bit relative to some initial forecasts,” said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey Inc. in Houston (see technical analysis of UNG).
One of the biggest gainers on the ETFdb 60 was the iShares MSCI Brazil Index Fund (EWZ), which jumped higher by 2.5% on the day. This came after a government report showed that Brazil’s GDP expanded 9% in the first-quarter when compared to a year ago. This surge was the fastest rate since the first quarter of 1995 and was sharply higher than analyst estimates, which pegged GDP growth at 8.5%. “What makes Brazil unique is the strength of domestic demand. Retail sales have been staggeringly strong over the past three or four months,” said Neil Shearing, a senior emerging- markets economist at Capital Economics Ltd (see more information about EWZ on its fact sheet).
Disclosure: Eric is long EWZ.