American equity markets finished the day mixed as debt fears in Europe weighed on a variety of sectors. Both the Dow and the S&P 500 ended the session down marginally while the Nasdaq managed to barely finish the day ahead by one point. The big news on the day was gold which managed to extend its rally and finish the day above the $1,400/oz. mark for the first time ever. This came as traders sold off the euro which finished the day down by 1% thanks to ongoing concerns over peripheral euro zone members such as Portugal, Greece, and Ireland.
Today’s worries over the European situation came as fears once again bubbled over in regards to how embattled Ireland would dig itself out of its debt crisis. Yields on Irish 10-year government bonds climbed to 7.6%, opening up a roughly 500 basis point gap with rock-solid Germany as the Emerald Isle struggled to find the political capital to reign in budget deficits through a host of spending cuts and tax increases. This helped to push credit default swaps on Irish debt to a new record while Portuguese and Spanish debt also hit new highs as well. “We’re finally seeing the market turn its gaze away from Fed easing and toward these ongoing problems in peripheral Europe,” said Matthew Strauss, senior strategist at RBC Capital Markets in Toronto. “Even before the Fed meeting, spreads for Ireland, Greece, Portugal were widening, and now that the Fed has indicated what it will do, the market is starting to trade on these worries.”
The ETFdb 60 Index finished the day flat losing just seven cents as losers outnumbered gainers by a near two-to-one margin. Volume was extremely light on the day and only barely surpassed half a billion shares, a sharp decrease from just last week when the ETFdb 60 was approaching the one billion mark.
One of the biggest winners on the day was the United States Natural Gas Fund (UNG) which gained 4.1% in Monday trading. Today’s surge came as traders bought up the fuel in anticipation of colder weather across much of the Northeast and the Midwest, potentially fueling a surge in demand for the popular heat source. This onset of cold weather could help to put a floor under the struggling commodity; UNG has lost 22.2% over the past quarter as the high number of drilling rigs and low demand helped to crash prices over the late-summer. “The first cold shock is always a little boost for everybody,” said Michael Rose, director of energy trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “A little cold snap can help, but once it ends, we’re right back where we started: oversupplied and under-demanded.” [see more charts of UNG here]
One of the biggest losers in the ETFdb 60 was the Financial Select Sector SPDR (XLF) which fell by 0.8% on the day. Monday’s losses came despite a solid performance out of Bank of America which gained 1.5% on the day thanks to a positive report from a Morgan Stanley analyst, Betsy Graseck, who said that the banking giant was a ‘buy‘. However, these gains were more than canceled out by losses out of JP Morgan, Goldman Sachs, and Citigroup which all fell by close to 1.1% on the day. An even worse performance came from the smaller PNC Financial Services company which sank by 1.3% helping to send many smaller banks lower, a fact that ended the recent strength in the most popular financial ETF which is still up close to 6.2% over the past week despite today’s setback [see fundamentals of XLF here].
Disclosure: No positions at time of writing.