Equity markets finished flat to start the week, as the Dow, Nasdaq and the S&P all lost less than five points on the day. Stocks were initially encouraged by positive economic data suggesting that personal incomes rose at a faster pace than consumer spending, but markets fell back in late afternoon trading. One of the biggest winners on the day were cigarette and gun makers which were both boosted by Supreme Court decisions. In commodity markets, gold managed to finish the day in positive territory after a call from the G-20 to get deficits under control in the near-term. Gold traders were probably encouraged by the lack of consensus on this issue as some countries; most notably the U.S. is intent on continuing the spending spree. Meanwhile, oil markets were among the biggest losers on the day as fears subsided over tropical storm Alex and its path across the Gulf of Mexico.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, finished lower by 3.06 points, or 0.3%. Trading volume was relatively low, perhaps setting the tone for a quiet pre-holiday week.
One of the biggest gainers on the day was iPath S&P 500 VIX Short-Term Futures ETN (VXX), which rose by 1.7% to start the week. This came as the S&P 500 fluctuated between gains and losses for much of the day; the S&P 500 crossed its starting level ten times on Monday. These fluctuation helped to bring fear back to the markets and left many traders and investors unsure of where the market will head later this week. Many sold off their positions in late trading in order to avoid any wild swings overnight. VXX is down close to 17.3% so far this year, but as the market turmoil has increased so have the returns of VXX; the ETN has surged higher by 28.2% over the past three months [see technical analysis of VXX here].
One of the biggest losers to start the week was the United States Natural Gas Fund (UNG), which sank by 4% in Monday trading. This sharp decrease came after traders realized that the first named storm of the 2010 hurricane season, tropical storm Alex, was likely to miss the bulk of America’s natural gas production region off of the coast of Louisiana and Alabama. The storm appears to be headed towards the Texas/Mexico border, far away from both the major gas producing regions as well as the oil spill which led many traders to sell their positions [read more about the impact of Alex on UNG].
Disclosure: No positions at time of writing.