Thanks to relatively bullish reports from Alcoa and CSX after the bell on Monday, equity markets surged higher in Tuesday trading; the S&P 500 and the Dow jumped by 1.5% and the Nasdaq rose by close to 2%. In commodity markets, gold jumped back above the $1,200 mark while oil surged more than 3% to top the $77/bbl mark. The boost came after a report from Alcoa in which the company predicted that global consumption of aluminum will grow this year by more than it had forecast just three months ago, helping to ease concerns over low growth and a weak economic recovery in developed markets. “When we go back to earnings and fundamentals, companies are delivering,” said Tom Karsten, senior managing partner at Karsten Financial in Fort Worth, Texas.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, climbed 10.70 points, or 1.1%. Winners outnumbered losers by more than five-to-one, although trading was light on the day.
One of the biggest winners in the ETFdb 60 today was the iShares Russell 2000 Value Fund (IWN), which surged higher by 3.2% in Tuesday trading. This surge came as investors grew more comfortable with higher-risk securities in light of the upbeat earnings reports yesterday, which showcased revenue growth and high guidance for the rest of 2010. This gain was marginally higher than IWN’s blend and growth counterparts, and continues the trend of small-cap value outperforming its other small cap peers; IWN is now up 3.2% on the year compared to a gain of 2.7% for the other major small cap funds [see more on IWN's fundamentals].
One of the biggest losers in Tuesday trading was the PowerShares DB USD Index Bullish Fund (UUP), which fell by 0.9% on the day. This drop came after the euro surged against the dollar by more than 1% on the day. Other major developed market currencies also had a good day, as the British pound and the Canadian dollar also strengthened against the greenback. These three currencies combine to make up almost 80% of the currency exposure in UUP, ensuring that the fund would be in for a rough day [see more information on UUP's fact sheet].
Disclosure: No positions at time of writing.