After slumping to start the day, equity markets soared to finish a dismal week on a positive note. The Dow finished ahead by 125 points while the S&P 500 jumped by 1.5%. Commodity markets, however, continued to show weakness, with oil hovering around $70/bbl and gold falling below $1,180/oz. Equity markets jumped on the news that the Senate had finished their financial overhaul bill, finally removing uncertainty regarding the scope of the bill. “There were a lot of concerns about how bad will the reform be and uncertainty is worse than anything,” said Phil Orlando, chief equity market strategist at Federated Investors in New York. “Now that there is a bill, investors may have gone through the details and concluded that this is not as deleterious as the worst case fears.”
The ETFdb 60 Index climbed 11.06 points, or 1.1%, reversing a weeklong slide that had pushed it below the 1,000 level. Trading volumes were once again nearly three times average levels, as investors snapped up risky assets at impressive rates.
One of the biggest losers in the ETFdb 60 was iPath S&P 500 VIX Short-Term Futures ETN (VXX), which sank 2.2% on the day. After soaring by close to 35% over the last week, VXX finally reversed its course in Friday trading as investors gained confidence in financials and sought to buy up risky assets that had been sold off earlier in the week. Despite the huge gain over the past week, VXX is still down close to 60% over the past 52 weeks (see more charts of VXX here).
One of the biggest gainers on the day was the iShares MSCI Brazil Index Fund (EWZ), which jumped 4.3% to finish the week. This came after the main index in Brazil, the Bovespa, snapped its longest losing streak since October of 2008. Among the biggest gainers were mining giant Vale, which soared higher by more than 7% in trading in New York. Vale makes up close to 10.4% of EWZ’s holdings and is the second biggest weighting for the fund (see more holdings of EWZ here). This spike higher snaps a brutal streak for EWZ, which has sunk by close to 10% over the past week before today’s gains.
Disclosure: Eric is long EWZ.