U.S. equities rose modestly ahead of another week full of key earnings reports, as the Dow and S&P 500 both gained 0.6% and the Nasdaq jumped higher by 0.9%. Investors jumped back into the volatile markets and sold off enough of their Treasury holdings to push the ten year note up to 2.97%, as memories of Friday’s rough trading day quickly passed. Commodity markets remained choppy; as gold fell back modestly while oil finished close to $76.50 a barrel. Today’s rise came with light volume as the NYSE saw roughly 1.2 billion less shares trade than on a typical trading day; about 20% of that volume came from Bank of America and Citigroup. Earnings reports out of Delta and Halliburton gave markets generally positive direction; both companies reported solid quarters.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, climbed 2.33 points. Investors traded cautiously ahead of several key earnings reports later this week; trading volume was very light on the day.
One of the day’s biggest gainers was the Utilities Select Sector SPDR (XLU), which rose by 1.6%. Utilities were boosted across the board by the bullish report from Halliburton, which saw profits improve by 83% thanks to robust levels of natural gas activity in North America. That corner of the market could push forward during the ban on offshore drilling. “Activity in the dry gas basins may slow due to weak natural gas fundamentals, which should be partially offset by the continued growth of oil- and liquids- rich reservoirs,” Halliburton said in its report. This report helped to boost companies such as Dominion, which was up 2.4% in today’s trading, and Duke Energy, which jumped by 1.8%; both companies are in the top five holdings of XLU [see more holdings of XLU here].
One of the biggest losers in the ETFdb 60 was the iPath S&P 500 VIX Short-Term Futures ETN (VXX), which fell by 3.1% in today’s trading session. VXX fell on above average volume as traders embraced risk again and shrugged off Friday’s steep slide in equity markets. Additionally, some traders may have sold off their positions in VXX after an unusually high put option order came through that was more than the open interest at the time and greater than the volume that is usually seen on these relatively new products. However, it is possible that these trades are hedged or relative value trades against some other position in the VIX or SPX, which could mean that VXX could jump back up after today’s drop [see more charts of VXX here].
Disclosure: No positions at time of writing.