Equity markets dove sharply in Thursday trading as retailers and bankers led on the downside. This sharp drop led to a 145 point loss on the Dow with the Nasdaq and the S&P 500 both losing more than 1.6% as well. Gold and oil both sank marginally as investors fled to U.S. Treasuries. Mortgage rates fell to their lowest levels since the statistics started in 1971. However, many have been reluctant to take advantage of the scenario due to the struggling economy. “As long as prospective homebuyers are still concerned about their jobs and financial well-being, many will be reluctant to take the plunge, even though affordability has never been better,” said Greg McBride, senior financial analyst with Bankrate.com.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through exchange-traded products, fell 9.03 points, or 0.9%. The day’s drop was moderate considering that losers outnumbered winners by more than four-to-one in heavy trading.
Among the biggest winners in Thursday trading was iPath S&P 500 VIX Short-Term Futures ETN (VXX), which surged by 6.1% on the day. This increase came as fear returned to the markets over possible new fees that could target banking firms in order to pay for the costs associated with the bailouts of Fannie Mae and Freddie Mac. Additionally, government data was bearish on the ability of the economy to create new jobs as the level of initial claims for unemployment stayed at an uncomfortably high level. Separately, durable good orders fell for the first time in six months [see the fundamentals of VXX].
Among the biggest losers on the day was the Vanguard REIT ETF (VNQ), which fell by 3.2% in Thursday trading. This sharp drop came as investors became more bearish on the prospects for a strong recovery, especially in the retail sector where both Nike and Bed, Bath and Beyond sank sharply on the day. Major retail real estate firms such as Simon Property Group, the top holding of VNQ, fell sharply on the new fears and helped to drag the fund lower on the day [see more holdings of VNQ here].
Disclosure: No positions at time of writing.