American stock markets surged to start Wednesday trading, but the rally fizzled out to end the session. Most equities still managed to post solid gains on the day, as the Dow and S&P 500 both jumped by 0.7% while the tech-heavy Nasdaq surged by 1% during Wednesday trading. Once again, commodity markets soared higher, with oil finishing just shy of $83/bbl. and the rest of the energy commodity sector following suit. Precious metals also jumped and were led by a 3.4% gain in the silver markets and a 1.8% gain in gold, which finished the day at the $1,370/oz. mark.
Today’s gains were fueled by strong corporate earnings from a variety of key companies, including America’s second largest railroad operator CSX. The company beat earnings estimates and crushed the figures from the same period last year by close to 48%, fueling speculation of a budding recovery in the transport sector. Meanwhile, JPMorgan’s CEO Jamie Dimon predicted credit card defaults are likely to fall next quarter and Intel said that sales should remain consistent through the end of the year as customers switch from back-to-school shopping to the holiday season, potentially keeping sales figures elevated into 2011. These three reports combined with increased speculation over the Fed’s moves to increase the attractiveness of stocks and commodities and fueled a mini rally during Wednesday trading.
One of the biggest gainers on the day was the Market Vectors Gold Miners ETF (GDX), which soared by 2.5%. This gain came as investors pushed gold prices to another record high, improving the outlook for firms engaged in the extraction of the precious metal in the process. Demand for gold once again surged as investors bought up the commodity on continued weakness in the dollar amid concerns that the Fed’s program will send the greenback even lower in coming months. “Gold and silver continue to remain robust given the real concerns about the U.S., eurozone and global economies,” according to a note to clients from Dublin-based bullion dealer GoldCore. “These concerns are creating doubt about the outlook for the dollar, the euro and other fiat currencies due to competitive currency devaluations and currency debasement.” [see holdings of GDX 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 2.1% on the day. Thanks to a solid day out of the markets, demand for the ETN tracking the ‘fear index’ fell throughout Wednesday trading. VXX experienced volume of over 35 million shares compared to an average of 22.2 million, as investors sold off their positions in order to buy into equities ahead of another easing phase by the Federal Reserve. The popular fund from iPath is now down 13.6% over the past week and has plunged by close to 60% so far in 2010 [see more fundamentals of VXX here].
Disclosure: No positions at time of writing.