After a choppy Wednesday trading session, equity markets managed to finish in positive territory; the Nasdaq led the way on the upside with a gain of 0.3%. Treasury yields fell slightly as investors continued to buy up the bonds despite near-record low yields for these relatively safe securities. Commodity markets were mixed as oil fell half a percent but gold moved higher to finish the day at the $1,230/oz. mark. Today’s modest gains came after strong results out of retailers helped to boost Wall Street expectations about the consumer heading into the fall quarter. One of the key reports came from Target, which made up early losses to gain 2.7% as second quarter earnings rose 14%. Chico’s FAS, a woman’s clothing retailer, jumped 8.2% on second quarter profits that were more than double last year’s levels. This helped to boost the rest of the consumer discretionary sector and allowed the markets to trend higher on low volume. “We live from economic data point to economic data point,” said John Stoltzfus, senior market strategist with Ticonderoga Securities in New York. “That will probably continue at least until the end of the summer as we wait for some kind of catalyst that would give the market better definition.”
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, climbed higher by 1.50 points, 0r 0.1%.
One of the biggest gainers on the day was the Market Vectors Gold Miners ETF (GDX), which jumped higher by 1.6%. This gain was driven by physical demand for the metal heading into the Indian wedding season as well as high levels of demand for gold by hedge funds which are piling into gold backed ETFs. This helped to push the precious metal to a seven-week high and within striking distance of record levels touched in mid-June. “[Gold] remains a global growth story,” said Matt Zeman, an analyst at LaSalle Futures Group in Chicago. “We’re seeing flight-to-quality trading going on and people coming back to gold.” [see charts of GDX here]
One of the biggest losers in the ETFdb 60 was the Energy Select Sector SPDR (XLE) which fell by 1% on the day. Today’s losses came after the Energy Department reported that crude supplies fell by far less than analysts were expecting–only 800,000 barrels compared to a 2.25 million barrel decline in the forecast. Refiners were also running at 90% of capacity, which surprised many traders who had expected the level to slip to 87% on moderating demand for crude oil. “Refiners have a difficult situation,” energy consultants Cameron Hanover said. “They do not want to give up hard-won long-term contracts with suppliers, knowing that a time will come when they will want those contracts. But, they are not keen to build either crude oil stocks or refined products stocks from existing levels. The problem is, though, that demand is not strong enough to avoid one or the other.” [see holdings of XLE here]
Disclosure: No positions at time of writing.