Friday was a rough day in the markets, as the S&P 500 fell close to 1.6% after Goldman Sachs was charged with Civil Fraud by the SEC. This news sent not only financials lower, but pushed investors into safer assets as the 10 Year T-Bond yield fell to 3.77% and oil dropped close to 3% to finish the week. “Basically it’s sell, and ask questions later,” said Quincy Krosby, market strategist at Prudential Financial. “A market that wants to sell off will find an excuse.”
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, slid 12.10 points, or 1.1% in one of its worst sessions of the year.
The day’s biggest loser was–not surprisingly–the Financials Select Sector SPDR (XLF), which tumbled 3.7%. The main loser in the fund was Goldman Sachs, which saw its shares slide by more than 12%. This came after the SEC accused one of the vice presidents at the firm of failing to disclose the nature of some of its relationships in regards to subprime mortgage funds. The SEC charges that Goldman itself profited by betting against the very mortgage investments that it sold to its customers. For more information about the case see a recent article on the Issues at Goldman.
One of the few winners in Friday’s trading was iPath S&P 500 VIX Short-Term Futures ETN (VXX), which benefited from the return of fear to the markets; this ETN was up 4.8% for the day. After experiencing a large run-up earlier in the week, markets gave back most of their gains today, which helped to further increase the volatility levels in the market and send VXX even higher. In addition to the news about Goldman, Google produced less then stellar quarterly results, and poor numbers from giants Bank of America and General Electric created a perfect storm for increased volatility in the markets (see our report on some of the early winners and losers this earnings season).
Disclosure: No positions at time of writing.