American equity markets experienced another choppy session on Thursday as France and Germany announced that a second summit would take place next week, suggesting that a resolution to the crisis would not come this weekend. Nevertheless, both the Dow and the S&P 500 managed to rise modestly on the day as the indexes gained, respectively, 0.3% and 0.5% on the session. The tech-heavy Nasdaq, however, wasn’t as fortunate as the index fell by about 0.2% to close just under the 2,600 level. Meanwhile, commodity markets continued to slide on the day as gold fell by about $25/oz. and oil slid by close to 0.2% to fall just below $86/bbl. These headline products also led the rest of the sector down although some strength was seen in the rest of the energy market. The heaviest losses instead came in corners of the soft market as well as the base metals sector as copper continued its slide, falling close to the $3.1/lb. level.
In currency trading, the U.S. dollar weakened marginally against its main rivals, as both the euro and the pound saw strength against the greenback. However, the dollar did finally manage to break out of its slump against the yen which helped to balance out the results of the U.S. dollar index on the day. Thanks to the flat performance in both currencies and stocks, bond trading was also mixed as the 10 year saw yields rise by about two basis points while the two year saw yields slump by one basis point to finish yielding around 0.27%.
One of the biggest ETF winners on the day was the iShares Dow Jones Transportation Average Index Fund (IYT) which gained 1.6% in Thursday trading. Today’s gains, which came on an overall flat day for the markets, were largely due to a robust earnings report from rail giant Union Pacific. The firm, which makes up the top component in IYT at just over 11.7%, saw estimate beating figures in terms of both revenue and earnings for the most recent quarter. Earnings came in at $1.85 a share while revenues were $5.1 billion, handily beating estimates which called for EPS of $1.81 a share on revenues of just under $5 billion. Investors were also impressed that the company saw business volume rise 1% year-over-year, a pretty good increase considering the overall weakness of the economy. Thanks to this earnings beat, the broad transport sector gained, allowing IYT to rise more than the broad markets in Thursday trading [see holdings of IYT here].
One of the biggest losers in the session was the PowerShares Base Metals Fund (DBB) which sank by 3.7% on the day. Today’s losses came as copper continued its recent slide, sinking by close to 5.3% in Thursday trading alone. This bout of selling was largely a result of more worries over European debt issues and the likelihood that an agreement to expand the EFSF will not be reached by this weekend. Should the negotiations go south, it could crush economic activity across the region and leave copper, which is a metal that is very heavily tied to growth, in low standing for the foreseeable future. “Copper tends to lead other markets. If copper prices are starting to begin another leg lower now — nearly 10 percent in just two days — that’s not just a blip on the radar … it is indicative of investors’ concern about the global economy,” said Adam Sarhan, chief executive of New York-based Sarhan Capital. Thanks to this, DBB was sharply lower on the day, but the inclusion of other base metals in the fund helped to temper losses and ensure that trading wasn’t too horrendous for the popular product [see charts of DBB here].
Disclosure: No positions at time of writing.