Although U.S. stocks experienced a rough start to trading, then soon recovered and finished the day with decent gains. The Dow finished the day up 66 points to close just below the 12,700 mark while the S&P 500 and the Nasdaq gained 0.5% and 0.6%, respectively. Most commodities also rebounded on the day as gold managed to finish the day slightly above even while oil futures added 0.7% as well. Soft commodities were more mixed as corn, coffee, and soybeans all rebounded but wheat, cotton, and cocoa all continued their recent weakness to slump during Thursday trading as well. This came as the U.S. dollar index fell by about 0.1% on the day, ending the recent run-up of the greenback against most of the world’s major currencies. Thanks to this small level of dollar selling, traders did sell off some of their positions in T-Bills as yields rose across most maturity levels and the benchmark 10 year note finished yielding 3.23% in Thursday trading.
One of the biggest winners in the ETFdb 60 was the PowerShares DB Base Metals ETF (DBB) which rose by 1.5% in the session. Today’s gains in DBB were largely fueled by a much needed bounce in copper prices as the red metal rose by about 1.5% on the day. “We had a pretty sharp sell-off yesterday but we held above $3.90, so we didn’t see prices tumble as much as expected and that may have shaken the resolve of some shorts out there,” said Rob Kurzatkowski, senior commodity analyst at optionsXpress. Thanks to this reversal, DBB managed to beat out all other funds in the ETFdb 60 in terms of gains on the day. However, it should be noted that the fund is still down 5.4% so far in 2011 and continued concerns over demand out of China could cap this fund through the rest of May [see charts of DBB here].
One of the biggest losers in the ETF world was the iPath S&P 500 VIX Short-Term Futures ETN (VXX) which declined by just 0.9% on the day. Today’s losses came as markets rebounded broadly in the second half of Thursday trading, limiting demand for this ETN representation of the ‘fear index’. The main catalyst for this change was the declining dollar which once again spurred investors into risky assets such as commodities and equities and out of products like VXX. The ETN also experienced higher-than-average volume on the day as more than 20 million shares changed hands or roughly three million more than usual. Thanks to this, VXX is now down 5.3% over the past week and has lost 17.9% over the past month period suggesting that despite some large moves in the market, overall volatility has been on a downward path [see holdings of VXX here].
Disclosure: no positions at time of writing.