Although markets plunged to start Thursday trading, thanks to a surprise report from the IEA and further weakness in the job market, investors bought up securities in the final few hours of the session on reports of a Greek bailout, pushing stocks well off their lows for the day. The Dow, which at one point was at 11,875, finished down just 60 points at the 12,050 mark while the S&P 500 lost just 0.3% on the day in comparison. Meanwhile, the Nasdaq managed to surge on the day, gaining close to 0.7% on the back of a 2.6% gain for tech giant Apple. Unfortunately, things were much worse for commodity investors as gold sank by close to 2% and oil plunged by nearly $3.6/bbl. thanks to a release of nearly 60 million barrels of oil from strategic reserves around the world. Other commodities also finished the day down although none experienced the bloodbath that was seen in oil trading, as most softs finished down about 1.2%, with the exception of coffee and sugar which managed to post gains on the day. Given the weakness in commodities, it shouldn’t be a surprise to many seasoned investors to see that the U.S. dollar index was up on the day, gaining close to 0.4% on strength against the commodity currencies. T-Bills also saw continued inflows in this environment as the 10-year fell five basis points and the two year finished the day yielding just 0.36%, within striking distance of its all-time low.
One of the biggest ETF winners on the day was the SPDR S&P Homebuilders ETF (XHB) which gained 1.2% in Thursday trading. Today’s gains came as the new homes sales report was released for the month of May, showing investors the number of newly built homes that had a committed sale during the month. Analysts had expected the seasonally-adjusted number to be about 305,000 but came in at 319,000, well above expectations. While this represents a modest 2.1% drop from the previous reading, investors bought up homebuilders and related companies on this better-than-expected number. Despite the beat and today’s gains for XHB, the outlook still looks relatively bleak for the housing market as a whole. “It looks like they beat expectations. Existing home sales also came in slightly above expectations.” said Alex Hoder, Economic Analyst at FTN Financial. “But the bottom line is, they’re in a really low, really tight range and these month to month changes don’t matter much.” [see more on XHB's fact sheet]
One of the biggest losers in the ETFdb 60 was the PowerShares DB Commodity Index Fund (DBC) which lost 2.1% on the day. Today’s losses in this popular commodity fund came as the IEA surprised markets by announcing a nearly 60 million barrel input of oil from strategic reserves around the world. The move, which amounts to two million barrels over the next thirty days, is in direct response to the Libyan crisis, according to IEA officals, as close to 132 million barrels of supply has already been lost from that region since the turmoil began earlier this year. “The situation is getting tighter and tighter” said Nobuo Tanaka, the IEA’s executive director, “We are very much convinced that if we don’t act the price spike could happen.” As a result, oil futures, as well as related crude-based products, fell across the board in Thursday trading. WTI sank by 3.8%, heating oil tumbled by 4.8% and Brent plunged by 5.4% in the session. Oil products make up close to 55% of DBC’s total holdings so this steep drop had a huge impact on the fund throughout the day [see more on DBC's fact sheet].
Disclosure: No positions at time of writing.