Although stocks rallied in mid-day trading, they couldn’t hang on to the surge and fell back towards breakeven to close out Tuesday’s session. The Dow managed to finish up by 0.1% but the broader indexes were not so lucky as the S&P 500 fell by 0.2% and the Nasdaq sank by 0.9%. Utilities and health care led on the upside while basic materials, some large cap tech, and a few big name financials led the way on the downside. In terms of commodities, the headline products of gold and oil both finished the day higher as gold rose by about 1.5% and oil gained about 55 cents a barrel or 0.6%. Other natural resources, namely the softs and most of the energy group, also trended higher although some grains and industrial metals led on the downside.
In currency markets, the dollar weakened slightly ahead of tomorrow’s key Fed decision, falling further against the yen and trading relatively range bound against both the pound and the euro. Meanwhile, in commodity currencies, the dollar rose against the loonie but fell back against the Aussie dollar as that currency now buys about $1.02 in American greenbacks. Treasury bonds were more flat on the day as most traders kept on the sidelines, preferring to wait for Bernanke’s decision tommorow on a variety of Fed programs before buying or selling bonds, keeping yields unchanged for Tuesday trading across much of the curve.
One of the biggest ETF winners on the day was the Market Vectors Gold Miners ETF (GDX) which soared higher by 3.4% in Tuesday trading. Today’s surge came as gold once again crossed the key $1,800 mark and investors sought to position themselves ahead of the possible announcement of more easing measures tomorrow by the Fed. In the FOMC decision, some are looking for more QE or other stimulative measures that could help boost the economy, but would likely be a dollar negative as well. Thanks to this sentiment, demand for gold and gold mining firms was high on the day as GDX traded on above average volume and added to its recent gains, moving the fund up to a 7.1% gain over the past month [see charts of GDX here].
One of the biggest losers in the ETFdb 60 was the PowerShares WilderHill Clean Energy Portfolio (PBW) which sank by 3.2% on the day. Today’s losses came thanks to more speculation that significant troubles were ahead for the solar power industry and that the current environment was likely to cripple profits going forward. A research report from Credit Suisse suggested today that the solar power industry is in a period of ‘siginificant’ oversupply, adding that “New polysilicon capacity in the fourth-quarter 2011 is likely to put further downward pressure on pricing across the value chain.” Thanks to this, the large solar component of PBW dragged this fund sharply lower on the day as top components like First Solar, Trina Solar, and JA Solar were all down more than 5% on the day with Trina falling by double digits in the session [see more holdings of PBW here].
Disclosure: Long PBW.