Equity indexes were fairly flat on Tuesday, oscillating between small gains and losses throughout much of the day, with the bears coming out on top as the trading session drew to a close. The Dow Jones Industrial Average led the way lower on Wall Street, sinking 0.46% on the day, while the NASDAQ proved to be the most resilient of the domestic equity indexes, managing to shed just 0.07% on the day. Gold and oil both climbed higher for the day as investors jumped ship from equities into commodities. Crude oil closed just under $98 a barrel, while futures prices for the precious yellow metal settled near $1,700 an ounce for the day.
Ongoing Euro zone debt woes, bolstered by rising yields on Italian, Spanish, and French bonds, coupled with a worse-than-expected third quarter U.S. GDP revision, paved the way for a very choppy trading session. Investor sentiment on the home front swung from fearful to optimistic; stocks sank after GDP growth came in at 2% versus the expected 2.5%, although equity indexes briefly jumped into positive territory after the Fed revealed their intentions for another round of stimulus [see Financial ETF Roundup: Ex-U.S. Edition].
One of the best performers today was the State Street SPDR Gold Trust (GLD), clinching a solid 1.11% gain on the day. Gold prices bounced back from yesterday’s sell-off as resurfacing inflation fears, bolstered by hints of an upcoming round of stimulus in the U.S., paved the way higher for safe haven assets. Gold has been highly correlated with equity markets over the past few months, although today’s divergence in performance showcased that the precious metal can still serve as a valuable inflation-defense tool [see How ETF Investors Can Save $415 Million]. GLD is up close to 20% from a year-to-date perspective.
Amidst the range-bound trading, investor worries over the health of the domestic economic recovery surprisingly eased up a bit, seeing as how the S&P 500 VIX Short-Term Futures ETN (VXX) was one of the worst performers, slipping lower by 2.36% on the day. Although the U.S. and Euro zone debt drama is far from over, today’s drop in the VIX “Fear” Index suggests that investor expectations for the future may be slowly turning from gloomy to hopeful [see Volatility ETPs: Where Are The Critics Now?].
Disclosure: No positions at time of writing.