In what was yet another rocky session for American stocks, bulls ended up winning out in the end as a late session surge carried equities higher. The Dow and the S&P 500 both finished ahead by 1.3% while the Nasdaq saw gains of 0.9% in comparison. Strength was seen in the beaten down financial sector, while good news also permeated the industrial goods and utilities markets as well. Tech and basic materials were more mixed, however, as weakness in demand hurt tech and uncertainty in metal prices dragged down many mining firms on the day. The real story was in the commodity markets as oil traded rangebound and gold slumped, falling by close to $100/oz. at one point before finishing the day lower by about 5.1%, or one of the worst performances in at least three years. Silver also followed gold sharply lower on the day while a variety of softs also saw weakness, leading to a very mixed, but tilted lower, day for commodity products across the board.
Commodity markets were also likely dragged lower by strength in the U.S. dollar, as the dollar index rose to finish the day just above the $74 mark. The biggest moves came against the yen and the pound as the greenback gained 0.3 yen against the Japanese currency and one cent against the British pound. In bond trading, investors did see more inflows out of U.S. Treasury debt, possibly into riskier assets, as the Two Year saw yields move off of their lows and the Ten Year saw a gain of 15 basis points, to a yield of 2.3%.
One of the biggest winners on the day was the Financial Select Sector SPDR (XLF) which surged by 2.6% in Thursday trading. Today’s robust gains came on light volume but helped to soothe some traders’ fears over a collapse in the banking system, at least for the time being. Investors were also glad to hear that Raymond James reiterated its strong buy rating for the embattled Bank of America, keeping its price target of $16. This report helped to boost shares of BAC by over 10% on the day and also pushed fears of a systemic event far lower, helping to send many other banking companies higher as well. In fact, JP Morgan, Citigroup, PNC, and Bank of New York Mellon were all up at least 3% on the session, suggesting broad strength in the sector on the reasonably positive news for Bank of America [see holdings of XLF here].
One of the biggest losers in the ETFdb 60 was the SPDR Gold Trust (GLD) which slumped by 3.4% in today’s trading session. Today’s heavy losses, which came on volume that was nearly three times normal, was the result of large scale profit taking in the precious metals trading community. The move also came after gold recently eclipsed the $1,900/oz. barrier, which further highlighted bubble fears for some investors. “Obviously somebody bought gold close to $1,900 an ounce and they’re probably experiencing some buyers’ remorse today,” said Mark Luschini, chief investment officer at Janey Montgomery Scott. Thanks to these losses, GLD is now up just one percent over the past week, suggesting to many that gold hitting $2,000/oz. may be beyond the metal’s reach for the time being [see charts of GLD here].
Disclosure: No positions at time of writing.