U.S. equity markets continued their recent slide as higher oil prices and tensions in Libya continued to weigh on stocks. The Dow fell by more than 100 points on the day while the S&P 500 slid by 0.6% and the tech-heavy Nasdaq slumped by 1.2% in the session as strong performances in a number of oil names allowed the S&P and the DJIA to outperform the Nasdaq. Meanwhile, in commodity markets, Tuesday’s trend carried over into Wednesday trading as gold and oil continued their march higher while a host of other commodities– specifically grains and softs– continued their retreat.
The biggest focus of the market was once again on North Africa where mass protests continued against the autocratic Libyan regime. Many reports cite that over 300 people have been killed so far with no end in sight to the strife on the streets of Tripoli. “We’re at a point where the market is concerned over this series of dominoes in the Middle East and wonders if there’s another country that’s next to fall,” said David Katz, a portfolio strategist for Weiser Capital Management. Technology shares also plummeted thanks to a weak report from Hewlett-Packard which caused shares of the tech giant to slide by more than 10% on the day. The gloomy outlook from the company also helped to drag down a number of other technology names and was one of the main reasons for the Nasdaq’s underperformance in today’s session.
One of the biggest ETF winners on the day was the PowerShares DB Commodity Index Fund (DBC) which surged by 2.2%. Today’s sharp gains for DBC came thanks to the fund’s heavy holdings in energy commodities; light crude, Brent crude, heating oil, and RBOB gasoline which combine to make up 50% of the fund’s total holdings. All four commodities posted strong gains in Wednesday’s session as Brent crude and RBOB gas lead the way on the upside rising by, respectively, 6.1% and 5.3%. These moves were largely the result of continued turmoil in Libya, a major exporter of crude, and concerns over that nation’s supply as well as similar situations starting elsewhere in the Middle East [see more on DBC's fact sheet].
One of the biggest losers in the ETFdb 60 was the iShares Dow Jones Transportation Average Index Fund (IYT) which sank by 2% in Wednesday trading. Many of this fund’s top components, such as UPS and FedEx, were hurt by sharply higher gas prices and fears over an economic slowdown stemming from the Middle East crisis. The two major railroad operators in the fund were both down by 1.9% in the session while UPS sank by 1.5%. However, the heaviest losses came from FedEx which saw a 4.3% decline in Wednesday’s trading session, among the worst 10% in the S&P 500 [see holdings of IYT here].
Disclosure: No positions at time of writing.