Stock markets in the U.S. finished the day mixed as a strong performance from the oil sector helped to buoy the broader indexes ahead of the more concentrated DJIA. Still, both the Nasdaq and the S&P 500 finished the day up by less than 10 points each while the Dow slid by just five, in what was a surprisingly flat session for most of the widely-held portfolio components. Commodities were also mixed in the session as gold rose marginally above the $1,360/oz. mark while oil fell back below the $85/bbl. level, however, the real focus was on the base metals, especially copper. Prices of the red metal surged by close to 10 cents a pound or just about 2.1% as China increased its copper imports for the month of January despite ongoing concerns over a slowdown in the country.
One of the biggest winners in the ETF world was the Energy Select Sector SPDR (XLE) which jumped higher by 2.2% in the session. These robust gains in the energy sector were largely fueled by a bidding war between GE and Halliburton over the well support arm of John Wood Group, General Electric closed the deal by offering to pay $2.8 billion for the unit leading many to believe that a wave of acquisitions was about the begin in the sector. Investor sentiment was also boosted by a series of upgrades in the sector as well; Cameron International benefited from an RBC upgrade while Hercules Offshore saw a similar boost thanks to a ratings boost from Capital One Southcoast. This onslaught of good news in an otherwise uneventful day helped to carry the energy sector higher and beat out virtually all of the other major sectors of the economy in Monday trading [see holdings of XLE here].
One of the biggest losers in the ETFdb 60 today was the iShares S&P National Municipal Bond Fund (MUB) which fell by 1.1% in Monday trading. Today’s losses were the result of continued speculation over the health of state and local budgets which many believe are increasingly at risk. Obama’s budget proposal likely weighed on the muni market as well since he called for the revival of the BAB market, potentially throwing a wrench into the current bond market, especially for states which would be enticed by the 28% subsidy offered in the new iteration of the program. Another possible reason for today’s losses was the increasingly tense situation in Wisconsin where a showdown is looming between public unions and the governor over the current state of the budget. The current governor, Scott Walker, said that he would put an end to collective bargaining rights for the vast majority of public employees. “Make no mistake about it, war has been declared on unions in Wisconsin,” said Teamsters representative Danny McGowan. “The attack on public sector bargaining is viewed as an attack on labor, no matter what the sector.” Thanks to the immense hostility to these cuts, the situation is not looking good for even more indebted states such as Illinois and California, putting extra pressure on an already strained market [see more charts of MUB here]
Disclosure: No positions at time of writing.