Although equity markets tumbled to start Thursday’s session, they soon rebounded to finish the day in the green across the board as rising oil prices allowed the energy sector to carry the broad markets to gains. The Dow and Nasdaq both rose by 0.2% while the broad S&P 500 gained 0.3% on the day thanks to robust performances from some of the smaller oil equipment and drilling firms. Meanwhile, commodity markets also gained on the day as gold hit its highest level in more than a month and oil gained close to $1.5/bbl. to finish just under the $86.5 mark. A number of other commodities also saw impressive trading days as well; corn and cotton both surged by more than 3% while coffee, wheat, and soybeans finished ahead by more than 2.5% as well.
The main economic news in Thursday’s session came from government reports which showed that the economic situation may be running into some headwinds. First, the CPI rose by 0.4% in January thanks to surging oil and food prices which pushed the index markedly higher to start the year. However, the ‘core’ CPI showed an increase of just 0.2% putting the year-over-year figure for core CPI at just 1.0%. Meanwhile, investors also honed in on a report from the Labor Department regarding first-time applications for jobless benefits as well. The report showed that the total number of applicants rose by 25,000 to 410,000 last week suggesting that the jobs market is still a very rough one for many individuals. Nevertheless, equity markets managed to post gains on the day thanks to surging commodity prices which helped to boost the many resource-focused companies that comprise the major indexes.
One of the biggest winners on the day was the PowerShares DB Agriculture Fund (DBA) which rose by 1.8% in the session. Today’s gains were the result of robust performances in a variety of the soft and grain sectors in the commodity world which helped to propel DBA sharply higher on the day. Among the biggest gainers were corn, coffee, soybeans, and sugar, all of which make up at least 10% of the fund. Today’s gains continue the solid performance of DBA which has now gained close to 9% so far in 2011 and has surged by 23.7% over the past quarter [see more charts of DBA here].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which sank by 1.9% in Thursday trading. This decline was the result of the EIA’s weekly storage report in which stockpiles of the popular heating fuel declined by 233 billion cubic feet, slightly below estimates of a 234 bcf decline. The decline was “in line with market expectations,” said Tim Evans, an analyst with Citi Futures Perspective. The lack of a surprise “was enough to keep the market pointed lower and focused, at least for now, on current warmer than normal temperatures.” As a result natural gas declined to its lowest level since November and helped to push UNG down 13.2% on the year [see fundamentals of UNG here].
Disclosure: No positions at time of writing.