U.S. equity markets managed to rise modestly in Thursday trading despite continued worries over the situation in Egypt thanks to solid data in the consumer discretionary sector. The broad S&P 500 led the way on the upside with a gain of just over 0.2% while the Nasdaq and Dow were not far behind in the session. Commodity markets continued their recent stretch of volatility as oil sank more than $1.4/bbl in the early part of the session before regaining most of those losses as finishing the day down just 14 cents. Meanwhile, gold surged higher thanks to testimony from Bernanke and an ECB meeting in Frankfurt which left many thinking that the easy monetary policies will continue for the foreseeable future. Equity markets were also boosted by solid data on the unemployment front in which the government reported that applications for first time jobless benefits declined by 42,000 to 415,000, a figure that helped to ease many concerns after last week’s unexpected rise in claims. As a result, many analysts are looking for a solid number out of the crucial jobs report tomorrow. “We had some good economic data here in the U.S., we might actually have a pretty good payroll number tomorrow,” said Judy Moses, a partner and portfolio manager at Evercore Wealth Management. Nevertheless, continued rioting in Egypt, and now Yemen as well, weighed on investor sentiment and likely kept the markets from breaking out later in the session and allowed Brent crude to stay above the $101/bbl. mark.
One of the biggest ETF gainers on the day was the Market Vectors Gold Miners ETF (GDX) which rose by 2.7% in Thursday trading. Today’s gains were largely due to the dramatic turnaround in the sentiment for gold as the precious metal gained 1.7% in the session. This reversal came thanks to continued concern over the health of the economy and comments from Fed Chair Ben Bernanke which suggested that the economy still needs the Fed’s help in order to sustain itself. “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established” he said. This announcement caused an immediate spike in the price of gold and kept prices elevated throughout the trading session. This increased demand for the ultimate inflation hedge, and as a result, boosted demand for gold miners as well [see more information on GDX's fact sheet].
One of the biggest losers in the ETFdb 60 was the United States Natural Gas Fund (UNG) which fell by 1.7% on the day. These losses came after the weekly EIA report on stockpiles of natural gas disappointed investors, prompting a sell-off in the popular heating fuel. Although supplies of natural gas shrank by 189bcf this was simply not enough to eat into the massive supply overhang that continues to plague the market. Some had called for a drawdown of over 200bcf given the extreme weather across much of the country but these expectations were quickly proven to be too optimistic, leading to another sell off in the natural gas market. “We could have expected higher withdrawal rates given how cold it has been,” said Chris Kostas, a senior analyst with Energy Security Analysis Inc. “The market is not concerned” that supply draws will reduce inventories to the point where scarcity becomes an issue, he said. Shares of UNG are now down 3.3% over the past week, an incredible loss considering the high demand for the fuel given the record blizzard that hit a great deal of the country [see charts of UNG here].
Disclosure: No positions at time of writing.