U.S. equity markets surged higher to slash into the severe losses from earlier in the week as good news from Intel and Boeing helped to relieve some of the pressure and send shares soaring higher. The Dow rose by 62 points on the day while the S&P 500 and the Nasdaq boosted more robust gains of, respectively, 1.1% and 1.6% as weakness in ExxonMobil and Johnson & Johnson dragged down the performance of the DJIA. Commodity markets also rebounded across the board as soft and grain markets saw large price increases as well. Cotton, corn, soybeans, and wheat all saw their prices rise by over 3.5% while more safe haven oriented commodities such as gold and silver declined to close out the week.
One of the biggest ETF winners on the day was the United States Natural Gas Fund (UNG) which surged higher by 3.5% in Friday trading. Today’s gains were largely attributed to traders buying up beaten down contracts in hopes that demand would increase thanks to such low prices. “The market declined yesterday into the expiration of the March contract,” said Stephen Schork, president of Schork Group Inc., a consulting company in Villanova, Pennsylvania. “Gas down at the $3.80 range is an attractive level. I would look for a retrace back up to the $4.20 area.” However, unfortunately for those bullish on natural gas, we are now approaching that awkward time of the year in March and April when it is too warm to use heavy amounts of gas for heating and still far too cold for much of the country to turn on their air conditioners. If this situation comes to pass it could keep natural gas prices depressed for at least the next several months baring any disruptions in supplies or a sharp cold snap [see fundamentals of UNG here].
One of the biggest losers in the ETFdb 60 was the iPath S&P 500 VIX Short-Term Futures ETN (VXX) which declined by 6.4% in today’s session. Today’s sharp losses came as traders sold off this ‘fear index’ as tensions cooled in the Middle East and many became satisfied that the protests would not spread to other important oil producing countries like Saudi Arabia. Even taking today’s losses into account VXX has been on a pretty remarkable run as of late gaining 18.1% over the past two weeks and 9.5% in the last week. However, if today’s sentiment holds over the weekend, these gains could quickly be erased, especially if oil slides back down to a more comfortable level to start March trading [see technicals of VXX here].
Disclosure: No positions at time of writing.