Despite a sinking dollar and a move away from U.S. Treasury bonds, most equities finished the session lower thanks to more poor data and speculation over Friday’s jobs report. The Dow led the way on the downside, falling by 0.3% in the session, compared to a 0.1% loss for the broad S&P 500. Meanwhile, the Nasdaq managed to post a four point gain for Thursday trading as strength in the semiconductor and internet sectors helped to carry the benchmark on the day. Commodity markets were also mixed on the day as many of the riskier soft commodities such as sugar and coffee rose sharply on the day although weakness was seen in the metals department as copper and gold declined marginally and silver fell by over 4% in the session. In the bond markets, Treasurys all but reversed their run-up yesterday as the ten year saw its yields rise by nine basis points and the 2 year note saw a three basis point increase to the 0.46% mark. This came as the U.S. dollar index plunged by 0.7% after Moody’s threatened to cut the U.S. credit rating should the country not be able to get its fiscal house in order in the near future. “Although Moody’s fully expected political wrangling prior to an increase in the statutory debt limit, the degree of entrenchment into conflicting positions has exceeded expectations,” the firm said regarding its concerns over American debt in the near term.
One of the biggest ETF winners on the day was the United States Natural Gas Fund (UNG) which gained 3.5% in Thursday trading. As usual, UNG was extremely active in Thursday’s session thanks to the weekly release of the EIA report which shows the change in stockpiles of the important fuel. The data showed that 84 billion cubic feet were added to supplies or roughly 10 billion cubic feet less than what analysts were predicting. This large miss boosted the price of the fuel to the highest level in four months and the highest settlement price in close to 10 months. The lower addition to the stockpile was largely due to the warm weather across much of the country which forced many Americans to turn their air conditioners on heavily to beat the heat. With many projections assuming that hot weather is here to stay across much of the country for the next two weeks, investors may see similar trends in the weeks ahead, further adding to the current level of bullishness surrounding UNG [see fundamentals of UNG here].
One of the biggest losers in the ETFdb 60 was the Consumer Staples Select Sector SPDR (XLP) a fund that lost 1.2% today and is not normally prone to such large moves in a single session. Today’s losses came thanks to a variety of factors as court cases and an analyst downgrade helped to hit many areas of the important sector. First, analysts at UBS downgraded, from Buy to Neutral, General Mills, one of the world’s largest food companies which caused the stock to sink by nearly 2% on the day. Additionally, tobacco makers plunged as well thanks to news that Altria lost a bid to dismiss a federal government racketeering case from 1999. Thanks to this, Altria, along with Reynolds American, and Lorillard saw weakness in Thursday trading as all three fell by at least 1.3% and were led by a 3.5% plunge by LO. Lastly, traders continued to fret over tomorrow’s key employment report as this could potentially signal how the consumer is holding up in light of the sluggish economic environment. Many anticipate that the number will be quite poor and that consumers will have far less to spend on goods, potentially hurting firms found in XLP in the process [see holdings of XLP here].
Disclosure: No positions at time of writing.