Although U.S. equity markets started the day on a high note, they soon fell back into the red on continued anxiety over both North Africa and Japan. The Dow finished lower by just 18 points while the S&P 500 and the Nasdaq posted slightly heavier losses of 0.3% and 0.4%, respectively. Financial and service companies were among the biggest losers, although losses were pretty widespread throughout the session with only the basic materials sector emerging relatively unscathed from the turmoil. “The fear trade is back,” said David Pankiw, partner at Cubic Financial Advisors. “There is a lot of doubt in the market and global situation.” Commodity markets, on the other hand, were more mixed, as gold finished the day flat but oil resumed its ascent higher and climbed by $1.8/bbl. to finish just below the $105 mark. Other commodities finished the day in positive territory as well, as silver finished ahead by more than 1% and most livestock and agricultural commodities managed to post solid gains for the session.
One of the biggest losers on the day was the iShares Dow Jones Transportation Index Fund (IYT), which sank by 1.4% in Tuesday’s session. Today’s losses were largely the result of the spike in crude oil, as the precious commodity is now trading close to $105/bbl. As a result, many of the package delivery firms and air freight companies were among the hardest hit in this fund during today’s session as EXPD and CHRW both lost more than 2.5% on the day, leading the declining names of IYT. The only thing that saved the fund from more significant losses on the day was IYT’s heavy allocation to railroad companies, which emerged relatively unscathed from the oil spike. In fact, CSX, a top five component of IYT making up nearly 8% of total assets, was up slightly on the day. This performance along with several other railroad companies helped to moderate IYT’s losses heading into Wednesday trading [see holdings of IYT here].
One of the biggest winners in the ETFdb 60 was the United States Natural Gas Fund (UNG), which rose by 2.3% on the day. Today’s gains were largely the result of speculation over a colder forecast in the near future which could be good news for natural gas consumption in many of the nation’s largest gas consuming markets. Predictions now call for lower-than-average temperatures across much of the Midwest and the Northeast which could help boost prices heading into April. However, all analysts are not as optimistic that this will result in a long-term trend higher. “One last shot of cold air moving into the Northeast at the end of this week is giving support to the market,” James R. Crandell, an analyst with Barclays Capital in New York, said in a note to clients today. “Regardless, the cold will be ‘too little, too late’ to significantly alter end-of-season inventories.” Nonetheless, UNG has been on a nice run as of late, surging by more than 9% over the past week alone thanks to supply drawdowns and speculation over colder temperatures across much of the nation [see fundamentals of UNG here].
Disclosure: No positions at time of writing.