U.S. equity markets oscillated between gains and losses for much of the day before finally finishing the day modestly in the green. Good news on the employment front combined with a robust IPO from internet firm LinkedIn to balance out an exceptionally poor reading from the Philadelphia Fed as well as weak home sales, helping to push the Dow up 45 points, the S&P 500 up three, and the Nasdaq up eight in Thursday trading. Commodities, however, did experience some weakness as gold fell two dollars an ounce and oil sank by 1.7% down below the $98.5/bbl. level. Soft commodities didn’t fare any better as sugar fell by 4.5%, cotton tumbled by 2.6% and coffee also sank by more than 2.3% on the day as well. Metals also dropped back despite a weakened U.S. dollar; the greenback fell by 0.35% in the U.S. dollar index today, finishing just above the $75 mark. Nevertheless, traders did continue to buy up U.S. Treasury bonds as both the ten year and the two year notes saw their yields decline a couple of basis points in Thursday trading.
One of the biggest winners in the ETFdb 60 was the iShares Dow Jones Transportation Index Fund (IYT) which rose by 1.1% on the day. Today’s gains largely came thanks to continued weakness in the price of oil since crude is often a major input costs for firms in this industry. Crude’s decline was a result of still high jobless claims which remained above the key 400,000 mark, as well as a sharper-than-expected contraction in Japan’s GDP as the country’s economy shrank at a 3.7% annualized rate. This news brought up concerns over demand for the crucial fuel, helping to drive the price well below the psychologically important $100 mark. As a result, companies such as FedEx, UPS, and Alexander & Baldwin–all three of which are in IYT’s top ten holdings– all gained more than 1% on the day, helping to send this important sector of our economy to a solid performance in Thursday trading [see holdings of IYT here].
One of the biggest losers on the day was the United States Natural Gas Fund (UNG) which sank by 2.4% in Thursday trading. Today’s losses came after the EIA released its weekly storage report which showed the largest weekly gain so far this year for the fuel. Gas stockpiles rose by 92bcf last week, three billion cubic feet above analyst expectations, helping to further saturate an already weak natural gas market. Supplies are now expected to reach about 3.9tcf at the end of the injection season in October, surpassing last year’s record supply of 3.84tcf. This could cap the price on UNG for the foreseeable future, especially if moderate weather continues across much of the Midwest and Northeast regions of the United States allowing large stockpiles to build before the summer cooling season begins [see charts of UNG here].
Disclosure: No positions at time of writing.