Today started off on a rough note, as more troubles in Europe combined with the still unresolved debt crisis that has only a week left in its timetable. Stocks made a climb during midday to nearly break even, but then tumbled to finish out the day. The Dow lobbed off nearly 200 points while the S&P saw a decrease of 1.7%. Gold exhibited a similar trend to equities as the commodity has been frustratingly correlated as of late; the precious metal finished out the day with losses nearing $10/oz. Finally, the euro saw another dip against the dollar, losing 0.5% and is presenting what many feel is one of the reasons for gold’s lackluster performance [see also Gold And Silver In A Correlation Bubble?].
All eyes have now shifted to the U.S. “Super Committee” that has just days to agree on a massive budget cut that will total somewhere around $1.2 trillion. As we head into the holiday season, the U.S. looks for strong consumption to help boost the slowing economy, but bad news from our government may bring that to halt, as consumers fear the stability of our future. With markets still stuck in their sideways rut, we outline two of the most notable ETF performances on the day [see also Six Noteworthy ETF Innovations].
One of the biggest ETF winners came from the United States Oil Fund (USO), which jumped 2.37%. Though this first generation commodity product often comes under fire for the contango it features on front-month crude futures, today was a different story entirely. Crude oil soared today as it was announced that Canadian firm Enbridge had bought a 50% steak in a major pipeline that moves crude from the Gulf to Cushing, Oklahoma. Enbrige announced that it will be reversing the flow of the pipeline, causing crude to surge. “The surprise announcement means that Canadian oil-sands production would be delivered to the Gulf Coast market, competing more directly with Brent-based barrels, wrote Tim Evans, an oil analyst with Citi Futures Perspective, in a note” writes Claudia Assis. Crude was also helped by a report of lower than expected supplies. Note that USO saw its ADV nearly double to 22.5 million. [see also Free ETF Webinar: The Importance Of Agricultural Commodities].
One of the biggest ETF losers came from the European ETF (VGK). This fund, which features exposure to some of the biggest names across Europe, has been under heavy pressure recently as the euro-zone has been filled with chaos. Today saw the announcement, from U.S. credit rating agency Fitch, that even though “the outlook on the U.S. banking industry is stable, it could worsen if the euro-zone’s debt crisis is not resolved quickly” writes Reuters. The news seems to suggest a lack of confidence in European banks, and while it prompted a sell off in all equities, it hit this fund especially hard. VGK sank 2.1% on the day bringing it to losses of nearly 20% in the last six months [see also How ETF Investors Can Save $415 Million (Without Breaking A Sweat)].
Disclosure: No positions at time of writing.