Markets faced a brutal start to the week as the world decided that the recent euro deal was only prolonging the inevitable and not taking a step in the right direction. The Dow sank 162 points while the S&P 500 lost 1.5%, the most of any major index. 10 year bond prices surrendered just over 2% while oil sank down to $98/barrel, creating an interesting buying opportunity for the fossil fuel. By far the worst performer on the day came from gold, which saw its price sink by nearly $50/oz. or 2.9%. Despite today’s crushing blow, gold is still one of the best performing assets on the year, but with euro fears keeping the precious metal on the chopping block, the latter trading sessions of the year could spell trouble for the commodity [see also Three Reasons Why Gold Is Overvalued].
Another big hit on the day came from Intel, the world’s largest chipmaker. After summer floods in Thailand disrupted hard disk drive supply, talks between HP and Dell have led to Intel slashing its fourth quarter earnings to “$13.7 billion, plus or minus $300 million, down from its prior forecast of $14.7 billion, plus or minus $500 million, in revenue” writes Marketwatch. Though the company sees production picking back up in the first half of the year, the stock suffered a 4% loss on the day as investors are fearful for the future of the company. In an effort to keep investors up to date on today’s hectic markets, we outline two of the most notable ETF performances on the day [see also When Structure Matters: ETF, ETN, Or Other?].
One of the biggest ETF winners from Monday’s session was the DB USD Index Bullish (UUP) which is designed to reflect the performance of the U.S. greenback. “The dollar surged to its highest in more than two months versus the euro on Monday, bolstered by renewed concerns that European officials have only kicked the can down the road in fending off a simmering sovereign debt crisis” writes RTT News. Most of the issues stem from the U.K. outright waiving the deal, concerning many that a collective agreement was not reached. With the euro drowning, this ETF gained 1% during today’s session [see also ETF Insider: Stay On The Defense].
One of the biggest ETF losers on the day came from the European ETF (VGK), which lost 3.9% on the day. Today’s losses put VGK down about 14% for the year, as the past few weeks have put the fund under an enormous pressure. Along with the U.K. refusal to sign the deal, the second outstanding issue for the nation-bloc comes from a “delayed reaction from European Central Bank chief Mario Draghi’s comments Thursday that there will be no ECB bond-buying of the toxic southern European debt” writes CNBC. Despite a nice rally over the last few weeks of November, it seems that VGK is destined to finish out the year on a low note as Europe keeps its stranglehold on the global economy [see also Euro Free Europe Portfolio Now Available].
Disclosure: No positions at time of writing.