U.S. stocks finished Wednesday’s choppy session in the red as financials and utilities continued to rally, while tech and health care tumbled on the day. The Dow and the S&P 500 both fell slightly by 0.1% while the Nasdaq had a much tougher session, sinking by 0.4% in comparison, led by losses in Microsoft and Oracle. Meanwhile, in commodity markets, most major resource benchmarks stayed relatively flat on the session as most oil products rose, livestock tumbled, and soft commodities were relatively mixed once again. Precious metals were also flat on the day as well, as gold managed to hang on to the key $1,600 level while silver managed to stay above the $40/oz. mark after losing about eight cents on the day. This choppiness in commodities came after the U.S. dollar weakened against many of its major rivals as the dollar index sank by 0.4%. The heaviest losses were seen against the euro,which gained close to six-tenths of a cent, and the yen, which finished the day trading below the 79 level. Unsurprisingly, traders sold-off medium term U.S. debt, as the 10-Year saw yields rise by five basis points, up to the 2.93% level.
One of the biggest ETF winners on the day was the Vanguard European ETF (VGK) which rose by 1.4% in the session. Today’s gains in the popular fund came on above average volume and were largely due to speculation over EU talks in Brussels. Government officials are meeting in Belgium in order to once again discuss plans to rescue Greece from the clutches of nearly 40% yields on its two-year sovereign debt, a figure that could quickly push the Greek economy into default if not mitigated in some way in the very near future. Many analysts remain optimistic that EU leaders will come to a consensus at the meeting in order to help prevent a contagion from spreading across the region, boosting sentiment for European stocks in today’s trading session. Nevertheless, VGK is still down close to 5.7% over the past two weeks alone, suggesting that further developments regarding Greek bonds could have a large impact on the broader European stock markets in the days ahead as well [see holdings of VGK here].
One of the biggest ETF losers in Wednesday’s session was the PowerShares DB Base Metals Fund (DBB) which sank by 1.2% on the day. Today’s losses came as the entire base metal sector performed poorly on the day as copper, zinc, and aluminum all trended lower in Wednesday trading. These losses were likely a result of worries over the American economic situation as existing home sales failed to match expectations, casting doubt over the health of the important housing industry. Copper prices tend to be heavily impacted by changes in housing demand so further weakness in that market could drag down prices for the red metal. With that being said, the biggest reason for today’s decline in DBB was the weakness in zinc as futures for this metal tumbled by close to 1.4% on the LME during the day, outpacing the less significant losses experienced in the other corners of the industrial metal world. Despite today’s losses, DBB is still up over 6% in the past month and nearly 2.4% in the last week, suggesting that some investors may have been taking profits out of this recently well-performing sector as well [see charts of DBB here].
Disclosure: No positions at time of writing.