Today saw another market rally as investors grew more and more hopeful that there will be some sort of detailed plan from the European nations by the end of the day. Talks had been seemingly deadlocked and overly delayed, causing a bit of panic in equities yesterday. Today saw major steps by countries like Germany to put forth strong proposals, spurning investor confidence that the crisis will be yet again adverted. The final and detailed agreement will have to come on part of all 17 countries involved and once the deal is reached, many think that it will be good for markets to get this battered region out of the media. “If Europe is out of the headlines, we think the global economies are doing okay,” says David Katz of Matrix Asset Advisers [see also Hedge Market Exposure With These Innovative ETNs].
The day saw the Dow tack on over 160 points with the S&P 500 popping over 1%. Gold continued its nice jump from yesterday as the precious metal closed out the day around $1,723/oz., marking a 1.4% gain. Oil, which has been in the news recently for performing very well, turned in a poor day, as crude dipped by more than 2.6%. This was likely expected though, as crude’s strong performance in recent days may have made it a prime candidate for correction in the markets. Regardless, the vital energy source was able to hold on to the $90/barrel mark to close out the day [see also ETF Insider: Bulls In Drivers Seat].
One of the biggest ETF winners from Wednesday’s market was the Vanguard European ETF (VGK), which was able to post gains of 1.84%. This product is composed of the biggest companies across Europe, including Nestle, Vodafone, and Total SA. The news that Europe’s heavy-hitters will back an aid package was key in VGK’s performance on the day. While the exact details of the aid are still to be determined, it appears that it will be a significant bailout of sorts and should help keep the region afloat for a while longer. VGK has lost 7.9% on the year while paying out a healthy dividend yield that eclipses 5% [see also Time To Take A Closer Look At The Irish ETF?].
One of the biggest ETF losers on the day was the S&P 500 VIX Short-Term Futures ETN (VXX) as volatility products have struggled with the recent strength among general equities. Though VXX dipped 4% today, its trading volume was minimal at just 17.3 million—just 40% of its average volume over the last three months. Though VXX posted yet another losing day, the fund is still up over 16% on the year, illustrating the extreme dip that markets took towards the end of Q3 [see more on VXX's fact sheet here].
Disclosure: No positions at time of writing.