Daily ETF Roundup: VXX Falls On Rising Market, DBB Jumps On Copper’s Advance

by on May 25, 2011 | ETFs Mentioned:

U.S. equity markets snapped their three day losing streak in Wednesday’s session as broad gains in the basic materials and technology sectors carried the markets. The Dow finished ahead by 38 points while the S&P 500 gained a similar amount percentage wise, rising by 0.3%. Meanwhile, the Nasdaq, which has been the worst performing of the three over the past few sessions, outperformed both the S&P and the DJIA, gaining 0.6% on the day. Commodities also gained broadly on the day as gold rose by about $2/oz. and oil regained its footing over the $100/bbl. level, finishing up around 1.6%. Other commodity sectors also performed admirably in the session; most softs bounced back from their poor Tuesday performances,led by a 3.3% gain for sugar and a 2.7% jump for cocoa. However, once again silver was the big winner as the white metal finished the day up by 4.6% or just under the $37.8/oz. mark, suggesting that investors are slowing beginning to return to precious metals after the devastating sell-off earlier in the month. 

One of the biggest ETF winners on the day was the PowerShares DB Base Metals Fund (DBB), which gained 2.1% in Wednesday trading. Today’s gains were a result of institutional interest in copper as well as concerns over supply in one of the biggest exporting countries. Goldman Sachs called copper ‘an attractive opportunity’ at current prices, and advised clients to purchase the red metal. ”The comments out of Goldman yesterday are giving people confidence in commodity investment again and copper is steadfastly holding on to that $4 mark,” said Matt Zeman, head of trading at Kingsview Financial. Meanwhile, in Chile, the world’s largest producer of copper, worker protests at the El Teniente mine, which is the world’s largest underground copper mine, could potentially cause a decline in total production. The mine is said to produce roughly 2.5% of total global mining output, so if these protests escalate it could impact the price of the metal and DBB heading forward [see more on DBB's fact sheet].

One of the biggest losers in the ETFdb 60 was the iPath S&P 500 VIX Short-Term Futures ETN (VXX), which declined by 2.8% in the session. Today’s losses came as traders once again embraced risky assets in the market, limiting demand for this ETN representation of the ‘fear index’. Broad gains were had in the basic materials and technology sectors as some of the Street’s biggest names– including Apple and Exxon– posted gains in excess of 0.8% while other blue chips, notably Pfizer and GE, also had strong days as well. As a result, demand for VXX was sharply down in Wednesday trading; less than 17 million shares changed hands on the day, roughly one million less than normal. Thanks to this drop, VXX is now down 3.7% over the past week and close to 4.0% over the past one month period [see more charts of VXX here].

Disclosure: No positions at time of writing.