Investors were spooked today by more bad news from Europe as the ECB made an unexpected move. Almost every major asset class took a nosedive on the day as traders feel that Friday’s European summit will not bring the good news that many had been hoping for. The DOW lobbed off nearly 200 points and closed below 12,000 after a nice rallying period to start the month. The S&P 500 lost grip on the 1,240 mark that many hoped would act as a resistance level; the index dropped over 2.1% for the total session. Though it was a choppy day for gold, the precious metal was finally able to break its correlation rut and feature a small jump on the day. But the hardest hit, no doubt, was crude oil, as the commodity lost 2.5% and finished at $98/barrel [see also 25 Ways To Invest In Crude Oil].
December has historically been the best month for the S&P and this is especially true in years when November was weak, like 2011, but if Friday turns out to be a disaster, markets may not be able to continue their “Santa rally”. Luckily, the ETF world remained active today to keep investors occupied on something other than the dismal markets. Today saw a first to market product with the FTSE Greece 20 ETF (GREK), which will feature exposure to Greek equities. Though this will present an extremely dangerous play, the high volatility that this ETF will offer will make for an enticing opportunity for active traders. With that, the exchange traded fund industry is now home to over 1,400 innovative products to help investors make the best allocations for their individual strategies. In an effort to help readers make more informed decisions, we outline two of the most notable ETF performances on the day [see also Global X Debuts First Greece ETF (GREK)].
One of the biggest ETF winners from Thursday’s session came from the S&P 500 VIX Short-Term Futures ETN (VXX), which gained 4.7%. The VIX product preyed on weak markets as the European Central Bank made a surprising move to cut rates by 0.25% and offer banks unlimited cash for three years. This got investors spooked that Europe was headed down the same path as the U.S. and could lead to printing euros to try and boost the economy; something that has a number of experts worried. “For every stock on the rise more than half a dozen fell on the New York Stock Exchange, where just over 510 million shares had traded as of 2:55 p.m. Eastern” as the news wreaked havoc on global equities writes Kate Gibson [see also 2011: A Year Of ETF Firsts].
One of the biggest ETF losers was the European ETF (VGK), which saw its price drop by 3.8%. With what some are calling the biggest moment in the history of the euro occurring tomorrow, this fund will be under enormous pressure. Its massive losses on the day obviously stemmed from the ECB’s most recent move, but also on investor speculation that European leaders will simply fail to get the job done. Though some have urged that failure is not an option, we will all be forced to anxiously wait and see how tomorrow plays out, as it will likely set the tone for the close of 2011 [see also Euro Free Europe Portfolio Now Available].
Disclosure: No positions at time of writing.