Daily ETF Roundup: VXX Sinks On Economic Data, VNQ Rises On M&A Activity

by on April 15, 2011 | ETFs Mentioned:

U.S. equity markets rose broadly in Friday trading as strong economic data helped to boost equities across the board. The Dow rose by 57 points in the session while the S&P 500 and the Nasdaq rose more modestly gaining 0.4% and 0.2%, respectively. These gains came largely thanks to dovish Fed comments that suggested that the Fed was unlikely to raise rates in the near future helping to ease the pain of some disappointing earnings reports from Bank of America and Google. Thanks to this speculation over rates, commodity markets also performed strongly with hold gaining more than 1% and oil rising by 1.3% on the day. Other commodities also performed admirably with large gains coming in most of the energy products and some of the soft commodities as well.  

One of the biggest ETF winners on the day was the Vanguard REIT ETF (VNQ) which gained 1.3% to close out the week. This fund was boosted by speculation that rates will remain subdued for the foreseeable future and thanks to some recent M&A activity in the space. ProLogis, a major component of VNQ, announced plans to buy up the remaining shares of ProLogis European Properties. In the offer, PLD offered a 22% premium over the firm’s Thursday closing price or about $1.7 billion. Thanks to this move and speculation over continued low rates, virtually every stock in VNQ was up in Friday trading setting the real estate sector up for a bullish run next week.

One of the biggest losers in the ETFdb 60 during Friday trading was the iPath S&P 500 VIX Short-Term Futures ETN (VXX) which tumbled by 2.3% on the day.  Today’s decline came as traders’ interest in alternative assets declined as demand for risky assets rose in light of solid economic data. Thanks to this, traders sold off their holdings in this representation of the ‘fear index’ instead looking towards precious metals and stocks for their exposure over the weekend. Volume was also up significantly on the product as well, as more than 22 million shares were traded in the session or six million more than average. Thanks to this loss, VXX is now down 3% over the past week and 4% over the past two weeks suggesting that investors are growing increasingly optimistic over the economic recovery  [see more on VXX's fact sheet].

Disclosure: No positions at time of writing.