Daily ETF Roundup: VXX Sinks On Flat Market, VNQ Rises On Strength In Home Sales

by on April 25, 2011 | ETFs Mentioned:

U.S. equity markets kicked off the week on a mixed note as a few companies gave their earnings reports and other traders focused in on the dynamic commodity market for guidance. The Dow and the S&P 500 both finished the day down by 0.2% while the tech-heavy Nasdaq managed to gain on the session, posting a 0.2% jump thanks to a strong performance out of chip maker Intel. In commodity markets, most major indexes were higher on the day as strength in the soft and precious metal sectors outweighed weakness in the copper and energy markets. Once again, traders continued to pile into precious metals for safe havens although T-Bills also saw some inflows which helped to push yields down across the maturity spectrum in Monday’s session.

One of the biggest gainers on the day was the Vanguard REIT ETF (VNQ) which rose by a modest 0.7% in the session. Today’s gains, which more than outpaced the overall market, came as investors cheered data that showed a reasonable increase in sales of new homes. For the month ago period, the market showed a seasonally adjusted annual rate of 250,000 while analysts had forecast 280,000 for the March data. However, figures came in at the high end of estimates at 300,000 while the median price rose 2.9%. Both of these figures suggest that the housing market may be improving slightly while the extra sales are helping to eat into the largely oversupplied market. As a result, most U.S. REITs rose on the news with some of the top components of the fund rising by as much as 1.3% in Monday trading on this bout of optimism in the sector [see holdings of VNQ here].

One of the biggest losers in the ETFdb 60 was the iPath S&P 500 VIX Short-Term Futures ETN (VXX) which tumbled by 2.3% to start the week. Today’s losses came on very light volume for the otherwise popular fund as only 11.2 million shares traded hands, a far cry from the ususal 16.6 million that the product averages. Additionally, the S&P was trading so flat on the day that most traders saw no need to buy up protection in the ‘fear index’ further curtailing demand for the fund. In fact, the S&P 500 traded within a seven point range on the day and finished the session down just two points, hardly ideal conditions for a round of fearful purchases of VXX [see more fundamentals of VXX].

Disclosure: No positions at time of writing.