Daily ETF Roundup: VXX Soars On Shaky Markets, XHB Flails On Housing Outlook

by on August 17, 2011 | Updated August 18, 2011 | ETFs Mentioned:

Wednesday saw markets start off strong, only to finish flat after enduring yet another volatile trading day. Though some positive earnings helped as open the session roughly 1% higher from yesterday’s close, a cautious report mixed with weak numbers from Dell helped turn markets south, forcing the Dow and S&P to finish right where they where upon Tuesday’s close. Dell, however, could not say the same, as their shares lost nearly 10% on the negative guidance. Nicholas Colas, chief marketing strategist at ConvergEx Group noted that “you don’t usually see tech down so sharply while the rest of the market is down less, which shows that the latest earnings have created a lot of concerns.”Despite bad reports from several key firms over the last few weeks, the overall earnings season has been quite strong; of the 94% of S&P companies who have reported, 72% have beat expectations. While this should have led to several prosperous trading weeks, the botched debt deal and S&P downgrade assured that stock markets would be stuck in limbo during a period that had high potential gains. Other notable performances on the day came from oil and gold, both of whom finished slightly up, marking for something of a winning streak for gold [see also Here’s A Wild Idea: The ETF ETF].

One of the biggest ETF winners on the day was the S&P 500 VIX Short-Term Futures ETN (VXX). This ETF has been gaining a lot of attention in recent weeks as investors have sought out the fund as a short-term trade to hedge against down days. In fact, VXX’s one month average volume has increased by nearly 20 million from its trailing three month average. Today’s gains were attributed to not only the issues with corporate earnings but also from more problems in the euro-zone. Both France and Germany made proposals to help out the battered currency bloc, but investors were seemingly unimpressed, as markets all over the world slid on the news. VXX gained a nice 2% on the day [see also Six ETFs Up 45% Or More During The Recent Crisis].

One of the biggest ETF losers on the day was the SPDR Homebuilders ETF (XHB). The loss on the day came from a speech made by President Barack Obama who cautioned that the housing market likely would not rebound for at least a year. Despite better than expected housing starts for July, the data was not enough to move past the foggy outlook from our nation’s leader. “The Commerce Department reported this week that the number of homes under construction is the fewest in 40 years – just 413,000 compared to 1.6 million homes being built a decade ago,” writes Jim Kuhnhenn. XHB dipped by about 1.4% on the day [see also ETF Insider: Beware Of A Dead Cat Bounce].

Disclosure: No positions at time of writing.