Halloween day was certainly a spooky one for investors, as one of the best months in years ended on a terrible note. The Dow surrendered over 275 points while the S&P 500 was the biggest loser with a near 2.5% decrease. What is perhaps more surprising is that the NASDAQ was the best performing of the three benchmarks; that index tends to underperform by comparison, so its win (by comparison) on the day is certainly a rare one. As for oil, it lost nearly 1%, though it is still holding on for dear life to its $90/barrel price. Finally, gold saw a down day, marking another bizarre performance as the safe haven metal usually exhibits low correlation to equities [see also New At ETFdb: ETF Scorecards Offer In-Depth Analysis And Ranking Of Every ETF].
Now that October is officially in the books, investor have been generally happy with the month. The S&P hasn’t had a month this strong since 1991 (10.8%), and likewise the Dow hasn’t seen such a profitable month since October of 2002 (9.5%). Still, with more worries over the details on the Greek debt deal, the crushing blow of MF Global’s bankruptcy, and with a major speech from the Fed this week, it seems that markets may stay on choppy waters for the time being. October has been infamous for wreaking havoc on stocks, with major crashes in 1929 and 1987, but this month was something of a darling. Hopefully November is able to close out the same way as October [see also 10 Strange But True Facts About The ETF Industry].
One of the biggest ETF winners on the day was the S&P 500 VIX Short-Term Futures ETN (VXX). Though this VIX product has been making headlines for its stunning losses in recent weeks, today saw a complete turn around, as this ETN fed off of market weakness. The 10.6% gains this fund raked in were propelled by the bankruptcy protection file for by MF Global, as well as some apparent holes in the Greek aid deal. MF Global was forced to file after it had taken in considerable losses on bets in made on European debt. The news was so big that some analysts have called it a baby Lehman. But while most equities ran for cover, the dismal day had VXX laughing all the way to the bank [see also ETF Insider: Bad Week To Be A Bear].
One of the biggest ETF losers on the day was the MSCI Japan Index Fund (EWJ), which tracks the performance of the Japanese equity market. “Japan sold the yen for the second time in less than three months after it hit another record high against the dollar” writes Tetsushi Kajimoto. The subsequent movement caused the dollar to soar nearly 4% higher; its best day in nearly three years. What’s worse, Japan’s Finance Minister’s deputy was quoted as speculating that the interventions are not yet over, putting enormous pressure on both this fund and the global economy. EWJ, which has lost 7.8% on the year, gave up 5.8% in today’s trading session [see also For ETF Investors, Currency Exposure Matters (More Than You Might Think)].
Disclosure: No positions at time of writing.