Markets got off to a rocky start as unfavorable news from Europe put a damper on the day from the beginning. Though major indexes started off down about 1%, both the Dow and S&P were able to go positive on the day, just barely finishing above level. 10 year bonds took the biggest hit on the day, losing over 3.6% as investor confidence was shaken by even the thought of an unproductive European summit later this week. The precious metal gold was finally able to post a winning day, as options activity soared early based on the euro speculations. Finally, oil saw another tough day, as the fossil fuel was unable to escape investor concern for the future [see also Euro Free Europe Portfolio Now Available].
The past few days have been quite active for the ETF world as issuers are scrambling to launch their products before the year end, thereby giving them a full calendar year in 2012. This year has already been the busiest ever for the exchange traded industry as we are now over 1,400 products with more than 300 of those coming in the last 12 months. As we head down the final stretch of the year, be sure to keep an eye out for the new product rush. Below, we outline two of the most notable ETF performances on the day [see also 2011: A Year Of ETF Firsts].
One of the biggest ETF winners on the day came from the S&P 500 VIX Short-Term Futures ETN (VXX), which gained 2.9% in Wednesday’s session. The fund was propelled by uneasy trading as investors digested the news that this Friday’s euro zone summit may not go according to plan. Though traders had initially been optimistic about an agreement by the end of the week, “hopes were dimmed when a German official cast doubt on any agreement for a far-reaching deal at the summit” writes Associated Press. With Germany being arguably the biggest superpower on the continent, this news came as quite a disappointment to a number of investors around the world, sending VXX through the roof [see also ETF Insider: Volatility Is Still Lurking].
One of the biggest ETF losers on the day was none other than the United States Natural Gas Fund LP (UNG), which has been one of the worst performing ETFs to date. UNG saw losses of 1.7% today based on more inventory woes, as the commodity cannot seem to escape its rut that the nation’s mild weather has put it in. Tomorrow will feature the weekly EIA natural gas inventory report, which is expected to show a stockpile drop of 11 billion cubic feet, 55 bcf lower than the annual average. Investors quickly sold off their UNG position in order to avoid more losses tomorrow. Note that the report will have a heavy impact on UNG’s performance no matter which way it turns out, so for investors who hold on to this ETF, it is best to keep an eye out for the weekly literature to ensure safe trading [see also Commodity Trading Trends: Natural Gas At A Pivotal Moment].
Disclosure: No positions at time of writing.