Investors rejoiced as Tuesday turned out to be a massive day for most asset classes. The Dow racked up an impressive 340 point gain while the S&P jumped by nearly 3%. 10 year bond prices saw a stellar jump of nearly 6.2% on euro hopes as well as better than expected housing starts, bringing markets a big winning day after a disappointing string of trading sessions. Gold is another asset that was able to snap its losing streak on the day, as it jumped a healthy 1.3% on the day. Its gains were likely propelled by a positive day for the euro, which has weighed on the precious metal for the past few weeks. Despite today’s big win, gold is still only at $1,617/oz., a potential value buy for those looking to get in while this hot commodity is still cheap [see also Three Reasons Why Gold Is Overvalued].
Of course, any day that equities surge will usually be followed by a tear in crude oil, and today was no exception. Tacking on more than $3.1/barrel, crude oil finished the day at about $97, as it steadily makes its way towards the triple digit barrier yet again. Many analysts feel that oil has nowhere to go but up, so its prices could be a potential buy in today’s environment. Though the day saw the broad investing world emerge victorious, the rest of 2011 is sure to be filled with volatility as we still have a number of issues pressuring the global economy. In an effort to keep investors up to date with today’s markets, we outline two of the most notable ETF performances on the day [see also How To Lose Money Investing In Commodities].
One of the biggest ETF winners was the SPDR Homebuilders ETF (XHB) as the ETF shot up nearly 5.3% in Tuesday’s trading. XHB, which tracks the homebuilding industry in the U.S., has been under an enormous pressure over the past few years as the real estate sector has struggled. But today brought welcoming news to this fund for the first time in recent memory. “Housing starts in November checked in at an annual rate of 685,000, up 9.3 percent from October 2011, and up 24.3 percent from October 2010″ writes Daniel Gross. Even though the fund had a massive day, XHB is still down 6.6% for 2011 [see also ETF Insider: Will Holiday Cheer Be Enough?].
One of the biggest ETF losers on the day came from the infamous S&P 500 VIX Short-Term Futures ETN (VXX). This VIX-based product took a nose dive with losses around 6.1% for the day. The steep drop is to be expected, however, given the strength that equities indexes exhibited. Other than the encouraging housing data, VXX was also hurt by hopes that the euro zone would attempt to smooth out some its issues with a conference later in the day. But as we have all seen before, putting your faith in the euro zone can end up burning you, so it wouldn’t be all that surprising to see VXX as a strong performer for Wednesday. Today’s dismal performance finally puts VXX back in the red for the year with losses nearing 3% since January 1st [see also Looking Back At Our ETF Ideas For 2011].
Disclosure: No positions at time of writing.