In yet another see-saw session, equity markets started the day on a high note on hopes of an expanded EFSF, fell sharply during the mid part of the day, only to rally in the final hour in most major sectors. Thanks to this late rally, the Dow finished the day up by 1.3% while the S&P 500 gained 0.8% in comparison, although the tech-heavy Nasdaq failed to match its counterparts, losing about 0.4% on the day. In addition to broad losses in tech, some of the smaller names in the services and materials sector declined, although it was a pretty good day for major oil companies and the vast majority of financial firms. In commodity markets, both gold and oil managed to finish the day in the green as gold added about three dollars an ounce and oil rose by about 1.8% in the session. These gains also trickled down into the softs and metals as most grains saw about 2% in gains while silver added about 1.8% on the day as well.
Currency trading was more flat in Thursday trading as the dollar index slipped by about $0.2 for the day as modest losses against the euro and the pound weighed on the benchmark. With that being said, the dollar did manage to put up some solid gains against the yen as well as the kiwi dollar as New Zealand suffered a downgrade at the hands of ratings agency Fitch. In bond markets, trading hovered around breakeven as the ten year stayed below 2.0% and the two year saw its yield rise to 0.27% for Thursday’s session.
One of the biggest winners in the ETF world was the SPDR Financial Select Sector Fund (XLF) which soared by 2.8% on the day. Today’s gains were spurred by German approval of more funding for the European bailout mechanism which caused many financial institutions to breathe a sigh of relief. The passing of the measure ensured that Greece would have ample support– at least for the time being– in its quest to get its fiscal house in order, lowering the risk of default and contagion for now. The banking sector was also supported by reasonably good data on both the GDP growth and employment fronts which also suggested that the risk of a double dip recession was declining and that loan losses might not be piling up in the near future. Thanks to these two good pieces of news, major banks such as JP Morgan, Citigroup, and Bank of America, all gained at least three percent on the day helping to carry XLF into the green for Thursday’s trading session [see more charts of XLF here].
One of the biggest losers on the day was the PowerShares QQQ Trust (QQQ) which declined by 1.2% in Thursday trading. Today’s losses were spurred by weakness in many of the big tech names that dominate the index as Apple, Microsoft, Google, and Intel all finished in the red for the session. The biggest losses came in top component Apple as the California-based giant slipped by about 1.6% on the day as more worries over competition and supplies for products hit the stock. Investors are continuing to push down Apple after the announcement of Amazon’s $199 Kindle Fire yesterday and there is some worry that demand for iPads is slowing, at least based on recent supply orders. However, things weren’t much better for top ten component Amazon either, as the company lost most of gains from yesterday’s session and slumped about 3.2% on the day. Thanks to this broad weakness throughout the sector, QQQ had a pretty rough day that was far worse than other market tracking funds such as SPY or DIA, reversing the trend of outperformance that we have seen from the PowerShares fund in recent sessions [see holdings of QQQ here].
Disclosure: No positions at time of writing.