Daily ETF Roundup: XLF Rises On Euro Hopes, UNG Sinks To All Time Low

by on December 5, 2011 | ETFs Mentioned:

Today saw yet another strong day for markets as hopes that the euro zone will come to an efficient solution fueled markets higher. Unfortunately, as the day came to a close, S&P issued a warning that it has put a number of European countries on credit watch. S&P is perhaps best known for their downgrade of U.S. debts, the first ever by a U.S. ratings agency. Many lashed out at the company, especially after Fitch and Moody’s upheld their top-rated rankings. Despite a late sell-off, the S&P 500 was able to come away with a 1% gain and the Dow grasped 78 points on the day [see also Equal Weight ETFs: Comparing Similar (But Different) Strategies].

Unfortunately, the late sell-off had adverse effects on gold and oil. Oil had been having a great day as it broke though $102/barrel intraday, only to finish the day down $0.35. Gold faced a nasty sell-off as well, as the precious metal dipped 1.6% with the majority of those losses coming near the end of the session. The market volatility is not surprising, however, especially given the high-profile meeting on Friday in which many are expecting a major decision to be made about the future of Europe. Against this unstable background, we outline two of the most notable ETF performances on the day [see also Ten Unexpected Observations On YTD ETF Returns].

One of the biggest ETF winners on the day came from the Financial Select Sector SPDR (XLF) which saw gains of 2% despite the late selling trend. This fund was propelled forwards by speculation that European leaders would reach and effective agreement by the end of the day, but also by a new debt package for Greece. Today, the IMF “agreed to release a 2.2 billion euro ($2.95 billion) aid disbursement to Greece, part of a three-year IMF-EU bailout package to help the debt-stricken country avoid bankruptcy” writes Reuters. The news lifted financials around the world, including this massive ETF [see also Tax Loss Harvesting With ETFs: 6 Ideas To Lower Client Liabilities].

One of the biggest ETF losers on the day came from the United States Natural Gas Fund LP (UNG), which lost a shattering 3.5% in today’s trading. The volatile commodity fund has been under enormous pressure as of late due to high stockpiles and mild weather across the country. Today saw natural gas prices sink, propelling UNG to its lowest price ever. With one of the most popular ETFs in the world sitting at such a low level, there is certainly an interesting opportunity for investors to make a play on the down-trodden commodity; but be advised, natural gas investing is not for the faint of heart [see also 25 Ways To Invest In Natural Gas].

Disclosure: No positions at time of writing.