American equity markets ended the day mixed after initial weakness thanks to unemployment claims put stocks in a hole to start the day. Nevertheless, the Dow managed to finish up by 14 points while Nasdaq lost one point and the S&P 500 finished the day flat as weakness in the financial sector offset strength in the healthcare market. Thanks to this market uncertainty and the continued weakness in the jobs market, gold powered ahead by $19/oz. to the $1,475 mark while oil continued to gain, surging by almost $1.3/bbl. during Thursday trading. Traders appeared to favor precious metals and other commodities over T-bills today as yields rose across the board for U.S. government debt, with the 10-year yielding close to 3.5% by the end of the day. This was likely thanks to fears over a lack of agreement over the debt ceiling which also helped to push the U.S. dollar index down by roughly a third of a percent or just under the $74.7 mark on the day.
One of the biggest ETF winners on the day was the United States Natural Gas Fund (UNG), which gained close to 2% in Thursday trading. These gains came as the latest EIA report showed a smaller-than-expected increase in supplies for the popular heating fuel. Just 28bcf were added to the overall market, slightly less than the 31-35bcf that analysts had expected to be added. Due to this, prices for the fuel roared higher in Thursday trading, and natural gas is now up 1.9% over the past week and 5.2% over the past month. However, April generally marks the start of large increases in supplies for the fuel so if stocks of natural gas are added in large quantities over the next few weeks traders should look for these gains to quickly be erased [see charts of UNG here].
One of the biggest losers in the ETFdb 60 was the Financial Select Sector SPDR (XLF), which fell by 0.9% on the day. Today’s losses developed as reports came to light regarding some of the country’s biggest banks and the possibility that they manipulated one of the world’s most important interest rate benchmarks, LIBOR. Additionally, a Senate subcommittee attacked Goldman Sachs for selling poor-quality mortgage securities that it bet against and is now calling for the Justice Department to further investigate the company’s CEO Lloyd Blankfein’s testimony before Congress. Lastly, banks were also hit by fears that a regulatory settlement would slice into profits for a variety of banks’ mortgage-servicing business potentially cutting a key revenue source for the industry. “Investors may be unsettled by the difficulty associated with estimating the impact to mortgage servicing revenues from higher servicing expenses and monetary remediation, and this could be an overhang on the shares of companies involved until all is settled,” banking analysts at Keefe, Bruyette & Woods, led by Fred Cannon, wrote in a research note late Wednesday, helping to crush the mood for the financial service industry which is still reeling after JP Morgan’s poor outlook on Wednesday [see holdings of XLF here].
Disclosure: No positions at time of writing.